APEC grapples with environment sectors

APEC grapples with environment sectors

KUANTAN, Malaysia (AFP): With only a couple of months to go before its next summit, APEC is finding the energy and environment sectors the hardest nuts to crack in the group's quest for early liberalization in nine targeted areas.

"Some more work on energy and environment needs to be carried out before we have a complete package," said Abdul Razak Ramli, the Malaysian chairman of a three-day meeting of senior APEC officials ending here Tuesday.

While the meeting is the third and final gathering ahead of this year's summit in Kuala Lumpur in November, delegates said the task of determining which products and services are covered in the two sectors remained a contentious issue.

According to the latest proposal, tariffs would be eliminated by the beginning of 2003 in the environmental sector and by mid- 2004 in the energy sector.

"What has yet to be settled is product coverage. That is the only burning issue," a senior official from a developing APEC member-economy told AFP.

"I have mixed feelings if APEC can resolve the issue by November. It will be difficult but the chairman is optimistic," he added.

Another delegate said some developed members were trying to include too many products into the two sectors, which developing economies are reluctant to accept.

"At the technical experts level, it will be difficult to solve," the delegate said, adding that officials had yet to receive any "clear instructions" on how to resolve the issue of product coverage.

China and Japan are said to have the most reservations, putting them up against countries such as Australia, Canada and the United States, all big energy exporters.

Against this sort of background, some energy exporters are arguing that tariffs on anything from bulldozers to shovels and buckets should be eliminated as they are all used in the mining industry, a frustrated official from one country said.

APEC economies account for nearly half the world's consumption of energy and regional demand is expected to grow 40 percent between 1993 and 2010, compared with 34 percent growth in overall world demand in the same period.

Abdul Razak said that when energy and the environment sectors were adopted as priorities, APEC decided to adopt "accepted classification of tariffs in an unconventional way" in devising the liberalization plan.

"We have taken an approach which cuts across the conventional classification of goods under the harmonized system," he added.

The harmonized system falls under an international treaty for classifying goods where each item is assigned a tariff rate.

APEC therefore has to decide which products fall in what category.

"The energy and environment sectors have a problem since there is no clear classification of goods in the two sectors under the harmonized system," one delegate said.

For example, he said, filters used for lighting are an energy- related product whereas water filters fall under the area of environmental products.

Under a proposed compromise, energy products can include generators, diesel units, wires, pumps and bulbs while environmental products can cover filters and monitoring equipment.

Abdul Razak is meanwhile assuring that a package will be ready for leaders to endorse in November.

"There is enthusiasm and a lot of people willing to do a lot of work to come up with a substantial package," he said. "As close as you can get to the norm on the flexibilities, then the more credible the package will be."

The other priority sectors include chemicals, fish, forest product, gems, medical equipment and toys. The ninth sector, telecommunications, is already settled.

APEC groups Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, the Philippines, Singapore, Taiwan, Thailand and the United States.

Russia, Vietnam and Peru are set to formally join the group in November.