The Role of Services Trade and Investment in Facilitating Sustainable (Green) Growth

Transcription

1 2010/SOM3/GOS/WKSP/018 Session 4B The Role of Services Trade and Investment in Facilitating Sustainable (Green) Growth Submitted by: JDB Solutions Workshop for Capacity Building on the Role of Cross-Border Services Trade in New Growth Strategies Sendai, Japan September 2010

2 Workshop for Capacity Building on the Role of Cross-Border Services Trade in New Growth Strategies 2010 APEC GOS Workshop Sendai, Japan 15/16 September 2010 Jane Drake-Brockman Managing Director JDB Solutions & Director Australian Services Roundtable 1

3 First Principles 1 There is no doubt, more or less by definition, that delivery of environmental services will assist in the achievement of a green growth strategy There is also no doubt, again more or less by definition, that the increased delivery and application of the most competitive environmental services which results from liberalisation of trade in environmental services will contribute significantly to a green growth strategy. First Principles 2 I could add that the same is true, again more or less by definition, for liberalisation of trade in environmental goods. For these reasons, liberalisation of environmental goods and services is part of the Doha Development Agenda. It is one of the few aspects of the Trade and Environment agenda that everyone agreed should be singled out for negotiation o in the DDA. So even it would seem difficult to argue that increased trade in environmental services should not be part of a green growth strategy. 2

4 What are Environmental Services Environmental services is defined ed in the GATS classification to include sewage services, refuse disposal, sanitation and similar services, reducing vehicle emissions, noise abatement services, nature and landscape protection services and other environmental services. WTO members have only made a modest level of commitments in these sectors, perhaps because many of these services are delivered by public utilities in many countries. Trade chiefly takes place via Mode 3, and some Mode 4 but Mode 1 trade is taking off. Trade in these services contributes importantly to both inclusive growth and green growth The availability of efficient environmental services for waste management, clean water management, efficient water distribution systems, and air-quality controls will be crucial elements of economic development in the coming years, and will be essential for the improvement of health and wellbeing in developing countries. Liberalizing the environmental services sector will provide developed and developing countries alike access to the most advanced technologies to ensure a cleaner environment and the protection of valuable environmental resources. 3

5 But the GATS definition of environmental services is inadequate This is one area where the OECD (Dale Andrews) paper makes a powerful contribution The definition in use in the GATS negotiations is not very useful. What we really need, as part of a green growth strategy is a much wider understanding of the cluster of services which can contribute. The OECD paper comes up with an indicative cluster which includes, in addition to environmental and energy services, financial services, IT and telecommunications, education services, construction and related engineering and a wide range of other business services including architecture, building design etc. Barriers to trade in this cluster of services are very significant This is another area where the OECD paper makes a significant contribution. The services, trade in which could contribute most significantly to green growth, are very heavily protected. And, as the OCED paper emphasises, trade in these services is subject to a demand-side constraint, in the absence of major pockets of under-regulation and/or absence of harmonised international regulatory standards. 4

6 Example; IT applied to wind power Wind power is one of the cleanest and most abundant forms of renewable energy. In 2009, the wind power industry showed an annual growth rate in the United States of 39% helped significantly by economic stimulus funding for green energy. Since 2002, the installed base of turbines in the US has jumped almost sevenfold. Today, wind power represents nearly two percent of the total power in the U.S. Compare this to Denmark, the leading producer of wind power, at 20 percent. We can make existing and new wind farms smarter. This involves software, field technologies, analytics and short-range weather forecasting to help wind farm operators optimize the performance of turbines, better predict and balance power output and commercialize wind output as a trading commodity, both for the trading of carbon credits and as a commodity to other utilities. We also need R&D services and new IT solutions to help adapt electricity grids to accept alternative energy sources. For example, the grid may be set to accept a particular mandated percent of wind; when the level of wind power drops, grid operators need to respond immediately and accurately by increasing the intake of another power supply such as hydroelectricity. This requires grid intelligence: the ability to recognize loss of a generation event through forecasting, modeling and other capabilities and the ability to reduce the load in the right place and time without impacting customers. This might help green growth ; but what does this have to do with international trade? It has everything to do with international trade. Its about opening up to inflows of modern technology and modern services intellectual property. Just because you cant drop it on your foot doesnt mean you dont have to buy it on the international market place if you want it. And as the OECD paper points out, there are currently too many barriers in the way, all of which contribute to unnecessarily high prices. 5

7 QuickTime and a decompressor are needed to see this picture. 9/22/2010 Example; IT applied to water One in eight people lack access to safe drinking water supplies; that's 884 million people. we should be smarter about water. Global industry uses 20% of the world's water supply; in the US, it's 46 %; in China, its 25 %; India is only about 5 %. But, according to a report by the United Nations, agriculture is the largest consumer of freshwater by far about 70 % of all freshwater withdrawals go to irrigated crops. Every business has a different relationship with water. a study by the US Alliance for Water Efficiency estimates that for every 1 million US dollars spent on water efficiency in the US, we can not only save as much as 10 trillion gallons of water, but also create about 220,000 jobs and increase economic output by as much as $2.8 million. 6

8 Architectural and Building Design Services The Australian Sustainable Built Environment Council undertook some similar work last year, showing how better designed commercial and residential buildings would provide some of the most affordable form of greenhouse gas abatement in the Australian economy. The study showed that achieving the full energy efficiency potential of the building sector, greenhouse gas savings of around 60 Mt per annum are achievable in Australia by This is an abatement of around 30 % against the baseline emission projections for the building sector. This abatement was estimated to save the Australian economy $38 billion by 2050 vis-à-vis the adjustment costs foreshadowed by the Government to arise from other propsed action designed to cut Green house gas emission. These gains are available now without the need to invent and apply new technologies. What does this have to do with trade or trade liberalisation? The OECD paper highlighted the extensive array of Mode 3 and Mode 4 obstacles which get in the way of trade in the set of business services involved in building design and green retrofitting. The OECD paper also highlighted the technical barriers to trade in these services; including in the lack of international standards and harmonisation of building codes. 7

9 Increased supply of Energy services can also contribute to both inclusive and green growth Energy accounts for approximately one-tenth of world economic output, according to the WTO, and an efficient energy sector is a prerequisite for social and economic development. The availability of varied sources of energy at competitive prices contributes to a nation s ability to compete in the world marketplace. There is a high correlation between more efficient energy usage and economic growth, increased life expectancy, and higher standards of living. Moreover, modern energy services provide the means to develop energy resources in an environmentally sound manner and in ways that promote responsible and efficient development and use of energy resources. There is a big services trade and investment liberalisation agenda ahead if we want to get serious about green growth. 8

10 Opening up to modern technology flows will help Liberalizing the energy services sector can help realize this joint set of goals. In countries where such liberalization has taken place, both foreign and domestic investment have increased competition and lowered prices. New technology in extraction, transformation, transportation and commercialization of energy products and services has modernized the energy supply chain, generating increased capacity. The spread of advanced technology and services in this sector will be crucial for developing countries to sustain their development path. We need to do some work on defining energy services and having them included in the GATS classifications 9