PricewaterhouseCoopers for the European Commission 1/136

Sustainability Impact Assessment (SIA) of the negotiations of the trade

agreement between the European Community and the Countries of the

Cooperation Council for the Arab States of the Gulf (GCC)

Inception Report Framework Contract EC TRADE 02-F3-03

28 March 2003

This report was prepared with financial assistance from the Commission of the European Communities. The views expressed herein are those of the Consultant, and do not represent

any official view of the Commission.

In co-operation with:

Université Libre de Bruxelles

Personal data in this document have been redacted according to the General Data Protection Regulation 2016/679 and the European

Commission Internal Data Protection Regulation 2018/1725

Acknowledgements Project Team Manager Jacques Serrure SIA Team Leader Sarah Richardson PwC Project Team Jacques Serrure Natalie Vermeir Lies Deurinck EcoModNet Project Team Prof. Ali Bayar Dr. Can Erbil

Suat Sisik

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Table of Contents I. Introduction..................................................................................................... 10

A. Purpose of the SIA............................................................................................ 10 B. EU-GCC Free Trade Agreement ...................................................................... 11 C. Purpose of the Inception Report ....................................................................... 12 D. Overall Project Description and Management.................................................. 12 E. Consultation Process......................................................................................... 13

1. Stakeholder Selection ....................................................................................... 14 2. Electronic Mechanisms..................................................................................... 15 3. Stakeholder Meetings ....................................................................................... 15 4. International meetings ...................................................................................... 16 5. Expert Networking ........................................................................................... 16

F. Data Availability............................................................................................... 16

II. Overall approach to the SIA ......................................................... 18

A. General Approach............................................................................................. 18 1. Screening and scoping ...................................................................................... 18 2. Detailed assessment.......................................................................................... 18 3. Mitigation and enhancement (M&E) measures ................................................ 19 4. Monitoring and post-evaluation........................................................................ 19

B. Context.............................................................................................................. 19 C. Country Groupings ........................................................................................... 20

III. Context for the SIA ................................................................... 21

A. Geographic/Climactic Context ......................................................................... 21 1. The GCC countries ........................................................................................... 21 2. The EU.............................................................................................................. 22

B. Economic Context ............................................................................................ 23 1. The GCC countries ........................................................................................... 23 2. The EU.............................................................................................................. 27

C. Political/regulatory context............................................................................... 29 D. Environmental Context..................................................................................... 30

1. Freshwater Quantity and Quality...................................................................... 30 2. Marine and Coastal Areas................................................................................. 32 3. Deterioration of land resources......................................................................... 34 4. Air Quality and GHG Emissions ...................................................................... 34

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5. Urbanisation and associated issues................................................................... 35 6. Biodiversity ...................................................................................................... 36

E. Social Context................................................................................................... 39 1. Demographic Profiles ....................................................................................... 39 2. Education .......................................................................................................... 41 3. Health and welfare............................................................................................ 42 4. Labour/Employment......................................................................................... 43 5. Civil and Political Freedoms ............................................................................ 44 6. Gender Equality ................................................................................................ 45

F. Trade Context ................................................................................................... 47 1. Trade and the GCC ........................................................................................... 47 2. The European Union......................................................................................... 51 3. The EU-GCC FTA............................................................................................ 52 4. EU-GCC Trade Flows ...................................................................................... 53 5. Tariff structures in the GCC countries: pre Customs Union ............................ 55 6. The GCC Customs Union................................................................................. 57

IV. Preliminary screening ............................................................ 60

A. Trade in Goods: Market Access for Industrial Products................................... 60 1. The GCC countries ........................................................................................... 60 2. The EU.............................................................................................................. 61

B. Trade in Services .............................................................................................. 62 C. Other issues related to Market Access.............................................................. 65 D. Standardisation and Conformity Assessment (including SPS measures) ......... 66 E. Public Procurement........................................................................................... 67 F. Customs Cooperation ....................................................................................... 69 G. Intellectual, Industrial and Commercial Property............................................. 70 H. Competition ...................................................................................................... 72 I. Current payments and movement of capital ..................................................... 73 J. Dispute Settlement............................................................................................ 74 K. Trade in Goods: Agriculture and Agricultural Products................................... 76 L. Trade in Goods: Fish and Fishery Products...................................................... 80

V. Preliminary scoping................................................................................ 85

Preliminary Indicators......................................................................................................... 86

VI. Undertaking the detailed SIA........................................ 93

A. Conditioning Factors ........................................................................................ 93 1. Security............................................................................................................. 93 2. Governance....................................................................................................... 94

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3. Technology ....................................................................................................... 94 4. Social/Cultural Context .................................................................................... 94 5. International Commitments .............................................................................. 95 6. Subsidies........................................................................................................... 95

B. Analytical Approach......................................................................................... 95 C. Services............................................................................................................. 97 D. Significance of Sustainability Impacts ........................................................... 100

VII. Proposal for in-depth sector specific assessments ....................................................................................... 102

VIII. Mitigation and Enhancement Measures .......... 104

Selected references............................................................................................................... 105

Annexes 111

Table of contents.................................................................................................................. 112

Annex 1: Terms of reference .............................................................................................. 113

Annex 2: Outline of final report......................................................................................... 114

Annex 3: Summary of the methodological framework .................................................... 115

Annex 4: International environmental commitments by GCC countries ...................... 117

Annex 5: Supporting tables related to demographic trends............................................ 118

Annex 6: Supporting tables related to education ............................................................. 120

Annex 7: Supporting tables related to health and welfare .............................................. 122

Annex 8: Supporting tables related to gender equality.................................................... 124

Annex 9: Supporting tables for trade context.................................................................. 127

Annex 10: Supporting tables for preliminary agricultural screening ........................... 131

Annex 11: Supporting tables for preliminary fisheries screening................................... 134

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List of Tables

Table 1 GDP and per capita GDP in GCC countries Table 2 GDP, value and percentage, by sector for GCC countries, 2001 Table 3 Energy production by source in GCC countries, 1997 Table 4 Total GDP and per capita GDP in EU member states Table 5 GDP and per capita GDP in EU candidate countries Table 6 Surface freshwater in GCC countries Table 7 Groundwater resources in GCC countries Table 8 Population within 100 km of the coast in GCC countries, 2001 Table 9 Emissions from fossil fuel and cement manufacturing in the GCC, 1996 Table 10 Existing and projected urban population in GCC countries Table 11 National protected areas in GCC countries, 2000-2001 Table 12 Threatened mammals and birds in GCC countries, 2000-2001 Table 13 Threatened reptiles and freshwater fish in GCC countries, 2000-2001 Table 14 Coastal biodiversity in GCC countries, 1990s Table 15 Foreigners as a percentage of population/workforce in GCC countries Table 16 Status of ratification by GCC countries of principal international human rights

treaties Table 17 Merchandise exports from GCC countries, 2000 Table 18 Merchandise imports to GCC countries, 2000 Table 19 The general structure of trade in GCC countries Table 20 Commodity composition of GCC imports, 2000 Table 21 The general structure of trade in EU member states Table 22 The general structure of trade in EU candidate countries Table 23 Imports of fuels by EU (15) from GCC (excluding Bahrain) Table 24 Tariff structure in the GCC economies (pre-GCC Customs Union) Table 25 Revenue from customs duties in the GCC economies (1996-2001) Table 26 GCC commitments related to services sub-sectors (2003) Table 27 Major international agreements on intellectual property rights Table 28 Exports of agricultural products from EU member states (1990-2000) Table 29 Total exports and imports of fishery products in the EU (1999) Table 30 Examples of preliminary indicators for environment and natural resources Table 31 Examples of preliminary social indicators Table 32 Examples of preliminary economic indicators Table 33 Examples of preliminary institutional indicators Table 34 Categories for assessing trade in services (OECD) Table 35 Some linking processes identified for sustainability assessment in the tourism

sector (WWF) List of Figures Figure 1 Organisational Structure of the Project Team Figure 2 Map of the GCC Figure 3 Map of the EU Figure 4 Total GCC merchandise exports by country 1990-2000 Figure 5 GCC imports of commercial services, 1990-1999 Figure 6 GCC exports of commercial services, 1990-1999 Figure 7 Export price of crude petroleum, 1990-2001(Q2)

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List of Boxes Box 1 Policy competencies in the EU Box 2 Abu Dhabi Declaration on the Future of the Arab Environment Programme Box 3 Land-based pollution from industry Box 4 Land degradation Box 5 Examples of protected areas and national parks Box 6 UNEP GEM rating Box 7 GCC membership in the WTO and GSP beneficiaries Box 8 Most important sectors in EU-GCC trade, 2001 Box 9 The EU’s Common Agricultural Policy (CAP) Box 10 The importance of security

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Acronyms AB Appellate Body (WTO) BSE Bovine Spongiform Encephalopathy CAP EU Common Agricultural Policy CBD Convention on Biological Diversity (UN) CCA Causal Chain Analysis CET Common external tariff CITES Convention on the International Trade in Endangered Species of

Flora and Fauna DSB Dispute Settlement Body (WTO) DSU Understanding on Rules and Procedures Governing the Settlement of

Disputes (WTO) EC European Commission ECWAS Economic Community of Western African States EP European Parliament ERWDA Environmental Research and Wildlife Development Agency EU European Union FAO Food and Agriculture Organisation of the United Nations FDI foreign direct investment FTA free trade agreement GATS General Agreement on Trade in Services GATT General Agreement on Tariffs and Trade GCC Cooperation Council for the Arab States of the Gulf GDP gross domestic product GEM Gender Empowerment Measurement (UNEP) GEO Global Environment Outlook (UNEP) GHG greenhouse gas GLP Good Laboratory Practice GNP gross national product GSP Generalised System of Preferences ICLRAM International Centre for Living Aquatic Resources Management IDPM Institute for Development Policy and Management (University of

Manchester) ILO International Labor Organisation INECE International network for environmental compliance and enforcement IPR Intellectual Property Rights ISCO-68 International Standard Classification of Occupations ISO International Standards Organisation IUCN International Union for the Conservation of Nature NA Not available NAFTA North American Free Trade Agreement NGO non-governmental organisation MARPOL Protocol of 1978 Relating to the International Convention for the

Prevention of Pollution from Ships MEA multilateral environmental agreement MFN Most Favoured Nation OECD Organisation for Economic Co-operation and Development OPEC Organisation of the Petroleum Exporting Countries PCBs Polychlorinated Biphenyls

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PIC Prior Informed Consent POPs persistent organic pollutants PPP purchasing power parity PwC PricewaterhouseCoopers ROPME Regional Organisation for the protection of the Marine environment ROWE SASO Saudi Arabian Standards Organisation SIA Sustainability Impact Assessment SCA Standardisation and Conformity Assessment SDR Saudi Arabia Riyal SPS sanitary and phytosanitary Tbd to be determined TNC transnational corporation TRIPS WTO Agreement on Trade-Related Aspects of Intellectual Property

Rights UAE United Arab Emirates UN United Nations UNCLOS United Nations Convention on the Law of the Sea UNDP United Nations Development Programme UNEP United Nations Environment Programme UNESCO United Nations Educational, Scientific and Cultural Organisation UNESCWA United Nations Economic and Social Commission for Western

Africa UNFCC United Nations Framework Convention on Climate Change WCMC World Conservation Monitoring Centre WHO World Health Organisation WIPO World Intellectual Property Organisation WRI World Resources Institute WTO World Trade Organisation WWF World Wide Fund for Nature

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I. Introduction A. Purpose of the SIA The European Union (EU) is committed to pursuing policies that promote sustainable development. To this end, in 1999 it initiated a programme on Sustainability Impact Assessment (SIA) of trade negotiations. This programme has as its overarching goal, the integration of sustainability concerns into the development of trade policy, and the pursuit of complementary policies that are designed to mitigate negative impacts of liberalisation and enhance positive impacts. Specifically under the programme, a number of studies have already been undertaken that provide considerable direction towards an overall framework methodology for assessing the sustainability impacts of trade agreements, which can be adapted for specific SIAs. Typically, these SIAs strive to develop policies that will promote sustainable development while ensuring economic benefits brought about by liberalisation. This mandate to consider the sustainability impacts of trade negotiations reflects the fact that the world economy has entered an era of globalisation where economic, environmental and social interrelationships exist between and among countries. Not only are the numbers of trade agreements being negotiated increasing, but their breadth and depth are growing in magnitude, and liberalisation policies are covering a wider range of sectors than ever before and penetrate deeper into areas once considered exclusively national domains. This presents a broadly based range of policies that might be impacted by liberalisation negotiations, including those in the environmental and social domains. There are a number of ways that changing trade policies and rules can affect economies, environments and issues related to social well-being. Changes in rules governing trade can affect specific sectors, traded products, the ways goods are produced to promote or deter trade in more or less environmentally or socially beneficial goods or methods of production. Trade liberalisation can reinforce patterns of comparative advantage or lead to specialisation and concentrate production. Areas of concentration might be those best suited and equipped (with environmental and socially-supporting infrastructure and transportation networks) to absorb the concentration. On the other hand, liberalisation may concentrate economic activity in sectors, firms or geographic areas unsupported by adequate technology, management, physical infrastructure or the institutional capacity to handle growth or where ecological or social stress is already acute. The impact of these changes on the environment and social well being will be magnified by their scale – that is, the levels of economic activity and growth that might be induced by trade liberalisation. In addition to the physical impacts of products and their production patterns, as barriers to trade are lowered at the border, trade liberalisation can increasingly impact domestic regulations. This might make it more difficult for countries to regulate for environmental protection, or to protect culture or other social imperatives. Alternatively, on a government-led or voluntary basis, it might encourage an upward movement of environmental and social standards toward a common higher norm that supports modernisation and good governance. The EU approach to SIA reflects the complexities of this reality. It raises the prospect for policy development in ways that meet economic, environmental and social goals simultaneously. The EU approach is comprehensive in its scope and reflects the multiple components of sustainability,

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employing indicators that cover a range of economic, environmental and social variables which alone, or in combination, will influence movement towards, or away from, sustainability. The results of a comprehensive SIA can help the EU, and its trading partners, develop trade policies in a co-ordinated way that reflects the interdependence of economic, environmental and social goals. In addition to informing negotiators of trade-offs that might be associated with specific trade-related initiatives, it can identify potential environmental and social impacts in a timely fashion, allowing for appropriate mitigation and enhancement measures to be put in place to prevent any damage or promote positive impacts. An effective SIA should be viewed as a strategic opportunity and an innovative tool for trade and other policymakers to contribute to meeting their responsibilities to promote sustainable development. The EU is pursuing this opportunity and has embraced such a comprehensive approach to SIA. The general objectives of the SIA are: ! to provide a better basis than has existed to date for EC institutions to ensure that ongoing

negotiations take the sustainable development dimension fully into account, and to provide an SIA-based assessment of the outcome of negotiations when the time comes to present them for formal adoption;

! to provide inputs to the definition of a full package of policies at the EU level and in the

domestic context of trade partners, which will produce the optimal outcome in terms not only of trade liberalisation and economic growth but also of other components of sustainable development;

! to create a basis for the discussion with European stakeholders about sustainability

implications of the negotiations.

B. EU-GCC Free Trade Agreement The EU is currently involved in trade liberalisation negotiations at the multilateral level in the World Trade Organisation (WTO), at the bilateral level, and with several partners at the regional level. Among the regional negotiations underway are those for a Free Trade Agreement (FTA) between the European Union and the Cooperation Council for the Arab States of the Gulf (GCC). As part of its commitment to undertake SIAs of trade negotiations, the European Commission (EC) has launched this SIA of the EU-GCC FTA.

The EC-GCC Co-operation Agreement, signed in Luxembourg on 15 June 1988, provided a basis for the Parties to enter into discussions leading to a FTA. The negotiations were initiated in October 1990 on the basis of negotiating directives, drafted in 1989. Negotiations were renewed in 1999, when the GCC made a commitment to establish a Customs Union by 2005 (later moved up to 2003) and presented a negotiating mandate of its own. The EC took the opportunity to update its own negotiating directive with a focus on ensuring compatibility with ongoing WTO negotiations, and broadening the scope of the FTA to include “new” areas such as services, government procurement and intellectual property rights. The EC and the GCC Secretariat resumed negotiations on the basis of a working document in March 2002. The GCC Customs Union has been in place since 1 January 2003.

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The primary objective of the FTA is to deepen existing relations between the Parties on the basis of reciprocity and mutual interest. To this end, the FTA will strengthen commercial and economic relations through trade liberalisation and will reinforce and broaden cooperation in related areas. The basic content of the FTA is defined in the negotiating directives. The primary building block is the establishment of a free trade area, by progressively eliminating tariffs and non-tariff barriers on substantially all trade between the Parties. The FTA will also aim to simplify requirements and procedures related to imports and exports and provide for the progressive and reciprocal liberalisation of trade in services aimed at assuring a comparable level of market access opportunities. The FTA is expected to include liberalisation of public procurement aimed at ensuring comparable and effective access to the Parties’ procurement markets on the principles of nondiscrimination and national treatment. Likewise, the FTA will seek to effectively and adequately protect and enforce intellectual, industrial and commercial property rights in accordance with the international standards. Finally, it will also include coverage related to customs and administrative cooperation, standardisation and conformity assessment (including sanitary and phytosanitary measures), competition, and current payments and capital movements. Initial discussions have covered the range of issues with a view to developing a common understanding on the basic structure and content of an agreement.

C. Purpose of the Inception Report This Inception Report launches the project and outlines the work to be performed. A Final Report will be available in October 2003. The Inception Report provides the Commission with the following information: − information on communication and activities and the consultation process; − information on the context of the SIA with respect to core sustainability issues; − a description of the main trade features of the EU-GCC relationship; − an overview of our methodological approach; − a preliminary screening for the key sustainability issues and impacts; − a proposal of the sectors to be analysed in the in-depth sector SIAs; − a way forward to complete the study, questions, methodological issues. The terms of reference for this EU-GCC SIA are attached in Annex 1.

D. Overall Project Description and Management Phase 1 of the project (February 2003-April/May 2003) includes the global Preliminary SIA of the EU-GCC FTA). Phase 2 (May/June 2003 until September 2003) consists of the in-depth analyses of specific sectors. The final report will be presented to the Steering Committee in October 2003. This process includes an important component of public participation and stakeholder consultation which involves a series of meetings with civil society organisations as well as extensive electronic and other outreach. Figure 1 illustrates the project’s overall organisational structure. An outline of the content of Final Report is attached in Annex 2.

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Figure 1: Organisational Structure of the Project Team

CORE TEAMBrussels

Jacques Serrure

STEERING COMMITTEESIA TEAM

LEADERSarah

Richardson

Bahrain Kuwait Qatar Saudi Arabia

PROJECT DIRECTION(EC/PwC)

UAE

Economical impact assessment – Prof. Bayar, EcoModNet

Social impact assessment - PwC

Environmental impact assessment – PwC

Oman

Work performed by the Consortium will occur under the supervision of an external Steering Committee. The Steering Committee is scheduled to meet twice during the course of this project. The first meeting was held on 10 February 2003 in Brussels. The second meeting will be held prior to October 2003. Additional meetings with the Steering Committee and with EC officials will be arranged on an ad hoc basis as necessary. E. Consultation Process An integral part of this project is the successful development of a meaningful dialogue with stakeholders in the EU and the GCC about issues related to sustainability and the EU-GCC trade negotiations. Stakeholders will include, inter alia, government representatives, non-governmental organisations representing business interests, the environment and development issues, academics, and other relevant institutions. The goal of the consultation process is to: − Inform all stakeholders about the SIA of the EU-GCC free trade agreement; − Raise awareness about the SIA process and progress achieved; − Increase the involvement of all stakeholders in the SIA and invite them to ask questions,

make comments and to contribute to the SIA; − Contribute to a growing understanding on the linkages between trade and sustainability.

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1. Stakeholder Selection Criteria to include stakeholders include: − Government representatives from all relevant ministries in the EU members states, the

European Commission, the GCC member countries or the GCC Secretariat and other regional bodies;

− Individuals or organisations with a direct relationship to economic and/or trade issues in the EU members states or the countries of the GCC (e.g., producers, traders, etc);

− Individuals and organisations with an indirect interest in economic and/or trade issues in the EU member states or the countries of the GCC (e.g., think tanks, academics etc.);

− Individuals and organisations with a direct interest in environmental issues in the EU members states or the countries of the GCC (e.g., producers, landowners, etc.);

− Individuals and organisations with an indirect interest in the environmental issues in the EU member states or the countries of the GCC (e.g., environmental NGOs, advocates, academics, etc.);

− Individuals and organisations with a direct interest in the social and development issues in the EU member states or the countries of the GCC (e.g., local communities, indigenous populations, women, children, etc.);

− Individuals and organisations with an indirect interest in the social and development issues in the EU members states or the countries of the GCC (e.g., social organisations that consider gender issues, issues related to children, developmental NGOs, labour organisations, advocates, academics, think tanks, etc.);

− Experts from government, civil society and regional or international organisations with knowledge of trade and/or issues related to sustainability outside the EU and the GCC who may be able to contribute meaningfully to this SIA.

The following categories of stakeholders have been identified for the purposes of the ongoing consultations: − National government representatives − Regional representatives − Environmental NGOs − Social/Development NGOs − Industry Representatives and Industry Organisations − Trade organisations − Professional and labour organisations − Academics − International organisations − Other experts (including consultants) The approach that will be adopted to ensure the active participation of stakeholders includes the following three components: − Electronic Mechanisms (communications and documentation) − Stakeholder Meetings (Europe and GCC region) − Expert Networking

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2. Electronic Mechanisms A dedicated Internet website has been created for this project (http://www.sia-gcc.org). This website will allow all stakeholders to access information about the project, receive updates on progress and to provide comments and input to the project team. The website includes the following features: ! information about the project including its context, objectives, consortium partners and

developments related to the SIA methodology; ! documents that are developed during this project (such as the flyer and project reports) as

well as related documents from other sources. The Inception Report will be posted on the website at the beginning of March 2003, with a final report in October 2003. Because no Mid-term report is included in this stage of the project, relevant intermediate documentation will be posted on the website, in a user-friendly format, to encourage stakeholders to comment on work as it progresses.

! electronic links to other related SIA websites, and in particular the website created by the Commission’s DG-Trade;

! an electronic newsletter that will be produced in April, June and September 2003, which will include updates related to progress in the project as well as information related to stakeholder participation;

! an electronic feedback function that allows stakeholders to comment on, and provide input to, the project;

! a list of events related to the project including a timetable for consultation as part of this project as well as other events that might be relevant for this SIA; and,

! a list of stakeholders that are included in the consultation process. This list will be updated regularly and visitors to the website will be invited to propose additional stakeholders. The stakeholder list will be structured according to major categories identified above.

The website will include a mechanism to track activity, including the number of visits. This information will be used for reporting purposes.

3. Stakeholder Meetings To encourage broad and meaningful stakeholder consultation the project team will employ, among other things, the experience of the consortium including regional PwC offices located in the GCC region. The consultation process will include a number of meetings to solicit input from stakeholders. In order to encourage the widest and most effective input, meetings will take place in Brussels and in the GCC region. Meetings in Brussels: As in past SIAs, meetings will be organised periodically by the EC in Brussels as part of the formal consultation process associated with this project. These meetings with civil society will be used to present and discuss the reports emanating from this SIA. In order to encourage active participation by stakeholders, reports will be posted on the project’s website and will be available for consultation and comment for a minimum of 30 days. The first meeting with civil society will take place at a date to be agreed with the Commission. GCC Regional Meeting: Recognising the difficulties associated with effective stakeholder consultation based only in Europe, the project includes plans to hold a workshop in the GCC

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region. The aims of this workshop will be to (i) present, and receive input on, early developments in the Preliminary SIA and, (ii) discuss key issues associated with the in-depth sector studies that will be undertaken. Prior to the first stakeholder meeting in Brussels, the Project Team will launch an information campaign using e-mail to:

! raise awareness among stakeholders (including government representatives) about the project; and,

! invite all stakeholders to provide input. Provisional Timetable for Consultation Activities

Planned activities Location Provisional Date Presentation of Inception Report (Meeting with civil society)

Brussels Early April 2003

GCC regional meeting (Meeting with civil society)

GCC-region May 2003

EU-GCC conference on progress of SIA: Preliminary SIA + issues in-depth sector studies (Meeting with civil society)

Brussels June 2003

Presentation of Final Report Brussels October 2003

4. International meetings The consortium and members of the project team will attend international meetings and discussions on impact assessments (e.g. OECD workshops, WWF and UNEP meetings). Where possible, the project team will make oral and/or written presentations about the EU-GCC SIA, reporting on progress. Since 1 January 2003 members of the project team have attended the following meetings related to SIA: − Workshop for the Development of a Framework for Strategic Integrated Assessment. UNEP.

13-14 February 2003. Geneva. − Integrated Assessment of Trade Liberalisation in the Agriculture Sector. UNEP. 19-20

February 2003. Geneva. − Sustainability Impact Assessment of Trade agreements – making trade sustainable? − EC DG Trade Seminar, 6-7 February 2003. Brussels.

5. Expert Networking Members of the project team will also seek to identify further opportunities to disseminate information about the project and to engage dialogue with experts in a variety of appropriate fora. This includes monitoring developments and findings in parallel EC efforts to conduct SIAs.

F. Data Availability Data concerning the GCC countries are not easily and fully available for all the necessary sustainability indicators. Environmental and social data are particularly scarce. Where data is available, this report will provide quantitative information to illustrate trade flows, changes in

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trade flows, investment levels and other issues related to the economic impacts of trade liberalisation. In many cases, identifying sustainability impacts associated with those changes may rely on standard qualitative methods based on social science methods including research, interviews and other techniques. In this Report and effort was made to collect preliminary data across major sustainability issues that are comparable among the countries of the GCC, the EU, and the EU candidate countries. In some cases this data collection is, as yet, incomplete. Nevertheless, in the next stage of the SIA an effort will be made to prioritise the collection of specific data for key sectors and sustainability issues that emerge in the scoping. Major data sources used in this phase of the SIA include, inter alia, the United Nations (in particular UNDP, UNEP and ECWAS), the International Monetary Fund, the World Bank, the World Resources Institute, the World Trade Organisation, the GCC Secretariat, National Statistical Offices in the GCC Countries and Eurostat.

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II. Overall approach to the SIA A. General Approach This SIA will adopt an overall approach that is generally consistent with that put forward in other SIAs undertaken for the EU.1 A summary of the approach is included as Annex 3. Consistent with the ongoing work being undertaken on behalf of the EU on SIA, the main stages in the SIA process are as follows:

1. Screening and scoping

The methodology employed by the EU includes as its first stage, screening and scoping. The screening phase is implemented to determine which measures, if any, may be excluded from the SIA because they are unlikely to give rise to significant sustainability impacts. The scoping stage is designed to identify specific scenarios to be investigated, the components of each measure that should be examined in the detailed SIA in terms of economic, environmental and social relevance, the country groups to be investigated, and to begin to develop causal links between potential trade-induced changes and economic, environment, social and regulatory impacts that can affect sustainability. This Report includes a preliminary screening of relevant issues, based on available information, for inclusion in a SIA. It also includes key contributions to the prospective scoping phase by isolating important economic, environmental and social issues associated with relevant trade measures and developing preliminary indicators.

2. Detailed assessment The second stage of the SIA, where the detailed assessment is undertaken, will typically involve a number of steps. First, an approach to the analysis should be described. This has evolved in the EU’s work on SIA to prioritise a Causal Chain Analysis (CCA). Such an approach begins with a consideration of the economic and regulatory impacts induced by changes in trade flows and trade rules under different scenarios, and traces these changes through to sustainability impacts on the environment and social issues through issues such as production, consumption, transportation, infrastructure, policy, structure and others. The significance of sustainability impacts are then assessed using subjective analytical techniques. Where possible, a CCA can factor in quantitative data generated by econometric forecasting techniques. In other cases it will rely on analysis of available data, and in still other cases, where data is not available, the analysis will be based on observed trends, expert information and other research. A detailed assessment of the proposed trade measures will not be undertaken in this Report. Prior to determining the detailed nature of the approach, the project team has identified a series of conditioning factors that might influence the direction and the nature of the analysis. Following this, a discussion on the methods that will be developed and later employed to identify economic, environmental and social impacts of the EU-GCC FTA will be presented in Section VI of this Report.

1 See Kirkpatrick, Colin and Norman Lee. 2002. Final Report to the European Union on Further Development of the Methodology for a Sustainability Impact Assessment of Proposed WTO Negotiations. IDPM. University of Manchester. 5 April.

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3. Mitigation and enhancement (M&E) measures Because trade agreements can have wide ranging effects on the economy, social development and the environment and these impacts can be positive and negative for sustainability, SIAs typically include mitigation and enhancement measures. M&E measures can include trade-related measures or non-trade related measures to accompany negotiations and/or trade agreements to help ensure that the outcomes of negotiations and the impacts of the agreements contribute to sustainability. This Report does not develop any specific mitigation and enhancement measures, which must await preliminary findings from the detailed SIA. A discussion of possible M&E measures, including criteria for their selection will be developed in the next phase of this work.

4. Monitoring and post-evaluation The methodology developed for the EU SIAs includes, as its final stage, the development of proposals to monitor and evaluate the impacts of the M&E measures on sustainability. The importance of follow-up mechanisms should not be understated as the effective application of the M&E measures are critical to the overall success of the SIA in supporting sustainability. A follow-up process might even include a subsequent environmental review to reflect the long-term effects of economic activities induced by broad trade measures.2 It is too early in the process to include any discussion of monitoring and post-evaluation mechanisms in this Inception Report.

B. Context In this, and other SIAs, there is value associated with taking into account the specific circumstances of the task at hand and, in particular, the various characteristics of the region that, along with the EU, will be the subject of the SIA – in this case, the GCC. Therefore, in addition to adopting the four stages for assessment identified above, this SIA will include, at the beginning, a section which develops a context for the study. The context includes a brief description of the geographic, political, economic, environmental, social and cultural issues associated with the particular region under examination in this SIA. This is particularly useful as it allows for the development of information relevant to a SIA in a region where there is little experience undertaking such an exercise. It also introduces issues related to trade flows and market access between the EU and the GCC to provide baseline information to help identify future changes that might occur as a result of liberalisation. While it provides a basis for initial analysis, it can also be built on as the study proceeds to uncover additional issues that need to be taken into consideration. In addition to serving as an ongoing frame of reference to underpin the analysis in this, and further stages of the study, the context section will contribute to the SIA in at least five concrete ways:

2 OECD 1994.

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1. Screening. It will help identify key issues for screening by reviewing the economic, environmental, social, and trade issues relevant to the GCC to help prioritise issues in the screening based on the criteria that reflect those issues most closely associated with sustainability and those issues most closely related to the EU-GCC trading relationship.

2. Scoping. The context will contribute to the scoping by suggesting core economic,

environmental and social variables that should be highlighted and reflected in the choice of indicators for the study. The initial survey of trade flows between the EU and the GCC, and the status of market access issues, will also contribute to developing baseline information for the SIA.

3. Detailed development of the SIA. The context will contribute to the actual SIA by

beginning to suggest ways (through transportation or infrastructure, for example) in which environmental and social variables might be impacted either directly by trade, or indirectly through economic and regulatory changes that are induced by trade.

4. Conditioning factors. The context will provide some background to point to a series of

conditioning factors, of distinct concern to the EU-GCC trading relationship based on trade-related and non-trade related forces that could have independent impacts on the behaviour of the Parties, might impact the outcomes of the negotiations, and that should thus be taken into account in a SIA.

5. Mitigation and enhancement measures. The context will assist in the development of

mitigation and enhancement measures by providing an indication of the political and legal structures in the region, existing environmental regimes and international commitments, and other contextual factors that will impact what is feasible and realistic in terms of M&E measures. It might also suggest avenues for the implementation of non-trade related policy measures to mitigate any negative impacts of trade or promote positive impacts.

C. Country Groupings The country grouping that will be used in this study includes on one hand the EU, its 15 member countries, and, where possible, the 10 candidate countries slated for EU accession in 2004.3 The report will also consider the GCC, made up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates (UAE).4 Typically, the analysis will be undertaken at a regional level. However where there are specific issues relevant to particular member countries of either the EU or the GCC, reference will be made to situations within those countries. 3 Candidate countries for accession to the EU in 2004 include:Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic, and Slovenia. 4 The GCC was established in May 1981. It was intended to encourage coordination, integration and inter-connection between member states in all fields. The aim of this integration is to achieve unity between them, to deepen and strengthen relations, links and areas of cooperation between their peoples, to promote the development of industry, agriculture, science and technology, to establish scientific research centers, set up joint ventures and encourage economic and trade cooperation by the private sector. The Secretariat-General of GCC is located in Riyadh, the Capital of Saudi Arabia.

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III. Context for the SIA This section describes contextual issues for the SIA as they relate to the GCC and the EU. It is included in an effort to develop baseline information and background, particularly at this stage in the project, with a focus on the GCC, a region where there has been little experience in undertaking SIA. The context will be further developed to include the EU and the EU candidate countries slated to join as member states in 2004. The context will help develop a SIA that focuses on the most relevant variables for sustainability, taking into account common elements within regions, as well as distinctive features unique to specific countries. Relevant issues as they relate to both the EU and the GCC will be addressed in more detail throughout the course of the analysis and in particular in the scoping and detailed assessment that will follow in later stages of the SIA. As the work progresses, the material that is presented as context will be moved into annexes, and the analysis will proceed based on the most relevant information.

A. Geographic/Climactic Context

1. The GCC countries The topography of the countries of the GCC share many elements. With the exception of Saudi Arabia, the countries of the GCC are relatively small. They tend to include important coastlines touching on a number of different seas, and often incorporate small islands in their territory. On the mainland, deserts, sometimes interspersed with oases, rocky plateaus and in some areas, higher mountain ranges, characterize the geography. Figure 2: Map of the GCC

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Saudi Arabia is by far the largest country in the GCC, at around 2.2 million square kilometres. Bahrain, the smallest nation in the GCC, is an archipelago made up of 33 separate islands in the Arabian Gulf. The countries of the GCC also share a number of unique and common characteristics with respect to climate. Typically this includes desert climates with hot dry summers characterised by extreme temperatures and virtually no rainfall. During the winter months, between October and April, temperatures cool down somewhat and minimal rainfall occurs. In general, conditions are hot and humid along the coast and dryer in the interior although there are noticeable variations in temperature among the coastal regions, the deserts in the interior and mountainous areas. Both the geography and climate in the GCC countries contribute to the nature and frequency of natural hazards in the regions. While these can vary from country to country, they often include periodic drought, dust and sand storms. In some areas sudden cloudbursts during the winter months can bring unusual amounts of rain and even flooding.

2. The EU The European Union was established in 1952 with six original Member States. There are currently 15 member states in the EU: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden and the United Kingdom. In addition, by the end of 2004 ten additional countries will accede to the EU. The candidate countries for accession in 2004 include: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. This will bring the total number of members to 25 by the end of 2004. The EU is a Customs Union, a currency union and a political partnership among its member states. Trade among the members states flows freely across borders. Figure 3: Map of the EU

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The total population of the EU is around 375 million people. The European Union is relatively small in surface area. The EU 15 surface area is 3191,110 km2. This is less than 3 per cent of the world total surface area. The population density of the EU is therefore relatively high at 117 inhabitants/square km.5 The population density in the EU is expected to decrease with the addition of the EU candidate countries in 2004. To join the EU, the candidate countries must fulfill the economic and political conditions known as the ‘Copenhagen criteria’, according to which a prospective member must: ! be a stable democracy, respecting human rights, the rule of law, and the protection of

minorities; ! have a functioning market economy; ! adopt the common rules, standards and policies that make up the body of EU law.

The enlargement of the EU will have an impact on the economy, environment and social context of the European Union. These issues will be included in the SIA as the work progresses. B. Economic Context

1. The GCC countries 1.1. Overall GDP In 2000, the GCC as a region had a combined gross domestic product (GDP) of just over US$295 billion. The GDP in the individual countries vary widely. In 2000, Saudi Arabia had by far the largest economy, with a GDP of over US$173 billion. It is followed by the UAE, Kuwait, Oman, Qatar, and Bahrain (Table 1). The citizens of the GCC are also relatively wealthy. In 2000 the region as a whole had a population of just under 30 million.6 Saudi Arabia has by far the largest population at around 20 million in 2000, followed by U.A.E. (2.6 million), Oman (2.5 million), Kuwait (1.9 million), and Bahrain and Qatar, both with around 600,000 inhabitants.7 Per capita GDP in each of the GCC countries was relatively high in 2000, led by Qatar at around US$18,500 and the U.A.E. at over US$17,000. Per capita GDP is lowest in Oman at US$9,242 (Table 1).

5 Eurostat. This compares with a population density in the United States, for example, of around 20 inhabitants per km2. 6 UNDP. Human Development Report 2002. This is projected to rise to over 40 million by 2015. 7 UNDP. Human Development Report 2002.

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Table 1: GDP and per capita GDP in GCC countries

Gross domestic product Per capita GDP GCC member country US$ billions

2000 PPP* US$

billions 2000

US$ 2000

Annual growth rate (%)

1990-2000 Bahrain 8.0 10.1 15,084 1.7a Kuwait 37.8 31.4 15,799 -1.4a Oman 15.0 21.3 b 9,242b 0.3a Qatar 14.5 10 b 18,517 b -- Saudi Arabia 173.3 235.6 11,367 -1.2 U.A.E. 46.5 48.9 17,935 -1.6a

Notes: a Data refer to a period shorter than specified; b Figure is for 1997 (Source: WRI). Source: UNDP, Human Development Report, 2002. Between 1990 and 2000 the per capita GDP in the GCC experienced little growth, and in some cases (Kuwait, Saudi Arabia and U.A.E.) shrunk at rates of just over 1 per cent. The per capita GDP in Bahrain and Oman grew at a modest rate of 1.7 per cent and 0.3 per cent, respectively, during the same period (Table 1). The region has experienced solid, if slackening real growth in recent years. In 2002, the combined GDP of the UAE, Saudi Arabia, Kuwait, Bahrain, Qatar and Oman rose by 2.6 per cent, compared with 3.4 per cent in 2001 and 5.4 per cent in 2000. The decline in growth rates is due to the decreasing price of oil and the region’s declining oil output, the latter due to OPEC price support agreements. Growth in 2002 was driven by an expansion in non-oil sectors. For 2003, the growth rate is projected to slacken further, to an estimated 1.8 per cent. However, this trend can be influenced by the recent international developments in the region. . During the past three years, Qatar has been the growth leader in the region, due to its production of crude at full capacity and burgeoning exports of liquefied natural gas. During this time the UAE also experienced relatively strong growth, recording 2.5 per cent in 2002. In 2002, Bahrain grew by 4.5 per cent, Oman by 2.9 per cent, and Kuwait by 1 per cent. In contrast, Saudi Arabia grew by only 0.74 per cent in 2002, and only 1.1 per cent in 2001, sharply down from 4.8 per cent in 2000. 1.2. GDP per sector Table 2 shows the distribution of GDP among major sectors in the countries of the GCC. For all of the countries, with the exception of Bahrain, the oil sector dominates contribution to GDP. In Qatar, the contribution of oil is the proportionally the highest, contributing over 58 per cent of GDP. In Saudi Arabia, the value is over five times higher at over US$50 billion but given the size of the Saudi Arabian economy, this represents just over 28 per cent of GDP.

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Table 2: GDP, value and percentage, by sector for GCC countries (2001) Bahrain Kuwait Oman Qatar Saudi

Arabia U.A.E.

US$m % US$m % US$m % US$m % US$m % US$m % Oil 1,513 17.8 14,038 42.8 8,497 42.7 9,460 58.4 50,268 28.4 18,928 28 Agriculture/ fisheries

77 0.9 131 0.4 398 2 65 0.4 15,222 8.6 2,704 4

Manufacturing 1,020 12 2,099 6.4 1,652 8.3 940 5.8 26,373 14.9 9,396 13.9Construction 340 4 754 2.3 438 2.2 551 3.4 10,620 6 4,732 7 Wholesale/ retail

1,088 12.8 1,902 5.8 2,268 11.4 NA NA 23,010 13 6,219 9.2

Restaurants/ hotels

195 2.3 262 0.8 NA NA NA NA NA NA 1,487 2.2

Transportation/ storage/ communication

671 7.9 1,607 4.9 NA NA NA NA 13,098 7.4 4,867 7.2

Financial Institutions

1,615 19 2,000 6.1 NA NA 1,296 8 3,540 2 4,596 6.8

Real Estate/ business services

756 8.9 2,263 6.9 NA NA 551 3.4 7,611 4.3 5,408 8

Community/ social services

144 1.7 7,740 23.6 NA NA NA NA 2,478 1.4 1,081 1.6

Source: Economist Intelligence Unit, Country Reports, 2002, based on national statistics. The GCC, as a region, is a major exporter of oil and has benefited from relatively high oil prices throughout the 1990s with corresponding economic growth. The oil and gas sector is central to each of the GCC countries, at both the macroeconomic and microeconomic levels. The sector remains largely under government ownership and control through large state corporations and monopolies.

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1.3. Energy production Table 3 indicates energy production by source in the countries of the GCC. Saudi Arabia is by far the largest producer of energy, at close to 5 billion m toe in 1997, followed by the U.A.E. and Kuwait. The energy production is dominated by fossil fuels and in particular liquid fuels, although gaseous fuels make up significant proportions in some countries, and in Bahrain exceed liquid fuel. None of the countries of the GCC engage in any significant production of nuclear or renewable fuels. Table 3: Energy Production by source, 1997 (000 m toe*) Source Bahrain Kuwait Oman Qatar Saudi Arabia U.A.E. All sources 7,487 116,087 51,620 43,967 487,095 153,555 All sources (per capita)a

12,853 67,022 22,391 77,315 25,006 66,553

Soild Fuels 0 0 0 0 0 0 Liquid Fuels 2,375 111,633 46,921 29,465 449,511 123,003 Gaseous fuels

5,113 4,455 4,699 14,502 37,584 30,552

Nuclear fuels 0 0 0 0 0 0 Renewable energy production

0 0 0 0 0 0

Total electricity generated

423 2,330 629 591 8,927 1,769

Notes: * toe: tons of oil equivalent. a kg oil equivalent. Source: WRI. Earth Trends, 2001. Bahrain stands out among the GCC countries in that it does not enjoy vast oil reserves. This explains an increased reliance on gas, but also significant moves to diversify the economy away from a reliance on energy production. Over the last 20 years, Bahrain’s diversification policy has led to development of basic industries and manufacturing including refining imported crude oil, aluminium, petrochemicals, ship repair, steel and tourism. Manufacturing is a key sector in Saudi Arabia and the U.A.E. contributing around 15 per cent and 14 per cent of GDP, respectively. In Bahrain, the contribution of manufacturing is 12 per cent and it the other countries it contributes between 6 and 9 per cent. Saudi Arabia and the U.A.E. also rely on a relatively high contribution to the GDP of the construction sector, at 6 and 7 per cent, respectively (Table 2). Countries in the GCC have sought to diversify in order to reduce dependence on oil, the domestic impact of energy price fluctuations, and to stimulate employment. In the U.A.E. industrial development has focused on construction, food, textiles, and aluminium. Each area of non-oil industrial development has spawned other loosely related industries. The construction boom, for example, increased demand for cement, cement blocks, PVC pipes, aluminium windows, furniture and a host of other items while the large increase in population created the need for greater food production. The non-oil sector of the UAE economy now accounts for more than twice the oil sector’s direct contribution to GDP, even though oil and gas production is expected to remain a major revenue earner for years to come. In Saudi Arabia, starting in the 1980s, the government sought to use gas production as industrial inputs for the production of chemicals and petrochemicals for export and the construction of

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energy-intensive industries to replace import and to meet infrastructure needs. It played an important role in the development of the manufacturing industry, such as petrochemicals and steel. Private investments were initially directed to plants that manufactured goods for the construction industry. With a decline in construction in the mid-1980s, there has been a shift towards manufacturing for “light” industry such as clothing, food processing, furniture and other consumer goods. The importance of services to the economies of the GCC countries is growing. Countries of the GCC are increasingly moving towards privatisation and governments are encouraging companies to moving away from government as reliance for financing and towards banks, stock markets and private investors. For example, the UAE, long recognized as the commercial and business hub of the Gulf region, has become the third most active re-export centre in the world (after Singapore and Hong Kong) by offering no corporate taxes, no income taxes, no foreign exchange controls, an import duty regime of four per cent (with exceptions) and competitive labour, energy and real estate costs. Bahrain also now has one of the most diversified economies in the Gulf region with well-developed transportation and communication networks. Service related sectors are increasingly important as contributors of GDP to the countries of the GCC. For example, the construction sector contributed 7 and 6 per cent to the GDPs of U.A.E. and Saudi Arabia, respectively, in 2001. The wholesale and retail sectors contributed 13 per cent GDP in Saudi Arabia in 2001, over 12 per cent GDP in Bahrain and over 11 per cent in Oman in 2001. Transportation is emerging as an important sector, contributing close to 8 per cent of GDP in Bahrain, and just over 7 per cent GDP in each of U.A.E. and Saudi Arabia in 2001 (Table 2). The financial institutions (financial services and banking) sector is also becoming increasingly important to the region. In Saudi Arabia, the banking sector is the largest segment of the private sector, although it currently contributes only 2 per cent GDP to the national economy. In the UAE, increasingly strict control of financial institutions by the Central Bank has improved the quality of services and performance of its 20 UAE-owned banks and 26 foreign banks and the sector contributes close to 7 per cent of GDP to the economy. Bahrain has the Gulf’s biggest community of international bank branches where the financial services and banking sector contributes 19 per cent GDP to the economy. The development of different industries and services, coupled with the fact that the GCC, as a region, has become an international financial centre, has resulted in a growing telecommunications and information technology services sub-sector. For example, Dubai (UAE) has created Dubai Internet City, the world's first free trade zone dedicated exclusively to the internet and information technology (IT) related firms.

2. The EU In 2000, the countries of the EU had a combined GDP of around US$7,836 billion, or close to eight trillion US$. Per capita GDP ranged from a high in Luxembourg of US$50,061 to a low in Greece of US$16,501. The average per capita GDP for the EU in 2000 was just under US$26,000. Annual growth rates between 1990 and 2000 ranged from a high of 6.5 per cent in Ireland, to a low of 1.2 per cent in Germany. The average annual growth rate for the EU in 1990-2000 was 2.3 per cent (Table 4).

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Table 4: Total GDP and per capita GDP in EU member states

Gross domestic product Per capita GDP Member state US$ billions

2000 PPP US$ billions

2000

US$ 2000

Annual growth rate (%)

1990-2000 Austria 189.0 217.1 26,765 1.7 Belgium 226.6 278.6 27,178 1.8 Denmark 162.3 147.4 27,627 2.1 Finland 121.5 129.4 24,996 2.4 France 1,294.2 1,426.6 24,223 1.3 Germany 1,873.0 2,062.2 25,103 1.2 Greece 112.6 174.3 16,501 1.8 Ireland 93.9 113.3 29,866 6.5 Italy 1,074.0 1,363.0 23,626 1.4 Luxembourg 18.9 21.9 50,061 4.1 Netherlands 364.8 408.4 25,657 2.2 Portugal 105.1 173.0 17,290 2.5 Spain 558.6 768.5 19,472 2.3 Sweden 227.3 215.3 24,277 1.6 United Kingdom

1,414.6 1,404.4 23,509 2.1

Source: UNDP. Human Development Report, 2002. Figures from the EU stand in contrast with similar figure for the EU candidate countries. For the same period, the combined GDP for the candidate countries was US$363.5 billion. Per country, this ranged from a high in Poland of US$157.7 billion to a low in Estonia of US$5 billion. Per capita GDP in 2000 ranged from a low of US$5,710 in Bulgaria to a high of US$17,367 in Slovenia. The average per capita GDP in the candidate countries in 2000 was just over US$ 10,000, which is less than half of the comparable figure in the existing countries of the EU. Annual growth rates between 1990 and 2000 in the candidate countries ranged from a low of -2.9 per cent in Lithuania to a high of 4.5 per cent in Poland. The average annual growth rates in the candidate countries for the period was 0.6 per cent (Table 5). Table 5: GDP and per capita GDP in EU candidate countries

Gross domestic product Per capita GDP Candidate country US$ billions

2000 PPP US$ billions

2000 US$ 2000

Annual growth rate (%)

1990-2000 Cyprus 8.7 15.8 20,824 3.1 Czech Republic 50.8 143.7 13,991 1.0 Estonia 5.0 13.8 10,066 1.0 Hungary 45.6 124.4 12,416 1.9 Latvia 7.2 16.7 7,045 -2.3 Lithuania 11.3 26.3 7,106 -2.9 Malta 3.6 6.7 17,273 4.0 Poland 157.7 349.8 9,051 4.5 Slovakia 19.1 60.7 11,243 1.9 Slovenia 18.1 34.5 17,367 2.8

Source: UNDP. Human Development Index, 2002.

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Box 1: Policy competencies in the EU Three types of competencies exist: ! Exclusive competencies of the EU The EU has some exclusive legal authority in someimportant political areas such as: external trade in goodsand some services, monetary policies, customs andfisheries. ! Shared competencies between the EU and the

Member States Most of the competencies are shared between the EU andthe Member States, e.g. environmental policy, consumerprotection, development aid, transport policy, visas,asylum and immigration. ! Competencies exclusively for the Member States The Member States have exclusive authority in interalia, the following areas: education, culture, publichealth, employment, social and urban policy and mostforeign and security policies.

Source: Bomberg and Stubb 2003.

Moving forward: Information on the key economic sectors in the EU, their contribution to GDP, their regional and/or geographic basis and other information will be developed. Similar information will also be collected for EU candidate countries. C. Political/regulatory context The political structures of the GCC countries have a great deal in common. In general, the countries are headed by monarchs. In some cases a Prime Minister exists, and in all cases a cabinet level Council of Ministers exists that is appointed either by the monarch alone or in consultation with the Prime Minister and includes many royal family members. Where legislative bodies are elected, as in Kuwait, the electorate is limited to men, and in some cases a small pool of men with longstanding ancestry in the country. In all countries, families and tribes still play an important social and political role. The Shariah (Islamic law) is the principal source of legislation governing family and personal matters. In the European Union decisions and procedures are derived from the basic treaties ratified by the Member States. The EU has five institutions, each of them playing a specific role: ! Council of the Union (composed of the governments of the Member States); ! European Parliament (elected by the peoples of the Member States); ! European Commission (driving force and executive body); ! Court of Justice (compliance with the law); ! Court of Auditors (sound and lawful management of the EU budget).

The EU Council of Ministers is the main decision-making body of the EU. It adopts regulations, directives, decisions and recommendations and opinions either independently or jointly with the European Parliament.

The European Parliament (EP) as an institution represents the 370 million citizens of the European Union. It is the largest multinational parliament in the world and forms the democratic basis of the Community. Since 1979 direct elections to the European Parliament have been held every five years in all the EU Member States. Together with the Council, the Parliament formulates and adopts legislation proposed by the Commission. The most common legislative procedure is codecision. This places the European Parliament and the Council on an equal footing and leads to the adoption of joint Council and Parliament acts. If the two institutions disagree, a conciliation committee is convened to find a compromise This procedure applies to issues like free movement of workers, environment, research & development, consumer protection, education, culture, health and trans-European networks.

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Furthermore, Parliament's approval is required for certain important questions of a political or institutional nature, such as the accession of new Member States, association agreements with third countries, and the conclusion of international agreements.

The European Commission, a political body, has various responsibilities and plays a major role in the European Union's policy-making process as EU laws are mainly enforced by Commission action. The European Commission has three distinct functions: initiator of proposals for legislation; guardian of the Treaties and manager and executor of EU policies and of international trade relations.

D. Environmental Context The information presented in this section is based on preliminary research. It provides an overall picture of environmental issues associated with the GCC that will be used to develop the approach to this work and, as relevant, might be explored in further stages of the SIA. It includes the five priority areas identified by the Council of Arab Ministers Responsible for the Environment (CAMRE) identified in Box 2. This section will be built upon to include relevant environmental priorities in the EU and the EU candidate countries. Environmental issues in the GCC region are impacted both by natural forces such as geography and climate, and by industrialisation, transportation, urbanisation and issues related to infrastructure and agriculture. Given their similar geographic, climactic and economic contexts, the countries of the GCC typically share similar environmental characteristics and concerns.

1. Freshwater Quantity and Quality Limited access to freshwater resources is a challenge facing all the countries of the GCC. Generally, given the desert landscape and lack of rainfall, water resources are limited. Countries rely on underground aquifers, oases, natural springs, limited freshwater bodies and desalination facilities to provide their water needs and ensure a steady supply of freshwater for their populations as well as necessary inputs into industry and agriculture. In some countries, the existence of large oases and natural springs contribute to the supply of freshwater and support localised agriculture. Natural springs are also an important source of drinking water.

Box 2: Abu Dhabi Declaration on the Future of the Arab Environment Programme (CAMRE, 3 February 2001) Two key challenges for sustainable development in the region: 1. The intensive increase in population, which

represents a major threat in the long run, including the imbalance of population density between urban, rural and Badia at the national levels; and

2. The limitation and deterioration of most natural resources in the Arab countries.

Identified the following five priority problem areas faced by the Arab countries in the 21st

century: ! The severe shortage of water resources

both in quantity and quality; ! The limitation of available lands and

deterioration of land resources; ! The unsustainable consumption of

natural resources; ! The rapid rates of urbanisation and

associated problems; ! Deterioration of coastal and marine

areas. Source: www.unep.org/bh/abudhabi

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Tables 6 and 7 indicate the very low levels of surface and groundwater resources in the GCC countries and show that volumes of both surface freshwater and groundwater are being withdrawn at rates that far exceed natural recharge rates. In all cases, with the exception of Saudi Arabia (at 1,002.1 m3 per capita for surface freshwater) renewable water supplies are well below the 1,000 m3 per capita value typically used in indicate chronic water shortage.8

In all countries of the GCC agriculture is by far the largest consumer of water. This is typically followed by domestic consumption and finally industrial consumption although both are extremely low in comparison to agricultural withdrawls (Tables 6 and 7). Nevertheless, the supply of freshwater in the countries of the GCC is still insufficient to support extensive irrigation. Challenges are associated with ensuring an adequate water supply to meet basic household and industrial demands. A steadily increasing population is also putting pressure on scarce water supplies. The GCC faces additional challenges of increasing efficiency in water use, developing methods to reuse water, effectively managing water distribution and sanitation networks and maintenance activities in water and wastewater plants, applying waste water treatment, and increasing the quality of drinking water. Table 6: Surface freshwater in GCC countries

Total Annual Internal

Renewable Resources

Annual River flows

Annual withdrawls various years

Sectoral withdrawls various years

Total km3,

various years

per capita

m3, 2000

From other

countries (km3)

To other countries

(km3)

Total (km3)

% of water

resources

Per capita m3,

Domestic %

Industry %

Agriculture %

Bahrain 0.0 6.5 NA NA 0.2 5,980.8 -- -- 4 57 Kuwait 0.0 NA 0.0 0.0 0.5 NA 307.1 37 2 60 Oman 1.0 387.5 NA NA 1.2 124.2 -- -- 2 94 Qatar 0.1 85.1 NA NA 0.3 558.8 529.9 23 3 74 Saudi Arabia

2.4 111.1 NA NA 17.0 708.3 1,002.1 9 1 90

U.A.E. 0.2 61.4 0.0 NA 2.1 1,405.3 -- -- 10 67 Source: WRI. Earth Trends 2001. Table 7: Groundwater resources in GCC countries

Annual Groundwater

recharge

Annual Groundwater withdrawls

(various years)

Sectoral withdrawls (various years)

Total km3,

various years

Per capita

m3, 2000

Total (m3)

Percentage of annual recharge

Per capita (m3)

Domestic %

Industry %

Agriculture %

Bahrain NA NA NA NA NA NA NA NA Kuwait NA NA 0.3 NA 142.7 0 0 100 Oman 1.0 375.7 0.4 41.9 280.7 NA NA NA Qatar 0.1 84.2 0.2 372.5 349.5 2 NA 98 Saudi Arabia

1.0 44.0 14.4 1,518.9 899.3 10 NA 90

U.A.E. 0.1 49.2 1.6 1,333.3 724.1 NA 19 81 Source: WRI. Earth Trends 2001. 8 UNEP/ROWA. State of the Environment in West Asia.

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Desalination Plants. A lack of natural water supply, perennial rivers and other freshwater bodies has led some countries in the region to develop sophisticated desalination facilities, which render seawater suitable for domestic and industrial use. In the GCC countries desalination plants supply about 40 m3 out of the total renewable water supply of 381 m3 per capita/year.9 Kuwait has developed some of world's largest and most sophisticated facilities, which now provide much of the country’s water. Saudi Arabia has also developed extensive desalination facilities. And since the early 1980s desalination plants needs for water in Bahrain have met 60 per cent of daily consumption. Despite their high capital and operating costs (desalinated water costs around US$1.0-1.5/m3), desalination plants will continue to be built to meet the domestic water demands of the GCC countries. According to the GCC, desalination capacity is expected to increase from 2,316 million m3 in 1996 to more than 3,000 million m3 in 2020.10 All desalination plants produce some contamination, including the discharge of heated brine into the marine environment. Research on the use of solar energy for desalination and power generation, coupled with advances in agricultural research and techniques for saving irrigation water, could help ease the impact of these problems.11 Over abstraction of water not only draws down available reserves at unsustainable rates, but also impacts the quality of the groundwater. Unsustainable withdrawals can lead to the intrusion of seawater along the shoreline, causing salination of coastal agricultural lands. This in turn will reduce agricultural production and ultimately destroy available arable land. For example, the Batinah coastal plain of Oman has been completely lost, and it is estimated that the saline interface between the sea and groundwater in Bahrain advances at an annual rate of 75-130 metres.12 Deteriorating water quality is brought about by industrial pollution from oil and gas production contamination from other industrial sources, and household sources such as septic tanks. In the GCC countries, only about 400 million m3 of the annual 918 million m3 of treated wastewater are tertiary-treated and used for irrigating non-edible and fodder crops and landscaped areas. About 60 per cent of the partially-treated wastewater is discharged to sea or low-lying land.13

2. Marine and Coastal Areas All countries of the GCC have important coastlines, often including islands, and have access to the seas and gulfs in the region. Increasingly issues of marine pollution are becoming an issue (Box 3). Impacts on the marine and coastal areas in the GCC countries are aggravated by increasing transportation through the waters surrounding the region. More than 30 per cent of the world’s oil tankers move through this area every year.14 There is an ongoing discharge of oil and oily waste into waters surrounding the GCC. Some 1.2 million barrels of oil are spilled into the Persian Gulf annually.15 In addition, large populations have settled in growing cities along the

9 UNEP. Global Environment Outlook (GEO), 2000. 10 UNEP. GEO 2000 (GCC 1996). 11 UNEP. GEO 2000. 12 UNEP. GEO 2000 (UNEP/UNESCWA 1991; UNEP/ESCWA 1992). 13 UNEP. GEO 2000. 14 UNEP 2000, WRI, ICLARM, WCMC, UNEP 1998. 15 The level of petroleum hydrocarbons in the area exceeds that in the North Sea by almost three times and is twice that of the Caribbean Sea. UNEP.GEO, 2000.

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Box 3: Land-based pollution from industry

! Oil pollution. Petroleum hydrocarbons from refineries, petrochemical industries, oil terminal, oil spills from ships, pipeline accidents, disposal at sea of oil contaminated ballast water and dirty bilge, and sludge and slop oil. Some 1.2 million barrels of oil are spilled into the Persian Gulf annually

! Solid waste. Discharges include household refuse of 0.5-1.5 kg/person/day and food wastes of 1.4-2.4 kg/person/day. However, this situation is being improved as a result of cooperation between ROPME, GCC and the European Union.

! Sewage. Some 20-30 per cent of the sewage discharged into the sea is estimated to be untreated or only partially treated. This poses a potential threat of eutrophication in confined areas such as bays.

! Sand. Sand depositions from the atmosphere as high as 29 g/m2/year have been reported. ! Land-based effluents. Levels of persistent organic pollutants (POPs) are still relatively low but

screening of contaminants in marine sediments and biota have also revealed low levels of halogenated pesticides, PCBs and organic phosphorous compounds.

! Heavy metals. Heavy metal concentrations are generally low but there are hot spots near the old outfalls of chemical plants where there are relatively high levels of mercury. Copper and nickel levels are also relatively high near the outfalls of desalination and power plants.

! Hot brine. Discharge of concentrated and hot brines from desalination plants.

coastlines. In Bahrain (of which the total surface is less than a diameter of 100 km’s), Kuwait and Qatar, 100 per cent of the populations live within 100 km of the coast (Table 8) Table 8: Population within 100 km of the coast in GCC countries (2001) Bahrain Kuwait Oman Qatar Saudi A. U.A.E. % of population within 100 km of Coast

100 100 88.5 100 30.2

Source: WRI. Earth Trends 2001. The West Asian region as a whole contains around 8 per cent of the world’s mapped coral reefs. Almost two-thirds of those in the Persian Gulf are classified as at risk. In addition, red tides and associated fish kills have increased in distribution and frequency in many coastal areas, and increasing extent of coastal areas is becoming unsuitable for recreation and food production, countries are experiencing a loss remaining mangroves, and the existing fish stock could be threatened with collapse.16

16 UNEP/ROWE.

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Box 4: Land degradation

! Most land in the region is either desertified or vulnerable to desertification. The percentage of desertified land is nearly 100 per cent in Bahrain, Kuwait, Qatar and the U.A.E.

! Salinity is a serious problem in Bahrain, Oman and the U.A.E.

! The percentage of irrigated land that is salinzed by irrigation is estimated at 33.6 in Bahrain, 85.5 in Kuwait

Source: FAO 1997, UNEP GEO 2000.

3. Deterioration of land resources A lack of water and the desert landscape bring the threat of drought and dust storms. These natural phenomena, combined with human activity often cause damage to infrastructure and have contributed to serious issues related to desertification, another environmental challenge that is common to all the countries in the region. Levels of soil contamination are also an environmental challenge common to the countries of the GCC (Box 4). Levels of soil pollution are typically impacted by oil and gas production. Other contributors include an increase in the salinity in the soil and contamination that occurs as a result of the extensive application of agro-chemicals such as pesticides and fertilisers. Agricultural practices in both Qatar and Saudi Arabia rely on high levels of agrochemical inputs into production.

4. Air Quality and GHG Emissions General issues associated with deteriorating air quality are also common to the countries of the GCC. Air pollution is caused largely by high levels of sulphur, sulphur dioxide, nitrogen oxides, carbon monoxide from industrial processing and the heavy metal industry. These substances contribute to the general air pollution including smog and acid rain as well as ground level ozone. Along with inhalable particulates, they can also impact human health. , Just as other countries in the world, the GCC countries contribute to global warming through the emission of greenhouse gases (GHG), in particular carbon dioxide and methane. Table 9 indicates emissions of fossil fuels in the countries of the GCC.17 The principal emissions come from liquid and gaseous fuels. In Saudi Arabia and to a lesser extent in Kuwait and Oman flaring is also a significant contributor to GHG emission. In all the countries of the GCC per capita emissions of carbon dioxide is well above the world average of 4.0 tonnes.

17 Vehicles are also a major source of air pollution in urban areas.

35

Table 9: Emissions from fossil fuel and cement manufacturing in the GCC, 1996a

CO2 Emissions by source (000 m tons) Total CO2 emissions

Solid fuels

Liquid fuels

Gaseous fuels

Gas flaring

Cement manuf.

CO2 emission per capita

CO2 per million in $ GDP (m tons)

Cum.CO2 contributions from 1950 to 1996

Bahrain 10,578 0 -2,972 13,454 0 96 18,552 NA 258,360 Kuwait 42,590 0 23,145 17,463 986 997 25,257 NA 981,102 Oman 15,143 0 4,752 9,065 726 598 6,791 NA 228,051 Qatar 29,121 0 2,481 26,297 0 344 52,159 NA 451,760 Saudi Arabia

267,831 0 156,343 79,351 23,948 8,191 14,225 1,318 4,107,234

U.A.E. 81,843 0 21,460 56,645 750 2,990 36,220 NA 1,202,675 Notes: a emissions represent the mass of carbon dioxide emitted. Source: WRI. Earth Trends 2001.

5. Urbanisation and associated issues Associated with rapid industrialisation come issues related to urbanisation. Urbanisation has occurred relatively rapidly in the GCC countries, within the past four decades as GDP and revenues from oil increased. By 2000 an average of over 88 per cent of inhabitants in all GCC countries lived in cities. In Kuwait, this figure was as high as 96 per cent. It was lowest in Oman with 76 per cent. By 2015, UNDP predicts that over 80 per cent of the population in the GCC countries will live in urban areas. Projections show that for all countries, with the exception of Oman at over 82 per cent, will have urban populations that make up over 90 per cent of total populations (Table 10). Table 10: Existing and projected urban population in GCC countries

Total population (millions) Urban population (% of total) 2000 2015a 2000 2015

Bahrain 0.6 0.8 92.2 95.0 Kuwait 1.9 2.8 96.0 96.9 Oman 2.5 4.1 76.0 82.6 Qatar 0.6 0.7 92.7 95.0 Saudi Arabia 20.3 31.7 86.2 91.0 U.A.E. 2.6 3.2 86.7 91.6

Notes: a Data for 2015 refer to medium-variant projections. Source: UNDP, Human Development Report 2002. In many of the GCC countries the vast majority of the population lives along the coastlines, due in part to the inhospitable nature of the desert interiors. In some cases, this has resulted in rapid urbanisation along the coastlines, supported by insufficient infrastructure. Sewage is often discharged into the surrounding waters, as is industrial and irrigation drainage. Urban waste. In the GCC countries, urban waste generation ranges from 430 kg per capita per year in Qatar to 750 in Dubai.18 In some GCC countries, waste collection and disposal are highly efficient and sanitary landfills are widely used. Some composting plants have even been opened

18 UNEP. GEO 2000. For comparison, in Toronto the figure is 511 kg per capita/year. (Habitat 1997).

36

producing organic manure and soil conditioners.19 Other issues typically associated with urbanisation include congestion, urban air quality, and noise pollution.

6. Biodiversity Biodiversity is generally taken to include wildlife habitats as well as wild species, including species of flora and fauna. In this case, it is important also to include marine biodiversity in a SIA of the EU-GCC FTA, given the important of the coastal waters surrounding the GCC countries. According to the IUCN, the single greatest source of biodiversity loss is linked to the loss of habitats and ecosystems. This can be brought about by fragmentation and degradation of land, through economic activity. The relationship between changes in land use and changes in biodiversity are not necessarily proportional and significant effects can arise from small changes, particularly in fragile and vulnerable ecosystems such as those that exist in desert conditions. Impacts on habitat threaten to deplete marine species of fish, as well as land-based species. Countries can create national protected areas and marine protected areas in order to preserve habitats for biodiversity. Some countries of the GCC have taken such measures (Table 11). Table 11: National protected areas in GCC countries (2000-2001)

Protected Areas (IUCN Categories I-IV) No. of Areas at least:

Number of Marine Protected Areas (IUCN Categories I-

IV)

Number Area

(000 ha) % of

land area 100,000

ha in size 1 million ha in size

Total Littoral Marine

Bahraina 3 1 1.2 0 0 1 NA NA Kuwait 5 27 1.5 0 0 4 2 2 Oman 3 3,428 16.1 1 0 5 2 3 Qatara 4 2 0.1 0 0 4 NA NA Saudi Arabia

71 4,973 2.3 8 2 4 3 4

U.A.E. 2 NA NA 0 0 4 3 1 World 28,442 851,511 6.4 1,250 154 3,636 2,852 1,685

Source: World Resources Institute 2000-2001 (World Conservation Monitoring Centre). Notes: a Figures for 1999 from WRI Earth Trends 2001. Relative to its small size, Oman has taken impressive steps in this regard, protecting over 16 per cent of its land area. Saudi Arabia has protected almost 5 million ha of area, amounting to over 2 per cent of its total land area (Box 5). Bahrain and Kuwait have protected between one and two per cent of land area, while Qatar has protected just 0.1 per cent. Only Oman is over the global average of 6.4 per cent.

19 UNEP. GEO 2000.

Box 5: Examples of protected areas andnational parks Saudi Arabia:

! Harrat al Harra Reserve ! Asir National Park ! Al-Jubail Marine Sanctuary

Oman: ! Arabian Oryx Reserve at Jiddat al

Harasis ! Sea Turtle Reserve at Ra’s Al-Hadd

Source: UNEP. GEO 2000.

37

Oman also includes the highest number of marine protected areas among the GCC countries, at five. Bahrain has one marine protected site, and the remaining GCC countries each include four marine protected areas (Table 11). The numbers of species in the GCC countries are relatively low compared to biodiversity levels in other parts of the world. Nevertheless, of the species that exist, anywhere from five to 20 per cent of mammals are currently considered threatened (Table 11). In addition to threats brought about by the destruction of natural habitats and human economic activity, in some countries of the GCC there have been particular threats to wildlife as a result of unregulated activity including poaching. For example, the Arabian Oryx (a breed of antelope), which was virtually extinct in the early 1970s, was reintroduced into Oman by the 1980s and by the late 1990s was again on the verge of extinction because of poaching. There is now an increasing recognition of the need to protect this endemic species and efforts exist throughout the GCC to this end.20 Table 12: Threatened mammals and birds in GCC countries (2000-2001)

Mammals Birds Total number of known species Total number of known species

All species

Endemic species

Threatened species

No. of species per 10,000 km2

Breeding species

Endemic species

Threatened species

Breeding bird species per 10,000 km2

Bahrain

a 17 0 1 41 28 0 1 68

Kuwait 21 0 1 17 20 0 3 17 Oman 56 2 9 20 107 0 5 39 Qatar a 11 0 0 11 23 0 1 22 Saudi A.

77 0 9 13 155 0 11 26

U.A.E. 25 0 3 12 67 0 4 33 World 4,629 NA 1,096 NA 9,672 NA 1,107 NA

Source: World Resources Institute 2000-2001 (from World Conservation Monitoring Centre, IUCN-The World Conservation Union, and other sources). Notes: a Figures for 1999 from WRI. Earth Trends 2001. Likewise, populations of birds and reptiles are relatively sparse, with few endemic species, native to the region (Tables 12 and 13). The countries of the GCC are home to a significant number of coral species as key marine biodiversity, emphasizing the importance of steps to preserve the marine ecosystems in the surrounding waters (Table 13).

20 The ERWDA in Abu Dhabi includes an Arabian Oryx Conservation Committee with the main objective of facilitating and encouraging conservation efforts for the Arabian Oryx within their natural existing habitat. The Committee is chaired by U.A.E. and includes all GCC countries with the exception of Kuwait. Information efforts include launching a website on the oryx at: www.whiteoryx.org.

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Table 13: Threatened reptiles and freshwater fish in GCC countries (2000-2001)

Reptiles Freshwater Fish Total number of known species Total number of known

species

All species

Endemic species

Threatened species

No. of species per 10,000 km2

All species Threatened species

Bahrain a 25 0 0 60 0 0 Kuwait 29 0 2 24 NA 0 Oman 64 8 4 23 3 3 Qatar a 17 0 2 16 0 0 Saudi A. 84 4 2 14 8 0 U.A.E. 37 1 2 18 5 1 World 6,900 NA 253 NA 25,000 734

Source: World Resources Institute 2000-2001 (from World Conservation Monitoring Centre, IUCN-The World Conservation Union, and other sources) Notes: a Figures for 1999 from WRI. Earth Trends 2001. Table 14: Coastal biodiversity in GCC countries (1990s) Length of

coastline (km)

Area of Mangrove

forests (km2)

Number of Mangrove

species

Number of Seagrass species

Number of Scleractinia Coral

Generaa Bahrain 255 1 1 NA 29 Kuwait 756 NA NA 2 23 Oman 2,809 20 1 NA 40 Qatar 909 <5 1 NA 27 Saudi Arabia

7,472 292 3 5 54

U.A.E. 2,871 30 1 1 28 Notes: a Scleractinia corals are reef-forming corals (i.e., true or stony corals) Source: WRI. Earth Trends 2001. Most of the countries in the GCC have signed (although some have not yet ratified) major multilateral environmental agreements developed over the past couple of decades. These include, inter alia, the UN agreements that were negotiated in Rio in 1992 (see Annex 4 for details). Moving forward: − Information on each of the major environmental media will be collected and where possible,

baseline environmental conditions will be quantified. This section will be expanded to include baseline environmental information for the EU and the Candidate countries.

− A section will be developed that presents the regulatory oversight for the environment in the

GCC countries and in the EU and Candidate Countries. This will be useful used in the final stages of the SIA when the Project Team develops mitigation and enhancement measures associated with this work.

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E. Social Context

1. Demographic Profiles 1.1. The GCC countries The demographic profiles of the GCC countries vary considerably although they share similar characteristics including a large expatriate work force and a large percentage of young people. Saudi Arabia has by far the largest population among the GCC countries with around 27 million inhabitants in 2000. Of these, 27 per cent are not nationals.21 Until the 1960s, most of the population was nomadic or semi-nomadic. However, as a result of economic and urban growth, more than 95 per cent of the population is now settled. Because much of the desert terrain is uninhabited, the population is concentrated in the coastal regions and around the interior oases. The UAE has a population of just over 2.5 million. This is followed by Oman at 2.5 million and Kuwait at 1.9 million. Of Kuwait’s total population, 64 per cent are foreigners.22 Qatar and Bahrain have the smallest populations of the GCC countries at 600,000.23 The percentage of young people under the age of 15 in the population is high in all the countries of the GCC, ranging from a low of 26 per cent in the U.A.E. to a high of around 44 per cent in Oman. Likewise the population of older people, above the age of 65 is relatively low, averaging around 2.5 per cent across the GCC. These figures are expected to shift slightly by 2015. UNDP estimates that in 2015 the population of the GCC countries will total 43.5 million, up from 28.5 million in 2000. The largest percentage increases are expected to occur in Oman and Saudi Arabia. In some countries of the GCC the population over the age of 65 is expected to increase by over 100 per cent, and in Qatar and the U.A.E. the rise is close to 300 per cent. Simultaneously, the proportion of young people is expected to drop off slightly although as a percentage of the total population young people will continue to represent over 20 per cent of the population and over 40 per cent in Oman. Significantly, UNDP expects a GCC average of 92 per cent of the population to be living in cities by 2015, up from a GCC average of just over 88 per cent in 2000. As in 2000, the greatest proportion will be in Kuwait, at over 96 per cent of the population living in cities, and the fewest will be in Oman with an urban population of just over 82 per cent in 2015, up from 76 per cent in 2000.

21 Non-nationals tend to come from ethnic groups including Arabs (90 per cent) and Afro-Asians (10 per cent). 22 These are predominantly other Arabs, but also South Asians and Iranians. Most foreign workers in Kuwait work in the private sector while native Kuwaitis tend to work in the government. 23 In Bahrain, over half (60 per cent) are native Bahrainis. Other major ethnic groups in the population are from Asia (19 per cent), other Arab countries (10 per cent) and Iran (eight per cent). About 70 per cent of the population lives in the capital, Manama.

Source tables for Demographic Profiles in Annex 5: ! Demographic trends in

GCC countries ! Demographic trends in

EU member states ! Demographic trends in

EU candidate countries Source: UNDP. Human Development Report, 2002.

40

The UAE, along with Qatar has the highest foreign component in its workforce at around 90 per cent (Table 15). At 81 per cent the workforce in Kuwait also includes a large number of foreigners. In Oman, foreigners, mainly of South Asian origin, make up just over half of the workforce. In Bahrain well over half of the workforce is made up of expatriate workers.24 Table 15: Foreigners as a percentage of population/workforce in GCC countries Non-citizens

(% of total population) Expatriates

(% of total workforce) Bahrain 40 64 Kuwait 64 81 Oman 26 55a Qatar 80 90a Saudi Arabia 27 55a U.A.E. 82 90a

Notes: a estimate. Source: Dubai Inc; US State Department. 1.2. The EU The total population of the EU was 375.7 million in 2000. This is expected to rise to 376.7 million by 2015 in the 15 current member states of the EU. However, in 2004 when the Candidate countries join the EU, the population will rise by around 75 million. Projections for populations in the candidate countries, taken together, for 2015 are close to 73 million, which is lower than 2000 levels, reflecting declining growth rates. The total population of the EU is growing very slowly, although this growth is not spread evenly among the member states. The populations in Belgium, France, Ireland, Luxembourg, the Netherlands, Sweden and the United Kingdom are expected to grow marginally between 2000 and 2015. In all other countries the population will either remain the same of fall slightly during the same period. In contrast with the countries of the GCC, in all countries of the EU, with the exception of Ireland, the population under 15 years of age is expected to decrease by up to 20 per cent between 2000 and 2015. In Ireland the rise in population under 15 as a percentage of the total population is marginal. In all the countries of the EU the percentage of population over 65 is expected to increase, in some cases by up to 25 per cent. Consistent with trends in the GCC countries, in all the countries of the EU (with the exception of Finland where is will remain the same) the percentage of the population that lives in cities is expected to increase between 2000 and 2015. However unlike the GCC, the levels of urbanisation in the EU will not surpass 90 per cent except in a handful of countries including Belgium, Luxembourg, Netherlands and the United Kingdom. The EU candidate countries will increase the total population of the EU by around 75 million peoples. Tables in Annex 5 indicate that in contrast with the existing member states, the overall population in the Candidate countries is declining. Within this overall decline, between 2000 and 2015 the urban population in all the candidate countries is expected to increase, the population under 15 is expected to decline, and the population over the age of 65 is expected to increase to levels below the existing member states but significantly higher than levels in the GCC countries.

24 From Asia, India, the United States, the United Kingdom and continental Europe. Typically they work in the industrial and services sector

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Levels of urbanization in the Candidate countries are well below levels in the existing member states and in the countries of the GCC.

2. Education 2.1. The GCC countries Literacy rates in the countries of the GCC tend to be high—over 70 per cent of the population in all GCC countries and as high as 87.6 per cent in Bahrain. In all GCC countries public primary education is available for both boys and girls. In most countries the public primary (and secondary) education is compulsory for children up to the age of 12 or 14. Education is considered a key element in promoting the necessary skills for social and economic development and to prepare young nationals to fill opportunities created by economic diversification. Enrolment at the primary level ranges from between 59 per cent in Saudi Arabia up to 97 per cent in Bahrain. At the secondary level the percentage of enrolment is typically lower. Figures for Saudi Arabia suggest that between 1985 and 1987 29 per cent enrolment existed at the secondary level. No additional data was available for 1998. In 1998, the enrolment at the secondary level in the remaining GCC countries ranged from 57 per cent in Kuwait up to 80 per cent in Bahrain. In some instances public education in the region is linked to religious traditions. For example, in Saudi Arabia, segregation by gender is required at all levels in education and female students remain excluded from engineering. However, the increasing number of female graduates, along with rapid economic and technological development and a desire to decrease the number of foreign workers, has led to plans to develop a general education system that encourages the practical participation of Saudis in the workforce. 2.2. The EU Comparable data for the EU suggest literacy rates of over 90 per cent in all countries where data is available. By 2000, recorded literacy rates for youth between the age of 15 and 24 stood at 99.8 per cent in all countries reporting. Likewise, net primary enrolment ratios are generally 100 per cent across the countries of the EU, with the exception of Germany (87 per cent), Austria (88 per cent) and Greece (95 per cent). The figures fall slightly with respect to net secondary enrolment ratios ranging from a high of 100 per cent in Sweden to a low of 77 per cent in Ireland. Similar figures exist for the EU candidate countries. Adult literacy rates across the candidate countries all exceeded 90 per cent in 2000, with most countries over 99 per cent.25 With the exception of Cyprus and Hungary at 81 and 82 per cent, respectively, the net primary enrolment ratio exceeds 90 per cent in all EU Candidate countries, reaching 100 per cent in Malta. In a

25 No comparable information is available for the Czech Republic, Estonia and Slovakia.

Source tables for education in Annex 6: ! Selected indicators for education in

GCC countries ! Selected indicators for education in EU

member states ! Selected indicators for education in EU

candidate countries Source: UNDP. Human Development Report, 2002.

42

similar pattern as in the EU, levels drop with respect to net secondary enrolment ratios, ranging from a low of 57 per cent in Poland to a high of 89 per cent in Slovakia in 1998.

3. Health and welfare 3.1. The GCC countries In general in the countries of the GCC life expectancy is high with an average of close to 73 years of age. Infant and under five morality rates have decreased significantly in the past 30 years, but remain more than double rates in the EU. On average, across the GCC there were close to 150 physicians per 100,000 people between 1990 and 1999. This ranged from a low of 100 per 100,000 people in Bahrain to a high of 189 per 100,000 people in the Kuwait. Kuwait, U.A.E. and Saudi Arabia all compared favourably with the lower rates in the EU, such as in the UK where the figure was 164 per 100,000. Typically, however, the availability of physicians to population is roughly 50 per cent of levels in the EU and EU Candidate countries. Nevertheless, the countries of the GCC, including Bahrain, Kuwait and Qatar, have comprehensive well-developed publicly accessible health care systems that cover a range of services including, inter alia, general medical care, dental, maternity and psychiatric care, and are available free of charge to their citizens.26 In the U.A.E., the government estimates that 90 per cent of the population has access to health services.27 Similar near-universal access to health care now also exists in Oman.28 This includes the introduction, in the late 1990s of privately-run health care clinics and hospitals. In Saudi Arabia the government seeks to improve services and to provide free medical care for all citizens. Advanced medical research and some of the most modern medical care centres are located in cities such as Riyadh. However, medical care in the countryside is limited and remains a challenge. A number of countries in the GCC have relatively well developed social safety nets. In Bahrain, a social security system was established in 1976 which provides state pensions and workers’ compensation. Kuwait also has a strong social service system offering its citizens guaranteed state employment and subsidized services including water and electricity. There is some concern that the benefits of the social services system are unevenly distributed among the population, in particular with respect to non-citizens.

26 In a number of countries, particularly Qatar and Kuwait, the health care system relies heavily on foreigners for staffing. 27 UNDP. Human Development Report, 2000. 28 Oman has seen a remarkable expansion in health services over the last 25 years. Starting with two hospitals in 1970, at the end of 1998 there were 54 government hospitals across the country and 110 health centres with 5,075 hospital beds. Health services' share of total government expenditure amounted to 5.9 percent in 1998.

Source tables for Health and welfarein Annex 7: ! Selected health-related indicators in

GCC countries ! Selected health-related indicators in

EU member states ! Selected health-related indicators in

EU candidate countries Source: UNDP. Human Development Report, 2002.

43

3.2. The EU In the EU, the average life expectancy among the 15 member states was 77.8 years in 2000. This was lowest in Ireland at 76.6 and highest in Sweden at 79.7. Infant mortality rates are generally low, having dropped significantly in all countries since 1970. Comparable figures are somewhat lower in the Candidate countries, where life expectancy averaged across the ten countries was 73 in 2000 and where infant and under-five mortality rates are roughly twice those in EU member states.

4. Labour/Employment The countries of the GCC share a number of common characteristics in terms of their labour and employment markets. Typically this includes historically low rates of unemployment that are now growing, high numbers of expatriate workers, a large number of natives employed in government jobs, and a prohibition on labour unions. GCC citizens filled 26 per cent of all jobs in the region in 1995, down from 33 per cent in 1985 and 61 per cent in 1975. Almost six per cent of Kuwait’s work force is employed in the private sector. This figure is close to nine per cent for the UAE and ten per cent other GCC countries. In general, the owners of private businesses in the GCC prefer to employ foreigners, because they are less expensive than their own citizens. Until the mid 1980s the labour markets in the GCC were characterised by the ready availability of jobs in the government sector and GCC nationals were assured these jobs. Expatriate workers were primarily employed in the private sector. However, a decline in government spending, spurred by less stable oil revenues in the mid 1980s led to a decrease in growth in the demand for labour. At the same time, although the number of graduates from national secondary schools and universities was rising, many did not have the skills required for work in the private sector. This created the unprecedented phenomenon of unemployment among GCC nationals, while substantial numbers of foreign workers continued to be employed in the private sector. Structural unemployment in the GCC reflects the fact that the demand and the supply of labour do not reflect changes in the structure of the economy. Cyclical unemployment occurs in the GCC as a result of economic slowdowns resulting from the instability of the oil market. The decline in government spending and its effects on the private sector had caused the public sector to reduce the pace of hiring while the private sector is consolidating, streamlining and downsizing in response to slow economic growth. The number of new nationals entering the labour market in Kuwait is estimated at about 6,500 annually.29 In Saudi Arabia, the comparable figure is about 74,000, most of whom (63 per cent) are secondary school graduates, and in Bahrain the number is estimated at around 8,000. With the exception of Bahrain, data on unemployment in the GCC are not readily available. However, the current structural unemployment has been estimated at around 450,000 national workers in the GCC as a whole. This represents only 6.4 per cent of the total expatriate labour force and 4.7 per cent of the total manpower, yet it constitutes a sizable 17.8 per cent of the total national labour force in the GCC countries.

29 Based on published data about the size of the national labour force during the last six years.

44

Unemployed nationals in the GCC are often less educated that the average for the national workforce. Unemployed women are typically secondary school graduates while unemployed men are generally primary school graduates or lower. A number of policies to improve labour markets and avoid future unemployment of nationals have been adopted in the GCC countries during the last decade. These have included a ban on, or a reduction in, foreign work permits, a generous system of unemployment compensation, a reduction in the length of the work week, and a system of required preferential hiring of nationals.

5. Civil and Political Freedoms Throughout the GCC there are important challenges that exist related to the exercise of basic civil and political freedoms—among the most important individual freedoms. This lack of basic freedoms is reflected in a range of measures including a prohibition on opposition political parties and censorship. Out of seven world regions, the Arab countries had the lowest “freedom score” in the late 1990s, according to UNDP. The low level of freedom in the Arab region is confirmed by a set of indicators of “voice and accountability” derived from another international database.30 This set includes indicators measuring various aspects of the political process, civil liberties, political rights and independence of the media. The Arab region has the lowest value of all regions of the world for “voice and accountability” indicators.31 Table 16: Status of ratification by GCC countries of principal international human rights treaties International

Convention on Civil and Political Rights

International Covenant on Economic and Social and Cultural Rights

The Convention on the Elimination of all forms of Torture and other Cruel, Inhuman or Degrading Treatment or Punishment

The International Convention on the Elimination of All Forms of Racial Discrimination

The Convention on the Elimination of All Forms of Discrimination against Women

The Convention on the Rights of the Child

Bahrain 06 Mar. 1998 27 Mar. 1990 13 Feb. 1992

Kuwait 21 May 1996

21 May 1996 21 Mar. 1996 13 Oct 1968 02 Sept 1994 21 Oct. 1991

Oman 09 Dec 1996

Qatar 11 Jan 2000 22 Jul 1976 03 April 1995

Saudi Arabia

23 Sept 1997 23 Sept 1997 07 Sept 2000 26 Jan 1996

UAE 20 Jun 1974 03 Jan 1997

Source: UNDP, Arab Human Development Report, 2002.

30 Kaufman et al, 1999. 31 UNDP. Arab Human Development Report, 2002.

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6. Gender Equality 6.1. The GCC countries Gender equality is a critical aspect of human freedom and is linked to economic development.32 The countries of the GCC typically incur relatively low scores based on international indicators on the status of women, applied by multilateral organisations. Nevertheless, the countries of the GCC have scored important successes in girls’ education. Combined primary, secondary and tertiary gross enrolment ratios for females range from 83 per cent in Bahrain to a low of 56 in Oman. This compares favourably with male ratios which range from 77 per cent in Bahrain to 59 per cent in Oman. The growing number of women passing through the education system in the countries of the GCC is putting pressure on governments to expand the areas where women might work. In Saudi Arabia, where only seven per cent of the work force is currently made up of women there are a growing number of female university graduates seeking employment. Despite these achievements, GCC countries rank poorly in terms of gender equality, based on international indicators. Typically, in terms of economic activity, the countries of the GCC average a rate of almost 37 per cent female economic activity as a percentage of male economic activity. This rate is highest in Kuwait (48 per cent) and Qatar (45 per cent). It is lowest in Saudi Arabia (27 per cent) and Oman (25 per cent) although these two countries have made the most progress among the GCC countries since 1990 to encourage female economic activity. Comparisons between the estimated earned income between female and males in the GCC countries in 2000 indicates that females earn around one-quarter of men in terms of PPP US$. In some countries the difference between females and males was much greater. For example, in Oman in 2000 the PPP US$ for females was 3,806 compared to 21,804 for males. In Bahrain, the figures diverged less with PPP US$ for females at 7,010 compared to 21,059 for males.

32 UNDP. Arab Human Development Report. 2002.

Source tables for Gender Equality in Annex 8: ! Gender-related development indicators in GCC countries ! Gender-related development indicators in EU member states! Gender-related development indicators in EU candidate

countries ! Selected indicators related to gender and economic activity

in GCC countries ! Selected indicators related to gender and economic activity

in EU member states ! Selected indicators related to gender and economic activity

in EU candidate countries Source: UNDP. Human Development Report, 2002.

Box 6: UNDP GEM rating “Applying the UNDP GEM to Arab countries clearly reveals that the latter suggest a glaring deficit in women’s empowerment. Among the regions of the world, the Arab region ranks next to last as measured by GEC; only sub-Saharan Africa has a lower score.” Source: UNDP. Arab Human Development Report, 2002.

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According to the UN, the main reason for the low gender empowerment measure (GEM) values of Arab countries is the limited participation of women in political organisations.33 There are no women holding seats in parliaments, where they exist, in the GCC countries. In the U.A.E, in 1999 eight per cent of total senior officials and managers were women and 25 per cent of professional and technical workers were women. The U.A.E. is the only GCC country for which any data of gender related economic activity were identified. 6.2. The EU Selected indicators related to gender and economic activity in the EU suggest that female economic activity as a percentage of male rates of activity are significantly higher than in the GCC countries, averaging 68.4 per cent. The rate is highest in Sweden at 89 per cent, and lowest in Ireland, at 52 per cent. However, consistent with trends in the GCC countries, Ireland has experienced the most significant improvement in this area since 1990. Among major sectors, agriculture tends to be dominated in all countries of the EU by male workers, with the exception of Greece, Portugal and Austria. In the industrial sector males out number women by a factor of close to 3 to 1 across the EU. The services sector is dominated by female workers in all countries of the EU. To the extent that jobs in the services sectors are often among the lowest paying jobs in a country’s economy, this contributes to the differentials in the EU between the PPP US$ between males and females. Across the EU females typically earn half the US$ PPP of males. The differences are most pronounced in Greece, Ireland, Italy, Luxembourg, Portugal, and Spain. The activity of females in politics is relatively robust in the EU, although not yet on par with male activity. As a percentage of total seats, the seats in parliament held by women average around 25 per cent across the EU. This ranges from relatively high levels Denmark (38 per cent), Finland (36.5 per cent) and the Netherlands (32.9 per cent) to low levels in Ireland (13.7 per cent), Italy (9.1 per cent) and Greece (8.7 per cent). Rates of activity are higher with respect to female legislators, senior officials and managers and across the EU female professional and technical workers make up between 45 and 56 per cent of the total. Indicators of gender development and economic activity in the EU candidate countries show that female economic activity as a percentage of male rates, are higher in some instances in the candidate countries than in the EU itself. The agriculture sector tends to be dominated by male workers. Likewise, industry is dominated by male workers, with the exception of Lithuania. As in the EU, female workers dominate the services sector. On average across the EU candidate countries, the estimated earned income (PPP US$) for women is approximately 35 percent lower than that of men.34 The ratio of estimated female to male earned income is higher in the EU candidate countries than in the EU. In addition, on average, across the EU candidate countries, women hold around 16 per cent per cent of seats in parliament.35 The highest levels occur in Poland (20.7 per cent) and the lowest levels occur in Malta (9.2 per cent). An average of around 31 per cent of the total number of legislators, senior officials and managers across the Candidate countries are women.36 The highest levels occur in Estonia (37 per cent) and Poland (33 per cent) and the lowest levels in Cyprus (with 14 per cent). On average, over 50 per cent of professional and technical workers, across the Candidate countries are women. 33 UNDP. Arab Human Development Report. 2002. 34 This does not include Estonia for which no comparable data were available. 35 This does not include Hungary for which no comparable data were available. 36 This does not include Hungary or Bulgaria for which no comparable data were available.

47

F. Trade Context

1. Trade and the GCC Of the GCC countries, Bahrain and the UAE are the most dependent on international trade, with a trade to GDP ratio of 65 and 64 per cent, respectively, in 2001 compared with around 40 per cent for other GCC members.37 Saudi Arabia is the largest trader in the region, with merchandise exports valued at just over US$ 84 billion in 2000, over twice as much as the region’s second largest exporter, U.A.E., valued at just under US$40 billion. Bahrain exported the least of the GCC countries in value terms in 2000 at nearly 6 billion. However, it posted significant gains compared to 1999 levels. Kuwait, U.A.E. and Saudi Arabia also posted significant gains from 1999 (Table 17). The U.A.E. imports more merchandise than the other countries of the GCC, in value terms, at close to US$32 billion in 2000. This was followed closely by Saudi Arabia at just over US$30 billion and by Kuwait at US$7.6 billion. Bahrain imported the least merchandise of the GCC countries in 2000 with imports valued at US$4.6 billion. Again, however, this represented a significant increase in merchandise imports from 1999 (Table 18). Table 17: Merchandise exports from GCC countries, 2000

Value (US$ billion)

Share (%) Annual percentage change GCC member country 2000 1990 1995 2000 1998 1999 2000 Bahrain 5.7 2.8 2.8 2.2 -25 25 40 Kuwait 19.5 5.3 9.5 7.4 -33 28 60 Oman 11.3 4.1 4.2 4.3 -28 31 57 Qatar 9.4 2.9 2.5 3.6 -10 43 30 Saudi Arabia 84.1 33.1 34.4 32.0 -36 31 66 U.A.E. 39.9 15.5 15.3 15.2 -9 15 29

Source: WTO. International Trade Statistics, 2001. Table III.67. Table 18: Merchandise imports to GCC countries, 2000

Value (US$ billion)

Share (%) Annual percentage change GCC member country 2000 1990 1995 2000 1998 1999 2000 Bahrain 4.6 3.7 2.8 2.7 -11 1 29 Kuwait 7.6 4.0 6.0 4.5 5 -12 0 Oman 5.0 2.7 3.2 2.9 13 -18 8 Qatar -- -- -- -- -- -- -- Saudi Arabia 30.3 24.3 21.5 17.7 4 -7 8 U.A.E. 31.9 11.3 16.1 18.6 -4 6 4

Source: WTO. International Trade Statistics, 2001. Table III.67. Overall, between 1990 and 2000, the value of imports and exports of goods and services have dropped in the GCC countries as a percentage of GDP (Table 19). Exports of primary products 37 Roy and Zarrouk, 2002.

48

make up the vast majority (but slightly declining) share of merchandise exports, followed by manufactured exports. Where figures are readily available, they indicate that exports of high tech are virtually insignificant. Table 19: The general structure of trade in GCC countries

Imports of goods and services

(% of GDP)

Exports of goods and services

(% of GDP)

Primary Exports (%

of merchandise

exports)

Manufactured exports (% of merchandise

exports)

High tech. exports (%

of manufacture

d exports

GCC country

1990 2000 1990 2000 1990 2000 1990 2000 1990 2000

Bahrain 95 63 116 82 91 89 9 11 -- (.) Kuwait 58 31 45 57 94 80a 6 20 a 3 1 a Oman 31 -- 53 -- 94 87 5 12 2 4 a Qatar -- -- 18 -- 84 90a 16 10 a -- -- Saudi Arabia

36 26 46 50 93 93 7 7 -- (.)

U.A.E. 40 -- 65 -- 54 -- 46 -- -- -- Notes: a Data refer to 1999. Source: UNDP. Human Development Report, 2002. Within the category of primary exports, fuels account for three quarters of total merchandise exports.38 As a region, the GCC benefited from an increase in oil prices in the early years of 2000. According to the WTO, the Middle East as a region recorded the highest export growth of all regions in 2001. Ninety per cent of Saudi Arabia’s exports consist of petroleum and petroleum production. Likewise, Bahrain’s principal exports include petroleum and petroleum products. In Kuwait, major exports consist of oil and refined products and fertilisers. With the exception of Bahrain and Oman, less than 9 per cent of GCC exports go to (or imports come from) GCC countries. At the global level, the import of manufactured products is important for a number of the countries in the GCC. For example, in 1999 Kuwait imported US$ 5.95 million worth of manufactures, representing around 78 per cent of the country’s total merchandise imports, and up from 65.6 per cent in 1990. Likewise, Saudi Arabia imported US$22.05 million worth of manufactures in 2000, representing 67.2 per cent of total merchandise imports. However, this was down from over 75 per cent in 1990.39 Saudi Arabia imported a US$81,981 million worth of 38 WTO International Trade Statistics, 2001. 39 WTO. International Trade Statistics, 2001. Table IV.32.

Figure 4: Total GCC merchandise exports by country 1990-2000, (US$ millions)

0100002000030000400005000060000700008000090000

1990 1995 2000

BahrainKuwaitOmanQatarSaudi ArabiaU.A.E.

Source: WTO, International Trade Statistics 2001, Table A5.

49

machinery and transport equipment in 2000 representing 60.9 per cent of total merchandise imports. This was up from 44.6 per cent in 1990.40 In 2000, Saudi Arabia imported US$1,242 million worth of telecom and office equipment, representing a 40.3 per cent share in the country’s total merchandise imports, up from 22.0 per cent in 1990.41 Other key imports for Saudi Arabia in 2000 were automotive products, valued at US$3,815 million. This represented 11.6 per cent of the country’s total merchandise imports, down marginally from 11.8 in 1990. Kuwait imported US$1,216 million worth of automotive products in 1999, representing around 16 per cent of total merchandise imports, up from 11.4 per cent in 1990. Oman imported US$800 million worth of automotive products in 1999. This represented around 17 per cent of total merchandise imports, up slightly from 16.0 per cent in 1990.42 Kuwait imported US$206 million worth of textiles in 1999, representing around 2.7 per cent of total merchandise imports, down from 4.2 per cent in 1990. Saudi Arabia imported US1,312 million worth of textiles in 2000, representing 3.0 per cent of total merchandise imports. This was down from 5.5 per cent in 1990. And U.A.E. imported US$2,024 million worth of textiles in 1999, representing around 6.2 per cent of total merchandise imports, down from 9.0 per cent in 1990.43 The countries of the GCC are also net importers of clothing. In 1999 Kuwait imported 330 million worth of clothing, representing 4.3 per cent of total merchandise imports, down from 5.2 per cent in 1990. Saudi Arabia imported 813 million worth of clothing in 2000, representing 2.5 per cent of total merchandise imports, down from 3.5 in 1990. And U.A.E. imported 12,992 million worth of clothing, representing 3.9 per cent of total merchandise imports, up from 3.1 per cent in 1990.44 Along with textiles and clothing, the majority of imports into Saudi Arabia are machinery and equipment, food, chemicals, and vehicles (Table 20). Table 20: Commodity composition of GCC imports (percentage of total imports, 2000) Commodity GCC

Total Bahrain Kuwait Oman Qatar Saudi

Arabia U.A.E.

Machinery & transport equipment

34.6 15.9 28.3 43.3 44.8 39.2 43.2

Classified Manufacturing goods

26.4 16.9 20.3 13.8 20.8 22.4 24.8

Food & live animals 11.4 12.4 15.2 12.0 10.2 15.9 7.0 Misc. manufactured goods

10.0 5.0 12.3 6.1 13.1 5.2 10.8

Chemicals 6.6 4.7 9.7 7.2 6.4 9.7 4.2 Mineral fuels & lubricants

3.1 40.7 0.6 1.6 0.4 0.2 1.1

Crude materials 2.9 2.2 2.0 2.9 2.6 1.8 5.0 Animal/Vegetable oil and fat

1.7 1.2 0.6 0.7 0.4 0.7 0.8

Beverages & tobacco

1.2 1.0 1.0 8.6 1.0 1.1 0.9

Source: Roy and Zarrouk 2002 (National sources, 2002) 40 WTO. International Trade Statistics. Table IV.50. 41 WTO. International Trade Statistics, 2001. Table IV.58. 42 WTO. International Trade Statistics. Table IV.66. 43 WTO. International Trade Statistics, 2001. Table IV.74. 44 WTO. International Trade Statistics, 2001. Table IV.82.

50

Figure 6: GCC exports of commercial services, 1990-1999 ($US millions) Notes: * Figures tbd for Qatar and U.A.E. Source: WTO, International Trade Statistics, 2001. Table A7

Figure 5: GCC imports of commercial services, 1990-1999 ($US millions) Notes: * Figures tbd for Qatar and U.A.E. Source: WTO, International Trade Statistics, 2001. Table A8

Commercial services exports in the region have expanded faster than imports over the last four years, but the region still has a deficit in commercial services in the order of 22 billion dollars.45

0

2 0 0 0

4 0 0 0

6 0 0 0

8 0 0 0

1 0 0 0 0

1 2 0 0 0

1 4 0 0 0

1 9 9 0 1 9 9 5 1 9 9 9

B a h ra inK u w a itO m a nQ a ta r*S a u d i A ra b iaU .A .E .*

0

1000

2000

3000

4000

5000

6000

1990 1995 1999

BahrainKuwaitOmanQatar*Saudi ArabiaU.A.E.*

Note: The Project Team is in the process of locating reliable data on the trade in services between the EU and the countries of the GCC. Detailed information will be provided to this end, along with a finalised screening of services issues in the next phase of the work.

45 WTO.

51

Intra-GCC Trade. Intra-GCC trade is important for Bahrain and Oman. In Bahrain, crude oil from Saudi Arabia makes up much of that country’s imports. The oil is imported from Saudi Arabia, refined, and exported to non-GCC countries. Some countries in the region, including the UAE, Oman and Kuwait, are important trans-shipment hubs handling a substantial share of imports of merchandise of some GCC countries from non-GCC sources. Goods are registered as re-exports if the products concerned have not been transformed sufficiently for their “origin” to change.46 Given the similarity of the natural resource endowments of many GCC countries and their small size, it is not surprising that they tend to trade relatively little with each other. Imports from the rest of the world account for 90 per cent or more of total imports for most GCC states. Food, machinery and equipment and other manufactures, together account for about 78 per cent of the total. These goods are imported predominantly from non-GCC sources. 47

2. The European Union Table 21: The general structure of trade in EU member states

Imports of goods and services

(% of GDP)

Exports of goods and services

(% of GDP)

Primary Exports (%

of merchandise

exports)

Manufactured exports (% of merchandise

exports)

High tech. exports (%

of manufacture

d exports

Member state

1990 2000 1990 2000 1990 2000 1990 2000 1990 2000

Austria 38 46a 40 45 a 12 12 88 83 8 14 Belgium 69 85 71 88 -- 18 -- 78 5 10 Denmark 31 37 36 42 35 30 60 64 15 21 Finland 24 32 23 42 17 15 83 85 8 27 France 22 27 21 29 23 17 77 81 16 24 Germany 25 33 29 33 10 9 89 85 11 18 Greece 28 29 a 18 20 a 46 49 a 54 50 a 2 9 a Ireland 52 74 a 57 88 a 26 9 70 86 41 48 Italy 20 27 20 28 11 10 88 88 8 9 Lux. 105 99 109 120 -- 13 -- 86 -- 17 Neths. 55 56 a 59 61 a 37 30 59 70 16 35 Portugal 40 43 33 31 19 14 80 85 4 5 a Spain 20 32 16 30 24 21 75 78 6 8 Sweden 29 42 30 47 16 9 83 85 13 22 U.K. 27 29 24 27 19 17 79 82 24 32

Notes: a Data refer to 1999. Source: UNDP Human Development Report 2002.

46 The rule of origin used in the GCC is a 40 percent value added criterion (i.e., no more than 60 percent of the value added may be of non-GCC origin). Roy and Zarrouk 2002. 47 See Roy and Zarrouk 2002.

52

Table 22: The general structure of trade in EU candidate countries

Imports of goods and services

(% of GDP)

Exports of goods and services

(% of GDP)

Primary Exports (%

of merchandise

exports)

Manufactured exports (% of merchandise

exports)

High tech. exports (% of manufactured

exports

Candidate country

1990 2000 1990 2000 1990 2000 1990 2000 1990 2000 Cyprus 57 48a 52 45 a 45 48 55 52 6 2 Czech Rep. 43 75 45 71 -- 11 -- 88 -- 8 Estonia -- 88 -- 84 -- 27 -- 73 -- 30 Hungary 29 67 31 63 35 12 63 86 -- 26 Latvia 49 54 48 46 -- 44 -- 56 -- 4 Lithuania 61 52 52 45 -- 40 -- 60 -- 4 Poland 22 34 29 27 36 20 59 80 -- 3 Malta 99 114 85 103 4 3 96 97 45 72 Slovakia 36 76 27 74 -- 15a -- 85a -- 4a Slovenia -- 63 -- 59 -- 10 -- 90 -- 5

Notes: a Data refer to 1999. Source: UNDP, Human Development Report, 2002.

3. The EU-GCC FTA The commitment to create a Customs Union in the GCC paved the way for a free trade agreement with the EU.48 Negotiations resumed in 2002. The primary objective of the Free Trade Agreement (FTA) is to deepen existing relations between the Parties on the basis of reciprocity and mutual interest. To this end, the FTA will strengthen commercial and economic relations through trade liberalisation, and reinforce and broaden cooperation. The primary building block is the establishment of a free trade area, progressively eliminating tariffs and non-tariff barriers on substantially all trade between the parties. In this context and in order to increase economic efficiency, the FTA will also aim at simplifying the requirements and procedures related to imports and exports, based on the highest international standards. The FTA will also provide for a progressive and reciprocal liberalisation of trade in services aiming at assuring a comparable level of market access opportunities. The FTA will include liberalisation of public procurement aimed at ensuring comparable and effective access to the Parties’ procurement markets on the principles of non-discrimination and national treatment. It will also include provisions related to the protection and enforcement of intellectual, industrial and commercial property rights. It will include clauses on customs and administrative cooperation, standardisation and conformity assessment (including sanitary and

48 A Co-operation Agreement was signed with the EU in June 1988. It provided for the Parties to enter into discussions concerning negotiations of an agreement aimed at the expansion of trade. Under the Cooperation Agreement the EU and GCC Foreign ministers meet once a year at a Joint Council/Ministerial Meeting. The objective of this agreement is to facilitate trade relations, as well as more generally to contribute to strengthening stability in a strategic part of the world. Working groups have been established in the fields of industrial cooperation, energy and environment.

53

phyto-sanitary measures), provisions on competition as well as on current payments and capital movements.

Initial discussions will cover all aspects of the prospective FTA, with a view to finding a common understanding on its basic structure and content. Subsequent rounds of negotiations will consider specific areas of the FTA. The period of negotiations will also be used for capacity building in the public and private sector of the GCC countries with a view to enhance their ability to define appropriate regional and multilateral trade strategies and policies. This will include measures to enhance competitiveness, to strengthen their internal Customs Union and to support regional trade integration initiatives, fiscal reform, and to upgrade infrastructure, and improve investment.

4. EU-GCC Trade Flows In 2001 imports by EU member states from the countries of the GCC totalled close to €20 billion. During the same period EU member states exported around €33.5 billion worth of goods to the countries of the GCC. Despite the favourable balance of trade in the GCC as a whole, the EU has consistently had an export surplus in its trade balance with the GCC.49 The GCC as a region imports 29.3 per cent of its total imports from the EU. This makes the EU the single largest source of imports for the GCC region, followed by the United States at 12.2 per cent, Japan at 9.1 per cent and other GCC countries at 8.3 per cent. Of this, the countries of the EU that are most dependent on EU imports are U.A.E. 43.6 per cent, followed by Saudi Arabia 33.7 per cent. The least dependent are Bahrain, responsible for 5.3 per cent of imports from the EU, and Oman, which imports only 3.9 per cent of the total goods from the EU.50 The European Union accounts for only 10.1 per cent of the total GCC exports. This is behind Japan at 20.0 per cent, but just ahead of the United States at 9.6 per cent. Saudi Arabia accounts for a full 70 per cent of total exports from the GCC to the EU. This is followed by Kuwait at 12.9 per cent and UAE at 12.2 per cent. Exports from the remaining GCC countries are very small. Qatar accounts for 2.1 per cent of exports to the EU, Bahrain accounts for 1.8 per cent and Oman accounts for the remaining 1.0 per cent of exports from the GCC region to the EU.51 The sectoral composition of EU trade with the GCC countries is varied among imports and exports although some sectors stands out in terms of overall trade flows.52 49 In 1995 EU imports from the GCC countries was around €11.5 billion and exports to the GCC were valued at around € 33 billion (see tables in Annex 9). 50 Based on national and international sources, published in Roy and Zarrouk 2002. 51 Based on national and international sources, published in Roy and Zarrouk 2002. 52 See Annex 9 for detailed preliminary tables.

Source tables for Trade Context inAnnex 9 ! EU Exports to GCC by major sector,

2001 (value and %) ! EU exports to GCC by trading partner,

2001 (value and %) ! EU imports from GCC by major sector,

2001 (value and %) ! EU imports from GCC by trading

partner, 2001 (value and %) ! EU Exports to GCC by major sector,

1995 (value and %) ! EU exports to GCC by trading partner,

1995 (value and %) ! EU imports from GCC by major sector,

1995 (value and %) ! EU imports from GCC by trading

partner, 1995 (value and %) Source: Eurostat.

54

Figure 7: Export price of crude petroleum, 1990-2001(Q2) (indices 1990=100)

020406080

100120140

1990 1995 1998 1999 2000 2001Q2

Crude Petroleum

Source: WTO. International Trade Statistics 2001. Table A21.

The major EU import from the GCC region (and hence export from the GCC to the EU) in 2001 was oil and fuel at 72 per cent of total EU imports from the GCC. Other sectors that are significant for EU imports from the GCC were machinery (6.2 per cent), vehicles, aircraft and vessels (4.8 per cent), chemical and chemical products (3.8 per cent) and natural or cultured pearls (2.6 per cent). These figures have changed somewhat since 1995 when over 76 per cent of EU imports from the GCC were oil and fuel. Despite this drop in percentage of total imports, however, the value of the EU imports of oil and fuel have risen since 1995 from almost €9 billion to over €14 billion. Other key imports in 1995 included machinery (5.8 per cent), vehicles, aircraft and vessels (4.2 per cent), and chemicals and chemical products (2.5 per cent). The value of EU imports from GCC countries is influenced heavily by the price of oil, given the relatively important role of oil in the trade flows between the regions. Oil is the major commodity exported by all the countries of the GCC with the exception of Bahrain. Saudi Arabia dominates this trade, followed by Kuwait (Table 23). The value of this trade is heavily influenced by the international price of oil which goes some way to explaining the relatively low values in the mid and late 1990’s compared to the higher values after 2000 when the price began to rise from lows in 1998 (Figure 5). Table 23: Imports of fuels by EU(15) from GCC (excluding Bahrain)

Annual percentage change GCC country Value (US$ millions)

Share (%) 1999 2000

Saudi Arabia 14,166 7.7 -1 117 U.A.E. 523 0.3 -31 320 Kuwait 3,955 2.1 17 194 Qatar 65 0.0 50 -29 Oman 15 0.0 -- --

Source: WTO. International Trade Statistics, 2001. Table IV.23.

55

Major EU exports to the GCC region are relatively diversified compared with imports. In 2001 35.5 per cent of EU exports to the GCC countries occurred in the machinery and mechanical appliances sector, valued at over €11 billion. In order of descending importance, this was followed by vehicles, aircraft and vessels (16.2 per cent), chemicals and chemical products (9.1 per cent), base metals (5.8 per cent), optical and photographic equipment (4.1 per cent) and food and beverages (4.0 per cent). This is relatively consistent with trade flows from the EU to the GCC countries in 1995. In that year, the EU exported close to €3 billion worth of mineral fuels and mineral oils to the GCC countries, representing close to 24 per cent of its total exports to the GCC. This was followed by vegetable products (14.31 per cent), base metals (12.78 per cent), cement (11.02 per cent), food and beverages (7.24 per cent), chemical products (6.04 per cent), and live animals/animal products (5.68 per cent). With seven sectors each contributing over 5 per cent of total exports from the EU to the GCC in 1995, the export trade was more diversified than in 2001 where only five sectors contributed over 5 per cent of total EU-GCC exports. This is explained in part by the large increase in exports from the EU of machinery, which more than doubled, in value terms between 1995 and 2001. In 2001, EU member states that exported most to the GCC countries were Germany (21.9 per cent of total exports to the GCC), the U.K. (19.9 per cent), Italy (13.9 per cent), France (17.5 per cent), and the Netherlands (6.3 per cent). This profile has changed only marginally since 1995. In 1995 Germany also led the EU member states in terms of exports to the GCC (21.3 per cent), followed by Italy (15.4 per cent), Sweden (14.6 per cent), France (10.2 per cent) and the U.K. (8.9 per cent). The Netherlands stood 7th spot in 1995, compared with 5th spot in 2001 with roughly the same percentage share in exports (6.2 per cent in 1995 compared to 6.3 per cent in 2001). However, in 1995 its exports to the GCC were worth just over 709 million, while in 2001 they were valued at over 2 billion. This indicates the rising value of overall EU exports to the GCC but also the concentration of the majority of those exports in fewer EU countries.

5. Tariff structures in the GCC countries: pre Customs Union Import duties have traditionally varied widely among the countries of the GCC and among particular products and commodities. Historically, tariffs have increased over time in most GCC countries, in part to collect revenue, in part to protect domestic industries, and in part in a move to a common external tariff (CET).53 In some instances high tariffs and other restrictions including outright bans are imposed on goods that are considered culturally undesirable for moral and religious reasons. All GCC members have applied tariff exemptions on imports of a set of “essential” commodities, which include items such as basic foodstuffs, cooking oils, agricultural inputs (such as seeds), and printed materials. These generally account for up to 20 per cent of all GCC imports.54 For example, Bahrain has abolished import duties on most food products, except corn and palm oil. The import of raw materials or semi-manufactured goods is also free from duties. The duty on consumer goods such as clothes was reduced from 10 to 7.5 per cent. In Kuwait there are no import duties on most food, agricultural items, essential consumer goods and raw materials. Imports of some machinery and most spare parts are also free from duties. For other goods there was a standard four per cent tariff. This rate could rise to 20 per cent where goods compete with locally manufactured products, although this has not been applied in Kuwait. The protective 20

53 Roy and Zarrouk 2002. 54 Roy and Zarrouk 2002.

56

per cent tariff rate has been used extensively by Saudi Arabia where almost all imported goods fall into this category including furniture, cooking salt, mineral water and plastic pipes. In Saudi Arabia 100 per cent import duties apply to wheat, flour, dates and long-life milk imports. The coverage of the 20 per cent protective tariff also applied in Bahrain, Kuwait and Oman. In January 2000 Saudi Arabia reduced the standard rate of 12 per cent to 5 percent and removed the protective rate of 20 percent. However, the 12 per cent rate was reinstated in Saudi Arabia for some products in November 2000 in response to efforts of the domestic manufacturing lobby. Table 24: Tariff structure in the GCC economies (pre GCC Customs Union) Bahrain Kuwait Oman Qatar Saudi

Arabia U.A.E.

Standard tariff rate 5% 4% 5% 4% 5%a 4% Higher tariff rate 10% n.a. 15% n.a. n.a. none Protective tariff (coverage)

20% (limited)

20% (not applied)

20% (not applied)b

none none

Special items: Tobacco 100% 100% 100% 100% Alcohol 125% banned 100% banned 50% Pork products 100% banned Cars 20% 4% 10%c 4% 12% 4% Exemptions: Essential commodities

Yes Yes Yes Yes Yes Yes

Inputs used by industry

Yes Yes Yes Yes Yes

Rationale for Customs Duties: Revenue for budget Yes No Yes No Yes No Protection of industry No No Yes No Yes No

Notes: a 5% rate came into effect in early 2000. b 20% applies to imports of dates; a 25% rate applies on bananas. c 15% on large cars (over 2500 cc engines) Source: Taken from Roy and Zarrouk 2002 (based on national sources). As an additional protection for domestic industry, most GCC members provide mechanisms through which investors (enterprises or projects) can obtain exemptions from duties on imports of machinery, equipment and primary and intermediate inputs. Such exemptions have been a significant source of revenue loss in a number of countries. The prevalence of industrial exemptions implies that the pattern of protection is not necessarily uniform even in countries that apply a uniform tariff. Both Qatar and UAE impose a standard four per cent tariff rate and do not set protective tariffs.55 In a number of countries mega-tariffs are imposed on items for cultural reasons, to discourage their consumption. For example, in Bahrain the import duty on tobacco is 100 per cent and 125 per cent for alcoholic drinks. In Saudi Arabia cigarettes are subject to 100 per cent duties. Similarly, the import of a number of products is strictly forbidden. For example, in Bahrain the import of wild animals, pornographic materials, certain drugs and medicines are banned. In Kuwait the import of pork, pork products, alcoholic beverages, products containing alcohol, gambling machines, pornographic material and goods coming from Israel is forbidden. In Saudi Arabia there is a prohibition for religious reasons on imports of weapons, alcohol, and pork.

55 Roy and Zarrouk 2002.

57

Average tariff burdens in the GCC were estimated at between one and eight per cent in 1996 and between one and 10 per cent in 2001. While this is higher than the applied rates in OECD countries (the average tariff in the EU on manufactured goods is around 3 per cent) they are not significantly below average rates found in a number of emerging market economies. Tariff revenue accounted for some 4 per cent of government revenue across all GCC states, in 2001. Bahrain is the GCC country most dependent on tariff revenue (11 per cent of total revenue), followed by Saudi Arabia (5.4 per cent). Other GCC countries generate between two and three per cent of overall revenue through tariffs.56 Table 25: Revenue from customs duties in the GCC economies (1996-2001/ $US million) Year GCC

total Bahrain Kuwait Oman Qatar Saudi

Arabia U.A.E.

1996 3,133 126 239 124 20 2,235 389 1997 3,412 148 274 114 26 2,394 456 1998 3,800 171 273 160 31 2,669 496 1999 3,075 175 280 209 22 1,875 514 2000 3,465 149 247 120 20 2,433 496 2001 4,586 190 261 281 19 3,331 504

Source: Based on information in Roy and Zarrouk, 2002 (National sources 2002).

6. The GCC Customs Union The countries of the GCC are moving steadily towards increasing economic integration. This began in 1983 when a free trade zone was established among the countries of the GCC. On 1 January 2003 a further step was taken toward economic integration with the establishment of the countries of a Customs Union. The GCC have also agreed to adopt single currency by 2010. As an intermediate stage toward establishing a single currency, they have all adopted the US dollar as a common peg for their currencies. The Customs Union involves the abolition of intra-GCC customs borders and the erection of one external border surrounding the region, adopted with common procedures to enforce the common external tariff (CET).57 In the GCC, the level of the CET was agreed at five per cent for merchandise imports that are categorized as “non essential”. For other goods, considered essential, a zero tariff will be applied.58 There is a third category of products where the member states of the GCC have agreed on a common list of restricted products (requiring import licenses) and a final group of products that are simply prohibited, in both cases, for safety, health or moral grounds.59 The creation of a customs union could reduce transaction costs and increase flows of trade in goods and services.60

56 Roy and Zarrouk 2002. 57 Trade between the member states of the GCC is already duty free and national of each country are free to establish and seek work in other GCC countries. 58 The zero per cent rate is imposed on 53 tariff lines at the HS 60digit level. 59 Imports of alcohol and pork products will be allowed, but only at points of entry in countries that have allowed these imports. There is no consensus among all countries on these issues. The recipient member country will keep the collected customs duties on these items. 60 Roy and Zarrouk 2002.

58

Box 7: GCC membership in the WTO and GSPbeneficiaries All the members of the GCC, with the exception of SaudiArabia are members of the WTO. Saudi Arabia began anaccession process in 1993. A Working Party on theaccession of Saudi Arabia was established on 21 July 1993.The last meeting of the Working Party was held in October2000. Topics under discussion in the Working Party include:agriculture, preshipment inspection, SPS and TBT, TRIPSand services. The fact that it is an uncertainty whether or when SaudiArabia will become a WTO member, entails a risk ofimbalance in the GCC group and could have an impact ontrade negotiations with the GCC countries. All members of the GCC country benefit from the EC’sscheme of generalised tariff preferences (GSP). Source: WTO/ EC Council Regulation 2501/2001, 10 December 2001.

Nevertheless, there are a number of concerns for GCC countries surrounding the creation of a customs union. These include less opportunities for protecting domestic industry (such as through the application of higher taxes) and a drop in revenue for those countries that rely on tariff revenues as an important part of their income. Countries such as Saudi Arabia, Oman and Bahrain, which applied escalating tariff structures, will see a general reduction in tariff levels. On the other hand, where the 5 per cent CET represents an increase, (such as in Kuwait, Qatar and UAE, where a flat 4 per cent tariff existed), this will raise the price of many imports. This could lead to trade diversion if these more expensive products can be sourced more cheaply in the GCC.61 Finally, some countries in the GCC are concerned that the enforcement of a customs union will impact their ability to set and enforce high national standards regarding public morals, health and safety. For non-GCC countries, the Customs Union will mean not only the application of a flat CET of five per cent for most merchandise trade, but the prospect that goods entering the region will be subject to administrative procedures (including inspections and other clearance procedures) and the imposition of duty only at the external border, and will then be allowed to circulate within the countries of the GCC. This will require, from the GCC a variety of implementing mechanisms including harmonized customs rules and procedures (for classification, valuation, origin determination, temporary entry and drawback, collection of statistics). It will also require a procedure to distribute tariff revenues among member countries. The GCC Customs Committee has reached an agreement that will allow customs department in each member county to collect revenues at the point of entry of a product. These will be transferred, on a monthly basis, to a common account where they will be prorated and disbursed to GCC member countries.62 The establishment of the Customs Union, and the implementation of the policy integration expected to accompany it, may also necessitate the creation of institutions and procedures to direct the Union’s common commercial policy. For the countries of the GCC, the application of a common external border will encourage imports to enter the region at locations serviced by the most sophisticated and efficient ports and other points of entry. Therefore, those countries with most sophisticated infrastructure, including port, will serve as points of entry for much of the volume of imports. This could lead to increasing competition among GCC ports of entry, and those ports that prove to be most successful might attract a concentration of activities and increasing populations seeking to take advantage of the economic opportunities generated by this activity.

61 However, the impact of the CET rate of five per cent is likely to be small in terms of trade diversion within the GCC as the region has been functioning as a free trade area since the 1980s. 62 They will be allocated based on a formula developed that reflects such issue as share of GCC important, share of total GCC GDP and share of total GCC population. Roy and Zarrouk, 2002.

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Such increased concentration of economic activity and population can have impacts on sustainability that will be explored further in this report. For example, rapid development of areas in close proximity to efficient GCC ports could lead to environmental and social degradation if these areas are not equipped with the natural resources and public infrastructure to support additional pressures, including the pressure of urbanization. There might also be impacts associated with industries that find it difficult to compete in the new trading environment. In these cases there might be adjustment costs associated with industry that typically are dealt with in trade agreements through the phase-in of tariff reductions over a longer period to give the industry time to adjust.63 Support can also be provided through targeted subsidies that help the industry modernize, and provide retraining for workers to allow them to take advantage of increased employment opportunities. The decision to achieve a Common Currency Union by 2010 has widened the scope of integration of the GCC countries. They already operate trade and payments free of current and capital account restrictions. A currency union will provide a degree of certainty to business and industry and further deepen the integration among the GCC markets. Despite agreeing to a free trade area, intra-GCC trade remains weak, and flat, in terms of commodity exports as a percentage of total exports, and in comparison with other regional trading blocs.64 Moving forward: − Develop detailed information for trade in services between the EU and the GCC countries; − Develop detailed information for trade in specific sectors (broken down, where possible into

products) between the EU and the GCC countries; In order to determine significance, need to determine the share of imports/exports into/from the EU as a value of overall imports in specific sectors, for both regions.

− Examine existing GSP preference, and potential implications of WTO accession for Saudi Arabia.

− Identify existing tariff structures for trade in goods and services between the EU and the GCC countries;

− Identify existing non-tariff barriers for trade in goods and services between the EU and the GCC countries;

− Identify potential scenarios for liberalization with respect to tariffs and non-tariff barriers, including treatment of “essential” products;

− Identify methods (including modeling efforts where possible) to assess changes in trade rules with respect to tariffs and non-tariff barriers on trade flows.

63 Roy and Zarrouk, 2002. 64 Approximate averages between 1989 and 1999 were: Bahrain 21 per cent; Kuwait 2 per cent, Oman 17 per cent, Qatar 7 per cent, Saudi Arabia 7 per cent, and UAE 5 percent. Roy and Zarrouk, 2002.

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IV. Preliminary screening The first stage of the application of the methodology is the screening process, which involves identifying trade-related issues for inclusion in the SIA. A negotiating mandate for the EU-GCC FTA, from the Council of the European Union, was adopted in 2001. This document has been used as a guideline to identify issues on the table in negotiations between the EU and the GCC that might be of most importance in the context of a prospective FTA. As part of the screening process the Project Team will attempt to prioritise these issues to focus the analysis in the SIA on those issues most likely to be important for economic, environmental and social sustainability. The Project Team has used the following criteria to assist in prioritising issues in this Preliminary Screening for the SIA.

• the issue is likely to be the subject to liberalisation negotiations between the EU and GCC; and,

• the issue is one where one might expect, a priori, there may be important economic, environmental and/or social impacts that affect sustainability (positive or negative).

This preliminary attempt to screen the issues and develop a list for inclusion in an SIA is presented as a means for initiating discussion. Based on preliminary information, it will feed into a final screening exercise. Final screening will be undertaken in close cooperation with the EC, taking into account the views of stakeholders. As the SIA proceeds, it might be necessary to adjust priorities based on the emergence of new information or avenues of analysis. Moving forward: − The project team will undertake a final screening of the trade related measures, providing

further detail on the importance of the measure for the GCC and for the EU and potential associations with economic, environmental and social sustainability. From this, a selection of key measures, and a prioritisation of those measures will follow.

− For some measures, additional steps have been elaborated at this stage over and above the

final screening and scoping.

A. Trade in Goods: Market Access for Industrial Products

1. The GCC countries Industrial products comprise a substantial and growing part of the economies of the GCC countries. All the governments of the GCC have made efforts over the past years to diversify their economies, traditionally almost completely reliant on oil and gas. Saudi Arabia has 48 per cent of its GDP in industry, a sector that employs 25 per cent of its workforce. Likewise, industrial products are a critical sector in Kuwait and now accounts for around 60 per cent of GDP and 45 per cent of GDP in Bahrain. Policies in support of diversification and the development of industrial products are often accompanied by policies to encourage investment, through privatisation. A number of industries are growing up in the non-oil sector under the general rubric of industrial products. These range from chemical and petrochemical production,

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manufacturing, steel, aluminium and others. Typically it is expanding now to include “light” industry such as clothing, furniture and consumer goods. Industrial products are among the most traded sectors between the EU and the GCC (Box 8). These are also important sectors for the economies in the country’s of the EU and the GCC. They are also sectors that have the potential of producing significant impacts on environmental and, through their economic importance, social sustainability. Manufacturing contributes and average of just over 10 per cent to the GDP’s of the countries of the GCC. This ranges from a low of 5.8 per cent in Qatar, to a high of 14.9 per cent in Saudi Arabia (Table 2).

2. The EU These industries are also important in the EU:

! Shipbuilding is an important industry in the EU, which is responsible for some 20 per cent of world deliveries in shipbuilding in recent years.65

! The world’s civil aircraft sector is concentrated in the EU, along with the United States.66 In 1998, Europe was the second larges producer of aerospace production with a turnover of €59 billion. Multilateral trade in civil aircraft is dominated by the 1979 GATT Agreement on Trade in Civil Aircraft.67 All countries of the EU and the EU are signatories to the Agreement on Trade in Civil Aircraft. None of the GCC countries are signatories. The sector is generally subject to WTO rules on subsidies although more specific multilateral rules exist regarding forms of government support.

! The machinery sector is one of the most important and largest industrial sectors in Europe.68 The machinery sector is particularly important for Germany, Italy, the U.K. and France.

! The EU is the world’s largest producer of chemicals. Tariff commitments in this sector exist under the WTO Chemical Harmonisation Tariff Agreement (CHTA). The countries of the GCC export significant amounts of chemicals to the European market, and vice versa.

65 DG Trade. 66 The Large Civil Aircraft sector (LCA-aircraft with more than 100 seats) is dominated by Boeing in the United States and Airbus in Europe. DG Trade. 67 The WTO Agreement on Civil Aircraft is one of the two WTO plurilateral agreements. It came into force on 1 January 1980. It eliminates import duties on all aircraft, other than military aircraft as well as on other products covered such as civil aircraft engines and their parts and components, all components and sub-assemblies of civil aircraft, and flight simulators and their parts and components (WTO). It includes provisions on procurement and certification, among others. As of 2000, there were 24 signatories to the Agreement, Bulgaria, Canada, the EU, Austria, Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, the U.K., Egypt, Japan, Macau, Norway, Romania, Switzerland and the United States. 68 DG Trade.

Box 8: Most important sectors in EU-GCC trade, 2001 EU imports from the GCC: EU exports to the GCC:Mineral Fuels, Mineral Oils Machinery Machinery Vehicles, Aircraft, Vessels Vehicles, Aircraft, Vessels Chemicals Chemicals Base Metals Source: Trade Context (date from Eurostat in Annex 9)

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! The automotive sector figures prominently in the trade between the EU and the countries of the GCC.

! The non-ferrous metals sector includes some 3,000 EU companies employing almost 300,000 people.69 The EU is also the world’s largest producer of steel, responsible for 19 per cent of global production. It accounts for about 1.8 per cent of the value added and 1.5 per cent of employment in EU manufacturing.

Given the range of industries included in this growing sector, and the importance of industrial products to the economies of the countries in the GCC, coupled with its potential position as a priority area for negotiation under market access provisions under a prospective FTA, industrial products should figure prominently in the EU-GCC SIA. This is reinforced by the nature of the industries that are leading the growth in this area and their potential for important associations with sustainability including, inter alia, the potential to generate high levels of industrial pollution, a need for high levels of inputs such as energy, and impacts on employment.

Moving forward: The industrial products sector appears to be important in terms of the range of industries it covers and their relative importance to the economies, trade and environment of the EU member states and the countries of the GCC. In order to explore this sector further, the project team will ! Identify the scope of the industrial products sector for the purposes of this analysis, and

each sub-sector within it; ! Identify existing rules related to each sector, tariff levels, non-tariff barriers, and identify

potential scenarios for liberalisation; ! Examine the impact of these changes on potential trade flows, for what countries, in what

products, in what locations; ! Examine the impact of these changes on the application of trade rules; ! Examine interlinkages between other related areas such as IP, other WTO rules including

antidumping and subsidy, competition, and services such as distribution; ! Further develop ways in which important industrial sectors are linked to environment and

social issues and select key variables/indicators; ! Assess of how changing structure of trade might impact sustainability based on the selected

indicators; ! Make a determination of significance.

B. Trade in Services The EU is the world’s biggest importer and exporter of services, with 24 per cent of the world’s trade in services compared with 19 per cent of the world’s trade in goods.70 Services are also an extremely important and fast-growing component of the economies of the GCC. For example, in Kuwait, services account for around 40 per cent of GDP. In Saudi Arabia services contribute 45 per cent of the country’s GDP and employs 63 per cent of the country’s labour force. Services are of growing importance to the economies of the GCC (following data from Table 2). 69 DG Trade. Basic raw materials enter the EU free of duty, and tariffs on refined metals vary between 0 per cent and 6 per cent (aluminium). 70 European Commission. WTO Members’ Requests to the EC and its Member States for Improved Market Access for Services.

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• Financial services was the largest contributor, on average, to the GDP in the GCC countries in 2001, at 8.38 per cent.71 This ranged from the highest contribution in Bahrain, or 19 per cent, to the lowest in Saudi Arabia, with 2 per cent.

• Recreational, cultural and social services (community and social services) was also a significant sector, contributing an average of 7 per cent across the economies of the GCC in 2001.72 This average may be somewhat skewed by the disproportionately high importance of this sector in Kuwait, where it contributed 23.6 per cent of the GDP in 2001. It was least important in Saudi Arabia, with a 1.4 per cent contribution.

• Transportation/storage and communication services contributed an average of 6.85 across the countries of the GCC in 2001.73 The contribution was most important for Bahrain (7.9 per cent) and least important in Kuwait (4.9 per cent).

• Real estate and other business services were responsible for an average of 6.3 per cent of GDP in the GCC countries in 2001.74 It was most important for Bahrain (8.9 per cent) and least important for Qatar (3.4 per cent).

• The construction sector contributed an average of 6 per cent to the GDP across the GCC countries in 2001. This ranged from a low in Oman of 2.2 per cent to a high in the U.A.E. of 7 per cent.

• Finally, wholesale/retail contributed an average of 5 per cent to the economies of the GCC, lowest in Kuwait (5.8 per cent) and highest in Saudi Arabia (13 per cent).75

All members of the EU and of the GCC (with the exception of Saudi Arabia) are members of the WTO and subject to WTO’s General Agreement on Trade in Services (GATS). Under GATS, there are four modes of supplying services

1. Cross-border: Trade takes place from the territory of one country into that of another. For example, telephone calls from one country to another or cargo transportation;

2. Consumption abroad: Consumers or firms make use of services while in another country, for example, tourism, education;

3. Commercial presence: A firm from one country establishes itself in another in order to supply services. A particularly common mode of supply in tele-communications;

4. Presence of natural persons: Natural persons from one country stay in another for a limited period in order to supply services. Includes the self-employed and employees of services providers, for example, construction and professional services.

For each of the major services sub-sectors, commitments can be made in one or more of the four subsets. The commitments can be further divided into commitments on market access, commitments on national treatment, or other commitments. Several GCC countries have made commitments under the GATS with respect to services sectors, including in particular, financial, tourism and travel related services, construction and related engineering services and environmental services (Table 26). These commitments may lead to the GCC countries realising their substantial tourism potential, with the associated environmental and social costs and benefits implied by that development.

71 This does not include Oman for which no comparable data were available. 72 This does not include Oman or Qatar where no comparable data were available. 73 This does not include Oman or Qatar where no comparable data were available. 74 This does not include Oman where no comparable data were available. 75 This does not include Qatar where no comparable data were available.

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Table 26: GCC commitments related to services sub-sectors (2003) Bahrain Kuwait Oman Qatar Saudi

Arabia U.A.E.

Computer and related services

tbd 0

Research and Development services

tbd 0

Other business services

0 NA tbd NA 0 NA

Courier Services tbd 0 Telecommunications Services

0 0 tbd NA 0 NA

Construction and Related Engineering Services

0 NA tbd NA 0 NA

Distribution Services 0 NA tbd 0 0 0 Educational services 0 0 tbd 0 0 0 Environmental services

0 NA tbd NA 0 NA

Financial services NA NA tbd NA 0 NA Health and related social services

0 NA tbd 0 0 0

Tourism and related services

0 NA tbd NA 0 NA

Transport services 0 0 tbd 0 0 0 Recreational, Cultural and Social Services

0 NA 0 0 0 0

Total Source: WTO. This chart is not complete. The European Union has made commitments in all of the above services sub-sectors, across all modes of supply. There are a number of areas where services liberalisation could have impacts on economic, social and environmental indicators of sustainability. Some of these include: consumer protection standards in all sectors, consumer security and safety, pricing levels, inflation, professional training and education, environmental standards, consumer relevant quality, diversity of choices and cultural diversity. Given the importance of services to the economies in the GCC regions, coupled with liberalisation occurring at the WTO, and the relative protection in the services sector in the GCC, it is likely that there is some prospect for further liberalisation under an EU-GCC FTA.

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Moving forward: ! The services sector appears to be both important for the EU and the GCC. Further research

and analysis is necessary to establish with certainty relevance of specific service sub-sectors to the countries of the EU, the GCC and the EU candidate countries, as well as the nature of existing commitments and the possibilities for further liberalisation under a FTA. This analysis of commitments under each of the four modes of supply, and the nature of he commitments (i.e., limitations on market access, limitations on national treatment, and additional commitments) will be developed in later stages of the report.

! Scenarios should be identified suggesting ways in which liberalisation in services under an EU-GCC FTA might deepen commitments that already exist under the GATS.

! In addition, the project team will consider the various links between services trade and sustainability and propose any alternate methodological approach that might be taken and that departs from the approach to trade in goods.

! The Project Team welcomes comments with respect to relevant areas for further investigation in the services area from stakeholders.

C. Other issues related to Market Access Additional measures related to market access typically include items such as non-tariff barriers, which are government measures other than tariffs that restrict imports, such as quantitative restrictions (quotas) and other charges applied to imports that affect trade. Other items related to market access include standstill, non-discrimination, and rules of origin.76 The countries of the GCC typically impose a range of non-tariff barriers. For example, the UAE maintains non-tariff barriers to trade and investment, in the form of restrictive agency, sponsorship, and distributorship requirements. In Saudi Arabia non-tariff barriers include preferences for national and GCC products in government procurement, a requirement that foreign contractors obtain their imported goods and services exclusively through Saudi agents and reservation of some services for Government-owned companies. In addition, a range of regulatory and bureaucratic practices restrict levels of trade in Saudi Arabia. Non-tariff barriers to trade in the GCC are often related to religious customs and cultural imperatives. For example, in all the countries of the GCC, trade is restricted (in those cases where mega-tariffs are not imposed) on number of items which are considered to be politically or religiously sensitive. For example, Kuwait prohibits the importation of gambling machines, pornography, and alcoholic beverages, among other things.

The sustainability impacts of removing non-tariff barriers to trade and other restrictions to market access will vary among the countries of the GCC, depending on the nature of the specific products that are protected by these restrictions. In some instances, such as in the case of cigarettes, a ban on trade in place for cultural reasons might have the indirect impact of contributing to the health and well-being of the population and reducing health costs. In such cases, and to protect cultural traditions, the impacts of raising quantitative restrictions on trade might have negative impacts on sustainability. Depending on the products, some will contribute more or less to environmental or social well-being. Priority attention on liberalisation of these products, facilitating their rapid dissemination would have positive impacts for sustainability.

76 “Rules of origin” are the criteria used to define where a product was made.

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The liberalisation of trade and services by removing non-tariff barriers can hasten processes of capital and technological modernisation for all firms. Newly opened markets can provide the revenue and the income to allow firms to accelerate capital turnover, and invest in cleaner, more efficient plants, technologies and processes. Moreover, new entrants into the market might bring with them modern, state of the art management systems based on best practices for environmental and social responsibility.

Moving forward: ! The project team will identify the full range of existing non-tariff barriers to trade that exist

between the EU and the GCC, including the EU candidate countries, identifying key sectors affected.

! Scenarios will be developed and then considered which examine the implications of changing trade rules to liberalise trade or eliminate barriers to market access.

D. Standardisation and Conformity Assessment (including SPS measures) It is common for free trade agreements to include provisions related to removing differences in standardisation and conformity assessment in an effort to facilitate trade. Under the WTO’s Agreements on Sanitary and Phytosanitary Standards, and the Agreement on Technical barriers to trade, countries are permitted to impose standards in order to protect animal, plant, or human health. Therefore, a range of standards are often put in place to do just that – promote health and safety, and the environment. Sometimes these same standards have the unintended impact of acting as a non-tariff barrier to trade. The balance that needs to be struck is facilitating the free flow of goods and services, while at the same time maintaining adequate protections, set at the domestic level, dealing with priority issues related to health, safety or the environment, all important components of sustainability. Not all the countries of the GCC have standard-setting authorities. The UAE has no central standard-setting authority although both the national and emirate governments, and professional associations, are reviewing standards requirements, particularly for the construction industry. The Saudi Arabian Standards Organization (SASO) has over 1,420 SASO and 976 Gulf promulgated standards, and is actively pursuing the promulgation of hundreds of new standards currently in various drafting stages of development. Kuwait also maintains a range of restrictive standards. The Department of Standards and Meteorology has drawn up about 300 Kuwaiti standards that are currently in force. These have been based on a combination of US, British, German and other national standards modified to suit Kuwait's needs. In addition, Kuwait has adopted a number of import regulations to comply with the Gulf Cooperation Council (GCC) standards, such as instruction manuals for imported durable goods to be Arabic; and consumer durable goods appliances to be able to operate without a transformer on Kuwait's 240 volt, 50 hertz power transmission system. A number of Bahraini manufacturing facilities are undergoing ISO 9002 audits and procedures, and in 1995-96 several obtained ISO certification. Bahrain has an ongoing process of examining and adopting international standards for manufactured and imported products, along with other GCC states. There have been certain measures taken by Bahrain authorities in order to prevent introduction of BSE into Bahrain, among other food safety issues such as shelf-life standards for a variety of food products.

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The GCC member states are in the process of preparing lists of standards that are destined to become internal GCC standards, in accordance with the desire to harmonise to ensure the effective functioning of the new Customs Union. These standards would apply to all imports entering the six member countries of the GCC. Presumably they will include common procedures to speed up the clearance of products subject to inspections at the border and, in the case of products that are subject to health and safety standards, should be based on the principle of mutual recognition. Under a liberalisation scenario, the enforcement of health and safety standards requires testing and conformity assessment procedures for products which should apply equally to domestic and imported goods. But exporters may already be subject to equivalent controls in their home country, so that testing can be duplicative, leading to higher compliance costs for foreign firms. In other cases, the authorities of one country may not trust the customs procedures of a partner country. The resulting duplication of procedures may be largely resource-wasting and redundant. While there is little data available on the actual costs of complying with these standards, it is safe to say that they are significant, particularly with respect to Saudi Arabia, which is not even constrained by the disciplines of the WTO. The prospect of mutual recognition of standards and conformity assessment procedures can lower costs, reduce waste, reduce redundancy, raise economics of scale and increase competition. There may be a concern on the part of some governments that moving towards more liberal trade and could lead to an erosion of national standards. However, it can also be viewed as an opportunity for the countries in the two regions to move to levels based on applicable international standards (including for certification). And the opportunity exists for the parties to seek convergence in their approaches to standard-setting and mutual recognition, based on the principles of transparency and impartiality. There are clearly opportunities associated with sustainable development in the area of standard-setting related, in particular to SPS measures, and any movement towards convergence, in the context of a FTA which is designed ultimately to increase the flow of goods and services across borders. These are worth exploring further in a SIA.

E. Public Procurement Government procurement is government purchases of goods and services. The EU-GCC FTA will strive towards achieving reciprocal and progressive liberalisation of public procurement aimed at ensuring comparable and effective access to their procurement markets on the basis of the principles of non-discrimination and national treatment. This includes transparency in their procurement markets for all levels of government, as well as public entities operating in such sectors as water, energy, transportation and petrochemicals. Even with the move towards privatization, the very heavy government ownership and control of the GCC economy makes government and public procurement a core feature of the economy and mean that government expenditures can account for a large proportion of GDP. For example, in Kuwait government dominates the local economy, as 90 per cent of the labour force works for the government or government-owned companies. To support the development of the oil industry, the government assumed control of the production of electricity and installed the most advanced water desalination plants. Indeed, it is the major provider of goods and services deemed to be essential for the development and operation of the economy, including the oil and gas industry, the aluminium and manufacturing industry, healthcare and education and the building and running of infrastructure and water desalination plants.

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At the WTO the Agreement on Government Procurement, is one of only four plurilateral agreements whereby not all WTO members need to sign on. It aims to open up government purchases, to international competition.77 The Agreement requires non-discriminatory practices and open procedures in government procurement amongst member states, in respect of central government procurement of goods, and services, including public works, and procurement at the sub-central levels of government (such as states in a federal system) and by public utilities.78 A small proportion of WTO are also members of the Agreement on Government Procurement. This includes the European Communities and its member states, but not the member states of the GCC.79 However, Oman has recently acceded to the WTO and has observer status on the WTO’s Committee on Government Procurement. Kuwait government procurement policies specify local products, when available and prescribe a 10 per cent price advantage for local firms in government tenders. In Bahrain, companies are required to register before they can be invited receive government tender documents. To be registered, a company must be under 51 per cent Bahraini ownership. Bahrain also provides preference in government tenders to Bahraini and GCC products up to a price differential of 10 per cent. There may be some pressure, through the existence of the Customs Union to implement common domestic policies at the GCC level on procurement. This would include reviewing treatment such as preferential treatment for local suppliers, if undertaken in the context of a FTA with the EU. Efforts could be made to harmonise at the highest possible standards from a sustainability perspective. Given the strong presence of the government in the GCC in their economies, and the range of activities that they undertake, this sector is one the might usefully be considered in an SIA, particularly as it is considered a likely area for negotiation under a prospective FTA. Liberalisation of procurement has the potential to impact sustainability, given the high value of purchasing involved and the important sectors that might be highlighted for priority treatment, including water, energy, transportation and petrochemicals all of which have direct linkages to sustainability. Some countries have begun to contemplate “green procurement”—that is, making procurement a force for environmental protection, or at least reduced environmental damage. The WTO Agreement mandates that technical specifications be based on international standards where they exist, and otherwise on recognized national technical regulations (based on recognized standard-setting bodies, such as ISO 14001) or recognized national standards. These and other ideas that relate procurement to sustainability may warrant further exploration in an SIA

77 The Agreement entered into force on 1 January 1996. 78 The exact coverage is determined by national schedules of commitments of purchasing entities and of services attached to the Agreement. 79 Members include: Austria, Belgium, Canada, Denmark, European Communities, Finland, France, Germany, Greece, Hong Kong China, Iceland, Israel, Italy, Japan, Korea, Liechtenstein, Luxembourg, Netherlands, Aruba (Netherlands) Norway, Portugal, Singapore, Spain, Sweden, Switzerland, United Kingdom, United States. Negotiating Accession: Bulgaria, Estonia, Jordan, Kyrgyz Republic, Latvia, Panama, Chinese Taipei. Observer government: Argentina, Australia, Bulgaria, Cameroon, Czech Republic, Chile, Colombia, Croatia, Estonia, Georgia, Jordan, Kyrgyz Republic, Latvia, Lithuania, Malta, Moldova, Mongolia, Oman, Panama, Poland, Slovak Republic, Slovenia, Turkey.

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F. Customs Cooperation

Customs cooperation sometimes falls under the general trade-related rubric of “trade facilitation.” It is designed to do just that. In the context of an FTA that lowers trade barriers (tariff and non-tariff barriers), it becomes important for companies in each of the parties to be familiar with procedures related to trade in the other parties to an agreement in order to facilitate the cross-border flow of goods and services. This typically includes regulations in trading parties concerning imports and exports, but an important component is procedures for getting through customs. It is likely that the EU-GCC FTA will consider, as a priority issue, customs cooperation.

The impact of customs cooperation will be, in effect, to share information (or at least provide easier access to information) and reduce the bureaucracy at the point where goods enter a country, thereby facilitating access. At the WTO this issue was raised at the 1996 Singapore ministerial conference with the aim of simplifying trade procedures.

On 1 January 2003 the GCC adopted a Customs Union, thereby adopting a structure similar to that of the EU, with a common external tariff (CET) and a common external border for customs purposes. The GCC has developed a formula for a CET with a uniform tariff of five per cent. This in and of itself, although it is subject to a range of exceptions, will contribute to a stable and predictable trading environment. In addition to a CET, the Customs Union implies the development, throughout the GCC, for application at the common border, administrative standards and regulatory requirements concerning imports and exports that are common to the countries of the GCC. This includes the abolition of intra-GCC customs borders, and the erection of one external border surrounding the region, adopted with common procedures to enforce the common external tariff. Non-GCC goods entering the region will be subject to administrative procedures, and the imposition of duty at the external border, and will then be allowed to circulate within the countries of the GCC. Common customs procedures are necessary to facilitate free movement of goods within the GCC. Cooperative mechanisms will need to be put in place as well to address concerns and standards related to security and health. Trade facilitation will come about as a result of the requirement for GCC countries to collaborate to achieve convergence with respect to regulations governing import and export and, in particular, in their custom procedures. From a procedural perspective, implementing mechanisms for enforcing the common external border will include harmonized customs rules and procedures including those for inspection, classification, valuation, origin determination, temporary entry, drawback and collection of statistics. These measures hold out the prospect of lower transaction costs, improved customs procedures, faster shipment clearance and less border formalities. Ultimately, institutions and procedures will be developed to direct the Custom Union’s common commercial policy. Any harmonization of customs procedures and regulatory restrictions will facilitate dialogue with the EU on issues of customs cooperation between the parties to the FTA. The ultimate goal of customs cooperation between the EU and the GCC will be to reduce transaction costs for businesses engaged in trade and provide some certainty with respect to the regulatory requirements and procedures involved. As such, it may have the result of increasing trade flows between the two regions, with the subsequent product, scale, and technology effects. The requirements to share information, or facilitate access to information can contribute to the development of a culture that promotes transparency and openness, that ultimately has the prospect of positive institutional and governance impacts.

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As indicated in the “Trade Context” there might be other, more specific, implications, for sustainability. For example, growth and changes in trade flows resulting from the establishment of a customs union will likely encourage competition among the GCC ports of entry as internal customs borders are abolished leading to free circulation of goods within one GCC member to another (which means that goods can enter at the most efficient points and then be transported freely throughout the region). This could lead to increased economic activity in those areas in close proximity to the most efficient GCC ports. Gains may be brought about by increasing economic growth and employment in these areas but without adequate infrastructure to support increasing populations and potential pressures related to urbanization, negative sustainability impacts might occur including increased degradation of land and water, air pollution, and increased pressure on scarce water resources and increased transportation from points of entry to final markets. It is important to ensure that the areas where this might occur are capable of absorbing such increases from and environmental and a social perspective and if not, policies will need to be put in place to help address any unsustainable concentration in particular geographic locales. The potential impacts of these shifts warrant investigation in this SIA.

G. Intellectual, Industrial and Commercial Property An FTA between the EU and GCC could cover issues related to intellectual property rights, with respect to offering effective and adequate protection for, and enforcement of, intellectual and commercial property rights, including protection against piracy and counterfeiting. The extent of protection and enforcement of intellectual property (IP) rights vary throughout the GCC region. However, all members of the GCC that are also members of the WTO and required to meet the provisions in the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Under TRIPS, IP (which includes copyrights and related rights, trademarks, geographical indications, industrial designs, patents, trade secrets, and layout-designs of integrated circuits) is subject to the basic principles of national treatment and most favoured nation treatment. The TRIPS Agreement attempts to strike a balance between technical innovation and the transfer of technology. Intellectual property rights are not well developed throughout the region, but given membership in the WTO, the systems for protecting IP are improving. For example, Qatar has legislation in force covering a range of intellectual property. This includes laws governing the protection of copyright, trademarks, geographical indications and industrial design.80 It is also subject to the GCC’s Unified Law on Patents.81 It is in the process of preparing a law on layout-designs (topographies) of integrated circuits and protection of undisclosed information and trade secrets, based on a model law reviewed by the World Intellectual Property Organisation (WIPO) and compatible with the TRIPS Agreement.

Bahrain introduced intellectual property rights legislation as early as 1955 (Law on Patents, Designs and Trademarks, revised). It introduced laws on copyrights and trademarks in 1991 and 1993, respectively. Following its accession to the WTO is has ratified other international agreements on IP and taken together, the Paris and Berne Conventions, along with TRIPS are now integral parts of the national Law of Bahrain. Oman is committed to the implementation of the TRIPS Agreement. It includes implementing a Trademark Law, including making it consistent with the TRIPS agreement, the implementation of Copyrights Law which exists in 80 Law No. 7 of 2002 on Protection of Copyright and Related Rights (June 2002); Law No. 9 of 2002 on Trademarks, Geographical Indications and Industrial Design (June 2002). 81 Approved by the Council of Ministers on 23 April 2002.

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Oman, again, making it consistent with TRIPS. Oman had adopted the GCC Unified Patent System as the patent law of Oman. Kuwait has made some moves towards complying with the standards set out in the TRIPS Agreement.82 Kuwait does not grant preferential treatment to any country in the area of intellectual property rights. Kuwait is also subject to the GCC Unified Law on Patents. Typically IP laws in the UAE do not conform to the standards set out in TRIPS. The same is true in Saudi Arabia where the legal system protects and facilitates acquisition and disposition of all property rights, including intellectual property. Saudi Arabia's Copyright Law does not extend protection to works that were first displayed outside of Saudi Arabia. Saudi Arabia has had a Patent Law since 1989 and the Patent Office accepts applications, but the number of patents issued remains limited.83 Trademarks are protected under the Trademark Law. Trade secrets are not specifically protected under any area of Saudi law; however, they are often protected by contract. International Cooperation. All of the countries of the GCC are members of the World Intellectual Property Organisation (WIPO). In addition, a number are signatories to major international agreements on intellectual property (Table 27). For example, with the exception of Kuwait and Saudi Arabia, all countries of the GCC are parties to the Paris Convention for the Protection of Industrial Property. Three of the six GCC countries (Bahrain, Oman and Qatar) are parties to the Berne Convention for the Protection of Literary and Artistic Works. All countries of the GCC with the exception of Saudi Arabia are parties to the WTO’s TRIPS Agreement. Table 27: Major international agreements on intellectual property rights Paris Convention for

the Protection of Industrial Property

Berne Convention for the Protection of

Literary and Artistic Works

WTO’s Trade Related Aspects of

Intellectual Property Rights (TRIPS)

Bahrain 29 October 1997 2 March 1997 1 January 1995 Kuwait 1 January 1995 Oman 14 July 1999 14 July 1999 9 November 2000 Qatar 5 July 2000 5 July 2000 13 January 1996 Saudi Arabia UAE 19 September 1996 10 April 1996

The adequate and effective protection of intellectual property rights can impact sustainability. On one hand, these rights, effectively enforced can foster innovation of new technologies such as drugs to cure disease, or technologies for environmental abatement. It is most likely that these technologies will be sold and disseminated widely in markets when there are guarantees that the ideas and inventions will not be pirated. On the other hand, the twenty-year period of protection for innovators that is provided in the TRIPS Agreement is considered by some to be too long. Some argue that prices will remain high and new, innovative technologies will be unavailable to all but the very rich. In this case, it is important that strong supports exist in government for comprehensive health plans, for example

82 Main IPR laws are: the Law on Copyright and Neighbouring Rights (Law No. 64 of 1999) including protection of amongst others computer works including computer programs, databases and alike, derivative works and translated works; the Law on Patents, Designs and Industrial Models and the Trademark Law. 83 The term of protection is 15 years. The patent holder may apply for a five-year extension.

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that include access to prescription drugs, or that allowable subsidies be employed to ensure access to state-of-the-art for protecting the environment.84 H. Competition

Competition policy covers private actions by firms that lead to restrictions on domestic and international trade. These actions may result from mergers or restrictive business practices such as cartel agreements, abuse of dominant position in the market (for example, predatory pricing), and exclusive distribution arrangements. Trade agreements to date have dealt primarily with actions taken by governments that restrict trade. Competition policy is seen to be complementary to trade policy in achieving greater trade liberalization in the context of internationally contestable markets. In this way, it is closely linked to the liberalization and protection of investment for private companies.

Both GATT (trade in goods) and GATS (trade in services) include rules on monopolies and exclusive service suppliers. The WTO’s TRIPS Agreement (on intellectual property) also recognises governments’ rights to act against anti-competitive practices, and their rights to work together to limit these practices. These principles have, in recent years, been elaborated with respect to the telecommunications sector in particular.

Competition policy is relevant for the EU-GCC FTA negotiations. However, there is currently an imbalance between a relatively highly developed regime governing competition in the EU and the lack of domestic legislation covering restrictive business practices or anti-trust matters in the GCC countries. In Europe, the European Commission has jurisdiction over competition policy. The EU policy is rigorous and gives the EC authority to rule on mergers and acquisitions, fight cartels, and rule on the appropriateness of many forms of state aid given by national or regional authorities to firms. The EC also acts on behalf of the member states in the international field. Trade agreements with the EU would require state companies in the countries of the GCC to harmonise with EU competition policies.

Competition policy in the GCC-EU FTA negotiations could raise particular challenges with respect to the GCC in light of the significant public ownership of key elements in the economy, including utilities. In the GCC, potential EU investors might face restrictions on foreign ownership in the GCC. A number of sectors of the economies of the GCC countries remain effectively controlled by domestic monopolies, despite multilateral efforts to open them to competition.

For example, in the UAE, the Etisalat Telecommunications Company (majority state-owned) enjoys a monopoly over the telecommunication sector in the UAE, despite pressure for the sector to be opened to competition. This monopoly may be challenged as a result of commitments under the WTO. Since it became a member of the WTO in 1996, the UAE has been granted a number of concessions and extensions on deadlines for complying with WTO rules on competition. These temporary exemptions are being phased out and by 2005 the UAE will be required to open its telecommunications sector to full competition. A similar situation exists in the UAE with respect to the banking sector. At present this sector is subject to a general requirement for 51 per cent 84 The TRIPS Agreement contains an exception whereby WTO members are not obliged to grant patents for products or processes where “the prevention within [national] territory of [their] commercial exploitation…is necessary to protect ordre public [law and order] or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment.” This has never been implemented.

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ownership by a local partner (exemptions to this rule are granted in special circumstances). There is increasing pressure from the WTO to open the banking sector up to foreign competition and it is likely to occur by 2005. Likewise, in Qatar, Qatar Telecom has a monopoly over the provision of telecommunications services in the country. Similarly, OmanTel has enjoyed a monopoly over internet service providers in the country since their introduction in 1996. There are likely to be linkages between increasing competition between and among firms in the EU and the GCC, and issues related to sustainability. These are expected to be felt most strongly with respect to economic and social impacts in particular, and, depending on the industries, products, and scale of the economic activity might also have important environmental impacts. Economic impacts are expected to be associated with increasing growth and investment. This might have spin-off effects generating access to a broader range of goods and services for consumers, potentially at lower prices, and encouraging technology transfer and dissemination including access to information technology. This activity can contribute to efficiency and the adoption of modern business practices that include management systems, which put a premium on respect for the environment and high social standards. Growth in areas delivering both goods and services could also increase employment opportunities in the GCC countries. Efforts might need to be made to ensure that education and training of GCC citizens are directed in a way that takes advantage of these opportunities.

I. Current payments and movement of capital It can be anticipated that the EU-GCC FTA will include provisions, similar to those in other recent free trade agreements between developed market economies and other countries or groups, regarding capital flows, notably current payments and capital movements. It is timely to implement such liberalization in the EU-GCC relationship and moves have already been made in some of the GCC member states in anticipation of such development. For example, Saudi Arabia has recently updated its foreign investment regulations. The new regulations set out investment categories, incentives, concessions and guarantees, arrangements for licensing and dispute settlement provisions. At a time when the global economy is subject to extremely rapid private sector capital flows, ensuing international financial crises, and financial support and conditionality from the IMF and other public sources in response, at least two major issues arise. First, experience since NAFTA (1994) has shown that a free trade agreement can lead private sector investors suddenly to direct large flows of capital to the newly opened partner. This can occur without long experience or deep knowledge of local conditions. The sudden withdrawal of such capital (which can be triggered by economic or political events elsewhere in the region) can create a crisis of confidence. In some cases, any resulting financial crisis and official support program can come with conditionality that mandates the recipient country to reduce government spending in ways that can have direct environmental or social effects, both negative and positive. Nevertheless, Chile’s free trade agreement with Canada, for example, has shown that it is possible to negotiate FTA’s with capital movement provisions that allow the potentially vulnerable country to protect itself against rapid capital outflow in the cases of a sudden loss of confidence by global investors. Second, as the FTA with the EU encourages private sector inflows into GCC economies, and as the GCC proceeds with deregulation, privatization, and moves toward a more common exchange rate and, potentially, harmonized financial supervision regime, there could be an incentive for GCC states to adopt the latest generation of codes and standards introduced by the IMF and other international bodies in response to recent financial crises. They may even participate more actively on a voluntary basis in the development and application of these and related regimes.

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This will produce moves among GGC’s firms and public entities for greater openness, transparency, and disciplined data development and dissemination in the fields of finance, banking, security, accounting and insurance. Such moves should permit better decision-making in regard to the allocation of capital, improved governance, and the accumulation of social capital and trust. In the long-term there is even the potential for the emergence of internationally grounded standards relating directly to corporate and public environmental and social responsibility. The adoption of any such standards would bring about attendant environmental and social benefits.

J. Dispute Settlement Dispute settlement procedures are common to many trade agreements providing for panel procedures to resolve disputes when no agreement can be reached through consultation. They are designed to complement a rules based trading system by elaborating a clear set of rules and procedures for settling disputes between parties. The EU-GCC FTA will almost certainly specify a regime for the settlement of disputes that might arise. In many cases bilateral or regional trade agreements will adopt dispute settlement procedures that are consistent with the WTO’s Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), which was negotiated during the Uruguay Round, building on the original dispute settlement system in the GATT. This is the case, for example, with NAFTA. Under NAFTA, the Parties have the option of going under WTO DSU, or a NAFTA panel that adopts the procedures with some changes. Any dispute settlement procedure adopted in an EU-GCC FTA would most likely mirror or could potentially build on the WTO mechanisms, possibly with more protections for the environment such as exist in the NAFTA model (which is the only one that includes any additional protections for the environment over and above what exist in the WTO). Interpretations within the WTO Panels of provisions that related to the environment and human health are helpful in assessing the potential sustainability impacts of dispute settlement provisions. Chapter 20 is the central element of the DSU at the WTO (and other trade agreements that adopt similar provisions).85 Chapter 20 includes exemptions for measures imposed in order to protect human, animal or plant life and health, and measures to conserve exhaustible natural resources.

Since 1996 there have been at least three cases where WTO rulings can be characterized as having important links to sustainabity. In a case against the United States, brought by Venezuela and Brazil, the WTO affirmed that the United States had the right to adopt the highest possible standard to protect its air quality so long as it did not discriminate against foreign imports. The United States lost the case because it discriminated (its requirement on domestic producers was less stringent than that imposed on imported gasoline).86 In 1998 a case against the United States (brought by India, Malaysia, Pakistan and Thailand) recognized that under WTO rules, governments have every right to protect human, animal or plant life and health and to take measures to conserve exhaustible natural resources. The United States lost this case because it 85 There are often other dispute resolution mechanisms with respect to specific provisions in the trading agreement such as investment and anti-dumping/countervailing 86 United States – Standards for Reformulated and Conventional Gasoline, WTO case Nos. 2 and 4. Ruling adopted on 20 May 1996.

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applied the measure in a discriminatory way.87 In this case, the WTO panel indicated that it would accept amicus curiae (friends of the court) briefs from NGOs or other interested parties. Finally, the WTO Panel and Appellate Body (hereafter referred to as AB) considered a case brought by Canada against the EU challenging an import ban imposed by France on asbestos and asbestos-containing products.88 The AB rejected Canada’s challenge, thereby reinforcing the view that WTO Agreements support members’ ability to protect human health and safety at the level of protection they deem appropriate. Dispute settlement based on the most progressive procedures implemented fully by the WTO including access to expert opinion, access to amicus curiae briefs, immediate and full dissemination of information on panel rulings can continue the trend towards further transparency and accountability, or at least legitimacy. Attention should focus on dispute avoidance and consultations and compliance should be encouraged through capacity building and technical assistance. Finally, there is some concern that the relationship between MEA and WTO dispute settlement provisions needed to be addressed in particular because the number of MEAs resorting to trade measures might increase in the coming years and with them the probability for disputes involving trade aspects. Despite the fact that no trade restriction in an MEA has ever been challenged at the WTO, there is debate surrounding the possibility that this might occur, threatening to undermine the legitimacy of the international environmental regime. NAFTA has addressed this issue by specifically exempting three key MEAs from challenge (with scope for adding more) under the provisions of the trade agreement (Art. 104) This provision would promote sustainability by providing some assurance that the trade-related provisions in the MEA will not be subject to challenge. There are a number of issues related to dispute settlement that make it appropriate for inclusion in a SIA. Some are relatively complex, but nevertheless worth pursuing. In particular, a thorough examination of the provisions that were adopted under other trading regimes that might be based on the WTO rules and procedures could help determine what, if any, provisions might be included in a dispute settlement process for the EU-GCC FTA in order to maximize its beneficial impacts on sustainability and minimize any negative impacts.

87 United States – Import Prohibition of Certain Shrimp and Shrimp Products, WTO case Nos. 58 and 61. Ruling adopted 6 November 1998. Recourse to Article 21.5 of the DSU. Ruling adopted on 21 November 2001. 88 European Communities – Measures affecting asbestos and asbestos-containing products. WTO case No. 135. Ruling adopted on 5 April 2001.

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K. Trade in Goods: Agriculture and Agricultural Products Although it varies from country to country, typically, the agricultural sector is not a major contributor to the economies of the countries of the GCC. The agriculture sector (classified as agriculture and fisheries) is most important for Saudi Arabia, representing 8.6 per cent of GDP in 2001, followed by the U.A.E. at 4 per cent of GDP. In Oman, agriculture is worth 2 per cent of GDP and in the remaining countries of the GCC the sector represents less than 1 per cent of total GDP (See Table 2). Saudi Arabia has by far the largest agricultural sector in the GCC countries. In 1997 it has 3,380,000 ha of cropland under cultivation compared with the next largest sector, that of the U.A.E. at 81,000 ha. Cropland per capita is also well above other GCC countries at 195 ha/1,000 people in 1997 compared to the next largest, the U.A.E. at 35 ha/1,000 people. All the countries of the GCC are characterised with relatively low levels of mechanisation, again, with the exception of Saudi Arabia, followed by the U.A.E. Agriculture is also a sector that is not heavily traded by the GCC. Trade in agricultural products between the EU and the GCC represent only .24 per cent of world agricultural trade in terms of imports and 5.7 per cent of world exports in the agriculture sector (excluding fisheries) (Table 2) However, agriculture is a key trading sector for the EU. The EU is the world’s largest importer and second largest exporter of agricultural products. In 2000 exports of agricultural products from EU member states were valued at over US$214 billion. This represented an increase from 1990 levels of around US$175 billion, despite the fact that for all the countries of the EU the share of agriculture as a per cent of total merchandise exports dropped slightly between 1990 and 2000 (Table 28). Table 28: Exports of agricultural products from EU member states (1990-2000)

Value (US$ millions)

Share in economy’s total merchandise exports (%)

Member state

1990 1995 2000 1990 2000a Austria na na na na na Belgium -- -- 19,862 -- 10.7 Denmark 10,648b 13,108 10,940 28.9 22.0 Finland na na na na na France 37,101b 44,265 36,518 17.1 12.2 Germany 24,621 b 32,296 27,762 5.8 5.0 Greece 2,584 3,719 2,507 31.9 24.5 Ireland 5,709 b 8,987 6,687 24.0 8.4 Italy 11,858 b 16,699 16,088 7.0 6.8 Luxembourg -- -- 557 -- 7.1 Netherlands 31,859 b 42,202 34,139 24.2 16.1 Portugal 2,208 b 2,765 2,471 13.5 10.6 Spain 9,368 b 15,294 16,875 16.8 14.8

Source tables for screeningTrade in Goods: Agriculture inAnnex 10 ! Indices of agricultural and food

production in GCC countries ! Agricultural land and inputs in

CGG countries ! Agricultural land and inputs in

EU member states ! Agricultural land and inputs in

EU candidate countries ! Food security in GCC countries ! Food security in EU member

states ! Food security in EU candidate

countries Source: WRI. Earth Trends, 2001.

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Sweden na na na na na United Kingdom 14,961 b 20,451 16,668 8.1 5.9 Total EU (15) 175,847 b 234,125 214,566 11.7 9.5

Notes: a Or nearest year; b includes WTO Secretariat estimates. Source: WTO. International Trade Statistics, 2001. Table IV.8. Given its relatively low contribution to the GDP of the countries of the GCC and the limited production in these countries, might suggest that agriculture should not be a priority area of investigation in a SIA of the EU-GCC FTA. Nevertheless, there are important issues associated with it. While it is not a widespread activity, because of the fragile desert conditions it is possible that small economic impacts of agriculture can have important environmental impacts in vulnerable areas. In addition, issues of food security given an increasing population and a general lack of self sufficiency make this a sector that might be worthy of some analysis despite its apparent relative lack of importance to the economies in the region. Agriculture is also a very important sector for EU from a trade perspective, and given its close association with the land and societies it is inevitably closely related to sustainability. It is also an important sector for the EU candidate countries where large levels of agricultural land are under production, and per capita levels of cropland are typically over twice the levels in the EU. Agriculture can have positive or negative impacts on the economy, the environment and development. These will depend on scale, type, and intensity of farming as well as on agro-ecological and physical factors and on climate and weather. Farming can lead to deterioration in soil, water and air quality, and to loss of natural habitats and biodiversity. These environmental changes can have important implications for the levels of agricultural production and food supply and can limit the sustainable development over time. However, farming can also provide sinks for greenhouse gases, conserve biodiversity and landscapes and help prevent floods, landslides and erosion. In the GCC, water shortages, and the major use of water for agriculture present important environmental challenges. In Bahrain, for example, 100 per cent of agricultural production relied on irrigation in 1997. In all countries, with the exception of Saudi Arabia at 42 per cent, irrigated land as a percentage of cropland was above 70 per cent in 1997. In the EU, levels of irrigation in 1997 were significantly lower, ranging from a high in the Netherlands of 60 per cent of cropland to a low of 0 per cent in Austria. Denmark, Italy Portugal all rely on irrigation for over 20 per cent of cropland. In the EU candidate countries the only country to record significant levels of irrigation were Romania and Slovakia with 31 per cent and 12 per cent irrigated land as a percentage of cropland, respectively. The levels of agricultural inputs used in production can also impact water quality and soil quality. These are both important issues in the GCC, where freshwater quality and soil degradation have been highlighted as key environmental variables. In the countries where figures are available, Qatar, Saudi Arabia and U.A.E., the average annual fertiliser use between 1995 and 1997 was 138, 98, and 421 kg/ha/cropland, respectively. Using these figures, the average for the region during that period was 219 kg/ha/cropland. Data for pesticide use is not available for the countries of the GCC with the exception of Oman where 24.1 kg/ha/cropland was used in 1996, higher than the countries of the EU and significantly higher than the candidate countries.

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Similar figures in the EU are somewhat higher with an average of around 304 kg/ha/cropland between 1995 and 1997.89 Belgium and the Netherlands used the most fertiliser during the period, at 883 and 821 kg/ha/cropland, respectively. The lowest level was recorded in Portugal at 84 kg/ha/cropland. Figures for pesticide use are less widely available. An average use in 1996 among nine member states of the EU was around 5 kg/ha/cropland.90 The highest levels were recorded in Italy (19.3 kg/ha/cropland) and the Netherlands (11.8 kg/ha/cropland), followed by the U.K. (4.7 kg/ha/cropland). In all the other countries for which there is information, levels of pesticide use were below 3 kg/ha/cropland in 1996. In the EU Candidate countries, levels of fertiliser and pesticide use are well below GCC and EU averages. Average fertiliser use between 1995 and 1997 was just over 82 kg/ha/cropland91. This included the highest level in Cyprus at 171 kg/ha/cropland to the lowest level in Estonia at 29 kg/ha/cropland. Pesticide use in 1996 averaged 4 kg/ha/cropland in the EU Candidate countries. Levels of pesticide use were highest in Cyprus (20.3 kg/ha/cropland) followed by Slovenia (6.4 kg/ha/cropland) and lowest in the Baltic states of Lithuania, Latvia and Estonia at 0.3, 0.2 and 0.1 kg/ha/cropland, respectively. In terms of employment, levels of employment in the agricultural sector vary widely among the countries of the GCC from a high of 45 per cent of the population in 1990 in Oman, to a low of 1 per cent in Kuwait. In Saudi Arabia and the U.A.E. the figures are 19 and 8 per cent, respectively. With the exception of Oman, these figures are generally consistent with comparable data in the EU where on average, agriculture employs 8.6 per cent of the total labour force.92 This ranges from relatively high levels in Greece (23 per cent), Portugal (18 per cent), Ireland (14 per cent) and Spain (12 per cent) to the lowest levels in Belgium (3 per cent) and the U.K. (2 per cent). In the EU Candidate countries the average figure for agricultural workers as a percentage of the total workforce at 15.6 per cent is somewhat higher than in Europe and the GCC. Agriculture as a key employer is particularly important for Poland (27 per cent), Slovakia (24 per cent) and Lithuania (18 per cent). It is least important in Malta (3 per cent). The clear trend that emerges from this data is that agricultural sector is an important sector from both a production perspective and as an employer in those countries of the EU at lower levels of development and for the EU Candidate countries. Any assessment of the agricultural sector in the EU will need consider the Common Agricultural Policy (CAP) and the prospect of future reform, which could have a larger impact on European agricultural production and its sustainability than trade liberalisation, which should be taken into account (Box 9).

89 This data excludes Luxembourg for which no comparable data were available. 90 This data excludes Belgium, France, Greece, Ireland, Luxembourg, and Spain for which no comparable data were available. 91 This does not include Slovenia for which no comparable data were available. 92 This does not include Sweden for which no comparable data were available.

Box 9: The EU’s Common Agricultural Policy (CAP) ! Under the competence of the EU; ! Direct payments provided to farmers based on

hectares under cultivation and number of livestock;

! Includes system of quotas and set aside regulations;

! Can, among other things, encourage farmers to cultivate marginal lands or carry too many animals;

! Encourages prices of agricultural goods produced in the EU higher than those from imported products and can have distorting effects on world trade in agricultural products;

! In 2000, the EU contributed some 47 per cent of its overall budget to finance the CAP.

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Moving forward: ! Collect specific data on major crops from a production perspective, a trade perspective

and a food security perspective. ! Complete screening process; ! Undertake scoping to identify precise economic, environmental and social variables; The following steps would be followed in order to undertake a more detailed analysis: ! Detailed examination of existing trade rules; ! Scenarios suggesting how FTA negotiations might change existing rules; ! Examining the impact of these changes on potential trade flows, for what countries, in

what products, in what locations; ! Examining the impact of these changes on the application of trade rules, including SPS

standards; ! Further development of ways in which the agriculture sector is linked to environment and

social issues and selection of key variables/indicators; ! Assessment of how changing structure of trade might impact sustainability based on the

selected indicators; ! Determination of significance.

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L. Trade in Goods: Fish and Fishery Products The fisheries sector is not a major contributor to the economies of the countries of the GCC. Classified with agriculture, it is most important for Saudi Arabia, representing 8.6 per cent of GDP in 2001, followed by the U.A.E. at 4 per cent of GDP. In Oman, fisheries (along with agriculture) is worth 2 per cent of GDP and in the remaining countries of the GCC the sector represents less than 1 per cent of total GDP (See Table 2). Among the GCC countries Oman recorded the largest average annual catch of marine fish between 1995 and 1997 at 120,139 million tons. This was followed by the U.A.E. with 109,002 million tons and then Saudi Arabia at 39,139 million tons. The remaining countries of the GCC recorded levels less than 7 million tons of marine fish in the same period. Saudi Arabia and Oman also led the region in average annual catch of molluscs and crustaceans at 8,459 million tons and 5,435 million tons, respectively. This was followed by Bahrain at close to 4 million tons. Between 1995 and 1997, figures on aquaculture production are available for only two countries in the GCC. Kuwait recorded average aquaculture production for marine fish of 111 million tons during that period, followed distantly by Qatar with recorded average levels of 1 million tons. Between 1995 and 1997 Saudi Arabia had an average freshwater aquaculture production of 3,329.7 million tons.93 It was the only country of the GCC to engage in freshwater aquaculture during that period. Within the region, the fisheries sector is most important for Oman. With the highest landings of marine fish and the second highest landings of molluscs and crustaceans, it is one of the two countries in the GCC region to export any significant amounts in this sector. Between 1996 and 1998 Oman exported US$59 million worth of marine fish and US$ 5 million tons of molluscs and crustaceans. The U.A.E. exported US$3 million worth of fish products and US$11 million worth of molluscs and crustaceans during the same period. The only other country to record any exports in this sector between 1996 and 1998 was Bahrain, which exported US$8 million worth of molluscs and crustaceans. The remaining countries in the GCC are net importers of fish products and molluscs and crustaceans. Imports were highest in Saudi Arabia, which imported US$ 81 million work of fish products, and lowest in Bahrain where imports of fish products were valued at US$ 1 million. As well as being the production and export leader in the region, Oman also has the highest percentage of domestic consumption at 9.8 percent of total protein being obtained by fish products in 1997. The other countries of the GCC all stood at below 4 per cent of total protein obtained by fish products in 1997, with the exception of the U.A.E. at 7.2 per cent.

93 WRI, Earth Trends 2001.

Source tables for screening Trade in Goods: Fish andFishery Products in Annex 11 ! Fish catch, aquaculture and consumption in GCC

countries ! Fish catch, aquaculture and consumption in EU member

states ! Fish catch, aquaculture and consumption in EU

candidate countries ! Trade in fish and fishery products and fishing effort in

GCC countries ! Trade in fish and fishery products and fishing effort in

the EU ! Trade in fish and fishery products and fishing effort in

EU candidate countries Source: WRI. Earth Trends, 2001.

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Both fishing and aquaculture are important economic activities in the European Union. Within the EU levels of fish catch and aquaculture are much higher than in the GCC countries. Among the countries of the EU, the average annual catch of marine fish between 1995 and 1997 was 424,465 million tons.94 The highest levels were recorded by Denmark (1,722,969 million tons), Spain (977,897 million tons) and the U.K. (751,185 million tons). The lowest levels were recorded by Belgium (29,407 million tons) Greece (116,761 million tons) and Finland (115,077 million tons). During the same period, the average annual catch of molluscs and crustaceans in the EU was around 65,366 million tons.95 The highest average catch was recorded by Spain (135,723 million tons) followed by the U.K. (134,446 million tons), Italy (124,144 million tons) and Denmark (112,514 million tons). Aquaculture production in the EU is dominated by France, Greece, Italy, Spain and the U.K. Between 1995 and 1997 six countries in the EU recorded aquaculture production of marine fish. Of these, Greece had by far the highest average aquaculture production at 26,722 million tons. This was followed by Italy at 10,883 million tons, Spain at 6,345 million tons, France (3,844 million tons), Portugal (1,088 million tons) and finally the Netherlands at 21 million tons. All countries of the EU recorded aquaculture production of diadromous fish between 1995 and 1997, with the exception of Luxembourg. The U.K., with an average annual production of 100,733 million tons, was by far the largest producer, followed by France (53,817 million tons) and Italy (53,200 million tons). Six of the countries in the EU had significant aquaculture production of molluscs and crustaceans between 1995 and 1997 led by France (216,730 million tons), Spain (202,240 million tons), Italy (143,019 million tons) and Greece (6,623 million tons). Finally, Italy also had a significant aquaculture production of aquatic plants, producing and average of 5,000 million tons per year between 1995 and 1997. In the EU candidate countries fish and fishery products are of less importance generally than in the EU. Average annual catch between 1995 and 1997 for marine fish in the EU candidate countries was 88, 156 million tons.96 This was led by Poland, with an average annual catch of 333,478 million tons, followed by Latvia (128,892 million tons) and Estonia (113,385 million tons). Marine fish was least important for Malta (825 million tons). Average annual catch of molluscs and crustaceans was 3,846 million tons between 1995 and 1997.97 Again, Poland recorded by far the largest average annual catch at 16,752 million tons, followed by Estonia (4,338 million tons). Aquaculture production in the EU candidate countries is significantly lower and less diversified than in the EU, although more significant than in the GCC. Between 1995 and 1997 Malta, Cyprus and Slovenia, reported aquaculture production in marine fish of 1,418, 620 and 71 million tons, respectively. During the same period, all the EU candidate countries (with the exception of Lithuania) engaged in aquaculture production of diadromous fish. Production was led by Poland, with average annual aquaculture production of 6,090 million tons between 1995 and 1997. This was followed by the Czech Republic (778 million tons) and Slovakia (715 million tons). Between 1995 and 1997 no EU candidate countries cultivated molluscs and crustaceans or aquatic plants through aquaculture.

94 This does not include Austria and Luxembourg where no comparable data were available. 95 This does not include Austria, Belgium, Finland or Luxembourg for which no comparable data were available. 96 This does not include the Czech Republic, Hungary or Slovakia for which no comparable data were available. 97 This does not include the Czech Republic, Hungary or Slovakia for which comparable data were not available.

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As in the GCC, the countries of the EU are typically net importers of fish and fishery products, with some exceptions. Between 1996 and 1998 Denmark recorded net average annual exports valued at US$803 in fish and products, US$143 in molluscs and crustaceans and US$155 in meals and solubles. Ireland and the Netherlands were both net exporters of fish and products (valued at US$214 and US$208, respectively) and molluscs and crustaceans (valued at US$72 and US$110, respectively). Both countries were net importers of meals and solubles. For the same period Greece exported US$5 million worth of fish and fish products, and Sweden exported US$1 million worth of meals and solubles. The remaining countries of the EU are net importers of fish and fishery products. In terms of value, the largest importers of fish products are Italy, France, Germany and Spain. Belgium is by far the largest importer of molluscs and crustaceans, followed by Spain, France and Italy. The U.K. imports the largest amount of meals and solubles by value, over three times the amount imported by Italy, in second spot. In 1999, of the countries of the EU, Denmark (24 per cent), the Netherlands (14.6 per cent), Spain (13.4 per cent), the United Kingdom (11.9 per cent) and France (9.3 per cent) are responsible for fully 73.2 per cent of exports in fishery products from the EU to the rest of the world. Similarly, France (16 per cent), Spain (16 per cent), Italy (13.3 per cent), Germany (11.1 per cent) and the United Kingdom (11.1 per cent) are responsible for 67.5 per cent of total imports. Only three member states (Denmark, Ireland and the Netherlands) had positive trade balances in the fisheries sector in 1999 (Table 29). Table 29: Total exports and imports of fishery products in the EU (1999)

Exports Imports Country Volume (tonnes) Value (‘000 euro) Volume (tonnes) Value(‘000 euro)

Belgium & Lux. 94,272 426,793 267,919 1,009,099Denmark 1,163,265 2,712,925 1,219,680 1,719,148Germany 627,945 915,068 1,033,934 2,166,845Greece 73,210 264,200 138,092 297,736Spain 762,229 1,519,461 1,282,166 3,101,879France 447,666 1,051,108 1,032,035 3,113,133Ireland 273,792 324,408 51,164 113,521Italy 121,730 341,195 826,070 2,579,015Netherlands 855,736 1,646,429 752,685 1,233,188Austria 5,451 10,468 63,438 197,294Portugal 99,011 267,675 345,860 956,671Finland 22,204 20,257 70,698 113,501Sweden 410,117 453,624 204,976 674,048UK 695,649 1,349,767 850,535 2,163,224EU-15 5,652,277 11,303,378 8,139,252 19,438,302

Source: Facts and figures on the CFP, Basic data on the Common Fisheries Policy The EU candidate countries are also typically net importers of fish and fishery products. The three exceptions are Estonia, Latvia and Poland. Between 1996 and 1998 Estonia exported US$57 million worth of fish and fish products and US$1 million worth of molluscs and crustaceans. During the Same period Latvia’s exports of fish and products were valued at US$54 million annually. Poland was a significant importer of marine fish (second only to the Czech Republic),

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but exported US$8 million work of molluscs and crustaceans and US$16 million worth of meals and solubles. Environmental and social issues surround the fisheries sector are varied. Environmental and social issues associated with marine capture, include, inter alia, depletion of natural resources, waste caused by incidental by-catch, and loss of biodiversity. Among the major social issues are employment in both the industrial fisheries as well as the health of coastal communities that rely on artisanal fisheries. Depletion of fish stocks results not only in lost production, but also in social pressures, particularly in coastal areas. Often in coastal communities the fisheries sector is the employer of last resort and there often is a lack of alternate employment. Communities involved often have very little mobility and are liable to be extremely disadvantaged by the social and economic consequences of poor management. With the development of the energy sector, the danger of oil spills and marine pollution has threatened the viability of the fisheries in waters off the GCC countries. In some instances, such as in Saudi Arabia, a limited demand and lack of marketing and processing facilities hinders the development of the fisheries as a core component of the economy. A number of similar issues surround increased production in aquaculture. Among the issues associated with aquaculture are the health of coastlines and their value as a recreational asset, pollution associated with aquaculture, access to information, credits and markets of aquaculture producers, and biodiversity. The expansion of global aquaculture can lead to destruction of marine habitats and coastal erosion. Intensive aquaculture farming high value species such as salmon can have a negative impact on the environment. Soluble nutrients released from salmon farms may stimulate the growth of phytoplankton which contribute to an increased risk of algal blooms with can damage other fish stocks and marine life. In addition, solid wastes can have smothering effects, building up under active cages and releasing methane and hydrogen sulphide, leading to a “souring” of the site. This can affect fish health, farm viability and pose risks to human health, as well as possibly causing wider ecological changes.98

In the GCC the number of people earning a livelihood from fisheries in 1996 was highest in Oman (25,575), Saudi Arabia (22,213) and the U.A.E. (13,411). This is consistent with the relative importance of production and trade in these countries. However, the lower level in the U.A.E. reflects the fact that fishing fleets in that country tend to be relatively modern, indicated by the figure of 4,050 number of fishing vessels in 1995, compared to 390 vessels in Oman, where the fisheries employs over twice the number of people, presumably on a smaller scale and in a more labour intensive approach. Similarly, Saudi Arabia recorded only 23 fishing vessels in 1995 suggesting that small scale, artisanal fisheries is important for the livelihoods of a significant number of people in that country.

The total number of individuals earning a livelihood from fishing in the EU in 1996 was close to 250,000. Figures for individual countries vary, and although the number might appear relatively small, fishery offers employment in areas where there might be few alternatives. In 1996, Spain recorded the highest number of people earning a livelihood from fishing (83,731), followed by

98 Sen 1994.

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Italy (40,236), Portugal (28,458), France (26,522) and Greece (22,192). The activities of fishermen also generate more jobs in processing, packing, transportation and marketing on the production side and in shipyards, fishing gear manufacturing, chandlers and maintenance. Given that fisheries is of generally little economic importance to the countries of the GCC it may not be a priority area for examination in this SIA. Nevertheless, the fisheries sector does represent a promising option for diversification and employment opportunities in some countries. It is a sector that also has potentially significant links to sustainability.

Moving forward:

The data uncovered so far in the project suggests that fisheries is of minimal importance to the economy in the GCC. It is more important for some individual countries in the EU. In terms of trade, the impact of fisheries is marginal. From an environmental perspective, there are important issues related to the fisheries sector including marine pollution, depletion of fisheries stocks, and biodiversity that might suggest fisheries as an important sector for further work. With respect to social issues, fisheries is a relatively small employer in both the GCC and the EU. The environmental and social issues need to be explored further in the final screening process, and elaborated in scoping. The following steps would be followed in order to undertake a more detailed analysis: ! Detailed examination of existing trade rules; ! Scenarios suggesting how FTA negotiations might change existing rules; ! Examining the impact of these changes on potential trade flows, for what countries, in

what products, in what locations; ! Examining the impact of these changes on the application of trade rules, including SPS

standards; ! Further development of ways in which the fisheries sector is linked to environment and

social issues and selection of key variables/indicators; ! Assessment of how changing structure of trade might impact sustainability based on the

indicators selected; ! Determination of significance.

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V. Preliminary scoping The second step in the methodological approach to the SIA of the EU-GCC FTA involves the outline of variables associated with economic, environmental and social sustainability with respect to the issues that are selected for inclusion in the SIA, as a result of the screening process. The analysis will take into account the association between the proposed measures and sustainability based on the following factors:

• Economic sustainability • Environmental sustainability • Social sustainability; and, • Governance and institutional issues.

The analysis in the scoping stage should lay the groundwork for further work with respect to the trade related issues in the SIA. It will also help the project team select specific issues to use as benchmarks of change in terms of impacts supporting or detracting from efforts to promote sustainability through the FTA. A first step in the scoping stage will be to identify the sustainability (economic, social, environmental and governance) impacts associated with the issues identified and prioritised during the screening exercise. A second step will be to determine the preliminary causal links between the likely changes in the trade regime on the economic and regulatory context of the issue, and sustainability impacts. This will involve isolating issues such as production practices, structural change, infrastructure impacts, transportation and other issues, consistent with the approaches to assessment that have been developed by other major international organisations.99 First and foremost, however, it will build on the work undertaken the EU on SIA, and particularly as it has evolved with a focus on CCA. These causal links will be developed further in the stage on detailed assessment. The scoping stage will also focus on developing the groundwork for the analysis as it relates to specific environmental and social impacts. This will involve, in the first instance, identifying key economic, environmental, social, and governance issues associated with the proposed measure. Typically these will be drawn from the indicators developed in this, and other preliminary stages of the SIA (see below). Where new issues arise, they will also be included. As part of the groundwork for the analysis of environmental and social impacts, the scoping phase will also elaborate on how economic, environmental and social issues will be assessed for their “significance”.

99 OECD 1994. CEC 1999. UNEP 2002. WWF 1999.

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Preliminary Indicators As part of an initial scoping exercise, this section presents a preliminary list of indicators drawn from available data for use in the SIA. The range of indicators attempts to address important issues related to sustainability in the region. In particular, they respond to the economic, environmental, social issues presented in Section I, “Context”. Further research will suggest core indicators for the global SIA and for each issue under consideration. In the charts that follow, the asterisk (*) represents indicators for which the Project Team has located information relevant to both regions covered by the SIA, the EU and the GCC. Although this set of indicators will be further developed as the study proceeds, at this point the Project Team considers it useful to begin with a broad set to allow for flexibility in selecting appropriate indicators based on challenges that might arise associated with data availability. In some cases, where no reliable indicators have yet been located, but where the Project Team believes that the issues warrants attention based on preliminary research, further efforts will be made to identify indicators, or proxy indicators, to include in the SIA. Moreover, the Project Team may decide, during the course of the SIA that other issues arise that warrant assessment and, where possible measurement. If this occurs, additional indicators will be added to this list. In developing this preliminary list of indicators, the Project Team examined the criteria developed by the University of Manchester. The Manchester methodology (Phase III) recommends the use of first Tier and Second Tier indicators to assess changes in sustainability. It presents the following criteria to assist in selecting relevant indicators:

• They should be limited in total number, but in aggregate they should be comprehensive in their coverage of sustainable development

• They should be balanced in their coverage of economic development, social development and environmental quality/resource conservation

• They should reflect concerns relating to intergenerational and intra-generational equity • They should focus on key components of concern to decision-makers and stakeholders.

An initial examination of issues related to environmental sustainability in the GCC point clearly to a number of priority environmental issues that should be incorporated into the SIA. This includes issues of freshwater quality and quantity, issues of marine pollution. With respect to land, desertification and soil quality emerge as important variables from an environmental perspective. Finally, there are important issues associated with air—both air quality and the contribution of the region to global issues such as climate change, through emissions of greenhouse gases.

The indicators below taken from the followingsources: FAO “State of the World’s Forests”, Rome FAO “Water Resources of the Near East Region:

a Review” 1997 FAO Statistical Database 2001.

http://www.fao.org OECD Environmental Indicators UNDP Human Development Indicators 2002 UNDP Arab Human Development Report 2002 UNESCO World Education Report UNESCO Statistical Yearbook United Nations, Department of Economic and Social Affairs, Population Division World Bank World Development Indicators

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A number of key social issues associated with the GCC countries also emerged in the research and writing so far in the SIA. For example, the GCC clearly places priority on fundamental issues such as education, health care, and in some cases the existence of a strong social safety net. These issues are important to the extent that they can help individuals cope with structural changes in economies that might come about as a result of liberalisation and retrain to meet new challenges in the workplace. In addition, there are important cultural considerations and issues related to gender that loom prominently in a social analysis of the region. Table 30: Examples of preliminary indicators for environment and natural resources Media Issue Indicator Water Resources Pressures include: Discharges of pollutants by major activity Human settlements Water abstractions Agricultural inputs and practices

Freshwater quantity Freshwater quality

Quality of surface water (eutrophication, toxic contamination, acidification) Quality of groundwater Drinking water Wastewater treatment (response)

Marine

Renewable water resources (per capita)* Annual water withdrawals (per capita) in m3* Water balance (per capita)* BOD/dissolved oxygen (DO) in inland water Concentration of nitrates and phosphates in inland waters Concentration of heavy metals Exceedance of critical loads of PH in water Sewage treatment connection rates

Land Soil quantity (desertification and erosion) Soil quality Coastal zones

Cultivated area (1,000 ha)* Cultivated area per capita (ha)* Land area (1000 ha)* Percentage forest to land area* Annual change rate (%)* Rates of erosion Nutrient quality of the soil Levels of salinisation Coastal zone degradation

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Air Pressures include: Economic growth Population growth Energy supply Fossil fuel supply Road traffic

Air Quality sulphur oxide (SOx) nitrogen oxide (NOx)

Urban Air Quality Ozone

Production/consumption of CFCs, halons and other ODS

Climate Change

CO2 emissions* CH4 emissions N2O emissions

SOx per unit of GDP (kg/1,000 USD) NOx per unit of GDP (kg/1,000 USD) SO2 concentrations in selected cities NO2 concentrations in selected cities Expenditure on air abatement pollution control Atmospheric ODS concentrations Ground-level UV-B radiation Stratospheric ozone levels in selected cities Existing CFC recovery rates Levels of CO2 emissions (million metric tons or carbon equivalent)*

Biodiversity Pressures include: Land use changes Transportation infrastructure Fish consumption Exports of fish and fish products

Species Threatened or extinct species Habitat Habitat alteration Land cover conversion Protected Areas Marine biodiversity Fish resources Other marine resources

Number of threatened or extinct species compared to the number of known species Number of protected species Area of key ecosystems Land areas under management categories I to IV of the IUCN classification Total protected area as % of national territory Intensity of fish catches expressed as a % of world captures and as amounts per capita Size of spawning stocks Over-fished areas Regulation of stocks Protection of fragile marine ecosystems, such as coral reefs

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Waste Pressures include: Consumption levels and patterns Production levels And patterns

Waste Generation (pressure) Trends and intensities of waste generation

Hazardous Waste Waste minimisation (response)

Municipal waste per capita Industrial waste Intensity of generation of hazardous waste Movements of hazardous waste Recycling rates

Energy Resources

Energy production (quadrillion btu)* Energy consumption* Electricity consumption per capita (kwh)* GDP per unit of energy use (PPP USD per kg of oil equivalent)* CO2 emissions per capita* Levels of CO2 emissions (million metric tons or carbon equivalent)* Share of world total CO2 emissions*

Table 31: Examples of preliminary social indicators Area Issue Indicator Education

Literacy Enrolment

Number of illiterate adults* Adult illiteracy rates (%)* Literacy rate of 15-24 year olds* Ratio of literate females to males among 15-24 year olds* Enrolment in pre-primary education* Enrolment in primary education* Enrolment in secondary education* Enrolment in tertiary education* Ratio of above enrolment between males and females*

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Health

Access to basic services

Life expectancy (years)* Infant mortality rate (per 1000)* Underweight children under age 5 (%)* One year-olds fully immunized against measles (%)* One year-olds fully immunized against TB (%)* Physicians (per 100,000 people)* Percentage of population without access to: Safe water* Health services* Sanitation*

Public Spending on Health and Education

Health Education

Total expenditure on health as % of GDP* Per capita health expenditure* Public education expenditure (as % of GNP) * Public education expenditure (as % of total government expenditure, at primary, secondary, tertiary levels)*

Population

Population levels Ageing index Youth index

Population (1000s)* (Males, Female, Total) Annual growth rate (%)* Percentage of urban population* Population ages 65+ (millions)* Population ages 0-14 (millions)*

Employment Labour Force Unemployment

Total labour force* Annual growth rate (%)* Labour force participation rate in economic activity (%) for males and females* Number of unemployed (age 15+)* Unemployment rate (%)*

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Gender Equality

Education Economic and Political Activity

Female adult literacy rate (% age 15+)* (and compared to male)* Female youth literacy rate (%) (and compared to male)* Female combined primary, secondary and tertiary gross enrolment ration (%) (and compared to male)* Female estimated earned income (PPP USD) (and compared to male)* Seats in parliament held by women (as % of total)* Female legislators, senior officials and managers (%of total)* Female professional and technical workers (% of total)* Ration of estimated female to male earned income* Female economic activity rate (% for age 15+)* Female economic activity rate (as % of male rate)* Female employment in agriculture (% of female labour force) Female employment in industry (% of female labour force) Female employment in services (% of female labour force)

Equity Access to Justice and Human Rights

Table 32: Examples of preliminary economic indicators Issue Indicator Gross Domestic Product

Total GDP* Per capita GDP* Sectoral composition of GDP in terms of production and value-added

Income Income (level and changes) Wages (level and changes)

Inflation

Inflation rate (%)* Sectoral price changes Exchange rates Terms of trade changes Export price changes Import price changes

Consumption Private consumption and its composition (food and clothing, rent and furniture, health, transport, recreation, other)

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Technology: Diffusion and creation

Telephone mainlines (per 1,000 people)* Cellular mobile subscribers (per 1,000 people)* Internet hosts (per 1,000 people)*

Investment

Domestic investment (level and changes) Net foreign direct investment inflows (as % of GDP)* National savings and its composition (level and changes)

Government expenditure and revenues

Government expenditure (level and changes) Public expenditure on education (% of GNP)* Public expenditure on health (% of GDP)* Military expenditure (% of GDP)* Total debt service (% of GDP)* Public expenditure on environmental issues Government revenues (level and changes) Composition of government revenues (tariff revenues, income taxes, indirect taxes, etc) (level and changes) Government deficits (level and changes)

Transport

Road Traffic (total volume, intensity per unit of GDP) Road Infrastructure Densities (Road network, motorways) Marine transportation

Table 33: Examples of preliminary institutional indicators Indicator Political Participation

Participation of parliamentary institutions in government policy making and implementing Number of civil society groups* Number of professional associations* Number of trade unions* Percentage of elected leaders*

Regulatory Capacity

International Cooperation

Status of ratification of major international conventions on human rights* Status of ratification of major international conventions on environment (Cartagena Protocol for Biosafety, FCCC, Kyoto Protocol to the FCCC,CBD)* Effective participation in trade negotiations*

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VI. Undertaking the detailed SIA There is a general agreement among practitioners that SIA is best approached using a range of methodologies.100 This is reiterated in the IDPM Phase III SIA methodology. A number of organisations have pointed to the benefits of incorporating a mix of qualitative and quantitative approaches when undertaking SIA or environmental reviews of trade liberalisation agreements. This is the approach that will be adopted in this SIA of the EU-GCC FTA. The first stage in developing an approach to the analysis for this SIA is to outline the factors that should be taken into account during the study and that might condition its results, based on the unique characteristics of the agreement and the regions.

A. Conditioning Factors When undertaking sustainability impact assessments, there are a number of factors that need to be taken into account, based on the nature of the issues, countries and regions involved that will contribute to the sustainability analysis. The context of the countries the GCC present a number of issues that have the potential to strongly influence behaviour associated with sustainability, in an independent way, unconnected to the specific provisions of any prospective trade agreement. Conditioning factors are those features, distinctive in the GCC region and in the GCC-EU relationship, which might influence the direction and nature of the SIA analysis. Flowing from the contextual factors identified above, these conditioning factors consist of trade related and non-trade related forces that could have independent impacts on the behaviour of the Parties, might impact the outcomes of the negotiations, and that should be taken into account in an SIA when assessing economic, environmental, and social impacts.

1. Security The GCC is a region where security concerns and military activities are particularly pronounced.101 The centrality of security concerns at this time has the potential to absorb the attention of governments and publics away from challenges associated with sustainability. Any impending military activity will also have important independent impacts on the economies in the region and could potentially divert public and private resources from environmental and social supports. In addition, the heavy presence of foreign and local military forces, at new or expanding facilities, in some cases for an anticipated short period of time, could have heavy concentrated local impacts on the surrounding environment and communities, particularly if “best practices” are not incorporated into all facets of operations. 100 See, for example, UNEP’s Reference Manual on the Integrated Assessment of Trade Related Policies, (2001) for a compilation of the many approaches and methodologies available for assessment. 101 This is due to a number of factors including the combined impact of the 1990-91 Gulf War, current international activities directed at Iraq, tension in the broader Middle East and Gulf region, and the ongoing campaign against terrorism in and around the GCC region.

Box 10: The Importance of Security “War has caused extensive damage to the marine environment of the Persian Gulf. The 1991 Gulf War exceeded all other environmental disasters in the past four decades. Several million barrels of oil were released into the marine environment. Fallout from burning oil products produced a sea surface micro-layer that was toxic to plankton and the larval stages of marine organisms. The long-term impacts of this war on fisheries and the marine environment in general have yet to be assessed.” Source: UNEP GEO 2000.

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The 1990-91 Gulf War clearly demonstrated that the outbreak of military conflict can lead directly to collateral environmental damage such as setting oil wells on fire or releasing oil into the waters surrounding the GCC. In addition, any use of so-called “weapons of mass destruction” by hostile neighbouring states, has the potential to add, catastrophically, to the environmental and social stress brought about by conflict. Together these security issues could encourage the deployment of foreign resources aimed at environmental remediation and capacity building. However they could also overwhelm the local environmental capacity and the ability of communities to absorb these inputs.

2. Governance A preoccupation with external security could also compound challenges associated with governance. Typically, the countries of the GCC place limits on freedom of association, including, in some cases NGOs and the media. This might make the task of developing and diffusing environmental information, encouraging transparency and accountability and building capacity within civil society, more difficult. The distinctive legal traditions that prevail in the GCC could also render less effective environmental regulations or enforcement procedures based on models prevailing in other regions that are based on extensive consultation and public participation. Any increases in the pace or path of GCC states to greater openness could bring corresponding benefits for sustainability.

3. Technology The oil and gas industry is central to the economies, societies and environmental within the GCC. This implies a heavy presence of externally-oriented, affiliated, supported, and (to a lesser extent) managed and owned firms and renders relevant changes in the environmental and social practices of these firms on sustainability. This includes the adoption of management practices such as codes of corporate responsibility and environmental management systems. It also includes the use of environmentally and socially-enhancing or damaging technologies that are developed domestically or externally and diffused through state and privately-owned firms into the GCC. Also potentially relevant in the realm of technology is the development and diffusion throughout the GCC of such renewable energy technologies as solar and wind power.

4. Social/Cultural Context The distinctive social composition of the GCC countries could also have an important independent impact on sustainability, both on its own, and in conjunction with trade related change. The presence of notable social fragmentation on several dimensions, notably between national and foreign populations, between urban and rural communities, and between men and women, may offer the potential for a diverse array of approaches to ecological and social sustainability, but make the diffusion of environmental best practices more difficult across such social divides. The youthfulness of the population, together with the well-developed formal educational system places a premium on environmental and social education in the classroom. It could also be important to identify the prevailing approach to sustainability grounded in the cultural and religious traditions of the region, and inquire if the formal educational system promotes an ethic of conservation and custodianship.

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5. International Commitments The GCC is a relatively small region in a global context. Nevertheless, it is one that is intensely globalized through economic, demographic and security ties with other countries and regions. Therefore, existing international regimes for trade, environment and social well-being could have an important independent impact on sustainability in the GCC. For example, five of the six countries of the GCC are members of the WTO (with the sixth, Saudi Arabia, negotiating its accession). Therefore, the progression and outcome of the WTO Doha Development agenda will impact trade relations within and outside the region. In addition, all the countries of the GCC have signed and ratified the UN Framework Convention on Climate Change (with the exception of Qatar). Therefore, the provisions in the Kyoto Protocol are relevant to the region and could have independent environmental impacts. In addition, the region is particularly reliant, from an economic perspective, on efforts with and beyond OPEC to develop international oil, gas and energy regimes and regulate prices. The reliance of the region on oil and gas makes the activities in OPEC of the utmost importance to the economic sustainability in the GCC. In addition to existing multilateral commitments that could impact movement towards sustainability, it is possible that countries beyond the EU might also seek to establish bilateral or regional trading arrangements with the GCC states. The United States, for example, has recently complete free trade negotiations with Jordan and Morocco. These agreements have been subject to environmental reviews which contemplate the possibility for including environmental provisions in trade agreement. Within the region, the dominant power of Saudi Arabia makes its approach to environmental and social regulation and practice of particular importance, both as it could impact any GCC-wide regime, and serve as a reference for other GCC states to react to, emulate or be incorporated into.

6. Subsidies The heavy presence of the state in the economies of the GCC makes government subsidy practices, as they relate to sustainability, of potentially significant importance. Such practices might change, as a result of several forces, beyond the disciplines that international or regional trade regimes, including an EU-GCC FTA, might bring about.

B. Analytical Approach The heart of the SIA is embodied in the analysis that identifies the prospective impacts of trade-induced change on trade flows and behaviour in the sectors identified for analysis in this SIA, as well as the impacts of changes in trade rules on key trade flows and economic activity. The ultimate purpose of the exercise is to identify the impacts of these changes on the economic, environmental and social indicators identified in the study in order to assess the impacts on sustainability. Consistent with the approaches of other major institutions, the approach that has been adopted by the EU suggests the use of a number of qualitative and quantitative tools, including case studies. The EU’s Further Development of the Methodology for a Sustainability Assessment of Proposed WTO Negotiations focuses on the application of a causal chain analysis (CCA), in conjunction with other analytic methods including modelling methods data-based (statistical estimation) methods, descriptive (case study) methods and expert opinion. Causal chain analysis will be employed using data generated in a quantitative manner, where possible. This includes tracing

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linkages to direct and indirect impacts of trade and other policies through economic or regulatory means will also be employed. A preliminary survey of some existing methodologies for assessment confirms the relevance of this approach.102 A comprehensive discussion of the approaches taken in EU SIA’s including the recent EU-Chile SIA, as well as ongoing work surrounding the WTO negations, will be developed in the next phase of this project and will provide a basis for further work. An analysis of the likelihood of sustainability impacts will begin with the identification of changes in the ability of governments to regulate, changes in trade flows and changes in economic activity, as they relate to the sustainability indicators identified for each proposed trade measure, or sector. • Ability to regulate or legislate. What are the changes expected, if any, in the governments’

ability to regulate, what is the state of governmental oversight related to the environmental and social issues most closely associated with the issue or sector under consideration?

• Trade flows. What are the expected changes in the flows of goods and services, including technology related to the issue or sector under consideration and how might these changes be expected to affect the sustainability issues most closely associated with that issue or sector?

• Economic activity. What are the changes in the overall level of economic activity (scale) and changes in the pattern of economic activity (structure) and how might this affect the sustainability issues most closely associated with the issue or sector under consideration?

In order to undertake this analysis, various materials might be consulted including literature and other SIAs for documented empirical evidence suggesting key linkages between economic activity and environmental effects, as well as available environmental and social data. The analysis of environmental, social and governance impacts will rely primarily on qualitative analysis, given the difficulty of modelling linkages between economic change and environmental, social or institutional change, and taking into account the regions under investigation where data, and particularly good time-series data, might not be readily available. Direct social or environmental impacts that result from the EU-GCC FTA will be described thoroughly identifying the process by which social impacts are felt. Similarly, it expected that regulatory analysis will be qualitative and descriptive in nature. The project team will undertake a thorough survey of the availability of quantitative data including existing studies that might forecast the economic impacts of such issues as changes in specific trade rules to the trade flows and economic activity in the EU and the GCC. Specifically, the analysis will include: • Changes in levels of trade flows for specific sectors and where relevant industries or

commodities) based on scenarios • Economic impacts of changing levels of trade flows, taking into account (where possible)

related macroeconomic trends (such as exchange rates) that might impact trade. • Where quantitative data is not available, qualitative analysis based on existing and past flows

and trends, and lessons learned from other efforts of assessment will be employed. 102 It should be noted that among the institutional and government-led approaches to assessment, only the efforts of the EU, and the WWF adopt approaches that include indicators of sustainability in the measurement of impacts of trade liberalisation. Unlike the EU and WWF methodologies, the OECD methodology is designed for conducting environmental review of trade policies and agreements. The CEC framework is also ultimately concerned with environmental change associated with trade liberalisation. Similarly, the two national governments with formal approaches to environmental review and assessment, the United States and Canada, respectively, focus exclusively on environmental impacts.

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• Causal links from changes in trade rules, changes in trade flows, through to trade-induced economic changes and potential sustainability impacts will be analyzed using a number of variables such as those identified by the OECD of scale, structure, technology, product and regulatory change. Additional variables linking economic change and sustainability will be identified and explained as necessary during the preliminary SIA.

As the work progresses, it will identify in detail the approach to assessment appropriate for the EU-GCC FTA. It is expected that, consistent with much of the work in this field, the methodology adopted for the Preliminary SIA will involve forms of causal chain analysis (CCA). This analysis, incorporating relevant techniques, will identify and, where possible, correlate changes in trading rules and flows with potentially significant economic, environment, social and governance impacts. The analysis will be undertaken for scenarios (to be determined) related to the individual trade measures. Where there are alternative approaches, such as in the case of services (see below), these will be taken into account in developing the detailed methodology.

C. Services There may be a divergence from this general approach with respect to the area of services. There have been at least two serious efforts to develop methodological approaches to the analysis of the environmental or sustainability impacts of services liberalisation. These will be taken into account by the Project Team in developing a detailed approach to the assessment in this SIA. OECD Services Methodology The first approach is that of the OECD, which resembles and builds on its 1994 methodology for assessing the environmental effects of trade in goods. 103 The OECD’s approach to assessment in the services sector, Assessing the Environmental Effects of Services Trade Liberalisation: A Methodology was released in January 2002. The OECD presents the following six steps for assessing the environmental effects of services trade liberalisation: 1. Scoping services sectors for environmental effects; 2. Building scenarios of services trade liberalisation. 3. Assessing environmental effects associated with economic changes; 4. Assessing regulatory effects arising from rule-making; 5. Screening for significance of environmental effects 6. Determining appropriate policy responses.104 The OECD methodology uses the same general categories for assessing trade in services as it does in its methodology for environmental and trade reviews (Table 34). These general categories serve as processes through which economic change can be linked to environmental change.

103 OECD, 1994. 104 OCED. 2002. Assessing the Environmental Effects of Services Trade Liberalization: A Methodology. 15 January. Paris: OECD.

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Table 34: Categories for assessing trade in services (OECD) Scale Effects

• Scale of economic growth • Scale of pollution • Scale of resource use

Structural (composition) Effects

• Structure of production/consumption • Structure of investment • Structure of costs • Geographical structure

Technology Effects

• Is liberalisation of the restrictions on services trade likely to affect the processes or production methods used in supplying the services?

• Is liberalisation of services trade likely to facilitate access to environmental friendly technologies?

Product Effects

• The use of which specific products is likely to increase (decrease) due to an increase in services trade following liberalisation of a given services sector?

• What are the environmental effects (positive and negative) of an increase (decrease) in use of such products relative to those involved in the pre-liberalised services trade regimes.

The methodology goes on to assess regulatory effects arising from changes in multilateral trade rules.105 Although it is limited to environmental impacts, this methodology proceeds in a manner that is generally consistent with the EU SIA approach, that is, to screening for significance of environmental effects and determining appropriate policy responses. World Wide Fund for Nature (Tourism Services) In February 2001 the World Wide Fund for Nature (WWF International) released a Preliminary Assessment of the Environmental and Social Effects of Trade in Tourism.106 The study aimed to contribute to the understanding on how further liberalisation of service-related activities could impact the environment and social well-being in countries engaged in that trade. Travel and tourism was selected as a priority sector for assessment because of its broad economic, environmental and social implications throughout the world. WWF developed an approach for its analysis that included four main stages: 1. Purpose, scope and focus. This section addresses the importance of clarifying from the outset

the purpose of the assessment, as it will in turn influence the definition, scope and focus of the assessment process.

2. Context. This section defines the economic, social, environmental and policy components of tourism services.

3. Linking tourism services to liberalisation: GATS, investment and other liberalisation efforts. This section examines the links between international trade/investment liberalisation and tourism services, distinguishing between GATS liberalisation provisions, investment liberalisation and other liberalisation measures.

4. Linking liberalisation of tourism services and sustainable development. This section contains a preliminary analytical assessment of the linkages between international trade in tourism services and potential environmental and social effects. Five key issues are identified through which trade and investment liberalisation policies can be linked to sustainability: (i) supply

105 OECD. 2002. pp.12-13. 106 WWF International. 2001. Preliminary Assessment of the Environmental and Social Effects of Liberalization in Tourism Services. Geneva: WWF International Discussion Paper. February.

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and structure; (ii) development and practice; (iii) physical infrastructure; (iv) organisations and institutions; (v) government and policy regulation (Table 35).

Table 35: Some linking processes identified for sustainability assessment in the tourism sector107 (WWF) Supply and Structure

This category of issues deals with how trade and trade liberalisation policies affect the provision and structure of tourism services. Liberalisation facilitates market access to foreign suppliers, foreign establishment and foreign investment. Thus, the structure of the tourism industry in the destination country will be affected as will the way the service is provided (e.g., changes in ownership, increased competition or market dominance of TNCs). The environment can be impacted by these structural changes in different ways. For example, technology transfer through foreign suppliers can lead to rising environmental standards. On the other hand, foreign suppliers and investors might be more interested in high rates of return than in environmental protection.

Development and Practice

This category of issues deals with the nature of tourism development resulting from trade and liberalisation policies in tourism services. Liberalisation can lead to an increase in foreign direct investment in tourism development of destination countries, such as for the construction of resorts, golf courses or airports. Related environmental impacts vary depending on where this foreign capital is directed and according to several factors such as the scale of development (rapid or slow, controlled or unchecked), the location (whether it is occurring in location/site that is able to absorb it), spatial characteristics (whether it is concentrated or spread out) and the environmental practices that exist for managing the development.

Physical Infrastructure

This category of issues addresses existing and future infrastructure requirements to support the development of tourism services, and its potential environmental implications. Physical and service infrastructure includes facilities such as roads, water, wastewater treatment, energy, communication networks, railways, ports, and airports. The issue of technology transfer is important here as trade and liberalisation processes can facilitate the development of, and access to, more environmentally friendly technologies. It is also important to consider the characteristics of the infrastructure development and whether the development occurs in locations where existing infrastructure can absorb new demands. Increased transportation needs could involve clearing of land, possibly damming, and result in increased fuel consumption and emissions and possibly accidents. If resources are scarce, local populations may compete with international tourists for resources such as land or water.

Organisation and Institutional Issues

This category of issue deals with the organisational and institutional issues associated with trade-induced tourism development. The impacts of such development will vary depending on the way in which stakeholders operate individually or collectively in networks, and whether institutions exist to facilitate their operations. Environmental protection measures might flow from a well-developed network of social organisations that can add to economic benefits important environmental, cultural and public values. Conversely, stress can arise when a rapid inflow of migrants taking advantage of employment opportunities overwhelms the environmental and social infrastructure, or when local populations feel that their culture, values and quality of life are affected by development from which they receive no apparent, or an insignificant, benefit. Social structures of relevance include business, labour, community, consumer, and environmental groups, as well as other co-operatives and aboriginal communities.

107 WWF International, 2001.

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Government Policy and Regulation

The last set of issues relates to the potential regulatory effects of tourism services liberalisation. GATS has direct impacts on domestic regulations, including environmental and social policies. Liberalisation may lead to changes in national regulations applying to the provision of tourism services, such as foreign exchange regulations and tourism investment incentives to attract foreign investment. International obligations can undermine domestic social or environmental policy objectives.

Taking into account this, and other existing work, the project team will identify ways in which the approach to analysis for the services sector might diverge from the assessment of trade in goods, or the impacts of trade rules and regulatory issues.

D. Significance of Sustainability Impacts Once a range of sustainability impacts associated with a particular trade measure are identified, a determination should be made in the detailed SIA with respect to their significance. Prioritising the most important sustainability impacts will help best inform negotiators during trade negotiations and can focus the development of appropriate M&E measures. In further stages of this work, the project team will identify means for assessing significance, whether on a sliding scale using numerical values ranging from -2 through to +2 as has been used in previous SIAs, or possible through the application of a subjective scale clearly identifying issues as having no, minimal, moderate, high or extreme significance, backed up by a clear rationale. There is some experience that can be drawn on in an effort to develop criteria and assessment methods for determining significance. First and foremost, is the work undertaken in previous SIAs which have presented the following criteria to assist with this determination:

• extent of existing economic, social and environmental stress, in affected areas, • direction of changes to base-line conditions, • nature, order of magnitude, geographic extent and duration of changes, • regulatory and institutional capacity to implement mitigating measures.108

In addition, the OECD has developed a series of criteria that it applies to screening for environmental significance of impacts from services. Given the important role of services trade for this SIA, these criteria will also be taken into account in developing a means for moving forward with this study. Among other things, this will involve considering their application to a broader set of sustainability issues including social and governance issues. In its recent methodology on services trade liberalization the OECD offers the following three questions in a screening for significant of environmental effects:

108 Kirkpatrick et al. 2002: 12.

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Those environmental effects – positive and negative – should be identifies which are significant enough to retain the attention of negotiations and lead to consideration for follow-up action. Questions:

• What is the potential scope of the environmental effects predicted (e.g., local, national, transboundary, global)?

• What is the potential magnitude of the environmental effects predicted? • What is the expected duration of the effects? Are such effects reversible?109

Among the key considerations to take into account in adopting criteria for significance are the following issues, many of which are incorporated into the criteria presented above. Sustainability thresholds. The criteria should attempt to address the concern that there might be limits to sustainability. For example, with respect to environmental sustainability, there might be limits to the ability of an ecosystem to maintain itself in a healthy state. Critical environmental thresholds are reached when pressures overwhelm supports to the degree that they cause a compounding, irreversible deterioration in the state of the ecosystem that carries it, below the level where it can sustain the life that depends upon it and recover to its earlier state. In those cases where environmental effects might be irreversible, policy intervention is urgent. Magnitude of the expected impact. At first glance, the greater the magnitude the more significant the impact. However, in assessing magnitude it is important to consider issues such as existing stresses on the environment and social structures/supports. For the environment, the ability to absorb additional stress, whether of great magnitude, or of smaller magnitude that adds incrementally to the stress over time, or in combination with other stresses and thereby threatens key ecosystems in a more subtle way. Given the attention paid in the framework to cumulative impacts, magnitude should be defined clearly to include incremental and overtime impacts. Spatial distribution of the impacts. Will they occur in a confined, common geographic region? Is this region able to sustain such impacts or is it a vulnerable ecosystem or species that might already be under threat? Or, in the case of social issues such as migration and urbanisation, what is the availability of infrastructure to support increased populations and what might be the environmental impacts on coastlines and the marine environment, for example, of increasing concentrations of people. Expected cumulative effects. This should include consideration of potentially disproportionate affects of small impacts from the same sector over time, but also the impacts associated with impacts of varied magnitude from other sectors that, combined, might have important effects in the short or longer term. Irreversibility. Finally a key component of significance should be the irreversibility of the impact. From an environmental perspective, if a change, whether or a great magnitude or a minimal magnitude is moving an ecosystem or a species to a point where key environmental thresholds are threatened and policy intervention is urgent, then it should be considered significant.

109 OECD 2002: 14.

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VII. Proposal for in-depth sector specific assessments

The Project Team is required to identify sectors that might be the subject of in-depth, sector specific SIA, to complement the Global SIA of the EU-GCC FTA. These decisions will be made based on the research and analysis that follows this Inception Report and in particular in the scoping phase. Trade in goods − Mineral Fuels, Mineral Oils − Machinery and Mechanical Appliances − Vehicles, Aircraft, Vessels − Chemicals − Base Metals − Petrochemicals − Agricultural products − Fish and fish products − Aluminium − Steel − Fertiliser − Cement Trade in services − Construction and Related Engineering Services − Financial services − Environmental services − Recreational, Cultural and Social Services − Tourism and related services − Transport services − Research and Development services − Other business services − Distribution Services These sectors are presented to initiate a preliminary discussion with the EC on the identification of priorities for in-depth SIA. The following criteria will be employed to develop a rationale for the selection of individual sectors: Criteria for Selecting Priority Sectors110 − The sector is important to the national economies and in particular in its contribution to

export revenues. − The sector relates directly or indirectly to major environmental media and natural resources. − The sector relates directly or indirectly to important issues of equity and social well being. − The sector has been, or might become, the subject of changes in the economic rules induced

by trade-related policies.

110 From UNEP. Reference Manual for the Integrated Assessment of Trade-Related Policies. 2001.

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− The sector is one with significant trade flows in both volume and financial terms and is experiencing changes in trade flows.

− The sector is one where one might expect, a priori, that there are important sustainability effects attributable to trade-related policies.

Moving forward: ! Further rationale for selection will be provided, based on the criteria above, and priority

sectors will be presented for further study. A final decision on the sectors to be addressed in this way will depend on the outcome of further discussions, including perhaps, the results of initial public consultations.

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VIII. Mitigation and Enhancement Measures An SIA of the EU-GCC SIA is required to include mitigation and enhancement measures (M&E) that might be appraised later in the SIA process. Typically, M&E measures should be designed to prevent, or at least mitigate, any potential negative impacts of the EU-GCC FTA on sustainability, or promote positive impacts. The range of M&E measures for inclusion in this SIA will, in some cases, be trade related and in some cases may not be so closely related to trade. In selecting M&E measures a degree of flexibility is also required to allow for the identification of policies to be implemented in the short, medium and longer terms. In some instances M&E measures might be implemented over the medium and longer term, particularly those designed to maximise the potential benefits brought about by the EU-GCC FTA. In other cases, particularly in situations where significant adverse impact is identified, swift remedial action might be required. Additional variables that should be considered when identifying appropriate M&E measures might also include the range of instruments available including command and control, market based instruments or voluntary action. The SIA Methodology for the WTO Negotiations (Phase III) includes the following criteria for the selection of M&E measures: − Impact on sustainable development; − Cost-effectiveness; and, − Feasibility.111 The range of, and criteria for, identifying appropriate M&E measures will be developed in later stages of the SIA. It will take into account further information developed, initial findings of a prospective detailed assessment, and consideration of any conditioning factors that might impact on the feasibility of adopting various measures to help ensure their effective implementation.

111 Kirkpatrick, C. and Lee, N. 2002. Further Development of the Methodology for a Sustainability Assessment of Proposed WTO Negotiations (Final Report). IDPM, University of Manchester.

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Selected references Publications American University in Cairo. 2002. Economic Trends in the MENA Region, 2002, The Economic Research Forum Edition. Cairo: American University Pres.. Commission for Environmental Co-operation. 1999. Final Analytic Framework for Assessment the Environmental Effects of the North American Free Trade Agreement (NAFTA), Montreal, June. Economic and Social Commission for Western Asia (ESCWA). 1999. Trade and Environment in ESCWA Member Countries. New York: United Nations. Economic Trends in the MENA region, 2002, The Economic Research Forum Edition, American University in Cairo Press, Cairo, 2002. Government of Canada. 2001. Framework for Conducting Environmental Assessment of Trade Negotiations. Ottawa: Department of Foreign Affairs and International Trade. Government of Canada. 2002. Handbook for Conducting Environmental Assessments of Trade Negotiations. Department of Foreign Affairs and International Trade. Government of Canada. 2002. Initial Environmental Assessment: Trade Negotiations in the World Trade Organization. Department of Foreign Affairs and International Trade. Government of Canada. 1999. Retrospective Analysis of the 1994 Canadian Environmental Review of the Uruguay Round of Multilateral Trade Negotiations. Ottawa: Department of Foreign Affairs and International Trade, November. Government of the United States. 2001. Draft Environmental Review of the proposed US-Chile Free Trade Agreement. November. Office of the US Trade Representative. Government of the United States. 2002. Draft Environmental Review of the proposed US-Singapore Free Trade Agreement. September. Office of the US Trade Representative. Government of the United States. 2002. Final Environmental Review of the US-Jordan Free Trade Agreement: Draft. Office of the US Trade Representative. Government of the United States. 2000. Guidelines for Implementation of Executive Order 13141, Environmental Review of Trade Agreements. December. Institute for Development Policy and Management, University of Manchester. 2002. Sustainability Impact Assessment of Proposed WTO Negotiations: Sector Studies for Environmental Services, Market Access and Competition. Final Inception Report. 12 July (amended 24 July).

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Kirkpatrick, Colin and Norman Lee. 2002. Final Report to the European Union on Further Development of the Methodology for a Sustainability Impact Assessment of Proposed WTO Negotiations. IDPM. University of Manchester. 5 April. Kirkpatrick, Colin, Clive George, Jamie Franklin, Oliver Morriessey, Kevin Gray and Ron Bisset. 2002. Sustainability Impact Assessment of Proposed WTO Negotiations: Qualified Preliminary Assessment of the Doha Development Agenda. Project Inception Report to the EC. IDPM in association with ODI, BIICL and Cordah Ltd. 15 July. Kirkpatrick, Colin, Norman Lee and Oliver Morrissey. 1999. WTO New Round, Sustainability Impact Assessment Study. Phase One Report. 1 October. Institute for Development Policy and Management and Environmental Impact Assessment Centre, University of Manchester and Centre for Research on Economic Development and International Trade, University of Nottingham. Kirkpatrick, Colin and Norman Lee. 1999. WTO New Round, Sustainability Impact Assessment Study. Phase Two Report. Main Report. 18 November. Institute for Development Policy and Management and Environmental Impact Assessment Centre, University of Manchester. Kirkpatrick, Colin and Norman Lee. 1999. WTO New Round: Sustainability Impact Assessment Study. Phase Two Main Report. Institute for Development Policy and Management and Environmental Impact Assessment Centre, University of Manchester. 18 November. Maltais, Aaron, Mans Nilsson, Asa Persson. 2002. Sustainability Impact Assessment of WTO negotiations in the major food crops sector. Stockholm Environment Institute. May. Organization for Economic Cooperation and Development. (OECD). 2002. Assessing the Environmental Effects of Services Trade Liberalization: A Methodology. 15 January. Paris: OECD. Organisation for Economic Co-operation and Development. 1994. Methodologies for Environmental and Trade Reviews. OCDE/GD(94)103. OECD, Paris. OECD. 2001. OECD Environmental Indicators: Towards Sustainable Development. Paris: OECD. OECD. 2000. Methodologies for Environmental Assessment of Trade Liberalisation Agreements: Report of the OECD Workshop held on 26-27 October 1999. Paris: OECD. COM/TD/ENV(99)92/FINAL. OECD.1994. The Environmental Effects of Trade, Paris: OECD. Planistat Luxembourg. 2002. Sustainable Impact Assessment (SIA) of the trade aspects of negotiations for an Association Agreement between the European Communities and Chile (specific agreement No. 1). Final Report (revised). December. Roy, Jayanta and Jamel Zarrouk. 2002. “Completing the GCC Customs Union. The World Bank.”(working draft, June 6,)

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Trade and Environment in ESCWA Member Countries, Economic and Social Commission for Western Asia, United Nations, New York, 1999. United Nations Conference for Trade and Development (UNCTAD). 2002. World Development Report, 2002. New York and Geneva: United Nations. United Nations Development Programme (UNDP). 2002. Arab Human Development Report. United Nations. United Nations Development Programme (UNEP). 2002. Human Development Indicators. United Nations. United Nations Environment Programme (UNEP). 2000. Global Environment Outlook (GEO). United Nations Environment Programme (UNEP). 2001. Reference Manual for the Integrated Assessment of Trade Related Policies. New York and Geneva: United Nations. United Nations Food and Agriculture Organisation (FAO). 2001. Statistical Database. World Bank. 2002. World Development Report, 2003: Sustainable Development in a Dynamic World, Transforming Institutions, Growth and Quality of Life. Oxford University Press. World Resrouces Institute. 2001. Earth Trends, 2001. www.wri.org. WorldWide Fund for Nature. 1999.. Initiating an Environmental Assessment of Trade Liberalisation in the WTO (Vol. II). A WWF International Discussion Paper. Gland: WWF International. March. World Wide Fund for Nature (WWF International). 2001. Preliminary Assessment of the Environmental and Social Effects of Liberalization in Tourism Services. Geneva: WWF International Discussion Paper. February. World Wide Fund for Nature (WWF-International) and Fundacion futuro latinoamericano. 2000. International Experts Meeting on Sustainability Assessment of Trade Liberalisation. 6-8 March 2000. Full Meeting Report. World Wide Fund for Nature (WWF-International) and World Wildlife Fund US (WWF-US) as part of an ongoing project on Sustainability Assessment of Trade Agreements: www.panda.org/balancedtrade. Periodicals Country Profile, UAE 2002, Economist Intelligence Unit, London, 2002. Country Profile, Saudi Arabia 2002, Economist Intelligence Unit, London, 2002. Country Profile, Bahrain 2002, Economist Intelligence Unit, London, 2002. Country Profile, Qatar 2002, Economist Intelligence Unit, London, 2002. Country Profile, Oman 2002, Economist Intelligence Unit, London, 2002. Country Profile, Kuwait 2002, Economist Intelligence Unit, London, 2002. Country Reports, UAE January 2003, Economist Intelligence Unit, London, 2003. Country Reports, Saudi Arabia January 2003, Economist Intelligence Unit, London, 2003.

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Country Reports, Bahrain February 2003, Economist Intelligence Unit, London, 2003. Country Reports, Qatar January 2003, Economist Intelligence Unit, London, 2003. Country Reports, Oman January 2003, Economist Intelligence Unit, London, 2003. Country Reports, Kuwait January 2003, Economist Intelligence Unit, London, 2003. External Trade Bulletin of the ESCWA Region: Ninth Issue, ESCWA publications, 1998 External Trade Bulletin of the ESCWA Region: Tenth Issue, ESCWA publications, 2000 External Trade Bulletin of the ESCWA Region: Eleventh Issue, ESCWA publications, 2002 National Accounts Studies of the ESCWA Region, Bulletin No. 18, ESCWA publications, 1998 National Accounts Studies of the ESCWA Region, Bulletin No. 19, ESCWA publications, 1999 National Accounts Studies of the ESCWA Region, Bulletin No. 20, ESCWA publications, 2000 National Accounts Studies of the ESCWA Region, Bulletin No. 21, ESCWA publications, 2001 Statistical Abstract of the ESCWA Region 1999, Nineteenth Issue, ESCWA publications, 1999 Statistical Abstract of the ESCWA Region 2000, Twentieth Issue, ESCWA publications, 2000 Internet Addresses www.wto.org www.unep.org/ www.unctad.org/ www.un.org/womenwatch/ www.imf.org www.worldbank.org europa.eu.int/comm/eurostat/ www.escwa.org.lb www.wri.org IORNET IORNET is the web site of the Indian Ocean Rim Business Facilitation Centre (IORBFC) operated by the Federation of Indian Chambers of Commerce and Industry (FICCI) with support from Ministry of External Affairs, Government of India, to promote business to business linkages and cooperation among the IORARC member countries (amongst others the GCC countries the United Arab Emirates and Oman ). http://www.iornet.org/newiornet/index.htm Directory of Development Organisations Guide to International Organizations, Governments, Private Sector Institutions, Development Agencies, Universities, Research and Training Institutes, NGOs/PDOs, Grantmakers, Banks, Microfinance Institutions and Development Consulting Firms http://www.devdir.org/ The World Bank Group: Countries and Regions The World Bank Group is one of the world's largest sources of development assistance. http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/0,,pagePK:180619~theSitePK:136917,00.html INECE: International Network for Environmental Compliance and Enforcement The International Network for Environmental Compliance and Enforcement (INECE) is an international partnership promoting compliance and enforcement of domestic and international environmental laws through networking, capacity building, and enforcement cooperation. http://www.inece.org/links_pages/onlineresourcesMiddleeast.html

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United Nations Environmental Program, Regional Seas, Red Sea and Gulf of Aden (Saudi Arabia) http://www.unep.ch/seas/main/partners/hpart.html United Nations Environmental Program, Division of Policy development and law, Global Judges Symposium on Sustainable Development and the Role of Law, Country Papers (Kuwait) http://www.unep.org/dpdl/symposium/Country_papers.htm FAOLEX: a comprehensive and up-to-date computerized legislative database, the world’s largest electronic collection of national laws and regulations, as well as treaties, on food, agriculture and renewable natural resources. (Food and Agriculture Organization of the united Nations) http://faolex.fao.org/faolex/index.htm Official site of the International Year of Freshwater 2003 http://www.wateryear2003.org/ev.php?URL_ID=1456&URL_DO=DO_TOPIC&URL_SECTION=201 Info-Prod Research (Middle East) Ltd.: Info-Prod publishes reports covering Middle East business and markets, as well as specific industries in the region. http://www.infoprod.co.il/country/bahrai.htm Environmental Research & Wildlife Development Agency United Arab Emirates http://www.erwda.gov.ae/c_contacts.asp The International Development Research Centre is a public corporation created by the Canadian government to help communities in the developing world find solutions to social, economic, and environmental problems through research. http://www.idrc.ca/ Universal Salt Iodization http://www.micronutrient.org/Salt_CD/5.0_key/5.4_mi/index.html The World Trade Organisation: The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations (http://www.wto.org/) The World Intellectual Property Organization: The World Intellectual Property Organization (WIPO) is an international organization dedicated to promoting the use and protection of works of the human spirit. http://www.wipo.org/about-wipo/en/ The United Nations website http://www.un.org and http://www.undp.org.bh (Bahrain) Friends of the Earth Friends of the Earth is the U.S. voice of an influential, international network of grassroots groups in 70 countries. http://www.foe.org/

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Human Rights Watch Human Rights Watch is dedicated to protecting the human rights of people around the world. http://www.hrw.org/mideast/index.php Greenpeace http://www.greenpeace.org/homepage The Global Knowledge Partnership The GKP is a "network of networks" with a diverse membership base comprising public, private and not-for profit organizations from both developed and developing countries. http://gkaims.globalknowledge.org/index.cfm Amnesty International Amnesty International is a worldwide campaigning movement that works to promote internationally recognized human rights. http://www.web.amnesty.org/ai.nsf/index/MDE110181996

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Annexes

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Table of contents Annex 1: Terms of reference................................................................................................. 113

Annex 2: Outline of final report ............................................................................................ 114

Annex 3: Summary of the methodological framework ......................................................... 115

Annex 4: International environmental commitments by GCC countries .............................. 117

Annex 5: Supporting tables related to demographic trends................................................... 118

Annex 6: Supporting tables related to education................................................................... 120

Annex 7: Supporting tables related to health and welfare..................................................... 122

Annex 8: Supporting tables related to gender equality.......................................................... 124

Annex 9: Supporting tables for trade context....................................................................... 127

Annex 10: Supporting tables for preliminary agricultural screening ................................... 131

Annex 11: Supporting tables for preliminary fisheries screening ......................................... 134

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Annex 1: Terms of reference The terms of reference for this project have been copied from the pdf-file with regard to the invitation to tender. Only the relevant pages (3 to 13) are reproduced below.

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Annex 2: Outline of final report A Final Report for the EU-GCC SIA Project is due to be submitted to the European Commission by October 2003. The Final Report is expected to contain the following elements: Acronyms Acknowledgements I. Executive Summary II. Approach to Assessment: The Methodology This involves a comprehensive description of the approach used by the Project Team to undertaken the SIA. It will include a summary of all stages of the SIA, and will focus, in particular on the detailed SIA for each issue. It will also identify a set of comprehensive yet practical indicators of sustainability that will be applied generally to the SIA, and an analysis of relevant M&E measures that might usefully be used in SIA. Summary Stage 1: Screening and Scoping Stage 2: Detailed assessment Stage 3: Mitigation and Enhancement measures Stage 4: Monitoring and follow-up III. Global Preliminary SIA This includes the overall assessment of the EU-GCC FTA, including all issues identified in the preliminary screening. It will be presented on an issue-by-issue basis and will include an overall conclusion and summary of findings. As appropriate, the sustainability assessment will be based on a common set of indicators that is applicable generally to the range of issues under investigation. It will also include an analysis of sustainability based on a common understanding of “significance”. M&E policies will be identified with respect to each issue. IV. In-depth sectoral SIAs This section will be divided into at least two components, representing priority sectors selected for in-depth analysis. Each sector will be assessed further to the methodology. It will include: Context, key changes in trade flows/rules affecting the sector, indicators relevant for the sector, likely economic, environmental and social impacts (based on the methodology) and an assessment of their significance. Key sector-specific M&E policies will be suggested for each sector. V. Final Conclusions and Synthesis References and key sources Annexes Terms of Reference Communication Activities Summary of Consultations Summary of Sources and Information Tools

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Annex 3: Summary of the methodological framework This SIA will adopt an overall approach that is generally consistent with that put forward in other SIAs undertaken for the EU. 1. Screening and scoping The first stage is screening. It is implemented to determine which measures, if any, may be excluded from the SIA because they are unlikely to give rise to significant sustainability impacts. This SIA will include, at the beginning, a further stage – the development of a context for the study. The context includes a brief description of the economic, political, geographic, environmental, social and cultural issues associated with the particular region for this SIA. The screening stage will then identify trade-related issues to include in the SIA. The Project Team will prioritize these issues to focus the analysis on those most likely to be important for sustainability. The scoping stage will then identify specific scenarios to be investigated, the components of each measure that should be examined in the detailed SIA in terms of economic, environmental and social relevance, and develop causal links between potential trade-induced changes and economic, environment, social and regulatory impacts. Therefore, the second step will involve identifying issues such as production practices, structural change, infrastructure impacts, transportation and other issues, consistent with the approaches to assessment that have been developed by other major international organisations. 2. Detailed assessment

The approach to the detailed assessment will be based on the approach that has evolved in the EU’s work on SIA—Causal Chain Analysis (CCA). This begins with consideration of the economic and regulatory impacts induced by changes in trade flows and trade rules under different scenarios, and traces these changes through to sustainability impacts on the environment and social issues through issues such as production, consumption, transportation, infrastructure, policy, structure and others. The significance of sustainability impacts are then assessed using subjective analytical techniques. Where possible, a CCA can factor in quantitative data generated by econometric forecasting techniques. In other cases it will rely on analysis of available data, and in still other cases, where data is not available, the analysis will be based on observed trends, expert information and other research. A first stage in developing an approach to the analysis for this SIA is to outline the factors that should be taken into account during the study and that might condition its results, based on the unique characteristics of the agreement and the regions. These are called “conditioning factors” in the SIA. The core of the SIA is embodied in the analysis that identifies the prospective impacts of trade-induced change on trade flows and behaviour in the sectors identified, as well as the impacts of changes in trade rules on key trade flows and economic activity. An analysis of the likelihood of sustainability impacts will begin with the identification of changes in the ability of governments to regulate, changes in trade flows and changes in economic activity, as they relate to the sustainability indicators identified for each proposed trade measure, or sector. The detailed assessment will elaborate on how economic, environmental and social issues will be assessed for their “significance”. Among the key considerations to take into account in adopting criteria for significance are: sustainability thresholds, magnitude of the

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expected impact. spatial distribution of the impacts, expected cumulative effects, and irreversibility. 3. Mitigation and enhancing (M&E) measures

Because trade agreements can have wide ranging effects on the economy, social development and the environment and these impacts can be positive and negative for sustainability, SIAs typically include mitigation and enhancement measures. M&E measures can include trade-related measures or non-trade related measures to accompany negotiations and/or trade agreements to help ensure that the outcomes of negotiations and the impacts of the agreements contribute to sustainability. This SIA will develop specific mitigation and enhancement measures, based on preliminary findings from the detailed SIA. 4. Monitoring and post-evaluation

The methodology developed for the EU SIAs includes at its final stage the development of proposals to monitor and evaluate the impacts of the M&E measures on sustainability. The importance of follow-up mechanisms should not be understated as the effective application of the M&E measures are critical to the overall success of the SIA in supporting sustainability. A follow-up process might even include a subsequent environmental review to reflect the long-term effects of economic activities induced by broad trade measures. At the appropriate stage in this SIA, later in the process, a discussion of monitoring and post-evaluation mechanisms will be included.

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Annex 4: International environmental commitments by GCC countries

GCC countries’ international commitments related to the environment

Bahrain Kuwait Oman Qatar Saudi Arabia UAE

CBD1 ratified signed/not ratified ratified ratified ratified ratified

UN FCC2 ratified ratified ratified ratified ratified ratified

Montreal Protocol3 ratified ratified ratified ratified ratified ratified

UN CLOS4 ratified ratified ratified signed/not ratified ratified signed/not

ratified

Hazardous waste5 ratified ratified ratified ratified ratified ratified

Environ. Modification 6 ratified

Nuclear Test ban7 ratified

Desertification8 ratified ratified ratified ratified ratified ratified

Endangered Species9 signed/ not ratified ratified ratified ratified ratified

Marine Dumping10 signed/ not ratified ratified ratified

Ship pollution 11 ratified

Wetland 12 ratified

Whaling 13 ratified

1. Convention on Biological Diversity (1993) 2. United Nations Framework Convention on Climate Change (1994) 3. The Montreal Protocol on Ozone Depleting Substances (1984) 4. The United Nations Convention on the Law of the Sea (1996) 5. Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal (1992) 6. Convention on the Prohibition of Military or Any Other Hostile Use of Environmental Modification Techniques (1978) 7. Treaty Banning Nuclear Weapon Tests in the Atmosphere, in Outer Space, and Under Water (1963) 8. United Nations Convention to Combat Desertification in Those Countries Experiencing Serious Drought and/or Desertification, Particularly in Africa (1996) 9. Convention on the International Trade in Endangered Species of Wild Flora and Fauna (CITES) (1975) 10. Convention on the Prevention of Marine Pollution by Dumping Wastes and Other Matter (London Convention) (1975) 11. Protocol of 1978 Relating to the International Convention for the Prevention of Pollution From Ships, 1973 (MARPOL) 12. Convention on Wetlands of International Importance Especially as Waterfowl Habitat (Ramsar) (1975) 13. International Convention for the Regulation of Whaling (1948)

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Annex 5: Supporting tables related to demographic trends Demographic trends in GCC countries

Total population (millions)

Urban population (% of total)

Population under age 15

(% of total)

Population age 65 and above (% of total)

2000 2015a 2000 2015 2000 20.5 2000 2015 Bahrain 0.6 0.8 92.2 95.0 28.2 20.2 2.9 6.1 Kuwait 1.9 2.8 96.0 96.9 31.3 25.9 2.2 6.6 Oman 2.5 4.1 76.0 82.6 44.1 41.5 2.5 3.7 Qatar 0.6 0.7 92.7 95.0 26.7 22.7 1.5 5.7 Saudi Arabia 20.3 31.7 86.2 91.0 42.9 38.6 3.0 4.4 U.A.E. 2.6 3.2 86.7 91.6 26.0 21.1 2.7 9.2 Total 28.5 43.3 Notes: a Data for 2015 refer to medium-variant projections. Source: UNDP, Human Development Report 2002. Demographic trends in EU member states

Total population (millions)

Urban population (% of total)

Population under age 15 (% of

total)

Population 65 and above (% of

total)

2000 2015a 2000 2015 2000 2015 2000 2015 Austria 8.1 7.8 67.3 71.0 16.6 11.8 15.6 20.0 Belgium 10.2 10.3 97.3 98.0 17.3 13.9 17.0 19.9 Denmark 5.3 5.4 85.1 85.7 18.3 15.1 15.0 19.5 Finland 5.2 5.2 59.0 59.0 18.0 14.2 14.9 20.7 France 59.2 61.9 75.4 78.4 18.7 17.4 16.0 18.6 Germany 82.0 80.7 87.5 89.9 15.5 12.1 16.4 21.0 Greece 10.6 10.5 60.1 65.1 15.1 12.7 17.6 21.2 Ireland 3.8 4.4 59.0 64.0 21.6 21.8 11.3 13.1 Italy 57.5 55.2 66.9 70.6 14.3 12.0 18.1 22.4 Luxembourg 0.4 0.5 91.5 95.0 18.7 17.3 14.4 16.0 Netherlands 15.9 16.4 89.5 91.0 18.3 14.7 13.6 17.8 Portugal 10.0 10.0 64.4 77.5 16.7 15.3 15.6 18.0 Spain 39.9 39.0 77.6 81.1 14.7 12.5 17.0 19.8 Sweden 8.2 8.8 83.3 84.2 18.2 12.4 17.4 22.3 United Kingdom 59.4 60.6 89.5 90.8 19.0 15.1 15.8 18.9 Total 375.7 376.7 Notes: a Data for 2015 refer to medium-variant projections. Source: UNDP, Human Development Report 2002.

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Demographic trends in EU candidate countries Total

population (millions)

Urban population (% of total)

Population under age 15 (% of total)

Population 65 and above (% of total)

2000 2015a 2000 2015 2000 2015 2000 2015 Cyprus 0.8 0.9 69.9 74.6 23.1 19.2 11.5 14.8 Czech Republic

10.3 10.0 74.5 76.4 16.4 12.8 13.8 18.7

Estonia 1.4 1.2 69.4 71.3 17.7 13.7 14.4 16.9 Hungary 10.0 9.3 64.5 69.4 16.9 13.3 14.6 17.4 Latvia 2.4 2.2 60.4 60.4 17.4 12.6 14.8 17.8 Lithuania 3.7 3.5 68.5 71.6 19.5 13.0 13.4 16.6 Malta 0.4 0.4 90.9 93.7 20.2 16.9 12.4 18.1 Poland 38.6 38.0 62.3 66.5 19.2 14.6 12.1 14.8 Slovakia 5.4 5.4 57.4 62.0 19.5 14.9 11.4 13.7 Slovenia 2.0 1.9 49.2 51.6 15.9 12.0 13.9 18.5 Total 75 72.8 Notes: a Data for 2015 refer to medium-variant projections. Source: UNDP, Human Development Report 2002.

120

Annex 6: Supporting tables related to education Selected indicators for education in GCC countries

Adult literacy rate (% age 15

and above)

Youth literacy rate (% age 15-

24)

Net primary enrolment ratio

(%)

Net secondary enrolment ratio

(%)

GCC country

1985 2000 1985 2000 1985-87a 1998b 1985-87a 1998b Bahrain 76.8 87.6 93.2 98.4 97 97 82 80 Kuwait 72.2 82.0 84.2 92/4 82 67 -- 57 Oman 45.5 71.7 74.0 97.9 69 66 -- 58 Qatar 74.4 81.2 86.8 94.8 92 86 66 67 Saudi Arabia 59.4 76.3 80.0 92.7 53 59 29 -- U.A.E. 69.0 76.3 79.7 90.7 89 83 -- 70 Notes: a Data refer to the most recent year available during the period specified; b enrolment rations are based on the new International Standard Classification of Education, adopted in 1997 (UNESCO. 1997). International Standard Classification of Education 1997), and so may not be strictly comparable with those for earlier years. Source: UNDP, Human Development Report 2002. Selected indicators for education in EU member states

Adult literacy rate (% age 15

and above)

Youth literacy rate (% age 15-

24)

Net primary enrolment ratio

(%)

Net secondary enrolment ratio

(%)

Member state

1985 2000 1985 2000 1985-87a 1998b 1985-87a 1998b Austria -- -- -- -- -- 88 -- -- Belgium -- -- -- -- 96 100 85 89 Denmark -- -- -- -- 99 100 85 89 Finland -- -- -- -- -- 99 -- 95 France -- -- -- -- 100 100 82 94 Germany -- -- -- -- -- 87 -- 88 Greece 93.2 97.2 99.4 99.8 98 95 82 86 Ireland -- -- -- -- 90 100 81 77 Italy 97.1 98.4 99.8 99.8 96c 100 68c 88 Lux. -- -- -- -- 85 100 60 -- Neths. -- -- -- -- 95 100 86 93 Portugal 84.4 92.2 98.8 99.8 100 100 -- 88 Spain 95.3 97.6 99.4 99.8 100 100 -- 92 Sweden -- -- -- -- 98 100 -- 100 U.K. -- -- -- -- 98 100 79 94 Notes: a Data refer to the most recent year available during the period specified; b enrolment rations are based on the new International Standard Classification of Education, adopted in 1997 (UNESCO. 1997. International Standard Classification of Education 1997), and so may not be strictly comparable with those for earlier years; c Data refer to 1984. Source: UNDP, Human Development Report 2002.

121

Selected indicators for education in EU candidate countries

Adult literacy rate (% age 15

and above)

Youth literacy rate (% age 15-

24)

Net primary enrolment ratio

(%)

Net secondary enrolment ratio

(%)

EU Candidate country

1985 2000 1985 2000 1985-87a 1998b 1985-87a 1998b Cyprus 92.5 99.8 99.6 99.8 96 81 76 73 Czech Rep. -- -- -- -- -- 90 -- 79 Estonia -- -- -- -- -- 96 -- 77 Hungary 98.8 99.3 99.7 99.8 97 82 66 85 Latvia 99.8 99.8 99.8 99.8 -- 94 -- 83 Lithuania 99.1 99.6 99.8 99.8 -- 94 -- 85 Malta 86.1 92.0 96.7 98.6 95 100 74 81 Poland 99.4 99.7 99.8 99.8 99 96 75 57 Slovakia -- -- -- -- -- -- -- -- Slovenia 88.5 99.6 99.7 99.8 -- 94 -- 89 Notes: a Data refer to the most recent year available during the period specified; b enrolment rations are based on the new International Standard Classification of Education, adopted in 1997 (UNESCO. 1997. International Standard Classification of Education 1997), and so may not be strictly comparable with those for earlier years; c Data refer to 1984. Source: UNDP, Human Development Report 2002.

122

Annex 7: Supporting tables related to health and welfare Selected health-related indicators in GCC countries

Infant mortality rate (per 1,000 live

births)

Under five mortality rate (per 1,000 live

births)

Life expectancy

at birth (years) 2000 1970 2000 1970 2000

Physicians (per

100,000 people)

1990-1999a

Tuberculosis cases (per 100,000 people)b

1999

Health expenditure,

per capita (PPP US$)

1998

Bahrain 73.3 55 13 75 16 100 33 358 Kuwait 76.2 49 9 59 10 189 31c -- Oman 71.0 126 12 200 14 133 10 -- Qatar 69.6 45 12 65 16 126 44 -- Saudi Arabia

71.6 118 24 185 29 166 17 --

U.A.E. 75.0 61 8 83 9 181 33c 1,428 Notes: a Data refer to the most recent year available during the period specified; b Data refer to tuberculosis cases reported to the WHO and may represent only a fraction of the true number in a country because of incomplete coverage by health services, inaccurate diagnosis or deficient recording and reporting; c Data refer to 1998. Selected health-related indicators in EU member states

Infant mortality rate (per 1,000 live

births)

Under five mortality rate (per 1,000 live

births)

Life expectancy

at birth (years) 2000 1970 2000 1970 2000

Physicians (per

100,000 people)

1990-1999a

Tuberculosis cases (per 100,000 people)b

1999

Health expenditure,

per capita (PPP US$)

1998

Austria 78.1 26 5 33 5 302 13 2,121c Belgium 78.4 21 6 29 6 395 11 2,137 c Denmark 76.2 14 4 19 4 290 11 2,785 c Finland 77.6 13 4 16 4 299 11 1,704 c France 78.6 18 4 24 5 303 10 2,288 c Germany 77.7 22 4 26 5 350 12 2,697 c Greece 78.2 38 5 54 6 392 9 965 Ireland 76.6 20 6 26 6 219 12 1,569 Italy 78.5 30 6 33 6 554 8 1,676 c Lux. 77.4 19 5 26 5 272 9 2,731 c Neths. 78.1 13 5 15 5 251 9 2,173 c Portugal 75.7 53 6 62 6 312 47 859 Spain 78.5 27 5 34 5 424 21 1,043 Sweden 79.7 11 3 14 4 311 5 2,145 U.K. 77.7 18 6 23 6 164 11 1,675 c Notes: a Data refer to the most recent year available during the period specified; b Data refer to tuberculosis cases reported to the WHO and may represent only a fraction of the true number in a country because of incomplete coverage by health services, inaccurate diagnosis or deficient recording and reporting; c Data refer to 1999.

123

Selected health-related indicators in the EU candidate countries

Infant mortality rate (per 1,000 live

births)

Under five mortality rate (per 1,000 live

births)

Life expectancy

at birth (years) 2000 1970 2000 1970 2000

Physicians (per

100,000 people)

1990-1999a

Tuberculosis cases (per 100,000 people)b

1999

Health expenditure,

per capita (PPP US$)

1998

Cyprus 78.0 29 6 33 7 255 5 Czech Rep.

74.9 21 5 24 5 303 16 380 c

Estonia 70.6 21 17 26 21 297 52 243 c Hungary 71.3 36 8 39 9 357 35 318 Latvia 70.4 21 17 26 21 282 79 166 Lithuania 72.1 23 17 28 21 395 76 183 Malta 78.0 25 5 32 6 261 6 Poland 73.3 32 9 36 10 236 31 248 c Slovakia 73.3 25 8 29 9 353 20 285 Slovenia 75.5 25 4 29 5 228 21 746 Notes: a Data refer to the most recent year available during the period specified; b Data refer to tuberculosis cases reported to the WHO and may represent only a fraction of the true number in a country because of incomplete coverage by health services, inaccurate diagnosis or deficient recording and reporting; c Data refer to 1999.

124

Annex 8: Supporting tables related to gender equality Gender-related development indicators in GCC countries Combined primary,

secondary and tertiary gross enrolment ration

(%)a

Estimated earned income

(PPP US$ 2000b)

Female Male Female Male

Seats in parliament

held by women (% of total)

Female legislators,

senior officials

and managers

(% of total)

Female professional

and technical

workers (% of total)

Ratio of estimated female to

male earned income

Bahrain 83 77 7,010c 21,059 c --e -- -- -- Kuwait 61 57 6,895d 22,186 d 0 -- -- -- Oman 56 59 3,806 d 21,804 d --f -- -- -- Qatar 75 75 6,864 d 25,277 d -- f -- -- -- Saudi A 60 62 3,466 d 18,252 d -- f -- -- -- U.A.E. 71 65 5,329 d 24,412 d 0 8 25 -- Notes: a Preliminary UNESCO estimates subject to further revision. b Because of the lack of gender-disaggregated income data, female and male earned income are crudely estimated on the basis of data on the ratio of female non-agricultural wage, the female and male shares of the economically active population, the total female and male population and GDP per capita (PPP US$). Unless otherwise specified, estimates are based on data for the latest year available during 1991-2000; c Calculated on the basis of GDP per capita (PPP US$) for 1999; d No wage data available. For purposes of calculating the estimated female and male earned income an estimate of 75% was used for the ratio of the female non-agricultural wage to the male non-agricultural wage; e The first legislature of Bahrain was dissolved by decree of the emir on 26 August 1975; f The country has never had a parliament. Source: UNDP. Human Development Indicators. 2002. Gender-related development indicators in EU member states Combined primary,

secondary and tertiary gross

enrolment ration (%)a

Estimated earned income

(PPP US$ 2000b)

Female Male Female Male

Seats in parliament

held by women (% of total)

Female legislators,

senior officials

and managers

(% of total)

Female professional

and technical

workers (% of total)

Ration of estimated female to

male earned income

Austria 89 90 17,914c 36,057 c 25.1 28 49 0.50 Belgium 111 107 16,784 38,005 24.9 19e 50e 0.44 Denmark 101 94 22,835 32,518 38 23 50 0.70 Finland 108 99 20,657 29,550 36.5 27 56 0.70 France 96 93 18,715 30,022 17.1 33 45 0.61 Germany 93 95 16,904 33,653 31 27 50 0.50 Greece 81 80 10,185c 22,998c 8.7 25 47 0.44 Ireland 93 89 17,078 c 42,815 c 13.7 34 50 0.40 Italy 87 81 14,719 c 33,084 c 9.1 19 44 0.44 Lux. 74d 71d 27,396 73,465 16.7 -- -- -- Netherlands 100 104 17,635 33,822 32.9 27 46 0.52 Portugal 99 94 12,134 22,850 18.7 32 50 0.53 Spain 99 91 11,791 c 27,503 c 26.6 32 45 0.43 Sweden 107 95 19,690 c 28,961 c 42.7 29 49 0.68 U.K. 112 100 17,931 29,264 17.1 33 45 0.61

125

Notes: a Preliminary UNESCO estimates subject to further revision. b Because of the lack of gender-disaggregated income data, female and male earned income are crudely estimated on the basis of data on the ratio of female non-agricultural wage, the female and male shares of the economically active population, the total female and male population and GDP per capita (PPP US$). Unless otherwise specified, estimates are based on data for the latest year available during 1991-2000; c No wage data available. For purposes of calculating the estimated female and male earned income an estimate of 75% was used for the ratio of the female non-agricultural wage to the male non-agricultural wage; d The ratio is an underestimate as many secondary and tertiary students pursue their studies in nearby countries; e Data are based on the International Standard Classification of Occupations (ISCO-68) as defined in ILO (2001). Source: UNDP. Human Development Indicators, 2002. Gender-related development indicators in EU candidate countries Combined primary,

secondary and tertiary gross enrolment ration

(%)a

Estimated earned income

(PPP US$ 2000b)

Female Male Female Male

Seats in parliament

held by women (% of total)

Female legislators,

senior officials

and managers

(% of total)

Female professional

and technical

workers (% of total)

Ration of estimated female to

male earned income

Cyprus 67 70 13,763 27,908 10.7 14 42 0.49 Czech Republic

70 69 10,354 17,833 14.2 26 53 0.58

Estonia 89 84 -- -- 17.8 36 67 0.64 Hungary 83 79 9,243 15,893 Latvia 83 80 5,992 8,276 17 37 67 0.72 Lithuania 83 77 5,789 8,582 10.6 42 70 0.67 Malta 82 79 7,626 27,104 9.2 Poland 86 83 6,936c 11,288 c 20.7 33 61 0.61 Slovakia 77 74 8,903 c 13,715 c 14 31 62 0.65 Slovenia 85 80 13,327 c 21,642 c 12.2 31 51 0.62 Notes: a Preliminary UNESCO estimates subject to further revision. b Because of the lack of gender-disaggregated income data, female and male earned income are crudely estimated on the basis of data on the ratio of female non-agricultural wage, the female and male shares of the economically active population, the total female and male population and GDP per capita (PPP US$). Unless otherwise specified, estimates are based on data for the latest year available during 1991-2000. c Selected indicators related to gender and economic activity in GCC countries Female economic activity

rate (age 15 and above) 2000

Employment by economic activity 1995-2001

Contributing family workers

(1995-2000) Agriculture Industry Services Rate

(%) Index

(1990=100) As %

of male rate

Female Male Female Male Female Male Female (% of total)

Male (% of total)

Bahrain 33.5 118 39 -- -- -- -- -- -- -- -- Kuwait 36.6 97 48 -- -- -- -- -- -- -- -- Oman 19.2 151 25 -- -- -- -- -- -- -- -- Qatar 41.0 124 45 -- -- -- -- -- -- -- -- Saudi Arabia

21.2 142 27 -- -- -- -- -- -- -- --

U.A.E. 31.7 108 37 -- -- -- -- -- -- -- -- Source: UNDP. Human Development Indicators. 2002.

126

Selected indicators related to gender and economic activity in EU member states Female economic activity

rate (age 15 and above) 2000

Employment by economic activity 1995-2001

Contributing family workers

(1995-2000) Agriculture Industry Services Rate

(%) Index

(1990=100) As

% of male rate

Female Male Female Male Female Male Female (% of total)

Male (% of total)

Austria 43.9 102 65 7 6 14 43 79 52 67 33 Belgium 39.7 105 66 2 3 13 37 86 60 85 15 Denmark 61.7 100 84 2 5 15 37 83 58 -- -- Finland 57 99 86 4 8 14 40 82 52 47 53 France 48.5 106 76 1 2 13 35 86 63 -- -- Germany 47.9 100 69 2 3 19 46 79 50 75 25 Greece 38 107 58 20 16 12 29 67 54 69 31 Ireland 37.1 115 52 2 12 15 38 82 50 56 44 Italy 38.3 106 58 4 6 21 39 74 55 55 45 Lux. 37.9 104 57 -- -- -- -- -- -- -- -- Netherlands 45.4 105 66 2 4 9 31 84 63 78 22 Portugal 51.2 104 71 14 11 24 44 62 44 66 34 Spain 37.5 111 56 5 8 14 41 81 51 64 36 Sweden 62.5 101 89 1 4 12 38 87 59 64 36 U.K. 52.8 105 74 1 2 12 36 87 61 65 35 Source: UNDP. Human Development Indicators. 2002. Selected indicators related to gender and economic activity in EU candidate countries Female economic activity

rate (age 15 and above) 2000

Employment by economic activity 1995-2001

Contributing family workers

(1995-2000) Agriculture Industry Services Rate

(%) Index

(1990=100) As %

of male rate

Female Male Female Male Female Male Female (% of total)

Male (% of total)

Cyprus 49.0 102 62 10 11 18 30 71 58 87 13 Czech Republic

61.2 100 83 4 6 28 49 69 48 78 22

Estonia 61 96 82 7 11 22 40 70 49 59 41 Hungary 48.5 102 71 4 9 25 42 71 48 67 33 Latvia 60 95 80 14 17 18 35 69 49 52 48 Lithuania 57.8 97 80 16 24 40 33 63 43 61 39 Malta 25.8 111 37 Poland 57.1 100 80 19 19 21 41 60 39 60 40 Slovakia 62.7 99 84 5 10 26 49 69 42 70 33 Slovenia 54.6 98 80 11 11 28 46 61 42 58 40 Source: UNDP. Human Development Indicators. 2002.

127

Annex 9: Supporting tables for trade context EU Exports to GCC by major sector, 2001 Sector Value

(‘000 €) % of EU exports to

GCC Machinery and Mechanical Appliances 11,893,201.69 35.5 Vehicles, Aircraft, Vessels 5,438,126.75 16.2 Products of the Chemical or 3,079,060.50 9.1 Base Metals and Articles of 1,962,579.49 5.8 Optical, Photographic, Cinematic 1,363,258.07 4.1 Food and Beverages 1,341,912.45 4.0 Natural or Cultured Pearls 1,269,362.97 3.8 Textiles and Textile Articles 1,158,590.38 3.5 Live Animals; Animal Products 1,084,048.40 3.2 Plastics and Articles thereof 981,937.41 2.9 Miscellaneous Manufactured Articles 861,661.12 2.6 Articles of Stone, Plaster, Cement 972,221.30 2.9 Books, Newspapers, Pictures 625,245.68 1.9 Vegetable Products 401,529.80 1.2 Mineral Fuels, Mineral Oils and 262,076.62 .78 Footwear, Gaiters and the Like 210,325.06 .63 Arms and Ammunition; Parts 187,087.80 .56 Wood and Articles of Wood 183,631.49 .54 Works of Art, Collectors’ Pieces 157,247.09 .46 Raw Hides and Skins, Leather, 96,949.45 .28 Animal or Vegetable Fats and Oils 37,669.36 .11 Total 33,567,722.88 100 Source: Eurostat. EU exports to GCC by trading partner, 2001

Value (‘000 €)

% of total EU exports to GCC

Germany 7,365,230.64 21.9 United Kingdom 6,700,781.02 19.9 Italy 4,669,577.70 13.9 France 5,875,792.00 17.5 Netherlands 2,105,061.84 6.3 Belgium 1,695,956.00 5.0 Spain 1,291,021.00 3.8 Sweden 968,455.60 2.9 Finland 733,470.00 2.2 Ireland 726,399.60 2.1 Austria 579,002.00 1.7 Denmark 494,785.10 1.5 Greece 200,151.00 0.6 Portugal 99,829.30 0.3 Luxembourg 35,202.47 0.1 Total 33,540,713.97 Source: Eurostat.

128

EU Imports from GCC by major sector, 2001 Sector Value

(‘000 €) % of total EU imports

from GCC Mineral Fuels, Mineral Oils 14,291,855,46 72 Machinery and Mechanical Appliances 1,225,416.85 6.2 Vehicles, Aircraft, Vessels 952,714.54 4.8 Products of the Chemical or 745,191.51 3.8 Natural or Cultured Pearls, 502,860.63 2.6 Plastics and Articles thereof 488,371.61 2.5 Base Metals and Articles of 404,799.14 2.0 Textiles and Textile Articles 375,395.52 1.9 Optical, Photographic, Cinematic 305,446.17 1.5 Live Animals; Animal Products 154,394.78 0.8 Works of Art, Collectors’ Pieces 86,501.98 0.4 Raw Hides and Skins, Leather 64,958.40 0.3 Articles of Stone, Plaster, Cement 50,360.87 0.2 Miscellaneous Manufactured Articles 28,623.05 0.15 Pulp of Wood or of other Fibers 28,469.29 0.15 Arms and Ammunition; Parts 16,275.56 0.08 Food and Beverages 9,492.30 0.04 Vegetable Products 5,618.38 0.03 Animal or Vegetable Fats and Oils 3,399.31 0.02 Footwear, Gaiters and the Like 3,222.46 0.02 Wood and Articles of Wood 983.09 0.005 Total 19,747,350.90 Source: Eurostat. EU imports from GCC by trading partner, 2001

Value (‘000 €)

% of total EU imports from the GCC

France 4,233,514.47 21 Netherlands 3,692,676.59 19 United Kingdom 3,389,607.11 17 Italy 2,532,923.81 13 Spain 1,678,027.02 8.5 Greece 1,205,491.30 6.1 Germany 1,125,568.98 5.7 Belgium 804,294.59 4.0 Portugal 462,063.19 2.3 Sweden 228,558.27 1.2 Denmark 162,131.82 0.8 Austria 132,121.70 0.7 Ireland 39,858.54 0.2 Finland 36,433.54 0.18 Luxembourg 3,895.38 0.02 Total 19,727,166.31 Source: Eurostat.

129

EU Imports from GCC by major sector, 1995 Sector Value

(‘000 €) % of total EU imports

from GCC Mineral Fuels, Mineral Oils 8,753785.10 76.6 Machinery and Mechanical Appliances 657,282.27 5.8 Vehicles, Aircraft, Vessels 483,974.55 4.2 Products of Chemical 281,020.81 2.5 Optical, Photographic, Cinematic 254,772.32 2.2 Plastics and Articles thereof 232,896.40 2.03 Textiles and Textile Articles 208,440.36 1.82 Natural or Cultured Pearls, 150,754.37 1.32 Base Metals and Articles of 146,683.12 1.28 Works of Art, Collectors’ Pieces 67,075.22 0.57 Total for countries where data is unavailable 57,817.42 0.50 Live Animals; Animal Products 41,374.08 0.36 Arms and Ammunition; Parts 31,986.62 0.28 Raw Hides and Skins, Leather 18,465.77 0.16 Vegetable Products 12,759.73 0.11 Miscellaneous Manufactured Articles 9,690.54 0.08 Books, Newspapers, Pictures 8,433.33 0.07 Food and Beverages 7,284.93 0.06 Articles of Stone, Plaster, Cement 2,510.08 0.02 Animal or Vegetable Fats and Oils 957.81 0.008 Footwear, Gaiters and the Like 453.32 0.003 Wood and Articles of Wood 423.35 0.003 Total 11,428,841.50 Source: Eurostat. EU imports from GCC by trading partner, 1995

Value (‘000 €)

% of total EU imports from the GCC

Netherlands 2,988,076.00 26.15 France 2,534,550.00 22.15 United Kingdom 1,510,718.00 13.22 Italy 1,423,601.00 12.46 Spain 1,018,070.00 8.91 Germany 868,558.40 7.60 Portugal 278,185.40 2.43 Greece 207,402.90 1.81 Sweden 201,127.70 1.76 Austria 140,721.20 1.23 Denmark 7,785.53 0.07 Finland 4,581.22 0.04 Ireland 3,856.04 0.03 Belgium 0 0 Luxembourg 0 0 Total 11,428,841.50 Source: Eurostat.

130

EU exports to the GCC by major sector, 1995 Sector Value

(‘000 €) % of total EU exports

to GCC Mineral Fuels, Mineral Oils 2,740,962.20 23.98 Vegetable Products 1,635,362.70 14.31 Base Metals and Articles of 1,461,020.50 12.78 Articles of Stone, Plaster, Cement 1,259,826.30 11.02 Food and Beverages 828,177.60 7.24 Products of Chemical 690,275.70 6.04 Live Animals; Animal Products 649,745.60 5.68 Machinery and Mechanical Appliances 507,031.30 4.43 Books, Newspapers, Pictures 418,687.60 3.66 Plastics and Articles thereof 318,079.10 2.78 Wood and Articles of Wood 303,334.50 2.65 Vehicles, Aircraft, Vessels 187,712.50 1.64 Miscellaneous Manufactured Articles 135,943.90 1.19 Total for countries where data is unavailable 122,363.40 1.07 Textiles and Textile Articles 93,206.60 0.82 Animal or Vegetable Fats and Oils 43,442.00 0.38 Footwear, Gaiters and the Like 17,696.80 0.16 Optical, Photographic, Cinematic 9,159.60 0.08 Works of Art, Collectors’ Pieces 3,939.60 0.03 Arms and Ammunition; Parts 2,031.90 0.02 Raw Hides and Skins, Leather 2,034.50 0.02 Natural or Cultured Pearls, 1,552.00 0.01 Total 11,431,858.90 Source: Eurostat. EU exports to the GCC by trading partner, 1995

Value (‘000 €)

% of total EU exports to GCC

Germany 2,438,431.10 21.3 Italy 1,761,327.00 15.4 Sweden 1,672,752.00 14.6 France 1,166,557.00 10.2 United Kingdom 1,016,311.80 8.9 Spain 975,545.00 8.5 Netherlands 709,338.70 6.2 Greece 374,266.00 3.3 Finland 205,742.00 1.8 Denmark 169,280.40 1.5 Austria 160,753.00 1.4 Ireland 71,946.70 0.63 Portugal 67,342.50 0.59 Belgium 0 0 Luxembourg 0 0 Total Source: Eurostat.

131

Annex 10: Supporting tables for preliminary agricultural screening Indices of agricultural and food productiona in GCC countries Total agricultural

1996-1998 Per capita agricultural 1996-1998

Total food 1996-1998

Per capita food 1996-1998

Bahrain 106 89 138 89 Kuwait 163 200 163 200 Oman 112 83 111 83 Qatar 156 134 156 134 Saudi Arabia 85 69 84 69 U.A.E. 206 172 207 173 Notes: a The index of agricultural production is a ratio of country’s net agricultural output in 1996-98 relative to the base period 1989-91. This ration is then multiplied by 100 to obtain an index number. Source: WRI. Earth Trends 2001. Agricultural land and inputs in GCC countries Cropland

1997 (000 ha)

Cropland per 1,000

people 1997 (ha)

Irrigated land, 1997

(% to cropland)

Average annual

fertiliser use 1995-97, (kg/ha cropland)

Pesticide Use, 1996

(kg/ha cropland)

Number of Tractors

1997

Agricultural workers as % of total

labour force 1990

Bahrain 5 9 100 X X 12 2 Kuwait 7 4 71 -855 X 100 1 Oman 63 27 98 X 24.1 150 45 Qatar 17 30 76 138 X 60 3 Saudi A. 3,830 197 42 98 X 9,500 19 U.A.E. 81 35 89 421 X 272 8 Source: WRI. Earth Trends 2001. Agricultural land and inputs in EU member states Cropland

1997 (000 ha)

Cropland per 1,000

people 1997 (ha)

Irrigated land, 1997

(% to cropland)

Average annual

fertiliser use 1995-97, (kg/ha cropland)

Pesticide Use, 1996

(kg/ha cropland)

Number of Tractors

1997

Agricultural workers as % of total

labour force 1990

Austria 1,479 183 0 168 2.7 352,375 8 Belgium 785 78 4 883 X 106,667 3 Denmark 2,373 451 20 167 2.2 141,293 6 Finland 2,129 414 3 147 0.4 194,750 8 France 19,468 333 9 262 X 1,312,000 5 Germany 12,060 147 4 250 2.1 1,215,700 4 Greece 3,915 370 35 133 X 236,100 23 Ireland 1,346 368 X 533 X 167,500 14 Italy 10,927 190 25 227 19.3 1,480,000 9 Lux. X X X X X X 4

132

Neths. 935 60 60 821 11.8 173,000 5 Portugal 2,900 294 22 84 2.6 150,000 18 Spain 19,164 484 19 123 X 841,932 12 Sweden 2,799 316 4 113 0.5 165,000 X U.K. 6,425 110 2 343 4.7 500,000 2 Source: WRI. Earth Trends 2001. Agricultural land and inputs in EU candidate countries Cropland

1997 (000 ha)

Cropland per 1,000

people 1997 (ha)

Irrigated land, 1997

(% to cropland)

Average annual

fertiliser use 1995-97, (kg/ha cropland)

Pesticide Use, 1996

(kg/ha cropland)

Number of Tractors

1997

Agricultural workers as % of total

labour force 1990

Cyprus 145 190 28 171 20.3 16,900 14 Czech Rep.

3,331 323 1 107 1.2 86,000 11

Estonia 1,143 790 0 29 0.1 50,607 14 Hungary 5,047 497 4 83 2.9 92,250 15 Latvia 1,830 744 1 30 0.2 56,938 16 Lithuania 3,006 811 0 41 0.3 77,871 18 Malta 11 29 18 X X 496 3 Poland 14,424 373 1 122 0.5 1,310,500 27 Slovakia 1,605 299 12 77 4.1 25,726 12 Slovenia 285 143 1 X 6.4 104,751 6 Source: WRI. Earth Trends 2001. Food security in GCC countries Average per

capita cereal production 1996-98 (m tons/1,000

people)

Variation in domestic

cereal production,

1989-98 (average % variation

from mean)

Food Aid as % of total imports 1995-97

% of children

underweight 1990-97

Average daily per

capita calorie

supply 1997 (kilocalories)

Average daily per

capita calories form

animal products,

1997 (kilocalories)

Bahrain X X X 9 X X Kuwait 2 35 0 6 3,096 728 Oman 2 5 0 23 X X Qatar 8 X X 6 X X Saudi A. 116 29 0 X 2,783 415 U.A.E. 0 57 0 14 3,390 827 Source: WRI. Earth Trends 2001.

133

Food security in EU member states Average per

capita cereal production 1996-98 (m tons/1,000

people)

Variation in domestic

cereal production,

1989-98 (average % variation

from mean)

Food Aid as % of total imports 1995-97

% of children

underweight 1990-97

Average daily per

capita calorie

supply 1997 (kilocalories)

Average daily per

capita calories form

animal products,

1997 (kilocalories)

Austria 586 7 0 X 3,536 1,256 Belgium 247 X 0 X 3,619 1,151 Denmark 1,779 8 0 X 3,407 1,259 Finland 734 9 0 X 3,100 1,195 France 1,104 7 0 X 3,518 1,334 Germany 537 8 0 X 3,382 1,050 Greece 437 9 0 X 3,649 798 Ireland 543 7 0 X 3,565 1,126 Italy 357 5 0 X 3,507 902 Lux. X X X X X X Neths. 95 6 0 X 3,284 1,135 Portugal 150 10 o X 3,667 995 Spain 537 15 0 X 3.310 860 Sweden 666 11 0 X 3,194 1,075 U.K. 403 5 0 X 3,276 1,024 Source: WRI. Earth Trends 2001. Food security in EU candidate countries Average per

capita cereal production 1996-98 (m tons/1,000

people)

Variation in domestic

cereal production,

1989-98 (average % variation

from mean)

Food Aid as % of total imports 1995-97

% of children

underweight 1990-97

Average daily per

capita calorie

supply 1997 (kilocalories)

Average daily per

capita calories form

animal products,

1997 (kilocalories)

Cyprus 19.1 X X X 3,429 1,054 Czech Rep. 663 29 0 1 3,244 816 Estonia 435 11 0 X 2,849 797 Hungary 1,213 17 0 2 3,313 1,046 Latvia 402 12 0 X 2,864 705 Lithuania 758 14 0 X 3,261 794 Malta 17 X X X 3,398 906 Poland 670 8 0 X 3,366 884 Slovakia 654 29 0 X 2,984 786 Slovenia 272 11 0 X 3,101 841 Source: WRI. Earth Trends 2001.

134

Annex 11: Supporting tables for preliminary fisheries screening Fish catch, aquaculture and consumption in GCC countries Average Annual Catch

1995-1997 (m tons) Average Aquaculture Production

1995-1997 (m tons) Per

capita food

supply from fish, 1997

Fish Protein (% of total

protein) 1997

Marine fish

Mulluscs and

crustaceans

Marine fish

Diadromous fish

Molluscs and

crustaceans

Aquatic plants

Bahrain 6,861 3,932 X X X X 14 3.8 Kuwait 6,178 2,054 111 X X X 11 2.6 Oman 120,139 5,435 X X X X 24 9.8 Qatar 4,593 88 1 X X X 10 3.3 Saudi A 39,139 8,459 0 X X X 7 2.2 U.A.E. 109,002 79 0 X X X 29 7.2 Source: WRI. Earth Trends, 2001. Fish catch, aquaculture and consumption in EU member states Average Annual Catch

1995-1997 (m tons) Average Aquaculture Production

1995-1997 (m tons) Per

capita food

supply from fish, 1997

Fish Protein (% of total

protein) 1997

Marine fish

Mulluscs and

crustaceans

Marine fish

Diadromous fish

Molluscs and

crustaceans

Aquatic plants

Austria X X X 2,201 X X 11 2.7 Belgium 29,407 X X 579 X X X X Denmark 1,722,969 112,514 X 41,687 X X 24 6.2 Finland 115,077 X X 17,100 X X 33 9.9 France 491,479 75,306 3,844 53,817 216,730 75 27 5.7 Germany 203,038 17,722 0 25,034 X X 13 4.1 Greece 116,761 32,361 26,722 2,538 6,623 X 26 6.5 Ireland 306,303 27,012 X 15,234 X X 15 3.9 Italy 234,802 124,144 10,883 53,200 143,019 5,000 22 5.8 Lux. X X X X X X X X Neths. 398,188 32,523 21 2,429 X X 15 5.0 Portugal 224,047 23,592 1,088 1,182 4,444 X 58 13.1 Spain 977,897 135,723 6,345 26,357 202,240 X 41 11.3 Sweden 371,647 3,673 X 5,917 1,433 X 26 8.0 U.K. 751,185 134,446 X 100,733 X X 21 5.7 Source: WRI. Earth Trends, 2001.

135

Fish catch, aquaculture and consumption in EU candidate countries Average Annual Catch

1995-1997 (m tons) Average Aquaculture Production

1995-1997 (m tons) Per

capita food

supply from fish, 1997

Fish Protein (% of total

protein) 1997

Marine fish

Mulluscs and

crustaceans

Marine fish

Diadromous fish

Molluscs and

crustaceans

Aquatic plants

Cyprus 2,122 352 620 103 X X 20 5.2 Czech Rep.

X X X 778 X X 9 3.4

Estonia 113,385 4,338 X 241 X X 19 6.9 Hungary X X X 6 X X 4 1.4 Latvia 128,892 2,867 X 3 X X 11 4.5 Lithuania 36,428 2,583 X 0 X X 15 4.6 Malta 825 23 1,418 1 X X 30 6.8 Poland 333,478 16,752 X 6,090 X X 11 5.5 Slovakia X X X 715 X X 5 1.6 Slovenia 1,965 32 71 513 X X 7 1.9 Source: WRI. Earth Trends, 2001. Trade in fish and fishery products and fishing effort in GCC countries Trade in Fish and Fishery Products, 1996-1998

Net average annual exports (million US$)

Fishing Effort (marine and freshwater)

Fish and Products

Molluscs and crustaceans

Meals and solubles

People fishing for livelihood

1996

Docked fishery vessels 1995

Bahrain (1) 8 X 4,815 165 Kuwait (9) (1) X 2,994 917 Oman 59 5 X 25,575 390 Qatar (2) (0) X X X Saudi Arabia (81) (5) (4) 22,213 23 U.A.E. 3 11 (1) 13,411 4050 a Includes fishing vessels such as trawlers, long liners, etc. and non-fishing vessels such as motherships, fish carriers, etc. Source: WRI. Earth Trends 2001.

136

Trade in fish and fishery products and fishing effort in EU member states Trade in Fish and Fishery Products, 1996-1998

Net average annual exports (million US$)

Fishing Effort (marine and freshwater)

Fish and Products

Molluscs and crustaceans

Meals and solubles

People fishing for livelihood

1996

Docked fishery vesselsa 1995

Austria (150) (27) (9) 2,300 X Belgium (318) (2131) (28) 600 156 Denmark 803 143 155 4,792 4,285 Finland (71) (17) (21) 6,373 3,838 France (1,307) (826) (45) 26,522 6,586 Germany (1,163) (286) (17) 3,894 2,406 Greece 5 (57) (28) 22,192 18.375 Ireland 214 72 (3) 7,500 1,353 Italy (1,413) (808) (48) 40,236 16,000 Lux. X X X X X Neths. 208 110 (34) 3,810 1,008 Portugal (438) (111) (7) 28,458 9,265 Spain (736) (990) (39) 83,731 15,243 Sweden (103) (133) 1 X 1,240 U.K. (500) (134) (154) 19,044 9,562 a Includes fishing vessels such as trawlers, long liners, etc. and non-fishing vessels such as motherships, fish carriers, etc. Source: WRI. Earth Trends 2001. Trade in fish and fishery products and fishing effort in EU candidate countries Trade in Fish and Fishery Products, 1996-1998

Net average annual exports (million US$)

Fishing Effort (marine and freshwater)

Fish and Products

Molluscs and crustaceans

Meals and solubles

People fishing for livelihood

1996

Docked fishery vesselsa 1995

Cyprus (16) (10) (5) 1,376 16 Czech Rep. (49) (2) (10) 2,065 X Estonia 57 1 0 10,468 186 Hungary (16) (1) (25) 4,200 X Latvia 54 (1) 0 X 351 Lithuania (4) (1) (3) X 131 Malta (8) (3) X 1,840 990 Poland (40) 8 16 9,178 445 Slovakia (35) (0) (6) X X Slovenia (13) (8) (2) 175 11 a Includes fishing vessels such as trawlers, long liners, etc. and non-fishing vessels such as motherships, fish carriers, etc. Source: WRI. Earth Trends 2001.