EU Trade SIAs

Lead Editor of this section is Johanna Ferretti

This text is based on: Ferretti, J., Guske, A.-L., Jacob, K., Quitzow, R. 2012. Trade and the Environment. Frameworks and Methods for Impact Assessment. FFU-Report 05_2012.

Short intro

The European Commssion's (EC) Trade SIA is applied during the negotiation phase of  trade agreements and assesses how the agreement should be designed to be most beneficial to all contracting parties, including non-EU countries. The generic IA process of the EC in contrary is applied to assess whether a trade agreement with a partner country should be pursued, and it is carried out before a negotiation process starts.

Introduction

The EC’s Trade SIA is an IA framework tailored to the assessment of trade agreements between the EU and non-EU countries which complements the generic IA process. Like the general IA, the Trade SIA represents an integrated framework that covers environmental, economic and social impacts. Its aim is to inform negotiators and decision makers about the likely consequences of a trade agreement and identify possible synergies and tradeoffs between policy options. Moreover, it should provide the basis for developing potential flanking measures (mitigation and enhancement analysis). By doing so, it should help reduce negative effects and help utilize the full potential of the policy. Finally, it is intended to make the decision-making process more transparent.

Stakeholder consultations take place during the whole assessment process to validate the analysis and ensure its legitimacy. In principle, the Trade SIA process is designed to accompany the trade negotiation process, but it can also be applied after a trade agreement is in operation to conduct an ex-post analysis of the impacts of a trade agreement.

A typical Trade SIA includes detailed qualitative and quantitative analysis of the likely impacts under various scenarios. It considers effects on different sectors as well as cross-sectoral effects. The choice of specific methods, however, remains up to the specific team conducting the analysis. The guidelines also provide recommendations on how to include stakeholders in the process and how to choose appropriate indicators for monitoring and evaluation. Finally, it points out the importance of considering the respective background conditions in the analyzed countries (e.g. data availability). A Trade SIA handbook (EC 2006) exists that defines the steps to be followed during the assessment and provides guidance for the selection and application of appropriate methods of analysis.

The Trade SIA Process

The steps to be followed in the analysis are divided into three broad phases, each consisting of a series of clearly defined steps:

Stakeholder participation

Stakeholder participation plays an important role in the EC’s Trade SIA. Its aim is to include the different points of view and expectations of the relevant groups that may be affected by the assessed trade measure. Additionally, the consultation process helps to ensure a greater awareness among stakeholders of the Trade SIA and to increase transparency and accountability in the trade negotiation process. An extensive stakeholder analysis is necessary to identify all relevant parties that should be included to ensure that the consultations are carried out in a balanced way. The group of stakeholders should consist of those affected by the trade measure and its consequences, stakeholders that will be involved in the implementation of the measure, and representatives of organizations that have stated objectives and are directly interested in the negotiation process.

The Trade SIA Handbook suggests using the following checklist to organize a consultation process:

  • Who should be consulted? Set up an international advisory committee; analyse the wider circle of stakeholders that should be reached;
  • What is the desired result? This may include comments on reports, methodological suggestions and analytical inputs. Explain the purpose of the consultation to participants;
  • What material needs to be made available and how? How should consultation be done? Describe the method chosen – meetings, call for contributions via email;
  • Who responds? How? Record the responses in terms of sources and content;
  • How is the input used? Provide feedback on the way in which the material is used. Annex 5 of the Trade SIA Handbook includes a more detailed description of the organization of a consultation process and the required reporting of results.

In Trade SIAs that have been conducted so far, several methods have been used to involve stakeholders in the assessment process. Some of these measures have been:

  • Dialogue between the consultant and stakeholders with interests in individual sectors or in the negotiations as a whole;
  • Use of an international network of experts to comment on the project reports (international steering committees);
  • Publication of project reports on a dedicated website with facilities for comment;
  • Meetings with civil society organized by the EC and Member States to discuss project reports;
  • Contacts with other organizations involved in the policy and practice of IA of trade issues, through policy dialogue and conference participation.

Inception Phase

In the inception phase, a screening and scoping of likely impacts has to be included. During  the screening phase, the trade policy measures (e.g. tariff reduction) are identified that are likely to have significant impacts, either inside or outside the EU. It serves to identify which components of the trade agreement should be subject to the Trade SIA. Following this, the scoping process helps to further narrow down the specific focus of the EC Trade SIA by beginning with an identification of the most important impacts that are expected. By using a simplified causal chain analysis, target country groups and trade liberalization scenarios are analyzed. This preliminary assessment helps select key priorities for the EC Trade SIA and the key issues to be considered in the more detailed impact analysis that follows.

Analysis and Case Study Phase

This phase consists of a detailed IA of the chosen focus areas, typically including both qualitative and quantitative analysis. The EU’s guidelines do not specify which methods or models should be used for this analysis. Rather, the appropriate tools for assessing all significant impacts in detail can be chosen with regard to the respective policy that is being analyzed.

The assessment should however include:

  • Determination of priority trade scenarios;
  • An analysis of separate components of the trade measure and their cumulative impact;
  • The use of detailed causal chain analysis;
  • Adjustment of the indicators from the preliminary analysis;
  • Strategies for coping with variations within country groupings (or single countries) by selecting contrasting countries (regions);
  • Preliminary IA and identification of main sustainability impacts.

Based on the findings from this detailed analysis, suggestions should be developed on how potential amendments might improve the trade measure in terms of their impacts on sustainable development and which complementary measures might be introduced to address negative effects and to maximize the positive effects. The analysis of these mitigating and enhancing measures should include measures on the domestic, regional and international level. Moreover, trade-offs among the measures should be identified.

Final Phase

The analysis conducted in the Analysis and Case Study phase may suggest a need for a more detailed sector-based analysis. The guidelines suggest including the following aspects in this analysis:

  • Quantitative and qualitative assessments of sector-based impacts: This analysis should be based on case studies, considering economic, social and environmental impacts and distinguishing between different EU regions. Also cross-sectoral effects should be considered;
  • Assessment and final selection of flanking measures;
  • Identification of future assessment needs.

Finally, this detailed IA should provide the basis for an ex-post monitoring and evaluation of the trade measure, but also suggest possible changes in the negotiation position like amendments or adaptions of the trade measure.

References & Links

EC (European Commission) Homepage: Trade. Analysis. Sustainability Impact Assessment: http://ec.europa.eu/trade/analysis/sustainability-impact-assessments/, checked on 10/01/2012.

EC (European Commission) (2006): Handbook for Trade Sustainability Impact Assessmenthttp://trade.ec.europa.eu/doclib/docs/2006/march/tradoc_127974.pdf

European Commission Homepage: List of Trade SIAs. Available online at http://ec.europa.eu/trade/analysis/sustainability-impact-assessments/ass..., checked on 10/01/2012