EU-ASEAN FTA Campaign Network-Philippines

This piece presents initial comments of the EU-ASEAN FTA Campaign Network-Philippines to the global analysis report drafted by ECORYS - a Netherlands-based consulting firm that was awarded the contract by the European Commission to conduct the Trade SIA.

As the negotiations for the EU-ASEAN FTA is underway, the European Commission (EC) has undertaken a Trade Sustainability Impact Assessment (SIA) through its external consultant Ecorys.

As such, the Trade SIA is designed to provide so-called flanking measures that refer to mitigation and enhancement mechanisms that “reduce significant negative impacts that result from trade liberalization and enhance positive impacts on sustainable development.”[2]  It also must “provide guidelines for the design of possible accompanying policy measures… [that] may go beyond the field of trade as such and may have implications for internal policy, capacity building or international regulation… [and] are intended to maximize the positive impacts of the trade negotiations in question, and to reduce any negative impacts.”

Alternative SIA Process 

Because of the inherent limitations of the framework of the Trade SIA, the EU-ASEAN FTA Campaign Network after several consultations and discussions decided not to participate in the consultation process and instead, will undertake its own parallel/ alternative SIA study that would determine the extent of the impacts on particular sectors and extend the scope of the study by not focusing on just mitigating and enhancing measures but on-the-ground solutions and proposals from the sectors themselves, in consideration of not only sustainable development but also of principles of equity, fairness, and social justice.  While the Network has decided not to participate within the given consultation spaces, it respects and will support organizations that would want to maximize such venues provided by the process by constantly coordinating actions and exchanging views with these groups. 

On September 01, 2008, based on the abovementioned mandate, Ecorys came out with a Global Analysis Report[3] submitted to the EC, and for consultation with civil society in Europe (September) and ASEAN (October). 

Below are our initial comments on the draft report which we hope to discuss further with the EU-ASEAN FTA Campaign Network in order to firm up our critique of the SIA process, and push our agenda for an alternative process.

Initial Comments on the TSIA Global Analysis Report on the EU-ASEAN FTA

1.     The Report validates the perception and impression that the TSIA has a limited frame from which it works – looking only at “flanking” measures assumes that the Free Trade Agreement that is being negotiated is one that would, without question, bring prosperity to both regions and that it is just a matter of celebrating the “winners” and cushioning the impact for the “losers.”

2.     The Report, then, puts forward the position that the EU-ASEAN FTA should be flanked with other policy proposals to maximize the gains and mitigate the costs. This approach completely insulates the FTA itself from any changes or reforms. The assumption is that the FTA, even a most ambitious one, should proceed despite the anticipated or foreseen negative consequences as long as this is flanked by other measures.

3.     Even if it appears that the TSIA is in no position to question the very basis of the FTA, the experiences of many developing countries and regions that have entered into FTA deals show that the very foundation on which these FTAs stand is now being seriously questioned especially in the light of the commodity, food and fuel price increases. This should provide the TSIA a relevant context from which to start its study from and not to gloss over such realities.

4.     From the report itself, there is substantial information to show that there will be major sectors that will be affected more than the other – for instance, employment in the “losing” sectors will decrease – the question that arises, then, is just how much and what kind of flanking measures will be put in place to mitigate the negative impact of, say, loss of employment for agricultural and industry workers or effects on the land use and ecological balance as a result of the strain that is put to bear on these resources to increase production on bio-fuels or mineral extraction.

5.     The Report seems to also gloss over the asymmetry in the two regions on a very crucial component of trade talks which is domestic and export subsidies given to agriculture and farmers in the EU.  This particular reality already tips the balance against the ASEAN countries that do not have the same capacity to provide support services and subsidies to their own farmers and yet, are expected to compete and rake in needed export revenues to tide over the ailing economies of many of the ASEAN countries. 

6.     The Report also made detailed description of how social, economic and environmental issues are seen in both regions, and what the realities are for its citizens; these statistics and analyses show the disparity and asymmetry of both regions, even by just looking at poverty levels and access to services. Clearly, these problems are not of the same scale and scope in both regions which would already show the picture that the EU can’t be serious in saying that ASEAN is its equal?

7.     Given the possible economic, social and environmental effects, the report seems to put premium on the projected economic gains sending the message that the social and environmental costs will be negated by these economic gains.

8.     Question is also being raised on how ECORYS and ultimately, the EC as the commissioner of this study, will reconcile the possibility of varying responses from the different stakeholders in the EU and ASEAN as to the choice of sectors and horizontal issues, for instance, and other focus themes.