How can trade contribute to sustainable development?
Recent extreme weather events and the COVID-19 crisis remind us that sustainable development needs to be promoted in all relevant policies.
As we are currently living the deepest global recession since World War II, we must acknowledge that economic growth cannot be achieved without finding the right balance between the development of economic growth and the promotion of sustainable development.
Trade is often assumed to be an obstacle to the achievement of Sustainable Development Goals (SDGs). This assumption is wrong. Trade is undoubtedly necessary to achieve economic growth. It is more and more promoted in a manner to favor sustainable development. Agenda 2030 pursues this same objective and provides among the SDGs specific targets to this end. It is notably worth mentioning targets 17.10 and 17.12, which respectively seek to “promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organization (WTO)”. The conclusion of negotiations under the “Doha Development Agenda” aims at “realizing timely implementation of duty-free and quota-free market access on a lasting basis for all least developed countries, consistent with World Trade Organization decisions, including by ensuring that preferential rules of origin applicable to imports from least developed countries are transparent and simple, and contribute to facilitating market access”.
This acknowledged, questions arise. To what extent trade and trade practices aim at promoting sustainable development? What are the current weaknesses in the trade-sustainable development linkage? What innovative proposals could be elaborated to ensure that trade is also conducted to the benefit of sustainable development?
Trade mechanisms implemented at the national, regional and global levels
The term sustainable development was first introduced in 1972 in the United Nations Conference on the Human Environment held in Stockholm. Its most popular definition came to life 15 years later in the Brundtland Report, as any policy that “meets the needs of the present without compromising the ability of future generations to meet their own needs”. However, we have to wait for the adoption of Agenda 2030 to really see the popularization of the term.
The SDGs balance three dimensions of sustainable development, namely the economic, social and environmental ones, and add two additional components: partnerships and peace. Any development intervention that aims at being sustainable should take due account of those five components. Agenda 2030 thus considers a broad notion of sustainable development, including environmental protection, promotion of labour standards, public health protection, democracy and the rule of law. Many trade mechanisms take due account of the above-mentioned concerns. For instance, in 2021, the European Union established the Carbon Border Adjustment Mechanism (CBAM), which ensures that the same carbon price is paid by domestic and imported products in the European Union. Across the Atlantic, the United States adopted trade mechanisms to fight against forced labour: “Withhold Release Orders” aim at banning the import of goods that are produced, in whole or in part, using forced labour. No later than January 2021, a Withhold Release Order was adopted to ban cotton and tomato products made by slave labour in China’s Xinjiang Uyghur Autonomous Region. It is worth noticing that the European Parliament has proposed a similar mechanism in the European Union, but the European Commission has not made a legislative proposal in this regard so far.
Environmental and labour provisions can also be strengthened through bilateral free trade agreements. Both the European Union and the United States systematically include labour rights in the free trade agreements they negotiate with their partners. Protection of public health could also be pursued through international rules. For instance, India and South Africa proposed in the World Trade Organization (WTO) a waiver on the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement to ensure access to COVID-19 protective equipment, treatments and vaccines. The proposal is still pending.
The above examples highlight the variety of mechanisms that can be put into place by States, regional and international organizations to promote sustainable development through trade. They range from unilateral State measures to provisions incorporated in bilateral agreements concluded between partners, to negotiations in multilateral fora like in the WTO, just to mention a few.
Innovative measures needed at all levels of governance
Obstacles and weaknesses are still observed. WTO debates on a TRIPs waiver have not been successful so far, as it brings into discussion the tension between the protection of intellectual property rights on the one side, and the public health concerns on the other side. In addition, although sustainable development provisions are incorporated in the new generation of EU free trade agreements, their effectiveness is disputed and strengthened rules are often requested.
Current and future leaders must therefore look for innovative solutions that strengthen sustainable development in trade instruments. Although States, regional and international organizations have a major role to play in promoting sustainable development in all relevant policies, an increasing number of new actors are involved, such as civil society and private undertakings.
The recent establishment of the “tax on plastic” at the EU level is a good example of innovating solution strengthening sustainable development. The new tax, introduced on 1st January 2021, constitutes a new category of EU own resources based on national contributions calculated on the basis of non-recycled plastic packaging. This new measure is aiming at reducing the pollution from plastic packaging waste and is expected to facilitate Europe’s transition towards a circular economy.
The previous reflections reveal that it is increasingly necessary to better know the actors involved and the tools available to ensure that economic development goes hand in hand with social justice, respect for human rights, high labour and environmental standards. It is important to reflect on the ways to ensure at best sustainable development in all governance fields and contribute thereby to the achieving of Agenda 2030 goals without compromising economic growth.
The Centre for European Legal Studies (CEJE) of the University of Geneva contributes to developing knowledge and skills in this area. Its one-year Master of Advanced Studies in European and International Governance (MEIG Programme) examines how the different actors at national, regional and global levels contribute to the attainment of the SDGs. A new e-learning module is specifically devoted to the topic “How can trade contribute to sustainable development?”
For further information on the MEIG Programme and on the e-learning module “How can trade contribute to sustainable development?”, please contact (+41 22 379 85 35).
This article has first been published in the NewSpecial Magazine (2021 november edition).