4.1 GATS Commitments for Environmental Services, by Supply Mode

could serve as a trailblazer agreement that other WTO members could join once they meet the required commitments and disciplines. Starting the initiative on a small scale was a deliberate choice, although other members will be welcome to join at a later stage. The ACCTS countries plan to extend their concessions on environmental goods and services to all WTO members on a most-favored-nation basis and have agreed to dispense with the critical-mass requirement. The latter is a landmark move in trade rulemaking, which shows the group’s commitment to achieving positive environmental outcomes, not just improving export opportunities (Steenblik and Droege 2019).

Compared with other service sectors (such as tourism, financial services, and telecommunications), the level of environmental service commitments bound under the General Agreement on Trade in Services (GATS) is modest.13 Many countries have made no commitments at all under mode 1, meaning that mode 1 is “unbound” in terms of both market access and national treatment (table 4.1).14 This trend is less pronounced for the other three modes of supply, but remains significant nonetheless (Sauvage and Timiliotis 2017, 15). In the environmental services sector, most trade takes place through commercial presence (mode 3), with the accompanying presence of natural persons (mode 4). Due to technological developments, cross-border supply (mode 1) is gaining importance. The limited commitments made by WTO member states under GATS is attributable to several factors, chief among them (a) the prevailing role played by public entities in providing environmental services and (b) the propensity of environmental services to become natural monopolies (special distribution or collection networks, high capital investments) (APEC 2020).15

Nevertheless, much liberalization seems to have taken place in the context of regional trade agreements. In 2009 the Organisation for Economic Co-operation and Development (OECD) conducted a survey of the preferential content of services in regional trade agreements, finding that roughly 40 percent of all market-access commitments for environmental services in the regional trade agreements surveyed were GATS-plus, meaning that they improved on prior GATS commitments. A similar analysis undertaken by de Melo and Vijil (2014) finds that regional trade agreements have tended to improve on GATS commitments made under environmental

TABLE 4.1 gAtS Commitments for Environmental Services, by Supply mode

Percentage

Mode of supply

mode 1: Cross-border mode 2: Consumption abroad mode 3: Commercial presence mode 4: movement of natural persons

Market access National treatment Unbound Full commitment Unbound Full treatment

84 10 80 20

57 32 55 45

55 54 20 0 55 54 45 14

Source: Sauvage and Timiliotis 2017, 15. Note: GATS = General Agreement on Trade in Services. The data refer to the sample of World Trade Organization (WTO) members covered by Miroudot, Sauvage, and Sudreau (2010), which includes all Organisation for Economic Co-operation and Development (OECD) members and a large number of nonmember economies, including Albania, China, Costa Rica, Croatia, El Salvador, Honduras, India, Indonesia, Jamaica, Jordan, Malaysia, Morocco, Oman, Peru, the Philippines, Singapore, Thailand, and Vietnam. The European Union, being a customs union, is treated here as a single WTO member. Environmental services refer to activities 6A, 6B, 6C, and 6D in the Sectoral Classification List (W/120).