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Environmentally Harmful Subsidies POLICY ISSUES and CHALLENGES « Environmentally Harmful Subsidies POLICY ISSUES AND CHALLENGES « The reform of environmentally harmful subsidies is a high priority for OECD countries. But is there agreement on a common definition of subsidies and on methods to measure them? Are enough reliable data and methods available to identify, measure and analyse environmentally harmful subsidies? These questions were addressed at an OECD workshop held in November 2002. For the first time, experts from a variety of backgrounds (government, academics, researchers and representatives of international organisations and civil society) had the opportunity to take stock of and share technical knowledge of subsidies and their environmental impacts. They addressed these issues in the context of such diverse areas as agriculture, fisheries, energy, industry, transport, forestry Environmentally and water resources. The workshop identified a number of technical issues and policy challenges that needed to be examined in pursuing the reform Harmful of environmentally harmful subsidies, in particular the development of a common framework to define and measure subsidies. The use of a policy “checklist” was identified as a potentially valuable tool to help identify those subsidies Subsidies Harmful Environmentally Subsidies whose removal would benefit the environment. POLICY ISSUES Proceedings of the OECD Workshop on Environmentally Harmful Subsidies, AND CHALLENGES 7-8 November 2002. OECD’s books, periodicals and statistical databases are now available via our online library. This book is available to subscribers to the following SourceOECD themes: Agriculture and Food Environment and Sustainable Development www.SourceOECD.org Ask your librarian for more details of how to access OECD books on line, or write to us at , AGRICULTURE ENVIRONMENT SUSTAINABLE DEVELOPMENT AGRICULTURE ENVI [email protected] SUSTAINABLE DEVELOPMENT ENVIRONMENT AGRICULTURE SUSTAINABLE DEVELOPMENT ENVIRONMENT ENVIRONMENT SUSTAINABLE DEVELOPMENT AGRICULTURE ENVIRONMENT SUS ENVIRONMENT AGRICULTURE SUSTAINABLE DEVELOPMENT ENVIRONMENT AGRICULTURE SUSTAINABLE OIYISE N CHALLENGES AND ISSUES POLICY SUSTAINABLE DEVELOPMENT AGRICULTURE ENVIRONMENT SUSTAINABLE DEVE AGRICULTURE SUSTAINABLE DEVELOPMENT ENVIRONMENT AGRICULTURE SUSTAINABLE DEVELOPMENT AGRICULTURE ENVIRONMENT SUSTAINABLE DEVELOPMENT AGRICULTURE ENVI SUSTAINABLE DEVELOPMENT ENVIRONMENT AGRICULTURE SUSTAINABLE DEVELOPMENT ENVIRONMENT ENVIRONMENT SUSTAINABLE DEVELOPMENT AGRICULTURE ENVIRONMENT SUS ENVIRONMENT AGRICULTURE SUSTAINABLE DEVELOPMENT ENVIRONMENT AGRICULTURE SUSTAINABLE SUSTAINABLE DEVELOPMENT AGRICULTURE ENVIRONMENT SUSTAINABLE DEVE AGRICULTURE SUSTAINABLE DEVELOPMENT -:HSTCQE=VUYY\V: ISBN 92-64-10447-X 51 2003 12 1 P www.oecd.org ENVIRONMENT AGRICULTURE SUSTAINABLE DEVELOPMENT E AGRICULTURE ENVIRONMENT SUSTAINABLE DEVELOPMENT AGRICULTURE ENVI SUSTAINABLE DEVELOPMENT ENVIRONMENT AGRICULTURE SUSTAINABLE DEVELOPMENT ENVIRONMENT ENVIRONMENT SUSTAINABLE DEVELOPMENT AGRICULTURE ENVIRONMENT SUS ENVIRONMENT AGRICULTURE SUSTAINABLE DEVELOPMENT ENVIRONMENT AGRICULTURE SUSTAINABLE SUSTAINABLE DEVELOPMENT AGRICULTURE ENVIRONMENT SUSTAINABLE DEVE AGRICULTURE SUSTAINABLE DEVELOPMENT ENVIRONMENT AGRICULTURE SUSTAINABLE DEVELOPMENT AGRICULTURE ENVIRONMENT SUSTAINABLE DEVELOPMENT AGRICULTURE ENVI SUSTAINABLE DEVELOPMENT ENVIRONMENT AGRICULTURE SUSTAINABLE DEVELOPMENT ENVIRONMENT ENVIRONMENT SUSTAINABLE DEVELOPMENT AGRICULTURE ENVIRONMENT SUS CULTURE SUSTAINABLE DEVELOPMENT ENVIRONMENT AGRICULTURE SUSTAINABLE VELOPMENT AGRICULTURE ENVIRONMENT SUSTAIN LE DEVELOPMENT ENVIRONMENT AGRICUL VIRONMENT SUSTA Environmentally Harmful Subsidies: Policy Issues and Challenges ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD) shall promote policies designed: – to achieve the highest sustainable economic growth and employment and a rising standard of living in member countries, while maintaining financial stability, and thus to contribute to the development of the world economy; – to contribute to sound economic expansion in member as well as non-member countries in the process of economic development; and – to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations. The original member countries of the OECD are Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries became members subsequently through accession at the dates indicated hereafter: Japan (28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland (22nd November 1996), Korea (12th December 1996) and the Slovak Republic (14th December 2000). The Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD Convention). © OECD 2003 Permission to reproduce a portion of this work for non-commercial purposes or classroom use should be obtained through the Centre français d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, tel. (33-1) 44 07 47 70, fax (33-1) 46 34 67 19, for every country except the United States. In the United States permission should be obtained through the Copyright Clearance Center, Customer Service, (508)750-8400, 222 Rosewood Drive, Danvers, MA 01923 USA, or CCC Online: www.copyright.com. All other applications for permission to reproduce or translate all or part of this book should be made to OECD Publications, 2, rue André-Pascal, 75775 Paris Cedex 16, France. FOREWORD In 2001, OECD Ministers asked the Organisation to continue to assist them in formulating and implementing policies to achieve sustainable development. They recognised sustainable development as an overarching goal for the OECD and its Member countries, and asked the Organisation to: x develop agreed indicators that measure progress across all three dimensions of sustainable development; x identify how obstacles to policy reforms, in particular to the better use of market-based instruments and to the reduction of environmentally harmful subsidies, can be overcome, and deepen its analytical work on these instruments; x analyse further the social aspects of sustainable development; and x provide guidance for achieving improved economic, environmental and social policy coherence and integration. The Ministers renewed their long-standing commitment to reduce trade-distorting and environmentally harmful subsidies in 2002. These subsidies were also highlighted at the World Summit on Sustainable Development held in Johannesburg in September 2002, and in the adopted Plan of Implementation. As a first response to the Mandate the OECD organised a Workshop on Environmentally Harmful Subsidies in November 2002. This technical Workshop was an important step in the response to the high-level mandates, involving the Directorate of Food, Agriculture and Fisheries; the Environment Directorate; the Directorate for Science, Technology and Industry, the Trade Directorate; the International Energy Agency; and the European Conference of Ministers of Transport. The objectives of the Workshop were to: x develop a shared understanding of the methodologies used in subsidy measurement; x identify information and analytical gaps standing in the way of progress; and x define a way forward for the OECD work on environmentally harmful subsidies. 3 This was the first time that the OECD had addressed the overall definition of subsidies and sought to identify those that are environmentally harmful, in a cross- sectoral manner. Most analysis to date has been undertaken sector by sector, often in isolation. Although the Workshop focused on the environmental dimension, several participants emphasised the need to analyse subsidies in the wider context of sustainable development. As the Deputy Secretary-General responsible for the OECD work on sustainable development, I have a strong commitment to advance work in this area and to contribute actively to the work itself. I also believe that subsidies are one of the areas where the OECD can and should make a contribution in the context of the Plan of Implementation of the World Summit on Sustainable Development. The OECD has been involved for a long time in measuring subsidies and developing tools for analysing them, and is internationally recognised as one of the leading organisations in the field. Also, the OECD database on environmentally related taxes provides detailed data on tax exemptions, another form of subsidy. In other words, the OECD has a clear comparative advantage in this area – and even a duty – to advance the analytical work and share our expertise on subsidies. It is not enough just to know what the environmental impacts of subsidies are. I would now like to see the debate move to another level – to analyse the obstacles to phasing out environmentally harmful subsidies and help governments develop a strategy for their removal. Moreover, we should try to see where there are real gains to be made in phasing out subsidies that not only harm the environment, but also distort trade, penalise developing
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