EU moves to assess trade round sustainability

Commission says new methodology is "major development" in assessment of trade policies

The European Commission has warmly welcomed publication of a preliminary assessment of likely impacts on sustainability of the new round of world trade talks. The methodology for sustainability impact assessment (SIA), produced for the Commission by a UK university group, "constitutes a major development in the field of impact assessments of international trade policy," the EU executive said on Monday.

Former EU trade commissioner Leon Brittan promised earlier this year that there would be an SIA of the millennium round of world trade talks (ENDS Daily 22 March). His successor, Pascal Lamy, said today that the assessment exercise would "continue throughout the coming negotiations, whatever the detailed agenda set at Seattle," where ministers are due to finalise preparations for the talks from 30 November to 3 December.

According to the Commission, the SIA methodology developed at Manchester University "puts the EU at the forefront of analysis of the relationship between trade liberalisation, economic growth, social equity and environmental protection".

The results of Manchester University's work suggest the new trade talks will have a complex pattern of social, environmental and economic impacts, including varying implications for different groups of countries and for different socio-economic groups. Costs of adjustment during transition to new trade rules can also be significant, the researchers say.

Two scenarios for the talks are assessed: an "intermediate" scenario approximating to the EU's own proposals for the millennium round, and a "full liberalisation" scenario. The intermediate scenario is based on an extension of talks beyond talks already mandated on agriculture and services to include a range of other issues; it also includes some social and environmental safeguards.

Based on a set of core sustainability indicators, the assessment measures impacts of possible agreements on average real income, employment, net fixed capital formation, equity and poverty, health and education, gender inequality, environmental quality and biological diversity.

Applying this methodology to the EU, the academics predict that full liberalisation would have a "less satisfactory" overall impact on environmental and social factors than the intermediate scenario. The main reasons for this are an absence of safeguards built into the intermediate scenario and higher costs during transition, they conclude.

Follow Up:
European Commission, tel: +32 2 299 1111; Institute for Development Policy and Management at the University of Manchester, email: chk@man.ac.uk . References: The report's executive summary is posted on the Manchester web site and also on the European Commission's Millennium Round web pages.

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