Methodological and Technological issues in Technology Transfer

4.9.3 Minimum environmental performance standards

Transfers to developing countries of older technologies whose environmental performance is lower than that of average technologies used in developed countries have been called "technology dumping". Technology dumping is a controversial issue. It often occurs because of lower technology costs relative to newer technologies (including base costs, taxes, duties, and royalty payments). The literature distinguishes two types of dumping: (a) an exporting country firm sets export prices lower than prevailing prices in the exporting country (due to favourable or artificial conditions prevalent through taxes and duties given by the exporting country); and (b) outdated technologies are purchased by users in developing countries because they are unable to afford new technologies (tax and duty structures may contribute to unaffordability of newer technologies).

Although industries trading older technologies may themselves be satisfied by the trade, environmental NGOs and governments have raised a variety of policy issues. Should old technologies with harmful environmental effects be sold to developing countries even if technologies meet the environmental standards of the recipient country? On the other hand, if newer technologies are not affordable to these countries and no financial assistance is available to them, are policies which deny them access to these technologies unfair?

Some ways forward have been suggested. Chapter 4 of the Habitat Agenda argues that "The international community should promote and facilitate the transfer of technology and expertise ¼ through…seeking to ensure that the process of technology transfer avoids the dumping of environmentally unsound technologies on the recipients ¼." (UNHABITAT, 1996). There are existing examples of mandatory and/or voluntary minimum performance standards in developing countries. However, enforcing environmental standards requires some type of certification process, which can become complicated (i.e., characterisation of degree of energy efficiency). It would be much easier is to base standards on some known characteristic such as age or size (see Box 4.7). There is clearly a role for government and international assistance in setting and enforcing standards.

Box 4.7: Technology Import Standards in India

India has recently announced a new import policy for second-hand technologies. Under this policy, imports of technologies that are more than 10 years old are prohibited. Technologies less than five years old can be imported at standard rates of duty. Technologies that are between 5-10 years old are decided on a case by case basis. The only criterium is the age of the technologies. Environmental performance is not considered, partly because any technologies will still have to meet existing environment standards for manufacturing processes and equipment. This ignores the consideration that imports of older manufactured products could consume energy inefficiently and result in greater indirect environmental impacts (e.g., refrigerators, CFLs with inferior phosphors, chokes, and motors).

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