Methodological tools for Ex-ante assessment

The approach to the ex-ante assessment can be divided into two broad steps:

  1. We will conduct an ex-ante simulation of potential new policies based on inputs received by the EC. These new policies will be assessed along the sustainability dimensions (economic, social, and environmental terms);
  2. Based on the information and results provided by the ex-post and ex-ante evaluation we will provide a concise summary within a framework that combines a sectoral synopsis outline with a qualitative cost-benefit analysis (CBA) of removing remaining barriers

Following this there are four basic blocks:

  • Economic analysis;
  • Social analysis;
  • Environmental analysis;
  • Summarising framwork and qualitative CBA.

Economic analysis

  • Using the trend and share analysis of the ex-post evaluation we will report GTAP projections employed by the CGE model;
  • Estimates from the gravity model will provide sectoral NTB benchmarks;
  • The CGE model will calculate macroeconomic and sectoral changes differentiated by goods/service NTBs, as well as spill-over effects.

Social analysis

  • We will present relevant CGE output indicators, as well as make use of them in combination with a household survey in order to make concrete statements about how the envisaged liberalisation scenarios impact poverty and inequality.
  • Qualitative work will identify and describe FTA impacts related to e.g. ILO Decent Work indicators, human rights issues, and the informal economy.

Environmental analysis

  • We will use an extension of the CGE model in order to calculate the impact of a modernised FTA on GHG and air pollutant emissions. This also includes a decomposition into composition and scale effects;
  • Linking CGE and baseline indicators will allow us to draw coherent qualitative conclusions.
  • Furthermore, regulatory aspects with regard to (planned) environmental provisions will be taken into account.

Summarising framwork and qualitative CBA of removing NTBs

Based on the information and results provided by the ex-post and ex-ante evaluation we will provide a concise summary within a framework that combines a sectoral synopsis outline with a qualitative cost-benefit analysis (CBA) of removing remaining barriers. This will be conducted in four steps:

  1. Step I: Economic, social, and environmental analysis: We will provide a concise sectoral summary of the ex-post and ex-ante module along the sustainability dimensions. This will be done with the help of an impact score matrix.
  2. Step II: Identification of sectors: Based on Step I we will filter high and low performing sectors in a type of screening in scoping exercise. This screening and scoping will look at past and expected export performance.
  3. Step III: Vertical and horizontal NTB issues: Based on literature, the survey, and expert opinion we will identify sector-specific and horizontal NTB issues that have contributed to and are expected to contribute to a high or low performance of selected sectors.
  4. Step IV: CBA of removing barriers: Based on Step III we can make a concise and targeted qualitative assessment of the costs and benefits of removing identified main barriers. Costs would include aspects such as adjustment and transition costs, whereas benefits can for example be expressed in enhanced market access or lower transaction costs.

 

 

For any comments, questions or suggestions regarding the Evaluation of the EU - Mexico FTA, please contact us at the following email address: eu-mexico@ecorys.com