Trade SIA in support of negotiations
on a plurilateral Trade in Services
Agreement (TiSA)
Draft Interim Report
Civil Society Dialogue
Nora Plaisier, Joseph Francois, Miriam Manchin,
Erik Merkus, and Stephanie Bouman
Brussels, 13 January 2017
1. Overall approach
2. Economic analysis
3. Social analysis
4. Environmental analysis
5. Sector selection
6. Consultations
7. Next steps
Agenda
Methodology applied
Overall approach
Case studies
Sector studies
Conclusions
and
recommendations
Preliminary in-depth
economic, social, human
rights and
environmental
analysis
Executing the
consultation plan
Screening and
scoping
Outlining
methodological
approach
Outlining consultation
plan
Preliminary screening
and scoping
Inception report Final report Interim report
Input, feedback, comments from stakeholders
Overall approach
Six methodological pillars applied
Study phase
Pillar 1
Screening/ scoping
Pillar 2 Gravity, CGE &
Scenario
Pillar 3
Additional analysis
Pillar 4
Sectoral analysis
Pillar 5 Causal Chain
Analysis
Pillar 6
Consultation & Dissemination
Inception X X X
Overall sustainability analysis
X X X X X
Sectorial analysis X X X X
Policy recommendations and flanking measures
X X
Economic analysis
Economic analysis
• We work with WB data (Service Trade Restrictiveness Index (STRI)).
• We apply a gravity analysis to calculate coefficients related to applied
policies (AVEs calculated by the WB) and to binding overhang (WB STRI
for bindings). This gives us price elasticities, and volume elasticities.
• These two coefficients let us determine the additional trade cost
equivalent (as an AVE) needed to give us the same volume effect as a
change in overhang.
• On average, the results of the analysis show that exporters are expected
to respond to more secure market access (by means of binding policies)
as if trade costs fell by 3.4 percent for OECD TiSA country’s markets and
5.8 percent for low and middle income country markets. This is effectively
the benefit of greater security of market access.
Challenge: measure the effect of reducing uncertainty related to
the binding overhang
Economic analysis
Scenarios and scope
Scenario A:
- TiSA countries commit to binding policies at current level of market access.
Scenario B:
- TiSA countries commit to binding policies at current level of market access;
- China, Vietnam, Malaysia, Philippines, Thailand also join TiSA.
• Outcomes provide a best estimate
• Due to data limitations, mode 3 and mode 4 not included in the
modelling, except to the extent that mode 3 and 4 commitments
(reduced uncertainty) would impact on mode 1 trade.
Economic analysis
EU macroeconomic effects – small but positive
Scenario A Scenario B
Real national income, % 0.1 0.1
Real national income, million € 8,645 11,461
GDP (quantity index), % 0.1 0.1
Consumer prices, % 0.0 0.0
Real wages of (%)
Low skilled 0.1 0.1
Medium skilled 0.1 0.1
High skilled 0.1 0.1
Terms of trade, % 0.0 0.0
Real household consumption, % 0.1 0.1
Exports, % 0.2 0.3
Imports, % 0.2 0.3
Economic analysis
Other country’s macroeconomic effects – TiSA participants
0.0
0.0
0.0
0.2
0.0
0.1
0.1
1.2
0.1
0.0
0.0
0.5
0.0
0.1
0.1
0.0
0.0
0.0
0.1
0.1
0.1
0.0
0.0
0.0
0.0
0.2
0.0
0.1
0.1
1.4
0.1
0.0
0.0
0.6
0.0
0.1
0.1
0.1
0.0
0.0
0.2
0.1
0.2
0.0
-0.2 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6
Australia
Canada
Chile
Taiwan
Colombia
CostaRica
EuropeanUnion
HongKong
Israel
Japan
Korea
Mauritius
Mexico
NewZealand
Norway
Pakistan
Panama
Peru
restofEFTA*
Switzerland
Turkey
UnitedStates
Realnationalincome,%change,2025benchmarkyear
experimentB experimentA
Economic analysis
Other country’s macroeconomic effects – third countries
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.0
0.0
0.0
0.1
0.0
0.0
0.0
0.0
0.0
-0.1
0.0
0.1
0.0
0.0
0.0
0.0
-0.2 -0.1 0.0 0.1 0.2
Brazil
China
Cambodia
India
Indonesia
Laos
Malaysia
Morocco
Paraguay
Philippines
Russia
Singapore
Thailand
Uruguay
Vietnam
EUneighbors
RestotASEAN
leastdevelopedcountries
Restofworld
Realnationalincome,%change,2025benchmarkyear
experimentB experimentA
Economic analysis
• Exports and imports of all ‘TiSA participants’ are estimated to
increase under both scenario A and B
• Largest changes for Mauritius (1.4 - 2.7 percent and Hong Kong
(1.3 – 2.1 percent). Trade of other TiSA participants grows on
average between 0.1 and 0.8 percent.
• Countries reaping the highest benefits in terms of real national
income increases are also the countries which are estimated to
have the highest increase in their trade
• Terms of trade changes are rather small for most countries,
below 0.05 percent
Changes in trade – TiSA participants
Economic analysis
Effects on real wages – TiSA participants
Economic analysis
• Sectoral effects are relatively small for both scenarios.
• Services sectors affected most as expected, mainly positively.
Largest increase in the insurance sector (0.2 percent), the sector
transport services by water contracts (-0.3 /-0.5 percent).
• Manufacturing and agricultural output predicted to increase only
little. Largest change in the motor vehicle sector (0.1 percent).
• Changes in sectoral employment are in general in line with
sectoral output changes. Reallocation ratio between 0.04 and
0.08 percent.
• EU exports and imports are expected to increase for all sectors,
with the exception of water transport services.
EU sectoral effects
Social analysis
Social analysis
General approach
• Baseline analysis – Current situation with regard to key social indicators for each TiSA
participant is presented
• Quantitative impact analysis – Discussion of the CGE results on social indicators
• Case studies – Selection of 5 case studies to analyse in-depth social issues in
selected in TiSA countries.
• Human rights impact analysis – Qualitative analysis of the expected impact of TiSA on human rights (in
the EU)
Social analysis
Baseline:
• Indicators have been chosen with respect to applicability,
comparability, and country coverage. ILO, OECD, and UN are
main sources: – Employment indicators (KILM);
– Wage and social protection indicators (ILO and ILOSTAT);
– Poverty and inequality indicators (KILM and World Bank).
Impact indicators:
• CGE indicators that will be presented are: – Wage effects;
– Consumer price effects;
– Labour displacement per sector
Indicator based assessment
Social analysis
• Employment: Chile, Colombia, Mauritius and Turkey are in the
bottom 33 percent for almost every indicator
• Australia and Iceland have the highest minimum wage (≈€1,650),
while lowest minimum wage is in Pakistan (€86)
• Mexico, Costa Rica and Colombia score lowest when looking at
social protection
• Colombia, Mexico, Costa Rica, Panama and Peru have low
performance on the poverty and inequality indicators
Quantitative baseline scenario – some facts
Social analysis
• More than half of the TiSA participants have ratified all ILO
Fundamental Conventions
• Only three countries have defined a Decent Work Programme
(Chile, Costa Rica, and Pakistan)
Qualitative baseline analysis – some facts
Social analysis
• Impacts directly stemming from provisions, but:
–No sustainable development chapter foreseen
–Based on EU proposals, offers and statements, no negative
impact expected on public services or right to regulate in the
EU.
• Indirect effects, stemming from economic impacts.
Impact assessment: Channels of impact
Social analysis
Quantitative impact analysis - EU
• Real household consumption and real wage changes for the EU
are around 0.1 percent
• Labour displacement in EU is lower than 0.1 percent
• Consumer prices in the EU are not expected to change
Social analysis
Quantitative impact analysis – TiSA participants
Country Value Rank Value Rank Value Rank Value Rank Value RankAustralia 0,0 0,0 0,0 0,1 0,0
Canada 0,0 0,0 0,0 0,0 0,0
Chile 0,0 0,0 0,0 0,0 0,0
Chinese Taipei -0,1 0,2 0,0 0,3 0,1
Colombia 0,0 0,0 0,0 0,0 0,0
Costa Rica 0,0 0,1 0,1 0,1 0,1
European Union 0,0 0,1 0,1 0,1 0,1
Hong Kong China 0,1 0,9 0,8 1,0 1,1
Iceland 0,0 0,2 0,2 0,1 0,1
Israel -0,1 0,1 0,1 0,3 0,1
Japan 0,0 0,0 0,0 0,0 0,0
Korea 0,0 0,0 0,0 0,1 0,0
Liechtenstein 0,0 0,2 0,2 0,1 0,1
Mauritius -0,8 0,4 0,4 0,9 0,1
Mexico 0,0 0,0 0,0 0,0 0,0
New Zealand 0,0 0,1 0,1 0,1 0,1
Norway 0,0 0,1 0,1 0,0 0,1
Pakistan -0,3 -0,4 -0,2 0,6 0,0
Panama 0,0 0,0 0,0 0,0 0,0
Peru 0,0 0,0 0,0 0,0 0,0
Switzerland 0,1 0,1 0,1 0,0 0,1
Turkey 0,1 0,1 0,1 0,1 0,2
United States 0,0 0,0 0,0 0,0 0,0
Effect (CGE) indicatorsC o nsumer prices H igh skilled wages M edium skilled wages Lo w skilled wages GD P
Social analysis
• Causal chain analysis: Establishment of links between the
baseline indicators and the changes reported in the CGE model: – Employment indicators: GPD and wages
– Wage indicators: wages
– Poverty and inequality: consumer prices and wages
• Selection based on: – Overview of most interesting linkages between social themes and TiSA
participants
– Discussion with the Steering Committee
Case study selection
Gender equality in the EU
Consumer effects in the EU
Poverty and inequality in Panama
Employment in Mexico
Wages in Korea
Social analysis
Human rights analysis
• Three documents used in framework for analysis: – EU guidelines on human rights impact assessments,
– Ecorys proposal and approved Inception Report,
– DG Trade Handbook for conducting Trade Sustainability Impact
Assessments.
• The human rights that warrant further investigation because of
potential impact from TiSA are: – Human right to health;
– Human right to access to health care;
– Human right to an adequate standard of living;
– Human right to work;
– Human right to education;
– Human right to information;
– Human right to the protection of personal data.
Social analysis
• Positive albeit small impact on right to an adequate standard of
living and the right to work
• Civil society organisations express concerns on the right to
health, the right to health care and the right to education.
Reservations made in the EU’s offer will be important.
• Right to information: transparency of negotiations could be
improved
• No official position of EU in negotiations regarding the issue of
data flows in negotiations, but commitment that EU data
protection and privacy rules will not change.
Human rights effects
Environmental analysis
Environmental analysis
1. Indicator-based baseline description;
2. Quantitative assessment;
3. Qualitative analysis ;
a. Trade in environmental services;
b. Screening and scoping;
c. Country-specific case studies.
General approach
Indicator-based
comparison of all
TiSA participants
Scale and
composition
effects (air
pollution) based
on CGE results
Qualitative
analysis
Review of trade in
environmental
services
Screening &
scoping Links of
issues and TiSA
effects
Case study
specific impact
assessment
Environmental analysis
• Both Pakistan and Israel currently have a much higher consumption
of water than available to them through natural replenishment (334%
and 261% respectively)
• Countries with high particulate matter exposure and a resulting
negative environmental effect are Pakistan, Korea, Hong Kong
China, and Taiwan
• Mexico, Peru, and the US rank highest in the number of endangered
species
• Panama, Peru and Costa Rica have the lowest percentage share of
population services by municipal waste collection (
Environmental analysis
• Sector emission coefficients: WIOD data on sector emission
matched with CGE sectors, projected percentage output change
and increase in total GDP
• Metals, transport services, agriculture, and construction are
impacted most in absolute changes
• Overall change in emission of air pollutants as a results of TiSA is
minimum (0.0 percent). Some large changes are expected in
Taiwan (0.0 - 0.9 percent)
Quantitative impact analysis
Environmental analysis
• Sum of scale effect and composition effect yields the total TiSA-
induced change in emissions
• Composition effect largely off sets the scale effect in the case of
all emissions
Quantitative impact analysis
-5,000
-4,000
-3,000
-2,000
-1,000
-
1,000
2,000
3,000
4,000
5,000
CO2 CH4 N2O NOX SOX CO NMVOC NH3
Th
ou
san
ds
Composition effect Scale effect Total effect
Environmental analysis
Qualitative impact analysis: benefits and concerns
Benefits (Stakeholder) concerns
Trade liberalization is vital in accelerating the
diffusion and uptake of environmental goods
and services
Inclusion of (semi-) public sector services in TiSA could decrease a government’s control over the quality of water and waste management services
These benefits accrue mostly to the developing countries, but developed countries can benefit economically by providing these services
TiSA may limit and possibly ban the return
to public control of privatised services
TiSA may increase the bargaining power of private economic interest
Environmental analysis
• Causal chain analysis: Establishment of links between the baseline
indicators and the changes reported in the CGE model
Case study selection
Issue Impacts of TiSA derived from CGE model (in percentage changes)
Reasoning
Water Agriculture, forestry, fishing Textiles Industry: Metals; Lumber, wood and paper
Agriculture is the most important water consumer. Textiles production can significantly contribute to water pollution.
Air pollution Industry, Transport Industry and transport are the main air pollution sources.
Climate change CO2 emissions CO2 is the most important greenhouse gas contributing to climate change.
Ecosystems & biodiversity
Agriculture, forestry, fishing Land use (Natural resource intensity)
Fisheries affect fish stocks and maritime ecosystems / biodiversity. Agricultural output and land use are closely related, both leading to pressure on natural habitat and thus affecting
ecosystems and biodiversity.
Waste GDP Waste production often increases with GDP.
Environmental analysis
• Selection based on: – Overview of most interesting linkages between social themes and TiSA
participants
– Discussion with the Steering Committee
Case study selection
Solid waste management and
FDI in and by the EU
Climate change indicators in
the EU
Air pollution and TiSA impact in
Costa Rica
Waste water treatment and TiSA
impact in Pakistan
Ecosystem and biodiversity in
Japan
Sector selection
Sector selection
• Based on 5 criteria and discussion with the Steering Committee – Initial importance for the economy
– Expected economic impact from TiSA
– Expected social, human rights and environmental impact from TiSA
– Stakeholder issues
– Importance in the negotiations
• Equal weighting of criteria
Screening and scoping
Sector selection
Output Export value Import value Low skilled
employment Medium skilled
employment High skilled employment
Sector Value Points Value Points Value Points Value Points Value Points Value Points
Water Transport -0.3 3 -0,2 1 0.4 1 -0.3 3 -0.3 3 -0.3 3
Air Transport 0.0 0.0 0.1 0.0 0.0 0.0
Other Transport 0.0 1 1.7 2 2.5 2 0.0 1 0.0 1 0.0 1
(Tele)communications
0.0 1 0.0 1 0.2 1 0.0 1 0.0 1 0.0 1
Trade (distribution) 0.0 1 0.3 1 0.6 1 0.0 1 0.0 1 0.0 1
Finance 0.1 2 4.2 3 4.2 3 0.0 1 0.0 1 0.0 1
Insurance 0.2 2 1.5 2 1.7 2 0.2 2 0.2 2 0.2 2
Business, professional services
0.0 1 0.4 1 0.6 1 0.0 1 0.0 1 0.0 1
ICT services 0.0 1 0.9 1 1.4 2 0.0 1 0.0 1 0.0 1
Construction 0.0 1 0.5 1 1.6 2 0.0 1 0.0 1 0.0 1
Personal Services 0.0 1 0.8 1 1.6 2 -0.1 2 -0.1 2 -0.1 2
Public Services 0.0 0.0 0.1 0.0 0.0 0.0
Sector selection
Sector
Criterion 1
Importance for the EU economy
Criterion 2
Expected economic impact
Criterion 3
Expected social / env. impact
Criterion 4
Stakeholder importance
Criterion 5
Importance in negotiations
Total
Water Transport 1.00 2.33 3 3 3 2.47
Other Transport 2.67 1.33 2 1 3 2.00
(Tele)communications 1.67 1.00 1 3 3 1.93
Trade (distribution) 3.00 1.00 1.5 1 1 1.50
Finance 2.67 1.83 1.5 1 3 2.00
Insurance 1.67 2.00 2 3 3 2.33
Business, professional services
3.00 1.00 1 1 1 1.33
ICT services - 1.17 1.5 3 3 2.17
Construction 1.33 1.17 1.5 1 1 1.20
Personal Services 2,00 1.67 1 2 1 1.53
Water transport ICT and telecommunications
Finance E-commerce
Insurance
Sector selection
• Four steps: – Analysis of the baseline situation;
– Analysis of market access conditions;
– Assessing the impact of TiSA;
– Conclusions and recommendations.
• Methods complementary to CGE: – Review of data and literature;
– Review of relevant legislation and regulation in the sector;
– Causal chain analysis;
– Survey to help in assessing the impact on business and SMEs in
particular;
– Interviews with stakeholders.
Approach to the sector studies in the final report
Consultations
Consultations
• Outreach: – Website: www.trade-sia.com/tisa
– Facebook, Twitter, LinkedIn
– Newsletters
– Email address: [email protected]
• Gathering input: – Civil Society Dialogue meetings
– Survey (open until 27 January 2017)
– Interviews
Activities conducted up to date
Some statistics
Over 17,000 website visits
≈ 70 percent are new visitors
Majority stems from Brussels
Peaks during newsletter/report
publication
http://www.trade-sia.com/tisahttp://www.trade-sia.com/tisahttp://www.trade-sia.com/tisamailto:[email protected]
Consultations
• Continuous updates on the communication platforms
• Civil Society Dialogue – Draft final report
• Interviews with stakeholders
Future consultation activities
Next steps
Next steps
Activity Deadline
Civil Society Dialogue meeting 13 January 2017
Deadline for providing comments draft Interim Report 27 January 2017
Closure of the stakeholder survey 27 January 2017
Publication Interim Report February 2017
Publication of the draft Final Report April 2017
Civil Society Dialogue meeting April 2017
Deadline for providing comments draft Final Report May 2017
Publication of the Final Report June 2017
Input, comments, or feedback can be send to [email protected]
Any questions?