: Mr. Lars Henrik Knutrud (Norwegian Ministry of Foreign Affairs) From : Mr. Svein Erik Haarklau (WWF-Norway) Date :

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1 WWF-Norway Kristian Augusts gate 7A Box 6784 St. Olavs plass 0130 Oslo Norway Tel: Fax: Memo To : Mr. Lars Henrik Knutrud (Norwegian Ministry of Foreign Affairs) From : Mr. Svein Erik Haarklau (WWF-Norway) Date : Subject : WWF comments to Norwegian studies of environmental impacts of trade liberalisation Copies to : Ministry of the Environment, Norwegian Agency for Development Co-operation (NORAD), Forum for Development and Environment SUMMARY Introduction WWF, World Wide Fund for Nature, has commented on the four Norwegian studies of environmental impacts of further trade liberalisation in the context of future WTO negotiations. The studies cover agriculture, fisheries, transportation services in addition to a cross-sectoral study. Given the lack of a detailed Terms of Reference (ToR) for the studies, a comparison of the final study reports with what the studies actually were expected to look into as defined by the Norwegian Government is difficult. Our comments are therefore based on set of criteria or key elements developed through the ongoing WWF Sustainability Assessment 1 (SA) project. These key elements build upon recommendations and guidelines from various organisations, such as the United Nations Environment Programme (UNEP), the Organisation for Economic Co-operation and Development (OECD) and the European Union (EU). The key elements comprise: i) objectives, ii) timing, iii) responsibilities, iv) participation and process, v) method, vi) starting with sustainability, vii) trade focus, ix) considering alternatives, and x) policy recommendations. The studies deal with complex issues and a field with great methodological challenges. The studies were initiated in 1999, when there was even less experience in the field than is the case today. Together with limited resources available for the studies this puts certain limitations on the studies that we fully acknowledge. The lack of detailed ToRs means that most of WWFs key elements were not specifically mentioned in the mandate for the studies. These limitations do, however, not change our overall conclusions of the four studies. We have limited experience in relation to the model and modelling utilised in the cross-sectoral study. Therefore, some of our conclusions may be less relevant for certain aspects (for instance methods) of this study. 1 Sustainability assessment: We try to consistently use the words sustainability assessment. Other names for such assessments include, among others, sustainability impact assessments, integrated assessments or environmental and social assessments. comments MFA stud B Page i

2 Main findings and conclusions The studies clearly fail to meet the overall goal of such studies and fail to fulfil certain fundamental requirements for impact assessments of trade and trade liberalisation. These studies do not provide a useful basis for making decisions in relation to trade and trade liberalisation, and we believe that they are of little value to policy makers as well as other stakeholders. It is clear that the studies can not be considered as an adequate basis for integrating environmental concerns and certainly not integrating the more comprehensive and complex sustainability concerns. In fact, all four studies fail in relation to almost all of our criteria or key elements for an effective SA. A possible exception to some of the conclusions is the cross-sectoral study where we have too limited experience in relation to the model and modelling utilised to provide detailed comments in relation to all key elements. The main findings and conclusions are outlined below. Objectives The studies objectives are limited compared to the purpose of a sustainability assessment. In addition, some important elements from the already restricted mandate have not been followed up in the various studies. In particular, the mandate s emphasis on contribution towards an improved decision-making basis has not been reflected in the studies. Certain essential elements that should have been included are that the purpose of a sustainability assessment process is to develop and implement policies both trade and non-trade to ensure that the benefits from trade are realised and that potential adverse impacts are avoided or mitigated. Public participation and involvement of policy-makers to ensure ownership should also be reflected in the objectives. Assessing the current sustainability of the sector should also be an objective if meaningful conclusions about impacts nature and significance are to be made along with recommendations that contribute towards a sustainable development. Timing The timing of the studies was poor compared to the objectives specified in the mandate and even more so compared to how such a sustainability assessment process should be run. A SA is an important tool in the policy-making process and should be conducted sufficiently early in the policymaking process to have an impact on the development of trade as well as non-trade policies. In order for policy makers to take full advantage of the results of the assessment, which will help them to develop policies and direct negotiating positions, the SA must be initiated at an earlier stage. Yet, these assessments have to be initiated at some stage and they will unavoidably be poorly timed to past and ongoing negotiations as well as negotiations coming up in the near future. Also assessments initiated to study the impacts of past trade agreements are valuable, and in fact necessary in order to improve the experience and knowledge base on which to base future sustainability assessments. Therefore the poor timing reduce their usefulness in terms of improving the decision making basis for the immediate WTO negotiations, but might still provide important lessons for future studies and negotiations. Responsibilities The studies have been carried out by various institutions contracted by the Ministries of Agriculture, Fisheries, Trade and Industry and Foreign Affairs. Other government departments do not appear to have been equally and effectively involved in the process, even though a interministerial group has provided some advice. The limitations in responsibility may be a problem by limiting the amount of relevant information obtained, limit the scope of impacts analysis and limit the feeling of ownership and buy-in. Buy-in and a sense of ownership may be particularly important with respect to the policy makers, trade and non-trade, who should make use of the sustainability assessment as an improved basis for decision-making. A truly multidisciplinary team will also assist in ensuring greater coverage of relevant areas and therefore a better decision-making basis, for instance by identifying the full range of national interests and potential conflict between policy areas at an early stage. comments MFA stud B Page ii

3 Participation and process Economic, environmental and developmental impacts of trade liberalisation are relevant for a wide range of interests and stakeholders. Sustainability assessment processes should therefore be open and transparent and include politicians, policy-makers, government officials, industry, commerce and civil society. Stakeholders should be given the opportunity to participate in the process from establishing a detailed ToR, through the assessment itself to follow-up and monitoring. Limited resources and short time frames for these studies are likely reasons for the lack of a clear approach to effective multistakeholder participation. There appear to be no public participation in the assessment process leading to the final study reports, which is very unfortunate. However, the current hearing process (under which these comments are provided) is clearly a positive step. Method An assessment should clearly identify its overall approach and methodology, which should be suitable to fulfil the objectives of the study and produce the expected outputs. In a situation where there is no one size fits all approach to assessment and there is a need for more experience from this complex field, the need for a clear description of approach and methodology is obvious. The agricultural, fisheries and transportation services studies are all clearly inadequate in the description of approach and methodology, in fact these elements are more or less missing. The lack of a clear approach and method can partly explain the limited value of the results and recommendations of these studies. The cross-sectoral study has a more comprehensive description of the model used and modelling carried out. WWF has limited experience with modelling and will not provide comments on that approach at this time. Starting with sustainability The studies only to a limited or very limited extent discuss environmental issues. The issues mentioned is presented in a rather general and textbook like style. Economic issues and even more so developmental issues are missing. None of the studies make any attempt to identify a sustainability baseline, and current unsustainable practices are barely discussed or not discussed at all. Regulatory and policy issues are almost entirely absent. These weaknesses mean that assessing the nature and significance of trade-related impacts will be difficult, as will making recommendations of appropriate mitigation and enhancement measures including policy recommendations (trade and non-trade). Sustainability impacts All studies mention the difficulties of identifying and quantifying impacts, both direct and in particular indirect impacts. The problems are reflected by the extremely few clearly spelt out conclusions. Environmental impacts are the focus of the studies, as was specified in the mandate, but the discussions of environmental impacts are generally very limited. Economic and in particular social and regulatory impacts are poorly studied, or simply omitted. None of the studies fulfil the mandate to examine national, regional and international issues. None of the studies discuss limits to sustainability (the ability of an ecosystem and/or society to maintain itself in a healthy state ) or mentions that such limits exist. Irreversible impacts or cumulative impacts are omitted. Given the clearly insufficient description of current conditions of the sectors (existing stresses, challenges and sustainability), it is almost impossible to assess the significance of impacts identified. Trade focus The focus of the studies is on traditional trade measures. Discussions of trade and trade related policies in a broad sense are not provided, even though this is a key element in an effective SA. Clearly, such a broad scope would require much more resources to be allocated for the studies and a broader participation. comments MFA stud B Page iii

4 Considering alternatives There is no consideration of alternatives and development of more sustainable options has not been included in any of the studies. Consequently, the studies are reactive instead of proactive. Public participation would probably have brought alternatives on the table, which would have given policymakers a broader basis for making decisions with respect to negotiation positions and policy responses (trade and non-trade). The studies lack a good description of the current conditions, including the sustainability of the sector. Together with a poor analysis of impacts, the need for alternatives and more sustainable options is very difficult to assess. If trade is to contribute to a sustainable development, these elements need to be included in the SA process. Policy recommendations A key element of a sustainability assessment is to provide concrete policy recommendations, related to both trade and non-trade factors, in order to mitigate negative impacts and enhance positive ones. A study of sustainability issues may also result in important findings and recommendations that will make activities in a sector more sustainable. Three out of the four studies do not make any policy recommendations. In fact they provide no specific recommendations at all, not even of future fields of study. The studies suffer from a lack of an adequate description of the current situation, including the sustainability of the sector, and clear conclusions about the impacts. This means that there is not a good basis for making policy recommendations. However, recommendations on future fields of study should have been indicated. Recommendations We believe such assessment processes have the potential to become very important and useful prior to, during as well as in the follow-up of trade negotiations and trade liberalisation measures. A range of important lessons can been learnt from the four studies. We recommend that these are discussed and shared with other stakeholders, and subsequently used for future sustainability assessments. Sustainability assessment is an emerging field and efforts are currently underway. It is by learning by doing that we can gain further understanding in this complex field. We therefore encourage the Norwegian Government to continue such efforts in close co-operation with other stakeholders. WWF is interested in actively participating in this process and contributing to this important field in the future. We recommend that sectors with significant sustainability issues involved be prioritised, in particular those that will be discussed in upcoming WTO negotiations. We believe that fisheries and aquaculture are among the most important sectors for future sustainability assessments. As a major export earner, and with aquaculture expanding rapidly, the development in trade policies will be important in terms of economic, environmental and developmental issues both at the national and international level. Future SAs should have detailed Terms of Reference with clearly defined objectives that includes the key elements highlighted above. It is important that policies are developed and implemented to ensure that benefits from trade are realised and that negative impacts are avoided or mitigated. Policies should cover both trade and non-trade areas and ensure policy coherence in the work towards sustainable development. Timing is a crucial issue and SAs need to be conducted sufficiently early in the policy-making process to have a real impact on the policy development and negotiation positions. We therefore recommend that new SAs are initiated soon. Policy-makers, negotiators, relevant government departments and other stakeholders should be involved from the outset of the process. Unless high-level commitment to, and involvement in, the SA process is ensured, the SA process will remain at the periphery of policy-making. Trading partners like developing countries would also benefit from the early comments MFA stud B Page iv

5 involvement. We strongly recommend the early public participation to ensure information sharing, a sense of ownership and buy-in. We recommend that a lot of attention is paid to the approach and methodology to be applied in a SA. It is important to ensure that the suggested methods are likely of fulfilling the SA objectives and provision of expected outputs. Given the methodological challenges at present and the need for adjustment to local conditions (information availability, priorities and needs), flexibility is important and close follow-up to correct the approach, if needed, is essential. We strongly recommend a thorough description of the current conditions, covering economic, environmental, developmental and regulatory aspects. This should be the basis for identifying a sustainability baseline, or at least whether current conditions and practices are sustainable. We further recommend that this be part of the basis for assessing the nature and significance of impacts. A SA should further discuss limits to sustainability and whether the trade or trade liberalisation in questions will move the sector(s) in a less or more sustainable direction, and possibly beyond the limits to sustainability. It is important that a SA consider trade policy in a broad sense, covering aspects like investments, services, privatisation and various other trade-related policies. We recommend a proactive approach, where alternative courses of action with respect to both negotiation positions and policy responses are considered and included as part of the decisionmaking basis for policy-makers. This may be important to develop more sustainable options with input from stakeholders from which decision-makers can choose. Finally, we strongly recommend that policy recommendations are a key aspect of a SA. These recommendations should cover both trade and non-trade issues and respond to the findings of the SA when it comes to identified impacts and the current sustainability of the sector(s) in question. The recommendations should promote overall coherence of Norway s objectives in fields like trade, environment, development and poverty alleviation. comments MFA stud B Page v

6 TABLE OF CONTENTS SUMMARY... i 1. BACKGROUND AND INTRODUCTION WWF in trade and environment Norwegian studies CRITICAL ELEMENTS FOR A SUSTAINABILITY ASSESSMENT Objectives Timing Responsibilities Participation and process Method Starting with sustainability Sustainability impacts Trade focus Considering alternatives Policy recommendations REVIEW OF THE NORWEGIAN STUDIES Objectives Agricultural study Fisheries study Transportation services study Cross-sectoral study Key review findings Timing Agricultural study Fisheries study Transportation services study Cross-sectoral study Key review findings Responsibilities Agricultural study Fisheries study Transportation services study Cross-sectoral study Key review findings Participation and process Agricultural study Fisheries study Transportation services study Cross-sectoral study Key review findings Method Agricultural study Fisheries study... 9 comments MFA stud B Page vi

7 Transportation services study Cross-sectoral study Key review findings Starting with sustainability Agricultural study Fisheries study Transportation services study Cross-sectoral study Key review findings Sustainability impacts Agricultural study Fisheries study Transportation services study Cross-sectoral study Key review findings Trade focus Agricultural study Fisheries study Transportation services study Cross-sectoral study Key review findings Considering alternatives Agricultural study Fisheries study Transportation services study Cross-sectoral study Key review findings Policy recommendations Agricultural study Fisheries study Transportation services study Cross-sectoral study Key review findings Summary table CONCLUSIONS AND RECOMMENDATIONS Conclusions related to the key elements of a sustainability assessment Objectives Timing Responsibilities Participation and process Method Starting with sustainability Sustainability impacts Trade focus Considering alternatives Policy recommendations Recommendations for follow-up REFERENCES comments MFA stud B Page vii

8 APPENDICES A WWF Position Statement: Balanced Process, Balanced Results: How to get there? Critical Elements for Sustainability Assessment B WWF Position Statement: An Effective Multistakeholder Process for Sustainability Assessment: Critical Elements C WWF Brochure: Balanced process, balanced results: Sustainability Assessments and Trade ABBREVIATIONS ECON EU GATS OECD MFA MoA MoE MoF NAFTA MoTI NILF SA ToR TRIPs UNEP WTO WWF ECON Centre for Economic Analysis European Union General Agreement on Trade in Services Organisation for Economic Co-operation and Development Norwegian Ministry of Foreign Affairs Norwegian Ministry of Agriculture Norwegian Ministry of Environment Norwegian Ministry of Fisheries North-American Free Trade Area Norwegian Ministry of Trade and Industry Norwegian Agricultural Economics Research Institute Sustainability Assessment Terms of Reference Trade Related Intellectual Property Rights United Nations Environment Programme World Trade Organisation World Wide Fund for Nature (previously World Wildlife Fund) comments MFA stud B Page viii

9 1. BACKGROUND AND INTRODUCTION 1.1. WWF in trade and environment WWF, World Wide Fund for Nature, has since it was founded in 1961 become one of the world's largest and most effective independent organizations dedicated to the conservation of nature. Currently, WWF has almost 5 million members worldwide. WWFs national organisations and programme offices world wide annually run about projects in almost one hundred countries. Despite often being perceived as a conservation organisation focusing on species conservation, WWF is working within a much broader range of issues, including trade and investment issues. The justification for the latter is quite simple; trade and investment flows have large implications for the conservation and sustainable use of natural resources. Working for successful conservation and sound natural resource management, WWF must take trade and investment issues carefully into account. WWFs work on trade, investment and environment began during the GATT (General Agreement on Tariffs and Trade) negotiations in July Today, the Trade and Investment Unit in WWF International is leading and co-ordinating a growing network of WWF trade and investment officers. We are also working to increase capacity particularly in developing countries. The main objective of our work is to redirect trade and investment policies and flows, including international trade and investment agreements, towards the objective of sustainable development. Among our activities is a three year project on sustainability assessments that aim to: Promote the adoption and implementation of effective sustainability assessment processes by national governments Build local capacity for stakeholders and governments to undertake and participate in sustainability assessments, and Demonstrate the value of sustainability assessments through their application in different sectors and regions The Norwegian Government has kindly supported WWFs SA project. This support has also made it possible to carry out some activities in Norway, under which these comments are provided. For more information about the SA project, see attached brochure and our Balanced trade website ( The website has links to about 50 case studies and relevant publications as well as other information about trade, environment and development issues Norwegian studies The Norwegian Government contracted four independent Norwegian institutions to carry out the four studies. The studies were supervised by various ministries, as shown in Table 1 below. The studies were initiated in the second half of 1999 and completed during the spring of Despite this relatively long period between study initiation and final report submission, time and other resources available for the studies were limited. It seems like the contracted institutions were given a budget equivalent to a few man-months of work. As far as WWF is aware, no detailed Terms of Reference was prepared for any of the studies. comments MFA stud B Page 1

10 Table 1 Brief information about the four Norwegian studies. Sector Client Contracted institution Report language Agriculture Fisheries Transportation services Ministry of Agriculture (Landbruksdepartementet) Ministry of Fisheries (Fiskeridepartementet) Ministry of Trade and Industry (Nærings- og handelsdepartementet) Cross-sectoral Ministry of Foreign Affairs (Utenriksdepartementet) Norwegian Agricultural Economics Norwegian only Research Institute (Norsk institutt for landbruksøkonomisk forskning, NILF) University of Tromsø (Universitetet i Tromsø) ECON Centre for Economic Analysis (ECON Senter for økonomisk analyse) Statistics Norway (Statistisk sentralbyrå, SSB) Norwegian only Summary and one chapter (on GATS) in English Main report in English, appendices in Norwegian 2. CRITICAL ELEMENTS FOR A SUSTAINABILITY ASSESSMENT WWF (2002a,b) has presented a number of key elements, which we consider should be included in the assessment process to ensure quality and usefulness of the SA process. The elements build upon recommendations and guidelines from various organisations, such as the United Nations Environment Programme (UNEP 2001), the Organisation for Economic Co-operation and Development (OECD 1994) and the European Commission (University of Manchester 2002). The elements include: Objectives Timing Responsibilities Participation and process Method Starting with sustainability Sustainability impacts Trade focus Considering alternatives Policy recommendations In the following, a short description of the various key elements and their importance is given Objectives The purpose of a sustainability assessment is to develop and implement policies both trade and non-trade to ensure that the benefits from trade are realised and that potential adverse impacts are avoided or mitigated. It is important to clearly specify at the outset the broad objective of the SA process, and that it is a process not just a document or report. The SA should also mention any specific aims, such as informing policy-makers in the context of a particular set of negotiations. comments MFA stud B Page 2

11 2.2. Timing A sustainability assessment is an important tool in the policy-making process and should be conducted sufficiently early in the policy-making process to have an impact on the development of policies. Policy makers must be able to take full advantage of the results of the assessment, which will help them to develop policies and direct negotiating positions. Timely provision of a broad decisionmaking basis is necessary in order to take into account relevant economic, environmental and developmental considerations in a balanced and practical manner. The early assessment of trade liberalisation agreements can help clarify national goals through participatory processes, ensure full access to information, identify required ancillary or flanking policies, build a constituency within government and beyond in support of such goals and policies, and prepare the ground for subsequent assessments Responsibilities It is important that all relevant government departments are equally and effectively involved in the process. The responsibility for leading SA within government should fall equally across the relevant departments, ministries and/or agencies responsible for economic and trade issues, environment and development matters. Establishing a multidisciplinary team to conduct the SA is important to ensure that all relevant areas are covered. Policy recommendations flowing from the SA should integrate the various interests, build on synergies and aim to resolve conflict between key policy areas. It is also advisable, where appropriate, to recruit outside expertise Participation and process The economic, regulatory, environmental and developmental impacts of trade policies or trade agreements touch the interests of a wide range of individuals and stakeholders, from politicians and government officials to industry groups, environmentalists, and civil society more broadly including local and indigenous communities. Sustainability assessments should therefore be open and transparent. All relevant stakeholders should be included in an ongoing process, which should start prior to defining the ToR and continue after the agreement/policy is implemented and therefore include follow-up and monitoring mechanisms. Without a sense of ownership and buy-in among highlevel officials as well as other stakeholders, which could be ensured through stakeholder involvement, the SA process will remain at the periphery of policy-making. The development and implementation of a clear approach to effective multistakeholder participation in the process of SA will promote coherence and legitimacy in policy making, and contribute to the quality and usefulness of SA itself, whether undertaken by governments or others Method The sustainability assessment should clearly identify its overall approach and methodology. There is no one size fits all approach to assessment. However, the method for conducting SA should include a range of quantitative and qualitative tools, taking into account relevant factors such as capacity, availability of information, resources, expertise, etc. In practice, this means that approaches vary in response to local realities, priorities and needs. Sustainability assessment is an emerging field and current efforts are really learning processes: it is by learning by doing that knowledge and expertise are building up worldwide. comments MFA stud B Page 3

12 2.6. Starting with sustainability Sustainability assessments should identify a clear sustainability baseline for the issue/sector under investigation, describing current economic, developmental and environmental conditions. The range of economic, environmental and developmental issues associated with the sustainability of a sector under investigation should be identified. For each area, relevant regulatory and policy issues should also be considered. SA should highlight any key issues associated with unsustainable practices and use relevant indicators to provide further concrete empirical data to support the analysis. This information can provide a useful baseline for determining the present state of sustainability within a sector, from which to assess the nature and significance of trade-related impacts Sustainability impacts SA should identify positive and negative effects, including economic, environmental, developmental and regulatory impacts, at domestic and international levels. SA should recognise that there may be limits to sustainability - the ability of an ecosystem and/or society to maintain itself in a healthy state. The analysis should consider issues of scale and spatial distribution, taking into account (i) existing environmental and social stresses, (ii) the ability of ecosystems or societies to absorb additional pressure, and (iii) irreversibility of certain impacts. SA should acknowledge that even small impacts, either incrementally or in combination with other stresses, can threaten ecosystems or societies in subtle but important ways Trade focus In order to be comprehensive, SA should not limit itself to narrowly constructed trade measures in the classical sense. Sustainability assessments should consider trade policy in a broad sense. Trade and investment policy may include much more than trade measures such as tariffs and related measures, non-tariff measures, trade-related subsidies, trade-related intellectual property rights (TRIPS), or trade-related investment measures. Broadly-based trade liberalisation agreements such as NAFTA and the prospective FTAA include key sectors such as investment and services, and a wide range of economic measures and institutional arrangements. Trade-related policy might also refer to specific commodity or sectoral agreements. Trade-related policies may also include such measures as privatisation, changes in customs procedures, foreign exchange policies, and macroeconomic and microeconomic policies at the domestic level Considering alternatives SA should be proactive, not reactive. It should not simply assess an existing or proposed set of policies; rather it should help the development of more sustainable options. Therefore, sustainability assessment should focus not only on the trade policy measure or trade agreement being reviewed but also on alternatives. As a key part of the policy-making process, it is important for those undertaking the SA to consider alternative courses of action with respect to both negotiating positions and policy responses. These alternatives should also be informed by public involvement Policy recommendations It is important that the sustainability assessment provide concrete policy recommendations related to trade and non-trade factors. Policies may be crafted at the domestic, regional and/or international levels. They may be directly related to trade (change in a trade negotiating position, slower opening up of sectors, or even no trade), or they may focus in priority on environmental or development- comments MFA stud B Page 4

13 related issues (non-trade related). The question of what can be done to make activities within a particular sector more sustainable should be addressed. Recommendations should be meaningful, practical and prescriptive. When considering the range of options associated with this section of SA, policy makers should ensure that they address the economic, environmental and development priorities identified in the SA. Options should be practical and consistent with domestic and international legal regimes, and with other policies being developed in response to the SA. In order to ensure the full implementation of the policies, a sufficient level of resources and capacity to monitor policy options should also be considered. These recommendations should be publicly disclosed. 3. REVIEW OF THE NORWEGIAN STUDIES The four Norwegian studies have been briefly reviewed in relation to the key elements of a SA as presented by WWF. Brief comments are given on each of the studies in relation to the key elements, and summarised in Table 2. Below we refer to the four studies as the agricultural study (Norwegian Norwegian Agricultural Economics Research Institute 2001), the fisheries study (University of Tromsø 2001), the transportation services study (ECON 2002) and the cross-sectoral study (Statistics Norway undated) Objectives Agricultural study The purpose of this study is stated to be provision of a better decision making basis for future negotiations in WTO, and contribute to integration of environmental concerns in the international trade system and negotiation process (paragraph, page 2). The purpose as it is stated reflects the most important parts of the objectives in the (somewhat limited) mandate given by MFA. However, the study does not provide the information needed to fulfil it s objectives, even though the objectives are too narrowly defined compared to an effective SA Fisheries study The fisheries study refers to the mandate and highlights positive and negative environmental impacts at national, regional and global levels as the objective of the study. Given the limited resources available the study limits the ambitions of the study to assess the direction of the environmental impacts. However, the study does not provide the information needed to fulfil it s objectives, even though the objectives are too narrowly defined compared to an effective SA Transportation services study The study does not clearly state it s objective and makes no clear reference to its mandate. The main issues to be covered by the study are stated to be the links between the transportation services sector and environmental impacts, the likely scenarios (extent) for future GATS negotiations, and how the various scenarios will affect the environment. The study limits itself to cover direct impacts of liberalised transportation, and excludes issues like changes in trade agreements for various goods and investments. The study does not provide the information needed to fulfil its objectives, even though the objectives are too narrowly defined compared to an effective SA. comments MFA stud B Page 5

14 Cross-sectoral study The main objective of the cross-sectoral study is to analyse the effects on Norwegian emissions to air and deposition of solid waste from the changes in Norwegian consumption and production patterns caused by WTO negotiations. Our limited experience from the model and modelling utilised suggest that we should not assess the degree to which the objectives are fulfilled. However the objectives are too narrowly defined compared to an effective SA Key review findings The studies objectives are limited compared to the purpose of a sustainability assessment. In addition, the already restricted mandate includes some important elements that have not been followed up in the various studies. In particular, the mandate s emphasis on contribution towards an improved decision making basis has not been reflected in the studies. Certain essential elements that should have been included are that the purpose of a sustainability assessment process is to develop and implement policies both trade and non-trade to ensure that the benefits from trade are realised and that potential adverse impacts are avoided or mitigated. Public participation and involvement of policy-makers to ensure ownership should also be reflected in the objectives. Assessing the current sustainability of the sector should also be an objective if meaningful conclusions and recommendations that contribute towards a sustainable development are to be made Timing Agricultural study The Norwegian studies were initiated in the second half of 1999, with the intention of improving the decision making basis for the next WTO round of negotiations. In order to influence the policy-making, positions as well as involve stakeholders in a meaningful way in relation to the expected negotiations, the timing was poor with late initiation of the study Fisheries study See above Transportation services study See above Cross-sectoral study See above Key review findings Timing of the studies was poor compared to the objectives specified in the mandate and even more so compared to how such a sustainability assessment process should be run. A SA is an important tool in the policy-making process and should be conducted sufficiently early in the policy-making process to have an impact on the development of policies, trade as well as non-trade policies. In order for policy makers to take full advantage of the results of the assessment, which will help them to develop policies and direct negotiating positions, the SA must be initiated at an earlier stage. It will not be possible to take into account relevant economic, environmental and developmental considerations in a balanced and practical manner. comments MFA stud B Page 6

15 Yet, these assessments have to be initiated at some stage and they will unavoidably be poorly timed to past and ongoing negotiations as well as negotiation coming up in the near future. Also assessments initiated to study the impacts of past trade agreements are valuable, and in fact necessary in order to improve the experience and knowledge base on which to base future sustainability assessments. Therefore the poor timing reduce their usefulness in terms of improving the decision making basis for the immediate WTO negotiations, but might still provide important lessons for future studies and negotiations Responsibilities Agricultural study On behalf of the MFA, the Ministry of Agriculture (MoA) has been responsible for the agricultural study. The study was sub-contracted to the Norwegian Agricultural Economics Research Institute (NILF), which is an independent research institute under the MoA. As far as WWF can see there has not been any responsibilities given to any other ministries or agencies with responsibilities or interest in environment, development and trade Fisheries study On behalf of the MFA, the Ministry of Fisheries (MoF) has been responsible for the fisheries study. The study was sub-contracted to the University of Tromsø, Department of Political Science. As far as WWF can see there has not been any responsibilities given to any other ministries or agencies with responsibilities or interest in environment, development and trade Transportation services study On behalf of MFA, the Ministry of Trade and Industry (MoTI) has been responsible for the transportation services study. The study was sub-contracted to ECON Centre for Economic Analysis, an employee owned economic knowledge-based firm carrying out research and consulting. As far as WWF can see there has not been any responsibilities given to any other ministries or agencies with responsibilities or interest in environment, development and trade Cross-sectoral study Statistics Norway, under the Ministry of Finance, was contracted by the MFA to carry out the crosssectoral study. As far as WWF can see there has not been any responsibilities given to any other ministries or agencies with responsibilities or interest in environment, development and trade Key review findings The studies have been carried out by various institutions contracted by Ministries of Agriculture, Fisheries, Trade and Industry and Foreign Affairs. Other government departments have not been equally and effectively involved in the process. The limitations in responsibility may be a problem by limiting the amount of relevant information obtained, limit the scope of impact analysis and limit the feeling of ownership and buy-in. Buy-in and a sense of ownership may be particularly important with respect to the policy makers and high-level officials, trade and non-trade, who should make use of the sustainability assessment as an improved basis for decision making. Given the very polarised and not always very constructive debate about economic globalisation and trade liberalisation recently, we believe a more participatory process would introduce nuances into the globalisation debate and make the debate more useful for all parties. A truly multidisciplinary team will also assist in ensuring greater comments MFA stud B Page 7

16 coverage of relevant areas and therefore a better decision-making basis, for instance by identifying the full range of national interests and potential conflict between policy areas at an early stage Participation and process Agricultural study As far as we can see there has not been any involvement of stakeholders outside the Government s own interministerial group, which included the ministries of foreign affairs, environment, agriculture, fisheries, trade and industry, transport, finance and petroleum and energy. This appears to apply for the preparation of the mandate/tor and carrying out the assessment Fisheries study See above Transportation services study See above. In addition the transportation services study mentions that WTO representatives were consulted Cross-sectoral study See above. Given the nature of this relatively complicated modelling exercise we would not expect a strong stakeholder involvement in all phases of this study. Stakeholders would simply not be able to provide meaningful input on parts of the model and the modelling exercise. However, in discussion of aspects like the study objectives, description of baseline conditions and policy recommendations stakeholder involvement would be beneficial Key review findings Trade liberalisation and associated assessments of the economic, environmental and developmental impacts is relevant for a wide range of interests and stakeholders. Sustainability assessment processes should therefore be open and transparent and include politicians, policy makers, government officials, industry, commerce and civil society. In some cases it will be important to pay particular attention to local and indigenous communities. Participation of trade partners, in particular developing countries, should be considered. Ideally, stakeholders should be given the opportunity to participate in the process from establishing a detailed ToR, through the assessment itself to follow-up and monitoring. Trade partners like developing countries have limited resources to carry out such assessment and their decision making basis will therefore be poor. Limited resources and short time frames for the studies undertaken are likely reasons for the lack of a clear approach to effective multistakeholder participation. Lack of stakeholder involvement results in less coherence and legitimacy in policy making, and reduce the quality and usefulness of such assessments. However, the current hearing process (under which these comments are provided) is clearly a positive step Method Agricultural study The agricultural study is basically a literature review based on project reports of a programme initiated by the Norwegian Ministry of Agriculture focusing on agriculture and environment. The review and comments MFA stud B Page 8

17 compilation of the reports contain no new analysis. Further, it is stated that the study is mainly a qualitative one, and that it will be limited to indicate directions of change. It is stated that the OECD methodology (OECD 1994) is difficult to apply, and the study will only to a limited extent follow this methodology. OECD s agrienvironmental indicators is used to some extent. Some results from a partial, static equilibrium model for the agricultural sector (JORDMOD) is used. The agricultural study lacks a proper section on methodology with description of approach and methods used Fisheries study The fisheries study makes a reference to the OECD methodology, but there is no description of the approach and methodology applied. This study is also basically a literature review. The study discuss concepts like trade liberalisation and changes in WTO-rules and environmental impacts and attempts to clarify what these mean in the context of the fisheries report. This is the section of the report that most resembles an approach. The study is a qualitative one Transportation services study The transportation services study frequently mentions the problems of methodology and measuring impacts and links between transport services and environment. No quantitative estimates are given, and the report barely mentions the OECD methodology. No description of approach and methodology is given Cross-sectoral study The cross-sectoral study applies a disaggregated dynamic CGE model of the Norwegian economy. The model is called MSG-6 (Multi-Sectoral Growth). The model has been designed for analysis of trade and industry policies as well as environmental effects of changes in economic activity. The model specifies 32 private business industries, seven government sectors and 60 commodities, of which 34 are tradables. The Norwegian National Accounts constitutes the main empirical data source for both calibration and estimation of behavioural and technology parameters. A more detailed presentation of the model can be found in the study report. The cross-sectoral study has clearly the most comprehensive methodology description, and it also discuss the importance of some assumptions Key review findings An assessment should clearly identify its overall approach and methodology, which should be suitable to fulfil the objectives of the and produce the expected outputs. In a situation where there is no one size fits all approach to assessment and when there is a need for more experience from this complex field, the need for a clear description of approach and methodology is obvious. Without such a description stakeholders will face difficulties in their participation and input to the process, and followup and learning from the process will be less effective. Ideally, the methodology should include a range of quantitative and qualitative tools, taking into account relevant factors such as capacity, availability of information, resources, expertise, etc. In practice, this means that approaches vary in response to local realities, priorities and needs. The agricultural, fisheries and transportation services study are all clearly inadequate in the description of approach and methodology. We believe this lack of a clear approach and method can explain the limited value of the results and recommendations of these studies. The cross-sectoral study has a more comprehensive description of the model used and modelling carried out. Unfortunately WWF- Norway has limited experience from such modelling and can not provide comments on this model and modelling at this stage. comments MFA stud B Page 9

18 3.6. Starting with sustainability Agricultural study The agricultural study contains a short description of the some environmental issues associated with agriculture, with focus on the multifunctionality and positive external effects in Norway. A few negative external effects are also mentioned, but there appears to be a bias which leaves an impression of an attempt to justify the existence of the agricultural sector through highlighting multifunctionality and positive external effects. Economic and developmental issues are not discussed, and a sustainability baseline is not identified. Unsustainable practices are not discussed, and forestry is completely excluded despite clear sustainability issues linked to conservation of biodiversity and environmentally harmful subsidies. Relevant regulatory and policy issues are barely mentioned Fisheries study Certain environmental and health issues are mentioned briefly in general terms, for instance overcapacity in the fishing fleet that is caused by subsidies, but no specific references to regions or impacts are given. It is also mentioned that there might be conflicts between environment and trade rules/guidelines, for instance the UN Food and Agricultural Organisation s (FAO) plan to reduce overcapacity and WTO rules and conflicts between various Multilateral Environmental Agreements and WTO rules. Economic and in particular developmental issues are barely mentioned. The description of fisheries sustainability issues often refers to the international arena or no geographical area at all, while Norwegian issues (e.g. setting quotas systematically above scientists recommendations, several aquaculture issues) are mostly overlooked or only discussed to a very limited extent. This is a serious omission given that the large size of this sector in Norway. There are no efforts to identify a sustainability baseline. Some regulatory issues at the international level are discussed, while Norwegian regulatory and policy issues are excluded Transportation services study Reference is made to various international studies of impacts from liberalisation within services, including transportation services. To a limited extent this covers environmental issues as the focus is more on impacts on the transport sector itself (which is an important step in the process of identification of environmental impacts). The study describes general and potential links between various environmental aspects and transport, for instance impacts on air quality, climate, noise, water pollution, accidents, habitat fragmentation and biodiversity. Variation in the type and extent of environmental impacts with different types of transport is discussed. Even though the description is very general, the transportation services study has the most comprehensive and systematic discussion of environmental aspects. Very little information is given about conditions in Norway. Developmental issues are not discussed and a sustainability baseline not identified. Regulatory and policy issues are considered to a small extent Cross-sectoral study The cross-sectoral study, which due to its modelling exercise has a somewhat different perspective, only to a limited extent discuss links between trade, environment and development. No sustainability baseline is defined. Regulatory and policy issues are mainly left out of the discussion. The dominance of the WTO over environmental treaties when it comes to enforcement and dispute settlement mechanisms is briefly mentioned. comments MFA stud B Page 10

19 Key review findings The studies only to a very limited extent discuss environmental issues associated with the various sectors. The issues mentioned is presented in a rather general and text book like style. Economic issues and even more so developmental issues are missing. None of the studies make any attempt to identify a sustainability baseline. Regulatory and policy issues are almost entirely absent. These weaknesses mean that assessing the nature and significance of trade-related impacts will be difficult, as will recommending appropriate mitigation and enhancement measures including policy recommendations (trade and non-trade) Sustainability impacts Agricultural study The introduction of the study emphasise that the relationship between agriculture and environment is the focus of the study, while the effects of a new agricultural agreement in WTO on agriculture and environment receive less attention. The reason given for this is the focus of the literature that the agricultural study is based on, which focus on the relationship between agriculture and environment rather than trade, agriculture and environment. WWF is surprised that the study already in the introduction emphasise that the study is in fact not a study of trade, agriculture and environment, despite the title Trade agriculture environment (translated from Norwegian), and certainly not a study of impacts. The study contradicts itself as the objective stated in the introduction of the study is to provide a better decision-making basis for future negotiations in WTO. Focus is on possible positive externalities associated with landscape, environment and food safety. Negative impacts are focused on aspects like erosion, nutrient runoff and pesticides. More emphasis is on the positive externalities, to an extent that leave the reader with an impression that it is not a balanced assessment. Sections of the report presents some impacts. With reference to a previous study, it is stated that under the assumption that there would be a significant reduction in agricultural employment (46% down) and cultivated agricultural area (30% down), certain impacts that are likely to occur are presented. However, this is not a full range of impacts, and there is a distinct lack of clarity around the impacts as they are described. In general, the study is clearly insufficient in terms of identification of positive and negative impacts, including economic, environmental, developmental and regulatory impacts. The study fail to provide information about impacts at the national, regional and global levels, as was required by the mandate. There is no discussion of a potential limit to sustainability, a threshold where the ecosystem or society can not maintain itself in a healthy state. There is no discussion of irreversible impacts or cumulative impacts Fisheries study The fisheries study mentions that the mandate requires identification of positive and negative environmental impacts at national, regional and global levels as the objective of the study. Given the limited resources available the study limits the ambitions of the study to assess the direction of the environmental impacts. Impacts are assessed in relation to two scenarios, a liberalisation scenario and a protectionist scenario. The study tries to follow the OECD methodology. The assessment is characterised by a text book like presentation of potential impacts, where very few clear indications are given and most comments MFA stud B Page 11

20 changes in trade patterns can yield both negative and positive impacts. Definitely, the links between trade liberalisation measures, actual trade changes and environmental impacts are complex, may vary between different fish species, are dependent on other factors like the fisheries management regime and other non-trade policies. Still, the lack of any conclusions is striking. There is no reasonably comprehensive identification of positive and negative impacts, including economic, environmental, developmental and regulatory impacts. The study does not provide information about impacts at the national, regional and global levels, as was required by the mandate. There is no discussion of a potential limit to sustainability, and there is no discussion of irreversible impacts or cumulative impacts Transportation services study The study has defined three scenarios which is the basis for impact assessment. Some positive and negative impacts are discussed, focussing on environmental impacts with some information on economic impacts and virtually no discussion of social impacts. Regulatory impacts are mentioned. Impacts are discussed in general terms and mostly without reference to national, regional or international conditions. As for the other studies there is no discussion of limits to sustainability, irreversible impacts or cumulative impacts. Despite the omissions of key aspect of such a study, the transport study appears to go further into the discussion of actual impacts of trade liberalisation rather than just potential links between transportation services and environment. Unlike the other studies, the transportation services study has a summary of its findings, making the results more accessible for policy makers and others Cross-sectoral study As mentioned above we do not have the competence required to review the model and modelling efforts in this study. However, we have some general comments without going into details from the study. The study appears to look into both some positive and negative impacts, covering economic and environmental impacts, and to some extent social impacts. The scope is limited to Norway, with regional and global issues left out. There is no discussion of limits to sustainability, irreversible and cumulative impacts Key review findings All studies mention the difficulties of identifying and quantifying impacts, both direct and in particular indirect impacts. There are extremely few clearly spelt out conclusions in the study. Environmental impacts are the focus of the studies, as was specified in the mandate, but the discussions of environmental impacts are generally very limited. Economic and in particular social and regulatory impacts are poorly studied, or simply left out. None of the studies fulfil the mandate of covering national, regional and international issues. None of the studies discuss limits to sustainability, irreversible impacts or cumulative impacts. Given the clearly insufficient description of current conditions of the sector (existing stresses, challenges and sustainability), it is almost impossible to assess the significance of impacts identified Trade focus Agricultural study The study was supposed to look at the impacts from reductions in support and protection, that is, classical trade liberalisation. This initial limitation is further limited by the fact that the study to a small comments MFA stud B Page 12

21 extent discuss impacts of trade but in fact focuses more on the relationships between agriculture and environment, in particular positive externalities and the multifunctional aspects of agriculture. The study highlights the uncertainty about the outcome of future WTO negotiations as a problem for study (but no potential scenarios are defined to study different potential outcomes). The study does not discuss trade and trade related policies in a wider context, and the links to impacts are barely discussed Fisheries study The study provides a very brief discussion of what trade liberalisation and changes in WTO rules may contain, but without arriving at a definition. The study limits itself to look at the overall and general changes in policy and rules (translated from Norwegian), which is not a very clear limitation. Tariffs and not-tariff barriers are discussed. Investments are just mentioned. The study looks at three scenarios; a liberalisation scenario, a protectionism scenario and a status quo scenario. These scenarios are, however, not clearly defined. The study only to a very limited extent discuss trade and trade related policies in a wider context, and the links to impacts are only briefly discussed in general terms Transportation services study A discussion is provided on different types of trade barriers within services. Brief references are made to studies of foreign direct investment. However, the study only to a limited extent discuss trade and trade related policies in a wider context, and the links to impacts are only briefly discussed Cross-sectoral study The study discusses some typical trade liberalisation issues of import protection (tariffs and non-tariff barriers) and subsidies. However, the study only to a limited extent discuss trade and trade related policies in a wider context Key review findings The focus of the studies is on traditional trade measures. Discussions of trade and trade related policies in a broad sense are not provided, even though this is a key element in an effective SA. Clearly, such a broad scope would require much more resources to be allocated for the studies and a wider participation Considering alternatives Agricultural study The study barely assesses an existing or proposed set of policies, and to an even smaller extent discusses and suggests alternative and/or more sustainable options. The study does not look at alternative courses of action with respect to negotiating positions and policy responses, probably because this was not mentioned in the mandate. It is likely that public participation would have brought alternatives on the table for discussion Fisheries study See above. comments MFA stud B Page 13

22 Transportation services study See above Cross-sectoral study See above Key review findings There is no consideration of alternatives and development of more sustainable options has not been included in any of the studies. Consequently, the studies are reactive instead of proactive. Public participation would probably have brought alternatives on the table, which would have given policy makers a broader basis for making decisions with respect to negotiation positions and policy responses (trade and non-trade). The studies lack a good description of the current conditions, including the sustainability of the sector. Together with a poor analysis of impacts, the need for alternatives and more sustainable options is of course difficult to judge. If trade is to contribute to a sustainable development, these elements need to be included in the SA process Policy recommendations Agricultural study The agricultural study does not make any policy recommendations. In fact there are no specific recommendations at all. In light of the difficulties encountered in the study and the omissions described above, the study should at least make clear recommendations for fields of future study that would improve the knowledge about sustainability impacts from trade and trade liberalisation in the agricultural sector Fisheries study The study makes no policy recommendations. Not a single specific recommendation is made. Given the difficulties encountered in the study and the omissions described above, the study should at least make clear recommendations for fields of future study Transportation services study The study mentions that trade liberalisation may cause adaptations of domestic policies other than trade, and these may be important. The importance of the regulatory frameworks of both transportation and environment as well as policy co-ordination is also mentioned. However, this is said to be outside the scope of the study. No policy recommendations are made, in fact no specific recommendations at all, not even recommendations for future fields of research Cross-sectoral study As the only study of the four, the cross-sectoral study actually recommends other policy instruments be applied to control environmentally harmful activities that expand in a trade liberalisation scenario. No specific recommendations are made directly, but it is emphasised that heavy polluting manufacturers are subject to favourable policy conditions by enjoying low energy prices and by paying low carbon taxes. Specific recommendations for future research are given. comments MFA stud B Page 14

23 Key review findings A key element of a sustainability assessment is to provide concrete policy recommendations, related to both trade and non-trade factors, to mitigate negative impacts and enhance positive ones. A study of sustainability issues for the sector in question may also result in important findings and recommendations that will make activities in a sector more sustainability. The policies recommendations may be at domestic, regional and/or international levels. They may be directly related to trade (e.g. change in a trade negotiating position, slower opening up of sectors, or even no trade), or they may be related to environmental or development issues (non-trade related). Economic, environmental and development priorities identified in the SA should be addressed and recommendations should improve policy coherence and be consistent with domestic and international legal regimes. Involvement of stakeholders, including relevant authorities, is important to ensure ownership to policy instruments recommended during a SA. The four studies suffer from a lack of an adequate description of the current situation, including the sustainability of the sector, and clear conclusions about the impacts. This means that there is not a good basis for making policy recommendations. However, recommendations on future fields of study should have been indicated Summary table Table 2 below summarises our comparison of the studies with the key elements as they are presented by WWF. The table is for illustration purposes and not meant as a detailed and quantitative assessment of the quality of the four studies. The overall conclusion is that the studies fail to meet the criteria defined for an effective SA. This may be caused by a variety of factors, including the lack of a detailed Terms of Reference, limited resources available, methodological problems, poor stakeholder involvement and limited experience among the institutions carrying out the studies. WWF s key elements were not specifically mentioned or required in the mandate for the studies. Therefore it was not expected that a review based on a comparison with these key elements would give a full or even a high score. However, our overall conclusions remain and several fundamental requirements for an effective SA have simply been omitted from the studies or only marginally been touched upon. comments MFA stud B Page 15

24 Table 2 Review summary of the Norwegian studies in relation to the key elements for a sustainability assessment as presented WWF. Agriculture Fisheries Transportation services Cross-sectoral Objectives -- Objectives limited compared to the purpose of effective SA, essential components missing also in mandate Timing -(-) Responsibilities Participation and process -(-) Poor timing with no specific link to policy-making process Few government bodies had responsibilities, few involved -- Not open and transparent, no public participation Method -- Literature review of studies of limited relevance. No proper methods description. Starting with sustainability Sustainability impacts -- No definition of sustainability baseline -- Few (sustainability) impacts identified, lack of conclusions Trade focus -- Trade and trade related policies not discussed in a wider context Considering alternatives Policy recommendations -- No alternatives or development of more sustainable options assessed -- Objectives limited compared to the purpose of effective SA, essential components missing also in mandate -(-) -(-) Poor timing with no specific link to policy-making process Few government bodies had responsibilities, few involved -- Not open and transparent, no public participation -- Literature review. No proper methods description. -- No definition of sustainability baseline -- Few (sustainability) impacts identified, lack of conclusions -- Trade and trade related policies not discussed in a wider context -- No alternatives or development of more sustainable options assessed -- Objectives limited compared to the purpose of effective SA, essential components missing also in mandate -(-) -(-) Poor timing with no specific link to policy-making process Few government bodies had responsibilities, few involved -- Not open and transparent, no public participation -- Literature review. No proper methods description. -- No definition of sustainability baseline -- Few (sustainability) impacts identified, lack of conclusions -(-) Trade and trade related policies barely discussed in a wider context -- No alternatives or development of more sustainable options assessed -- Objectives limited compared to the purpose of effective SA, essential components missing also in mandate -(-) -(-) Poor timing with no specific link to policy-making process Few government bodies had responsibilities, few involved -- Not open and transparent, no public participation Description of model given, we lack experience to review in detail -- No definition of sustainability baseline -(-) -(-) Few (sustainability) impacts identified Trade and trade related policies barely discussed in a wider context -- No alternatives or development of more sustainable options assessed -- No policy recommendations -- No policy recommendations -- No policy recommendations - Issue discussed, but no specific policy recommendations made ++ : Very good + : Good 0 : Neutral - : Inadequate -- : Poor comments MFA stud B Page 16