JOINT NGO COMMENTS ON THE SIA-EMFTA PHASE 1 REPORT FINDINGS AND METHODOLOGY

The seven networks which comprise the Comité de Suivi, together representing several hundred NGOs, have undertaken a thorough critique of the SIA-EMFTA Phase One report. Their principal observations and recommendations are reproduced in the table below, together with a discussion of the comments made and how they are being acted on in the subsequent stages of the SIA study.

The networks [organisations] which contributed to the critique are:

ENDA Maghreb

European Environmental Bureau (EEB)

MEDNET (Friends of the Earth)

Mediterranean Information Office for the Environment, Culture and Sustainable Development (MIO-ECSDE)

RAED-Arab Network for Environment and Development

WWF (World Wide Fund for Nature), Mediterranean Programme

Their comments and recommendations are much welcomed.

There are two levels of recommendations made in this common position addressed to the European Commission as the sponsors of this process and the authors of the ToR for the SIA document. The recommendations are divided into recommendations for immediate action as a result of the findings of the interim SIA report and recommendations concerning the methodology and ToR of the SIA study itself.

Joint NGO comment	SIA-EMFTA consortium response
A) Findings Requiring Immediate Action:
1) SIA Findings: That the Association Agreements negotiated by the EU and its southern and eastern Mediterranean partner countries are lacking in detail (if not completely ignore) environment and workers’ rights issues (SIA report page 12). In comparison, US trade agreements with Mediterranean countries include significant sections on environmental protection and workers’ rights (SIA Report page 11).	As summarised in the SIA Phase 1 report, the Association Agreements are linked to other correlated measures such as the protection of intellectual property rights, workers’ rights, and the environment. The agreements are however lacking in detail in most of these areas. The SIA study aims to provide information through which these issues may be more fully addressed within the EU-Mediterranean Partnership (EMP).
Corrective Action Required:
Negotiation of a regional environmental and social Side Agreement should be agreed at the EuroMed Foreign Affairs Meeting (Barcelona VII) in May 2005, to provide a common framework on these issues for all association agreements signed to date. The negotiations should start without delay and in this process the findings of the SIA need to be taken into account. The Side Agreement should be completed by the end of 2006.	It is planned that initial findings of the SIA will be available in May 2005. The minutes of the public meeting on the SIA held in November 2004, record that the EU noted the special significance of the Ministerial meeting of the EMP to be held in November 2005, and anticipated that substantial results from the SIA would be available in advance of the meeting.
2) SIA Finding: That the environmental regimes – regulations, funds, qualified staff and environmental management in the partner countries are very weak (SIA report page 16). That lessons from past experience with the accession into the EU of European Mediterranean states reveals economic and environmental impacts (SIA report page 22) (and that is despite strong support for the respective environmental regimes and large EU funds allocated).
Corrective Action Required:
Current EU initiatives to strengthen environmental regimes as well as regional cooperation to promote environmental protection and sustainable development are hardly as successful as they should be, neither in their operation nor in the minimal funds allocated by the EU. All EU MEDA funds as well as EIB loans should be screened to ensure they promote sustainability and have support for environmental regimes as a priority issue. Integration of environmental concerns needs to take place in the other sectoral programmes, industry, energy, agriculture, etc. of the EuroMed process, as recommended by EuroMed Environment Ministers at their 2^nd conference in 2002. The SMAP programme should be strengthened and broadened, to fulfil one of its original mandates to promote environmental integration throughout EMP activities, and should receive significantly increased funding.	These observations are timely, and will be taken into account during the current and future stages of the SIA. Phase 2 of the SIA study includes a review of relevant institutional capacity, and an initial examination of potential measures to mitigate or enhance EMFTA impacts. Phase 3 will make further recommendations on mitigation and enhancement.
3) SIA Finding:
That current healthy consumption patterns relating to the Mediterranean diet will be negatively impacted and northern consumer habits, production processes and mobility patterns will be exported with social and environmental impacts (SIA report page 26).	The SIA report quotes other studies which suggest that ‘overall consumption in the MEDA countries will increase in the future partly due to the increase in population and partly following economic growth and free trade. Moreover, consumption patterns in MEDA countries are rapidly growing towards the model of Northern countries (increased meat and milk product consumption, and reduced consumption of vegetables and cereals; increased packaging). Free trade may intensify further these consumption patterns. New consumer habits, trade intensification, and increased mobility of people will contribute to growth in transport that is expected to increase at a higher rate than production and incomes. The increase in the number of cars will obviously raise several environmental issues.’ (p26) These potential impacts will be considered in Phase 2. They may be assessed in more detail in Phase 3 if identified as prority issues in Phase 2.
Corrective Action Required:
MEDA funds should be allocated through the various activities of the Partnership to counter harmful changes already taking place to consumption patterns in the south and eastern Mediterranean that are likely to be further intensified by further trade liberalization.	The Phase 2 study will include a broad evaluation of this type of action, followed by more detailed evaluation in Phase 3 of measures to mitigate priority impacts.
4) SIA Conclusion: That non EU Mediterranean countries need to undertake their own studies and consultation process to evaluate the EMFTA and not solely rely on the EU sponsored SIA report (SIA report page 28).	The current study is a fairly general one with only limited ability to evaluate specific cases. We endorse this suggestion that partner countries should undertake their own more detailed studies.
Corrective Action Required:
That matching funds be provided by the EU to support non-EU member states to undertake their own SIA studies.
B) Comments Concerning SIA Methodology and ToR
1) Links between the SIA-EMFTA and MSSD and the Barcelona Convention.
The links with the forthcoming Mediterranean Strategy for Sustainable Development (MSSD) are not made. No methodology is proposed to demonstrate how EMFTA would enhance overall sustainability, in line with the goals of the MSSD, themselves reflecting the Johannesburg Plan of Implementation, 2002. Yet, EuroMed Environment Ministers recommended in 2002 that the MSSD should become the “vehicle” for the sustainable development strategy of the partnership, and the conclusions of their conference were endorsed by Foreign Ministers at Barcelona VI in December 2003.	The links have been established more fully in response to this recommendation. Consortium partners will be attending a number of forthcoming meetings on the MSSD. The goal of the SIA-EMFTA is to assess the potential positive or negative contributions of EMFTA to sustainable development.
Also, there is no identification either of ways in which the proposed EMFTA would contribute to the implementation of the Barcelona Convention 1975 and its Protocols – of which the European Community and seven EU member states are Contracting Parties.	The Barcelona Convention and its Protocols under the Mediterranean Action Plan (MAP) require actions by the EU and MPCs which are quite distinct from the EMFTA. The SIA will however evaluate the extent to which the EMFTA may contribute positively or negatively to meeting the objectives of MAP.
2) Basic scenario of the SIA
The SIA only contemplates one scenario i.e. trade liberalisation in the EuroMediterranean region. This is contrary to normal practice of Strategic Impact Assessments as well as cost-benefit analysis, which contemplate ‘with’ and ‘without’ scenarios, and compare the net benefits from each scenario.	We believe that this is a misinterpretation of the Phase 1 report. The Terms of Reference require one or more scenarios for the EMFTA to be compared with a “without EMFTA” baseline scenario.
The report claims that a range of studies gives a clear message of the “potential for large welfare gains associated with the EMFTA…(which) is dependent on the success of related national domestic policies”. Is this the 'welfare' of classical and neo-classical economics? If so, what is the forecast distribution of these welfare gains a) amongst countries or at least North and South viz both EU and south Med b) amongst income groups i.e. its net contribution to poverty reduction in the South Med, and a fortiori to achieving the Millennium Development Goals targets for 2015?	The potential for such gains in economic welfare is indicated by econometric studies and by studies which consider a wide range of determinants of economic development. The report draws attention to the assumptions made in these studies as to the internal adjustment processes associated with economic efficency gains from resource reallocation. The SIA will evaluate the expected distribution of economic gains as suggested, and the potential contribution to poverty reduction and the MDGs.
“Social and environmental effects” are mentioned, but it appears that no effort will be made to make an extended cost-benefit analysis which will compare social and environmental effects (which many studies indicate could be highly negative) with the imputed economic benefits - but benefits for whom exactly? – to arrive at an assessment of overall net benefits.	We consider that techniques for economic valuation of environmental (and often social) impacts have limited validity, such that it is not possible to arrive at a reliable overall net benefit for this type of policy measure. Value judgements must instead be made, as part of each country’s decision-making processes. To assist with this, the SIA will identify likely impacts and assess their significance.
3) Only primary impacts are mentioned, not secondary impacts.
Page 27 states that: “The SIA will not attempt to make value judgments on the relative importance of different impacts, or trade-offs between adverse and beneficial effects.” Then the SIA emerges not as an impact ASSESSMENT, but merely a checklist of impacts. Clarifying trade-offs should be one of its central functions and surely the basis for designing a coherent and integrated set of ‘mitigation and enhancement’ measures referred to.	Where practicable, the SIA will estimate the cost-effectiveness of potential mitigation and enhancement measures. It will also evaluate the likely significance of positive and negative impacts, and where practicable, their magnitude. Trade-offs will be clarified in this way. The SIA will follow established practice in Strategic Impact Assessment and other forms of impact assessment, in using both quantitive and qualitative data to estimate the significance of expected impacts
The evaluation of potential impacts generally employs a combination of logical analysis and empirical evidence from the literature. Empirical evidence will be sought from other countries’ experience of integration with the EU, as well as studies of past trade liberalisation in the region, and the effects of liberalisation more generally. This approach ignores the self-evident truth of the very divergent levels of development of South Med Partner states (with the exception of Israel) with those of the EU, or even of pre-accession Spain, Greece and Portugal. The closest approximation to what is contemplated in EMFTA is NAFTA, in operation for a decade	We agree concerning different levels of development, and the approach takes them into account. Empirical evidence will, inter alia, be sought from studies of past trade liberalisation in the region and the effects of liberalisation more generally. This will include NAFTA. In seeking additional evidence from the experiences of countries such as Spain, Greece and Portugal, allowance will be made for their different socio-economic and environmental characteristics prior to accession, as compared with the varying characteristics of the partner countries.
As stated in the Carnegie Endowment’s study (2003): “NAFTA: Promise and Reality: Lessons from Mexico for the Hemisphere”. NAFTA has accelerated Mexico’s transition to a liberalized economy without creating the necessary conditions for the public and private sectors to respond to the economic, social, and environmental shocks of trading with two of the biggest economies in the world. Mexico’s most vulnerable citizens have faced a maelstrom of change beyond their capacity, or that of their government, to control.	We express our thanks for this reference, which will be referred to in the study.
According to the last paragraph of section 5.6.3, “The presentation of findings will be as specific as possible in relation to affected economic sectors, environmental characteristics and particular social groups. In order to avoid key results being lost in the description, a summary table or other approaches will be used to draw out the key findings.” What is meant by ‘environmental characteristics’ (water resources, air and soil quality, land use, etc.). Which ‘particular social groups’ (women, youth, the poor, farmers, industrial workers, etc.)?	The environmental characteristics mentioned are among those identified in the core indicators and more detailed MCSD indicators referred to in the report. The social groups mentioned will be included in those considered, with more specific identification where appropriate Empirical evidence and causal chain analysis will be used to identify those groups most likely to be affected.
Moreover, monitoring gender indexes is not an adequate approach to address the specific gender impacts, whether in industry, services or agriculture, of trade liberalisation.	We agree. The approach will be as described in the response to the previous comment.
The impact of climate change on water resources is not mentioned (page 15) as a factor expected to progressively limit water resource availability in the region.	This is an important point, which the current phase of the study will consider in evaluating the baseline situation.
4) Mitigation and enhancement measures
What such measures would involve is not clarified. Development aid programmes “could contribute to the identification of practical mechanisms to implement mitigation measures that may be proposed based on the SIA findings” (page 28). Elsewhere in the text, identification appears as the responsibility of the contractor.	Whereas Phase 1 of the study developed the proposed methodology, Phases 2 and 3 will evaluate impacts and assess appropriate mitigation and enhancement measures.
The report also states, “For details of the agreements which have yet to be defined, the SIA will additionally provide information for negotiations.” Why not recommendations?	The study is intended to provide information that will be of use to the EU’s negotiators and those of partner countries.
5) Product coverage of SIA
Industrial goods
It appears that the SIA will refrain from suggesting any change in liberalisation schedules (whether tariff or non-tariff barriers) for industrial goods enshrined in Association Agreements, even in cases where such a measure would be the most cost-efficient in terms of avoiding negative impacts. Page 30 states: For those aspects of the agreements which are already defined, the main purpose of the SIA is to contribute to the design of complementary mitigation and enhancement measures. The effects of the agreements will be assessed by comparison with a baseline scenario, which reflects the situation that would exist if the agreements had not been made”.	Where trade liberalisation measures have already been agreed, the impacts will be assessed and included in the evidence provided to trade negotiators.
Agricultural goods.
The methodology (p 11 par 3) appears to contemplate a limited range of agricultural products, but does not reflect the much broader agricultural trade liberalisation foreshadowed by the final conclusions of the Barcelona VI conference of EMP Foreign Ministers, December 2003 viz: “Ministers expressed their common commitment to achieving a free trade area, including trade in agriculture by the target date of the Barcelona Declaration of 2010.”	As discussed on p 31 of the report, the SIA will identify one or more 20-year scenarios to describe the free trade area that is intended, including the potential results of the ongoing negotiations for agriculture. The scenarios that are proposed will be described in a report on Phase 2 of the study.
Services.
Page 11 par 4 does not reflect more recent commitments to wide-ranging services liberalisation according to the two most recent conferences of EuroMed Trade Ministers viz: “Ministers reaffirmed the objective of liberalisation of trade in services across the EuroMed area, taking into account the obligations arising from GATS article V. (3^rd Conference of EMP Trade Ministers July 2003, final conclusions) (Ministers) reiterated their commitment to liberalisation in this important sector and to the ultimate aim of complementing the Euromed liberalisation of trade in goods with an integrated free trade area for services. (4^th Conference of EMP Trade Ministers, July 2004, final conclusions)	As summarised on p 32 of the report, discussions are scheduled between the EU and partner countries on services liberalisation. The scenarios proposed during Phase 2 will describe the nature and extent of the services liberalisation to be assessed.
6) Future mechanisms.
The report (page 28) indicates “Proposals for a participatory and practicable monitoring mechanism to assist EMP countries and stakeholders to promote sustainability during the evolution of EMFTA will be prepared in Phase Three”. The MSSD and its supporting institution MCSD are apparently not considered for the monitoring exercise posited below. Why not?	Please see page 36 of the report, regarding the use of the MCSD indicator set for monitoring impacts. The actual mechanisms by which MCSD and/or other insitutions might monitor impacts identified in the SIA will be considered in Phase 3.
Close consultations (page 28) “with EU’s MEDA representatives” are proposed. Stakeholder participation in such consultations is not clarified.	Consultation between the SIA team, EC representatives and stakeholder representatives will take place to discuss each of the reports that are to be published during the study. For M&E measures, this will occur at the end of Phase 2, and again in Phase 3.
7) Language of publications.
The absence of an Arabic language version of the proposed newsletter is extremely unfortunate and will not be well received in Arabic-speaking South Mediterranean Partner countries (i.e. 9 out of the 10 South Mediterranean partners). This decision should be reviewed.	We welcome this advice. An Arabic version of the newsletter is now being prepared.

IDPM on behalf of the SIA-EMFTA consortium.

24 February 2005.