United States
Environmental Protection
Agency
Policy, Planning
And Evaluation
(PM-221)
EPA 230-R-93-006
July 1993
vvEPA
International Trade In
Environmental Protection
Equipment
An Assessment Of
Existing Data
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INTERNATIONAL TRADE IN
ENVIRONMENTAL PROTECTION EQUIPMENT:
An Assessment of Existing Data
Economic Analysis and Research Branch
Economic Analysis and Innovations Division
Office of Policy Analysis
Office of Policy, Planning and Evaluation
U.S. Environmental Protection Agency
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SUMMARY
This study estimates total U.S. imports, exports, and trade balances for environmental
protection (EP) equipment between 1980-1991. The levels of trade in EP equipment are
disaggregated by environmental medium (i.e., air, water, and other). Bilateral trade flows between
the United States and selected U.S. trading partners also are presented for 1980-1991. Finally, this
study describes trade in pollution abatement equipment from the perspective of selected U.S. trading
partners. Data on their imports, exports, and trade balances for 1988-1991 are reported.
The conceptual framework used to estimate levels of international trade in EP equipment is
based primarily upon the existing system for collecting and classifying international trade data, the
harmonized system. Because the harmonized system is extensively documented, this framework
for estimating international EP trade has the advantage of being well-defined and reproducible.
However, it shares the same limitations as the data from which it is derived. In short, the definition
of EP trade used in this study is constrained because the data either are not gathered and published,
or they are published at an insufficiently disaggregated level. Data on patent rights for EP
technology, direct foreign investment in EP equipment, and pollution prevention processes are not
published; data on trade in services are not sufficiently disaggregated to isolate EP services. Due
to data limitations, it is not possible to estimate these components.
The data compiled in this report show that the United States is a major exporter of EP
equipment in general and air pollution control equipment in particular. Only 21 percent of the air
pollution control equipment sold in the United States is supplied by imports. The United States
enjoyed a surplus of trade in environmental protection equipment of $1.1 billion in 1991, and this
surplus has been increasing steadily since 1989. Between 1989 and 1991, U.S. exports increased
approximately 70 percent, while imports increased approximately 45 percent.
Although the United States is a major exporter of EP equipment, trade in EP equipment
constitutes a relatively small percentage of total U.S. trade. In 1990, U.S. exports of EP equipment
were less than one-half of one percent of all U.S. merchandise exports. The U.S. trade surplus in
EP equipment was dwarfed by the overall U.S. trade deficit of more than $100 billion in 1990.
Furthermore, data compiled in this study cast doubt on other claims regarding patterns of
international trade in EP equipment. Contrary to views on German leadership in this market, the
data show that in 1990 the United States led Germany in exports of air pollution control equipment
by about $63 million. This lead grew to $362 million by 1991, when the United States supplanted
Germany as the country with the largest trade surplus in environmental protection equipment. The
trade estimates compiled in this study also differ dramatically from those presented by OECD.
July 1993
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/'/' International Trade in Environmental Protection Equipment
Finally, the data show that levels of trade in EP equipment are highly volatile. One reason
for this volatility could be that the levels of trade in EP equipment are relatively small.
Consequently, a single sale of EP equipment could case a country's total exports of EP equipment
to rise sharply. In addition, definitions for the commodity trade codes are under constant revision.
These two factors make any trend analysis difficult, and they suggest that any projections of exports
and imports of EP equipment will be uncertain.
July 1993
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ACKNOWLEDGEMENTS
This report was prepared by Deborah Vaughn Nestor and Carl A. Pasurka, Jr. in EPA's
Office of Policy, Planning and Evaluation. The authors gratefully acknowledge substantial input
from Anne E. Grambsch, also of EPA's Office of Policy, Planning and Evaluation. The authors also
thank the individuals mentioned below for assistance and input during the various stages of this
project.
Steven Cadena (U.S. EPA) assisted in tracking down various publications and in organizing
the international trade data. Elizabeth Lonoff (U.S. EPA) also assisted in organizing the
international trade data and with providing guidance regarding which international trade commodity
codes to include in the environmental protection equipment category. Anya Schoolman assisted
with the translations of Spanish to English. Don Garner (Environmental Law Institute) and Jim
Lockhart (Environmental Law Institute) also provided assistance with the data.
The U.S. trade data cited in this study was found at the library of the U.S. International
Trade Commission and the library of the Department of Commerce. The library of the Embassy
of Canada, the library of the European Economic Community delegation (Ms. Melinda Bills), the
Japan Economic Institute, the Korea Economic Institute (Mr. Rick Johnson), the Embassy of Mexico
(Mr. Arturo Jessel), and the Taiwan mission (Mr. Owen Hsieh) all provided assistance in locating
trade data for countries other than the United States.
Mr. Seiji Takeda of the Japan Society of Industrial Machinery Manufactures and Ms. Evelyn
Nishimoto of the Chicago office of the Japan Export Trade Organization (JETRO) provided data
on Japan's exports of environmental protection equipment and exports and imports of environmental
protection technology.
The following individuals at the United States International Trade Commission provided
advice: Aaron Chesser, Dennis Fravel, John Gersic, William Greene, Nelson Hogge, and Stephen
Wanser. David Ingersoll, Environmental Affairs specialist, also provided comments.
William T. Lorenz (Lorenz and Co.) and John Mcllvaine (The Mcllvaine Co.) helped
provide additional insights.
Professor Kimio Uno allowed use of data from a working paper of which he is a co-author.
July 1993
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iv International Trade in Environmental Protection Equipment
The following individuals reviewed an earlier draft of this document and provided numerous
helpful comments:
Outside EPA
Bureau of Economic Analysis: Allan H. Young
Congressional Budget Office: Patrice L. Gordon
Department of Commerce: William Holroyd
Office of Technology and Assessment: Robert D. Atkinson and Rodney Sobin
Within EPA
Office of Air and Radiation: Steve Harper
Office of International Activities: Jill Gallagher
Office of Prevention. Pesticides and Toxic Substances: Robert E. Lee, II
Office of Solid Waste and Emergency Response: Barnes Johnson, Julia Lyddon and
Ken Marcy
Office of the Adminstrator (Office of Cooperative Environmental Management):
Pat LeDonne, Jan McAlpine, and Abby Pirnie
Office of Water: Mark Luttner and Maureen O'Neill
Within the EPA's Office of Policy, Planning and Evaluation, Alan Carlin, Maryann
Froehlich, Mary Jo Kealy, Al McGartland, Dick Morgenstern, Brett Snyder, and Doug Turner also
provided assistance and encouragement.
Finally, a special thanks to Tom Super (EPA's Office of Policy, Planning and Evaluation)
for assisting with the finishing touches.
July 1993
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TABLE OF CONTENTS
SUMMARY i
ACKNOWLEDGEMENTS iii
LIST OF TABLES vii
LIST OF FIGURES viii
1. OVERVIEW 1
1.1. Purpose of the Study 1
1.2. Principle Findings 2
1.3. Outline of the Report 3
2. DEFINING ENVIRONMENTAL PROTECTION EQUIPMENT 4
2.1. Defining EP Equipment 4
2.2. Data Sources 6
2.3 Data Limitations 7
3. ESTIMATES FOR U.S. TRADE IN ENVIRONMENTAL PROTECTION
EQUIPMENT: 1980-1988 8
3.1. U.S. Exports, Imports, and Trade Balances 8
3.2. Composition of U.S. Trade in Pollution Control Equipment 8
3.3. Bilateral Trade Flows 15
4. ESTIMATES FOR U.S. TRADE IN ENVIRONMENTAL PROTECTION
EQUIPMENT: 1989-1991 20
4.1. U.S. Exports, Imports, and Trade Balances 20
4.2. Composition of U.S. Trade in Pollution Control Equipment 20
4.3. Bilateral Trade Flows 24
5. COMPARISON OF TRADE IN POLLUTION CONTROL EQUIPMENT TO
OVERALL U.S. TRADE 24
6. TRADE IN POLLUTION CONTROL EQUIPMENT FOR OTHER
COUNTRIES 27
6.1. Canada 31
6.2. France 31
6.3. Germany 31
6.4. Japan 31
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vi International Trade in Environmental Protection Equipment
6.5. Republic of Korea 32
6.6. Mexico 32
6.7. Republic of China 32
6.8. United Kingdom 32
7. COMPARISON OF ENVIRONMENTAL TRADE ESTIMATES 32
7.1. Comparison to Public Perceptions 33
7.2. Comparison to OECD Estimates 35
7.3. Comparison to Estimates Reported in Other Studies 39
REFERENCES 43
APPENDIX A A-l
APPENDIX B B-l
APPENDIX C C-l
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Vll
LIST OF TABLES
Table 1: U.S. Exports, Imports, and Trade Surpluses for
Environmental Protection Equipment (1980-1988) 9
Table 2: U.S. Exports and Imports for in Environmental Protection
Equipment by Media (1980-1988) 10
Table 3: U.S. Exports of Environmental Protection Equipment
for Selected Trading Partners (1980-1988) 16
Table 4: U.S. Imports of Environmental Protection Equipment
for Selected Trading Partners (1980-1988) 17
Table 5: U.S. Balances of Trade in Environmental Protection Equipment
for Selected Trading Partners (1980-1988) 18
Table 6: U.S. Exports, Imports, and Trade Surpluses for
Environmental Protection Equipment (1989-1991) 21
Table 7: U.S. Exports and Imports in Environmental Protection
Equipment by Media (1989-1991) 21
Table 8: U.S. Exports, Imports, and Trade Balance of
Environmental Protection Equipment for
Selected Trading Partners (1989-1991) 25
Table 9: Comparison of Environmental Protection (EP) Equipment
Imports and Exports to Total U.S. Merchandise
Exports and Imports (1980-1990) 26
Table 10: Selected Industries with Export Levels Comparable to
Export of Environmental Protection Equipment in 1990 28
Table 11: Selected Industries with Trade Balances Comparable to
the Trade Balance for Environmental Protection Equipment in 1990 28
Table 12: Exports, Imports, and Trade Balances for Selected
Other Countries 29
Table 13: Shipments, Exports, and Imports of Stationary
Source Air Pollution Control 34
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viii International Trade in Environmental Protection Equipment
LIST OF TABLES (CONTINUED)
Table 14: Trade in Stationary Source Air Pollution Control
Equipment for 1989-1991 34
Table 15: Summary of OECD Trade Estimates for the
Environmental Protection Industry 36
Table 16: Total Output and Export Levels for Products
Purchased for Environmental Protection in Germany 37
LIST OF FIGURES
Figure 1: Exports and Imports of Environmental Protection Equipment 11
Figure 2: Exports of Environmental Protection Equipment by Media 11
Figure 3: Imports of Environmental Protection Equipment by Media 12
Figure 4: Exports and Imports of Air Pollution Control Equipment
for Selected Trading Partners 14
Figure 5: Exports of Water Pollution Control Equipment 14
Figure 6: Exports and Imports of "Other" Pollution Control Equipment 15
Figure 7: Exports of Environmental Protection Equipment by Media (1989-1991) 22
Figure 8: Imports of Environmental Protection Equipment by Media (1989-1991) 22
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1. OVERVIEW
1.1. Purpose of the Study
This study examines trends in the international trade of environmental protection (EP)
equipment. It was undertaken because the ongoing public debate about the economic impacts of
environmental regulation, especially the international trade impacts, has been impeded by a lack
of consistent, well-documented data describing the pattern of international trade in EP
equipment.
It has been asserted, for example, that the United States imports as much as 70 percent of
its air pollution control equipment, and that Germany has the largest share of the global market
for air pollution control and other environmental technologies (see Porter, 1991 and Wirth,
1992). The Organization for Economic Co-operation and Development (OECD) paints a more
positive picture for the United States, estimating the U.S. trade surplus in pollution control
equipment at $4 billion in 1990 alone (OECD, 1992). At the same time, however, the OECD
reports a $8 billion trade surplus for all of Europe. According to the OECD, Germany enjoyed a
trade surplus of $10 billion, the United Kingdom and France each had a surplus of $500 million,
while Japan had a trade surplus of $3 billion.1 It is unclear from these data which countries, if
any, ran a trade deficit in EP equipment.
These claims, as well as others like them, cannot be verified or reconciled without better
supporting data. This study attempts to fill this need by estimating levels of international trade
in EP equipment using a conceptual framework based primarily upon the existing system for
collecting and classifying international trade data. This harmonized system, used by most U.S.
trading partners, is similar to the Standard Industrial Classification (SIC) scheme. Because the
harmonized system is extensively documented, this framework for estimating international EP
trade has the advantage of being well-defined and reproducible. However, it shares the same
limitations as the data from which it is derived. As discussed below, data on a number of EP
components either are not gathered and published or are published at an insufficiently
disaggregated level. Yet the framework is flexible enough to allow modification if additional
EP trade data become available.
This study estimates total U.S. imports, exports, and trade balances for EP equipment
between 1980-1991. The levels of trade in EP equipment are disaggregated by environmental
medium (i.e., air, water, and other). Bilateral trade flows between the United States and selected
July 1993
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2 International Trade in Environmental Protection Equipment
U.S. trading partners also are presented for 1980-1991. Finally, this study describes trade in
pollution abatement equipment from the perspective of selected U.S. trading partners. Data on
their imports, exports, and trade balances for 1988-1991 are reported.
It should be emphasized that this study estimates international product flows, not the
potential size of foreign markets for EP equipment. Product flows are measured in dollars.
This study draws no conclusions about the benefits accruing from the use of the EP equipment.
1.2. Principle Findings
Despite their limitations, these data provide insight into the U.S. competitive position in
the EP industry vis-a-vis the rest of the world. An assessment of the importance of trade in EP
equipment relative to the total volume of U.S. trade is also possible. Further, the data allow the
verification or refutation of common claims regarding levels and trends in EP trade. Finally, the
study gives some indication of the feasibility of predicting future trends in EP trade.
The data compiled in this report show that the United States is a major exporter of EP
equipment in general and air pollution control equipment in particular. Only 21 percent of the
air pollution control equipment sold in the United States is supplied by imports. The United
States enjoyed a surplus of trade in environmental protection equipment of $1.1 billion in 1991,
and this surplus has been increasing steadily since 1989. Between 1989 and 1991, U.S. exports
increased approximately 70 percent, while imports increased approximately 45 percent.
Although the United States is a major exporter of EP equipment, trade in EP equipment
constitutes a relatively small percentage of total U.S. trade. In 1990, U.S. exports of EP
equipment were less than one-half of one percent of all U.S. merchandise exports. The U.S.
trade surplus in EP equipment was dwarfed by the overall U.S. trade deficit of more than $100
billion in 1990.
Furthermore, data compiled in this study cast doubt on other claims regarding patterns of
international trade in EP equipment. Contrary to views on German leadership in this market, the
data show that in 1990 the United States led Germany in exports of air pollution control
equipment by about $63 million. This lead grew to $362 million by 1991, when the United
States supplanted Germany as the country with the largest trade surplus in environmental
protection equipment. The trade estimates compiled in this study also differ dramatically from
those presented by OECD. For 1990, OECD estimates the U.S. trade surplus for EP equipment
at $4 billion, more than four times the value estimated in this study.2
Finally, the data show that levels of trade in EP equipment are highly volatile. One
reason for this volatility could be that the levels of trade in EP equipment are relatively small.
Consequently, a single sale of EP equipment could case a country's total exports of EP
equipment to rise sharply. In addition, definitions for the commodity trade codes are under
July 1993
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International Trade in Environmental Protection Equipment 3
constant revision. These two factors make any trend analysis difficult, and they suggest that any
projections of exports and imports of EP equipment will be uncertain.
1.3. Outline of the Report
This report consists of six additional sections and three appendices. In Section 2, the
traded products that constitute EP equipment are defined. Section 2 also provides information
on the statistical reports which served as data sources and discusses the limitations of the
published data.
Section 3 presents estimates for U.S. trade in EP equipment for 1980-1988, while Section
4 presents estimates for 1989-1991. In both Sections 3 and 4, estimates for U.S. exports,
imports, and trade balances are provided. These estimates are disaggregated first by
environmental medium and then by major importing and exporting countries. The 1989-1991
are presented separately because traded commodity classifications were changed in 1989, thus
limiting the comparability of the 1980-1988 data to the 1989-1991 data. Section 5 examines
exports, imports, and trade balances from the perspective of eight U.S. trading partners: Canada,
France, Germany, Japan, Mexico, the Republic of China, the Republic of Korea, and the United
Kingdom.
Section 6 places U.S. trade in EP equipment in the context of overall U.S. international
trade by comparing EP exports and imports to total U.S. exports and imports. Examples of
industries with similar levels of exports and trade balances are given. The U.S. data and the data
from other countries are compared to estimates of international trade in EP equipment from
other studies in Section 7.
Appendix A presents data on the number of instances of exports and imports which
involve the licensing of EP technology for Japan. The products and product codes that are used
to estimate EP trade for the United States and selected U.S. trading partners are listed in
Appendix B. Finally, Appendix C presents data on the inputs purchased for pollution abatement
in Germany. These data are used to discuss the OECD methodology for estimating EP trade.
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4 International Trade in Environmental Protection Equipment
2. DEFINING ENVIRONMENTAL PROTECTION EQUIPMENT, DATA SOURCES,
AND DATA LIMITATIONS
2.1. Defining EP Equipment
2.1.1. Method
In order to estimate trade in EP equipment, the products that constitute EP equipment
must be defined. The definition of EP equipment used in this study is largely a function of
existing sources of published trade data.
International trade data are published as a series of commodity codes, much like the
Standard Industrial Classification (SIC) scheme. To develop a definition for EP equipment, all
commodity trade codes were reviewed, and those that consisted predominantly of EP equipment
were identified. The products and their respective trade code numbers were taken from the
Tariff Schedule of the United States Annotated (TSUSA) classification system for imports,
schedule B for exports, and the harmonized system for both imports and exports. The products
and product codes are listed in Appendix B.3
The United States switched to the harmonized system for classifying traded commodities
in 1989. This affects the definition of EP trade and comparability of yearly trade flows, because
the old and new systems are not easily compared. Since most U.S. trading partners switched to
the harmonized system in 1988, it is now possible to develop a reasonable concordance of trade
classification codes among countries. Thus, trade in EP equipment for U.S. trading partners was
measured using the trade codes that correspond roughly to the harmonized EP commodity codes
for the United States. Prior to 1988, trade product classification schemes varied across
countries, making it virtually impossible to determine which products constituted EP equipment.
The harmonized codes used to measure exports, imports, and trade balances from the perspective
of major U.S. trading partners also are presented in Appendix B. The sources of data for other
countries are discussed in greater detail in Section 3.
2.1.2. Types of Equipment Included
The trade codes selected for inclusion in the definition of EP equipment data fell roughly
into three categories: air pollution control equipment, water pollution control equipment, and
other types of pollution control equipment. The air pollution control equipment includes, but is
not limited to: incinerators, electrostatic precipitators, and dust collection and air purification
equipment. The water pollution control equipment component is comprised of machinery for
purifying water and other liquids. The third category ("other") contains EP products that do not
fit neatly into either the air or water pollution control equipment components (e.g., ion exchange
resins).4
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International Trade in Environmental Protection Equipment 5
2.1.3. Components of EP Trade Not Captured
Ideally, the definition of EP trade would include elements besides pollution equipment,
such as patent rights and the large body of equipment and devices that prevent pollution rather
than control it. Unfortunately, the analysis of EP trade at this time is limited to the components
for which data are available. The omission of certain components from this study does not
imply that they do not constitute a significant portion of EP trade. In fact, it is possible that the
omitted components form a larger share of EP trade than the measured components. Yet,
without more detailed data, it is not possible to assess the importance of the unmeasured
components to total EP trade. However, if data on the unmeasured components of EP trade were
to become available, it would be fairly easy to incorporate the data into the framework for
measuring EP trade used in this study.
The definition of EP trade, for example, should include the amounts paid for patent
rights for the use of EP technology. Payments for patent rights would appear as an entry for
royalties and license fees in the current account of the balance of payments. This component of
EP trade is of particular interest, because inclusion of information on imports and exports of EP
patent rights by country would allow testing for correlations between stringency of
environmental regulations and leadership in the development of technology. One hypothesis that
could be tested is whether stringent environmental regulations on one country give that country a
comparative advantage in producing these products and selling them in the international market
(Porter, 1991).
Direct foreign investment by U.S. or foreign firms in the EP equipment industry also
should be included. Direct foreign investment would appear in the capital account of the balance
of payments. To the extent that capital flows substitute for commodity flows, estimates of
international trade based on physical commodity flows understate actual international activity in
the EP equipment sector.
Similarly, the definition of EP trade used in this study does not include trade in
environmental protection services. The U.S. Department of Commerce, Bureau of the Census
(1992, pp. 40 and 57) reported that of the $17.1 billion of current account costs of pollution
abatement incurred by manufacturing sectors in 1990, $5.4 billion were for services and
equipment leasing. Given that services potentially form an important component of EP
expenditures, estimates of trade that do not include trade in EP services understate export and
import levels.
Finally, the data do not include the potential for trade in inputs that reduce environmental
emissions via changes in production processes (pollution prevention). As pollution prevention
supplants traditional end-of-the pipe measures for protecting the environment, it is likely that
production process changes will begin to represent a larger share of EP trade. Without data on
pollution prevention, EP trade may be significantly understated, and trends in EP trade may be
July 1993
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6 International Trade in Environmental Protection Equipment
misleading. Similarly, the data do not include pollution control devices that are "embodied" in
traded products. For example, catalytic converters installed in automobiles traded
internationally are not captured.
In short, the definition of EP trade used in this study is constrained because the data
either are not gathered and published, or they are published at an insufficiently disaggregated
level. Data on patent rights for EP technology, direct foreign investment in EP equipment, and
pollution prevention processes are not published; data on trade in services are not sufficiently
disaggregated to isolate EP services. Due to data limitations, it is not possible to estimate these
components. However, if the data limitations were overcome, it would be relatively easy to
incorporate these components into this study's framework for estimating EP trade.
2.2. Data Sources
To analyze trade in pollution abatement equipment, this study aggregates data for each of
the commodity trade codes classified as EP equipment. A variety of statistical reports published
by the United States as well as its major trading partners served as sources of data.
For the United States, the following reports published by the Department of Commerce
(Bureau of the Census) were used:
• U.S. Exports: Schedule B Commodity by Country (FT 446).
• U.S. Exports: Harmonized Schedule B Commodity by Country (FT 447).
• U.S. Imports for Consumption and General Imports: Tariff Schedule of the
United States Annotated (TSUSA) Commodity by Country of Origin (FT 246).
• U.S. Imports for Consumption: Harmonized Tariff Schedule of the United States
Annotated (TSUSA) Commodity by Country of Origin (FT 247).
For U.S. trading partners, the data sources included:
• Canada: Exports: Merchandise Trade, (Catalogue 65-202) and Imports:
Merchandise Trade, (Catalogue 65-203), published by Statistics Canada
(International Trade Division).
• Japan: Japan Exports & Imports: Commodity by Country, published by the
Tariff Association.
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International Trade in Environmental Protection Equipment 7
• France, Germany, and the United Kingdom: External Trade and Internal
Trade, published by the Statistical Office of the European Community.
• Mexico: Annuario Estadistico del Commercio Exterior de los Estados Unidos
Mexicanos, published by the United States of Mexico, Institute Nacional de
Estadistica, Geografia e Informatica.
• Republic of China: Monthly Statistics of Exports and Monthly Statistics of
Imports, published by the Republic of China Statistical Department (Directorate
General of Customs, Ministry of Finance).
• Republic of Korea: Statistical Yearbook of Foreign Trade, published by Korean
Customs Administration (Korea Customs Research Institute)
2.3 Data Limitations
For the United States, even though data are gathered at a finer level of disaggregation
than for most nations, some products of the U.S. EP industry cannot be isolated from the broader
categories of equipment not generally classified as EP equipment. For example, trade in "sewer
pipes" ideally would be classified as EP trade. It is not possible, however, to isolate trade in
"sewer pipes" from the broader category "pipes," which may or may not represent EP trade.
Further, some types of equipment and products (e.g., fans and chemicals) can be used for both
EP and non-EP activities. To correct for this difficulty, the reported data would need to be
disaggregated by end use, not product type as is currently the case.
As mentioned above, the United States adopted the harmonized system for trade
classification in 1989. Consequently, despite attempts at reconciliation, the data from the old
(pre-1989) and the new (1989 and beyond) trade classifications are not comparable.5 The
harmonized system allows for greater detail in measuring imports and exports and comparing
them across different countries. Thus, in this study, the pre-1989 and the post-1988 data are
presented separately.
Also due to the limited detail of the data, classifying the trade codes by environmental
medium is difficult. In some instances, a trade code may include data for two or more media. In
this case, a judgement has been made regarding the predominant type of equipment represented
by the trade code category. If this judgment could not be made with any degree of confidence,
then the code was placed in the "other" EP equipment category.
In some cases, published U.S. data estimating bilateral trade flows understates export and
import values for some nations. This occurs because "small" values for exports and imports of a
specific commodity classification are aggregated into an "other countries" category.
Consequently, even though a U.S. trading partner is not listed separately under an EP product
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8 International Trade in Environmental Protection Equipment
code, its trade in the EP commodity is not necessarily zero. However, because it is not possible
to determine which countries are included in the "other country" category, this situation is
treated as a zero trade case in this study.
When comparing U.S. data with data from other countries, it is important to keep in
mind that the harmonized system is comparable across countries only up to the 6-digit level of
disaggregation. The United States publishes data at the 10-digit level of disaggregation, and
identifying the trade codes that constitute EP equipment requires utilizing the full 10-digit
specification. To define EP trade for other countries, trade codes which correspond roughly to
the 10-digit U.S. codes were used. Even if a country publishes data at a similar level of
disaggregation, there is no guarantee that its 10-digit trade code represents the same class of
commodities as in the United States. Thus, the U.S. data may not be fully comparable to the
data for other countries.
3. ESTIMATES FOR U. S. TRADE IN ENVIRONMENTAL PROTECTION
EQUIPMENT: 1980-1988
3.1. U.S. Exports, Imports, and Trade Balances
U.S. exports, imports, and trade balances are presented for the period 1980-1988 in Table
1, while Figure 1 illustrates the historical trend.6 The trade statistics are reported in thousands of
current U.S. dollars.
After an initial increase from 1980-1981, U.S. exports declined through 1986. Exports
of EP equipment increased sharply from 1986 to 1988, nearly doubling in size from $445
million in 1986 to $859 million in 1988. U.S. imports of EP equipment, which totaled $113
million in 1980, tended to increase throughout the 1980s. By 1988, U.S. imports totaled $426
million.
The United States carried a surplus in trade for EP equipment from 1980-1988, even
though from 1980 to 1985 the surplus was declining. Between 1985 and 1986, it stopped
declining and began to rise steadily from 1986 to 1988. The balance of trade remained positive
ever since. Beyond 1986, a sharp increase in exports more than offset the effect of a steady
increase in imports on the U.S. balance of trade in EP equipment.
3.2. Composition of U.S. Trade in Pollution Control Equipment
The trends in trade for each component of EP equipment helps explain the factors that
have influenced fluctuations in trade. Table 2 and Figures 2 and 3 present data on exports and
imports for air, water, and other pollution control equipment. Table 2 shows only exports for
water pollution control equipment since, prior to the adoption of the harmonized system for
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International Trade in Environmental Protection Equipment
Table 1
U.S. Exports, Imports, and Trade Surpluses for
Environmental Protection Equipment—1980-1988
(thousands of current dollars)
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
Exports
655,573
725,509
696,054
657,979
558,523
458,465
445,226
559,796
858,746
Imports
113,257
145,650
178,960
145,633
173,317
233,570
268,246
355,610
425,894
Balance
542,316
579,859
517,094
272,346
385,206
224,895
203,980
204,186
432,852
Note:
Data were compiled from the following U.S. Department of Commerce (Bureau of
the Census) reports: U.S. Exports: Schedule B Commodity by Country (FT 446)
and U.S. Imports for Consumption and General Imports: TSUSA Commodity by
Country of Origin (FT 246).
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10 International Trade in Environmental Protection Equipment
Table 2
U.S. Exports and Imports for in Environmental Protection Equipment by Media—1980-1988
(thousands of current dollars)
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
Air
163,601
158,023
146,074
115,938
105,789
101,697
88,012
99,332
160,791
Exports
Water
144,985
190,802
177,580
188,915
149,471
131,883
130,651
137,010
203,477
Other
346,987
376,684
372,400
353,126
303,263
224,885
226,563
323,454
494,478
Imports
Air Water
21,806 *
22,980 *
27,194 *
31,736 *
32,716 *
50,619 *
61,489 *
78,403 *
97,108 *
Other
91,451
122,670
151,766
113,897
140,601
182,951
206,757
277,207
328,786
Note:
* Prior to the adoption of the harmonized system for trade classification, data for imports were not detailed enough to isolate imports of water pollution
control equipment.
Imports of water pollution control equipment are captured in the "other" category.
July 1993
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International Trade in Environmental Protection Equipment
11
1,000,000 -,
CO
jo 800,000 -
"o
Q
j. 600,000 -
O
n 400,000 -
T3
I
| 200,000 -
1980 1981 1982 1983 1984 1985 1986 1987 1988
Year
Exports Imports
Figure 1: Exports and Imports of Environmental
Protection Equipment (1980-1988)
100% r
•c
o
80%
60%
40%
S. 20%
0%
1980 1981 1982 1983 1984 1985 1986 1987 1988
Year
• Air D Water D Other
Figure 2: Exports of Environmental Protection
Equipment By Medium
July 1993
-------
12
International Trade in Environmental Protection Equipment
100% r
80%
60%
o
-------
International Trade in Environmental Protection Equipment 13
from 1980 to 1985, peaking at 85 percent in 1982. From 1983 to 1988, water and other
pollution control equipment ranged from 77 percent to 81 percent of total EP imports.
3.2.1. Air Pollution Control Equipment
Figure 4 illustrates imports, exports, and trade balances for air pollution control
equipment in the United States. Between 1980 and 1988, the pattern of trade for air pollution
control equipment was quite similar to the overall trend for EP equipment. Exports of air
pollution control equipment fell nearly 50 percent between 1980 and 1986, from $164 million to
$88 million. After 1986, exports of air pollution control equipment rose sharply to $161 million.
Between 1980 and 1988, imports increased steadily from $22 million in 1980 to $97 million in
1988. During this period, exports of air pollution control equipment always exceeded imports,
as shown in Figure 4.
3.2.2. Water Pollution Control Equipment
Figure 5 shows the trend for exports of water pollution control equipment from 1980-
1988. As mentioned above, the published data are not detailed enough to allow for separate
reporting of water pollution control equipment imports, which are combined with other pollution
control equipment imports. From 1980 to 1981, water pollution control exports increased about
32 percent. With the exception of 1983, exports of water pollution control equipment then
declined until 1986. Water pollution control equipment exports increased to $203 million in
1988, well above the 1980 level of $145 million.
3.2.3. Other Pollution Control Equipment
Exports and imports of the combined categories of water and other pollution equipment
are shown in Figure 6. Because imports of water pollution control equipment were combined
with imports of other pollution control equipment, the values for exports and imports of other
pollution equipment as reported in Table 2 are not directly comparable. Exports of water and
other pollution control equipment were combined in Figure 6 in order to present a useful
comparison.
Imports of water and other pollution abatement equipment, with the exception of 1983,
rose from 1980 through 1988. The trade balance was positive each year, although the surplus
declined through 1986. After 1986, the trade surplus rose sharply due to a large increase in
exports in 1987 (29 percent over the 1986 level) and 1988 (95 percent over the 1986 level).
July 1993
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14
International Trade in Environmental Protection Equipment
„ 250,000 -
Q 200,000 -
t 150,000 -
O
o 100,000 -
in
T3
| 50,000 -
o
E 0
1980 1981 1982 1983 1984 1985 1986 1987 1988
Year
Exports Imports
Figure 4: Exports and Imports of Air Pollution Control
Equipment
« 250,000 -i
Q 200,000
t 150,000 -
O
° 100,000 -
g 50,000 -
3
o
1980 1981 1982 1983 1984 1985 1986 1987 1988
Year
Exports
Figure 5: Exports of Water Pollution Control Equipment
July 1993
-------
International Trade in Environmental Protection Equipment
15
800,000 -i
2 700,000 -
Q 600,000 -
£ 500,000 -
O 400,000 -
M—
S 300,000 -
T3
| 200,000 -
S. 100,000 -
0
1980 1981 1982 1983 1984 1985 1986 1987 1988
Year
Exp o rts Im p o rts
Note:
Exports of water pollution control equipment are included.
Figure 6: Exports and Imports of "Other" Pollution Control
Equipment
3.3. Bilateral Trade Flows
The published U.S. data also allow for disaggregation of U.S. exports (imports) by
country of destination (origin). Tables 3 through 5 provide bilateral trade flows as well trade
balances for selected U.S. trading partners for 1980-1988. These trading partners accounted for
over one-half of total U.S. EP exports and about three-fourths of all U.S. EP imports.
3.3.1. Exports
As can be seen in Table 3, Canada typically has been the largest U.S. export market for
EP equipment. In 1980, exports to Canada totaled $138 million, 21 percent of total U.S. EP
exports. The level of exports to Canada in 1980 was more than double the amount of exports to
Japan, the second largest U.S. export market for EP equipment. From 1980-1984, Canada
accounted for at least one-fifth of U.S. EP exports, and in 1983, nearly one-half of U.S. exports
of EP equipment went to Canada. Even though U.S. EP exports to Canada fell below pre-1984
levels from 1985-1987, Canada still remained the largest export market for U.S. EP equipment.
July 1993
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16
International Trade in Environmental Protection Equipment
Table 3
U.S. Exports of Environmental Protection Equipment for Selected Trading Partners—1980-1988
(thousands of current dollars)
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
Canada
138,358
159,080
144,736
315,681
154,487
77,977
65,843
83,323
113,751
France
22,627
19,856
25,348
21,551
19,669
19,219
25,155
25,889
40,190
Germany
23,301
25,682
27,406
20,399
15,941
17,061
20,833
22,621
26,335
Japan
65,319
61,129
56,716
53,144
44,426
45,399
47,837
64,903
105,331
Mexico
59,051
56,391
30,300
27,070
17,177
16,169
19,848
68,257
121,129
Republic
of Korea
8,333
25,465
26,050
14,464
20,802
14,230
10,445
18,049
23,894
Republic
of China
12,141
14,035
10,444
10,880
10,448
5,958
10,620
15,885
29,243
UK
23,858
24,965
27,763
28,289
30,006
26,634
29,760
36,685
46,962
July 1993
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International Trade in Environmental Protection Equipment
Table 4
U.S. Imports of Environmental Protection Equipment for Selected Trading Partners—1980-1988
(thousands of current dollars)
17
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
Canada
25,690
32,335
38,393
27,991
38,278
48,299
44,571
61,970
82,428
France
8,958
12,065
10,883
7,404
15,719
19,089
22,836
19597
33,437
Germany
26,001
26,169
26,430
21,132
32,735
40,619
56,512
54,462
52,519
Japan
10,320
21,168
27,809
21,063
17,389
30,896
38,585
61,042
59,825
Republic
Mexico of Korea
1,604
1,659
1,426
769
496
1,136
3,143
7,149
7,409
0
0
89
75
206
772
2,242
4,404
6,212
Republic
of China
61
98
9,,344
5,402
1,514
2,804
4,389
9,592
15,981
UK
18,453
17,993
20,856
15,332
19,780
28,537
29,785
42,208
48686
July 1993
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18 International Trade in Environmental Protection Equipment
Table 5
U.S. Balances of Trade in Environmental Protection Equipment for Selected Trading Partners—1980-1988
(thousands of current dollars)
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
Canada
112,668
126,745
106,343
287,690
116,209
29,678
21,272
21,353
31,323
France
13,669
7,791
14,465
14,147
3,950
130
2,319
6,292
6,753
Germany
(2700)
(487)
976
(733)
(16,794)
(23,558)
(35,679)
(31,841)
(26,184)
Japan
54,999
39,961
28,907
32,081
27,037
14,503
9,252
3,861
45,506
Mexico
57,447
54,732
28,874
26,301
16,681
15,033
16,705
61,108
113,720
Republic
of Korea
8,333
25,465
25,961
14,389
20,596
13,458
8203
13,645
17,682
Republic
of China
12,080
13,937
1,100
5,478
8,934
3,154
6,231
6,293
13,262
UK
5,405
6,972
6,907
12,957
10,226
(1,903)
(25)
(5,523)
(1,724)
July 1993
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International Trade in Environmental Protection Equipment 19
Mexico also has been an important export market for U.S. EP equipment. From 1980-
1983, Mexico was the third largest importer of U.S. EP equipment. Mexico was the fastest
growing U.S. EP export market during 1986-1988, with exports to Mexico increasing from $20
million in 1986 to $121 million in 1988. In 1988, Mexico was the largest importer of U.S. EP
equipment, surpassing Canada for the first time. Together, Mexico and Canada purchase a
significant portion of U.S. EP exports, accounting for an average of 23 percent of the total for
1980-1988.
Interestingly, Japan was the second largest importer of U.S. EP equipment throughout the
1980s. Although in 1987 and 1988 Japan fell into third place behind Canada and Mexico, U.S.
exports of EP equipment to Japan were rising sharply, from $48 million in 1986 to $65 million
in 1987 to $105 million in 1988. By 1988, Japan had become almost as large an export market
as Mexico ($121 million) and Canada ($114 million).
European countries have tended to account for relatively smaller shares of U.S. EP
exports. Individual shares for France, Germany, and the United Kingdom have ranged from
three to seven percent of total U.S. EP exports. France, Germany, and the United Kingdom
together accounted for $70 million of U.S. EP exports, roughly 11 percent of the total. In 1987
and 1988, U.S. exports of EP equipment to these three countries amounted to $85 million and
$113 million, approximately the amount of exports to Canada.
3.3.2. Imports
With the exception of 1980 and 1986, the largest exporter of EP equipment to the United
States was Canada. Between 1980-1988, the share of Canadian imports in total U.S. EP imports
ranged from 17 percent to 23 percent. In contrast to exports, U.S. imports of EP equipment
from Mexico were relatively small ($7 million), only two percent of the total in 1988.
Typically, Germany and Japan have been the second or third largest exporter of EP
equipment to the United States. Two exceptions were 1980 and 1986, when Germany passed
Canada as the largest exporter of EP equipment to the United States The three European
countries (France, Germany, and the United Kingdom) together account for a substantial share
of U.S. EP imports. In 1981 and 1984-1986, France, Germany, and the United Kingdom
accounted for about 40 percent of U.S. EP imports. In 1980, the United States imported $53
million of EP equipment from these three countries, or about 47 percent of total EP imports.
3.3.3. Trade Balances
The United States historically has run a surplus with all of these countries, except for
Germany and the United Kingdom. The only year between 1980 and 1988 that the United States
ran a surplus with Germany was 1982. Further, the deficit with Germany appears to have
followed an upward trend during this time, as exports to Germany remained essentially constant
July 1993
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20 International Trade in Environmental Protection Equipment
while imports from Germany were increasing steadily. The United States ran a fairly small
surplus with the United Kingdom between 1980 and 1984. This surplus became a small deficit
in 1985. Overall, during 1985-1987, surpluses became smaller while deficits became larger. By
1988, however, surpluses rose substantially above pre-1988 levels while deficits became smaller.
This is due primarily to an across-the-board increase in EP exports.
4. ESTIMATES FOR U.S. TRADE IN ENVIRONMENTAL PROTECTION
EQUIPMENT: 1989-1991
4.1. U.S. Exports, Imports, and Trade Balances
As discussed in Section 4 above, the switch to the harmonized system for trade
classification in 1989 limits the comparability of pre-1989 and post-1988 data. Thus, the pre-
1989 and the post-1988 data are presented and discussed here separately. Because the switch
represents a definitional change, the two series should not be combined or compared.
Estimates for exports, imports, and trade balances for 1989-1991 are presented in Table
6. During this three-year time period, U.S. exports increased from $975 million to 1,680 million
or about 72 percent. Imports of EP equipment rose more slowly, from $410 million in 1989 to
$567 million in 1991, an increase of 38 percent. Thus, the trade surplus grew from $565 million
in 1989 to $1.1 billion in 1991.
4.2. Composition of U.S. Trade in Pollution Control Equipment
The switch to the harmonized system for trade classification in 1989 allows for more
accurate disaggregation of imports and exports of EP equipment. The disaggregation, however,
is still far from perfect. As with the pre-1989 system, some trade codes still include data for two
or more media, and assigning them to a specific medium can introduce inaccuracies. Table 7
reports exports and imports for air, water, and other EP equipment, while Figures 7 and 8 show
the composition of imports and exports under the harmonized system for 1989-1991.
July 1993
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International Trade in Environmental Protection Equipment 21
Table 6
U.S. Exports, Imports, and Trade Surpluses for
Environmental Protection Equipment—1989-1991
(thousands of current dollars)
Year
1989
1990
1991
Exports
975,158
1,310,254
1,680,021
Imports
409,667
501,391
566,921
Balance
565,491
808,863
1,113,100
Notes:
1989-1991 are not comparable to preceding years due to the switch to the harmonized system for trade product classification.
The values in Table 6 should not be combined with the values in Table 1.
Data were compiled from the following U.S. Department of Commerce (Bureau of the Census) reports U.S. Exports:
Harmonized Schedule B Commodity by Country (FT 447) and U.S. Imports for Consumption: Harmonized TSUSA
Commodity by Country of Origin (FT 247).
Table 7
U.S. Exports and Imports in Environmental Protection Equipment by Media—1989-1991
(thousands of current dollars)
Year
1989
1990
1991
Air
377,395
543,553
885,620
Exports
Water
363,110
409,161
449,798
Other
234,653
357,540
344,603
Air
122,790
123,397
127,995
Imports
Water
141,690
187,785
216,060
Other
145,187
190,209
222,866
Notes:
1989-1991 are not comparable to preceding years due to the switch to the harmonized system for trade product
classification. The values in Table 7 should not be combined with the values in Table 2.
Data were compiled from the following U.S. Department of Commerce (Bureau of the Census) reports U.S. Exports:
Harmonized Schedule B Commodity by Country (FT 447) and U.S. Imports for Consumption: Harmonized TSUSA
Commodity by Country of Origin (FT 247).
July 1993
-------
22
International Trade in Environmental Protection Equipment
0.39
0.42
0.37 \ I y 0.32
0.24 ~-j_^ o.27
1989 1990
0.53
Wo
0.27
• Air
D Water
D Other
1991
Figure 7: Exports of Environmental Protection Equipment By
Medium (1989-1991)
0.35
0.37
0.35
0.38
1989
1990
• Air
D Water
D Other
0.39
1991
Figure 8: Imports of Environmental Protection Equipment By
Medium (1989-1991)
July 1993
-------
International Trade in Environmental Protection Equipment 23
4.2.1. Air Pollution Control Equipment
The largest component of exports is air pollution control equipment, which accounts for
over one-half of total U.S. EP exports. This suggests that some air pollution control equipment
may have been captured in the "other" category under the pre-1989 system of classification. Air
pollution control equipment is a growing share of EP exports. Exports of air pollution control
equipment more than doubled between 1989 and 1991, from $377 million to $866 million.7 In
1989, 39 percent of U.S. EP exports were air pollution control equipment, and by 1991 air
pollution control equipment accounted for 53 percent of total U.S. EP exports. In contrast,
imports of air pollution control equipment remained virtually constant during 1989-1991. Thus,
the share of air pollution control equipment in total U.S. EP imports declined from 1989 to 1991
(from 30 to 23 percent).
4.2.2. Water Pollution Control Equipment
Exports of water pollution control equipment increased substantially during 1989-1991,
from $363 million to $450 million, a 24 percent increase. As a share of total U.S. EP exports,
exports of water pollution control equipment declined from 37 percent in 1989 to 27 percent in
1991. Although exports of water pollution control equipment were rising, the growth in air
pollution control equipment exports was much higher, causing the share of water pollution
control equipment in total U.S. EP exports to decline.
The harmonized system for trade classification allows for separate reporting of water
pollution control equipment imports. Imports of water pollution control equipment increased 52
percent from 1989 to 1991, from $142 million to $216 million. The share of water pollution
control equipment in total U.S. EP imports increased from 35 percent in 1989 to 38 percent in
1991.
4.2.3. Other Pollution Control Equipment
Exports of other pollution control equipment increased 47 percent from 1989 to 1991,
from $235 million to $345 million. However, exports of other pollution control equipment
decreased slightly between 1990 and 1991, from $358 million to $345 million. The share of
other pollution abatement equipment in total U.S. EP exports has remained fairly constant, with
a slight rise from 24 percent in 1989 to 28 percent in 1991. Imports of other pollution control
equipment increased from $145 million in 1989 to $225 million in 1991. Imports of other
pollution control equipment, then, are roughly the size of imports of water pollution control
equipment. The share of other pollution control equipment in total U.S. EP imports increased
from 35 percent in 1989 to 39 percent in 1991.
July 1993
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24 International Trade in Environmental Protection Equipment
4.3. Bilateral Trade Flows
Table 8 shows bilateral trade flows as well trade balances for selected U.S. trading
partners for 1989-1991. Trade with these countries constituted more than 60 percent of total
U.S. EP exports and about three-fourths of all U.S. EP imports.
4.3.1. Exports
Except for 1989, Canada was this country's largest export market during 1989-1991. In
1989, Japan was the largest export market, and in both 1990 and 1991 Japan was the second
largest export market. Together, Canada and Japan accounted for 40 percent or more of U.S. EP
exports in 1990 and 1991. Following Japan and Canada, the United Kingdom was the third
largest export market in 1989 and 1991, while Mexico was the third largest in 1990. During
1989-1991, exports to Mexico comprised approximately five percent of total U.S. EP exports.
Exports to Canada, Mexico, and Japan represented about one-third of U.S. EP exports. Exports
to France, Germany, and the United Kingdom represented about 16 percent of U.S. EP exports.
While it is difficult to infer trends from three years of data, it is interesting to note that in 1991
export levels were substantially higher than 1989 and 1990 levels for each of the U.S. trading
partners.
4.3.2. Imports
During 1989-1991, the United States purchased a considerable portion of its imports
from three countries: Canada, Japan, and Germany. Imports from these three countries
accounted for over one-half of total U.S. EP imports.
4.3.3. Trade Balances
During 1989-1991, the United States carried a surplus with all of these trading partners,
except Germany and the United Kingdom. In 1989 and 1990, the United States ran a small
deficit with Germany, but this deficit became a small surplus in 1991. Only in 1990 did the
United States run a deficit with the United Kingdom. The largest surplus in 1991 was with
Canada and Japan, due to a large increase in exports to these two countries.
5. COMPARISON OF TRADE IN POLLUTION CONTROL EQUIPMENT TO
OVERALL U.S. TRADE
By way of context, it is useful to compare the values for trade in EP equipment presented
in this study to U.S. international trade in general. Table 9 shows total U.S. merchandise exports
and imports from 1980 through 1991. Exports of EP products constituted less than one-half of
one percent of U.S. merchandise exports in 1991. Imports of EP equipment accounted for
approximately one-tenth of one percent of U.S. merchandise imports in 1991. For years
July 1993
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International Trade in Environmental Protection Equipment
25
Table 8
U.S. Exports, Imports, and Trade Balance of Environmental Protection
Equipment for Selected Trading Partners—1989-1991
(thousands of current dollars)
Country
Canada
France
Germany
Japan
Mexico
Republic
of Korea
Republic
of China
United
Kingdom
1989
126,945
43,482
33,674
142,239
53,512
50,162
66,586
74,291
Exports
1990
383,331
57,261
40,588
138,133
69,699
49,152
59,707
38,227
1991
420, 399
71,104
97,161
319,789
94,720
57,959
72,427
98,282
1989
94,391
19,692
52,524
71,556
11,268
1,589
13,848
28,565
Imports
1990
117,410
19,781
61,910
92,140
16,634
3,073
21,943
63,320
1991
102,901
24,253
88,057
118,102
18,561
4,680
18,863
45,532
1989
32,554
23,790
(18,850)
70,683
42,244
48,573
52,738
45,726
Trade Balance
1990
265,921
37,480
(21,322)
45,993
53,065
46,079
37,764
(25,093)
1991
317,498
46,851
9,104
201,687
76,159
53,279
45,726
52,750
Notes:
1989-1991 are not comparable to preceding years due to the switch to the harmonized system for trade product classification. The values in Table
8 should not be combined with the values in Tables 3-5.
Data were compiled from the following U.S. Department of Commerce (Bureau of the Census) reports: U.S. Exports: Harmonized Schedule B
Commodity by Country (FT 447) and U.S. Imports for Consumption: Harmonized TSUSA Commodity by Country of Origin (FT 247).
July 1993
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26
International Trade in Environmental Protection Equipment
Table 9
Comparison of Environmental Protection (EP) Equipment Imports and Exports to Total
U.S. Merchandise Exports and Imports 1980-1990
(Millions of current dollars)
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
EP
Exports
656
726
696
658
559
458
445
560
859
975
1,310
1,680
Total U.S.
Exports
224,300
237,100
211,000
201,800
219,900
215,900
223,300
250,200
320,200
361,700
388,700
416,000
EP Exports as
a Percent of
Total Exports
0.29
0.31
0.33
0.21
0.25
0.21
0.20
0.22
0.27
0.37
0.34
0.40
EP
Import
s
113
146
179
146
173
234
268
356
426
409
501
567
Total
U.S.
Imports
249,800
265,100
247,600
268,900
332,400
338,100
368,400
409,800
447,200
477,400
497,600
489,400
EP Imports as
a Percent of
Total Imports
0.05
0.05
0.07
0.05
0.05
0.07
0.07
0.09
0.10
0.09
0.10
0.12
Total U.S. imports and exports are taken from Economic Report of the President (U.S.
President, 1993, p. 464). EP imports and exports are taken from Tables 1 and 6. Data for
1989-1991 are included with pre-1989 data to give a frame of reference. Data on EP trade
for 1989-1991 are not comparable to the pre-1989 data.
July 1993
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International Trade in Environmental Protection Equipment 2 7
preceding 1991, the percentage of EP equipment in total U.S. imports and exports was even
smaller. Hence, it is apparent that EP equipment does not constitute a major component of U.S.
merchandise trade.
The comparisons of trade in EP equipment to overall trade, while useful for placing EP
trade in context, should not be interpreted as evidence that EP trade is trivial. For most kinds of
traded goods, the share in total U.S. trade is likely to be small. It is more meaningful to compare
EP trade to trade in other sectors of the economy. According to the Statistical Abstract 1991
(U.S. Department of Commerce, 1991), two 2-digit SIC industries had levels of exports in 1990
comparable to, or less than, the level of exports for EP equipment (in millions of dollars). These
two industries were furniture and fixtures (SIC 25) with exports of $1.6 billion, and leather and
leather products (SIC 31) with exports of $1.4 billion.
Table 10 shows data for selected 3- and 4-digit SIC industries that had levels of exports
in 1990 comparable to, or less than, the level of exports of EP products. According to Table 10,
the level of exports for EP equipment was roughly twice the level for fabricated textile products
(SIC 239) in 1990. Exports of EP equipment were approximately the same as exports for book
publishing (SIC 2731). Table 11 gives data for selected industries with trade surpluses in the
general range of the trade surplus for environmental protection products. The trade surplus for
EP equipment was larger than the trade surplus for pulp mills (SIC 2611) and roughly the same
size as the surpluses for farm machinery and equipment (SIC 3523), space vehicle equipment,
nee (SIC 3769), and radio and TV communications equipment (SIC 3663).
6. TRADE IN POLLUTION CONTROL EQUIPMENT FOR OTHER COUNTRIES
Prior to 1988, trade product classification schemes varied across countries, making it
virtually impossible to determine which products constituted EP equipment. The adoption of the
harmonized system for trade classification in 1988 by all countries allows for the development of
a reasonable concordance of trade classification codes among countries.8 Table 12 provides data
on exports, imports, and trade balances for Canada, France, Germany, Japan, the Republic of
Korea, Mexico, the Republic of China, and the United Kingdom.
The harmonized system is comparable across countries only up to the six-digit level of
aggregation. In many instances, identifying the trade codes that constitute EP equipment
requires a finer level of aggregation. Thus, the U.S. data may not be fully comparable to the
data for other countries. In fact, except for data from European countries (France, Germany, and
the United Kingdom), the data may not be comparable across any of the other countries. The
European data are comparable because they are from the same source.
To illustrate the difficulties with the data, refer to Mexico in Table 12. In 1990, using
July 1993
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28 International Trade in Environmental Protection Equipment
Table 10
Selected Industries with Export Levels Comparable to Export of Environmental
Protection Equipment in 1990
(Millions of current dollars)
Industry
Machine Tools
Book Publishing
Fabricated Textile Products
Household Appliances
Sporting & Athletic Goods
Environmental Protection Equipment
SIC
3541,-2
2731
239
363
3949
—
Exports
1,640
1,428
630
1,778
1,023
1,310
Source: U.S. Department of Commerce, International Trade Administration, 1992
(Environmental Protection Equipment Figures are taken from Table 1).
Table 11
Selected Industries with Trade Balances Comparable to the Trade Balance for
Environmental Protection Equipment in 1990
(Millions of current dollars)
Industry
Pulp Mills
Farm Machinery and Equipment
Space Vehicle Equipment, NEC
Radio and TV Communications Equipment
Environmental Protection Equipment
SIC
2611
3523
3769
3663
—
Trade
Exports Imports Balance
3,288
3,165
724
3,728
1,310
2,851
2,551
79
3,042
501
437
614
615
686
565
Source: U.S. Department of Commerce, International Trade Administration, 1992
(Environmental Protection Equipment Figures are taken from Table 1).
July 1993
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International Trade in Environmental Protection Equipment
29
Table 12
Exports, Imports, and Trade Balances
for Selected Other Countries
(Thousands of U.S. Dollars)
a. Exports
Country
Canada
France
Germany
Japan
Republic of Korea
Mexico
Republic of China
UK
US
1988
111,269
248,182
933,329
546,934
2,053
115
*
342,156
*
1989
143,821
326,413
1,089,792
577,643
3,227
233
20,306
507,434
975,158
1990
194,240
476,734
1,506,968
563,030
4,440
355
29,887
666,880
1,310,254
1991
197,858
488,716
1,491,798
695,354
551
N/A
28,065
659,059
1,680,021
b. Imports
Country
Canada
France
Germany
Japan
Republic of Korea
Mexico
Republic of China
UK
US
1988
436,951
242,318
422,052
139,086
25,499
5,532
*
239,573
*
1989
478,121
285,089
482,796
149,708
49,708
11,599
107,014
283,016
409,667
1990
458,870
419,708
681,003
210,903
47,298
16,551
102,067
343,699
501,391
1991
481,725
474,632
771,812
216,969
7,503
N/A
118,678
372,067
566,921
July 1993
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30 International Trade in Environmental Protection Equipment
Table 12 (continued)
c. Trade Balances
Country
Canada
France
Germany
Japan
Republic of Korea
Mexico
Republic of China
UK
US
1988
(325,682)
5,864
511,277
407,848
(23,446)
(5,417)
*
102,583
*
1989
(334,300)
41,324
606,996
427,935
(46,481)
(11,326)
(86,708)
224,418
565,491
1990
(264,630)
57,026
825,965
361,127
(42,858)
(16,196)
(72,180)
323,181
808,863
1991
(283,867)
14,084
719,986
478,385
(6,952)
N/A
(90,613)
286,992
1,113,100
Notes:
Canada's data are compiled from Canada, Statistics Canada, International Trade Division,
various issues; European community data are compiled from Statistical Office of the European
Community, various issues; Japan's data are compiled from Japan Tariff Association, various
issues; The Republic of Korea's data are Republic of Korea, Korean Customs Administration,
Korea Customs Research Institute, various issues; Mexico's data are compiled from United
States of Mexico, Institute Nacional de Estadistica, Geografia e Informatica, various issues;
the Republic of China's data are compile from The Republic of China, Statistical Department,
Directorate General of Customs, Ministry of Finance, various issues.
To convert to U.S dollars, exchange rates for Canada and Japan were taken from U.S.
President, 1992; exchange rates for the European community were taken from Commission of
the European Community, Directorate General for Economic and Financial Affairs, 1992;
exchange rates for the Republic of China were taken from Federal Reserve System, Board of
Governors, 1991 and 1993.
*The Republic of China and the United States did not switch to the harmonized system for
trade classification until 1989 so that data for 1988 are not available.
N/A = not available
July 1993
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International Trade in Environmental Protection Equipment 31
data reported by Institute Nacional de Estadistica, the estimated level of Mexican exports to all
countries was only $355,000. Table 8 shows that, using data published by the U.S. Department
of Commerce, Mexico exported $16.6 million to the United States alone. These types of
inconsistencies stem from reporting requirements that vary across countries and the fact that the
harmonized system is comparable across countries only up to the six-digit level of aggregation.
6.1. Canada
Table 12 shows that Canada's exports of EP equipment grew from 1988-1991. In 1991,
Canadian exports were $198 million, up 78 percent over 1988 levels of $111 million. Imports
also rose, but not as fast. In 1991, Canadian imports were $482 million, up from $437 million in
1988, or 10 percent. The data also show that Canada ran a deficit in EP trade for all four years.
This deficit is slowly declining.
6.2. France
According to Table 12, France's exports of EP equipment were growing during 1988-
1991. In 1988, France's exports totaled $248 million. By 1991, France's exports were $489
million, up almost 100 percent. France's imports, on the other hand, increased from $242
million to $475 million, about 96 percent, during these four years. France thus ran a surplus in
EP trade during 1988-1991. During 1988-1990, the surplus rose rapidly, from about $6 million
to $57 million. Between 1990 and 1991, the surplus declined to $14 million, about 75 percent.
6.3. Germany
From 1988-1991, German EP exports grew from $933 million to $1.5 billion, or roughly
60 percent. German EP imports nearly doubled, rising from $422 million in 1988 to $772
million in 1991. Germany also ran a trade surplus during this time, a surplus which rose from
$511 million in 1988 to $826 million in 1990. In 1991, the surplus fell to $720 million.
6.4. Japan
Except for 1990, Japan's exports of EP equipment rose steadily between 1988-1991. By
1991, exports were $695 million, 27 percent above the 1988 level of $547 million. Japan's EP
imports also increased during this time, from $139 million in 1988 to $217 million in 1991,
about 56 percent. Thus, Japan carried a trade surplus in EP equipment during 1988-1992. This
surplus remained fairly stable, ranging from a low of $361 million in 1990 to a high of $478
million in 1991.
July 1993
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32 International Trade in Environmental Protection Equipment
6.5. Republic of Korea
The Republic of Korea imports substantially more EP equipment than it exports. Table
12 shows that EP exports from the Republic of Korea were relatively low during 1988-1991,
ranging from about one-half million dollars in 1991 to over four million dollars in 1990. In
1988, the Republic of Korea imported $25 million. EP imports rose to about $50 million in
1989, then declined to $47 million in 1990. In 1991, imports declined even further to less than
$8 million. These widely fluctuating patterns of exports and imports for the Republic of Korea
are reflected in its trade deficit, which ranged from about $46 million in 1989 to $7 million in
1991.
6.6. Mexico
The data for Mexico were available only for 1988-1990. In all three of these years
Mexico's EP exports were relatively small, well below one-half million dollars. Mexican
imports were larger, ranging from less than $6 million in 1988 to about $17 million in 1990.
During 1988-1990, Mexico ran a deficit in EP trade, ranging from $5 million in 1988 to $16
million in 1990.
6.7. Republic of China
Like the United States, the Republic of China did not switch to the harmonized system
for trade classification until 1989. Thus, data on EP trade for the Republic of China are
available only for 1989-1991. EP exports from the Republic of China rose from $20 million in
1989 to $28 million in 1991, or 40 percent. EP imports also rose during this time, from $107
million to $119 million, around 11 percent. During 1989-1991, the Republic of China ran a
deficit in EP trade that grew from $87 million to $91 million.
6.8. United Kingdom
The United Kingdom's exports of EP equipment increased dramatically from 1988 to
1991, almost doubling from $342 million to $659 million. The increase in EP imports was not
as large, from $240 million in 1988 to $372 million in 1991. During this time, the United
Kingdom carried a surplus in EP trade that more than doubled from $103 million in 1988 to
$287 million in 1991.
7. COMPARISON OF ENVIRONMENTAL TRADE ESTIMATES
Several other studies have made claims regarding the nature of the patterns in EP trade
between the United States and other countries. In this section, the results from this study are
compared to estimates generated in other studies as well as to some common public perceptions.
First, the estimates are discussed in the context of public perception. The OECD estimates then
July 1993
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International Trade in Environmental Protection Equipment 33
are reviewed and the large discrepancies between the estimates of EP trade generated in this
study and OECD's are discussed. Finally, this study's estimates for EP trade are compared to
estimates reported by the U.S. Department of Commerce and the Japan External Trade
Organization (JETRO). The estimates of EP trade presented in this study are relatively close to
the values reported by the U.S. Department of Commerce and JETRO.
7.1. Comparison to Public Perceptions
Several claims regarding the nature of EP trade have appeared in the popular press. It
has been asserted that the United States imports as much as 70 percent of its air pollution control
equipment and that Germany leads the in global market for air pollution control and other
environmental technologies (see, for example, Porter, 1991 and Wirth, 1992).
To analyze the accuracy of claims regarding the percentage of air pollution control
equipment that the U.S. imports, it was necessary to estimate both total U.S. demand for air
pollution control equipment and the amount of that demand satisfied by imports. Total U.S.
demand for air pollution control equipment is equal to total shipments of domestically produced
air pollution control equipment plus imports of air pollution control equipment less exports. To
measure shipments of air pollution control equipment, data for industrial air pollution control
equipment (SIC 35646) were used.9 Because SIC 35646 compares to the trade code
corresponding to stationary source air pollution control equipment (Trade Code 8421.39),
estimates of exports and imports for air pollution control equipment were generated using only
Trade Code 8421.39. In Table 7 above, the component of EP trade classified as air pollution
control equipment included more trade codes (see Appendix C) so that the air pollution control
equipment values reported in Table 7 are larger. This larger value is not comparable to SIC
35646.
Table 13 provides data on total U.S. shipments, exports, and imports of stationary source
air pollution control equipment for 1989-1991. For each year, these data were used to compute
the percentage of total U.S. demand for stationary source air pollution control equipment
satisfied by imports. Between 1989 and 1991, this percentage ranged from 20 percent to 35
percent, substantially lower than the 70 percent commonly claimed.
To analyze the accuracy of claims regarding German leadership in air pollution and other
environmental technologies, this study again used the trade code corresponding to stationary
source air pollution control equipment (Trade Code 8421.39). Exports and imports of stationary
source air pollution control equipment are reported for France, Germany, Japan, the United
Kingdom, and the United States in Table 14.
Table 14 shows that, in all three years, the United States lead Germany in exports of
stationary source air pollution control equipment, although in 1989 and 1990 Germany was a
July 1993
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34
International Trade in Environmental Protection Equipment
Table 13
Shipments, Exports, and Imports of Stationary Source Air Pollution Control Equipment
Shipments*
Exports**
Inports**
Domestic Consumption (Shipments + Imports - Exports)
Imports as a Percentage of Shipments
Imports as a Percentage of Domestic Consumption
Exports as a Percentage of Shipments
1989
710,942
292,723
104,883
523,102
15
20
41
1990
825,311
437,560
121,136
598,887
15
24
53
1991
936,680
738,564
108,421
306,537
12
35
79
'U.S. shipments of stationary source air pollution control equipment is measured using data for SIC 35646 (see U.S. Department of
Commerce, U.S. Bureau of the Census, "Selected Industrial Air Pollution Control Equipmenl£urrent Industrial Reports, MA35J).
"Trade in stationary source air pollution control equipment is measured using trade code 8421.39, as this is comparable to SIC 35646.
Note: The large increase in exports of air pollution control equipment for the U.S. between 1990 and 1991 can be traced to trade code
8421.39.00.90. In 1989 and 1990, the published trade data reported no exports forthis commodity code. In 1991, however, exports of $562
million were reported for trade code 8421.39.00.90.
Table 14
Trade in Stationary Source Air Pollution Control Equipment for
1989-1991 (Commodrty Code 8421.39)
(Thousands of Current U.S. Dollars)
Country
France
Germany
Japan
UK
US
1989
Exports
54,959
246,234
101,860
84,806
292 723
Imports
74,998
142,637
26,810
57,149
104,883
1990
Exports
96,543
375,318
76,459
106,342
437,560
Imports
122,046
237,499
48,126
94,883
121,136
1991
Exports
95,213
376,863
116,670
112,942
738,564
Imports
149,160
251,691
85,085
93,030
108,421
July 1993
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International Trade in Environmental Protection Equipment 35
close second. In 1991, however, U.S. exports were amost double the size of Germany's. In
1990, the U.S. led Germany in exports of air pollution control equipment by about $63 million.
This lead grew to $362 million by 1991. Furthermore, in 1991, the United States supplanted
Germany as the country with the largest trade surplus in EP equipment (see Table 12). Thus,
while Germany appears to be a major exporter of air pollution control equipment as well as EP
equipment in general, the data compiled in this study suggest that it does not hold the lead often
claimed in the popular press.
7.2. Comparison to OECD Estimates
The OECD gathers and compiles statistics on EP trade from member countries. In a
1992 report, the OECD lists values for EP trade for selected countries in 1990. According to the
report, each of the following enjoyed a surplus in EP trade in 1990: United States ($4 billion),
Europe ($8 billion), and Japan ($3 billion). Within Europe, Germany enjoyed a trade surplus of
$10 billion, while the United Kingdom and France each had a surplus of $500 million. This
yields a combined trade surplus of $15 billion dollars. The OECD did not indicate which
countries are importing this quantity of environmental protection goods.
OECD estimates for the 1990 U.S. and Japanese trade surpluses for pollution control
equipment are more than four times the value estimated in this study. For Germany, the OECD
estimates are more than 10 times this study's estimates (see Table 12). Since OECD did not
identify the specific trade codes classified as EP equipment, there is no way to fully reconcile the
values estimated in this study and those reported by OECD. However, there are two possible
explanations for these large discrepancies.
One potential explanation is the OECD methodology for obtaining its estimates. Briefly,
OECD gathers data on the estimated level of total domestic production of EP products and the
size of the trade balance for the United States, Germany, France, the United Kingdom, and
Japan. Exports are reported as a share of domestic EP equipment production. Table 15
summarizes OECD's data for 1990 (1992, p. 21). The Production, Export Share, and Trade
Balance columns are taken directly from OECD (1992, p.21). From these values, it is easy to
determine the implied level of exports and imports for each of the countries. Exports are derived
by multiplying Production by Export Share. Imports are derived by subtracting the Trade
Balance from Exports.
The most obvious problem with the OECD data is the inconsistency in the Japanese data.
Since the implied level of exports is less than the trade surplus assigned to it by the OECD,
Japan must have negative imports, which is not possible.10 These types of inconsistencies
highlight the need for better data collection procedures and a consistent framework for
integrating the data.
Another possible explanation for the discrepancy between the EP trade estimates
July 1993
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36
International Trade in Environmental Protection Equipment
Table 15
Summary of OECD Trade Estimates for the Environmental Protection Industry
Country
Production
(Billions of
U.S. Dollars)
(1)
Export Share Trade Balance Exports Imports
(Percentage of (Billions of (Billions of (Billions of
Production U.S. Dollars)
Exported)
U.S. Dollars) U.S. Dollars)
(2)
(3)
(4)
(5)
United States
Germany
France
United Kingdom
Japan
80.0
27.0
12.0
9.0
30.0
10.0
40.0
14.0
17.0
6.0
4.0
10.0
0.5
0.5
3.0
8.0
10.8
1.7
1.5
1.8
4
.8
1.2
1.0
-1.2
Note:
The Production, Export Share, and Trade Balance columns are taken directly from OECD
(1992, p.21). Exports are derived by multiplying Production by Export Share. Imports are
derived by subtracting the Trade Balance from Exports.
reported in this study and by OECD is the share of domestic EP production that is exported.
Using information from additional sources, it is possible to examine the accuracy of OECD's
reported values for export share. For Germany in 1980, Schafer and Stahmer (1989) estimated
the value of purchases for all goods and services used in pollution abatement. In addition, they
provided information on the exports and output of each of these goods and services.
Table 16 provides the Schafer and Stahmer data for each of the goods and services
purchased for purposes of pollution abatement in Germany.11 Total purchases as well as exports
and total production are included. For each product and service, it is possible to calculate the
share of exports in total production and the percent it accounts for in total EP expenditures.
July 1993
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International Trade in Environmental Protection Equipment
37
Table 16
Total Output and Export Levels for Products Purchased for
Environmental Protection in Germany
(106DM)
Amount of Domestic
Production
Product/Service Purchased for EP
Agricultural, forestry and
fishing products
Electricity, gas, water, mining
products
Chemicals, chem. products
Petroleum products
Plastic and non-metallic products
Basic metal products
Machinery (except electrical),
transport equipment
Electrical machinery, fabricated
metal products, n.e.c.
Textiles, leather, wood, paper and
products
Food, beverages, tobacco
5
1,649
699
183
0
5
2,289
609
13
0
Exports
2,564
6,675
43,094
4,954
14,720
29,555
109,015
48,375
24,125
14,181
Percent of
Total Exports as a Product/Service in
Domestic Percent of Total EP
Production Production Expenditures
68,951
112,589
131,322
81,565
92,711
174,918
299,921
163,921
163,343
172,050
3.7
5.9
32.8
6.1
15.9
16.9
36.3
29.5
14.8
8.2
0.0
5.4
2.3
0.6
0.0
0.0
7.5
2.0
0.0
0.0
July 1993
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38
International Trade in Environmental Protection Equipment
Table 16 (continued)
Percent of
Amount of Domestic Total Exports as a Product/Service in
Product/Service Production Exports Domestic Percent of Total EP
Purchased for EP Production Production Expenditures
Environmental protection services
Non-market services except
environmental protection services
Construction
Trade, transport, and communication
services
Other market services except
environmental protection services
TOTAL INTERMEDIATE INPUTS
Imported products
Non-deductible value added tax
Consumption of fixed capital
Compensation of employees
Property and entrepreneurial income
GRAND TOTAL
6,658 0 18,874 0.0
571 536 368,324 0.1
407 7,207 197,578 3.6
11,461 40,312 343,736 11.7
0 10,785 508,510 2.1
24,549 356,098 2,898,313 12.3
751
1,036
2,246
1,795
o
30,377 356,098 2,898,313 12.3
21.9
1.9
1.3
37.7
0.0
80.8
2.5
3.4
7.3
5.9
0.0
100.0
Source: Schafer and Stahmer (1989)
July 1993
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International Trade in Environmental Protection Equipment 39
Although it is not obvious which EP products are included in the OECD data, several
insights can be drawn from Schafer and Stahmer. First, purchases for environmental protection
services and trade, transport, and communication services represent the largest components of
total EP expenditures for goods and services. These two sectors combined represent almost 60
percent of total EP expenditures for goods and services. However, in the German economy in
1980, zero percent of environmental protection services was exported, and only about 12 percent
of trade, transport, and communication services was exported. It appears that the major EP
products produced in the German economy were purchased predominantly for domestic use.
Hence, it is unclear how OECD justifies the assumption that 40 percent of all output of
the environmental protection industry in Germany is exported. One possibility is that Germany
exported a substantially larger percentage of its EP output in 1990 than in 1980. However, other
sources suggest that the share of EP equipment that is exported may be small (see JETRO
1989/90, p.55 and 1992, pp. 20-21). The reasons are: (1) the cost of transporting the
equipment, (2) the "low-tech" nature of hardware components, (3) the differences in regulations
among nations, and (4) the service/maintenance requirements of purchasers. It also may be
possible that there has been a dramatic change in the types of products that are purchased for
environmental protection (i.e., there has been a shift in purchases from nontraded goods and
services to traded goods and services). At this point, data to support or refute this possibility are
unavailable.
7.3. Comparison to Estimates Reported in Other Studies
Other studies have generated estimates of EP trade that are closer to the values reported
in this study. Two examples are the U.S. Department of Commerce (1991) and data published
by the Japan Export Trade Organization (JETRO).12'13
The U.S. Department of Commerce (1991, p. 29) has used data for SIC 35646 (industrial
air pollution control equipment) to estimate the size of the world export market for air pollution
control equipment. The DOC reports that, in 1986, the size of this market was $142 million. Of
the total world export market for air pollution control equipment, the DOC study found that the
United States supplied roughly 30 percent. Germany supplied approximately 18 percent of the
market. The United Kingdom, Japan, and Sweden all controlled less than 10 percent of the
world export market for air pollution control equipment.
According to the DOC report, the United States had exports of $67.5 million in 1987 and
$119 million in 1989. This study, on the other hand, estimates U.S. exports of air pollution
control equipment in 1987 at $99 million (see Table 2). In Table 7, this study reports U.S.
exports of air pollution control equipment at $377 million in 1989. The values estimated in this
study are larger because they are based upon a broader definition of the trade codes that
constitute air pollution control equipment than in the DOC report. However, the estimated
July 1993
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40 International Trade in Environmental Protection Equipment
levels of U.S. air pollution control exports for 1987 and 1989 reported in this study are of the
same order of magnitude as in the DOC report.
As a second source of comparison, JETRO has published data on Japanese exports of EP
equipment. In Table 17, the data reported by JETRO (Uno, 1991 for 1988) are converted to
thousands of U.S. dollars.14 The Japanese values are about 64 percent to 76 percent smaller than
values compiled in this study and reported in Table 12. However, the differences are not by
orders of magnitude as is the case with the OECD figures.
Table 17
Japan Export Trade Organization (JETRO) Estimates of Japan's
Exports of Pollution Abatement Equipment
(Thousands of U.S. Dollars)
Air Pollution
Water Pollution
Waste Disposal
Noise and Vibration
TOTAL
1988
89,990
48,490
24,694
148
163,322
1989
104,997
28,833
710
1,456
135,997
1990
145,379
37,034
17,738
593
200,744
Source: JETRO (1989/90) for 1988 and 1990 and Uno (1991) for
1989.
To convert to U.S dollars, exchange rates for Japan were taken from
U.S. President, 1992.
July 1993
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International Trade in Environmental Protection Equipment 41
NOTES
1. The OECD also states that "Japanese firms are large exporters and licensors of air pollution
control equipment...." (OECD, 1992, p. 22). At present, there are few data regarding licensing
agreements for EP technology. The Japanese External Trade Organization, however, publishes
information of the number of instances of exports and imports which involve the licensing of EP
technology (e.g., licensing technology for construction of an incinerator). This information,
which is presented in Appendix A, provides a basis for assessing the validity of this claim.
2. It is possible that the OECD included components of EP trade not captured in this study in
its measure (see discussion in Section 2 below). However, it is not possible to fully reconcile
the values estimated in this study and those reported by OECD since the OECD did not identify
the specific trade codes classified as EP products or identify its data sources.
3. See the following Department of Commerce (Bureau of the Census) reports: U.S. Exports:
Schedule B Commodity by Country (FT 446) and U.S. Imports for Consumption and General
Imports: Tariff Schedule of the United States Annotated (TSUSA) Commodity by Country of
Origin (FT 246) for the pre-1989 system for trade classification; U.S. Exports: Harmonized
Schedule B Commodity by Country (FT 447) and U.S. Imports for Consumption: Harmonized
Tariff Schedule of the United States Annotated (TSUSA) Commodity by Country of Origin (FT
247) for the post-1988 system for trade classification.
4. Due to data limitations, equipment for solid waste pollution abatement could not be reported
separately.
5. For a discussion of the harmonized system, see U.S. Department of Commerce, International
Trade Administration (1990, pp. 3-8).
6. The trade balance is defined as exports minus imports. When the trade balance is positive,
there is a trade surplus. When the trade balance is negative, there is a trade deficit.
1. This large increase in exports of air pollution control equipment can be traced to trade code
8421.39.00.90. In 1989 and 1990, the published trade data reported no exports for this
commodity code. In 1991, however, exports of $562 million were reported for trade code
8421.39.00.90.
8. The U.S. and the Republic of China did not adopt the harmonized system until 1989.
9. See U.S. Department of Commerce, U.S. Bureau of the Census, "Selected Industrial Air
Pollution Control Equipment," Current Industrial Reports, MA35J.
10. This insight is from Heskett, 1992, p.7.
11. The full set of Schafer-Stahmer numbers is reported in Appendix C.
July 1993
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42 International Trade in Environmental Protection Equipment
12. As a third source, Heskett (1992, p. 16) also used the harmonized trade classification to
determine U.S. exports of various categories of environmental protection equipment. In contrast
to this study, Heskett defined trade in pollution abatement equipment as consisting of: Dust
Collection and Air Purification Equipment (trade code 8421.39.00.10), Filtering and Purifying
Machinery for Gas (trade code 8421.39.00.50), Industrial Gas Cleaning Equipment (trade code
8421.39.00.90), and Incinerators and Laboratory Furnances (trade code 8417.80.00.00).
Heskett also used the harmonized system to determine German exports of environmental
protection equipment.
13. The data published by the Japan Export Trade Organization (JETRO) are compiled by the
Japan Society of Industrial Machinery Manufacturers.
14. These data are further disaggregated into 7 categories of air pollution control equipment and
6 categories of water pollution control equipment. The 1988 export figures are from JETRO
(1990/92, pp. 56). The 1989 export data are from Uno (1991, p. 19). The 1990 export data are
from JETRO (1992, pp. 7, 12, 18, 20).
July 1993
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REFERENCES
Canada, Statistics Canada, International Trade Division (various issues), Exports: Merchandise
Trade, (Catalogue 65-202).
Canada, Statistics Canada, International Trade Division (various issues), Imports: Merchandise
Trade, (Catalogue 65-203).
Commission of the European Community, Directorate General for Economic and Financial
Affairs (1992), The European Economy: Annual Economic Report, 1991-1992, No. 50, p. 262.
Customs Co-operation Council (1986), Harmonized Commodity Description and Coding System:
Explanatory Notes, Brussells.
Federal Reserve System, Board of Governors (1991), "Foreign Exchange Rates,' Federal Reserve
Bulletin, 77, no. 12 (December), p. A68.
Federal Reserve System, Board of Governors (1993), "Foreign Exchange Rates,' Federal Reserve
Bulletin, 79, no. 1 (January), p. A68.
Heskett, J. Clayton (1992), "Green to Gold: The Global Market for Environmental
Technologies," Los Alamos National Laboratory, mimeograph.
Japan Tariff Association (various issues), Japan Exports & Imports: Commodity by Country.
Japan External Trade Organization (JETRO) (1989/90), Japan's Machinery Market for Foreign
Manufacturers (Part III): Environmental Pollution Control Equipment Market, pp. 47-87.
Japan External Trade Organization (JETRO) (1992), Your Market In Japan: Environmental
Pollution Control Equipment, (2nd edition), March, No. 38 (M-17).
Organization for Economic Co-operation and Development (1992), The OECD Environmental
Industry: Situation, Prospects and Government Policies, Paris (OCDE/GD(92)1).
Porter, Michael E. (1991), "Essay: America's Greening Strategy," Scientific American, 268, No.
4 (April), 168.
The Republic of China, Statistical Department, Directorate General of Customs, Ministry of
Finance (various issues), Monthly Statistics of Exports.
The Republic of China, Statistical Department, Directorate General of Customs, Ministry of
Finance (various issues), Monthly Statistics of Imports.
July 1993
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44 International Trade in Environmental Protection Equipment
Republic of Korea, Korean Customs Administration, Korea Customs Research Institute (various
issues), Statistical Yearbook of Foreign Trade.
Schafer, Dieter and Carsten Stahmer (1989), "Input-Output Model for the Analysis of
Environmental Protection Activities," Economic Systems Research., 1, No. 2, 203-228.
Statistical Office of the European Community (various issues), External Trade, Luxembourg.
Statistical Office of the European Community (various issues), Internal Trade, Luxembourg.
U.S. Department of Commerce (1991), Statistical Abstract 1991, Washington, D.C.: U.S.
Government Printing Office.
U.S. Department of Commerce, U.S. Bureau of the Census (1992), "Pollution Abatement and
Control Expenditures, 1990," Current Industrial Reports, MA200, Washington, D.C.: U.S.
Government Printing Office.
U.S. Department of Commerce, U.S. Bureau of the Census (various issues), "Selected Industrial
Air Pollution Control Equipment," Current Industrial Reports, MA35J, Washington, D.C.: U.S.
Government Printing Office.
U.S. Department of Commerce, U.S. Bureau of the Census (various issues), U.S. Exports:
Schedule B Commodity by Country (FT 446), Washington, D.C.: U.S. Government Printing
Office.
U.S. Department of Commerce, U.S. Bureau of the Census (various issues), U.S. Exports:
Harmonized Schedule B Commodity by Country (FT 447), Washington, D.C.: U.S. Government
Printing Office.
U.S. Department of Commerce, U.S. Bureau of the Census (various issues), U.S. Imports for
Consumption and General Imports: TSUSA Commodity by Country of Origin (FT 246),
Washington, D.C.: U.S. Government Printing Office.
U.S. Department of Commerce, U.S. Bureau of the Census (various issues), U.S. Imports for
Consumption: Harmonized TSUSA Commodity by Country of Origin (FT 247), Washington,
D.C.: U.S. Government Printing Office.
U.S. Department of Commerce, International Trade Administration (1991), A Competitive
Assessment of the U.S. Industrial Air Pollution Control Equipment Industry, Washington, D.C.:
U.S. GPO.
July 1993
-------
International Trade in Environmental Protection Equipment 45
U.S. Department of Commerce, International Trade Administration (1990), U.S. Foreign Trade
Highlights: 1989, Washington, D.C.: U.S. GPO.
U.S. Department of Commerce, International Trade Administration (1992), U.S. Industrial
Outlook '92, Washington, D.C.: U.S. GPO.
U.S. Department of Commerce, International Trade Administration (1993), U.S. Industrial
Outlook '93, Washington, D.C.: U.S. GPO.
U.S. International Trade Commission (1992), Harmonized Tariff Schedule of the United States
(1992): Annotated for Statistical Reporting Purposes, USITC Publication 2449.
U.S. President (1992), Economic Report of the President, Washington, D.C.: U.S. Government
Printing Office.
United States of Mexico, Institute Nacional de Estadistica, Geografia e Informatica (various
issues), Annuario Estadistico del Commercio Exterior de los Estados Unidos Mexicanos (1989
and 1990 data from computer print-out supplied by the Secretaria de Commercio y Fomento
Industrial, Subscretaria de Commercio Exterior, Direccion General de Politicia de Commercio
Exterior via the Trade Office, Embassy of Mexico).
Uno, Kimio (1991), "Quality-of-Life and Environmental Accounting: Assessment of Pollution
Prevention Investment," unpublished mimeograph, Institute of Policy Management, Keio
University.
Wirth, Timothy E. (1992), "Lighten Up, Loggers—Environmental!sm Actually Creates Jobs,"
The Washington Post, October 4, 1992, p. C3.
July 1993
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APPENDIX A
INTERNATIONAL TRADE IN ENVIRONMENTAL TECHNOLOGY FOR JAPAN
-------
International Trade in Environmental Protection Equipment A-l
International Trade in Environmental Technology for Japan
At present, there are few data regarding the trade in environmental protection technology.
The Japan External Trade Organization (JETRO) however, publishes some data on Japanese trade
in EP technology. The data are not reported as monetary values. Rather, Japanese firms provide
the number of "cases" of exports and imports of technology. These typically appear to involve the
licensing of environmental protection technology (e.g., licensing technology for construction of an
incinerator).
JETRO (1989/90, pp. 70-71) contains detailed information on Japanese exports and imports
of environmental protection technology for fiscal years 1984-1988. Table A-l lists the total number
of cases for exports, while Table A-2 lists the total number of cases for imports.
Between 1984 and 1988 Japan had one case of exports of air pollution control technology
to the United States each year (except for 1987 when there was no case). Japan recorded 7 cases
of air pollution technology imports from the United States in 1985 and 1987, 6 cases in 1984 and
1986, and 3 cases in 1988. The United States was the leading exporter of air pollution control
technology to Japan in all five years.
The United States was also the leading exporter of water pollution control technology and
waste disposal technology to Japan from 1984 through 1987. The United Kingdom was the leading
exporter of each of these technologies in 1988. Overall, the United States was also the leading
exporter of technology to Japan in all five years: 1984 (18 cases), 1985 (19 cases), 1986 (17 cases),
1987 (16 cases), 1988 (6 cases - tied with the United Kingdom). The Federal Republic of Germany
was the second leading exporter of technology to Japan in 1984 (8 cases) and 1985 (9 cases). The
United Kingdom was the second leading technology exporter to Japan in 1986 (7 cases) and 1987
(7 cases).
In 1990, (see JETRO, 1992, p. 22), there were 10 cases of Japanese exports and 23 cases of
Japanese imports of environmental protection technology. Of these, 4 cases were exports to Europe,
1 case of exporting technology to Mexico, and 1 case of exporting technology to North America (i.e.
Canada and the United States). On the other hand, Europe (7 cases) and North America (15 cases)
account for 22 of the cases of Japanese imports of environmental protection technology. Given that
JETRO (1989/90, pp. 70-71) showed no exports or imports of technology to Canada for 1984
through 1988 (inclusive), the United States probably accounts for virtually all of the trade in
technology assigned to North America in 1990.
These data appear to indicate that, although the gap has narrowed during the later 1980s,
Japan remains a net importer of environmental protection technology. Most of Japan's exports of
technology are to other Asian nations, while most of its imports of technology are from Europe and
the United States. Contrary to the OECD (1992, p. 22) statement that "Japanese firms are large
July 1993
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A-2 International Trade in Environmental Protection Equipment
exporters and licensors of air pollution control equipment. . . .," theUnited States was a net exporter
of environmental protection technology to Japan during the entire period.
Table A-1
Japanese Exports of Environmental Protection Technology
(Number of Cases)
Components
Air Pollution
Water Pollution
Waste Disposal
Noise and Vibration
TOTAL
Source: JETRO (1989/90)
1984 1985
8 15
7 6
2 4
2 2
19 27
Table A-2
1986
12
2
3
0
17
1987
8
4
1
1
14
1988
8
5
3
1
17
Japanese Imports of Environmental Protection Technology
Components
Air Pollution
Water Pollution
Waste Disposal
Noise and Vibration
TOTAL
(Number of Cases)
1984 1985
16 18
22 21
6 6
1 1
45 46
1986
11
14
7
1
33
1987
11
13
4
1
29
1988
4
11
4
1
20
Source: JETRO (1989/90)
July 1993
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APPENDIX B
TRADE CODES USED FOR MEASURING TRADE IN ENVIRONMENTAL
PROTECTION EQUIPMENT
-------
International Trade in Environmental Protection Equipment
Table B-l
U.S. Trade Codes Classified as Environmental Protection Equipment
B-l
a. Air Pollution Control Equipment
Description
Industrial or lab furnaces and ovens, including incinerators,
n/ele nesoi
Dust collection and air purification equipment
Electrostatic precipitators
Industrial gas cleaning equipment
Gas separation equipment
Filtering or purifying machinery and apparatus, gas, nesoi
Filtering or purifying machinery and apparatus, gas, nesoi
Gas or smoke analysis equipment, optical
Harmonized
TSUSA
(Imports)
8417.80.00.00
8421.39.00.10
8421.39.00.20
8421.39.00.30
8421.39.00.40
8421.39.00.50
8421.39.00.90
9027.10.40.00
Harmonized
Schedule B
(Exports)
8417.80.00.00
8421.39.00.10
8421.39.00.20
8421.39.00.30
8421.39.00.40
8421.39.00.50
8421.39.00.90
9027.10.00.00
TSUSA Schedule B
(Imports) (Exports)
661.3000 661.3020
661.9400 661.9825
661.9805
661.9808
661.9815
July 1993
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B-2
International Trade in Environmental Protection Equipment
Table B-l (continued)
b. Water Pollution Control Equipment
Description
Harmonized Harmonized
TSUSA Schedules TSUSA Schedule B
(Imports) (Exports) (Imports) (Exports)
Machinery for filtering or purifying water
Machinery for filtering or purifying other liquids
8421.21.00.00 8421.21.00.00
8421.29.00.50 8421.29.00.50
8421.29.00.60 8421.29.00.60
661.9855
c. Other Pollution Control Equipment
Description
Parts of machinery for filtering/purifying water
Parts of machinery for filtering/purifying other liquids
Filtering and purifying machinery and parts, nspf
Ion exchange resins
Harmonized
TSUSA
(Imports)
8421.99.00.40
8421.99.00.80
Harmonized
Schedule B
(Exports)
8421.99.00.40
8421.99.00.80
TSUSA
(Imports)
661.9580
661.9500
661.9520
Schedule B
(Exports)
661.9875
661.9880
July 1993
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International Trade in Environmental Protection Equipment
B-3
Table B-2
Trade Codes for Canada
Trade Code
Description
8417.80
8421.21
8421.29
8421.39
8421.99
9027.10
Industrial or lab furnaces & ovens, inc incinerators non-electric nes
Filtering or purifying machinery and apparatus for water
Filtering or purifying machinery and apparatus for liquids nes
Filtering or purifying machinery and apparatus for gases nes
Parts for filtering or purifying machinery and apparatus for liquids or gases, nes
Gas or smoke analysis apparatus
Table B-3
Trade Codes for Japan
Trade Code
Description
8417.80-000
8421.21-000
8421.22-000
8421.29-000
8421.39-000
8421-99-000
9027.10-000
Furnaces and ovens other than those for roasting, melting or other heat-treatment of
ores, pyrites or of metals and bakery or
biscuit ovens
Filtering or purifying machinery and apparatus for water
Filtering or purifying machinery and apparatus for beverages other than water
Filtering or purifying machinery and apparatus for liquids, n.e.s.
Filtering or purifying machinery and apparatus for gases, other than intake air filters
for internal combustion engines
Parts of filtering or purifying machinery and apparatus for liquids or gases
Gas or smoke apparatus
July 1993
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B-4 International Trade in Environmental Protection Equipment
Table B-4
Trade Codes for France, Germany, and the U.K.
Trade Code Description
8417.80-10 Furnaces and ovens for the incineration of rubbish, (non-electric)
8417.80-90 Industrial or laboratory furnaces, including incinerators, (non-electric), (excl.
8417.10-00 to 84-17.80-10)
8421.21-90 Machinery and apparatus for filtering or purifying water, (excl. for civil aircraft)
8421.29-90 Filtering or purifying machinery and apparatus for liquids, (excl. 8421.21-10 to
8421.29-10)
8421.39-30 Machinery and apparatus for filtering or purifying air, (excl. for civil aircraft),
(excl 8421.31-90)
8421.39-51 Machinery and apparatus for filtering or purifying gases (excl. air), by a liquid
process, (excl. for civil aircraft)
8421.39-55 Machinery and apparatus for filtering or purifying gases (excl. air), by an
electrostatic process, (excl. for civil aircraft)
8421.39-71 Machinery and apparatus for filtering or purifying gases (excl. air), by a
catalytic process, (excl. for civil aircraft)
8421.39-75 Machinery and apparatus for filtering and purifying gases (excl. air) by a
thermic process, (excl. for civil aircraft)
8421.39-99 Machinery and apparatus for filtering and purifying gases (excl. air) (excl. for
civil aircraft), (excl 8421.39-51 to 8421.39-75)
8421.99-00 Parts of machinery and apparatus for filtering or purifying liquids or gases
9027.10-10 Electronic gas or smoke analysis apparatus
9027.10-90 Gas or smoke analysis apparatus (excl. electronic)
July 1993
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International Trade in Environmental Protection Equipment
B-5
Table B-5
Trade Codes for the Republic of Korea
Trade Code
Description
8417.80.2000
8421.22.0000
8421.29.2000
8421.39.2000
8421.39.9010
8421.99.1000
8421.99.9010
9027.10.0000
Laboratory type
For filtering or purifying beverages other than water
For the treatment of harmful waste water
For purifying exhaust gas for vehicles of chapter 87
For the treatment of harmful exhaust gas
For purifying exhaust gas for vehicles of chapter 87
Of filtering or purifying machinery and apparatus, for internal combustion
Gas or smoke analysis apparatus
Table B-6
Trade Codes for Mexico
Trade Code
Description
8417.80-02
8421.21-02
8421.21-03
8421.21-04
8421.29-01
8421.29-03
8421.39-01
8421.39-03
8421.39-05
8421.39-06
8421.39-07
8421.39-08
9027.10-01
Incinerators
Chlorine-based chemical purifiers
Magnetic water filters
Inverted osmosis modules
Liquid purifiers
Precipitators
Precipitators
Gas filters
Air filters
Oil separators
Oil separators for compressors
De-gasifiers
Gas and smoke analysis equipment
July 1993
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B-6 International Trade in Environmental Protection Equipment
Table B-7
Trade Codes for the Republic of China
Trade Code Description
8417.80.1000-2 Incinerators
8421.21.9000-1 Other filtering or purifying machinery and apparatus for water
8421.22.9000-9 Filtering or purifying machinery and apparatus for beverages other than water
8421.29.0000-2 Other filtering or purifying machinery and apparatus for liquids
8421.39.1000-8 Electric air filters and purifiers
8421.39.9000-1 Other filtering or purifying machinery and apparatus for gases
8421.99.1000-5 Filter elements (for instant use)
8421.99.9000-8 Other parts of filtering or purifying machinery and apparatus for liquids or gases
9027.10.0000-9 Gas or smoke analysis apparatus
July 1993
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APPENDIX C
INPUTS PURCHASED FOR POLLUTION ABATEMENT IN GERMANY
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International Trade in Environmental Protection Equipment
C-l
Total Output and Export Levels for Products Purchased for
Environmental Protection (EP) in Germany
(106DM)
Amount Purchased
as Operation and
Maintenance
Expenditures
Sector
Agricultural, forestry and
fishing products
Electricity, gas, water, mining
products
Chemicals, chem. products
Petroleum products
Plastic and non-metallic products
Basic metal products
Machinery (except electrical),
transport equipment
Electrical machinery, fabricated
metal products, n.e.c.
Textiles, leather, wood, paper and
products
0
1,649
699
183
0
0
202
60
0
Amount
Purchased as
Capital
Expenditures
5
0
0
0
0
5
2087
549
13
Total
Amount
Purchased
forEP
5
1,649
699
183
0
5
2,289
609
13
Total
Exports
2,564
6,675
43,094
4,954
14,720
29,555
109,015
48,375
24,125
Total
Output
68,951
112,589
131,322
81,565
92,711
174,918
299,921
163,921
163,343
July 1993
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C-2
International Trade in Environmental Protection Equipment
Total Output and Export Levels for Products Purchased for
Environmental Protection (EP) in Germany—Continued
(106DM)
Amount Purchased
as Operation and
Maintenance
Expenditures
Sector
Food, beverages, tobacco
Environmental protection services
Non-market services except
environmental protection services
Construction
Trade, transport, and
communication services
Other market services except
environmental protection services
TOTAL INTERMEDIATE
INPUTS
Imported products
Non-deductible value added tax
Consumption of fixed capital
Compensation of employees
Property and entrepreneurial
income
GRAND TOTAL
0
0
89
0
10,038
0
12,920
490
112
2,246
1,795
0
17,563
Amount
Purchased as
Capital
Expenditures
0
6658
482
407
0
0
10206
261
924
0
0
0
11,391
Total
Amount
Purchased Total
forEP ExP°rts
0 14,181
6,658 0
571 536
407 7,207
11,461* 40,312
0 10,785
24,549 356,098
751
1,036
2,246
1,795
0
30,377 356,098
Total
Output
172,050
18,874
368,324
197,578
343,736
508,510
2,898,313
—
—
—
—
—
2,898,313
'Includes 1,423 general government consumption expenditures for environmental protection.
Source: Schafer and Stahmer (1989), pp. 210-211.
July 1993
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