Results and recommendations of the EU's Sustainablity Impact Assessments must feed into trade policy-making and negotiations

March 28, 2006

On 21-22 March 2006 the European Commission organized the EU TRADE Sustainability Impact Assessment (SIA) Stocktaking Conference. The two-day discussions focused to a great extent on the question of whether trade SIAs were, in fact, feeding into policy making. The Center for International Environmental Law (CIEL) and many other participants were of the view that SIAs were either being carried out too late -- so that the results could not possibly feed into the well-advanced or closed negotiations -- or, where the timing of the SIA was more adequate, the SIAs were simply not translated into policy choices, making the SIA irrelevant for the negotiations.


Background on EU Sustainability Impact Assessments

The European Union (EU) began to carry out Sustainability Impact Assessments (SIAs) for the negotiations of its major multilateral and bilateral trade agreements in 1999. These assessments, which are generally conducted during the negotiations, aim at identifying the economic, social and environmental impacts of trade agreements.

Although the European Commission issued a Communication in 2002 on Impact Assessment, the emerging practice of conducting SIAs has not yet evolved into a strict legal obligation. The 2002 Communication has the legal status of a policy guideline, and stems from the decision of the 2001 European Council to better implement sustainable development in EU policies. It directs the Commission to conduct impact studies on sustainable development for different types of major regulatory initiatives, including trade agreements.

Impacts are analysed both with respect to the EU and third country partners -- an approach that differs from the Canadian and US approaches, where the focus is only on the environment and where only the impacts on Canada and the United States are normally assessed.

So far, SIAs have been carried out at the initiative of the European Commission for a number of negotiations, including: the ongoing WTO negotiations pursuant to the Doha agenda; the agreements in the Euro-Mediterranean Free Trade Area; negotiations with Chile; the on going negotiations with African, Caribbean and Pacific (ACP) countries (one for each sub region); the on going negotiations with Mercosur; and the on going negotiations with the Gulf Cooperation Council (GCC) countries.
Contracts to carry out SIAs are awarded by the Commission to independent external consultants following a tender procedure. A consultation committee within the Commission is set up to guide the consultants. The Commission has provided for stakeholder consultation and input in the SIA process, although there are no precise procedural guidelines for this purpose. Draft versions of the assessment are disclosed for public comment, and the final SIA is also published.


The SIA Conference - Participants voice their concerns:
Lack of integration of SIA results into trade policy-making

The aim of the SIA Conference, which built on a similar event in 2003, was to appraise the work done so far and raise awareness of Trade SIAs. The Commission also launched the final version of the Trade SIA Handbook, which provides a guide as to how to conduct a Trade SIA based on the experiences so far.

To a large extent, the discussions at the two-day conference focused on the fact that the SIAs that have been conducted so far have generally not fed into trade negotiations. For example, Manchester University is carrying out an independent SIA of the EuroMed Free trade Area (SIA-EMFTA) to examine the potential impacts of proposed trade liberalisation measures on sustainable development in the region. The SIA phase II report identifies a number of social and environmental impacts that may be significantly adverse unless effective mitigating action is taken. Phase II of the report enumerates a number of mitigation measures that the non-EU Mediterranean countries in particular need to take to avoid the adverse impacts. However, the recommendations have not been integrated into the ongoing negotiations, and there is no indication that this will be done.

The Trade SIA Handbook, which was launched at the conference, was also cause for disappointment for many, as it does not appear to provide the adequate tools to strengthen the link between the SIA results and trade negotiations. For instance, one issue of concern raised by several participants at the SIA Conference related to the preliminary in-house assessment conducted by the EC, which is also referred to in the Handbook. NGOs had previously proposed to replace the preliminary in-house impact assessment with an independently executed SIA to accompany the proposed negotiation mandate submitted by the EC to the Council. Many are of the view that the preliminary impact assessment -- which is not disclosed to the public -- fails to ensure that the potential environmental, developmental, social and economic impacts of the envisaged mandated negotiations are given full consideration.

Other concerns raised at the Conference - including by Members of the European Parliament -- concerned the lack of reporting to the European Parliament, both in Committee and Plenary, about the results of the relevant SIAs along with an explanation as to how these have informed negotiations.

The example of the Doha negotiations on non-agricultural market access

The fact that the newly released Handbook gives insufficient guidance as to how SIA results should be integrated into negotiations indicates that this is not a top priority of the European Commission. CIEL and other groups, for example, have repeatedly urged the Commission to integrate the SIA results into the Doha negotiations, especially in the context of the negotiations on non-agricultural market access (NAMA), which covers discussions on the liberalization of natural resources such as forestry and fisheries. The European Union commissioned a Sustainability Impact Assessment (SIA) of the WTO negotiations, released in June 2005, which focused, inter alia, on liberalization of the forestry products sector (NGO Statement on SIA Handbook). Using a model scenario of full liberalization (zero tariffs), the SIA study predicts that developing and some transitional economies that have problems with forest governance could face significant social and environmental costs, which could outweigh any economic gains from additional trade liberalization in the absence of adequate safeguards. At the SIA Stocktaking Conference, Commissioner Mandelson cited the sectoral forestry and linked the results to the ongoing Doha negotiations. He noted:

"In the end we will be judged by results. If the SIA Programme is to make sense, it must be more than a pro forma exercise. Take for example the recent SIA study of the negotiations on forestry products in the Doha Round. It concludes that liberalisation in that sector brings opportunities, providing adequate regulation in introduced and change is tailored to what particular regions can bear. Without that, accelerated liberalisation and illegal logging bringing short term gains at the price of longer term deforestation, strains on the environment and social imbalance in certain regions. On the basis of this analysis, I cannot see us carving out the forestry sector for faster liberalisation in the Doha Round." (Text of Speech)

It is important to note that this is an acknowledgement that, finally, some policy choices have been made, allegedly based on the results of the SIA. It is regrettable, however, that the Commission has not issued position papers in response to these SIA findings. Moreover, the Commission has never taken a clear stance in the WTO's Negotiating Group on Market Access (NGMA) where the liberalization of forestry products is being discussed. It would seem adequate and useful to inform other WTO Members of the SIA results relating to this sector. The EC instead presented (without taking position) the SIA results to the WTO's Committee on Trade and Environment (CTE), which generally consists of an entirely different set of negotiators than those in the NGMA.

Conclusion

If the EC is serious about its efforts for sustainable development and if the SIA are to make a difference for negotiation outcomes, then the EC needs to make deliberate and clear policy choices based on SIA results and recommendations, and these choices need to be shared and discussed with negotiating partners. Otherwise, SIAs will indeed, as Commissioner Mandelson put it, be nothing more than "a pro forma exercise".

Related links:

NGO Statement on SIAs:
http://www.foeeurope.org/publications/2006/NGO_Statement_natural_resources_SIAs_March06.pdf

NGO statement on the draft Handbook for Sustainability:
http://www.foeeurope.org/trade/NGO_statement_on_SIA_Handbook.pdf

EU TRADE Sustainability Impact Assessment (SIA) Stocktaking Conference:
http://europa.eu.int/comm/trade/issues/global/sia/sem0306_prog.htm

The SIA phase II report:
http://www.sia-trade.org/emfta

Trade SIA Handbook:
http://trade-info.cec.eu.int/doclib/html/127974.htm


For more information, please contact Nathalie Bernasconi-Osterwalder.