Document(s) 3 of 13

During the 1990s civil society organisations expressed increasing concern over the potentially adverse effects of further trade liberalisation on the environment, on employment levels and wage rates in high income countries, and on the development process in developing countries. Concerns that had arisen on the eve of the 1994 North American Free Trade Agreement (NAFTA) became a major issue for the World Trade Organization (WTO) negotiations in Seattle in 1999. After the failure of the Seattle ministerial meeting, the subsequent agenda for the WTO negotiations at Doha in 2001 adjusted to focus on development, with sustainable development as a key goal. Similar goals have been established for many regional and bilateral negotiations.

In response to civil society concerns, the European Commission (EC) embarked on an ongoing programme of Sustainability Impact Assessments (SIAs) of all its trade negotiations. The programme aims to ensure that policy choices are informed by an assessment of their potential economic, social, and environmental impacts in both the European Union and its trading partners, and that they are consistent with the overarching objective of sustainable development.² SIAs have been carried out for both global and regional trade agreements, beginning in 1999 in the preparations for the Seattle WTO ministerial. The process includes extensive consultation and participation with stakeholders and other interested parties, alongside qualitative and quantitative research into the relationships between proposed trade measures and their potential effects.

¹ This chapter draws on work undertaken for the European Commission to develop and apply a methodology for assessing the impact on sustainable development of trade negotiations and agreements. It reviews the work of many other organisations involved in the commission’s Sustainability Impact Assessment programme, whose contributions are gratefully acknowledged. The authors are also grateful to the referees for their helpful comments on an earlier version of the text. The views and opinions expressed are, however, those of the authors alone.

² The EC has produced revised guidelines on how to conduct the required analysis (see EC 2005a; 2006b). The guidelines quote from commission’s strategic objectives as follows: ‘We should make policy choices that ensure that our various objectives are mutually reinforcing. Actions that promote competitiveness, growth and jobs, as well as economic and social cohesion and a healthy environment reinforce each other. These are essential components of the overarching objective of sustainable development, on which we must deliver’ (EC 2005a, 1).

This chapter examines two policy episodes associated with the EC’s SIA programme: the Hong King ministerial meeting of the WTO in December 2005 and the 10th anniversary ministerial summit of the Euro-Mediterranean Partnership held in November 2005. It examines the extent to which the SIA programme has influenced either EU trade policy or the formulation of parallel policy measures. Many difficulties have to be addressed in conducting meaningful assessments and integrating their results into trade policy making, and this chapter reviews the extent to which such difficulties have been overcome, as well as the factors that have been influential in contributing to policy change.

Greater understanding of the likely impacts of a trade agreement may influence policy either by way of a change in a country’s negotiating position, and hence in the negotiated agreement, or by influencing parallel policy measures designed to enhance the beneficial effects of the agreement or counter its adverse ones. Parallel policies may include domestic measures in any of the trading partners, or support for the introduction of such measures through development assistance.

The European Union’s SIA Programme

Following the Uruguay Round of multilateral trade liberalisation, it became apparent that although some developing countries had experienced significant economic benefits, others had not. Much of the evidence suggested that many of the least developed countries (LDCs), particularly in sub-Saharan Africa, had failed to gain from trade liberalisation and, in some cases, had suffered losses. As well as these disappointing outcomes for the LDCs, higher income developing countries became concerned about adverse effects on their development potential resulting from other aspects of the Uruguay agreements, such as the agreement on Trade-Related Intellectual Property Rights (TRIPS). Similar concerns were expressed by civil society organisations, along with further concerns about social impacts in high income countries and worldwide effects on the environment.

In response to these mounting concerns during the preparations for the Seattle ministerial, the EC initiated a preliminary assessment of the impacts on sustainable development in its trading partners and in Europe of the proposed negotiations. This involved extensive stakeholder consultation in parallel with technical analysis, in order to provide objective information for stakeholder dialogue as well as for the negotiation process. The methodology was developed in early 1999, building on earlier experience in assessing the environmental impacts of trade policy (Commission for Environmental Cooperation 1999; Kirkpatrick et al. 1999; see also NAFTA Environmental Review Committee 1992; Organisation for Economic Co-operation and Development 1994; United States Trade Representative 1993). An overview assessment of the Seattle agenda was undertaken prior to the WTO ministerial in November 1999 (Kirkpatrick and Lee 1999). This initial analysis indicated that while an overall economic benefit could be expected, many of the issues that had been raised were genuine cause for concern and would need fuller investigation.

After the failure at Seattle, negotiations were subsequently mandated by the Doha ministerial. The EC launched more detailed assessments of all aspects of the Doha agenda and those regional trade negotiations and agreements to which the EU is a party, following further development and refinement of the SIA methodology (Kirkpatrick and Lee 2002). Some 16 SIAs have been undertaken to date by a range of organisations, as listed in Appendix 3–1.³

From the outset the SIA programme has stimulated much debate and criticism associated with civil society concerns over the trade liberalisation agenda (SUSTRA 2003; WWF 2002). Many detailed lessons have been learned and have contributed to ongoing refinement of the SIA methodology and its application (George and Goldsmith 2006; Kirkpatrick and George 2006). Further civil society contributions have maintained the pressure to strengthen the process, to enhance its relevance to decision making and to embed it more fully in the formulation of trade policy (Aprodev et al. 2002; Campaign to Reform the World Bank et al. 2006; Royal Society for the Protection of Birds and International 2003; Solidar 2005). The EC has held two international conferences to review experience and further develop the process (EC 2003a; 2006a).

³ All SIA studies have been undertaken by external consultants, on a contracted basis. Assessment reports are listed in the references, and are also available on the Sustainability Impact Assessment Website at <www.sia-trade.org>.

SIAs contribute to the public debate on trade liberalisation and, through that debate, provide objective information to decision makers to enable them to integrate sustainable development more successfully into trade policy. To achieve this, the SIA process has to include extensive consultation and participation with stakeholders and other interested parties alongside its technical analysis of causes and effects. The process gathers different views and evaluates them in the light of available information, to provide objective information that is intended to inform the negotiations and contribute to the design of national and international policy measures to enhance beneficial effects and mitigate potentially adverse ones.

A typical SIA examines all the trade measures under negotiation and their potential impacts on all economic sectors in the affected countries. A broad assessment may be undertaken in a preliminary overview SIA, which identifies those measures and sectors for which more detailed sectoral SIAs are needed. Consultation takes place at key stages of either type of assessment, as summarised in Figure 3–1.

The technical aspects of the assessment follow the vertical sequence in the central box of Figure 3–1, interacting with the horizontal inputs and outputs of the consultation process. The first need in the technical assessment is to evaluate the causal relationships for all aspects of the trade policy agenda. The principal measures currently or previously under discussion in the WTO agenda are the following:

• Agricultural tariffs
  
• Non-agricultural tariffs
  
• Trade in services
  
• Trade facilitation
  
• Government procurement
  
• Trade and investment
  
• Competition policy
  
• TRIPS
  
• Technical Barriers to Trade (TBT)
  
• Sanitary and Phytosanitary (SPS) measures
  
• Rules of origin
  
• Subsidies, anti-dumping and countervailing measures
  
• Trade and environment
  
• Dispute settlement mechanism

Figure 3–1: Overview of the Sustainability Impact Assessment Process

Figure 3–2: Assessment of Impacts

A regional trade agreement may include the equivalents of any or all of these measures.

All of the components of a potential trade agreement have an economic effect, differing between countries, which will in turn have social and environmental effects. Some may also have direct social or environmental effects. The analysis of causal relationships includes, where appropriate, those embedded in economic modelling studies, together with logical analysis of other relationships and empirical evidence from the literature. The process is summarised in Figure 3–2.

For each component of the policy agenda, the central part of the technical analysis begins by identifying the effect of the proposed change on economic incentives and opportunities, in comparison with a baseline of no change to existing agreements. This will cause changes in the production system, differently in different countries, with consequent economic, social, and environmental impacts that may interact with each other. Some impacts may be only temporary, occurring while the system adjusts to the change, while others will continue into the longer term.

Long-term impacts may also arise through the impact of the trade measure on underlying processes of economic development, social transformation, and environmental degradation (or improvement) that are taking place in response to various drivers of change. Any effect that the measure may have on accelerating, decelerating, or otherwise altering any of these processes may have significant long-term impacts on the economic, social, or environmental aspects of sustainable development.

For some components of the policy agenda such as tariff changes, the causal relationships are fairly well understood and may have been incorporated into economic and other models. For others the relationships are less well understood, and empirical evidence of past effects is limited. In such cases much of the analysis consists of evaluating the validity of the various claims made by negotiating parties for and against the proposed measure, alongside stakeholder concerns and further logical analysis of likely causes and effects. The EU’s approach to trade impact assessments is not intended to evaluate the impacts of any particular negotiating position or trade policy, but rather to provide information that may contribute to policy development in both the EU and its trading partners. In some of the early studies, attempts were made to evaluate a range of alternative scenarios for a potential trade agreement, but the large number of permutations combined with a relative lack of precision in assessment techniques made this impracticable. Subsequent studies have instead used a single scenario comprising an outer bound for each of the measures under negotiation, from which the likely impacts of any intermediate position can be inferred for each measure.

At the broadest level, sustainable development can be defined in terms of the eight Millennium Development Goals (MDGs) and their 18 targets. Some of the more recent SIAs have therefore assessed the impacts on each target of the MDGs. While this provides important information, these targets are too general to give a clear indication of many significant impacts. At the regional level a greater degree of precision may be available in an established indicator set. For example, in the SIA of the Euro-Mediterranean Free Trade Area (EMFTA), impacts on each of the 34 priority indicators of the Mediterranean Strategy for Sustainable Development were assessed. Even here however, many of the indicators are designed to monitor the effects of actions other than trade liberalisation, while many of those that are relevant to trade are too broad to indicate important impacts. The SIA methodology therefore steers the assessments according to nine aggregate indicators or sustainable development themes, and two indicators of sustainable development processes (see Table 3–1).

Table 3–1: First-Tier Indicators or Themes for Sustainability Impact Assessment Methodology

More specific analysis is guided by an initial scoping exercise based on consultation, a review of causal effects, and the evaluation of stakeholder concerns. More detailed secondtier indicators are developed from the significant impacts identified during the assessment, primarily for the purpose of subsequent monitoring.

The Institutional and Political Context of the SIA Programme

The EC developed its SIA programme in response to public concerns. The idea for extensive public dialogue supported by objective analysis of the issues came from within the EC’s Directorate General (DG) for Trade and was supported strongly by trade commissioner Pascal Lamy (2005). Informal discussions in the early stages of the programme indicated that some negotiators welcomed the initiative while others felt that it would add little to negotiating positions and might hamper the negotiating process. Officials in the DGs responsible for environmental and social issues were generally supportive.

Whereas the SIAs for the WTO negotiations and most of the EC’s regional trade agreements have been commissioned by DG Trade, the SIA for the Euro-Mediterranean Free Trade Area was commissioned by EuropeAid in association with DG External Relations. The difference is associated with a history of EC programmes in the Mediterranean region contributing to the development of a strong network of environmental and civil society organisations, which were active in calling for an impact assessment of the proposed free trade area. Strong support from DG Environment and other DGs working with civil society in the region led to funds being made available for the SIA, with additional support from the DG Trade officials responsible for the other SIAs.

The initial interest to attend to public concerns presents particular challenges for integration into decision making. In assessing impacts in other countries as well as in the EU, the approach aims to be objective and impartial. However, the EU’s trade policy is by definition partial, favouring the EU’s interests and working toward an agreement with other countries through a process of give and take. If an SIA is indeed impartial, there will inevitably be conflicts between its findings and Europe’s negotiating position. This tension is reflected in a clear distinction between the impact assessments conducted under the programme (SIA) and those conducted in parallel under EU procedures for the impact assessment of policy proposals (EC 2005a). For all policy decisions made at the EU level, since 2003 the EC has been implementing an impact assessment process for all major initiatives that are presented in the annual policy strategy or in the work programme of the EC (2002). The majority of these impact assessments involve public consultation and provide full public access to assessment reports. This is not, however, the case for trade policy, where the EC’s impact assessments are conducted internally and access to the reports is restricted (EC 2007). If the development of a negotiating position were done publicly, it would reveal the hand of the negotiators and weaken their position. Therefore, although the publicly conducted SIA process is intended to inform negotiating positions, it does not define them.

The EC recognised early on in the post-Doha SIA programme that tensions could arise between the SIA and the established process of building negotiating positions and conducting negotiations. The EC did not expect its negotiating positions to be completely different from the results of an SIA, but accepted that there may be inconsistencies. It established a mechanism for resolving them, in which the EC may modify its position if it considers the result to be robust, but otherwise it may not. In view of the high levels of uncertainty in many of the SIA findings, there is considerable scope for rejecting them on these grounds. The EC may publish its response to the SIA findings and recommendations on its website, although its decisions may entail a degree of confidentiality, to avoid undermining the negotiating position.

Sustainable development is a complex concept covering a wide variety of economic, social, and environmental impacts resulting from many interacting activities. Decisions on appropriate balances and trade-offs can only be made by political processes that take account of the differing values and interests of all the stakeholders in each country. Trade negotiations are one of many such processes, undertaken by negotiators whose prime aim is to maximise particular benefits for their own country. Each country’s negotiators consult other government departments in order to develop a negotiating position consistent with that country’s interpretation of sustainable development. The subsequent negotiations are primarily a process of give and take on specific economic issues, influenced by each country’s arguments that its own interpretation of sustainable development is correct, and that where other countries’ interpretations differ from it they are incorrect. Instances where an SIA can demonstrate incontrovertibly that one or other interpretation is correct are extremely rare. More commonly the most an SIA can do is tilt the balance of the negotiations toward Europe’s position or against it. A change in the outcome may occur directly if EC negotiators consider the assessment to be sufficiently robust to change their negotiating position, or indirectly through any influence that the public dialogue on the SIA findings may have on the negotiations.

Trade negotiations take place in a wider institutional setting in which the WTO is responsible for maintaining the stability of the international trade regime and promoting further liberalisation of trade, while other international bodies are responsible for international agreements on social and environmental issues. WTO committees on trade and environment and trade and development aim to ensure consistency between WTO agreements and these other agreements, but the WTO’s own responsibility is limited to the management and promotion of international trade. The aim of multilateral or bilateral/regional trade negotiations is similarly restricted to promoting trade, while remaining consistent with international agreements on social and environmental issues. To the extent that current global development is socially inadequate and environmentally unsustainable, this may be taken as an indication of the relative weakness of international social and environmental institutions compared with those responsible for economic issues. This weakness may limit the extent to which SIAs can contribute to enhancing sustainability within existing international structures and decision-making frameworks. Alongside this, SIAs may offer the potential to contribute to WTO reform and the reform of other trade policy formulation processes, to steer them more strongly toward sustainable development. The remainder of this chapter examines the extent to which SIAs have influenced trade policy making in favour of sustainable development, and the potential for expanding this influence.

The Effectiveness of SIAs in Inducing Policy Change

Any evaluation of the effectiveness of a programme should in principle begin by specifying its objectives. However, evaluation at the level of final objectives is confronted by the problems of attribution. The methodological problems of establishing a counterfactual baseline from which to assess impacts, and the difficulties of attributing changes to the initial policy intervention, have restricted effective evaluation at this level. A further difficulty often arises with a mismatch between the time over which the impacts have their full effect and the period within which the results of the evaluation can influence decision making. For practical reasons, it will often be necessary to conduct the evaluation at preceding stages in the cause–effect chain. Evaluation at the level of outcomes will assess the effect of the initial activity on the intermediate targets. Output evaluation will assess the outputs of the activity being evaluated. Activities-level evaluation focusses on the procedures followed.

Figure 3–3: Evaluation of Trade Sustainability Impact Assessment

The objectives of the trade SIA programme have been specified by the EC as:

Sustainability Impact Assessment is a process undertaken before and during a trade negotiation which seeks to identify economic, social and environmental impacts of a trade agreement. The purpose of an SIA is to integrate sustainability into trade policy by informing negotiators of the possible social, environmental and economic consequences of a trade agreement. The idea is to assess how best to define a full package of domestic policies and international initiatives to yield the best possible outcome, not just in terms of liberalisation and economic growth, but also of other components of sustainable development. An SIA should also provide guidelines for the design of possible accompanying policy measures. Such measures may go beyond the field of trade as such, and may have implications for internal policy, capacity building or international regulation. Accompanying measures are intended to maximise the positive impacts of the trade negotiations in question, and to reduce any negative impacts (EC 2005b).

The objective of SIA is therefore to ‘integrate sustainability into trade policy’, so that the implementation of the negotiated trade measures and accompanying policy measures will contribute to the ‘best possible outcome’ in terms of sustainable development.⁴

Figure 3–3 illustrates this evaluation chain in the context of the trade SIAs.

The integration of sustainable development into trade policies and accompanying measures was discussed at an international SIA seminar organised by the European Commission in 2003, where participants called for sustainable development to be more firmly established as an overarching aim of trade negotiations (European Commission 2003b). The seminar also sought clarification of the role of SIA in the negotiation process, with many participants worried that SIAs would lead only to accompanying measures to mitigate negative effects of agreements, rather than to modifications in the EU’s negotiating position. In responding to these concerns DG Trade (2003, 1, 2) made the following statements:

⁴ The core impact indicators used in the SIA methodology are specified in terms of the economic, social, and environmental pillars of sustainable development.

• ‘Sustainable development has to become a central objective in all trade negotiations.’
  
  
• ‘SIA is an analytical and information tool that should play a key role in attaining this objective.’
  
  
• ‘DG Trade is committed to SIAs that improve the EU’s negotiating positions in the interests of sustainable development. SIAs are not intended to find ways of compensating for the shortcomings of negotiating positions by identifying the need for complementary measures.’

Some indirect evidence on the influence of the SIA studies on the EU’s negotiators can be drawn from the position papers published by the EC. For each SIA the EC aims to prepare a paper based on the SIA findings, which defines points of agreement, responds to disagreements, and considers what further action should be implemented. Prior to publication, the position paper is drafted and discussed with member states at the trade committee—the so-called ‘133 Committee’. This time-consuming process has been completed only for some of the earlier SIA studies. Typical responses fall into one of five main categories:

• specific new action is proposed;
  
  
• possible new action is under consideration;
  
  
• more detailed analysis is needed before decisions on action can be taken;
  
  
• sufficient action is already being taken;
  
  
• the EC disagrees with the SIA findings.

Where the responses fall in the first group, the proposed action has tended to be non-specific, such as raising awareness of EC delegations. This suggests that the SIA studies have had little direct influence on negotiating positions.

This conclusion is consistent with the outcome of the Hong Kong ministerial of the WTO in December 2005. No agreement was reached, other than to continue discussions, which themselves reached an impasse in July 2006. Efforts to revive the process have entailed reducing the extent of trade liberalisation under negotiation to be considerably less ambitious than originally proposed. This outcome is compatible with the findings of the SIA studies, which indicate that in the absence of effective mitigation and enhancement measures the original proposals offer only small gains with potentially large adverse effects. Negotiating positions on the WTO Doha agenda have moved toward less ambitious proposals, not as a direct response to the SIA findings, but because of limited progress in the negotiations.

In the case of the EMFTA there is evidence that the impact of the studies on EU policy making may have been somewhat greater, primarily through the attention received in Parliament. The Euro-Mediterranean Parliamentary Assembly Resolution on Economic and Financial Issues, Social Affairs, and Education (21 November 2005) was formulated ‘having regard to the Executive Summary of Phase 2 of the Sustainability Impact Assessment Study of the Euro-Mediterranean Free Trade Area’ (Euro-Mediterranean Parliamentary Assembly 2005, 2). In addition, a parliamentary question was tabled in the European Parliament, which required the EC to react to the findings of the SIA.

The SIA for the EMFTA is one of the more recent studies, timed to coincide with the preparations for the 10th anniversary ministerial summit of the Euro-Mediterranean Partnership. Many of the actions agreed at the summit address specific issues that were identified in the preliminary consultation draft of the SIA report, as detailed in the final report (SIA-EMFTA Consortium 2006). This suggests that the SIA might have had some indirect influence on the outcome of negotiations, arising primarily through the public dialogue on findings and its contribution to the influence of civil society groups and parliamentarians in both the EC and its trading partners.

In order to obtain wider evidence of the impact of the SIA studies, a pilot questionnaire survey was undertaken to solicit the views of internal and external stakeholders. The limited number of responses cautions against generalising the results, which are best interpreted as providing an indication of the range and variety of views that a larger and more representative sample might reveal. Responses were received from non-governmental organisations (NGOs), the private sector, and EC trade negotiators and officials, giving both ‘outsider’ perceptions and ‘insider’ judgements informed by experience. In the responses to specific questions no statistically significant difference was identified between the responses of insiders and outsiders. However, differences may be gleaned from the specific comments made. Respondents were asked to consider only those SIA studies with which they were familiar.

In relation to outcomes, the survey asked two questions covering the impact of the SIAs on decision making.

Question A. To what extent has SIA strengthened the integration of sustainable development into trade policy decisions?

Question B. What is your overall impression of the extent to which SIA has influenced decision making in each of the following areas: influence on trade agreement; influence on development aid programmes; influence on EU domestic policy; influence on domestic policy in non-EU countries?

For the first question, 59% of responses considered that the impact was low or very low, on a scale from one to five for very low to very high. Only one respondent gave a score of five, for very high impact. The responses for the second question were similar, indicating particularly low influence on trade agreements or on domestic policy in non-EU countries. They indicated somewhat greater influence on EU domestic policy and development aid programmes. For development aid, 31% of respondents reported a medium level of influence, and 6% a high level. For EU domestic policy 30% of responses ranged from medium to very high influence (10% each), but with 70% reporting low or very low influence. Over 80% of respondents thought that the influence on trade agreements or non-EU domestic policy was low or very low.

An indication of respondents’ reasons for these estimates was given by their responses to the questions related to activities and outputs. Nearly 70% of respondents thought that the SIA methodology had improved with the more recent studies, and only one thought that it had deteriorated. While 37% considered that the quality of analysis of the potential economic, social, and environmental impacts was poor, 16% thought that it was satisfactory, and 47% considered it to be good or very good. The responses to all the questions on the consultation process were positive overall, with 78% indicating satisfactory or better, and 50% good or very good. The discussion of mitigation and enhancement proposals and recommendations for policy makers was the weakest element. This was considered to be poor or very poor by 52% of respondents, and satisfactory or good by 48%. None thought that it was very good. A further indication of respondents’ views on the influence of the SIA programme is given by their detailed comments. These are given in Table 3–2.

Table 3–2: Stakeholder Comments on the Sustainability Impact Assessment Process

The stakeholder survey revealed that more still remains to be done to improve the technical and consultative aspects of impact assessments, but a fairly large majority of respondents considered them to be satisfactory or better in most respects. The principal shortcoming identified for the assessments themselves related to the relevance and specificity of the recommendations for mitigation and enhancement. As identified by one of the trade officials, many of the recommendations require non-trade interventions with separate financial and political implications. These are outside the remit of negotiators, and therefore cannot directly influence the negotiations. Others are fairly general and identify issues that negotiators should take into account, without specifying the details of any agreement they should reach. Since the issues are mainly social or environmental, while negotiators are concerned primarily with particular economic gains and losses, it is not clear how they can respond to this type of advice.

These shortcomings identified in the technical aspects of the SIA are consistent with the more general shortcomings identified by respondents, concerning a lack of integration of the studies into trade negotiations and linked policies. This is related to the institutional and political context in which negotiations are conducted and SIAs are undertaken. As noted above, there are significant tensions between an impact assessment process that evaluates impacts for all trading parties and a decision-making process based on negotiation between those parties. This difficulty is compounded by the introduction of social and environmental issues into negotiations that focus primarily on specific economic gains and losses.

Some of these tensions have been eased with the a new generation of studies. The EC has moved away from a philosophy in which the SIA is undertaken as in independent evaluation toward playing a stronger role itself in leading the assessment, and in defining specific issues for which better information is needed. To this end there is a steering committee for each SIA, whose members include trade negotiators for the relevant sectors and representatives of other departments with responsibilities for environment, social issues, and international development. The process has strengthened the role that SIA can play in helping to coordinate the different interests within the EC. Additionally, the interest generated within the European Parliament has enhanced its role in guiding the EC. As well as informing the negotiations, the SIA studies are intended to induce parallel policy measures in both the EU and its trading partners. Here again the stakeholder survey indicates that the SIA studies have had little influence to date. In general the studies have not revealed major adverse impacts in the EU, and so most of the recommendations for parallel measures relate to domestic policy in developing countries and the support that can be provided through development assistance programmes.

As identified in the survey, it is not expected that the studies will have a major influence on domestic decision making in non-EU countries. No evidence of significant influence has been identified. Stakeholders do not expect major influence partly because of a lack of specificity in the recommendations for mitigation and enhancement, and partly because the studies are neither commissioned by partner country governments nor steered toward the specific interests of their negotiators. In general the prime aims of partner country negotiators are to secure greater access for their exports and to minimise the concessions they have to make. In doing so they aim to obtain a net economic benefit, which the studies generally show will be small. Adverse social or environmental impacts as identified in the studies are the responsibility of other government departments, which have limited influence on the negotiations.

The greatest influence on parallel policy measures is expected to occur through EU technical assistance. For example, the study for the forestry sector in the WTO added greater weight to international action already being taken to strengthen forest governance, although there is no clear evidence that the policy was significantly changed by the SIA findings. Most of the SIA recommendations for technical assistance are uncontroversial, and assist primarily in identifying priorities. The greatest influence is expected for regional trade agreements. The number of countries involved is smaller than for WTO negotiations, allowing a greater degree of specificity in the SIA findings and recommendations. Also, regional trade liberalisation may be conducted within a wider framework of regional cooperation, allowing trade issues to be considered alongside non-trade issues. The stakeholder survey did not reveal any clear evidence of policy change at this stage. However, a new generation of SIAs have made more detailed recommendations for development assistance.

Barriers to Policy Influence and Possible Future Developments

The broad programme is an ambitious effort to strengthen the evidence base of trade policies and steer them toward sustainable development. Success to date has been limited. While there are signs that the programme has led to a heightened awareness of the potential impact of trade negotiations and has influenced decision-making processes within the EU, this has yet to feed through to significant changes in trade policy.

Many of the studies have shown that appropriately designed trade reforms have the potential to make a significant contribution to development, and, with appropriate parallel measures, can do so in an environmentally sustainable manner. It has, however, proved extremely difficult to realise these goals through the existing trade negotiating process. The Doha agenda did not change the multilateral process, only its stated goals. Multilateral trade negotiations are not designed to deliver sustainable development. Their purpose has always been to maximise gains and through a process of give and take, and move toward freer trade. To give real life to the development component, it may be necessary to reform the negotiating process itself.

Typically, the SIA studies show that global impacts on climate change and biodiversity loss are adverse, with many local adverse environmental impacts that are not cancelled out by the beneficial ones, and significant social impacts that include losers as well as gainers in many countries. The losers are often the most vulnerable groups. Trade negotiators, individually and collectively, are not responsible for these issues. They are given little specific information on how they should handle them, if at all, even when relevant information is made available. Their prime aim is to achieve market access gains, within the constraints placed by the government’s overall policy. They are not responsible for delivering the MDGs, nor do they have the competence to do so. They operate instead on the broad assumption that trade liberalisation, in any form, will help to deliver these goals, and that adverse impacts will be countered through the expected economic gains. This assumption is not borne out by the SIA studies. The current impasse in multilateral trade negotiations, and corresponding difficulties at the regional and bilateral level, may be taken as both an opportunity and an incentive for governments to re-evaluate the role of trade in contributing to wider goals and to adapt the policy-making process accordingly.

The SIA techniques may be able to contribute in two ways. First, although the findings of the multi-country studies have tended to be insufficiently specific to influence policy in developing countries, they have highlighted areas of concern that may be studied in more depth using similar methods by each country individually. The United Nations Environment Programme (UNEP) is undertaking a programme to build capacity in developing countries to undertake integrated impact assessments of this nature, with the support of the EC. An expansion of such assistance may be particularly beneficial for countries that do not have the capacity to support their negotiators with detailed assessments of the impacts of other countries’ proposals, or of their own proposals. However, while this would assist developing country negotiators in some respects, it would not remove the problem that the negotiations revolve primarily around the interests of key economic actors in each country, with little attention paid to social and environmental issues, even when information is available.

To help address this fundamental disconnect in the trade negotiation process, transparent multi-country SIA studies as undertaken for the EC might make a larger contribution if undertaken on behalf of the wider international community, rather than being commissioned by one of the main negotiating parties. Such studies might for example be commissioned jointly by a group of international bodies (such as UNEP, the United Nations Development Programme [UNDP], the International Labour Organization [ILO], the World Health Organization [WHO], the United Nations Industrial Development Organization [UNIDO], and the United Nations Conference on Trade and Development [UNCTAD]), with a joint steering committee similar to those introduced by the EC, and with the WTO and other international bodies such as the World Bank and the International Monetary Fund (IMF) invited to participate as observers. The findings of such studies would have no mandate to influence the WTO negotiations directly. However, they may carry sufficient weight and credibility in the public arena to influence negotiations indirectly. Similar initiatives may also be taken at the regional level. In the Mediterranean region, for example, the EU and its partner countries have adopted the overarching Barcelona process for regional cooperation and development. This pursues a wide range of development objectives, among which the creation of a free trade area is just one component. In parallel they have developed a Mediterranean Strategy for Sustainable Development. Further refinement of the sustainable development strategy, and its adoption as the defining strategy of the Barcelona process, would allow trade policy to be made subordinate to sustainable development, and steered more strongly toward sustainable development goals. A similar approach might be taken for other regional agreements.

Conclusions

The EU’s programme of ISAs of global and regional trade agreements has presented many challenges. These relate to consultation at the regional or global level, the technical aspects of assessing impacts whose origins lie in complex economic effects, and potential conflicts with local, regional, and global decision-making processes. In all these areas approaches have been developed that move some way toward addressing the issues, but many challenges remain. Many of the studies have shown that the benefits that have traditionally been expected from the static efficiency gains of trade liberalisation are small, and that many of the significant impacts occur through long-term dynamic processes. The analysis of these longer term effects and their interactions with other policy areas is expected to be a key area for future developments in trade impact assessment.

In respect of the two specific policy episodes examined, the influence of the SIA programme has been limited. At the regional level of the EMFTA there are indications that the SIA findings may have had some influence on the negotiations, via representations from civil society organisations and from parliamentarians in the EU and partner countries, rather than through any observable change in Europe’s negotiating position. At the multilateral level of the WTO Doha agenda negotiating positions have moved toward less ambitious proposals, because of limited progress in the negotiations rather than in response to the SIA findings.

This limited influence is associated with potential conflicts that have been identified between the impact assessment process and the decision-making process. While some of these have been satisfactorily resolved, attention needs to be paid to the decision-making process itself in order to better address the most significant regional and global issues that have been identified in the assessments. Most trade agreements have adopted sustainable development as a goal, but the bodies that negotiate them are not responsible for sustainable development, do not have the competence to define what sustainable development means, and are not subject to the requirements of any other authority except as provided through international environmental law and other mechanisms of regional and global governance. This chapter has identified steps that might be taken to address these limitations at both global and regional levels, which might help to make trade policy more readily steerable toward sustainable development goals.

Finally, the trade impact assessment techniques that have been developed for use by high income countries may prove to be highly appropriate for helping to strengthen trade policy in developing ones. For single country studies the decision-making processes are more straightforward, impacts can be studied in more detail, and recommendations can be made more specific. The integrated assessment of economic, social, and environmental effects, by each country for its own purposes, may be particularly influential in helping developing countries to formulate their trade policy more effectively, and to play a stronger role in international trade negotiations.

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Appendix 3–1: European Union Sustainability Impact Assessments

Sustainability Impact Assessments before 1999

Initial development of SIA methodology (Kirkpatrick et al. 1999)

• Overview SIA (IARC)

World Trade Organization’s Doha Development Agenda

Further development of SIA methodology (Kirkpatrick and Lee 2002)

• Preliminary Overview SIA (IARC consortium)
  
  
• Sector studies
  
  
• Agriculture: Major food crops (Stockholm Environment Institute)
  
• Non-agricultural market access: Textiles and clothing, non-ferrous metals, pharmaceuticals (Overseas Development Institute/IARC)
  
• Competition policy (British Institute of International and Comparative Law/World Trade Institute/IARC)
  
• Environmental services (Cordah/Westlake/IARC)
  
• Distribution services (International Trade and Services Policy/IARC)
  
• Forests (Savcor Indufor/IARC)
  
• Agriculture: General (Overseas Development Institute/IARC)
  
• Fisheries (Natural Resources Institute/IARC)
  
• Final Overview SIA (IARC)

Regional Sustainable Impact Assessments

• European Union–Gulf Cooperation Council (PriceWaterhouseCoopers)
  
  
• European Union–African, Caribbean, and Pacific countries (PriceWaterhouse Coopers)
  
  
• overview SIA
  
• sector/sub-region SIAs
  
  
• European Union–Chile (Planistat)
  
  
• European Union–Mercosur
  
  
• overview SIA (Planistat)
  
• sector/sub-region SIAs (Impact Assessment Research Centre consortium, in progress)
  
  
• Euro-Mediterranean Free Trade Area (SIA-EMFTA consortium/IARC)
  
  
• overview SIA

Sector/Sub-regional Sustainable Impact Assessments

• • In progress

Note: IARC = Impact Assessment Research Council, University of Manchester; EMFTA = Euro-Mediterranean Free Trade Area; SIA = Sustainability Impact Assessment.

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