Frequently Asked Questions (FAQ)

What is Sustainability Impact Assessment (SIA)?

How does sustainability fit into EU policy-making?

How does sustainable development fit into trade policy?

Why do we need Sustainability Impact Assessments?

What trade negotiations are SIAs being applied to?

How has SIA been developed?

What are the key principles in implementing a SIA?

How does the SIA methodology work in practice?

What is the methodology used for the EU-ACP SIA? Is this the same as the other SIA?

Which sectors studies have been conducted? How have sectors for in-depth studies been selected?

Who is consulted during a SIA?

What are the sustainability indicators used to measure economic, environmental and social impacts?

What does the Commission do with SIA outcomes?

How does SIA improve governance?

Is anyone else carrying out SIAs?

What are Economic Partnership Agreements (EPAs)?

How can ACP countries promote economic growth and sustainable development through trade?

Which countries are negotiating EPAs?

What do Africa, Caribbean and Pacific countries gain from Economic Partnership Agreements (EPAs)?

Why should regional agreements work any better than the existing arrangements?

Why ask ACP regions to liberalise their tariffs?

How will the ACP replace the revenues they lose by reducing tariffs and continue to pay for public services?

Why should EPAs include rules related to investment?

What are the timeframes for liberalisation?

What are the alternatives? Does the alternative to Cotonou have to be EPAs?

Will ACP countries get any more Aid for Trade money?

Could Cotonou Waiver be extended?

How was the SIA used by negotiators and other stakeholders? And how did the SIA impact influence EPA negotitations?

What is the link between the SIA and the EU development cooperation?

What are the results of the EU-ACP SIA?

What are the costs and gains showed by the SIA for the ACP countries?

Who has been consulted in the course of the EU-ACP SIA?

What is the EU Civil Society Dialogue and how was it involved within the SIA?

What is the role the ACP-EU follow-up committee of the European Social and Economic Committee and how was it involved?

Is there an SIA planned for monitoring the EPA implementation?

 

What is Sustainability Impact Assessment (SIA)?

An SIA is a process seeking to identify economic, social and environmental impacts of trade agreements. It also aims at devising policy packages to maximise positive impacts of trade and mitigate any negative consequences.

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

 

How does sustainability fit into EU policy-making?

The European Union is committed to promoting sustainable development as a key strategic of the EU Amsterdam Treaty, as well as other international decision-making processes in the UN system or the WTO.

Sustainable development was defined in the Bruntland Report entitled "Our Common Future" (1987) as: "development that meets the needs of the present without compromising the ability of future generations to meet their own needs". The idea was put on the map at the Earth Summit in Rio de Janeiro (1992), which launched Agenda 21. This is a comprehensive plan of action to be taken globally, nationally and locally by organizations of the United Nations System, Governments, and Major Groups in every area in which human activity impacts on the environment. Since then, the concept of sustainable development has emerged as a key element in policy-making. All involved have been asked to design policies good for economic growth, but also good for sustainability. Thus, they need to build in responsible management based on trade-offs between economic, social and environmental resources. And they need to be sensitive to non-immediate needs, in accordance with the Bruntland definition. Sustainable development is a key strategic objective in EU primary law (Amsterdam Treaty) as well as in international decision-making processes such as the UN Millennium Development Goals, follow-up to the International Conference on Financing for Development held in Monterrey (2002) and the preamble of the Doha Development Agenda currently being negotiated under the auspices of the World Trade Organisation (WTO).

 

How does sustainable development fit into trade policy?

Trade can (and should) contribute to economic growth, social development and environmental sustainability. But liberalisation can also have negative environmental and social effects.

Trade policy is an area in which decision-makers are expected to deal with complex clusters of issues, sometimes with conflicting objectives. International bodies such as the United Nations or the WTO recognise that trade can and should contribute to growth in ways that dovetail with the requirement of good governance and sustainable development principles. Trade opening can promote sustainable development. It can create opportunities for economic growth, for social development, for instance, through boosting employment for women in the tourism sector, or the environment, through better use of environmental resources. But liberalisation can lead to negative environmental or social impacts, particularly if the domestic regulatory framework is not properly geared up to it. The challenge is to maximise the positive side, and to minimise the negative.

 

Why do we need Sustainability Impact Assessments?

The European Union is committed to assessing the economic, environmental and social impacts of trade.

The European Union is committed to pursuing policies which are successful not just in trade terms, but which also bring about the biggest gains in welfare. We need to assess how trade opening affects environment and social development. SIA helps us to measure both the economic and the non-trade impacts potentially derived from trade agreements in a manner consistent with sustainable development. Civil society has actively sought more public debate on trade policy, especially since the failed WTO ministerial meeting in Seattle (1999). The European Commission decided that same year to initiate work on a methodology for sustainability impact assessment of World Trade Organisation multilateral trade negotiations.

The SIA aims to encourage trade that promotes economic, social and environmental sustainability.

The ultimate objective of the European Commission’s SIA programme is to help ensure that trade between the EU and the ACP Group of countries supports economic, social and environmental sustainability. Fundamental to the SIA is the premise that strengthened regional integration can be a tool for achieving sustainability.

The SIA should help ensure that the EPA negotiations take sustainable development into account.

The specific goals of the EU-ACP SIA are to:

• Enhance the analytical awareness and understanding of the negotiators of the links between trade liberalisation (and the EPAs in particular) and sustainability to ensure that the EPA negotiations take sustainable development fully into account.
• Contribute to research and policy efforts related to the EPA negotiations and to encourage negotiators to adopt positions that will promote sustainability in the EU and in the countries of the ACP.
• Help define, and provide input into, policy packages being developed by the EU and by the countries of the ACP to accompany EPAs to ensure that the outcome of the negotiations contributes to sustainable development.
• Increase transparency by developing a basis for the discussion with European and ACP stakeholders about sustainability implications associated with the negotiations.

 

What trade negotiations are SIAs being applied to?

The EU applies SIA systematically when entering into multilateral and bilateral trade negotiations.

The initial work on methodology was applied to the WTO Doha Development Round negotiations. Then the methodology was refined and applied to other negotiations, regional and bilateral, including those with Chile, Mercosur, African Caribbean Pacific countries, the Mediterranean, and the Gulf Cooperation Council countries. In 2007 the European Commission will also launch SIAs on other regional and bilateral negotiations including, inter alia, those with Ukraine, Korea, India, China, and the Andean Community.

 

How has SIA been developed?

The EU applies SIA systematically when entering into multilateral and bilateral trade negotiations.

The methodological approach and basis had to be developed from scratch, as most impact studies up until then had focused on either economic or environmental aspects. The aim with SIAs was to integrate three dimensions - economic, environmental and social - combined to cover all aspects of sustainable development. The Commission contracted consultants to develop a methodology and to carry out a preliminary assessment of WTO negotiations. SIA is now enshrined in a broader commitment endorsed at the European Council at Gothenburg (2001). The Commission’s Communication on Impact Assessment (COM 2002 276) introduced a comprehensive regulatory and assessment framework for all policy areas, including trade. Complementarities and synergies between Sustainability Impact Assessment and Impact Assessment will be developed further by methodological improvements.

The specific methodology for Trade SIAs is constantly reviewed to ensure trade policy is designed in a way that meets the requirements of good governance. A snap shot of the current methodology is provided in the EC Handbook for Trade SIAs, which is available from the European Commission website: http://trade.ec.europa.eu/doclib/docs/2006/march/tradoc_127974.pdf

 

What are the key principles in implementing a SIA?

These are the principles the European Commission has adopted to date:

• SIAs should be carried out for all major trade negotiations, multilateral and bilateral.
• All three pillars of sustainability, the economic, the social and the environmental, should be tackled.
• Where possible, impacts on third countries should be analysed as well as those on the EU.
• SIAs should be carried out in cooperation with third country partners.
• SIA should be based on transparency, with external consultations. All stakeholders should be given an opportunity to take part in the analysis of issues and impacts.
• Results of all SIAs should be made public.
• SIA should be carried out by external consultants selected by public tendering procedures. Consultants are independent. The EU stipulates only that they work in a transparent and rational manner and base their findings on scientific evidence.
• An internal consultation process should be set up to guide consultants. An inter-service steering committee involving all agencies and negotiators within the EU should ensure the relevance of the SIA process.
• Coordination with Member State experts and Members of the European Parliament is also part of the SIA process.
• More details on the methodology for trade SIAs are provided in the EC Handbook for Trade SIAs, which is available from the European Commission website: http://trade.ec.europa.eu/doclib/docs/2006/march/tradoc_127974.pdf

 

How does the SIA methodology work in practice?

There is no "one-size-fits-all" approach to SIA. But there are four steps for each:

• Screening: to determine which measures proposed on the trade agreement agenda may be excluded from appraisal because they are unlikely to give rise to significant impacts.
• Scoping: to determine the terms of reference. What components should be assessed? What appraisal methods and consultation procedures should be used?
• Preliminary Assessment: to determine the impacts associated with each measure and with the agreement as a whole. How significant will each of them be?
• Flanking measures (mitigation and enhancement analysis): to determine types of flanking measures which may reduce significant negative impacts that result from trade opening measures and enhance positive impacts on sustainable development. This is particularly important for developing countries and least developed countries.

 

What is the methodology used for the EU-ACP SIA? Is this the same as the other SIA?

In parallel with the EPA trade negotiations, the EU-ACP SIA was undertaken in three phases between December 2002 and December 2006. The overall methodology employed during the SIA, was developed during Phase I. It is similar to the methodologies used in other SIA studies, but needed to be adapted to the specific context of the ACP regions and the development context of the EPA negotiations. In Phases II and III the team employed the framework and undertook six sector studies on a range of issues, one in each of the ACP regional negotiating configurations. In this, Phase IV, the final phase of the SIA, the team seeks to disseminate to negotiators and stakeholders in the ACP and the EU, the fi ndings and recommendations developed through the sector studies.

The overall methodology is described in further detail on pages 46-51 of the SIA report and in the specific methodologies applied for the regional/sector studies is described in each sector study.

 

Which sectors studies have been conducted? How have sectors for in-depth studies been selected?

The EU-ACP SIA covers six sector studies in 6 different ACP regions:

• Horticulture in Eastern and Southern Africa (ESA)
• Rules of Origin in the Southern African Development Community (SADC) Group
• Financial Services in Central Africa
• Agro-industry in Western Africa
• Tourism Services in the Caribbean
• Fisheries in the Pacific

Other sectors such have also been assessed in other SIA studies as part of the SIA conducted on the ongoing Doha development agenda negotiations within the WTO (e.g., competition and environmental services in 2002-2003, agriculture, forestry, distribution services in 2003-2004 and fisheries in 2004-2005) or other regional SIA studies conducted by other consultants (e.g., agriculture, forestry and automotive in the EU-Mercosur SIA study).

These studies are available from the European Commission’s SIA website: http://ec.europa.eu/trade/issues/global/sia/studies.htm

The sectors studies were selected by the European Commission based on recommendations and proposals made by the SIA Consultant. As far as practically feasible, proposals for sector studies were presented and discussed with stakeholders at the EU Civil Society Dialogue meetings in Brussels and/or regional workshops in the ACP.

 

Who is consulted during a SIA?

The widest possible range of stakeholders. Consultation is carried out during each phase to ensure stakeholders of all kinds are aware of the process and understand it. Consultation is essential to ensure involvement and legitimacy in the use of SIA results. They also help to build in quality checks for results. Ways and means used to date include:

• Use of email to ensure continuous dialogue and flow of information between the contractor and stakeholders.
• Use of an international network of experts commenting on project reports.
• Use of dedicated websites to publish project reports, with facilities for submission of comments and contributions.
• Use of civil society dialogue meetings organised by the EU to discuss project reports and other relevant issues
• Attendance at relevant conferences on impact assessment to help put the SIA initiative in a wider context.

 

What are the sustainability indicators used to measure economic, environmental and social impacts?

A core group of indicators has been selected to identify the impact that further trade opening and changes in trade rules might have on sustainability. They have economic, environmental and social components and include variables such as average real income, employment, net fixed capital formation, equity and poverty, health and education, gender inequality, environmental quality of air, water and land, biological diversity and other natural resource stocks.

 

What does the Commission do with SIA outcomes?

The European Commission aims to integrate SIA results into its policy making. For each SIA, the European Commission prepares a paper, based on the contractors’ findings. It should define points of agreement and respond on disagreements. The paper considers what further analysis should be undertaken and what policy action should be implemented. Relevant flanking measures are identified and may include capacity-building and trade-related assistance initiatives, international regulation, use of trade and regional policy instruments within the EU. For each SIA final report, a position paper is drafted and discussed with Member States at the trade committee - the so-called "133 Committee", named after the clause on the common commercial policy in the Amsterdam Treaty.

 

How does SIA improve governance?

SIA contributes to international, European and national governance by ensuring EU policies are more coherent and appropriate, through open, consultative processes involving stakeholders and third countries in the EU’s trade policy analysis. Improving governance at all levels has been identified as a strategic objective by the European Commission in 2000.

 

Is anyone else carrying out SIAs?

Several methodologies intended to assess the impact of trade policy on the environment and sustainability have been developed outside the EU over the past decade. Two main approaches can be identified:

• The United States, Canada and Norway are carrying out National Environmental Reviews. These focus on environmental impacts mainly within the country. They are carried out by national agencies. They may entail internal consultation processes among the agencies involved, as well as formal external consultations.
• The United Nations Environment Programme and World Wildlife Fund have developed impact assessment methodologies based on a case study approach. These are typically ex post, assessing the effects of a policy already in place, rather than ex ante, anticipating the possible effects of a policy. They are carried out mainly at national level, in close cooperation with national organisations, universities and other agencies. These assessments integrate the three pillars of sustainability and typically include consultation and regional workshops.

 

What are Economic Partnership Agreements (EPAs)?

Economic Partnership Agreements are being negotiated between the European Union and 77 African, Caribbean and Pacific countries within the framework of the Cotonou agreement

The EPAs are being negotiated between the European Union and the African, Caribbean and Pacific (ACP) group of countries within the framework of the Cotonou Agreement.
The 77 countries that make up the ACP – developing countries, least-developed countries (LDCs), landlocked countries and small island developing states – face special challenges related to development. Thirty-eight ACP countries fall under the United Nations classification of LDC. Five LDCs are located in the Pacific region, one (Haiti) is in the Caribbean region and the remaining 32 are located in Africa. Most ACP countries are relatively weak in terms of their trading positions with the EU and the rest of the world. There is a high level of dependence on single commodities (often where international prices are falling) and low levels of regional integration, which aggravates supply-side constraints.

The EPAs will replace the Lomé Conventions’ trade preferences, which have been maintained temporarily.

The Cotonou Agreement replaced Lomé IV as a temporary measure in 2000 and includes similar non-reciprocal preferential access to the EU market for certain ACP agricultural and other goods, through to the end of 2007. Trade provisions in the Cotonou Agreement have been sanctioned by a waiver granted by the World Trade Organisation (WTO). ¹

EPAs will cover “substantially all trade”, be WTO compatible, and will require a degree of asymmetry.

The EPAs will be reciprocal, cover “substantially all trade” and will be WTO-compatible. They will take into account the level of development of the Parties and the particular economic, social and environmental constraints the ACP countries face in terms of their capacity to adjust to the new trading arrangements. This is required by Article 37(7) of the Cotonou Agreement which provides that, “on the Community side, trade liberalisation shall build on the acquis and shall aim at improving current market access” for ACP countries. The negotiations will be flexible in establishing the duration of a sufficient transitional period and in the final product coverage (taking into account sensitive sectors). This requires a degree of asymmetry in terms of the timetable and extent of tariff dismantling which, in turn, requires careful consideration of what constitutes “substantially all trade”.

Negotiations should be completed by 31 December 2007.

The EPA negotiations began in September 2002 and should be completed by 31 December 2007. The EPAs will be implemented between 2008 and 2020.

The EPAs will have a strong development component.

The EPAs are intended to have a strong development component and several of the principles governing the negotiations refer to the role that the EPAs can play in promoting sustainability. Because the EPAs are situated in the broader context of the Cotonou Agreement they are perhaps better suited than many trading arrangements to address sustainability challenges. The central objectives of ACP-EU co-operation as set out in the Cotonou Agreement are: “poverty reduction and ultimately its eradication; sustainable development; and, progressive integration of the ACP countries into the world economy” (Article 19).

 

¹Universal trade preferences for imports from all developing countries, as extended under the Generalised System of Preferences (GSP), are consistent with the General Agreement on Tariffs and Trade (GATT) under the Enabling Clause. The same is true for preferences granted to all LDCs (such as the “Everything but Arms” initiative). Specific trade preferences for limited groups of developing countries, such as those provided under the Lomé Conventions are not consistent with the GATT although in the past the WTO granted waivers, which allowed the EU to maintain these specific preferences.

 

How can ACP countries promote economic growth and sustainable development through trade?

The EPAs present the ACP countries with new opportunities to trade, improve investment and capital flows, and generate advances in technology (including information technology) to promote economic growth, development and raise the living standards of the people in the ACP regions. Whether or not these potential gains can be realised depends on, inter alia, improving competitiveness, productivity, horizontal diversification, vertical integration, the delivery of basic services, and improved infrastructure (such as transportation, communications and financial services).

 

Which countries are negotiating EPAs?

For the purposes of the EPA negotiations the EC and ACP have agreed to negotiate as six regional negotiating configurations: West Africa, Central Africa, Eastern & Southern Africa, the SADC Group, the Caribbean and the Pacific.

The member countries of each negotiating block are detailed in Table 1 below.

Table 1 Negotiating configurations for the EPAs

European Union (EU-27)	West Africa	Central Africa	Eastern and Southern  Africa (ESA)	Southern Africa	Caribbean	Pacific
				"SADC Group"
Austria	Benin	Cameroon	Burundi	Angola	Antigua & Barbuda	Cook Islands
Belgium	Burkina Faso	Central African Republic	Comoros	Botswana	Bahamas	Fiji
Bulgaria2	Cap Verde	Chad	Djibouti	Lesotho	Barbados	Kiribati
Cyprus1	Gambia	Congo	Eritrea	Mozambique	Belize	Marshall Islands
Czech Republic1	Ghana	Democratic Republic of Congo	Ethiopia	Namibia	Dominica	Micronesia
Denmark	Guinea	Equatorial Guinea	Kenya	South Africa3	Dominican Republic	Nauru
Estonia1	Guinea Bissau	Gabon	Malawi	Swaziland	Grenada	Niue
Finland	Ivory Coast	Sao Tomé & Principe	Mauritius	Tanzania	Guyana	Palau
France	Liberia		Madagascar		Haiti	Papua N. G.
Germany	Mali		Rwanda		Jamaica	Samoa
Greece	Mauritania		Seychelles		St. Kitts & Nevis	Solomon Islands
Hungary1	Niger		Sudan		St. Lucia	Tonga
Ireland	Nigeria		Uganda		St. Vincent	Tuvalu
Italy	Senegal		Zambia		Suriname	Vanuatu
Latvia1	Sierra Leone		Zimbabwe		Trinidad & Tobago
Lithuania1	Togo
Luxembourg
Malta1
Netherlands
Poland1
Portugal
Romania2
Slovakia1
Slovenia1
Spain
Sweden
United Kingdom

Notes: LDCs are presented in bold. EU member states that joined the EU after 2002 when the ACP-EU negotiations were launched are identified as follows:
¹ member since 2004;
² member since 2007.
³ In response to a proposal tabled by the SADC in March 2006, the EU Council of Ministers included South Africa in the SADC Group EPA negotiations on 12 February 2007, which was after the completion of Phase III of the SIA.

 

What do Africa, Caribbean and Pacific countries gain from Economic Partnership Agreements (EPAs)?

Put simply, after more than thirty years of bilateral trade with Europe, the ACP still exports just a few basic commodities, most of which fetch lower prices than they did twenty years ago. Old recipes have not promoted diversification, competitiveness, growth. And they are no longer compatible with WTO rules on non-discrimination and have been successfully challenged. New solutions are necessary and urgent.

The ACP-EU’s Economic Partnership Agreements are the agreements that the EU is negotiating with the six African Caribbean and Pacific regions that will replace the trade chapters of the Cotonou Agreement when the trade preferences of this agreement expire in 2008. EU and ACP countries have until that date to negotiate new agreements that are WTO compatible.

The EPAs are intended to be broad agreements, helping first of all to build regional markets and diversify economies in the ACP regions before opening up trade to build increased, balanced and sustainable trade between the two regions. They will change our relationship, from one that offers tariff preferences - an eroding lifeline - to one that builds lasting and more efficient regional and international markets for the ACP.

 

Why should regional agreements work any better than the existing arrangements?

Regional integration is at the heart of the ACP’s own development strategies. The fact is that ACP economies are too small to go it alone and most trade more with Europe than they do with their neighbours and more duties are paid on developing countries exports to other developing countries than to OECD countries. This means that regional integration has potential to boost local trade and create larger markets to attract trade and investment. Most ACP countries currently depend on their exports to the EU. Take the case of Ghana: 49% of their exports go to the EU, exports to its neighbour Benin only accounts for 2.6%. In Cameroon, 61% of exports go to the EU, and 55% of imports come from the EU. Eliminating barriers between neighbouring countries and creating real integration would favour trade exchanges and boost economic growth. It would also create bigger markets more attractive to investors and would facilitate trade with landlocked countries.

Where an ACP region is preparing for a customs union, as in the West and Central Africa, this will boost the potential of the EPA. Otherwise, the European Union does not push for customs union to be formed if the countries are not considering or not ready for it.

 

Why ask ACP regions to liberalise their tariffs?

Need to comply with WTO rules on non-discrimination.

The EC will negotiate the tariff reductions necessary for a WTO compatible Free Trade Agreement but this has to be on the basis of mutual agreement, not EU imposition. ACP countries and the EU have already agreed to revamp their trade relations and progressively remove barriers to trade between them. This is necessary to stop ACP marginalisation and contribute to ACP growth and poverty eradication. It is also a prerequisite if ACP-EU trade relations are to be legally secure by being compatible with the World Trade Organisation rules on non-discrimination.

Obtaining market access to ACP is not an EU interest.

The backdrop of this is that most of ACP exports to the EU already enter into Europe at zero tariff duty under a preferential treatment. EU products exported into the ACP, on the other hand, do not benefit from the same treatment. Obtaining such access to ACP markets is not an EU interest; the EU seeks only the treatment necessary to comply with WTO rules.

Obtaining market access to ACP is not an EU interest.

Nevertheless, the experience seen in emerging economies in Asia also shows that a progressive and targeted reduction of customs tariffs benefits consumers and companies (that need cheaper machinery, raw materials and parts for assembly) and local products become more competitive when exposed to well designed foreign competition.

The European Union has never proposed either a total elimination of tariffs, nor that ACP should open their markets as widely or as the EU has already done nor at reckless speed. It has also never proposed that the lowest applied rates by any ACP state become the basis for regional liberalisation, or for a single external tariff.

On the contrary, the EU has clearly said that long transition periods, a phased introduction of tariff dismantling, exemptions from liberalisation for sensitive products and a strong asymmetry between EU and ACP opening are perfectly acceptable and reasonable.

 

How will the ACP replace the revenues they lose by reducing tariffs and continue to pay for public services?

This question is not as acute as some would have it and answers are available. Replacing customs tariffs by other sources of fiscal revenue is a reform most countries have made because other fiscal revenues are more efficient both for the economy as a whole and the government.

A much better long term solution is to shift dependence from tariff revenues to fiscal revenues (through excise duties, sales taxes or taxes on revenues) but also by increasing the tax base through boosting trade and economic growth. These other forms of taxes are a more sustainable tax base to finance much needed basic social services such as health and education.

Some studies have overestimated the impact of tariff reduction on fiscal revenues, without considering other aspects. The assumption of rapid liberalisation on the ACP side is clearly mistaken. Current high tariffs encourage smuggling and corruption, and theoretical revenues are often lost through derogations and irregularities. Lower tariffs would reduce the incentive for these practises. Customs revenues would also increase by an increase in trade and these benefits would largely compensate the initial losses.

This said, the EU is ready to assist with fiscal reform and adjustment to any net fiscal losses observed as a result of EPAs and has the means to do so. The EU has increased budget support, which is the most appropriate way to assist in this transition. The EU has also expressed its willingness to discuss regional financing mechanisms to that effect.

 

Why should EPAs include rules related to investment?

Asia and Latin America are channelling foreign investment into the infrastructure and job creation their developing economies need. The October 2006 UNCTAD report on global investment in developing countries highlighted the extent to which Sub Saharan Africa in particular is falling far behind the rest of the developing world in attracting the foreign investment that is vital for development. Africa in particular is trapped by barriers to inward investment, nationalised industrial fiefdoms and fractured regional markets. Africa's own investors choose to invest outside of the continent.

One of the key ambitions of the Economic Partnership Agreements is precisely the creation of integrated regional markets that will help attract inward investment and keep African investment from flying abroad. The EU is prepared to help improving conditions in these economies for inward investment: clearer rules and rights for all companies. Policy frameworks at regional level will further help consolidating national markets and make them individually and collectively more attractive.

The UNCTAD report offers the clearest argument why EPA are a pro-development agenda. Those who dismiss the EU's position in these negotiations as 'forcing open' these markets to unwanted EU investment misrepresent the EU's intentions

 

What are the timeframes for liberalisation?

The European Union is not pushing a simple ‘liberalisation’ agenda. The EPAs aim at long transition periods for the ACP (certainly more than the 12 years used in other agreements) and will maintain exceptions for sensitive products – exceptions that Peter Mandelson has said he will defend in the WTO if necessary. Studies and experience show clear economic evidence that regional integration and trade liberalisation between the ACP countries themselves brings clear economic benefits. The idea that ACP countries are always threatened by imports is mistaken. In any case, it is healthy for countries, including developing economies, to take in new imports. These can be the very inputs necessary for local producers to develop and diversify away from the current dependence on commodities and into areas such as value-added industries. Although the EU is often accused of having an aggressive liberalisation agenda in ACP markets it is important to bear in mind that the EU exports to ACP markets represent a tiny fraction of its external trade, and most agricultural goods from the EU already enter at low or zero tariff rates. It has no mercantilist agenda in these markets. The EU has made clear that it will remove export subsidies on any product where the ACP removes tariffs.

 

What are the alternatives? Does the alternative to Cotonou have to be EPAs?

In theory, no. But there is simply no alternative that offers either the same development benefits or can improve on ACP market access to Europe. The WTO waiver covering the Cotonou preferences expires on 31st December 2007 and the EU can no longer continue these trade arrangements. This is one reason the ACP and EU agreed in the Cotonou agreement itself that EPAs are the best option. In the event any Least Developed Countries decides not to sign an EPA they can benefit from EBA but would lose out on all the regional integration benefits of EPAs. The EU gave a commitment to consider alternatives for any non Least Developed Country that indicated they would not sign an EPA. However, no country actually requested this and all continue to negotiate EPAs.

In 2006, ECDPM, ENDS and Oxfam international have published a report ‘Alternative (to) EPAs – Possible scenarios for the future ACP trade relations with the EU’ that evaluates alternatives to EPAs as possible scenarios for the future ACP trade with the EU. The study explores what options may be available to ACP countries to clarify the discussion.

This report is available from the ECDPM website: http://www.ecdpm.org/pmr11.

 

Will ACP countries get any more Aid for Trade money?

The ACP countries already benefit from substantial assistance through the European Development Fund and the EU budget: €1.6 billion over the period 2001-2005. On 16 October 2006 EU Ministers agreed to prepare a strategy setting out the delivery of €2 billion per year of further aid by 2010 to help developing countries put in place new trade policies to boost their growth and help them integrate into global markets. Very significantly, they agreed that a substantial part of this increase in aid will be specifically targeted to African Caribbean and Pacific countries, with a priority given to measures that help put in place Economic Partnership Agreements.

The money will be available to help countries prepare new structural reforms and trade policies, adjust to the changes they bring and enhance infrastructure and competitiveness to seize trade opportunities. It will be delivered through a combination of international partnerships, EU and Member States' development programmes.

 

Could Cotonou Waiver be extended?

There is no realistic alternative to EPAs that has the same content and potential. If negotiators fail to put a new system in place we would have to fall back on the only legal alternative which is the EU's existing Generalised System of Preferences: this is tariff only with less generous access than under Cotonou for many and no economic governance framework. For the West Africa region, for example, more than €1 billion of trade would potentially be lost, as the average tariff to be paid under GSP is in average 20%. 36% of today exports from Ivory Coast (€700 million) would face a tariff of 27% against 0% under Cotonou and EPAs, for Ghana it is 25% of exports (€240 million). For Central Africa, about €360 millions of exports would potentially be lost.

Could we not negotiate with other WTO members to extend the existing waiver beyondseven years? In practice, this would be extremely unlikely. The WTO waiver for the EPAs to be negotiated was obtained on a time-limited basis. Extending it is not an option. The idea of a new waiver sometimes comes up. But those who know the WTO will know that it's far from clear we could even obtain a new waiver. It wasn't in the deal at Doha in 2000. Non-ACP developing countries, some of whom are actually poorer than some ACP countries, already resent the favourable discriminatory benefits we provide the ACP.

The original Cotonou waiver was only secured by agreeing to cuts in the preferential access granted to ACP countries. If we were to obtain a new waiver extension a hefty price would be paid in the form of further ACP preference erosion. The best we could hope for would be to secure more years of a failing agreement and we would secure it on weaker terms, with ACP countries paying the long term price.

 

How was the SIA used by negotiators and other stakeholders? And how did the SIA impact influence EPA negotitations?

As EPA negotiations are still ongoing it is too early to fully respond to this question.

Also, it is difficult to demonstrate a causal link between recommendations made in the SIA and the ongoing ACP-EU EPA negotiations. In several areas there are parallels between recommendations in the SIA and policies being pursued in the negotiations. This is consistent with the fact that the SIA was conducted with significant public participation, including a dialogue with negotiators. However, it is also clear that the SIA has had an influence on the thinking of some negotiators.

Negotiators in the EU have used the SIA for a variety of purposes.

Negotiators in the EU have used the SIAs for a variety of purposes. The sector studies have been used as background information for individuals from the EU and from the ACP regions, in putting together presentations on the EPAs, writing speeches, and addressing the sustainability elements associated with the EPAs. The SIAs have thus helped to raise awareness in areas that are relevant for the negotiations. All perspectives and inputs from outside experts are considered useful in considering the broad range of issues, including environmental, social and development issues, which will be included in the EPAs.

The SIA has been used by negotiators and stakeholders in the ACP regions.

The studies have also been used by relevant negotiators and stakeholders in the ACP regions. For example, the SADC Group study on RoO has been circulated to meetings of stakeholders and negotiators in the ACP regions and used as a background document for workshops that are unrelated to the SIA. In that case the SIA was ground-breaking as the link between rules of origin and sustainability in the context of the EPAs had not been studied and the sector study encouraged a new avenue of discussion. The Central African sector study on financial services has been used as the basis for a meeting with ACP negotiators in Brussels. The Caribbean sector study on tourism services is familiar to the ACP negotiators and to stakeholders in that ACP region and has been on the agenda at several fora since it was initially written.

The SIA has reinforced the importance of existing debates.

In some cases the SIA reinforced the importance of existing debates. For example, the West African sector study recommended that specific products be classified as “sensitive”. There will be a schedule of sensitive products included in the EPAs, although there is no consensus on how they should be defined. What is clear, is that the mandate to liberalise “substantially all trade” will fall somewhere around the 80 per cent mark, which is consistent with the scenario employed in the SIA. It is also likely that there will be safeguards included in the EPAs. While this is standard practice in trade agreements, it is not clear whether the safeguard provision could be triggered by sustainability concerns (in addition to trade-related concerns), as recommended in the SIA.

The SIA can help set priorities for trade-related infrastructure and development.

The SIAs can help define priorities for development that may be included in the EPAs. For example, the focus on infrastructure in the SIAs and the cross-cutting issues developed throughout the sector studies suggested priority areas for trade-related infrastructure development, which can be pursued through development cooperation in conjunction with the implementation of the EPAs.

The SIA has highlighted issues related to regional integration.

Several factors recommended in the SIA contributed to the discussion surrounding regional integration. This included clear priorities such as adopting a CET in Western Africa, for example, but extended to recommendations such as developing economic and industrial policies at the regional level in areas including agriculture, textiles and tourism. Moreover, the SIA highlighted key points associated with the EPAs and regional integration in terms of ensuring the general compatibility of trade rules to promote regional integration and the effective operation of those rules. There was also a common recognition that the collection of statistical data should be enhanced at the regional level.

The SIA has highlighted relevant institutional measures.

As with trade-related measures, institutional discussions may not flow straight from the SIA into the EPAs. However, the approach suggested in the SIA has been part of a discussion that could lead to a new institutional arrangement to monitor the implementation of the EPAs. The extent that such a body would include permanent links to vital interests in civil society is not yet clear. It is also likely that trade-related groups could be established to facilitate on-going cooperation among the parties in order to implement the EPAs. The further cooperation in areas such as trade facilitation or standards and accreditation that are recommended in the SIA could help provide initial agenda items for a comprehensive and far-reaching agenda for these groups.

The SIA has inspired debate and has been part of the discussion.

The SIA has inspired debate and has been part of the discussion among negotiators and stakeholders from civil society. It has been useful in order to increase awareness, engage stakeholders, raise the level of dialogue and encourage discussion both in the EU and at regional workshops in the ACP regions. This has resulted in the fact that the SIA and its component sector studies have been used and quoted by NGOs in various statements and reports, which have helped raise awareness and added to the discussion about the EPAs and the SIAs and helped disseminate its findings and recommendations.

 

What is the link between the SIA and the EU development cooperation?

The SIA is useful to help set and/or reinforce the agenda for development co-operation.

Althought the SIA is a initiatives conducted under the leadership of the European Commission Directorate for Trade, the results of the SIA have been used to help set and/or reinforce the agenda for development cooperation aimed at improving levels of competitiveness and infrastructure. The SIA has served as a vital starting point for identifying issues and mechanisms to encourage the sustainable development component of the EPAs. The sustainability aspects are linked to development and core environment and labour standards and the message that social and environmental standards should not be neglected is an important one. Environmental and social chapters negotiated in the context of the EPAs should correspond to regional sustainable development objectives, including those identified in the SIA and a call for the improved observance and enforcement of environmental and social standards.

 

What are the results of the EU-ACP SIA?

The SIA of the EU-ACP EPAs has yielded several conclusions and recommendations for negotiators and other stakeholders that can help ensure that the EPAs promote development that supports economic, social and environmental sustainability.

Twelve recommendations are highlighted. They reflect the body of work that has been undertaken through case studies in key sectors (one in each of the ACP regions represented in the negotiations), which included extensive consultation with negotiators, experts, and relevant stakeholders in civil society in the EU and in the ACP regions. They are considered to be broadly relevant for the diverse regions and countries of the ACP.

Regional integration:

• Regional integration (recommendation #1). The EU and ACP countries should strive to ensure coherence between EPA negotiating configurations and overlapping efforts at regional integration and should ultimately pursue, at regional level, strategies for developing key economic sectors and for promoting sustainability.

Trade measures

• Market access - tariffs in the EU (recommendation #2). All ACP countries should retain duty free and quota-free access to the EU market and access to the EU should be improved for the few products not yet fully liberalized.
• Market access - tariffs in the ACP countries (recommendation #3). To mitigate potential negative impacts of reciprocity and encourage positive impacts, negotiators should classify some products as “sensitive” and ensure that there is an appropriate safeguard provision in the EPA taking into account the goal of promoting sustainability.
• Rules of orgin (recommendation #4). Negotiators should explore policy options to simplify and relax rules of origin that will encourage increased trade in transformed products.
• Trade in services (recommendation #5). Negotiators should increase commitments in the services sectors examined in this SIA to improve certainty and transparency, and encourage trade, and support sustainable development.
• Foreign Direct Investment (recommendation #6). The EPAs should contribute to a stable climate for Foreign Direct Investment (FDI) and encourage FDI and regional investment that support sustainability through, inter alia, including means of cooperation to achieve compliance with environmental and social regulations at the national level by foreign investors.
• Standards and accreditation (recommendation #7). EU-ACP cooperation on standards should focus on addressing obstacles to trade, maintaining high levels of protection for consumers and the environment and assisting ACP countries to develop their own national and regional approaches to Sanitary and Phytosanitary Measures (SPS) and technical barriers to trade (TBT).
• Trade facilitation (recommendation #8). The EU should engage in ongoing cooperation with the ACP on several areas related to trade facilitation, including, inter alia, customs, transportation, technology, business information and human resources.

Measures to promote sustainable development:

• Diversitification and inceased value added (recommendation #9). Development cooperation should focus on priority needs for diversitification of production and exports towards higher value-added products, with an emphasis on reinforcing economic and industrial sectors impacted by the EPAs, while ensuring the sustainability of new development.
• Data collection on trade and sustainability (recommendation #10). Development cooperation should focus on technical cooperation and assistance to collect information and data on trade and sustainability to support sound policy development.
• Capacity building (recommendation #11). Development cooperation should focus on capacity building to promote sustainable development in both the private and public sectors with an emphasis on training, research and development, and a sound regulartory framework.

Institutional mechanisms and oversight:

• Institutional mechanism to monitor implementation (recommendation #12). A permanent institutional mechanism should be developed to monitor the implementation of the EPAs from the perspective of economic, environmental and social sustainability.

 

What are the costs and gains showed by the SIA for the ACP countries?

Due to a lack of consistent and reliable data across the ACP it was not possible to perform quantitative assessments of the welfare costs and gains of the EPAs within the scope of the SIA. However, some sectoral studies such as the study on tourism services in the Caribbean, the study on the horticulture sector in Eastern and Southern Africa and the study on agro-industry in West Africa employed economic modeling techniques to quantify the impacts of like EPA scenarios. The detailed results are provided in each sector / regional study.

 

Who has been consulted in the course of the EU-ACP SIA?

Stakeholder participation was an important element of the SIA process.

Stakeholder consultation and public participation was an important element of the SIA was throughout the process to disseminate information, raise awareness, increase transparency, and ensure that the work is relevant and responds to the major concerns of stakeholders. This involved the development of a sustained dialogue with stakeholders, in a range of fora, about issues related to sustainability and the EPAs.

Stakeholders were involved through various means: electronic mechanisms such as a dedicated Internet website or electronic discussion groups; stakeholder workshops in the EU and ACP regions to present and discuss the preliminary findings of the SIA.

Over the four-year period, the SIA consortium made presentations at more that 30 meetings bringing together a broad range of stakeholders including trade negotiators and experts as well as representatives from private sector, trade unions or non-governmental organisations (NGO) in the EU and across the ACP.

More details on public participation are provided on pages 48-51 of the final report. More details on meetings attended to consult with EU and ACP stakeholders are provided on the website: http://www.sia-acp.org/acp/uk/events.php.

 

What is the EU Civil Society Dialogue and how was it involved within the SIA?

The European Commission’s Directorate for External Trade has set up a Civil Society Dialogue (CSD) mechanism to engage in dialogue with civil society.

With the CSD the European Commission holds regular meetings on trade issues in Brussels with the European Commissioner for Trade, senior Commission officials and trade negotiators. The objective of this dialogue is to develop a confident working relationship between all interested stakeholders in the trade policy field and to ensure that all perspectives to EU trade policy can be heard. The CSD operates according to specific process guidelines (see: http://ec.europa.eu/trade/issues/global/csd/dcs_proc.htm and a broad range of organizations are registered (see: http://trade.ec.europa.eu/civilsoc/index.cfm).

The CSD was fully involved in the EU-ACP SIA and intermediate and final results of the EU-ACP SIA were presented to the CSD at public meetings in Brussels (on average 2-3 times a year).

Minutes of all meetings organized as part of the CSR are available from the European Commission website: http://trade.ec.europa.eu/civilsoc/index.cfm.

 

What is the role the ACP-EU follow-up committee of the European Social and Economic Committee and how was it involved?

The ACP-EU Follow-Up Committee is composed of 12 EESC members and 12 representatives of ACP economic and social interest groups. This Follow-Up Committee, which meets on a regular basis, is responsible for organising the various activities of the economic and social interest groups, and is a primary partner of the political authorities in the Partnership and the European Commission.

More information is available from the EESC website: http://www.eesc.europa.eu/sections/rex/index_en.asp?id=2030rexen

The ACP-EU Follow-up committee was involved in consultations on the UE-ACP SIA since 2003 and opportunities for consultation were pursued through the ACP-EU Economic and Social Committee (EESC). For example, team members attended the meeting of the ACP-EU Follow-up Committee in Brussels on 14 March 2003 and the Eighth Regional Seminar of ACP-EU Economic and Social Interest Groups in Bamako (Mali) on 22-24 May 2006, to present the results of the SIA.

In 2007, the final results of the SIA were also presented at the meeting of the ACP-EU follow-up committee on 9 March 2007 in Brussels, Belgium, and at the 9th Regional seminar of ACP-EU follow-up committee of the EESC on 14-16 May 2007 in Bridgetown, Barbados.

 

Is there an SIA planned for monitoring the EPA implementation?

A permanent institutional mechanism to monitor the implementation of the EPAs from the perspective of economic, environmental and social sustainability.

The EU-ACP SIA recommends setting up a permanent institutional mechanism to monitor the implementation of the EPAs from the perspective of economic, environmental and social sustainability (Recommendation #12). Multi-stakeholder institutional mechanisms are vital for ensuring an integrated approach to future trade negotiations and monitoring the implementation of the EPAs to assess their contributions to economic, social and environmental sustainability. Stakeholders seek to have input into trade negotiations. To do this, where they do not already exist, mechanisms should be established and/or strengthened that encourage transparency and opportunities for dialogue between negotiators and civil society during the process of trade negotiations. Between the parties to the negotiations, trade-related working groups could advance a regulatory dialogue and a cooperative agenda under the EPAs on trade-related issues of common concern such as, for example, trade facilitation and standards and accreditation.

The aim of the EPAs is to promote trade and development that is sustainable. Civil society actors equipped with the appropriate information, knowledge and skill can make effective contributions to ACP-EU cooperation under the EPAs to support sustainability. In the medium and longer terms, this could occur through an effective, multistakeholder monitoring mechanism to follow-up on the implementation of the EPAs. Such follow-up and monitoring could suggest priorities for ongoing development cooperation and provide valuable lessons for future trade negotiations and agreements. The SIA suggested the establishment of a permanent EU-ACP Cooperative Dialogue for Public Participation and Capacity Building for Sustainability to support sustainability under the EPAs on an on-going basis. In cooperation with national and regional authorities, and with a high degree of stakeholder participation, it could, inter alia, compile and disseminate information with regard to trade and sustainable development, coordinate technical assistance in support of sustainability, and develop indicators to monitor the implementation of the EPAs and assess their ongoing contribution to sustainability.

A specific report on monitoring mechanisms for EPAs is currently being prepared by ECDPM and the German Institute for Development Cooperation (Deutsches Institut für Entwicklungshilfe - DIE).

 

 

 

 

 

• Download SIA reports:

• 
• Horticulture in Eastern and Southern Africa (ESA)
  
  
  
  
  
• Rules of Origin in the Southern African Development Community Group (SADC Group)
  
  
  
  
• Financial Services in Central Africa
  
  
  
  
  
  
  
• Agro-industry in West Africa, Tourism services in the Caribbean & Fisheries in the Pacific
  
  
  
  
• Caribbean workshop on building sustainable development issues into Economic Partnership Agreements (EPA)
  
  
• Central African workshop on building sustainable development issues into Economic Partnership Agreements (EPA)
  
  
• Summary of key findings, policy recommendations and lessons learned.
  Executive summary
  
  
  
  
• SIA - flyer