Good service

Trade that Benefits the Environment and Development: Opening Markets for Environmental Goods and Services
OECD Observer

Waste processing is nothing new. In ancient Greek legend, Hercules is said to have charged a fee to clean out the Augean stables by diverting water from two rivers through a hole he created in the cattle yard, flushing the waste out the other end. Nowadays, processing waste is a major enterprise, but does it qualify as a good or as a service?

This distinction is important in international trade, and is one issue raised in Opening Markets for Environmental Goods and Services, a collection of reports that aim to clarify the difference. The proposition is that the potential benefits of liberalising trade in environmental services and in environmental goods at the same time may be greater than those generated by liberalising trade in just one of them.

When most people think of consulting services, they imagine people sitting in offices pushing paper and hammering out reports on computers. However, as the report shows, some services are not easily distinguishable from certain goods. This is true of environmental services where trash compactors, for instance, designed specifically for solid-waste management, are operated by refuse disposal services. Pumps, filters, valves and compressors are vital to any environmental service requiring the conveyance of fluids. In wastewater treatment, pumps move water, as well as any chemicals in solution used in the treatment process, from one section of the treatment plant to another. Pumps are vital for those firms cleaning up oil spills or even washing streets.

In short, if the market opens up for a service, it should open up for the related goods too, particularly if these are not available locally. Liberalising trade simultaneously in both environmental services and goods would make it easier to improve the environmental performance of local industries and thereby attract foreign investment, reduce costs and spur innovation, the report argues. It could also spur local producers who could in turn take advantage of export opportunities. How Hercules might have benefited from that.

ISBN 926403577X. See the New Publications pages or for ordering details.

©OECD Observer No 252/253, November 2005

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