Annexes 45 Annex V Limitations of the CGE model 1 According to the European Economic and Social Committee’ ‘the results of modelling presented in SIAs are without any real informative value for negotiators or stakeholders, since they do not indicate significant or suf ficiently targeted impacts. As a result of the absence or shortage of reliable statistics in the informal sector, the SIA does not take sufficient account of the possible impact on this sector’ Both the Commission and the external consultants have also highlighted the inherent limitations of the CGE model (@) the CGE model can only be used for simulation purposes and not for forecasting’ and its simulation of long-run effects is tenuous’; (b) its somewhat tautological construction, i. all results are implicitly linked to the assumptions and calibra- tion made’; (©) commodities are grouped within a broad category so that itis impossible to usefully determine the impact on specific products within a broad category, e.g. medium-quality wheat in the context of the estimated impact on ‘wheat®; (d) diverse countries such as Russia, Norway, Switzerland and Turkey are combined into a single grouping, limit- ing the useful interpretation that can be made from the CGE estimates for this group’; © the formal modelling’s inability to account for the impact of investment liberalisation and measures that facilitate the movement of professionals’; and (fl the CGE model results are not well suited for social impact assessments due to their lack of disaggregated information at the household level" 1 Paragraph 2(6 of Opinion NoBT8/20T of the European Economic and Socal Committee 2 Paragraph 115) of Annex 89 Comision IA guidelines 3 According to Commission services postion paper onthe SIA forthe FTA between the EU and the Republic of nai of March 201, thefong-un effects are among the most enuous parts of CGE modeling because the copital accumulation precessinevicbiyreieson basic assumptions and ignres the dynamiceffectofenhancedintegrtion andcompettion’ 4£ Paragraph 116} of Annex to Commission Aguiceines, 5 EU-CanadasIA nalreport briefing document, une 201, 5 idem 7 dem, 8 EU-Andean trade sustainability impact assessment, final report, October 2008.