civil society dialogue - europa€¦ · • sme survey • •. revised-trade2016/c2/c06...

SUSTAINABILITY IMPACT ASSESSMENTS IN SUPPORT OF FREE TRADE AGREEMENTS BETWEEN THE EUROPEAN UNION AND THE PHILIPPINES AND BETWEEN THE EUROPEAN UNION AND

MALAYSIA

Civil Society DialogueDecember 18, 2018 – Charlemagne Building

REVISED-TRADE2016/C2/C06

Agenda

1. Introduction

2.Stakeholder Consultation Activities

➢Overview of local stakeholder workshops

➢Update on other stakeholder activities

➢Discussion

3.Overview of Draft Interim Reports

➢Methodology

➢The Philippines Draft Interim Report

➢Discussion

➢Malaysia Draft Interim Report

➢Discussion

4.Next Steps

➢Timeline for the next phases

➢Discussion


Stakeholder Consultations


Stakeholder Engagement Overview

❑ Online presence

▪ Online public consultation

▪ Website online contact form

▪ Social media channels

▪ Electronic newsletters

❑ Dialogues

▪ Civil Society Dialogues

▪ Inter-Service Steering Group

❑ Interviews and meetings

❑ Local workshop


Local Stakeholder Workshops

❑ 24 October Local Stakeholder Workshop in Manila

❑ 05 December Local Stakeholder Workshop in Kuala Lumpur

▪ Over 50 participants representing:

➢ Non-governmental Organisations

➢ Business organisation

➢ Labour organisations

➢ International organizations based in Malaysia and

the Philippines

➢ Other civil society organisations

❑ Stakeholders shared their comments and suggestions with the Study Team, as well as the

representatives of the Directorate General for Trade of the European Commission and of the

Delegation of the EU to the Philippines and the Delegation of the EU to Malaysia.


Manila Stakeholder Workshop Outcomes

❑ Stakeholders suggested that the study team should look more closely into:

➢ The impacts on SMEs in the Philippines, especially as the Philippines has prevalence of micro companies

➢ The fisheries sector, as stakeholders suggested that the CGE model underestimates the impacts on the fisheries sector

➢ Coconut oil

➢ Forest related production and environmental impacts to forests

➢ The issue of technology transfer

❑ Under the social, human rights and environmental impact section,

the stakeholders suggested to look more closely into:

➢ Children’s rights

➢ Indigenous people’s rights

➢ Freedom of association


Kuala Lumpur Stakeholder Workshop Outcomes

❑ Stakeholders suggested that the study team should look more closely into:

➢ The impacts on automotive and parts sector, as the CGE model could overestimate the impacts in this sector, it was also suggested to separate motor vehicles and parts.

➢ The impacts on beverages and tobacco sector, as the CGE model could also overestimate impacts in this sector.

➢ More nuanced overview is needed of the palm oil sector, taking more into account also the social impacts.

➢ Foreign Direct Investments and their impacts

❑ Under the social, human rights and environmental impact section, the stakeholders suggested to look more closely into:

➢ Migrant workers’ situation

➢ Environmental trade barriers

➢ More distinction needed between urban and rural Malaysia


Stakeholder Engagement: Survey

• 12 week online public consultation open until 15 January

• Distributed via the dedicated websites as well as in hardcopy during workshops and other meetings

• Objective: It further provides stakeholders with the opportunity to give feedback on the likely free

trade agreement’s economic, social, environmental, and human rights impacts.

3 Different Surveys:

• General Survey

• Consumer Survey

• SME Survey

•www.eu-malaysia-sia.com

•www.eu-philippines-sia.com

http://www.eu-malaysia-sia.com/

http://www.eu-philippines-sia.com/


Stakeholder Engagement: Interviews and Meetings

❑ Face-to-face meetings with interested parties

➢ The Study Team held 9 face-to-face interview sessions in Manila, and 5 sessions in Kuala

Lumpur, where stakeholders’ concerns pertaining to the environment and social issues were

discussed in a further detail.

❑ Stakeholder interviews via phone call, EU, the Philippines and Malaysia

➢ NGO and civil society representatives

➢ Business organisations

❑ Written Contributions

➢ Over 20 written contributions from NGOs and civil society organisations, international

organisations and business organisations from the EU and the Philippines and Malaysia

received.

➢ Contributions are still welcome


Stakeholder Engagement: Online Presence

Dedicated website

• Visibility of progress on the project by

publication of relevant information and

documents

• Main platform for conducting online

stakeholder outreach and consultation

• www.eu-malaysia-sia.com

• www.eu-philippines-sia.com

Electronic Newsletter

• To update stakeholders on the progress of

the project

• To announce important events

Social media channels

To update stakeholders on the progress

of the project

To facilitate discussion and stakeholder

engagement




Discussion


Overview of the Draft Interim Reports


Methodology

Objective:

Assess how trade and

trade-related provisions

under negotiation could

impact economic, social,

human rights and

environmental issues in each partner country


Overview of Draft Interim Reports

1. The SIA Report is a Draft Interim Reports (follow on from the initial Inception Report)

2. Draft Interim Reports use quantitative and a qualitative approach

❑Quantitative approach uses multi-region CGE model based on the GTAP framework

❑Qualitative approach uses regulatory analysis and assesses the potential impact on “SMEs”

3. Analysis an ‘ambitious’ degree of liberalisation and a more ‘conservative’ degree of liberalisation

4. Draft Interim Reports cover Economic, Social, Human Rights & Environment Assessments

5. Draft Interim Reports also analyse 6 key sectors

6. The Philippines Draft Interim Report will be available on: http://www.eu-philippines-sia.com/ and

Malaysia Draft Interim Report will be available on: http://www.eu-malaysia-sia.com/




Modelling Scenarios

❑ Baseline

▪ 2011 reference year

▪ Time horizon: 2032

▪ Projected growth in macro variables (GDP, sectoral TFP, population, skilled and unskilled labour

force) according to WB and UN projections

▪ Implementation of FTAs and EPAs (EU-Korea, EU-Singapore, EU-Vietnam, Pakistan-Indonesia,

Malaysia-Chile, Malaysia-Australia, Malaysia-Turkey, TPP, EFTA-Philippines, EU-Western Africa EPA, EU-Southern African Development Community EPA)

❑ Liberalisation Scenarios (2)

▪ Conservative scenario – less than full removal of

tariffs

▪ Ambitious scenario – full removal of tariffs


The Philippines Draft Interim Report


Economic Impact Assessment: Macroeconomic Impacts

❑ Expected overall increases in welfare, GDP and Trade (bilateral and total) for both sides.

❑ Greater projected gains under more ambitious agreement

❑ For GDP impact expected to be more pronounced in the Philippines than the EU;

❑ For both: increase in global exports of about 2 billion euros

❑ This means relatively bigger impact on Philippines as its economy is smaller

❑ Note: the CGE modeling does not fully take into account the removal of NTBs

❑ Note: the modelling does also not capture the impact of investments


Economic Impact Assessment: Sectorial Impacts for the EU

❑ Agriculture:

▪ marginal expected reductions in overall agricultural output;

▪ expansion in other animal products, tobacco & beverages and milk & dairy. Potential further gains from GIs

▪ Does not account for reduction in NTBs (SPS, TBTs, trade facilitation)

❑ Industrial products

▪ Projected expansion of output of:

➢ Chemical, rubber, plastic products

➢ Motor vehicles & parts

➢ Electronics

➢ Other transport equipment

▪ Projected contraction of:

➢ Wearing apparel, textiles

❑ Services

➢ Marginal estimated overall expansion of output; likely underestimated

➢ Larger output in “other services (ranging form retail and hospitality to healthcare and education)


Economic Impact Assessment: Sectorial Impacts for the Philippines

❑ Agriculture:

▪ Growth in output and exports

➢ Notable expansion in processed food section

➢ Growth in beverages and tobacco products; rice and sugar

❑ Industrial products:

▪ Notable expected expansion of overall and bilateral exports and output of:

➢ Textiles, wearing apparel, electronics

▪ Potential contraction of:

➢ Chemical, rubber, & plastic products, and other transport equipment

❑ Services

➢ Some expansion of output in services , especially other services, but also other transport services and financial services


Economic Impact Assessment: 6 sectors for in-depth analysis

Motor Vehicles – A noticeable increase can be expected in EU’s exports of motor vehicles to thePhilippines, as well as a potential increase in EU investments to the Philippines, which couldimprove domestic R&D capabilities, as well as facilitate skills and technology transfer.

Clothing and apparel – An increased output of clothing and apparel can be expected in thePhilippines, coupled with increased exports to the EU. Opportunities would exist for the Philippinesto integrate more into global value chains in this sector.

Fisheries – The modelling exercise suggests that a future agreement would not have a majorimpact on the fisheries sectors in the EU and the Philippines. Further analysis will be carried out.

Tourism – The preliminary findings do not show a clear impact of a future FTA on the tourismsector, however increased investments from the EU and increased tourist flows could potentiallyresult in some growth in the tourism industry in both the Philippines and the EU.

Other business services (BPO, communication and IT services) – Given its importance tothe Philippines’ economy, there is potential scope for a future FTA to generate economic impactsassociated with Business Process Outsourcing (BPO).

Electronics – The modelling exercise suggests that an increase in output and bilateral exportscan be expected for both the EU and the Philippines. The Philippines could potentially move higherup in the global value chain in this sector.


Economic Impact Assessment: Impacts on SMEs

❑ Potential gains to Philippine SMEs engaging in textiles, apparel and leather products (almost

90% SMEs)

❑ Potential gains to Philippine SMEs in electronics section, opportunities to further engage in the

Global Value Chains

❑ Expected decrease in output for EU SMEs in textiles, apparel and leather products; gains in

motor vehicles and transport equipment

❑ Involvement in GVCs can be supported by promotion of standards, logistics and trade

facilitation, information within or resulting from the FTA

❑ Reduction in Non-tariff barriers important for SME use of FTA


Social Impact Assessment: Shifts in Employment

❑The Philippines:

▪ Increase in employment in: leather products, wearing apparel, textiles, electronics, processed food, sugar.

▪ Increase in employment more pronounced under ambitious scenario.

▪ Potential contractions in employment in: motor vehicles and parts, other transport equipment, other machinery, chemicals, rubber and plastic products, paper, forestry and wood products, milk and dairy products.

▪ Potential skills mismatch

▪ Under any liberalization scenario, wages for both unskilled and skilled labour in the Philippines rise.

▪ Potential small increases in inequality in the Philippines to appear under an FTA

▪ Need for adjustment/ flanking measures

❑The EU:

▪ Increase in employment in: electronics sector, other transport equipment sector, motor vehicles and parts sector.

▪ Potential contractions in employment in: rice, sugar, wearing apparel, leather products and textiles sector.

❑Shifts of employment are more pronounced in the Philippines than in the EU.


Social Impact Assessment

❑Increase in GDP an welfare offer opportunities, but impacts depend on domestic policies including welfare spending; spending on education; policies towards reducing inequality.

❑Tackling the problems of informal and vulnerable employment, poor occupation safety and health standards as well as assuring women’s job security remain important aspects in the Philippines.

❑Expansion of Garment, Textile and Footwear (GTF) sector means potential job creation of about 20 000 new jobs.

❑Concerns of poor working conditions in the GTF sector in the Philippines

❑Importance of emphasizing the ILO Conventions and ILO Decent Work Agenda in the FTA


Human Rights Impact Assessment

Three main categories of human rights identified that potentially could be impacted by a future EU-

Philippine FTA

1. Special rights of the indigenous peoples (IPs)

•Land conversion for industrial or manufacturing zones resulting from increased investments and trade might lead to decreased access to land for indigenous peoples and deterioration of land rights for indigenous peoples

2. Women’s rights

•Expansion of sectors where women make up a large segment of the labour force can have implications on women’s rights (GTF sector); at the same time increase in female employment could ensure a greater culture of inclusivity.

3. Children’s rights to special protection

•Use of child labour could potentially grow with increased investments and trade in sectors (sugar, rice, fisheries and GTF sector) that have reported cases of child labour in the Philippines.

Disclaimer: direct effects of an FTA on human rights are limited. However, the sectors that profit or lose most from an

FTA are closely connected to specific groups of people. Indirectly human rights could therefore be impacted by trade and investment agreements.



Future FTA could potentially have impacts on the people in the Philippines occupied in and around

the sectors that see either a rapid increase in output or substantial increase in bilateral trade,

especially for sectors where concerns already exist on human rights issues.

Examples include:

• wearing apparel and textiles

• some agricultural sectors including sugar, vegetable oils and oilseeds

• fisheries.

Vulnerable groups are more likely to be impacted, including indigenous people, women,

children and migrant workers.


Environmental Impact Assessment

❑ Greenhouse Gas Emissions & Air Pollution: Small increase in CO2 and GHG emissions in both EU and the Philippines (more pronounced) foreseen under any liberalisation scenario.

➢ Potential adoption of mitigation measures and EU best practices, investment in innovative

technology can bring positive impacts and minimise the negative ones.

❑ Water quality and resources:

➢ Scale and composition effects as major contributors

Most impacted sectors include: rice, textile/apparel and leather products

Expected expansion of the textile/apparel industries raising concerns about pollution and

environmental degradation impacts (especially on water)

➢ Potential positive impacts from EU’s experience and capacity; increased cooperation;

application of new technologies; use of alternative resources



❑ Waste and Waste Management: High generation of waste expected to continue. Especially an

issue if material flows are mismanaged, or in areas where waste treatment infrastructure is

lacking (more pronounced in the Philippines).

❑ The increase in industrial output as foreseen under an FTA is expected to increase waste

generation through its scale effects

❑ Particular relevance of EU exports to the Philippines and treatment at the end of their life cycle

(e.g. apparel, textile and leather, motor vehicles and parts, metal products, electronics, chemical,

rubber and plastic products)

❑ Importance of mitigation measures

❑ Ecosystem services, biodiversity and protected areas: Main contributing factors on changing

ecosystems and diminished biodiversity are changing climates (due to increased GHG

emissions) and shifting land-use into areas previously untouched or little frequented by humans.

❑ Effects of pollution and overexploitation on biodiversity, could affect access to food.

❑ Concerns on illegal trade in wildlife and trade in endangered exotic species (including fish) / Opportunity to include provisions for joint cooperation on customs capacity


Discussion


Malaysia Draft Interim Report


Economic Impact Assessment: Macroeconomic Impacts

❑ Expected overall increases in GDP and Trade (bilateral and total) for both sides.

❑ Greater projected gains under more ambitious agreement

❑ Impact on EU expected to be Euro 3.54 – 4.63 billion added to GDP in absolute terms

❑ Impact on Malaysia is similar in absolute terms (Euro 4.21 – 5.63 billion added to GDP)

❑ For both: increase in global exports of about 8.5 billion euros

❑ This means relatively bigger impact on Malaysia as its economy is smaller

❑ Note: CGE modelling does not include cuts in NTBs for the agricultural sector

❑ Note: the modelling does also not adequately capture increases of investments

❑ This means that gains in terms of additional GDP may be greater


Economic Impact Assessment: Bilateral Trade Impacts

❑ EU: significantly increases its exports of manufacturing and motor vehicles & parts. Limited

impact on EU agri-foods and trade.

❑ Malaysia: modest changes in output and exports of agricultural products and services;

❑ For example, output of vegetable oil and oil seeds (includes palm oil) goes up by 0.8% only

❑ Bigger impact on industrial output (esp. machinery and electronics; but also wearing apparel

and textiles)

❑ In Baseline scenario trade balance in favour of Malaysia in baseline scenario moves further up

to Euro 15,6 billion

❑ In Conservative and Ambitious scenarios this is reduced to respectively Euro 6.8 and Euro 4.0

billion


Economic Impact Assessment: Sectorial Impacts (EU)

❑ Agri-foods:

➢ small expected reductions in overall agricultural output;

➢ Gains heavily reliant on agreement’s ability to remove tariffs on alcoholic beverages

➢ Does not account for reduction in NTBs (SPS, TBTs, trade facilitation)

❑ Industrial products

▪ Projected expansion of output of:

➢ Motor vehicles & parts

➢ Electronics

➢ Metal and metal products

▪ Potential slight contraction in output of:

➢ Vegetable oils and oilseeds

➢ Textile and wearing apparel

❑ Services

➢ Rather small estimated overall expansion of output; likely underestimated


Economic Impact Assessment: Sectorial Impacts (Malaysia)

❑ Agri-foods:

▪ Growth in output and exports

➢ Slight expansion of Vegetable oil and oilseeds sector

➢ Expansion of processed foods and forestry & wood products

❑ Industrial products:

▪ Notable expected expansion of overall and bilateral exports and output of:

➢ Electronics and machinery

➢ Textiles, wearing apparel and chemicals, rubber and plastic products

▪ Potential contraction of:

➢ Malaysian automotive production

➢ Beverages and tobacco

❑ Services

➢ Minor impacts associated with output and trade in services

➢ Expansion of output mainly in other services sector


Economic Impact Assessment: Impacts on SMEs

❑ Potential gains to Malaysian SMEs engaging in electronics sector

❑ Potential gains to Malaysian SMEs in electronics section, opportunities to further engage in the

Global Value Chains

❑ Decrease in output for EU SMEs in textiles, apparel and leather sectors; gains in motor

vehicles and parts and metal industry

❑ Involvement in GVCs can be supported by promotion of standards, logistics and trade

facilitation, information within or resulting from the FTA

❑ Reduction in Non-tariff barriers important for SME use of FTA

❑ May have lower Preference Utilisation Rates in sectors where margins of preference are larger


Economic Impact Assessment: 6 sectors for in-depth analysis

❑Vegetable Oils and Oilseeds: Increase in Malaysian output of vegetable oils and oilseeds, including

palm oil; increase in bilateral exports; need for mitigating policies (environmental and working conditions)

❑Machinery: Positive economic impact for both the EU and Malaysia; EU’s overall exports of non-

electronic machinery are projected to increase up to €1.7 billion and Malaysia’s up to €1.3 billion. Potential

job creation in EU and Malaysia❑Electronics: Significant economic benefits for both the EU and Malaysia; Increase in output and export

in both the EU and Malaysia; Opportunities (especially ICT products), for Malaysia to move higher up in

global value chains, but concerns over working conditions

❑Motor Vehicles: Increased output in the EU coupled with increased exports; Potential job creation in the

EU, but slightly decrease in output in Malaysia.

❑Financial Services: No significant impacts for either party; Increased presence of EU operators in the

financial and insurance sector can lead to knowledge spill overs in Malaysia; A future FTA has the potential

of increasing green investments.

❑Environmental Goods and Services: Potential economic gains for EU providers of environmental

goods and services, which would enjoy facilitated access to Malaysia’s growing market; potential positive

environental impacts.


Social Impact Assessment: Shifts in Employment

❑Malaysia:

▪ Increase in employment in: electronics, leather products, wearing apparel, textiles, other machinery, other transport equipment, sugar.

▪ Increase in employment more pronounced under ambitious scenario.

▪ Potential contractions in employment in: motor vehicles and parts, paper, beverages and tobacco, other business services sector.

▪ Unskilled wages in Malaysia increase by 0.20% (conservative scenario) and skilled wages increase by 0.99% as demand for skilled labour rises

▪ Potential skills mismatch as a result of shifting sector priorities

▪ Need for adjustment flanking measures based on GCE model.

❑The EU:

▪ Increase in employment in: electronics sector, motor vehicles and parts sector, metal products sector, other machinery sector.

▪ Potential contractions in employment in: rice, sugar, vegetable oils and oilseeds, wearing apparel, leather products, textiles, forestry and wood products sector.

❑Shifts of employment are more pronounced in Malaysia than in the EU.


Social Impact Assessment

❑Increase in GDP an welfare offer opportunities, but impacts depend on domestic policies including welfare spending; spending on education; policies towards reducing inequality.

❑Tackling the problems of informal and vulnerable employment, poor occupation safety and health standards as well as assuring women’s job security and improving migrant workers’ situation, remain important aspects in Malaysia.

❑Expansion of Garment, Textile and Footwear (GTF) and Electronics sectors (potential job creation).

❑Opportunities for more women to join the workforce.

❑Concerns of poor working conditions in the electronics and GTF sectors in Malaysia (situation of migrant workers, reported cases of child labour and forced labour).

❑Importance of emphasizing the ILO Conventions and ILO Decent Work Agenda in the FTA



1. Special rights of the indigenous peoples (IPs)

•Land conversion for industrial or manufacturing zones resulting from increased investments and trade might lead to decreased access to land for indigenous peoples and deterioration of indigenous peoples’ land rights

2. Women’s rights

•Expansion of sectors where women make up a large segment of the labour force can have implications on women’s rights and on how the family is run; at the same time it could ensure a greater culture of inclusivity and increase in human development indicators.

3. Children’s rights to special protection

•Use of child labour could potentially grow with increased investments and trade in sectors (electronics; garment and textile; palm oil as examples) that already have reported cases of child labour in Malaysia.

The main categories of human rights identified that potentially could be impacted by a future Malaysia

FTA

Disclaimer: direct effects of an FTA on human rights are limited. However, the sectors that profit or lose most from an FTA are closely connected to specific groups of people. Indirectly human rights could therefore be impacted by trade and investment agreements.



❑Future FTA could potentially have impacts on the people in Malaysia occupied in and around the sectors that see either a rapid increase in output or substantial increase in bilateral trade, especially for sectors where concerns already exist on human rights issues.

➢examples include: wearing apparel and textiles; electronics sector; some agricultural sectors including sugar, vegetable oils and oilseeds; fisheries.

➢Vulnerable groups are more likely to be impacted, including indigenous peoples, women, children, migrant workers and domestic workers.

➢Increased trade and investments could improve CSR practices in Malaysia, which could have a positive effect on human rights situation in the country.



Greenhouse Gas Emissions & Air Pollution:Small increase in CO2

and GHG emissions in both EU and Malaysia (more pronounced) under any liberalisation scenario

❑ Expected expansion of high polluting sectors raise concerns about serious environmental degradation including: energy, chemical, rubber, plastic products, and textiles

❑ Potential adoption of mitigation measures and EU best practices, investment in innovative technologies to limit the negative environmental impacts

Water Quality and Resources:

❑Scale and Composition Effects as major contributors; risks associated with increased output for

rice, textile, wearing apparel and leather products

❑Additional water-related risks may arise from EU’s exports of motor vehicles and parts, metal

products, electronics, chemicals, rubber, and plastic products to Malaysia

❑Potential positive impacts from EU’s experience and capacity; increased cooperation; application

of new technologies; use of alternative resources



Waste and Waste Management:

❑In the absence of mitigation measures, an increase in industrial and new waste streams deriving

from EU exports to Malaysia raises concerns on how these will be treated after the completion of

respective life cycles

❑This includes: motor vehicles and parts, other manufacturing, metal products, other machinery,

electronics as well as chemical, rubber and plastic products, and electronics.

Ecosystem services, biodiversity and protected areas :

❑The scale and composition effects of the EU-Malaysia FTA on biodiversity relate to industrial

activity, increased emissions and waste generation.

❑Trade in exotic animals (including fish) is a concern as currently customs authorities in both

parties are often unable to differentiate critically endangered species from similarly looking, not

endangered species.


Discussion


Next Steps


Phase tasksMonth 12-18 01-19 02-19 03-19

Week 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Phase 3

Submission of Final Interim Report

Draft summary report of Local Workshop

Revised Quantitative Analysis

Scenario Modelling – Overall/Sectoral (cont’d)

Revised Qualitative Analysis

3rd round impact assessment (cont’d)

Network consultation (cont’d)

Collation of Phase 3 revised impacts

Flanking measures and policy recommendations

Stakeholder Consultation through surveys (cont’d)

Submission of Draft Final Report

SIA ISG Meeting 3

Civil Society Dialogue Meeting 3

Incorporation of feedback to Final Report

Submission of Final Report

Revised Timeline for project activities for Phase 3 of the EU-Philippines SIA and EU-Malaysia SIA


Discussion


Thank You !

Stay up to date on the evaluation process:

[email protected] ; [email protected]

www.eu-malaysia-sia.com; www.eu-philippines-sia.com

@EU_PH_SIA; @EU_MY_SIA

Thank You! We welcome Your input!

mailto:[email protected]

mailto:[email protected]



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