Draft Guideline for Environment Impact Assessment of Trade Policy in China

1. Prepared for OECD WORKSHOP ON REGIONAL TRADE AGREEMENTS AND THE ENVIRONMENT June 19-20, 2007 Draft Guideline for Environment Impact Assessment of Trade Policy in China Hu Tao Policy Research Center for Environment and Economy, SEPA, CHINA Mao Xianqiang School of Environment, Beijing Normal University

2. Outline • Necessities of EIA on Trade policy • 2 Key points in the EIA guideline • Capacity building needed

3. Necessities • From China’s practices • To understand better the environmental implication of China’s accession to WTO • To ensure the environment is part of China’s national interests of WTO Doha round negotiation • To unveil the environmental problems and benefits of FTA/RTA negotiation • To realize environmental problems resulted from domestic internal trading • To achieve environmental goals by trade measures, together with consumption measures and production measures • To adjust sector trade policies which are environmentally harmful • To achieve sustainable trade by greening current trade policy • In a word, trade policy EIA is the fundamental basis of any trade policy adjustment towards sustainable development

4. Necessities • From international experiences • OECD, RTA • EU, SIA • UNEP, IA • Canada, SEA • US, ER • An EIA on trade policy (RTA, WTO, sector trade etc) is needed • From legal perspective • China’s EIA Act • We SEPA are authorized to do EIA at Project level and planning level • EIA on policy is needed • Trade policy is a pilot phase of policy EIA

5. Key points in the EIA guideline • Mechanism of trade affecting environment • Direct effects • Environmental regulation effect • Technology diffusion effect • EGS effect • Environmental bads/services effect

6. Key points in the EIA guideline • Mechanism of trade affecting environment • Indirect effects • Scale effect • Composition (structure) effect • Polluting industry migration in the world • Carbon intensive industries shifting from Annex I to non Annex I • Efficiency effect

7. Key points in the EIA guideline • Measurement of trade balance accounting from environmental perspective • Trade balance measured by monetary value indicator • Trade balance measured by physical indicator • Trade balance measured by environmental indicator (direct and indirect trade impacts) • Virtual water • Virtual carbon • Virtual SO2 • Etc

8. Capacity building needed • Technical assistance of improving the guideline of trade policy EIA is needed • Training is needed for EIA researchers and practitioners • Legal expertise is needed to support EIA Act Revision

9. Thank you for your attention!