Members share experiences on going beyond tariff codes to implement environmental measures

Organized and moderated by Luis Oña-Garcés of Ecuador, the session featured experience-sharing by members implementing environmental measures which are controlled at the border based on tariff classification categories beyond the Harmonized System codes.

A series of key questions guided delegations in addressing environmental measures implemented through tariff classification, exploring the use of specific codes and additional categories designed for this purpose. Other mechanisms used at the border, such as certifications or licences, were also analysed. Good practices identified in the implementation and monitoring of these measures were shared. The objective was to understand the challenges and results of these strategies.

The European Union shared its process used to track trade in products covered by regulations of fluorinated greenhouse gases, ozone-depleting substances, and deforestation. This included the EU TARIC databases which identify specific products beyond 6-digit HS codes. This more exact definition helped customs operations by enhancing traceability and smoothing the cross-border process.

The EU suggested that the World Customs Organization (WCO) put in place a project aimed at improving the classification of green technology and environmentally friendly products by refining definitions and collaborating with international organizations. The EU noted that updating the current HS system to recognize products under green initiatives and the circular economy will streamline processes, enhance policy enforcement, and improve trade efficiency and traceability.

The United Kingdom indicated that collaboration between trade and customs is essential to understand limitations posed by the HS and to apply solutions that can be implemented at the border. The UK emphasized that differentiation of production processes or end-use, especially for environmental products, is challenging. It noted that national tariff lines and harmonized definitions/standards are alternatives to HS amendments.

The UK presented a case study showing that HS codes have no precise categories for recycling, reuse and waste of textiles, which hamper monitoring trade. Discrepancies in customs classification and contamination cause trade barriers due to HS code definitions not conforming with industry procedures. To avoid this, the UK said greater WTO member cooperation can enhance knowledge of trade restrictions due to unclear HS nomenclature.

The Dominican Republic reported on the successful implementation of Multilateral Environmental Agreements (MEAs) and their integration into the country's customs tariff system. It has introduced further subdivisions in its tariff structure, beyond the HS standard codes, to monitor environmentally sensitive products and institutionalised interagency planning and coordination through the creation of a Green Customs Department.

Addressing challenges and opportunities, the Dominican Republic noted the obstacles encountered, particularly on outdated law frameworks, and emphasized the significance of effective technology-driven customs regulation and staff training to improve understanding and implementation of environmental policies while maintaining trade efficiency.

Jamaica also highlighted its efforts in enforcing environmental policies on plastics pollution, hazardous waste treatment and disposal, and the development of renewable energy through customs policy. However, Jamaica noted the numerous challenges that hinder effective enforcement both at the national level and regionally within the Caribbean Community (CARICOM). These include insufficient stakeholder knowledge of MEAs and lack of coordination among regulatory and customs institutions. Jamaica said that enforcement continues to be difficult despite advancement because of a shortage of resources and the need for additional interagency coordination. The country continues to modernize customs practices and simplify policies according to international environmental commitments, with the aim of striking a balance between trade facilitation and sustainability goals.

The HS is a multipurpose international product nomenclature developed by the WCO. It comprises more than 5,000 commodity groups or categories, each of them identified by a six-digit code. See here for the current HS 2022 nomenclature.

The system is used by 212 economies as a basis for their customs tariffs and for the collection of international trade statistics. Over 98% of the merchandise in international trade is classified in terms of the HS.

A first thematic session on Greening the HS was held in June 2024. It provided a detailed presentation of the HS role and structure, including its potential and limitations in identifying goods of policy interest. The challenge of defining environmental goods and making them visible in the HS were discussed, as were proposed HS amendments by the Food and Agriculture Organization and the Basel, Rotterdam and Stockholm Conventions.

The Chair of the Committee on Market Access, Nicola Waterfield of Canada, said that the presentations gave members an opportunity to learn about a very wide range of challenges and solutions beyond the HS to implement their environmental policies. They also highlighted the crossovers between greening efforts and the work of the Committee on transparency in import and export restrictions and prohibitions which would be notified as quantitative restrictions.

As with past thematic sessions in the Committee, and to respond to a demand by members, the WTO Secretariat will prepare a factual summary report based on information shared.