Sustainability Impact Assessment in support of the EU-Australia Free Trade Agreement Negotiations

The SIA consists of two equally important and complementary components:

• a robust analysis of the potential economic, social, human rights and environmental impact (both negative and positive) that the trade agreement under negotiation could have in Australia, the EU and in other relevant countries (notably the EU's outermost regions and least developed countries) - this section provides more details on these analysis; and
• a continuous and wide-ranging consultation process to ensure a high degree of transparency and the engagement of all relevant stakeholders in the conduct of the SIA.

The economic impact analysis provided the starting point for the SIA, as many of the other effects are consequences of the agreement's economic effects. The economic impact analysis was not restricted to changes in Australia's and the EU's exports and imports but covered a vast range of economic factors.

Among the issues that the economic analysis comprised are:

• The identification, description and analysis of the tariffs and non-tariff obstacles affecting trade between the EU and Australia;
• The impact of removing both tariffs and non-tariff barriers affecting trade in goods and services;
• The impact on behind-the-border issues, government procurement and investment liberalization;
• The impact on SMEs as well as on participation in global value chains;
• The impact of the FTA on third regions, in particular the EU Outermost Regions and least developed countries (LDCs);
• Implications which the agreement might have for the promotion of good governance and fight against corruption; and
• The links between the EU-Australia trade agreement and both parties' conclusion of trade agreements with other countries.

The starting point for the economic analysis was the CGE modelling undertaken by the Commission, complemented by additional quantitative and qualitative analysis.

The social analysis responds to the question of how a reduction of tariff and non-tariff barriers due to the Trade Agreement, and the resulting changes in trade and investment flows between the EU and Australia may affect the situation on the labour market, job quality, welfare, rights of consumers, and public policies and services, such as social protection, education, and health-care in both Australia and the EU.

In particular, the following types of impact are addressed:

• impact on employment levels across sectors of economic activity, gender, and skills groups, i.e. low-skilled and highly skilled workers;
• impact on women in their diverse roles as workers, entrepreneurs, traders, and consumers;
• impact on consumer welfare including inequality and vulnerable groups;
• impact on job quality, including wages, types and duration of contracts (including differences between direct employment and sub-contracting), working hours, health and safety at work (e.g. the number of fatal and non-fatal injuries at work), as well as number of labour inspectors and inspections carried out at work places;
• impact on consumers, including the availability and affordability of goods and services (including through changes in consumer price index), as well as their safety and quality;
• impact on rights at work as enshrined in the eight ILO fundamental conventions, i.e. non-discrimination at work and the situation of vulnerable workers (e.g. disabled persons and migrant workers), respect for freedom of association, and the right to collective bargaining, and social dialogue, including the presence of the social partners (trade unions and employers’ associations) across sectors and types of enterprises;
• mpact on public social policies, such as education and health-care, social protection as well as availability, accessibility, and quality of the provided services;
• impact on uptake of Corporate Social Responsibility practices, including those implementing international instruments in this area, as well as respect for decent work in global supply chains.

The human rights analysis responds to the question of how the Free Trade Agreement may affect the human rights situation in both Australia and the EU. The assessment was carried out by taking into account the EC human rights impact assessment guidelines as well as using the Better Regulation Toolbox.

It is based on the international human rights normative framework, including core UN human rights treaties and conventions, the Charter of Fundamental Rights of the European Union, the European Convention on Human Rights and other relevant regional human rights conventions, core ILO Conventions, and, where relevant, customary international law.

In particular, the human rights analysis:

• identified the specific human rights most likely to be affected by measures included in the FTA under negotiation;
• analysed the extent to which measures foreseen in the free trade agreement may enhance or impair the enjoyment of the relevant rights and/or may strengthen or weaken the ability of the EU or Australia to fulfil or progressively realise their human rights obligations;
• identified individuals or specific groups of people or those living in a particular region that are likely to be specifically affected by those changes.

Particular attention was paid to women's rights and the effect that the trade agreement could have on gender equality, including possible differential effects on men and women. Gender aspects played an important role across all dimensions of the study, including the consultations.

In the environmental impact assessment, we assess the most significant potential environmental impacts resulting from the FTA in both the EU and Australia. Although the analytical work carried out in the ex-ante study has shown that, overall, environmental impacts are likely to be limited both in Australia and the EU, selected environmental effects or effects in certain sectors still needed to be studied.

We identified six main environmental impact areas: climate change, air quality, land use & soil, biodiversity, water and waste. Even though the impact assessment on each environmental impact area relies on both qualitative and quantitative research methods (where applicable), the analyses for the first two impact areas (climate change and air quality) heavily employ quantitative methods. The analyses on the remaining impact areas mostly rely on qualitative methods.

The impact of the free trade agreement may vary considerably across different actors, sectors, and issues. Therefore the general analysis of economic, social, human rights and environmental impacts was complemented by assessments of selected economic sectors and thematic case studies.

The selection of sectors was based on four main criteria:

• Criterion 1: Importance of a sector for the economy. This is determined by looking at the relative importance of a sector in terms of its share in GDP, employment and value added, as well as its role in innovative drive, and the enabling nature of a sector for other sectors;
• Criterion 2: Magnitude of the agreement’s expected economic impact on the sector, based on the results of the Commission's CGE model simulations;
  
• Criterion 3: Magnitude of the agreement’s expected social, human rights and/or environmental impact based on a quick screening of literature and engagement with stakeholders;
• Criterion 4: Importance of specific issues raised by stakeholders and issues of particular relevance/importance/sensitivity from a negotiating perspective. The goal of the SIA is to generate analytical and stakeholder-driven findings that are relevant for the ongoing negotiations, as well as address those issues which are considered of high importance by stakeholders and civil society in general.

For thematic case studies, in principle the same criteria were applied, but the selection by nature was less structured than the selection of sectors for the sectoral analysis.