Final report, preliminary overview of ... - trade.ec.europa.euDispute Settlement 28 4.6....

SUSTAINABILITY IMPACT ASSESSMENT OF PROPOSED WTO NEGOTIATIONS

PRELIMINARY OVERVIEW OF POTENTIAL IMPACTS OF THE DOHA AGENDA

FINAL REPORT

Prepared by:

Clive George and Colin Kirkpatrick Institute for Development Policy and Management

University of Manchester

4 June 2003

Personal data in this document have been redacted according to the General Data Protection Regulation

2016/679 and the European Commission Internal Data Protection Regulation 2018/1725

This report was prepared with financial assistance from the Commission of the European Communities. The views expressed herein are those of the Contractor, and do not

represent any official view of the Commission.

This Report has been prepared for the European Commission under Framework Contract No Trade 01/F3-1 (Sustainability Impact Assessment of Proposed WTO Negotiations)

Project Reports and information about the project are available from the project website:

http://idpm.man.ac.uk/sia-trade

CONTENTS

ACKNOWLEDGEMENTS 1

ABBREVIATIONS 2

1. INTRODUCTION 3

2. INTERNATIONAL TRADE 6 2.1. The Value of World Trade 6 2.2. Tariff Levels 7 2.3. Non-Tariff Barriers for Merchandise Trade 8 2.4. Non-Tariff Barriers for Trade In Services 8

3. METHODOLOGY OF THE PRELIMINARY OVERVIEW SIA 9

4. PRELIMINARY OVERVIEW ASSESSMENT FINDINGS 15 4.1. Agriculture 15 4.2. Market Access for Non-Agricultural Products 18 4.3. Services 21 4.4. Trade and Environment 25 4.5. Dispute Settlement 28 4.6. Trade-Related Aspects of Intellectual Property Rights 30 4.7. WTO RULES 32 4.8. Implementation Issues in Developing Countries 35 4.9. Trade and Investment 36 4.10. Competition Policy 39 4.11. Trade Facilitation 40 4.12. Transparency of Government Procurement 42 4.13. Other Measures 44 4.14. Cross-Cutting Issues and Overall Impact 47

5. RECOMMENDATIONS FOR FURTHER SECTORAL SIA STUDIES 51

6. REFINEMENTS TO THE METHODOLOGY FOR FURTHER SIA STUDIES 55

7. KEY FINDINGS FOR NEGOTIATORS AND STAKEHOLDERS 60

REFERENCES 63 Annexes

1. Terms of Reference 2. The Consultation Process 3. Data tables

SIA of WTO Negotiations -–Preliminary Overview Page 1

ACKNOWLEDGEMENTS We owe our gratitude to the many people who have contributed ideas and assistance throughout the project, both within the project itself, and through written comments and verbal discussions. In particular we thank Oliver Morrissey of the Overseas Development Institute, Kevin Gray of the British Institute of International and Comparative Law, Ron Bisset of BMT Cordah, Raymond Colley of Deloitte & Touche, Simon Evenett of the World Trade Institute and Michael Johnson, independent consultant, all of whom have contributed to particular parts of the study and its overall development.


ABBREVIATIONS ATC Agreement on Textiles and Clothing CBD Convention on Biological Diversity CITES Convention on International Trade in Endangered Species CGE Computable General Equilibrium CTG Council for Trade in Goods DDA Doha Development Agenda DSB Dispute Settlement Body DSM Dispute Settlement Mechanism DSU Dispute Settlement Understanding EC European Commission EU European Union FDI Foreign Direct Investment GATS General Agreement on Trade in Services GATT General Agreement on Tariffs and Trade GDP Gross Domestic Product GI Geographical Indication GPA Government Procurement Agreement IPR Intellectual Property Rights LDC Least Developed Country M&E Mitigation and Enhancement MEA Multilateral Environmental Agreement NFIDC Net Food Importing Developing Country NGO Non-Governmental Organisation NTB Non-Tariff Barrier OECD Organisation for Economic Cooperation and Development RTA Regional Trade Agreement SCM Subsidies and Countervailing Measures SDT Special and Differential Treatment SIA Sustainability Impact Assessment SME Small and Medium-sized Enterprise SPS Sanitary and Phytosanitary Standards TBT Technical Barrier to Trade TRIM Trade-Related Investment Measure TRIPs Trade-Related Aspects of Intellectual Property Rights WTO World Trade Organisation


1. INTRODUCTION The European Commission is committed to carrying out sustainability impact assessments (SIA) of all major EU policy initiatives. As part of this commitment, DG Trade is ensuring that sustainability concerns are integrated into trade policy. Underlying these formal commitments is the concern that the integration of sustainability into trade negotiations can contribute to a trade liberalisation process that is more supportive of sustainable development. Trade policies and agreements can have significant effects on the economy, on social development and on the environment. Assessment of these potential impacts can inform the decision-making process, and can help in identifying measures that will enhance the positive effects and mitigate negative effects of trade policies. In this way, trade can become a more effective instrument for achieving the goal of sustainable development. The Ministerial Declaration of the Fourth Session of the WTO Ministerial Conference in Doha, 2001, reaffirmed the commitment of the WTO to the goal of sustainable development, and acknowledged the contribution that international trade can make to economic development and the alleviation of global poverty.1 The Ministerial Declaration also recognised the need to enhance the mutual supportiveness of trade and the environment.2 The Declaration identified a wide-ranging work programme of discussions and negotiations (the Doha Development Agenda) which are intended to be concluded by 1 January 2005. DG Trade has initiated an ongoing programme of Sustainability Impact Assessment (SIA) studies that is expected to continue until the completion of the negotiations. The SIA studies are intended to provide an analysis of the potential impacts of the proposed trade agreements on sustainable development, and of any necessary flanking measures, the adoption of which would enhance positive impacts and mitigate negative impacts on sustainable development. The results of the SIA are expected to inform the trade negotiation process and to support a negotiated outcome that is consistent with the goal of sustainable development. The first phase of the SIA-WTO programme has required the contractor to undertake two studies: a qualified preliminary assessment of the Doha Development Agenda (DDA) as a whole, and three detailed sectoral SIA studies (covering market access, environmental services and competition)3. The aim of the preliminary assessment of the DDA (including the Singapore issues) is to provide an overview of the potential major impacts on sustainability of all the proposed sectoral measures, taking into account potential impacts associated with intersectoral linkages. This is intended to assist in determining the more detailed sectoral assessments that will be undertaken in later stages of the programme. The qualified preliminary SIA is also intended to describe any refinements or further developments of the SIA methodology to be used in the sectoral studies, and in a final global SIA, that will be undertaken during the remainder of the SIA-WTO programme4. 1 “International trade can play a major role in the promotion of economic development and the alleviation of poverty. We recognise the need for all our peoples to benefit from the increased opportunities and welfare gains that the multilateral trading system generates”. WTO (2001) Paragraph 2. 2 “We are convinced that the aims of upholding and safeguarding an open and non-discriminatory multilateral trading system, and acting for the protection of the environment and the promotion of sustainable development can and must be mutually supportive”. WTO (2001) : Paragraph 6. 3 The sectoral SIA studies are presented in a separate report (Kirkpatrick and George 2003) 4 The task specifications for the preliminary SIA are given in Annex1.


This report summarises the results of the qualified preliminary SIA of the Doha Development Agenda5. There are seven sections in this report. The first section provides a short introduction, and the second section presents a review of international trade. Section 3 summarises the SIA methodology used for the preliminary overview assessment, and Section 4 provides the preliminary sectoral findings. The fifth section contains the recommendations for further sectoral SIA studies. The sixth section describes proposed refinements to the SIA methodology framework for these detailed studies, and to the methodology which will be used to complete the final overall SIA of the DDA as a whole, after all of the individual sectoral studies have been completed. The final section contains the key findings of the preliminary overview study for policymakers and stakeholders. It should be noted that in a qualified preliminary study of this nature, empirical evidence and other inputs are necessarily limited. This is the case for all sections of the report, and applies in particular to those relating to trade and environment, rules, implementation, public procurement, trade facilitation and TRIPs. The contents of the report are not conclusive, and it remains to be seen if further work is needed.

5 The preliminary overview assessment of individual trade measures is presented in a separate report (George and Kirkpatrick 2003).


2. INTERNATIONAL TRADE 2.1. THE VALUE OF WORLD TRADE The total value of world trade in 2001 was over 7400 billion US dollars, which is about 23 percent of world Gross National Income ($31315 billion in 20006). Of this total, over $5400 billion is in non-agricultural products, about $550 billion is agriculture, and trade in services is approximately $1500 billion. These figures may underestimate services trade, which is difficult to measure. The only comprehensive data currently available come from balance of payments statistics, which do not record all forms of services trade. Making allowance for trade not covered by these statistics, it has been estimated that total world trade in services may be at least 60% higher7. The value of trade in different groups of products and services is shown in the tables in Annex 3, along with information on trade barriers. Trade in both goods and services has been growing at about 7% per year, with services growing somewhat faster than goods. Between 1990 and 1998 world services exports grew by about 69%, and merchandise by 58%, although the rate of growth declined towards the end of the decade, associated with the East Asian financial crisis8. Developed countries are the largest international traders, but the rate of growth has been higher in developing countries. In particular, middle-income countries have increased their share of world trade in both goods and services. Low-income countries, which include the least developed, have increased their share of trade in services, but their trade in goods has grown less rapidly than the world average. These figures reflect increasing trade between developing countries, particularly middle income ones. The balance between exports and imports of different types of products and services varies considerably between regions and individual countries. Some regions for example are major exporters of minerals and importers of manufactured products, while others tend to import minerals and export manufactures. Japan is a major importer of agricultural products, and a major exporter of non-agricultural manufactures. Most countries both import and export services. North America is a net importer of non-agricultural products, and a net exporter of agricultural products and commercial services. The European Union is a major importer and exporter of both goods and services. The developing regions as a whole are net exporters of merchandise and net importers of services, but with variations between countries. Variations between different regions of the world are shown in the tables of Annex 3. Countries implement their trade policies by applying tariffs and a variety of non-tariff measures. Trade in agricultural and non-agricultural goods is subject to both tariff and non-tariff measures, while barriers to trade in services are generally of a non-tariff nature. All of these measures must comply with international agreements that countries have entered into, which at the multilateral level are agreed and administered through the WTO. The data in Annex 3 include information on tariff levels and NTBs for different types of product and service.

6 World Bank (2002) 7 Maurer and Chauvet (2002) 8 World Bank (2001)


2.2. TARIFF LEVELS In the Uruguay Round that was completed in 1994, countries made a wide range of commitments to reducing tariffs and other trade barriers. The average post-Uruguay Round tariff rates for a range of product groups are summarised in Tables D10 and D11, separately for developed and developing countries. These show the bound rates which must not be exceeded under the agreement, and the rates that are actually applied. Applied tariff rates are on average about 70% of the bound rates in developed countries, and are still slightly above them in developing countries. Developing countries’ tariffs remain significantly higher than those in developed countries for all product groups, although for agricultural and some non-agricultural products such as textiles, bound rates remain relatively high in some developed countries. Tariffs on transport equipment tend to be particularly high in transition countries, and also in the newly industrialising Asian countries9. Agriculture offers significant potential for further tariff reduction in both developed and developing countries. For non-agricultural products, there is considerable scope for general tariff reduction in all product groups in developing countries. In developed countries there are two broad groups of non-agricultural products which offer the greatest scope for further tariff reductions: textiles, clothing, leather goods and footwear; and transport equipment, which includes automobiles and automotive products. In addition to general reductions, there is also considerable scope for reducing tariffs on specific products in both developed and developing countries. For those individual products that countries wish to protect from competition, the applied rates may be significantly higher than the average tariff for the product group (tariff peaks). An indication of the prevalence of tariff peaks is given in Table D12. In developed countries, tariff peaks tend to follow the same pattern as average tariffs, with the largest share of peaks in textiles, clothing, leather and, to a lesser extent, transport equipment10. As a further protection of domestic industries, higher tariffs are often applied for processed goods than for raw materials (tariff escalation). In both developed and developing countries tariff escalation typically ranges, with exceptions, from zero rates for raw materials, to low to moderate for intermediate products, and higher rates for finished goods11. Table D13 gives an indication of the extent of tariff escalation for different types of product. Agricultural products are also subject to tariff rate quotas. The Uruguay Round required certain non-tariff barriers to be converted to equivalent tariffs, and introduced tariff rate quotas for the products affected. Quotas were to be equal to the previously imported quantities, or a minimum of 3% of domestic production in the base period, rising to 5% on full implementation of the Uruguay Round agreements. In-quota tariffs were required to be ‘low or minimal’, with higher rates permissible for above-quota imports. Tariff quotas apply particularly to fruit and vegetables, meat, cereals, dairy products and oilseeds. Countries which apply the highest numbers of quotas include the EU and several non-EU European countries, the USA, the Republic of Korea, Colombia, Venezuela and South Africa12.

9 WTO (2001b) 10 WTO (2001b) 11 Laird (2002) 12 WTO (2001b)


2.3. NON-TARIFF BARRIERS FOR MERCHANDISE TRADE In many countries the same product groups which offer scope for tariff reductions are also subject to non-tariff barriers (NTBs). These include export subsidies, production subsidies, regulations requiring products to meet certain specifications (technical barriers to trade, TBT), measures which restrict the involvement of foreign companies in the domestic market (trade-related investment measures, TRIMs) and quantitative restrictions such as import quotas. Tariff rate quotas are not regarded as quantitative restrictions, since their quotas can be exceeded (at a higher tariff). NTBs also include voluntary export restraints, which were to be eliminated under the WTO Agreement on Safeguards, in return for flexibility in safeguards use. Certain NTBs in textiles and clothing, notably the remaining substantial quotas enforced under the Multifibre Arrangement, are due to be eliminated under the WTO Agreement on Textiles and Clothing (ATC). The OECD13 defines core NTBs as including export price restraints, variable charges, anti-dumping and countervailing actions, nonautomatic licensing, export restraints and other quantitative restrictions. Table D14 indicates the pervasiveness of these core NTBs in the manufacturing sector. Export subsidies are a particularly prevalent form of NTB for agricultural products. Scheduled commitments and actual use of export subsidies are shown in Table D15, along with the volume of world trade in each of the product groups. 2.4. NON-TARIFF BARRIERS FOR TRADE IN SERVICES For trade in services, barriers to trade exist for each of the four modes of supply defined in GATS. GATS requires WTO member countries to comply with the agreement’s general rules and principles, and to commit to a national schedule which lists any trade restrictions they wish to apply in each of the four modes, for any or all service sectors. Any other restrictions that do not comply with the Agreement’s rules and principles are not permissible. A broad indication of the level of barriers to trade in services is given by the number of commitments countries have made in their national schedules. This is shown in Table D16. Where few commitments have been made, barriers generally remain high. In general, developed countries have made more commitments under GATS than developing countries. However, this applies primarily to those countries which took part in the Uruguay Round negotiations. Low and middle-income countries that have joined the WTO subsequently have in general accepted greater numbers of services commitments as part of their accession negotiations.

13 OECD (1997)


3. METHODOLOGY OF THE PRELIMINARY OVERVIEW SIA The methodologies used for the preliminary overview SIA and the detailed sectoral SIAs share the same underlying principles and share many common characteristics, but do have a number of significant differences relating to the purposes for which they are to be used. The purpose of the preliminary overview SIA is to provide an assessment of the potential impact on sustainability of all of the proposed sectoral measures, taking into account potential impacts associated with inter-sectoral linkages. This is intended to assist in determining the more detailed sectoral assessments to be undertaken. This preliminary assessment is undertaken within a global screening and scoping update of the earlier preliminary SIA study of the pre-Seattle broad agenda14. An important part of this screening and scoping update is the screening of the Doha agenda as a whole, to include cross-sectoral linkages and cumulative impacts likely to result from the implementation of the set of measures included in the DDA. The fundamental purpose of the screening and scoping update is to systematise the determination of the terms of reference for the detailed sectoral SIAs, and for the Agenda measures as a whole, which will be undertaken during the remainder of the SIA-WTO programme. The methodological approach used in the preliminary screening and scoping update includes the following components:

• trade measures • negotiation scenarios • country groupings • assessment methods • impact significance criteria • sustainability indicators • cross-cutting issues and overall impact • preliminary indication of mitigation and enhancement measures • consultation process

These elements in the SIA methodology framework are discussed in the following paragraphs, as they apply to the preliminary assessment of the DDA. Trade measures The content and scope of each of the measures in the DDA (Table 1) need to be specified. However, the level of detail needed for the preliminary SIA is less than will be required subsequently for the measures selected for detailed sectoral SIAs. Negotiation scenarios The purpose of the SIA studies is to provide an overview of the potentially significant impacts of the trade measures covered by the Doha agenda. To achieve this, the assessments are based on two scenarios:

• a base scenario representing full implementation of existing agreements; and • a further liberalisation scenario which represents the strongest probable

implementation of the negotiations that were agreed to at the 4th Ministerial Conference in Doha.

14 Kirkpatrick and Lee (1999)


The two scenarios aim to represent the outer bounds of the likely outcome of the negotiations. For discrete measures for which this approach does not apply, specific alternatives are considered. Section 4 describes the interpretation of the base and further liberalisation scenarios more fully for each trade measure. Country groupings In the detailed sectoral SIAs, four main country groupings are considered:

• the European Union • non-EU developed countries • developing countries • least developed countries

Where significantly different impacts may occur within a country group, for example between net importers and net exporters or between industrial, agricultural and natural resource-based economies, the analysis must take this into account. Since the prime aim of this overview study is to identify potential impacts which may warrant further investigation, the assessment focuses more strongly on the country characteristics which influence potential impacts than on segregation into the four main country groupings. The assessment of impacts in the four country groups will be undertaken in the subsequent detailed SIAs and in the final global overview study. In the more detailed SIA studies, impacts are assessed, in part, by the evaluation of specific case studies for individual countries. In this overview study, more general case study findings are used to inform and illustrate the analysis of causes and effects in different types of country. Assessment methods The overall conceptual framework for the preliminary SIA is the same as for the detailed sectoral studies, and is based on causal chain analysis, using information from econometric modelling and case studies where appropriate. The assessment begins by identifying the effects on market incentives and opportunities which result from the negotiated change to a trade agreement. This will induce a change in the economic behaviour of producers, consumers and intermediaries, which will in turn affect the production system. The next stage in the causal chain analysis is to assess the significance of the linkages, from the effects on production relationships to sustainability impacts. A change in production may give rise to significant changes in employment, investment and/or income. Environmental impacts may arise from the effect of changes in the production system on environmental quality, natural resource stocks and/or biodiversity. Changes in the production system may also be linked to significant social impacts, where, for example, production shifts affect the level and distribution of household income, and may also impact on the gender balance of paid and unpaid labour. Changes in prices of essential goods and services may also have a significant impact on livelihood and poverty levels. These changes do not occur instantaneously or simultaneously, and the speed of adjustment will vary in different parts and at different stages in the causal chains. The SIA studies therefore make a distinction between short-term and long-term effects. The short-term effects are the immediate economic, social and environmental effects, while the long-term effects can be thought of as the ‘equilibrium’ outcomes.


For this overview study a further step in the analysis is needed. The long-term outcome discussed above represents sector-specific impacts. However there will also be interlinkages between the measure being assessed and other components of the Doha agenda. Similarly, the Doha agenda as a whole may have a significant effect on development processes. It is therefore necessary to evaluate the cumulative effects which the trade measures may have on these sustainable development processes, and hence their overall impact on sustainable development outcomes. For the preliminary overview SIA, simplified forms of causal chain analysis are used to help in identifying the potentially important cause-effect links which relate each trade measure to its eventual significant sustainability impacts. The practical implementation of this conceptual framework for each of the measures in the Doha agenda is described in the associated SIA report on the assessment of individual measures15. Impact significance The SIA methodology16 defines three levels of significance:

• non-significant impact – compared with the base situation • lesser significant impact – marginally significant to the negotiation decision, and if

negative, a potential candidate for mitigation • greater significant impact – significant to the negotiation decision, and if negative,

merits serious consideration for mitigation. The methodology also defines the following factors which need to be taken into account in evaluating significance:

• the extent of existing economic, social and environmental stress in affected areas; • the direction of changes to base-line conditions; • the nature, order of magnitude, geographic extent, duration and reversibility of

changes; • the regulatory and institutional capacity to implement mitigation and enhancement

measures. In interpreting these factors, judgements have to be made on the importance of the predicted change in relation to the base situation, i.e. the prevailing circumstances. Where impacts cannot be quantified, a judgement must be made of the likelihood that impact magnitude reaches the level at which it is considered significant. These comparisons and judgements should be made explicit, by identifying the base situation against which comparisons are made, and by explaining the reasoning through which the impact is judged to be significant. Sustainability indicators The Phase Three methodology retains the set of nine core indicators that were used for the Phase One and Phase Two studies. These are:

• Economic impacts: real income; fixed capital formation; employment • Social impacts: poverty; health and education; equity

15 George and Kirkpatrick (2003) 16 Kirkpatrick and Lee (2002)


Cross-cutting issues and overall impact Many of the trade measures under negotiation interact with each other, such that impacts due to one measure will be dependent on actions taken under another. In addition to these interactions, they all combine to contribute to a number of cross-cutting effects. Cross-cutting effects may be classified into five broad groups; scale, technology, structural, location and regulatory.

• scale effects result from growth in production and consumption • technology effects arise from technological developments which create products or

services whose impacts may be different from those they replace • structural effects relate to structural changes in the economy • location effects occur when production moves from one country to another • regulatory effects relate to the nature and effectiveness of social and

environmental policies or regulations. These cross-cutting effects are considered in the assessment of the impacts Doha agenda as a whole. Mitigation and enhancement This preliminary global overview provides an initial indication of the types of mitigation and enhancement (M and E) measures that might need to be appraised in more detailed SIA studies in the rest of the programme. Such measures may include:

• Measures which are closely trade-related and which might be built into a WTO agreement itself.

• Closely related side or parallel agreements between WTO member countries, or in regional agreements which may ‘nest’ within international agreements.

• Collaborative agreements and other joint initiatives between international organisations to clarify the relationship and strengthen the consistency, between international trade agreements and other types of international agreements.

• International and regional initiatives to promote technical cooperation and capacity building in developing countries.

• Measures by national governments to remedy market imperfections, regulatory failures, social inequalities, which are harmful to sustainable development and whose removal could enhance the contribution which trade measures may make to sustainable development.

Consultation process Consultation is a key component of the methodology, intended to ensure a greater understanding and awareness among stakeholders of the SIA, and to allow a wide and inclusive process of consultation with different stakeholder groups. In particular, the following measures are being implemented as part of the current project:

• Dialogue between the contractor and stakeholders with interests in the negotiations as a whole or individual sectors.

• Use of an international network of experts, in commenting on the project reports. • Publication of project reports on a dedicated website with facilities for comment.


• Meetings with civil society organised by the European Commission, to discuss project reports.

These consultation processes are described more fully in Annex 2, together with recommendations for further enhancement. Limitations and Problems Encountered in Applying the Methodology The principal limitation in a preliminary overview study of this nature comes from the constraints which must be placed on the depth of analysis, with much of the detail to be filled in subsequently by individual sectoral SIAs. The study does not therefore go into great depth in its evaluation of the different effects that may occur in different countries in different situations, or the variations which may occur between different communities and different local environments within individual countries. The analysis of these variations is at a general level only. The difficulties of understanding causal linkages and obtaining valid data can be considerably eased by wide consultation. The analytical assessment is preceded by initial consultation to identify stakeholder concerns, and is followed by further consultation to test the validity of the analysis and refine it as appropriate. The preliminary SIA is itself a part of the consultation process, intended to trigger debate that will inform the subsequent SIA studies.


4. PRELIMINARY OVERVIEW ASSESSMENT FINDINGS The preliminary SIA is intended to provide an overview of the potential impacts on sustainable development of the proposed Doha Agenda policy measures, and of any cumulative impacts that are likely to result from the implementation of the Agenda as a whole. This report presents the key results for each of the measures in the Doha agenda. Each measure is discussed under three headings: negotiation issues and scenarios; likely sustainability impacts; mitigation and enhancement measures. The preliminary overview assessment on which the results are based is presented in a separate report17, together with full references to the case studies and analyses which have been used. 4.1. AGRICULTURE Negotiation issues and scenarios The Doha Ministerial Declaration commits WTO members to comprehensive negotiations covering:

• substantial further improvements in market access beyond those committed under GATT;

• reductions in all forms of export subsidies with a view to phasing them out; • substantial reductions in trade-distorting domestic support; • special and differential treatment for developing countries, to effectively take

account of their development needs, with particular mention of food security and rural development;

• non-trade concerns (such as environmental protection, animal welfare, food security and rural development), as provided for in the Agreement on Agriculture.

The base scenario assumes that no new agreement on agriculture is reached, but that the provisions of the Uruguay Round relating to agriculture are fully implemented. These include the conversion of quotas to tariffs, tariff reductions, reduction of export subsidies and limits on domestic support, as defined in the existing agreement. The further liberalisation scenario assumes:

• further reductions in tariffs, export subsidies and domestic support, by percentages similar to those agreed in the Uruguay Round;

• retention of the blue and green boxes, with some additional support for non-trade issues;

• strengthened provisions for special and differential treatment for developing countries.

Likely sustainability impacts Impacts in EU

• Domestic prices are expected to fall for most agricultural products, benefiting consumers. Domestic production is expected to increase for wheat, but to fall for oilseeds, meats and dairy products. Production changes will have short term adjustment impacts on employment and associated social factors.

17 George and Kirkpatrick (2003)


• An overall long term fall in agricultural production may entail a shift in employment from rural to urban activities. Permissible agricultural support mechanisms may alleviate this trend to a degree, but some changes to rural environments and social structures are likely.

• Where production decreases, there may be beneficial effects on environmental factors such as water supply and water pollution, but potentially adverse effects on the amenity value of agriculture. Where production increases, the opposite effects are expected.

• A change from agricultural use to semi-natural habitat may have visual effects that may be considered adverse, but a positive effect on biodiversity.

• Animal welfare standards may be relaxed, through economic pressure to adjust domestic policy.

Non-EU developed countries Similar effects associated with production changes are anticipated in the US, Canada and Japan, although different products will be affected. Some exporting developed countries such as Australia may experience significant production increases, with economic and social gains but potential negative environmental effects. Impacts in developing and least developed countries The principal driving effects for impacts in developing countries are a rise in world market prices due to reductions in agricultural support, particularly in the EU and the US, and increased market access for exports, to other developing countries’ markets as well as developed ones. These changes are expected to have the following effects.

• An overall economic welfare benefit in most countries, with potential losses in the Middle East and North Africa.

• A rise in consumer prices, which is felt particularly in least developed countries and net food importing developing countries (NFIDCs). Higher prices may also have an adverse effect on low income non-farming communities in other developing countries, notably on the urban poor, although in countries where there is an overall welfare benefit, these should be short term adjustment effects only.

• Higher world prices will discourage agricultural imports and encourage exports. This will have beneficial effects on agricultural employment in commercial agricultural areas, and hence on incomes and associated social factors. It may correspondingly assist agricultural development strategies.

• Adverse effects on food security. With greater agricultural trade, any future increase in world prices for basic foods will have an adverse effect on supply in developing countries, particularly the least developed, where the cost of food is a large proportion of household income. The opposite effect will result from any decrease in world price, but the net impact may be greater vulnerability to price changes. Similarly, in consequence of larger agricultural trade flows, any decrease in world price for products oriented towards developed country markets will have a greater adverse impact on developing countries’ export earnings, and hence their ability to import other foodstuffs on which they have become dependent. The net effect of liberalisation may therefore be increased susceptibility to food security crises.

• The opportunities created by trade liberalisation are expected to be tapped primarily by commercial agriculture, with consequent incentives for commercial


support mechanisms which will continue to be permissible within the WTO system, other actions which may be taken to minimise or avoid adverse effects include:

• strengthening environmental regulations or market-based mechanisms to counter potential pollution impacts;

• protection of rural livelihoods and the amenity value of the rural environment by replacing agricultural support by equivalent WTO compatible support for other activities such as tourism or recreation;

• landuse planning and the designation of conservation areas may be adapted to optimise the biodiversity and amenity value of rural areas;

• education and training policies may be used to assist and accelerate the take-up of new employment opportunities;

• potential impacts on animal welfare may be avoided by resisting economic pressures to relax existing regulations.

In developing countries, there is greater scope for enhancing beneficial impacts as well as mitigating adverse ones. In particular, while the static economic efficiency gains of agricultural liberalisation are expected to be limited, relative to total GDP, dynamic effects on development processes can make a much larger contribution to meeting the Millennium Goals. The key factors here are the extent to which trade liberalisation accelerates the commercialisation of agriculture, and the processes through which agricultural employment losses are replaced by higher value-added opportunities in other sectors of the economy. These factors will be strongly influenced by national development policies and strategies, international support for these strategies, and interactions with other measures in the Doha agenda, particularly for trade in non-agricultural products and services. Actions to mitigate potential adverse impacts which may be taken at the national level include:

• strengthening environmental and health regulations and market-based environmental mechanisms;

• promotion of appropriate agricultural technologies and management techniques associated with water use, nutrient control, fertilisers, pesticides and herbicides;

• education and training policies to assist the take-up of new employment opportunities.

Potential mitigation measures at the international level may include:

• technical assistance and capacity building in support of these national actions; • provision of food aid and other support to LDCs and NFIDCs, as is being

discussed as one of the implementation issues related to the Marrakesh Decision of 1994;

• strengthened international financing and support to protect against food security crises.

4.2. MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS Negotiation issues and scenarios At the Fourth Session of the WTO Ministerial Conference in Doha, WTO members agreed to negotiations which would aim, by modalities to be agreed, to reduce or as appropriate eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff


escalation, as well as non-tariff barriers, in particular on products of export interest to developing countries. Key issues in the negotiations relate to which tariffs are to be reduced, the treatment of relatively high tariffs, and whether countries reduce proportionally and in stages. Tariff peaks (ad valorem duties above 15%) are often concentrated in products of export interest to developing countries. Tariff escalation is another issue expected to feature prominently in the negotiations (where importing countries apply progressively higher levels of protective tariffs according to the level of processing). The treatment of non-tariff barriers (NTBs) in the market access negotiations overlaps with those for other measures under various WTO agreements. The base scenario represents the situation that will prevail when existing commitments have been fully implemented, using 2005 as the time horizon date. The further liberalisation scenario assumes

• the most probable extent of liberalisation of market access that can be achieved during the WTO negotiations, varying between sub-sectors;

• a target of full liberalisation (zero tariffs) for non-sensitive sectors such as pharmaceuticals;

• less complete liberalisation for more sensitive sectors such as textiles and clothing;

• commitments are made by 2005, and implemented by 2010 (later for developing countries).

Likely sustainability impacts Impacts in developed countries

• An increase in economic welfare can be expected from the economic efficiency effect of trade liberalisation.

• Strong environmental regulation is expected to prevent significant environmental impacts from production increases.

• Short-run social effects due to employment changes are expected to be small, primarily for textiles, automotive products and associated sectors.

• For automotive products and other high skill manufactures, longer term process effects are expected. High value-added production may shift to exporters whose labour costs are lower, particularly in newly industrialising developing countries. The long term economic and social effects will depend on how the economy adjusts, which in turn depends on these countries’ development strategies for promoting new technologies and services providing high skill employment.

Impacts in developing countries Impacts differ significantly between countries at different stages of development. In least developed countries, manufacturing exports are limited, but where domestic capacity exists, it may be adversely affected by increased competition from imports. In newly industrialised countries, where a competitive manufacturing base has already been established, liberalisation is likely to increase export opportunities. The following economic, social and environmental effects are anticipated.


Economic: 1 real income; 2 fixed capital formation; 3 employment Social: 1 poverty; 2 health and education; 3 equity Environmental: 1 biodiversity; 2 environmental quality; 3 natural resource stocks Process: 1 sustainable development principles; 2 sustainable development strategies x: likely significant impact (beneficial or adverse) blank: impact is unlikely to be significant Mitigation and Enhancement Measures In developed countries, the main factors which influence the direction, magnitude and significance of likely impacts relate to development processes which introduce new, high value-added employment opportunities, to replace those which may be transferred to newly industrialised developing countries, in response to changes in comparative advantage. In developing countries, national development strategies play a role in the creation of effective WTO compatible approaches to promoting industrial development. Potential national and international mitigation and enhancement measures for this and other factors which affect impact significance include:

• strengthened strategic policy mechanisms for industrial development; • the introduction of appropriate competition law and policy, and market-

strengthening regulation policy; • education and training policies targeted at potential growth areas; • strengthening gender-related and child welfare policy; • strengthening environmental regulations and market-based environmental

mechanisms; • international technical assistance and capacity building in support of these national

actions.

4.3. SERVICES Negotiation issues and scenarios A new round of GATS negotiations was launched in February 2000, and ongoing negotiations have been incorporated into the Doha agenda. Negotiations are mandated on most-favoured-nation exemptions, with a view to reducing their number, and on domestic regulation, qualification requirements and procedures, technical standards and licensing procedures. Negotiations are also mandated on the GATS rules which cover emergency safeguards, government procurement and subsidies. A provisional set of disciplines has already been agreed for accountancy rules, and will come into force at the end of the negotiations. For negotiations on national schedules the Doha Ministerial Declaration set dates for the submission of requests (30 June 2002) and offers (March 2003). The deadline for completion of negotiations is 1 January 2005, when agreed new GATS commitments will form part of the single undertaking. The base scenario assumes that no new commitments are made, but that the provisions of existing commitments are fully met. The further liberalisation scenario represents the strongest probable implementation of the negotiations agreed to at the 4th Ministerial Conference in Doha:

• restrictions are presumed to remain primarily for difficult areas such as air transport and movement of natural persons;


• with these exceptions it is assumed that a majority of countries bind according to a notional schedule across the four modes of

o Mode 1 (cross-border trade) – minimal restrictions other than for consumer protection

o Mode 2 (consumption abroad) - no restrictions o Mode 3 (commercial presence) – removal of the market access restrictions

listed in Article XVI of GATS and of all scheduled restrictions on national treatment (Article XVII)

o Mode 4 (presence of natural persons) – further commitments on temporary movement of intra-corporate transferees and contractual service suppliers.

Likely sustainability impacts Business services (including professional and computer) Reduced trade barriers for computer-related services are expected to have a significant beneficial effect for purchasers of more cost-effective services, and for suppliers in developed and some developing countries (such as India). For professional services, the scenario suggests an economic benefit to developed countries and a possible decrease of professional employment in developing ones, depending on the extent to which purchaser preferences for developed country qualifications offset the lower wage rates of local professionals. Impacts for other business services are not expected to be significant Communication services Communications in general, and telecommunications in particular, are an increasingly important component of business competitiveness in developed countries, and in the formal sectors of the economy in developing countries. The potentially positive economic and developmental benefit may be highly significant, but will depend on countries’ ability to introduce appropriate regulation. Construction and related engineering services Export opportunities are expected to increase for developed countries and those developing ones which have established an internationally competitive construction sector, such as China. In other developing countries a decrease in professional employment may occur, along with a benefit from the transfer of skills and technology. Greater involvement of overseas companies may in some cases reduce potentially adverse environmental impacts. In general, many of the potentially significant economic, social and environmental impacts associated with the sector are related to the expansion of construction activity, rather than trade liberalisation as such. Distribution services An economic gain is expected in exporting countries from the return on investment, and in importing countries from increased economic efficiency. Efficiency gains lead to lower consumer prices, particularly for higher income urban communities. The number of small traders is expected to decline, with a smaller number of jobs becoming available in new outlets, giving a net adverse effect on employment and associated social factors. Goods are expected to be sourced from a wider area, including internationally, with associated environmental effects from the additional transport. Improved effectiveness is expected for those distribution services which supply modern industrial and commercial equipment to other sectors of the economy, with an enhancing effect on developing countries’ growth rates.


Educational services The further liberalisation scenario is not expected to have major impacts. Environmental services For water and wastewater, economic benefits are expected in developed countries from overseas investments, and in developing countries through increased efficiency due to competition. Increased efficiency is expected to lead to improved overall availability of water, although regulatory and subsidy frameworks are critical to maintaining access for poorer communities. There may be a short term loss of jobs in both the formal and informal sectors. Some environmental benefits are expected, while others are uncertain, depending on regulation and the quality of the service. Developed countries and some developing countries also benefit economically from increased export opportunities in solid waste management. In developing countries an environmental benefit is expected from better management. Health benefits are associated with environmental ones. There may be some loss of livelihood opportunities for waste pickers. For services associated with air, water and land quality, noise abatement, and protection of biodiversity and landscape, the effects are expected to be small. Energy services Greater services trade flows are expected from developed countries to developing ones, with anticipated economic benefits to both. Increased efficiency is expected to improve availability, particularly for electricity, but sophisticated regulatory and subsidy frameworks are needed to prevent the formation of private monopolies, and to maintain access for poorer communities. There may be some loss of local employment, but this may be more than offset by a high degree of skill transfer. This may translate into the creation of competitive domestic energy services, depending on national strategies for social and economic infrastructure. Financial services Improved financial services of different types can contribute to the growth of a wide range of activities, and hence to overall economic growth. Liberalisation can enhance the efficiency of the domestic financial sector, strengthen its stability, and increase access to lending for SMEs, with strong potential for direct social benefits for some types of service (e.g. microfinance). In some cases however, where foreign-owned banks are inadequately regulated, they may be less effective than domestic ones in lending to SMEs, addressing gaps in the credit system for disadvantaged regions, and in responding to macroeconomic and balance of payments management needs. This may have potentially adverse effects on both growth and stability. Strong regulation and a controlled pace of liberalisation are key factors in avoiding adverse effects and achieving intended benefits, and should be considered as potential M&E measures. Health-related and social services Developed countries are expected to gain economically, and many developing ones are expected to benefit from downward pressure on health service costs (although poorer countries are less well placed to benefit). Improved health service management can be expected to lead to better controlled medical wastes, with environmental as well as health benefits. There is also potential for developing countries to become major exporters, either by attracting foreign patients or by temporarily sending health personnel abroad. To reap such benefits, and at the same time improve their own health services, developing


• the policy and regulatory frameworks needed to contain or avoid adverse social or

environmental impacts • the regulatory frameworks necessary to achieve the intended benefit The frameworks in place in many developing countries may be inadequate. A further concern relates to re-negotiation penalties which may apply to countries which identify a need for stronger regulations after they have entered into market access commitments. For both of these factors, controlling the pace of liberalisation through appropriate phasing or sequencing should be considered. 4.4. TRADE AND ENVIRONMENT Negotiation issues and scenarios The Doha Declaration established a negotiating mandate for trade and environment on three issues:

• The relationship between WTO rules and specific trade obligations in MEAs; • The reduction or elimination of tariff and non-tariff barriers to environmental goods

and services; and • Procedures for regular information exchange between MEA Secretariats and the

relevant WTO committees, and the criteria for granting observer status. Negotiations on a fourth issue relevant to trade and environment were mandated under the heading of WTO rules:

• Clarify and improve WTO disciplines on fisheries subsidies. WTO rules and MEAs The negotiations are not intended nor expected to place constraints on the ability of MEAs to make use of trade measures. Rather, they relate primarily to the interpretation of MEAs. Under Article XX of GATT 1994, a trade restriction may be applied for environmental reasons only if it is demonstrated to be necessary, and is not arbitrarily discriminatory or a disguised restriction on international trade. Approaches which have been considered include: the status quo; exempting actions taken under an MEA from other WTO requirements; the requirement that a specific waiver from WTO obligations should be obtained before a measure is introduced in pursuance of an MEA. Tariff and non-tariff barriers The principal argument in favour of negotiating on tariff and non-tariff barriers for environmental goods and services under the trade and environment heading, rather than under market access for non-agricultural products and services, is that this can enable stronger measures to be taken, leading to greater environmental benefits. The main argument against is that these products and services are exported primarily by developed countries, and that, under this heading, developing countries are not in a position to negotiate a reciprocal trade benefit that is comparable. Liaison and fisheries subsidies Improving liaison between the WTO and MEA secretariats is generally regarded as desirable. Fisheries subsidies are discussed in the section on WTO Rules.


Other subjects under discussion The Committee on Trade and Environment has been given a renewed mandate for discussion of all other items under its agenda, with particular attention to the effect of environmental measures on market access (especially in relation to developing countries, in particular the least developed among them), relevant provisions of the TRIPs Agreement, and eco-labelling. Work on these issues is to include the identification of any need to clarify relevant WTO rules, with a report to be presented to the Fifth Session of the Ministerial Conference. This report may include, as appropriate, recommendations on future action, including possible negotiations on these issues. The discussions on market access extend the debate on protectionist measures to all environmental issues. On the TRIPs Agreement and the environment, issues subject to discussion include its effect on biodiversity, which is also subject to discussion in the TRIPs Council. The discussions on eco-labelling revolve around its potential to focus consumer pressure against environmentally damaging products. The costs of operating a labelling scheme are however a cause for concern in developing countries. The base scenario assumes that no changes are made in relation to existing WTO agreements and procedures. The further liberalisation scenario assumes:

• clarification of the relationship between WTO rules and specific trade obligations in MEAs;

• a significantly greater reduction of tariff and non-tariff barriers to environmental goods and services than would be achieved in the negotiations on market access for non-agricultural products and services;

• improved coordination between MEA Secretariats and the relevant WTO committees.

It is assumed that no agreement is reached on environmental protection measures beyond those related to MEAs, that no change is made to the provisions of the TRIPs agreement, and that no provisions are made within the WTO context for eco-labelling. The potential sustainability impacts of these additional measures are however discussed briefly, separately from the scenario analysis. Likely sustainability impacts Relationship between WTO rules, MEAs and other environmental issues Under the liberalisation scenario, the current situation will be replaced by one in which WTO agreement will have to be reached before a restrictive measure is applied rather than after. All countries will benefit from the avoidance of unnecessary disruptions. Typically, measures have a beneficial effect on the local environment in the producing country. They may also have a net beneficial effect on the global environment, but as judged by the provisions of MEAs, such effects are not significant. The environmental impact of the scenario will be to halt the beneficial effect that occurs during the dispute settlement period, i.e. there will be a short term adverse environmental impact in the producing country. Economic and social effects will also be short term only. They are expected to be positive in the producing country, and negative in importing and other exporting countries. In general, trade restrictions in pursuance of environmental improvement are likely to be applied by countries with high environmental standards, against those with lower ones.


The level of a country’s environmental standards generally increases with its level of development, and so the impacts for importing countries are likely to occur for developed countries, while those for producing countries will apply mainly to developing countries, particularly the least developed. In the longer term, clarification of the relationship between trade measures and MEAs may have more significant effects on the international governance of environmental issues, as discussed below under information exchange. Reduction of tariff and non-tariff barriers to environmental goods and services The liberalisation scenario presumes that a greater reduction of tariff and non-tariff barriers will be achieved than would be possible if the negotiations were conducted under market access for goods and services, causing an increase in magnitude of all impacts. Beneficial economic and social impacts are expected in exporting countries, while importing countries may experience a small economic loss through loss of tariff revenues. A beneficial impact on the environment is likely in importing countries, but this is expected to be small. Information exchange Greater information exchange is expected to have beneficial impacts in all three spheres, of lesser significance. In the long term the negotiations may lead to considerably greater synergy between MEAs and WTO rules, and hence to highly significant impacts on sustainable development principles and processes, in developed countries, developing ones, and globally. Such agreements are not however expected to be achieved under the further liberalisation scenario. Provisions of the TRIPs Agreement The further liberalisation scenario assumes that no change is made to the relevant provisions of the TRIPs agreement, and therefore no impacts will arise. However, in coming to an agreement on future actions, the discussions under the Doha agenda may need to take into account the following sustainability issues.

• Transgenic crops. The long-run environmental implications cannot yet be evaluated with any certainty, with limited evidence even for the potential environmental benefits that certain varieties are designed to achieve. The uncertainty principle should play an important role in governments’ decisions.

• Protection of traditional knowledge. A requirement for patent applicants to disclose the origin of their genetic resources is expected to have beneficial impacts, but such arrangements may be of little value if they are not legally enforceable.

• Harmonised international system of IPRs. This presents difficulties for developing countries, both in their capacity to introduce such a system and the costs of regulating it. Evidence on potential economic and social benefits is inconclusive.

• New plant varieties. Evidence is mixed on the likelihood of achieving potentially beneficial impacts on poverty, food security and natural habitat.

Eco-labelling In general, eco-labelling can be expected to have a beneficial effect on the environment in the exporting country, and globally where impacts are of international importance. The economic costs of operating a labelling scheme, and hence potential social ones, will be


the DSU, while clarifications refer to the Dispute Settlement Mechanism (DSM) through which the DSU is interpreted. Improving the efficiency of the DSM is the basis of the EU’s proposals, which include:

• mechanisms to make compensation more attractive than retaliation, e.g. by introducing the formal obligation to offer compensation as an alternative to the suspension of concessions (sanctions);

• the establishment of a permanent panel body, instead of the present system of ad hoc panellists;

• a clearer text to regulate the ‘sequencing’ of procedures in the implementation phase;

• an increased transparency and openness for dispute settlement proceedings, in terms of public access both to documents and hearings;

• a procedure for the admission of amicus briefs by NGOs in dispute settlement proceedings.

Increased transparency has also been proposed by the US. Other proposals include:

• a joint Chilean/US proposal on ‘flexibility’; • a Mexican proposal on retroactivity and interim measures; • Indian and Chinese proposals on litigation costs; • an African proposal on the creation of a DS fund for developing countries; • proposals from various members to enhance 3rd parties' rights; • various proposals on SDT, notably as regards timeframes and reasonable period

of times for implementation; • amendments to the DSU procedures for compliance panels, to address the

‘sequencing problem’ of obtaining multilateral authorisation of retaliatiory action; • clarification of compensation, to include financial compensation; • amendment of the DSU to reform or eliminate cross-retaliation.

Several of these issues revolve around the extent to which the existing system favours developed countries over developed ones, primarily in relation to the high costs of legal fees, and if so, the extent to which this should be redressed. The base scenario assumes that no changes are made to the DSU or the existing DSM. The further liberalisation scenario assumes:

• a limited degree of greater transparency in making dispute submissions publicly available;

• continued flexibility in the acceptance of amicus curiae briefs, and clarification of procedures for expert submissions;

• clarified procedures for making appropriate expertise more readily available for dispute settlement panels, including a professional roster of dispute panellists;

• greater flexibility in establishing compliance panels. No significant changes are assumed in relation to financial compensation or barriers to retaliation against developing countries. Likely sustainability impacts The overall economic effect of improved dispute settlement is expected to be positive, in all developed countries and most developing ones. No least developed country has yet been involved in a dispute, and the further liberalisation scenario is not expected to


The TRIPs Council was instructed to report to the General Council before the end of 2002. This was not achieved, although a draft decision on compulsory licensing was endorsed by the majority of WTO members (but not the USA). Members agreed to extend negotiations on the issue. The base scenario assumes that no changes are made to the existing TRIPs agreement, and that it is fully implemented within the currently defined timescales. The further liberalisation scenario (which may be regarded as a misnomer in this instance) assumes:

• agreement on a system of notification and registration of geographical indications for wines and spirits, with limited additional provisions for mandatory protection;

• extension of the same protection of geographical indications to products other than wines and spirits;

• agreement on limited measures for the export of generic drugs under compulsory licences.

Likely sustainability impacts Geographical Indications The proposed system of notification and registration of geographical indications for wines and spirits is expected to have a beneficial economic effect in countries which produce protectable products. In those cases where exceptions do not apply, and a contestable name is no longer able to be used, the opposite effect is anticipated. Among developed countries, the EU is expected to benefit more than others, through its large heritage of valued geographical names. The extension to other products will have similar effects. Production changes will occur in the same direction, with consequent short term effects on employment. In some areas these could be significant. In countries with poor environmental controls, production increases may have adverse environmental impacts, while production decreases may have beneficial effects. These are expected to be small or non-significant. Meanwhile, reduced competition is expected to have an adverse economic effect in all consuming countries, felt by consumers. A corresponding increase in consumer satisfaction may be assumed, related to perceptions of product quality. The net effect on consumer welfare is expected to be small and negative. TRIPs and public health The following effects are anticipated, by comparison with the base situation:

• lower drug prices in non-manufacturing developing countries • greater production of generic drugs, primarily in developing countries • decreased production in patent-holding countries • decreased royalties in patent-holding countries

Very little systematic investigation has been undertaken of the magnitude of likely health impacts. They are expected to be beneficial and significant, although primarily in helping to relieve suffering, rather than addressing the fundamental HIV/AIDS problem.


Subsidies (including countervailing measures) and anti-dumping Pressure to strengthen these rules is related to the suggestion that, as tariffs have been reduced through the Uruguay Round, the use of anti-dumping measures and related practices has risen. The inference has been made that anti-dumping measures have increasingly been misused, to afford the same level of domestic protection as was previously attained through tariffs. While the potential misuse of anti-dumping and related measures is a cause for concern, the subsidies and other trade distortions they are intended to counter may themselves have important economic, environmental and social effects. When used to promote nascent industries the effects can be beneficial, and developing countries have argued for greater flexibility in their permissible use. The potential adverse effects are of particular concern for fisheries, which are singled out for attention in the Doha declaration. Fisheries subsidies The principal concern is that fisheries subsidies contribute to over-capacity of fishing fleets, and hence to depletion of fish stocks and damage to the marine environment. Concerns have also been expressed for possible discrimination against developing countries in the use of constraints. The issue is related to those being discussed in the Trade and Environment Committee on the relationship between WTO rules and MEAs, and a cross-reference between the two is made in the Doha declaration. The question arises of whether measures to conserve the global environment should be negotiated in the WTO, or in a multilateral environmental forum. Regional trade agreements Under the most favoured nation rule, RTAs would not be permissible, but are exempted under Article XXIV of GATT, which defines conditions under which they may be established. All WTO members are party to at least one such agreement, or are in the process of joining one. The negotiations focus on clarifications to reduce the trade-diverting effect which bilateral or regional agreements may have, while maintaining the contribution they can make to the liberalisation of trade and to promoting development. The aim is to maintain support for increased multilateral trade integration, and at the same time to retain the flexibility offered by regional agreements and their potential to assist developing countries. Proposals for greater provisions for special and differential treatment are countered by the argument that excessive protection inhibits development. The base scenario assumes that no changes are made to existing disciplines and procedures. The further liberalisation scenario assumes:

• clarification of the disciplines on Subsidies, including Countervailing Measures, (SCM) and Anti-Dumping (AD), which reduce the misuse of these measures;

• stricter limitations on the use fisheries subsidies; • clarification of disciplines for RTAs, giving greater freedom for support to

developing countries. Likely sustainability impacts Subsidies (including countervailing measures) and anti-dumping


Economic: 1 real income; 2 fixed capital formation; 3 employment Social: 1 poverty; 2 health and education; 3 equity Environmental: 1 biodiversity; 2 environmental quality; 3 natural resource stocks Process: 1 sustainable development principles; 2 sustainable development strategies x: likely significant impact (beneficial or adverse) blank: impact is unlikely to be significant Mitigation and Enhancement Measures The potentially adverse effects may be mitigated by strengthening regulation, and international support for such action. The beneficial environmental impact of reducing fisheries subsidies may be significantly enhanced by strengthening fisheries management policies both nationally and internationally. 4.8. IMPLEMENTATION ISSUES IN DEVELOPING COUNTRIES Negotiation issues and scenarios The main areas covered by the issues identified in the Doha Implementation Decision include: • Agriculture • General Agreement on Tariffs and Trade (GATT) • Agreement on Textiles and Clothing • Trade-related investment measures (TRIMs) • Trade-related aspects of intellectual property rights (TRIPS) • Agreement on Rules of Origin • Agreement on Subsidies and Countervailing Measures • Technical Barriers to Trade (TBT) • Sanitary and phytosanitary (SPS) measures • Cross-cutting issues The decision also urges developed countries to grant preferences in a generalised and non-discriminatory manner, i.e. to all developing countries rather than to a selected group. In the Doha discussions of these issues, the only substantive changes agreed were those on timescales for implementing the SPS and TBT agreements, and on exemption rules for Subsidies and Countervailing Measures. The majority of other settlements have related to the provision of information or commitments to further work, with substantive agreements yet to be reached. Some of the negotiations on implementation issues are taking place as part of other negotiations, while others are being discussed separately by the Trade Negotiations Committee. By the deadline of December 2002, significant progress had been made on only a small number of the separately negotiated issues. The question then arises of whether these issues should be absorbed into the other negotiation areas. The base scenario is the starting point, of no change to existing agreements (prior to the settlements that have already been made). The further liberalisation scenario assumes that:

• agreements will be reached on a large number of current issues; • these agreements will take full account of the needs of developing countries.


In recognising the needs of developing countries, the Declaration committed the WTO to work in cooperation with other relevant intergovernmental organisations to:

• provide strengthened and adequately resourced assistance to respond to the needs of developing and least developed countries,

and required that:

• the special development, trade and financial needs of developing and least developed countries should be taken into account as an integral part of any framework.

During the closing plenary session of the Doha conference, the chairman clarified his interpretation of the wording of the Declaration, which in his view would ‘give each member the right to take a position on modalities that would prevent negotiations from proceeding after the Fifth Session of the Ministerial Conference until that member is prepared to join in an explicit consensus’18. This interpretation applies also to the discussions on competition policy, transparency in government procurement, and trade facilitation. The Doha declaration defines the work to be undertaken prior to the 2003 conference, to focus on the clarification of: scope and definition; transparency; non-discrimination; modalities for pre-establishment commitments based on a GATS-type, positive list approach; development provisions; exceptions and balance-of-payments safeguards; consultation and the settlement of disputes between Members. The base scenario presumes that the TRIMS agreement is unchanged, and is fully implemented. The further liberalisation scenario assumes that a negotiated agreement will be reached on each of the items defined for discussion in the Doha declaration:

• a definition of investment, covering enterprises, capital transactions and foreign direct investors;

• transparency requirements covering publication and notification of investment measures, deadlines for compliance, response to enquiries and procedural arrangements, with scope for exemptions;

• non-discrimination in accordance with GATT principles, including most favoured nation and national treatment obligations, with scope for exceptions;

• national commitments based on a GATS-type, positive list approach; • development provisions which include technical assistance and freedom for

developing countries to regulate in accordance with basic WTO principles; • balance-of-payments safeguards; • dispute settlement through the existing DSU; • guidelines on investor behaviour.

Likely sustainability impacts Economic effects An approximate assessment of the direct economic impact of a WTO investment agreement has indicated a significant global welfare gain, with the benefits accruing to both developed and developing countries. More detailed studies of causal effects

18 WTO (2001a)


This area is therefore a rich one for international flanking measures beyond the WTO negotiations, notably in development assistance to strengthen technology transfer, in order to enhance the contribution which foreign direct investment can in principle make to sustainable development. The other main factors affecting impact significance relate to the effectiveness of national policy and regulatory frameworks, and international support for strengthening them. Potential national and international actions are similar to those discussed above for agriculture, non-agricultural market access and services. 4.10. COMPETITION POLICY Negotiation issues and scenarios Trade and competition policy is one of the Singapore issues, introduced at the 1996 WTO conference. The Doha Declaration recognises the case for a multilateral framework to enhance the contribution of competition policy to international trade and development, agreeing that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken by explicit consensus at that Session on modalities of negotiations. Cooperation is called for with relevant intergovernmental organisations, to provide assistance to respond to the needs of developing and least-developed countries. The Working Group on the Interaction between Trade and Competition Policy will focus on the clarification of: core principles such as transparency, non-discrimination and procedural fairness, and provisions on hardcore cartels; modalities for voluntary cooperation; and support for progressive reinforcement of competition institutions in developing countries through capacity building, with full account to be afforded to the needs of developing and least-developing countries and the appropriate flexibility provided to address those needs. The baseline scenario takes as given the nations which have already enacted competition laws and assumes that no other nation will enact such laws. The principal elements of the future liberalisation scenario are taken to be:

• A commitment to enact and enforce a national cartel law. • A commitment to apply a set of core principles (including non-discrimination) to

whatever competition laws a nation already has on the statute books. • The development of a set of modalities on voluntary cooperation between

competition agencies and such cooperation need not be limited to cartel enforcement actions.

• A framework of measures that support the introduction and strengthening of competition policy-related institutions.

Likely sustainability impacts A detailed SIA for competition policy has already been carried out in a parallel study. In general, beneficial short and long term economic and social impacts are identified in all countries, where the adoption of anti-cartel measures results in reductions in various anti-competitive practices. Some adverse economic adjustment costs are however identified in developing and least developed countries, from the cost of compliance with the proposed multilateral framework on competition.


enhanced technical assistance and capacity building in this area. Ministers agreed that negotiations will take place after the Fifth Session of the Ministerial Conference, on the basis of a decision to be taken by explicit consensus at that Session on modalities of negotiations. In the period before the Fifth Session, the Council for Trade in Goods is to review, and as appropriate, clarify and improve, relevant aspects of Articles V, VIII and X of the GATT 1994 and identify the trade facilitation needs and priorities of members, in particular developing and least developed countries. This was accompanied by a commitment to ensure adequate technical assistance and support for capacity building in this area. The base Scenario represents full implementation of commitments already made in previous agreements. The further liberalisation scenario assumes:

• agreement to implement a degree of simplification in trade procedures in member countries;

• capacity building and technical assistance for developing and least developed countries.

Likely sustainability impacts The existence of the single market in the EU implies that the opportunity for further gains from trade facilitation measures for their own transaction costs would be limited. Significant gains can however be expected from more efficient and streamlined trade procedures in relation to the coming enlargement to 25 member states, which will require the collaboration of 25 national border and customs administrations. There may also be a significant economic benefit from cheaper and more efficient access to developing country markets. The same will apply in other developed countries whose procedures meet similar standards. For developing countries, potentially significant economic benefits may arise from short-term allocative efficiency gains and a longer term increase in investment and trade flows. However, the cost of achieving this may be high in terms of physical infrastructure and institutional reform. Whether these investment costs are mitigated by proposed capacity building initiatives will determine the net economic impact. In some developing countries, the introduction of tighter procedures may result in a significant economic gain through a reduction in rent-seeking activities. However, unless a more general improvement in governance occurs, this may be fully negated by rent-seekers moving their activities to other areas of the economy. Social impacts will be directly associated with economic ones. No significant environmental impacts are anticipated, although there may be a small positive impact from more efficient use of public resources.


Mitigation and Enhancement Measures Technical assistance and capacity building may have a significant influence on the net impact in developing and least developed countries. 4.13. OTHER MEASURES Negotiation issues and scenarios The Doha Declaration identified seven other measures for which a WTO work programme was to be established or continued, but with no commitment to negotiations. The first, electronic commerce, covers the particular market access issues which arise for this newly emerging form of trade. The other six concern the particular needs of developing countries, and are related to negotiations taking place for other measures. The Doha declaration defined the issues to be discussed by WTO work programmes as follows. Electronic commerce The Doha Declaration continues the work programme that was adopted following the Second Ministerial Conference in Geneva. It restates the recommended practice of not imposing customs duties on electronic transmissions, until the Fifth Ministerial Conference in 2003. Developing countries have expressed a desire to impose duties after this date, which is resisted by developed countries. The question arises of whether electronic supplies are classed as services or goods, and whether the absence of a specific entry in a country’s national schedule prevents the collection of customs duties. It is anticipated that this problem may become more acute as the use of e-commerce expands. The expansion of such trade raises concerns about fiscal implications, where duty-free e-commerce may erode sources of tax revenue, particularly in developing countries. A further aim of this work is to decide whether and how special provisions for e-commerce should be included in the negotiations on services, with particular reference to whether mode 1 (cross-border transactions) or mode 2 (consumption abroad) is more appropriate. Small economies The Doha Declaration mandates the WTO to examine problems faced by small economies in participating in world trade. The work will lead to recommendations at the next Ministerial Conference on trade-related measures to improve the integration of small economies. Trade, debt and finance A working group on Trade, Debt and Finance was established in Doha, to consider trade-related measures which might contribute to addressing developing countries’ external debt problems. The group will report to the 5th Ministerial Conference in 2003 Technology transfer The Doha conference agreed to establish a working group to examine how the references made in various WTO agreements to promoting technology transfer to developing countries might be given more substance. A report will be made to the next conference in 2003.


Technical cooperation and capacity building The Doha Declaration recognises difficulties faced by developing countries in meeting its commitments, and promotes technical assistance to help overcome them. The sections on market access for non-agricultural products, trade and investment, competition policy, transparency in government procurement, trade facilitation and environment all include reference to this need, and further paragraphs in the agreement give general consideration to technical cooperation and capacity building and the needs of least-developed countries. Meanwhile, developing countries are encouraged to include trade measures in their development strategies. The agenda gives priority to small, vulnerable, and transition economies, and calls for coherence between the WTO and other relevant international organisations in their technical assistance. Following the Doha conference the WTO General Council increased its own budget for technical assistance and established a Doha Development Agenda Global Trust Fund. Further progress is to be reported to the 5th Ministerial Conference in 2003. Least-developed countries The Doha declaration commits members to the objective of duty-free, quota-free market access for products of least developed countries, and to consider measures to improve market access for these countries’ exports. Members also agreed to help make it easier for least-developed countries to negotiate WTO membership. A WTO work programme on these issues was established. Special and differential treatment The Doha Declaration commits members to reviewing all special and differential treatment provisions for developing countries, with the aim of strengthening them and making them more precise. These provisions include longer time periods for implementing agreements, and commitments or measures to increase trading opportunities for developing countries. The Declaration endorses the work programme on special and differential treatment set out in the Decision on Implementation-Related Issues and Concerns, which requires the Committee on Trade and Development to identify which special and differential treatment provisions are mandatory, and to consider the implications of making mandatory those which are currently non-binding. Recommendations were required to be made to the WTO General Council by July 2002. The base scenario is equivalent to the current situation. The further liberalisation scenario assumes:

• that agreement will be reached on levying customs duties on e-commerce, within the framework of GATS;

• clarification and strengthening of agreements to take account of the needs of developing and least developed countries.

Likely sustainability impacts Electronic commerce The expansion of e-commerce has the potential for a great many impacts of considerable significance for both developed and developing countries, with corresponding potential for differentiation between beneficial and adverse impacts between countries at different levels of development. Apart from agreement on the levying of customs duties, many of


the impacts on sustainable development will occur through the development of e-commerce itself, rather than form trade liberalisation as such. Two main effects of customs duties can be anticipated: a restraint on international trade flows; and an increase in government revenue compared with the absence of taxation of electronic products. The principal impacts are expected to be a small loss in export earnings for those countries with significant e-commerce industries, a small increase in some developing countries’ growth potential through infant industry protection, and greater flexibility in raising government revenues. Small economies The assistance that is expected to be given to small economies is considered likely to have a significant positive impact on all aspects of their sustainable development, at low cost to the countries which provide it. Trade, debt and finance The discussions in this area focus on two main issues; the debt burden faced by many developing countries; and their susceptibility to financial crisis in a volatile world economy. The impact of an agreement would depend on the nature of any measures that are adopted. Careful research may be needed in the design of any assistance through the WTO, and in the assessment of its potential impacts. Technology transfer This area is considered to have considerable potential to make a highly significant positive contribution to sustainable development in developing countries. Against this, actions which help to enhance developing countries’ competitiveness in high value added commercial activities may have adverse economic and social effects in developed countries. Identifying win-win opportunities through which both groups of countries can benefit may not be straightforward. Technical cooperation and capacity building Of several possible types of assistance, the most fruitful is expected to be provision of the finance needed to maintain larger Geneva delegations, and training to allow delegates to engage more actively in WTO affairs. Least developed countries The work programme in this area is expected to have a significant beneficial impact on sustainable development in LDCs, at low cost to developed countries. Special and differential treatment This aspect of the ‘other measures’ in the Doha agenda is being addressed as an Implementation Issue.


Timing of negotiations (criterion 2) For the agriculture negotiations, draft schedules are due to be submitted by September 2003. For non-agricultural market access, services, and trade and environment, sufficient progress is required by the same date for a stocktaking to take place. Negotiations on trade and investment are not due to begin until after the Ministerial Conference in September 2003, following current discussions. For TRIPs and public health, the TRIPs Council was due to find a solution by the end of 2002. The negotiations on all measures are due to be completed by the end of 2004. In scheduling individual SIA studies it is recommended that the Commission give consideration to the current status of the negotiations on the relevant sectors, and to the potential contribution which the SIA findings may make at key stages of the ongoing negotiation process. Feasibility (criterion 5) and budgetary indications The established SIA methodology has been shown to be broadly applicable to all measures, with variations as discussed in the preliminary assessment of each measure. The information available is limited in all areas, with uncertainties in particular for social, environmental and process impacts. These limitations are not however considered to be sufficiently serious to reduce the value of more detailed study of any of the measures or sub-sectors. Of the areas recommended above for consideration, agriculture and trade and investment are likely to be the most consuming of time and resources, because of the complex interactions that may need to be evaluated. To undertake detailed SIA studies for these two sectors would require a resource allocation similar to the requirements for the three studies that have been completed so far. For the other areas, the initial scoping of likely impacts that has been carried out in this preliminary study will help to minimise the resources needed, and the required budget for a detailed SIA will be similar to that for the corresponding sectoral assessments carried out in parallel with this overview study. The final selection of sectors for detailed SIA may be based on the recommendations of Table 5.3, following the eliciting of opinions from relevant departments of the Commission (criterion 3), and of other stakeholders and representatives of civil society (criterion 4).


6. REFINEMENTS TO THE METHODOLOGY FOR FURTHER SIA STUDIES The SIA methodology is designed to be sufficiently comprehensive and adaptable to be applied to the broad Doha Declaration work programme, which includes negotiations on a range of measures and other tasks20. The SIA-WTO framework contract required a global preliminary SIA at its commencement, a number of sectoral assessments during its duration, and a comprehensive SIA of all agreements reached, before final decisions are made on their adoption. By allowing assessment of the sustainability impact of negotiations in each of the areas included in the Doha Declaration and of the Agenda as a whole, the SIA methodology is intended to inform and assist negotiations throughout the period leading up to the conclusion of negotiations by 1 January 2005. The SIA studies are expected to provide relevant and timely assessments to all interested parties, in an accessible and user-friendly form. The individual SIAs should be scheduled therefore, as far as is feasible, to produce assessment findings at key points in the negotiations’ timetable. Consultation arrangements also need to be scheduled so that stakeholders can contribute to the SIA studies, as experts in contributing their individual expertise and advice on specific issues during the screening and scoping update and full assessment stages of the assessment methodology. Consultation is also an integral part of the SIA process, and the SIA methodology is intended to allow for a wide and inclusive process of consultation with different stakeholder groups. It is emphasised that these studies do not attempt to judge what is the ‘best’ outcome. Views on this will vary according to the standpoint from which the judgement is being made. Rather, the intention is to provide those involved in negotiations with information on the range of different kinds of impacts, under different negotiation scenarios. In this way, they may be better informed when making their own judgements. The remainder of this section identifies the main areas of the SIA methodology that are being adapted and further developed, to meet the requirements of further detailed SIAs and of the final global overview SIA that will be undertaken at the end of the SIA-WTO framework work programme. Methodological refinements for individual sectoral SIAs From the findings of the preliminary overview SIA, and experience from the sectoral studies for market access, environmental services and competition, the following general guidance is given for conducting each of the further detailed SIA studies.

• Scoping. The preliminary overview SIA report on the assessment of individual measures21 presents impact summary tables for each measure, which may be used as an initial scoping list of potentially significant impacts.

• Country case studies. These tables and the corresponding text also give an indication of the types of country for which specific case studies may be appropriate.

• Adjustment impacts. The detailed SIAs should give a broad indication of the likely duration of adjustment impacts, and of any major variations for particular impacts. In particular, attention should be paid to the possibility that social or environmental factors may take longer to adjust than the economic effects which cause them.

20 Kirkpatrick and Lee (2002) 21 George and Kirkpatrick (2003)


consultation at the completion of the assessment stage of the final global study will facilitate stakeholder involvement at the point when policymakers are engaged in final negotiations prior to the adoption of all agreements.

In responding to these needs for further development of the SIA methodology, and recognising the increasing complexity and analytical/information demands which arise, detailed consideration needs to be given to selecting the appropriate level of detail, disaggregation and precision for the global SIA. Consideration of these issues will need to be informed by a realistic assessment of the constraints in terms of time and resources, within which the work programme should be competed. A related issue is the choice of assessment methods that is likely to be most appropriate for use in the global SIA assessment. The original methodology report recognised the role that global trade models can play in informing the assessment, particularly on economic impacts. Trade models have the merit of allowing for inter-sectoral and inter-country linkages, and can therefore assist in strengthening the SIA methodology in this area. While the value of global trade modelling depends on the relevance and quality of both the modelling and the data that are used, it is likely that further work in this area could strengthen the information basis for the SIA, particularly at the final global overview stage. However, undertaking new modelling work is likely to be an expensive and time-consuming exercise.


On the basis of the impacts that have been identified for each sector, sub-sector or trade measure, the likely significance of these impacts, the volume of trade affected and the degree of further liberalisation anticipated, it is recommended that the following areas be considered for detailed SIA studies:

• Agriculture (all sub-sectors) • Automobiles, automotive products and other transport equipment • Leather goods and footwear • Energy services • Financial services • Distribution services • Tourism and travel services • Trade and Investment • Trade and Environment • TRIPs and public health

Consideration should also be given to the following areas, although the need for more detailed study is judged to be less than for those above: chemicals; electrical and electronic equipment; maritime services; construction services; forest products; fish and fish products. Recommendations have been made for methodological refinements and adaptations in undertaking these further studies, for extending the consultation process, and for conducting the final global overview SIA of the Doha agenda as a whole. The SIA analysis also includes recommendations for the evaluation of any necessary flanking measures that might be introduced to mitigate negative impacts and enhance positive impacts on sustainable development. Such measures have been considered at the national level, where individual countries can adjust their trade policy and other related policy measures to optimise the impacts of a negotiated agreement, and also at the international level. In addition to its recommendations for more detailed SIAs of individual sectors and trade measures, the overview SIA has given a first indication of the factors which will influence the impact on sustainable development of the Doha agenda as a whole. In this respect, it is suggested that the international community can support developing and least developed countries’ efforts to build a strong domestic enabling environment, which is supportive of market-led development. Securing the potential gains from multilateral trade liberalisation requires well-developed markets, effective regulatory institutions, and a stable and predictable policy framework. Where these necessary conditions are absent or weak, trade liberalisation is unlikely to be a sufficient condition for achieving sustainable development. Additionally, the involvement of stakeholders in the development of trade policy has an important role to play in achieving progress towards sustainable development, as recognised in the commitments made in the Doha Ministerial Declaration. Trade-offs between economic, social and environmental issues, within individual countries, internationally and globally, are a major factor of trade and sustainable development policy. Negotiators can help resolve these issues by addressing the differing stakeholder perceptions of the issues involved, as identified in outline within this overview study, and more fully in detailed SIAs. This overview study’s initial evaluation of the impact on sustainable development of the Doha agenda as a whole has identified a need to improve policy coherence and


integration for the pursuit of the goal of sustainable development, which negotiators can contribute to achieving. Policy coherence is a particular priority in relation to trade, since it is a cross-cutting issue for many other areas of national and international policy. This has implications for policymaking within the EU and the WTO, and between these bodies and the other multilateral and development institutions, where better integration of economic, social, environmental and development goals within the mandate of the institutions, will facilitate the implementation of the sustainable development goal. Improved policy coherence and integration has particular significance in the context of the international commitment to achieving the Millennium Development Goals, with its target date of 2015.


REFERENCES DFAIT (2002) Initial Environmental Assessment: Trade negotiations in the World Trade Organisation, Department of Foreign Affairs and International Trade, Government of Canada FAPRI (2002) The Doha Round of the World Trade Organization: Appraising Further Liberalization of Agricultural Markets, Working Paper 02-WP 317, Food and Agricultural Policy Research Institute, Center for Agricultural and Rural Development, Iowa State University George C and Kirkpatrick C (2003) Sustainability Impact Assessment of Proposed WTO Negotiations: Preliminary Overview of Potential Impacts of the Doha Agenda: Assessment of Individual Trade Measures, Institute for Development Policy and Management, University of Manchester Kirkpatrick C and George C (2003) Sustainability Impact Assessment of Proposed WTO Negotiations: Sector Studies for Market Access, Environmental Services and Competition: Final Report, Institute for Development Policy and Management, University of Manchester Kirkpatrick C. and Lee N. (1999): WTO New Round, Sustainability Impact Assessment Study (Phase Two Report). IDPM, University of Manchester. Kirkpatrick C and Lee N (2002). Further Development of the Methodology for a Sustainability Impact Assessment of Proposed WTO Negotiations (Final Report). IDPM University of Manchester Laird S (2002) Market Access Issues and the WTO: an Overview, in Hoekman B et al (eds) Development, Trade and the WTO: a Handbook, World Bank, Washington DC Maurer A and Chauvet P (2002) The Magnitude of Flows of Global Trade in Services, in Hoekman B, Mattoo M, and English P, eds Development, Trade, and the WTO: A Handbook, World Bank, Washington DC OECD (1997), Assessing Barriers to Trade in Services: A Pilot Study on Accountancy Services TD/TC/WP(97)26, Working Party of the Trade Committee, Paris. World Bank (2001) World Development Report 2000/2001, Oxford University Press, New York World Bank (2002) Global Economic Prospects and the Developing Countries 2002: Making Trade Work for the World’s Poor. World Bank, Washington DC. WTO (2001) Ministerial Declaration, WTO Ministerial Conference, Doha, World Trade Organisation, Geneva WTO (2001a) Statement by the Conference Chairman, Doha Ministerial Conference closing plenary session, WTO Geneva WTO (2001b) Market Access: Unfinished Business - Post Uruguay Round Inventory. Special study No. 6. Geneva: WTO


ANNEX 1. TERMS OF REFERENCE TASKS SPECIFICATIONS

Preamble: The aim of this specific agreement is to provide a qualified preliminary assessment of the trade negotiations which will cover the DDA including the Singapore issues. This should include an examination and overview of the potential major economic, environmental and social impacts of these negotiations.

A. Preliminary SIA A.1 Objectives of the qualified preliminary assessment

This qualified preliminary assessment will cover both DDA negotiation mandate and sectors which could be included in the negotiation mandate after the 5th Ministerial (in particular implementation and Singapore issues).

It should provide an overview of the potential major impacts on sustainability of all of the proposed sectoral measures, taking into account potential impacts associated with inter-sectoral linkages. This is intended to assist in determining the more detailed sectoral assessments to be undertaken.

A.2 Main tasks:

The qualified preliminary SIA will :

1) refine and adapt for the purpose of the current framework contract the methodology which has been outlined in Phase One and Two of the SIA of a proposed round of WTO negotiations and in the recent methodological study, taking into account the previous development of the study (specific agreement N°1 for 3 sectoral studies). A description of the overall methodological framework which will be used to complete the whole Phase III SIA will be set out (including the different steps, logical framework, etc…).

2) provide an overview of the potential impacts on sustainability of the proposed policy measures, undertaken within a global screening and scoping update. In particular, the outcomes will include the specifics of each trade measure to be negotiated and of those of its components which should be submitted to detailed assessment at the next stage in the process:

-The scenarios for the measures to be analysed in the detailed assessment. -The criteria by which the significance of the sustainability impacts are to be assessed. -The country groups and/or individual countries for which the sustainability impacts should be assessed. -The time horizons over which the impacts should be assessed. -The cumulative impacts, likely to result from the implementation of the New Round as a whole. -The methods, data sources and sustainability indicators to be used, and the consultations to be undertaken, in the detailed assessments and in subsequent stages in the assessment process.

For that purpose, the consultant will analyse the main causal chains which identify the significant cause-effect link between a proposed change in trade policy and its social,


environmental and economic impacts. This analysis should as far as possible combine qualitative and quantitative approaches. The main output will comprise an assessment of those areas where the Contractor considers that more detailed assessments should be carried out and proposal of a complementary list of sectoral studies to be undertaken during the following steps of the study, including budget proposals. 3) Development of the consultation process: On the basis of the work carried out in a previous methodological study, the consultant will make proposals to improve the consultation process by which the commission can ensure transparency of the SIA process and enable civil society and other stakeholders to provide inputs during the study and in particular in the scoping/screening phase. These proposals could include:

- interest/use of networks with constituencies - organisation of meetings

- use of electronic means - feedback process and quality control of the consultations. For each issue the consultant will make practical proposals, taking into account comments made by civil society.

B. Working meetings

Attend meetings in Brussels with Commission officials. These will include: presentations and explanations by the Contractor of work completed, further information from the Commission on negotiating developments and discussion of future work and the specific sectors to be assessed. This will entail a maximum of four meetings (one meeting at the start, and one after each report delivery).

C. Public meetings: The contractor will participate in public meetings organised by the Commission

(involving representatives of Member States, the European Parliament and Civil Society). It will present and explain work completed and provide the opportunity for interested stakeholders to provide direct input.

D. Electronic documentation

The contractor will maintain a web-site dedicated to the above project, with a link to the DG Trade web-site. All reports, outputs presented to the Commission and publication/documentation sources will be published by the contractor on this web-site. The web-site should incorporate a feedback function allowing all interested parties to provide input.

D. Deliverables:

D.1 Content of the reports: For each study, the two first reports (inception and midterm) should aim 1) to describe the state of play of the study and


2) to describe the way ahead and propose some further developments to be discussed with the Commission. The Commission draws the attention of the consultant to a necessity of transparency in reports which must include all the references, analytical paths needed to understand fully the outcomes and results of the study.

Inception report:

This inception report will provide the Commission with: A selective review of literature, list of tools and references to be used Set out the methodological approach and framework (including steps, links between

the different parts of the analysis) A preliminary screening exercise for the key sustainability issues/impacts associated

with the trade agreement Outlines of the contents for both the mid-term and final reports.

Midterm report:

The midterm report will summarise the work that has been undertaken on the project and its principal outcomes. In particular, it will describe

Implementation of the methodology: a summary of the process by which the methodology has been implemented for the qualified preliminary assessment

Information on communication activities : o Update of the web site and links to other web sites. Number of hits. o Consultations and dialogue with external experts and civil society:

summary of comments and suggestions received (via e-mail, web site comment function, ordinary mail, meetings etc.) and the uses made of these.

o Development of network of SIA experts: contacts undertaken, information supplied and comments received.

State of play of study underway, main outcomes regarding the screening / scoping phase

The way ahead to complete the study, questions, methodological issues

Final report:

The final report will entail the following elements The methodology used for the qualified preliminary assessment Refinement of the methodological framework to be used for the full Phase III SIA The outcomes and results of the qualified preliminary assessment Identification of sectoral studies to be undertaken, with budget indications Communication actions, networking Conclusions References and key sources


D.2 Timing:

Deliverables as defined in Annex 5 of the framework contract, will be produced in accordance with the following timetable:

Inception report Midterm Report Final report

15.07.2002 18.11.2002 17.03.2003


2.2. DETAILS OF COMMENTS AND SUGGESTIONS RECEIVED Comments made at public meetings on the project inception and mid-term reports held by the European Commission are summarised in Boxes 2.1 and 2.2. Box 2.1. Observations made by participants at the public meeting on the project inception reports, 25 July 2002 The SIA seems to be a study of trade developments as they are currently happening, and not of the alternatives.

Island states are not covered. Response: they are covered directly in part, e.g. with reference to the Caribbean in the Competition study. They are indirectly covered through attention to particular vulnerabilities.

The study should link to parallel research on development issues, particularly in relation to agriculture, which provides the livelihoods of 80% of people in developing countries.

Textiles. Request for specific studies of particular chapters of the HS. Request to include study of Brazil. Attention should be paid to environmental and social linkages. Non-tariff Barriers to Trade present important issues which should be addressed. Evaluate the effect of negotiations on the EU’s preferential treatment policy, particularly in relation to the poorest countries.

Pharmaceuticals. The study needs to cover the entire supply chain. Non-tariff barriers are important, e.g. import licensing in China. More attention is needed to social effects.

Export restrictions and export duties have major effects which should be evaluated in parallel with tariff escalation. Linkages to competition policy, dispute settlement and export subsidies should also be examined, and environmental services are also relevant.

Similar issues arise in relation to non-ferrous scrap in Russia.

Agriculture is by far the most important sector. Considerable attention should be given to each component of the agriculture sector, e.g., livestock, cereals, fisheries etc.

Requests to look at forestry and investment.

Box 2.2. Observations made by participants at the public meeting on the project mid-term reports, 12 December 2002 Market access for non-agricultural products. Request for scenario to be more similar to the EU’s WTO submission, particularly in relation to special and differential treatment.

Request for further consideration of metal scrap recycling.

Discussion of the effects of price-sensitivity of products.

Non-tariff barriers. Discussion of M&E measures on customer-related trade facilitation.

Textiles. Observation that sate owned Chinese companies are unprofitable, which should be taken into account.

Request that export restrictions should be specifically assessed, particularly in relation to leather goods.

Requests for detailed SIAs on agriculture, trade and investment, and sustainable development issues in developing countries.

Competition policy. Consider interactions with corporate social responsibility.

Observation that national treatment has had the opposite effects in Zambia from those reported for China and India.

Developing countries do not have the capacity for successful prosecutions on anti-competitive practices.

Request to examine links to EU policy in relation to regional trade agreements.

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