AN ENVIRONMENTAL IMPACT ASSESSMENT OF CHINA'S WTO ACCESSION An analysis of six sectors A Report by the Task Force on WTO and Environment China Council for International Cooperation on Environment and Development October 2004 AN ENVIRONMENTAL IMPACT ASSESSMENT OF CHINA'S WTO ACCESSION An analysis of six sectors A Report by the Task Force on WTO and Environment China Council for International Cooperation on Environment and Development October 2004 An Environmental Impact Assessment of China’s WTO Accession The International Institute for Sustainable Development contributes to sus- tainable development by advancing policy recommendations on interna- tional trade and investment, economic policy, climate change, measurement and indicators, and natural resources management. By using Internet com- munications, we report on international negotiations and broker knowledge gained through collaborative projects with global partners, resulting in more rigorous research, capacity building in developing countries and better dia- logue between North and South. IISD’s vision is better living for all—sustainably; its mission is to champion innovation, enabling societies to live sustainably. IISD receives operating grant support from the Government of Canada, provided through the Canadian International Development Agency (CIDA) and Environment Canada, and from the Province of Manitoba. The institute receives project funding from the Government of Canada, the Province of Manitoba, other national governments, United Nations agencies, foundations and the private sector. IISD is registered as a charitable organization in Canada and has 501(c)(3) status in the United States. Copyright © 2004 International Institute for Sustainable Development Published by the International Institute for Sustainable Development All rights reserved ISBN 1-895536-51-0 International Institute for Sustainable Development 161 Portage Avenue East, 6th Floor Winnipeg, Manitoba Canada R3B 0Y4 Tel: +1 (204) 958-7700 Fax: +1 (204) 958-7710 E-mail: [email protected] Web site: http://www.iisd.org IISD Linkages: http://www.iisd.ca ii Overview China Council for International Cooperation on Environment and Development The China Council for International Cooperation on Environment and Development (CCICED), a high level non-governmental advisory body, was established by the State Council of China in 1992. Its stated purpose is “to further strengthen cooperation and exchange between China and the international community in the field of environment and development.” The Council, which meets annually, is composed of 49 Chinese and inter- national members. The members on the Chinese side are of Ministerial or Vice Ministerial rank together with several eminent Chinese experts. The international members are of comparable stature. Members participate as experts in their personal capacities, at the invitation of the Chinese Government. They have been chosen for their expert knowledge and expe- rience and come from different fields of expertise: environment, economics, science, technology, energy policy, agriculture, industry, business, finance and education. The Chinese members come from ministries, agencies and educational institutions directly concerned with the central issues of eco- nomic development and the environment. Expert working groups/task forces have been established by the Council, each jointly chaired and staffed by Chinese and international experts. The working groups/task forces analyze important problems that China faces in the above areas, propose strategies based on international experience and China’s needs, conduct demonstration projects and prepare preliminary recommendations for the Council. The Council then decides what recommendations to forward to the Chinese Government. Council members present these recommendations in person to a senior Chinese leader at the conclusion of their deliberations. Every year since 1993, the CCICED has approved formal recommendations for presentation to the State Council through the Senior Chinese leader whom members meet at the conclusion of their annual session. These recommenda- tions are based largely on the expert reports of the working groups. Because of this unique access to the highest levels of decision-making, these recommen- dations are given priority attention by the various branches of government. As one senior Chinese leader assured the Council: “The Chinese Government will seriously study the Council’s recommendations and will implement them where it is appropriate and relevant to China.” The CCICED has created a unique cooperative mechanism for bringing the best Chinese and international advice directly to the attention of the Chinese Government. It has been one of major contributors to many Chinese envi- ronmental achievements during the past years. For more information on CCICED, visit the Council Web sites at: http://www.harbour.sfu.ca/ and http://www.cciced.org/cn/ iii An Environmental Impact Assessment of China’s WTO Accession Task Force on WTO and Environment The Task Force on WTO and Environment (TFWE) is the successor of the Working Group on Trade and Environment (WGTE) established by the CCICED in 1994. It is a high-level advisory body reporting to the CCICED and carrying out policy-related research leading to practical recommendations for consideration by the Government of China on the development of trade policies and environmental policies that promote sustainable development and trade liberalization. The mandate of the Task Force is to assist China in developing and implementing long-term, comprehensive and integrated trade and environmental policies and measures that support sustainable development, in particular within the context of China as a WTO Member. In Phase III of the CCICED, the Task Force has more defined objectives, With China’s WTO membership, the Task Force aims to help China to enhance its ability to address environment and sustainability issues while it further opens its markets, taking advantage of “green trade” opportunities without sacrificing its environment or natural resources. It also aims to help China to be prepared to address issues related to the environment and sus- tainable development that may arise in the Doha Round of negotiations. iv Overview Task Force on WTO and Environment Chinese Members YE Ruqiu (Co-Chair) Senior Advisor and former Deputy Administrator, State Environmental Protection Administration (SEPA) CHEN Wenjing President, Chinese Academy of International Trade and Economic Cooperation (CAITEC), Ministry of Foreign Trade and Economic Cooperation (MOFTEC) XIA Guang Director, Policy Research Centre for Environment and Economy, SEPA YU Jianhua (2003) Deputy Director General, Department of WTO Affairs, MOFTEC ZHANG Xiangchen Deputy Director General, Department of (2003–2004) WTO Affairs, MOFTEC ZHANG Shigang Deputy Director General, Department of International Cooperation, SEPA International Members David Runnalls President, International Institute for (Co-Chair) Sustainable Development (IISD), Canada Thomas Cottier Professor of Law and Director, World Trade Institute, University of Bern, Switzerland Simon Tay Professor of Law, National University of Singapore, Chairman, Singapore Institute of International Affairs and Chairman, National Environmental Protection Agency Laurence Tubiana President of Institute of Sustainable Development, Paris, France, and former Conseillere pour l’envi- ronnement, Premier Ministre of France Konrad von Moltke Senior Follow, IISD, and Professor of Free University, Amsterdam, the Netherlands Advisor LI Shangtong Professor, Development Research Centre of the State Council v An Environmental Impact Assessment of China’s WTO Accession Team Leaders for EIA work HU Tao Senior Fellow, PRCEE, SEPA CHENG Lulian Senior Engineer, PRCEE, SEPA JIANG Kejun Senior Fellow, Energy Research Institute of State Development and Planning Commission PAN Jiahua Senior Fellow, Centre for Sustainable Development, the Chinese Academy of Social Science (CASS) SUN Changjin Director of Center for Ecological and Environmental Economics, CASS ZHAO Yumin Director, Trade and Environment Department, CAITEC Chinese Coordinators HU Tao (Technical) Senior Fellow, PRCEE, SEPA SHEN Xiaoyue Research Associate, PRCEE, SEPA International Coordinator Wanhua Yang Senior Advisor – China, International Institute for Sustainable Development, Canada vi Overview Contents Preface ix Overview 1 Agriculture 25 Forestry 47 Aquaculture 75 Automobiles 107 Energy 139 Textiles 179 vii An Environmental Impact Assessment of China’s WTO Accession viii Overview Preface China’s accession to the World Trade Organization (WTO) has been an event of exceptional importance. Its impact on China’s economy has been remarkable but the environmental consequences have also been undeniable. It has created opportunities and challenges for improved environmental management, all of which require determined action on the part of the Chinese authorities. Certain environmental consequences are the result of growth. In many instances the need for careful management of these consequences is well known. Growing industries are dynamic and engaged in processes of inno- vation, so often opportunities exist to find solutions that protect the envi- ronment without impacting growth. The textile sector is a good example. Trade liberalization not only promotes increased production; it also creates consumer surpluses associated with falling prices or increased quality. Again there are important environmental measures that