Environmental impact analysis

• Author: Development Solutions Europe Limited, Directorate-General for Trade (European Commission)
• Pages: 111-126

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4 Environmental impact analysis

This section will discuss the environmental i mpact of the GSP on the beneficiary

countries. It will address the following evaluation questions:

(i) What has been the impact of the present scheme on developing countries and

LDCs?

(ii) What are the factors influencing the achievements observed?

(i) What unintended consequences, if any, can be linked to the design,

implementation, or use of the current GSP?

It will first analyse the literature on the impact of the previous GSP Regulation on the

environment (Section 4.1). Then it will look into more detail at the environmental

impact (Section 4.2), including the i mpact of the GSP+ arrangement (Section 4.3). A

following section (Section 4.4) provides data and country rankings on the

environmental status for the beneficiary countries under investigation using the ND-Gain

Index. A concluding section (Section 4.5) will draw together i nformation from these

sections as well as further information from the case studies in a set of conclusions on

the environmental impact of the GSP.

4.1. Lessons learnt from literature

It has been challenging to comprehensively assess the environmental impact of the GSP

due to a variety of reasons. Firstly, tangible indicators to measure environmental

impacts are lacking or laggi ng behind, and secondly, it is difficult to isolate the GSP from

other causati ve factors at play within the wider domestic, regional and global contexts.

Hence, considering the data available, the environmental impact assessment can only

provide insight into the type and direction (positive or n egative) of environmental

impacts likely associated with the GSP. It is not instead possible to systematically

quantify the magnitude of these impacts that can be ascribed to the GSP.

The majority of the literature makes use of a simple approach to assess the

environmental impact of the scheme – the environmental impact of the GSP in a

beneficiary country is equated with the country’s ratification and effective

implementation of the respective environmental conventions covered by the GSP+ and

whether it is abiding to the reporting requirements. 193 While the shortcomings of this

approach are evident, it has often been used as an appropriate in dicator for the

environmental impact of the scheme due to data paucity.

Whether GSP conditionality has a positive environmental impact in the beneficiary

countries is, according to the li terature, difficult to m easure.194 In some specific case

studies, it was found that the ratification of conventions covering environmental

protection and climate change was wi der, as compared with labour ri ghts conventions.195

According to the first biennial Commission Report on the GSP+196, one finds that despite

the fact that th e beneficiary countries i ncluded in the GSP+ have ratified the respective

environmental conventions, the vast majority of the countries have compliance issues

193CARIS.(2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences; European

Commission.(2016). (SWD (2016) 8 final).

194CARIS.(2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences, p. 170.

195CARIS.(2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences, p. 187.

196European Commission. (2016). Joint Staff Working Document on the EU Special Incentive Arrangement for

Sustainable Development and Good Governance ('GSP+') covering the period 2014 – 2015. Available at:

https://eeas.europa.eu/sites/eeas/files/european_commission._2016._report_on_the_generalised_scheme_of_

preferences_during_the_period_2014-2015.pdf

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with the conventions. Lack of compliance is particularly an issue for the Stockholm

Convention on Persistent Organic Pollutants, the Cartagena Proto col on Biosafety and the

CITES.197

It shoul d be noted that there is an overall lag in data on environmental indicators and

the costs associated with the monitoring and collecting of such data are often high for

developing countries facing severe budget constrai nts. As a result, there is onl y outdated

or incomplete information available on the environmental conditions and associated

impacts of the GSP on the environment in the beneficiary countries in recent years.

Additionally, it can take considerable time before the effect of efforts and changes in

trade become visible. Considering that the reformed scheme entered into force i n 2014,

these factors hamper a comprehensive analysis of the environmental impact of the

scheme.

4.2. Environmental impact of the GSP

Product effects

A series of environmental effects, both positive and negative, are related directly to

trade in products. These direct impacts can be studied across the following three

dimensions:

 Scale – Growth in trade for a product (as for a series of products) will lead to an

increase in the environmental i mpacts associated with its production, assuming other

technology, regulation and other dimensions do not change.

 Composition – Trade liberalisation allows countri es to specialise in sectors where they

enjoy competiti ve and comparative advantages, and thus can change the

composition of exports. This can lead to changes in related environmental impacts,

for example if a country’s production shifts from raw materials to manufactured

products.

 Technology - Trade l iberalisation and foreign investment can have positive

environmental impacts by promoting use of m ore efficient, less polluting

technologies: these may be put in place, for example, in response to demands by

importers in other coun tries (who may in turn be responding to dome stic public and

stakeholder concerns).

There may also be distributional changes in terms of environmental effects: for example,

new manufacturing may increase impacts on urban dw ellers, while new extractive

activities such as mining and fishing for export can affect populations and economic

sectors located nearby.

Structural and regulatory effects

Trade can also have an indirect but broad-based role as an important facilitator for

environmental protection and improvement. Increased trade leads to economic growth,

increased incomes, and facilitates a more efficient resource allocation. As such, more

resources can be al located t owards environmental protection and improvement. This is

particularly true for developing countries and countries in transition, which often lack the

financial resources to implement effective po licies on environmental protection and

climate change.198

197European Commission.(2016). (SWD (2016) 8 final).

198Potier, M. and Tébar Less. (2008). Trade and Environment at the OECD: Key Issues since 1991. Available at:

http://dx.doi.org/10.1787/235751371440; Yale University (2016). Environmental Performance Index.Available

at: http://epi.yale.edu/; WTO. An introduction to trade and environment in the WTO. Available at:

https://www.wto.org/english/tratop_e/envir_e/envt_intro_e.htm