WTO overview SIA final report: summary of comments and responses (civil society and EU Member State delegations)

Public meeting, Brussels, 16 June 2006
1. The representative for ESF questioned what the appropriate parameters for the Aid for Trade discussion should be. Narrower or wider?	Discussed in the meeting, and clarified in the text
2. The representative for ICFTU asked for an explanation of the statement that developing countries as a group would gain from the DDA. Did the aggregation disguise the fact that a few large DCS would gain whereas a larger number of smaller DCs were expected to lose from the DDA.	The detailed text explains this more fully
3. FoEE argued that the section on mitigation measures was too narrowly focused on Aid for Trade. The report did not sufficiently reflect the potential negative findings of the SIA. There was a need to discuss the causes rather than symptoms of the adverse impact of the DDA. In particular, the implications of WTO negotiations for restricting domestic policy space should be given more attention.	The discussion of the wider context of development assistance has been expanded.
4. The representative for COCERAL drew attention to the problem of preference erosion. Aid for Trade could play a role in assisting countries which were dependent on particular commodities that were vulnerable to preference erosion	We agree
5. A representative for the Food and Drinks Industries asked for more focused and specific recommendations, particularly with regard to monitoring	The chapter on future action deals with this
6. RSPB representative argued that the report findings were not significantly different or new. What was important was how the Commission proposed to respond to the findings and recommendations.	Noted
7. Another participant argued that trade policy itself should be seen as a potential mitigation measure e.g. the pace of liberalisation, or selective industrial protection could be used to accelerate the development process	This has been mentioned in various parts of the text
8. Another participant asked for a more explicit explanation of the different modelling estimates of global welfare gains from the DDA.	Discussed in the meeting. The text covers it more fully
9. European Union of Wholesale with Eggs, Egg Products, Poultry and Game (EUWEP) submitted comments which included their belief that vulnerable egg lines should be afforded Sensitive Product status, thereby subjecting them to the minimum tariff reductions.	These considerations have been taken into account in the SIA analysis.
UK delegation
Many positive comments
However, we nevertheless feel some paragraphs of the report tend to downplay the potential positive gains resulting from trade liberalisation. For example chapter 4 concludes that global welfare gains are “modest”. However, even though recent estimates might be smaller than earlier ones, we feel that tens of billions of gains are nevertheless significant. Other examples in this respect include the following:	The use of the word modest has been clarified, in comparison to GDP and expected growth rates.
Chapter 5 on agriculture: The World Bank study and its use of harmonising formula captures extra gains from bigger reductions in higher tariffs, and highlights the potential for sensitive products to erode developing country gains. It would have been worth highlighting these results over those in the Polaski study.	The WB study is for full liberalisation, not for the Doha scenario.
Chapter 5 on NAMA: Studies that include Swiss formula and flexibilities for developing countries better capture the likely outcome for the round. We would therefore welcome if the NAMA chapter did include a more detailed look at the UNCTAD – Cordoba and Vanzetti study.	The Cordoba and Vanzetti study has been included in the analysis of different results from different assumptions, all of which include their own approximations.
Trade facilitation: We agree that the general equilibrium modelling is less capable of measuring gains in services and trade facilitation (than in goods trade liberalisation). We nevertheless believe that those dossiers can bring significant and widespread gains. In particular trade facilitation has the potential to be a win-win, which could bring benefits to a very wide range of countries.	We have clarified the discussion of this.
Rules negotiations: Similar to trade facilitation, improvements in rules will help all WTO members. These two dossiers (trade facilitation and rules) could be given higher profile, for example in the executive summary.	Has been highlighted in the Executive Summary
In general we believe that both dynamic impacts, as well as resource allocation, are important parts of the economic gains.	This has been stressed.
Additional comments on specific chapters
Page 46, Table 5.7: Key Impacts: The table says with respect to the economic impact on HPDCs that consumers would gain from cheaper imports due to tariff reductions. We are wondering though whether these gains due to tariff reduction are not off-set by higher world market prices (as mentioned on page 45).	Partial offset added
On the agriculture section: It doesn't seem to mention that there is significant binding overhang in many developing country tariffs. A lot of the assumptions seem to be based on developing country tariffs actually falling after tariff cuts, which might not be the case.	Reference to binding overhang added.
Aid for Trade (AfT): We agree that AfT has an important role to play in order to unlock the development potential of the DDA. We also agree that AfT should be integrated with broader development strategy and planning. We believe for example that AfT should be channelled to developing country governments through trade programmes within country-owned poverty reduction plans in the case of LDCs, and the national development plans of non-LDCs. We also recognise AfT as an important part of the enhanced Integrated Framework.	The comments are welcomed
French Delegation July 2006
The bibliographic synthesis doesn’t mention any study on liberalisation of services and trade facilitation, like for instance: “A Quantitative assessment of the Outcome of the Doha Development Agenda” by CEPII (Lionel Fontagné and Yvan Decreux). Furthermore, CEPII’s modelling choices are interesting, moderated (imperfect land mobility - the opposite of the World Bank, possible wage adjustments depending on the sectors, and imperfect mobility for unskilled labour for agriculture and industry).	The CEPII study has been examined subsequently, and does indeed give extra information. It does not however change the conclusions of the overall review of modelling studies.
The welfare loss for developing countries is explained by preference erosion, as mentioned p. 15, but by two other factors as well, which should be mentioned: an unfavourable terms of trade  effect (food prices increase) The absence of positive effects linked to liberalisation, because in those scenarios, the developing countries do not liberalise or not much, hence can’t benefit from better resource allocation.	These points have been added
p. 18/ on poverty, we could criticise Polaski’s model: because unskilled wages in industry are fixed, it is possible to increase industrial exports indefinitely without having to raise industrial sector wages. The agrarian wages are pushed up because the resource is getting rare while workers are being absorbed by the industrial sector. This increase is beneficial to the whole rural sector. Hence the benefits of industrial liberalisation are overestimated by the model and the results would be different according to the situation of the country: net manufactured products importer or exporter. The impact on the labour market and poverty is then distorted.	We agree with this observation. However, all the models have their limitations, and a balanced view is taken from the various results.
As a conclusion, it could be interesting to underline those models’ fragility, all the more in a study on sustainable development. By the model choices, the results could illustrate the liberalisation impacts through different temporal scales: the long term (OECD, World Bank with factors’ perfect mobility), the short term (Carnegie with factors total rigidity) and the mid term (CEPII). Nevertheless, it is not possible to give any conclusion on the sustainable development with this economical information: the impact on environment is not modelled and the impacts on poverty, inequity and unemployment reduction are too vaguely modelled.	We agree, but consider that the fragility of the models has already been stressed sufficiently.
Government of Spain (fisheries SIA)
Suggestion to include a sentence on page 9 of main report, related to a possible special treatment of the fisheries sector in tariff negotiations	The sentence was not included given the negotiations do not foresee that special treatment of the fisheries sector.
Friends of the Earth Europe
FoEE’s comments on the SIA Global Overview Draft Final Report
Chapter 5.4.2: Non-Agricultural Market Access
We would like to comment the tables 5.16 and 5.17 which address the issue of NAMA liberalisation and sustainable development policies. These tables refer to a central problem of trade liberalisation, going even beyond those of loss of government revenue and de-industrialisation, namely: policy space.
We agree that “increased trade alone is unlikely to cause significant direct negative sustainability impacts” (§ 5.2.3, p. 72). We also agree that national governments hold a big share of responsibility in the degradation of the environment. However, we believe that the process of trade liberalisation carries with it a series of inherent effects. Amongst them lies the loss of policy space. This is because trade liberalisation is not just about reducing or eliminating tariffs. It is also about removing any kind of “trade-distorting measure” or “protectionist policy” taken by domestic governments (this is the rationale behind every WTO negotiation but is most obvious in the negotiations on non-tariff barriers, trade facilitation or domestic regulation). In other terms, this process is one which limits the governments’ control over their economy. One critical element of this process is the so-called “lock-in effect” of WTO agreements, which prevent states to re-introduce new legislation or regulation as a result of domestic collective preferences.	This is dealt with under the heading of process impacts, to which a reference to policy space has been added.
In this view, effective “mitigating measures” are condemned from the start since they would be incompatible with WTO’s deregulatory disciplines. The recommendations included in this SIA can therefore be interpreted as eminently paradoxical (see next point on chapter 6).	See response below
In the case of natural resources, it means that trade liberalisation and market opening (through the NAMA negotiations on a general formula, sectorals and non-tariff barriers) automatically limits the possibility for governments to use regulatory or legislative measures that restrict trade for other “non-trade concerns”, such as the protection of the environment or the promotion of sustainable productions. And this is particularly dangerous as many developing countries lack the necessary regulatory systems (the sustainable development strategies outlined in table 5.17) that could mitigate the adverse impacts of trade liberalisation.	We do not consider that this is a correct interpretation of WTO disciplines. We agree that regulatory systems are weak, but do not agree that it is easier to regulate the environment through a trade measure than through environmental regulation
Chapter 6: Opportunities for enhancement, prevention and mitigation
We acknowledge that the final draft of the SIA refers to European NGO positions but we are still not satisfied by the overall content of the chapter on enhancement, prevention and mitigation measures.
Firstly, we regret that this chapter is very short (three pages) comparing to the total size of the study.	The chapter has been clarified to explain why it does not go into fuller detail
Secondly, we regret that that many observations made throughout the study are not reflected in the recommendations.	See point above. Chapter 6 now refers the reader to the main text for greater detail
Finally, this chapter still gives too much prominence to the Hong Kong “Aid for Trade” package and does not give any credit to alternative trade measures. This is still a “flanking measures-like” approach. We consider it too narrow as it only addresses the symptoms of the problems and not the causes (trade policies themselves).	The text has been amended to repeat the statement made at the end of the previous chapter, regarding better sequencing of trade reforms
To address this limitation, the scope/Terms of Reference of SIAs should be expanded. SIAs must be allowed to question the adequacy of trade liberalisation itself and provide recommendations as to where limits should be placed.	Noted
Chapter 7.3: Maintaining the SIA Trade Experts Network and capacity building in partner countries
We welcome the idea to enhance capacity-building on trade SIAs in partner countries, for we share your feeling of a capacity lack in partner countries on trade sustainability impact assessments. Nevertheless, we would like to flag an issue which is regrettably not addressed in the recommendations, namely: stakeholder consultation.	Noted
We believe that stakeholder consultation in third countries can still be improved in future studies. This part of the SIA methodology should be strengthened and emphasized in future contracts with the European Commission. A meaningful part of the EC grant should be allocated to stakeholder consultation, such as to allow more proactive (1), balanced (2) and consistent (3) consultation with stakeholders in third countries.	Noted
(1) Proactive: many stakeholders are not aware of the EC SIA exercise and therefore do not react to the consultation drafts. This can be changed if researchers have the capacity to approach stakeholders themselves.	Noted
(2) Balanced: there should be a political balance amongst the group of consulted stakeholders (industry, government, academia, NGOs, trade unions…)	Noted
(3) Consistent: the methodology on stakeholder consultation should be developed and applied to every particular SIA in the same spirit.	Noted