August 07, 2022
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Environmental or climate-friendly goods

Photo by Christian Joudrey on Unsplash

It's about trade liberalisation of climate-friendly goods: What is defined as a ‘climate-friendly good’? How are these goods included in the Harmonised System (HS)?

There are various international agreements to liberalise cross-border trade of environmental/ climate-friendly goods: the Environmental Goods Agreement (EGA), the Agreement on Climate Change, and Trade and Sustainability, to mention a few. How are these goods defined in those agreements?

What is defined as an ‘environmental’ or ‘climate-friendly good’?

The definition was, and remains an issue, as is outlined in the article ‘The crucial role of the WCO in trade liberalisation of climate-friendly goods’ by Emilie Eriksson, published in WCO News 98 - Issue 2/2022:

‘…the definition requires environmental goods to have an environmental end use in terms of environmental protection or resource management. However, the end use criteria in the OECD/Eurostat definition create two main problems:

  • first, how to manage dual-use goods that have both an environmental and a non-environmental end use (such as a pipe that can be used in a wastewater plant or to transport oil;
  • second, the definition fails to include so-called “environmentally preferable products” (EPPs), which cause less environmental damage in terms of production, consumption or disposal than substitute goods. Examples include recycled paper or sustainable building goods.’

How is the issue of the definition being solved?

The issue of definition is solved by negotiating lists of goods that are considered to be climate-friendly and including those lists in agreements.

How are these goods included in the Harmonised System (HS)?

In the Harmonised System (HS), information about the environmental or climate-friendly goods is included in the subheading description. The author of the article outlines a related issue: ‘some six-digit subheadings identify a specific environmental good, while other subheadings contain both environmental and non-environmental goods’. Therefore, in the future, significant changes will be made to Harmonised System in this area.

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