Sustainability Impact Assessment (SIA)
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Sustainability Impact Assessment (SIA) of the negotiations of the trade agreement between the European Community and the Countries of the Cooperation Council for the Arab States of the Gulf (GCC) FINAL REPORT (This report was finalised upon analysis and evaluation of all written content related comments received from public society until 30 May 2004 (being four months of public consultation) and a public society consultation meeting held on 18 February 2004, in the offices of the European Commission.) Framework Contract EC TRADE 02-F3-03 30 May 2004 This report was prepared with financial assistance from the Commission of the European Communities. The views expressed herein are those of the Consultant, and do not represent any official view of the Commission. In Cooperation with: PricewaterhouseCoopers for the European Commission Final report 30 May 2004 1/351 Acknowledgements Project Team Manager Christoph Vanderstricht PwC Project Team Lies Deurinck David Giordano Christoph Vanderstricht Willem Thomas Van Ierland Natalie Vermeir CEPS Project Team David Kernohan SIA Experts Sarah Richardson Julian Arkell PricewaterhouseCoopers for the European Commission - final report – 30 May 2004 2 Table of Contents I. Highlights ..............................................................................................17 II. Executive summary .............................................................................17 II.A Aim of this Sustainability Impact Assessment .................................................. 17 II.B The EU and the GCC, two markedly different regions ....................................... 18 II.B.1 Their economies ..................................................................................... 18 II.B.2 Their environment .................................................................................. 19 II.B.3 Their social fabric ................................................................................... 19 II.C The issues at the negotiating table of the Free Trade Agreement that could have an impact on the sustainability of the GCC and the EU...................................................... 19 II.C.1 Trade in goods ........................................................................................ 20 II.C.2 Trade in services..................................................................................... 20 II.C.3 Foreign Direct Investment....................................................................... 21 II.C.4 Public Procurement................................................................................. 21 II.D What potential impacts have been identified? ................................................... 21 II.D.1 Impacts on their Economies..................................................................... 21 II.D.2 Impacts on their Environment.................................................................. 23 II.D.3 Impacts on their Social Fabric ................................................................. 26 II.E Sector specific Impact Assessments................................................................. 27 II.E.1 The Petrochemical Sector........................................................................ 27 II.E.2 The Aluminium Sector ............................................................................ 28 II.F Potential mitigation measures.......................................................................... 29 II.G Follow-up/further steps ................................................................................... 30 II.G.1 In-depth analysis of Services ................................................................... 30 II.G.2 In-depth analysis of the food sector, clustering several sub-sectors:............ 30 II.G.3 Blueprint for cooperation on sustainable development of GCC region as part of the development and implementation of mitigation measures................................. 31 III. Introduction ........................................................................................31 III.A Purpose of the SIA.......................................................................................... 31 III.B EU-GCC Free Trade Agreement...................................................................... 32 III.C Overall Project Description and Management ................................................... 33 III.D Consultation Process....................................................................................... 34 III.D.1 Electronic Mechanisms ........................................................................... 34 PricewaterhouseCoopers for the European Commission - final report – 30 May 2004 3 III.D.2 Stakeholder Meetings.............................................................................. 36 III.E Data Availability ............................................................................................ 36 IV. Overall approach to the SIA.................................................................37 IV.A General Approach........................................................................................... 37 IV.A.1 Context .................................................................................................. 37 IV.A.2 Screening ............................................................................................... 38 IV.A.3 Global SIA and sector specific SIA assessments....................................... 38 IV.A.4 Defining mitigation measures.................................................................. 39 V. Context for the SIA .............................................................................39 V.A Introduction to the GCC and the EU ................................................................ 39 V.B Geographic/Climactic Context......................................................................... 40 V.B.1 The GCC countries ................................................................................. 40 V.B.2 The EU.................................................................................................. 40 V.C Economic Context .......................................................................................... 41 V.C.1 The GCC countries ................................................................................. 41 V.C.2 The EU and its new Member States ......................................................... 48 V.D Political/regulatory context.............................................................................. 49 V.E Environmental Context ................................................................................... 50 V.E.1 Freshwater Quantity and Quality ............................................................. 51 V.E.2 Deterioration of land resources................................................................ 54 V.E.3 The unsustainable consumption of natural resources and the impact on biodiversity ............................................................................................................ 55 V.E.4 Urbanisation and associated issues........................................................... 56 V.E.5 Air Quality and GHG Emissions .............................................................. 57 V.F Social Context ................................................................................................ 58 V.F.1 Demographic Profiles ............................................................................. 58 V.F.2 Education ............................................................................................... 59 V.F.3 Health and welfare.................................................................................. 59 V.F.4 Labour/Employment ............................................................................... 60 V.F.5 Poverty .................................................................................................. 63 V.F.6 Civil and Political Freedoms.................................................................... 63 V.F.7 The Human Development Index .............................................................. 64 V.G Conditioning Factors for the SIA..................................................................... 64 PricewaterhouseCoopers for the European Commission - final report – 30 May 2004 4 V.G.1 Governance............................................................................................ 65 V.G.2 Culture................................................................................................... 65 V.H Trade in Goods: Market Access for Industrial Products ..................................... 66 V.I Trade in Services............................................................................................ 72 V.I.1 Services and structural change..................................................................... 72 V.I.2 Importance of services in the GCC............................................................... 73 V.I.3 How Services Add Value ............................................................................ 74 V.I.4 Potential impacts of an EU-GCC FTA on Trade in Services .......................... 77 V.J Other issues related to Market Access.............................................................. 81 V.J.1 Foreign direct investment ............................................................................ 82 V.J.2 Financial Services....................................................................................... 86 V.J.3 Standardisation and Conformity