Introduction

The main objective of this study is to develop a methodology for carrying out a sustainability impact assessment (SIA) and then to use it to make a broad qualitative assessment of the impact upon sustainability of the New Round. In addition, the study findings are to be used to provide ideas on how best to maximise the positive impacts of the expected liberalisation or rule-making.

The work is to be completed in two phases: mid July - mid September (Phase One) and mid September - mid November (Phase Two). Phase One has involved literature and case study reviews of the relevant documents and the development of an SIA methodology for use in Phase Two. The second phase will mainly involve an examination of the potential impact on sustainability of each area (measure) within the negotiations. The findings should be summarised, distinguishing those areas where negotiations are likely to have a relatively limited impact and those where the impact may be greater. Proposals are also invited by the Commission for cost-effective and workable flanking measures for those areas of negotiation where the expected impact is greater.

This summary contains the main conclusions arising from the Phase One work programme and describes the proposed Phase Two work programme and the types of follow-up work that may be needed after Seattle.

Phase One Findings

Sustainability impact assessment is a relatively new concept for which there is no established methodology and little practical experience, particularly relating to international trade policy (EDRC, 1999; WWF, 1998).

What is very familiar, is the methodology and application of separate forms of economic, social and environmental appraisal at the project level. Cost benefit analysis, environmental impact assessment and social impact assessment are long-standing and, in the first two cases at least, their methodologies are well established (Kirkpatrick and Lee 1997a, ch.1).
However, the application of specialised economic, social and environmental appraisals at the policy, plan and programme level (strategic-level appraisal) is much less developed. It is most developed in the economic sector, much less developed (though growing) in the environmental sector, and least developed in the social sector.  A similar pattern exists so far as trade-related impact studies are concerned. It is relatively most advanced in the trade-economic sector, where modelling studies are often used.  It is considerably less advanced in the trade-environment sector where a small number of modelling studies and a greater number of case studies have been completed. It is least developed in the trade-social sector, where case studies predominate.  Further details are contained in chapters 3 and 4, and Appendices 3 and 4.

The development of an SIA methodology, for application to trade-related international agreements, faces a number of challenges. The first is the geographic breadth and ill-defined scope and content of the proposed New Round agreement. Second, there is the under developed nature of the constituent appraisal methodologies - economic, social and environmental - for use at the strategic level, and the limited practical experience in their application. Third, there is no established method for integrating these specialised strategic appraisal methodologies, which are based on different discipline-based paradigms and research methods, within a common SIA framework (Lee and Kirkpatrick 1999, forthcoming, ch.1).

Our response to these challenges is in two forms. One, reported in Chapter 2, is to construct an 'appraisal approach' to help in planning the SIA study. This considers four issues:

1. What is the task for which the SIA appraisal is needed? Answering this question not only clarifies the types of trade-related measures to be appraised but also the stage in the policy formulation process at which the SIA appraisal is to be used in Phase Two. Since this is an early and imminent preparatory stage it is clear that a preliminary rather than full SIA is required in the pre-Seattle situation.
2. What is the analytical framework within which the SIA should be structured? This, in its simplest form, is illustrated in Figure 1 below. It highlights the importance of certain sub-systems (trade, economic, social, environmental and regulatory) as building blocks within the overall framework, and draws attention to the main interdependencies which exist between them (section 2.2).
3. What are the main sustainability impacts to be assessed and how is their importance to be determined? Attention is focused on a core set of sustainability indicators which relate to economic, social and environmental impacts of importance to sustainable development in all societies (see Box 1). The significance of specific changes in these indicators is to be assessed, using the criteria which are also summarised in Box 1 (section 2.3).
4. How are the inevitable uncertainties (arising from incomplete information, limitations in analytical tools, unpredictability of future events, etc.) to be handled within the SIA? A number of methods and procedures are identified by which some of these uncertainties may be reduced, and others may be managed, within the SIA process itself and through proposed flanking measures (section 2.4).

The literature reviews have been of two kinds: methods-based and trade-agreement-based. The findings are reported in Chapter 3 and Appendix 3, and Chapter 4 and Appendix 4, respectively. Their common purpose is to clarify the current state of knowledge, of relevance to the appraisal of trade-related agreements, and to assist in the development of the proposed SIA methodology. The first review covers more specialised forms of appraisal (i.e. economic, social, environmental and regulatory impact appraisals) and integrated appraisals (including sustainability appraisals). The second review covers appraisals of trade-related agreements and other initiatives of relevance to the appraisal of measures that may be included in the New Round negotiations. These relate, among others, to the North American Free Trade Agreement (NAFTA), the Uruguay Round negotiations and outcomes, the European Union Single Market Study and other studies such as the OECD study concerned with trade liberalisation and transport sector reforms.

The methods used are very diverse, partly reflecting the differences in the paradigms of the different disciplines involved - economic, social, environmental, and legal. They range between computable general equilibrium models and sophisticated forms of statistical analysis at one end of the spectrum to interview-based case studies, participatory appraisal studies and international case law studies at the other.

Much valuable work has been completed in a number of these areas during recent years. However, the development of an integrated SIA methodology, appropriate for trade-related agreement proposals, is still at a relatively early stage. A good deal is known about a number of the sub-systems in Figure 1, but many of the links between them (with the partial exception of trade policy - trade effect - economic impact links) are insufficiently identified and described for appraisal purposes. More precise definitions and consistent information, and some strengthening of analytical methods, are needed to remedy this.

The additional understanding gained from the literature and case study reviews has assisted in developing the SIA methodology, which it is proposed to use in Phase Two. Its principal components are summarised in Box 2 and are detailed in Chapter 5. Its main features are:

1. The objectives and content of the appraisal are closely related to its intended use in the pre-negotiation period.
2. The nature and extent of the relevant information which is available, the types of analysis which may be feasible and the limited time remaining in the pre-negotiation period are fully taken into account.
3. Guidance is provided on: the identification of trade measures, the appraisal scenarios to be used, country groupings, core sustainability indicators (economic, social and environmental), and on appraisal methods, information sources and consultation procedures.
4. A structured and staged approach to appraisal (involving screening, scoping, preliminary assessment, identification of flanking measures) is used, based partly on the environmental assessment process which is already familiar, within the European Union and internationally. This supports the development of a systematic and transparent assessment process, which will encourage more balanced, good quality and influential appraisals.

Phase Two Work Programme

The work undertaken in Phase Two will mainly consist of the following:

1. Determination of the measures to be submitted to a preliminary SIA

It is proposed that the study team should screen the list of measures contained in Appendix 1 and make recommendations on which of these should be submitted to a preliminary SIA. The list of measures to be appraised should be discussed during the meeting with the Commission on October 1 when the proposed methodology, described in Chapter 5, will also be discussed. The Commission has undertaken to provide the study team with further information on its negotiating objectives and expectations to assist in undertaking these appraisals.

2. Carrying out preliminary SIAs for each of the selected measures

This will be undertaken, using the proposed SIA methodology, according to the following stages:

• Scoping: to establish the appropriate coverage of each SIA.
• Preliminary sustainability assessment: to identify those impacts for each measure, which are likely to have a significant effect, positive or negative, on sustainable development.
• Mitigation and enhancement analysis: to suggest cost-effective and workable measures in those areas identified as having a potentially greater impact on sustainable development.

The following consultations should take place during Phase Two.

• Meeting with the Commission, on October 1, to discuss the proposed SIA methodology, the proposed list of measures to be subject to SIA and the specific features of the measures to facilitate their appraisal. Informal consultations will also be held with Commission personnel at various times during Phase Two to assist in the appraisal of individual measures.
• Contacts with other experts and key organisations, as required, to facilitate the completion of the Phase Two Work Programme.
• Placing the findings of the Phase One report and the list of measures to be subject to SIA, on the University of Manchester Web Site and inviting comments and suggestions relating to this.
• Participating in the meeting in Brussels on October 20, organised by the Commission, to discuss the WTO study programme with representatives of NGOs and the Member States.
• Debriefing meeting with the Commission, immediately following the submission of the Phase Two report in the middle of November.

The present work programme has been primarily concerned with the development and application of a preliminary form of SIA in the pre Seattle period. During Phase Two, preparations should be made for the development of a more detailed form of SIA for use in subsequent stages of the New Round negotiations, after the Seattle meeting. Suggestions relating to this will be presented in the final report.

The arrangement of a follow-up meeting with representatives of civil society, after the completion of the current study, should be considered by the Commission. Its purpose would be to discuss the conclusions of the final report in the light of outcomes of the Seattle meeting, and the desirability of further development of the SIA methodology for more detailed application in subsequent phases of the New Round negotiations.