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P 210855Z FEB 08
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RUEHBS/USEU BRUSSELS 0224

UNCLAS KUALA LUMPUR 000113 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
STATE PASS USTR - JENNIFER PRESCOTT 
USTR ALSO FOR BARBARA WEISEL AND DOUGLAS BELL 
GENEVA FOR USTR - RACHEL SHUB 
 
E.O. 12958: N/A 
TAGS: SENV EAGR ETRD MY
SUBJECT: DEMARCHE REGARDING WTO DDA NEGOTIATIONS ON ENVIRONMENTAL 
GOODS AND SERVICES 
 
REF: A) STATE 011974 B) 2007 KUALA LUMPUR 997 
 
¶1. (U) Econoff discussed ref A demarche on February 21 with Harjit 
Kaur Chand Singh and Arividya Arimuthu, Office of Multilateral Trade 
Policy and Negotiations, Ministry of International Trade and 
Industry (MITI).  Harjit noted that Malaysia takes seriously the 
need to encourage trade in environmental goods and services (EGS), 
in particular those goods that would alleviate climate change. 
However, Malaysia shared the concerns of many other WTO members 
about agreeing to permanent duty reductions for goods and services 
that also could be used for non-environmental purposes.  MITI had 
found it difficult to create definitions of EGS that would not 
create significant loopholes, and its own informal list of 
acceptable EGS was much lower than the 450 or so products that 
members have identified so far. Harjit indicated that the same 
concerns exist for Malaysia regarding the smaller number of climate 
related products that would be addressed in the first tier of the 
U.S.-EC proposal of November 2007. Malaysia will be interested in 
hearing more on the proposal from the U.S. and the EC at the 
February 25-27 meeting of the Committee on Trade and Environment 
Special Session.  Harjit was unaware of Brazil's proposal from 
October 2007 and would likewise welcome additional information at 
next week's meeting. 
 
¶2. (U) Harjit indicated that Malaysia saw merit in both 
project-specific and list-specific approaches, so a "convergent" 
proposal like that of the U.S. and the EC was somewhat appealing. 
However, Malaysia was not willing at present to commit to any 
proposal.  Harjit suggested that the United States and the EC be 
more flexible with regard to temporary duty reductions, at least on 
the 43 climate-related products that are the focus of the first tier 
of the November 2007 U.S.-EC proposal; in the meantime negotiations 
could continue that could eventually lead to permanent duty 
reductions on those and other EGS, she added. 
 
¶3. (SBU) Comment: Since econoff last discussed the issue with MITI 
in June 2007 (ref B), Malaysia appears to have made only limited 
internal progress on what it would accept in an EGS market access 
agreement. It is encouraging that MITI has at least attempted to put 
together its own list of EGS products since then.  Malaysia appears 
willing to be convinced that the U.S.-EC proposal would be a 
workable solution to the stalemate on progress to date, but Malaysia 
will likewise remain sympathetic to the approaches of other 
developing countries like India and Brazil. It may be particularly 
keen on the inclusion of biofuels in an eventual agreement (as in 
Brazil's proposal), given Malaysia's intention to significantly 
increase its exports of palm-oil-based biofuel.  End comment. 
 
KEITH