DEPUTY DIRECTOR-GENERAL ALAN WM. WOLFF
Sustainability has two relevant definitions:
“the ability to be maintained at a certain rate or level”, and as
“Sustainable development” — “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” (1)
Sustainability of the WTO
Applying the first of these two definitions of sustainability: the WTO must not continue as it is. It must succeed as a forum for negotiations, where agreements evolve and be relevant; it must be a place where disputes are settled; and it must be a fount of information on every subject that a national trade policy maker requires to make informed decisions. Continued underinvestment in the institution is not acceptable. Maintaining the status quo can only lead to further disaffection.
The economic history of the last seven decades has validated the wisdom of the founders in their decision to create the multilateral trading system. There is only one sensible world order and it includes a global framework for rules-based trade. However, stasis will not suffice. It is necessary to respond now to the challenges before us — dealing with the pandemic, supporting the needed economic recovery, taking responsibility for stewardship of the planet and its peoples, and WTO institutional reform.
This subject could fill volumes and has been the subject of my remarks here at Chatham House and elsewhere. For today, I will not concentrate on institutional WTO reform, a subject with its own importance, but will move to addressing the second usage listed above of the concept of “sustainability”, the sustainability of economic growth.
The two are intimately related, however. If the WTO does not engage fully with environmental issues, with the existential threat of climate change, along with making the WTO central to the framework for global digital commerce, and does not address the suite of issues affecting well-being, the institution will move deep into the shadows of irrelevance.
The Sustainability of Economic Growth
“Sustainable development” encompasses three dimensions: economic, social and environmental. It is a concept that is enshrined in the Preamble of the Marrakesh Agreement as its opening words —
Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development, … .
There is no better place to start a conversation on this subject than to examine the activities of the WTO in relation to the UN’s 17 Sustainable Development Goals (SDGs) which aim to transform our world by the year 2030:
- GOAL 1: No Poverty
- GOAL 2: Zero Hunger
- GOAL 3: Good Health and Well-being
- GOAL 4: Quality Education
- GOAL 5: Gender Equality
- GOAL 6: Clean Water and Sanitation
- GOAL 7: Affordable and Clean Energy
- GOAL 8: Decent Work and Economic Growth
- GOAL 9: Industry, Innovation and Infrastructure
- GOAL 10: Reduced Inequalities
- GOAL 11: Sustainable Cities and Communities
- GOAL 12: Responsible Consumption and Production
- GOAL 13: Climate Action
- GOAL 14: Life Below Water
- GOAL 15: Life on Land
- GOAL 16: Peace, Justice and Strong Institutions
- GOAL 17: Partnerships for the Goals
The SDGs explicitly identify trade, alongside finance, technology and capacity building, as a means of implementation, that is, as a tool to achieve the SDGs. This perspective closely mirrors the WTO's founding charter, where global co-operation in trade is a means to unleash growth, alleviate poverty, raise living standards and ensure full employment, while also protecting the environment.
In a 2018 publication(2), Mainstreaming trade to achieve the sustainable development goals, the WTO looked at how its work could support efforts to fulfill the SDGs. That report emphasized nine of the seventeen SDGs, in the sections which are summarized here:(3)
How trade contributes to delivering key Sustainable Development Goals
SDG 1: No Poverty
WTO 2018: There is increasing evidence that well planned and strategically executed trade policy initiatives can impact positively on sustainable poverty reduction. Trade opening has also generated higher living standards through greater productivity, increased competition and more choice for consumers and better prices in the marketplace.
The UN cites two specific goals:
- By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day.
- By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions.
It should be beyond doubt that by these two agreed measures, the trading system has contributed toward this goal. Progress has been made toward lifting hundreds of millions of people out of poverty. Trade contributes to higher living standards through productivity increases, made it possible by access to global markets and sources of supply. Decades of empirical evidence indicate that the countries that have sustained high per capita growth rates long enough to transform people’s living standards and life prospects used the global economy to drive growth.(4)
Broadly open global markets provided demand far larger than the home market, to be sure, but also served as a source of ideas, technology, and knowhow. While the years before the pandemic saw substantial progress on reducing poverty, the countries that lagged behind were generally those that had been unable to break into world markets for goods and services, or only managed to export unprocessed minerals.
Today, trade plays an important role in the economy of developing countries. To have an idea, trade now represents 34% of developing countries' GDP on average — compared to 20% for advanced countries. Fueled by trade, real GDP per person in emerging economies more than doubled from 1995 to 2019 and facilitated rapid, broad-based economic expansion that has narrowed the income gap between countries and within them.
And, in addition to accelerating economic growth, trade also makes available the necessary resources to implement other development targets in the social and environmental spheres.
There are two groups of challenges to this claim. There are growing voices against globalization as a creator of income inequality within and perhaps among countries. There is also criticism that economic growth is potentially incompatible with environmental goals.
Neither set of criticisms is borne out by the facts. Widely differing levels of income inequality in countries similarly exposed to globalization suggest trade is not the determining factor.
SDG 2: Zero Hunger
WTO 2018: Eliminating subsidies that cause distortions in agriculture markets will lead to fairer more competitive markets helping both farmers and consumers while contributing to food security. The WTO’s 2015 decision on export competition eliminated export subsidies in agriculture, thereby delivering on Target 2.B of this goal.
A well-functioning multilateral trading system is imperative for the realization of SDG 2. In remarks at the FAO in 2017, I made the following points
It is widely acknowledged that trade openness can make a positive contribution to each of the four dimensions of food security as espoused by the FAO, namely availability, access, utilization and stability. Trade openness increases the availability of food by enabling products to flow from surplus to deficit areas, connecting the “land of the plenty to the land of the few”. It enhances access as it contributes to faster economic growth, higher incomes and higher purchasing power. Indeed, in response to the transmission of unbiased price signals, it encourages an effective allocation of resources based on comparative advantages, thus limiting inefficiencies.
Trade openness also facilitates utilisation and improved nutrition by increasing the diversity of national diets and accelerating the diffusion of sound SPS regulations around the world. Lastly, it enhances food availability and reduces price volatility, as risks associated with domestic food production are greater than pooled production of countries worldwide. (5)
In addition, the elimination of export subsidies has levelled the playing field and provided opportunities for farmers in developing countries to compete. This has increased their incomes and enhanced their living standards.
By making more affordable goods available at home, trade enables poor households to purchase more with their income, particularly essential foodstuffs. Better and less distorted access to foreign markets for agricultural goods that the rural poor farmers produce also opens new employment opportunities for them.
One lesson from COVID-19 is that stockpiling and on-shoring with added domestic investment are not a sufficient substitute for trade flows.
As my colleague, DDG Xiaozhun Yi recently noted,
The trade coverage of the regular import-facilitating measures stood at USD 731.3 billion (up from USD 544.7 billion in the previous period) while that of import restrictions came in at USD 440.9 billion (down from USD 746.9 billion). This is a positive development. This drop was likely a result of the sharp decline in overall global trade flows, the diversion of governments' attention towards fighting the pandemic — through trade policy as well as other areas, and a general commitment to keep trade flowing.
The export restrictions on food seen in the Spring have been substantially rolled back.
SDG 3: Good Health and Well-being
WTO 2018: One of the main objectives under SDG 3 is to ensure access to affordable medicines for all. An important amendment to the WTO’s TRIPS Agreement recently entered into force. This measure will make it easier for developing countries to have a secure legal pathway to access affordable medicines in line with Target 3.B of this goal.
The COVID-19 pandemic taught us that trade can be responsive to human health and well-being. There was more than a doubling of trade in goods relevant to fighting the disease from 2Q 2019 to 2Q 2020.
The next challenge will be the distribution of the vaccines. Trade is playing — and will continue to play — a key role in the manufacturing and distribution of vaccines around the world. Leveraging supply chains for everything from pharmaceutical glass, syringes and refrigeration equipment to the vaccines themselves, where possible, would help scale up production more efficiently than trying to do everything domestically. The trading system must help deal with any cross-border logistics challenges that exist.
WTO Agreements give Members ample space to pursue health protection objectives and promotes cooperation in the pursuit of health. In the area of food safety and animal and plant health, the SPS Agreement requires that measures be based on science and Members are strongly encouraged to follow international standards. The TBT Agreement also strongly encourages that health protection regulations for drugs, PPE or medical devices be based on relevant international standards. The TBT and SPS Agreements also promote regulatory cooperation among trade partners — such as mutual recognition of certification — which can help increase global access to essential health products.
To this should be added an immediate update of the Pharmaceutical and Information Technology Agreements to cover, among other goods, all those which will facilitate the international movement of vaccines, medicines, equipment (including production equipment), PPE, and IT equipment relevant to fighting COVID-19. Not only should duty-free treatment be provided but also trade facilitation measures to lower the costs of trade and speed delivery of essential goods. Medical services should be covered in a companion agreement with the same objective.
SDG 5: Gender Equality
WTO 2018: Trade can create opportunities for women’s employment and economic development. Through trade, job opportunities for women have increased significantly. Jobs in export sectors also tend to have better pay and conditions. Export sectors are an important job provider for women in developing countries.
A group of WTO Members agreed to establish an Informal Working Group on Trade and Gender on 23 September 2020, marking the next phase of an initiative started in 2017 to increase the participation of women in trade. The online meeting to launch the new WTO working group was held at the invitation of Iceland and Botswana.(6)
Women’s empowerment through trade is an important part of the WTO’s current narrative. There will undoubtedly be a further effort to make this more concrete for MC12, the 2021 WTO Ministerial Conference. Given that internet access is a boon for micro, small and medium enterprises, in which tend to be disproportionately represented as workers and entrepreneurs, the flexibilities offered by e-commerce should continue to be a great equalizer in these areas, where individual initiative and ingenuity is the first key to market entry. The e-commerce talks as well as those aimed at making the trading system more responsive to the needs of micro, small and medium enterprises should prove beneficial to the empowerment of women through trade.
Moreover, the choice of the first woman Director-General of the WTO provides a role model for women advancing in the field of trade policy.
SDG 8: Decent Work and Economic Growth
WTO 2018: Trade-led inclusive economic growth enhances a country’s income-generating capacity, which is one of the essential prerequisites for achieving sustainable development. The WTO’s Aid for Trade initiative can make a big difference in supplementing domestic efforts in building trade capacity, and SDG 8 contains a specific target for countries to increase support under this initiative.
Trade is very important in the attainment of SDG 8 as it is generally described in the Agenda 2030 as an engine for inclusive economic growth and poverty reduction.
Opening up to trade affects growth positively through a number of channels. Trade improves resource allocation. It allows each country to specialize in the production of the good or service it can produce relatively cheaper and import the other goods and services, thus exploiting comparative advantages. By extending the size of the market in which the firm operates beyond national border, trade allows firms to exploit economies of scale and become more productive. Trade also affects long-term growth since it gives access to more advanced technological inputs available in the global market and because it enhances the incentives to innovate.
The rise of populism in the industrialized countries indicates that providing opportunities for decent work and experiencing the fruits of economic growth are not solely a concern for developing countries. David Riccardo’s voice now has increasing competition among economists who focus on a rising tide not necessarily lifting all boats.
Technological progress and trade have been key engines of global prosperity. Resistance to innovation and retreat from global integration are not options that will help eliminate extreme poverty. At the same time, policymakers need to ensure that benefits are spread more widely. A reallocation of resources is often necessary to reap the substantial benefits from trade. Governments need to be better prepared for disruptions, including those caused by the pandemic, and enable their peoples to take advantage of new opportunities.
Like other structural change — notably change triggered by technological progress — trade can create adjustment pressures for certain segments in society, both in developing and developed countries. It is therefore important to have in place appropriate complementary domestic policies to ensure that the gains from trade are more evenly shared and the trade-related adjustment costs affecting certain regions and individuals are mitigated. This can contribute to make the gains from trade truly inclusive and sustainable.
The global rules for trade must be seen to deliver fairness. The WTO needs to be widely known for providing a level playing field for trade. Factory workers, farmers, designers of apps, must all feel that they can rely on the rules of the trading system to provide opportunities to serve markets abroad as well as being able to source what they need from suppliers whether at home or abroad. Trade must be able to flow on the basis of competitive merit. The core underlying principle of the WTO, although unstated, is that market forces are to determine competitive outcomes.
In sports, another area of international competition with roots in antiquity, the Olympics have long strived to provide equality of opportunity to the extent possible. To counter crimped nationalistic views but allow scope for pride and dignity that comes from excelling on a world platform, the trading rules have to be improved. The system needs to be widely seen as rewarding those who excel in the marketplace on equal terms to the extent that this can be achieved. The WTO must combine the heritage from Ancient Greece of the agora, the marketplace, with that of the Olympic stadium.
SDG 8 contains a lot more to unpack.(7) For example, it includes as a target “endeavour to decouple economic growth from environmental degradation”, as well as youth unemployment. WTO Members are addressing the former (see environmental sections of these remarks) but not directly as far as I know, the latter.
One of the targets of SDG 8 is to “encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services”. There is a current WTO Joint Statement Initiative (JSI) launched at 11th Ministerial Conference at Buenos Aires in December 2017 aimed at assuring improved participation of MSMEs in the multilateral trading system. Work has progressed very substantially over the last three years and is seen as particularly relevant to the contribution that the WTO can make to economic recovery from the current pandemic.(8)
Trade finance is also a focus of the WTO, particularly for Micro, Small and Medium Sized Enterprises. The WTO, the International Chamber of Commerce (ICC) and B20 Saudi Arabia issued a joint statement on 9 July pointing to the diminishing availability of trade finance. Warning that gaps between trade finance supply and demand could seriously impede the ability of trade to support post COVID-19 economic recovery, they are urging private and public-sector actors to work together to address shortages.(9)
Another of the targets of SDG 8 reads:
- take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms
Forced labor is not a topic on the current WTO agenda, but it has been discussed. Although the WTO has not taken a multilateral decision to address this issue, this does not prevent individual governments from adopting and taking measures that they deem necessary.(10) GATT Article XX General Exceptions permits measures dealing with products relating to prison labour and measures necessary to protect human life. On core labor standards, WTO Members have sought coherence and recognized the role of the ILO in its Singapore Ministerial Declaration. The WTO General Council in 2003 agreed on a waiver that gives legal certainty to domestic measures taken under the Kimberley Process aimed at curbing trade in conflict diamonds, the mining of which often involves forced labor.
SDG 9: Industry, Innovation and Infrastructure
WTO 2018: Trade produces dynamic gains in the economy by increasing competition and the transfer of technology, knowledge and innovation. Open markets have been identified as a key determinant of trade and investment between developing and developed countries allowing for the transfer of technologies which result in industrialization and development, helping to achieve SDG 9.
The WTO deserves good grades on fulfilling this SDG even were the benefits of the system were limited to the movement of goods across borders. The products covered by the information technology agreement foster the global availability the tools that connect budding inventors, innovative individuals, making possible the world wide web. The WTO provides more than that, however, as noted in the WTO’s “World Trade Report 2020 government policies to promote innovation in the digital age”
Open and transparent trade policies contribute to innovation through improved access to foreign markets and increased competition, which provide firms with incentives to invest more in R&D. This is true for both developed and developing economies: a study of 27 emerging economies shows that both competition from foreign firms and linkages with foreign firms, through importing, exporting or supplying multinationals, increase product innovation, the adoption of new technologies and quality upgrading….(11)
The basic set of GATT and WTO agreements provide a framework that foster “the development of an ICT-enabled economy in countries across all levels of development”. The framework provides for non-discrimination, transparency, reciprocity and the prohibition of unnecessarily trade restrictive measures. This framework includes the Information Technology Agreement (ITA), the Technical Barriers to Trade (TBT) Agreement, the Government Procurement Agreement (GPA), the General Agreement on Trade in Services (GATS) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)(12).
Innovation will be key to advancing sustainability. Just as we needed to innovate our way out of the COVID-19 crisis — with adaptable supply chains, digitalized economies, and turbocharged vaccine development — we will also need to innovate our way out of the current environmental crisis. A striking example of this — is the way renewable energy(13), especially solar power, is fast becoming cheaper and more cost effective than fossil fuels. This could be the gamechanger in climate battle. And it is at least partly thanks to trade/globalization's role in spreading renewable technologies, fuelling innovation and driving down production costs. It turns out that the very things many people thought needed ‘fixing’ or ‘resetting’ at the beginning of the pandemic — globalization, free markets, supply chains, corporate innovation — are actually what got us through the crisis, delivered a vaccine, and could provide us with the tools to fight climate change or plastics pollution.
The links between development, technology and trade have been widely recognized. For most developing economies, accessing and deploying new technologies is the primary source of economic growth. Imported capital goods and technical intermediate inputs can directly improve productivity by being placed into production processes. There is significant evidence that global value chains are a powerful channel of technology dissemination.
Supply chain linkages intensify contacts between foreign firms and domestic suppliers and therefore open up channels for flows of knowledge and know-how. When a foreign firm and a local supplier are part of the same production chain, they need to interact and coordinate to guarantee a smooth functioning of the chain. Face-to-face communication with key foreign personnel will facilitate the transfer of non-codified knowledge and increase domestic innovative capacity. Also, foreign outsourcing firms are more willing to transfer the know-how and technology required for an efficient production of the outsourced input, because they will eventually be the consumer of that input. Offshoring of tradable services has also been key in the development of these industries in the developing world.
SDG 10: Reduced Inequalities
WTO 2018: At the global level, changes in development patterns have been transforming prospects of the world’s poorest people, decreasing inequality between countries. WTO rules try to reduce the impact of existing inequalities through the principle of Special and Differential Treatment for Developing Countries. This allows the use of flexibilities by developing and least-developed countries to take into account their capacity constraints.
A rising tide lifts most if not all boats, but some boats ride higher in the water than others. Within industrialized countries, there are wide variations of participation in income and sharing of the benefits of trade. This is mainly due to domestic policies, not international trade agreements. But trade agreements can be made more responsive to this set of problems. Political support for open international trade depends substantially on finding answers to questions of income inequality. One obvious area of response is the availability of trade remedies under the WTO agreements. These were conceptually important to the structure of the GATT and the WTO. Trade remedies were designed to offset unfair and injurious practices and to smooth adjustment to international competition. That basic concept was lost sight of during the last several decades, and costs are now being incurred. When trade remedies become unavailable and job losses occur, domestic support for the “rules-based” trading system is undermined. (See also the discussion of level playing field issues under SDG 8).
Productivity gains from new technologies are reducing the demand for labor in more traditional sectors, such as agriculture or manufacturing. This so-called “fourth industrial revolution” is not going to make all jobs disappear, but it is bringing about enormous changes. While these processes have brought progress overall, it is important to recognize that not everybody has been able to benefit and participate.
This is a challenge facing governments and societies everywhere — in both developed and developing economies. Sustainable and balanced economic progress will hinge on the ability of economies to adjust to changes and promote greater inclusiveness. There is not a ‘one size fits all’ recipe, approaches need to be tailored to a country's specific situation and mainstreamed into development policy objectives to ensure that trade is inclusive, that it benefits the largest possible sections of the population and that those who may be losing out are provided assistance to adjust.
A challenge that the WTO faces is how to balance the rights and obligations across its diverse membership. In the past this has mostly been done by the adoption of special and differential treatment provisions in the WTO Agreements that in many cases give developing countries flexibilities in undertaking commitments. Views have varied among Members over the potential benefits of these provisions. Many believe that special and differential treatment, particularly for the least developed, needs additional elements to be effective. Being freer of obligations for those with limited capacity to participate beneficially in world trade does not convey an advantage. Moreover, if there are no new agreements, there is only a stock of S&DT that may not deliver much more that is of use. The entire approach to development needs fresh thinking.
SDG 14: Life Below Water
WTO 2018: The WTO plays an important role in supporting global, regional and local efforts to tackle environmental degradation of our oceans under SDG 14. The Decision on Fisheries Subsidies taken by WTO members in December 2017 is a step forward in multilateral efforts to comply with SDG Target 14.6, committing members to prohibit subsidies that contribute to overcapacity and overfishing, and eliminate subsidies that contribute to illegal, unreported and unregulated fishing, with special and differential treatment for developing and least-developed countries. Members committed to fulfilling this commitment by the 12th Ministerial Conference.
There is currently active engagement of WTO Members in negotiations to reach this goal. While the trade aspect of the negotiations is certainly an important element, it is worth highlighting that the principal objective in the negotiating mandate is an environmental one. This is a first for the WTO. A successful conclusion of these negotiations will demonstrate the importance and flexibility of the multilateral trading system in pursuing global aims that go beyond the purely economic.
SDG 17: Partnerships for the Goals
WTO 2018: SDG 17 recognizes trade as a means of implementation for the 2030 Agenda. The targets under this goal call for: countries to promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system; the increase of developing countries’ exports and doubling the share of exports of least-developed countries (LDCs); and the implementation of duty-free and quota-free market access for LDCs with transparent and simple rules of origin for exported goods. The WTO is the key channel for delivering these goals.
The UN states the following with respect to trade and SDG 17:
The 2030 Agenda for Sustainable Development defines international trade as “an engine for inclusive economic growth and poverty reduction, [that] contributes to the promotion of sustainable development”. The adoption of Agenda 2030 commits UN member states to continue to promote “meaningful” trade liberalization over the next 15 years to help maximize the contribution of trade to the success of the sustainable development agenda. In this context, international trade is expected to play its role as a means of implementation for the achievement of the SDGs.
As major institutional stakeholders on trade and the SDGs issues, UNCTAD, WTO, and International Trade Center monitor trends, analyze policy and build analytical capacity for making international trade an engine for sustainable development.
The WTO works closely with FAO with respect to achieving SDG 2. With respect to accessions, the WTO works closely with the World Bank, the IMF and regional development banks and UN agencies. With respect to the environment, the WTO works with UNEP. These are a small fraction of the collaborative efforts that support the attainment of the Sustainable Development Goals.
In order to further support efforts at the national level to achieve the SDGs and to ensure that the benefits of trade are spread more widely, the WTO together with our partners in the Geneva Trade hub, UNCTAD and ITC, also recently launched the SDG Trade Monitor, at SDGTRADE.ORG. This website is an online repository of trade-specific development indicators including MFN and preferential tariff rates, amongst others. This database will allow policymakers, trade professionals and researchers to explore the relationship between trade and sustainable development, and to support data driven trade policies.
By implementing responsive, data-driven polices trade can serve as a driver of development, there are impressive figures to confirm that this is the case. For instance, developing countries' share of global trade has jumped from 25% in 1995 to 43% in 2017. This has happened not just because of growth in the large emerging markets of China, India and Brazil but also because of increased participation by small, former LDCs such as Samoa, Cabo Verde and the Maldives. All of these countries have graduated from LDC to developing country status and Vanuatu is expected to do so very soon. These countries mainstreamed their trade policies to tackle capacity constraints, using trade and attracting FDI, to advance their economic growth and development which, in turn, helped them to achieve the required social benchmarks they needed to graduate from the ranks of the world's “least developed countries”.
Recent WTO negotiating outcomes also prove that the system does deliver for development. Successes include the Trade Facilitation Agreement, the expansion of the Information Technology Agreement, the amendment of the TRIPS Agreement easing access to medicines and the agreement to abolish agricultural export subsidies.
The different approaches represented in each of these agreements show that the system can rise to the level of being adaptable and dynamic in its response to emerging challenges. Members must now show sufficient flexibility in their negotiations on fisheries subsidies, WTO reform, and e-commerce, if these subjects with important implications for SDG attainment are to move to a successful conclusion.
This adaptability will also be crucial to an effective response to COVID-19, which is likely to have a severe negative impact on the achievement of the 2030 SDG Agenda.
The Environmental Dimension
The WTO is at the dawn of a new era of addressing deepened and broadened environmental concerns of its Members. The remaining 8 SDGs, those not highlighted in the 2018 WTO publication cited throughout the preceding sections of this narrative are front and center in the emerging WTO focus.
Trade policies, pursued through WTO agreements, have a huge potential to support environmental sustainability. For example, reviving and quickly concluding an Environmental Goods and Services Agreement (EGSA) would serve SDG goals 6 and 7, Clean Water and Sanitation, and Affordable and Clean Energy; SDG Goal 11 Sustainable Cities and Communities; Goal 12 Responsible Consumption and Production and Goal 13 Climate Action.
A study by the World Bank found that eliminating import barriers in the top 18 developing countries ranked by emissions of greenhouse gases would increase imports by 63% for energy-efficient lighting, 23% for wind power generation, 14% for solar power generation and close to 5% for clean coal technology. At the same time, more open trade in environmental goods and services can help domestic companies to tap into a rapidly growing global market estimated at US$ 2 trillion per year by 2020.(14)
An EGSA and expansion of the Information Technology Agreement (ITA), together with an increase in the coverage of GATS, would address in several respects these goals, making more available the goods, for example, to enable cleaner transportation and cleaner air and water, and better handling of waste. Using trade to assist in creating the circular economy; dealing with plastic waste, all would make cities more livable. Climate would be addressed directly as Members consider initiatives for curb fossil fuel subsidies.
Just last month, during WTO Trade and Environment Week, several Members took an important step forward for expanding the contribution of trade to the SDGs by launching two initiatives. The first consists of “structured discussions” on trade and environmental sustainability launched by 50 WTO Members. The second is the informal dialogue on plastic pollution and sustainable plastics trade launched by 8 WTO Members.
The structured discussions seek to identify areas of common interest and work towards concrete deliverables on trade and sustainability. The group plans to have its first meeting in early 2021. The initiative seeks to build on past efforts by WTO Members to address issues such as circular economy, natural disasters, climate change, fossil fuel subsidies reform, the conservation and sustainable use of biodiversity and the Blue economy, among other issues that are at the core of the SDGs 7 on clean energy, 12 on sustainable production and consumption, 13 on climate change and 15 on life on land.
Trade and Environment Week also saw the inaugural meeting of the WTO informal dialogue on plastics pollution and sustainable plastics trade. The dialogue seeks to identify areas where the WTO can complement global efforts to fight plastic pollution, for example by improving transparency and coherence of plastic-related trade measures, promoting best practices and tracking trade in plastics, exploring areas for collective action and cooperating with other international processes. These efforts could make a tangible contribution to achieve not only SDG12 on sustainable production and consumption, but also SDG 14 on ocean health, SDG 15 on life on land, SDG 11 on sustainable cities and SDG 8 on decent work, among other SDGs.
One area of great potential for constructive bilateral and multilateral discussions is trade and climate change. The WTO, and in particular its Committee on Trade and Environment (CTE) has a standing mandate to discuss trade and environmental measures with potential significant trade effects and to arrive at coherent, most fit-for-purpose solutions. Several countries have recently started to look at the adoption of border carbon adjustment measures (BCAs) to support their ambitious climate mitigation plans. The European Union expects to have a concrete proposal by next June and a measure in place by January 2023, at the latest, Canada, in its recently announced 2020 Fall Economic Statement, and Mexico, in its nationally determined contribution, has also shown interest in such measures. It is my understanding that the next Administration in the United States also envisages a BCA as part of its climate ambition.
It would be an understatement to say that these discussions will not be easy and the potential for trade conflict and retaliation is ever present. To avoid a counterproductive clash over climate-related trade measures, we need to have serious and constructive discussions at the WTO on how to ensure that trade-related measures adopted — and trade more broadly — contribute effectively to transatlantic ambitions on climate change but are also fair and well calibrated in terms of their trade impact. It is worth noting that discussions on the EU plan to adopt a BCA have already started at the WTO, including inquiries in the form of specific trade concerns in three different Committees. The new US Administration could ensure that discussions move forward in a proactive and constructive way, adding the US unique perspective and expertise to the table.
In the same vein, other trade and climate topics, such as fossil fuel subsidy reform or facilitating trade in low carbon technologies also seem to offer constructive avenues for transatlantic cooperation. If the recent trend of ambitious carbon neutrality pledges continues, the multilateral trading system will certainly have to play its role in addressing the intersection between climate action and the cross-border flow of goods and services. Transatlantic co-operation on these topics could become an important driver of concrete action on these important issues, all of which have big implications for achieving SDG 13
Goal 4 Quality Education. This goal is addressed in a myriad of ways by the WTO. ITA makes more available computers, smart phones and tablets. E-commerce talks and the moratorium on imposing customs duties on electronic transmission facilitate international transfer of the tools to educate. The Enhanced Integrated Framework (EIF) helps to increase capacity of the least developed through the spread of technology and information. The Cotton Consultative Forum for Development is currently working on identifying projects to assist cotton farmers in least developed countries to gain the knowledge as well as the means necessary to increase the value that they can get from cotton by-products. The WTO is active in providing technical assistance to acceding countries, and more generally to developing and least-developed countries with respect to the full range of WTO agreements.
Trade in education services can help to increase the supply of education and investment in the sector, particularly in higher education, thereby, contributing to enhancing access and quality in education. In this context, the General Agreement on Trade in Services (GATS), which aims at progressively liberalizing trade in services, including trade in education services, is a means of promoting economic growth and development. Leading universities can more easily establish campuses in countries making commitments to openness in this sector. The GATS provides enough flexibility to craft commitments reflecting countries' needs and priorities in a way that allows them to reap the benefits of opening trade in education with the aim of achieving the SDGs.
Goal 15, Life on Land.
Promote sustainable use of terrestrial ecosystems. Being able to have efficient use of land depends very much on trade. Standards must be known, transparency is needed, they must not be protectionist, developing countries must be helped to meet international standards. The WTO and other partner international organizations have set up the Standards and Trade Development Facility (STDF). The STDF promotes improved food safety and animal and plant health capacity in developing countries by convening and connecting diverse stakeholders from across its projects, and by piloting and learning from innovative, collaborative and cross-cutting approaches. Technical assistance can help lessen the use of pesticides and herbicides, including through the fund-raising efforts of the Director-General’s Consultative Framework for Cotton Development Assistance. Curbing subsidies yields more environmentally friendly use of land for crops.
Goal 16, Peace, Justice and Strong Institutions
It should not be surprising that the multilateral trading system, conceived during a 30-year war that took place in two great catastrophic phases separately mainly by a deep economic depression, was intended to be an antidote to conflict. It was designed to maintain peace.
These roots were over time forgotten — something that historians might come across — until these last few years, when conflict-affected countries, Afghanistan, Liberia, countries of the Middle East and of the Horn of Africa sought entry into the WTO. For them, the contribution of integration into the global economy, of thereby increasing the likelihood of stability, the precondition for economic development, the link of trade to peace, the cause of trade for peace, is real, immediate and profound. These fragile countries appreciate the relevance of the multilateral rules-based trading system as a mechanism for peacebuilding through promoting good governance and the rule of law, reducing poverty and achieving economic growth.
The bottom line: A new edition of a book on the WTO and the SDGs should spell out how all 17 goals either are or can be served by the WTO and its agreements. But more than a book, we need WTO Members to engage and conclude negotiations that have a direct impact on achieving the SDGs. I have already spoken about the negotiations to discipline fisheries subsidies, the specific goal of SDG 14.6 on a result on that subject would speak volumes, and you can all push for its successful conclusion.
Trade is one of the best anti-poverty tools in history. By boosting economic growth, trade was a catalyst for reaching the Millennium Development Goal of cutting extreme poverty in half — well ahead of the 2015 deadline.
Trade must play its full part in achieving the 2030 sustainable development goals. To help deliver on these goals and maximize the power of trade in tackling poverty and hunger, making our economies more sustainable and inclusive, WTO Members must put sustainable development at the core of WTO reform efforts. A reform process that results in tangible progress in fully aligning trade and sustainability would be a major contribution the WTO could make to advancing the issues we are discussing here today.
- Sustainable development has been defined in many ways, but the most frequently quoted definition is from Our Common Future, also known as the Brundtland Report, which was issued in 1987. back to text
- https://www.wto.org/english/res_e/booksp_e/sdg_sum_e.pdf. back to text
- In 2019, we WTO and UNEP, published a joint report on Making trade work for the environment, prosperity and resilience. https://www.wto.org/english/res_e/publications_e/unereport2018_e.pdf. back to text
- Growth Commission (2008) The Growth Report: Strategies for Sustained Growth and Inclusive Development. (Washington: World Bank on behalf of the Commission on Growth and Development). back to text
- https://www.wto.org/english/news_e/news17_e/ddgra_24oct17_e.htm. back to text
- See, inter alia, https://www.wto.org/english/news_e/news20_e/women_23sep20_e.htm. back to text
According to current figures, over 200 million people around the world are unemployed, especially young people. Employment and economic growth play a significant part in combating poverty. The promotion of sustainable growth and green business practices and the creation of sufficient decent jobs, in a context of respect for human rights and planetary boundaries, are of key importance not only for developing countries but for emerging and industrialized economies too.
Goal 8 includes targets on sustaining economic growth, increasing economic productivity and creating decent jobs. It envisages combating forced labor and ending modern slavery and human trafficking by 2030. Sustainable economic growth should not be to the detriment of the environment, which is why Goal 8 also advocates improved global resource efficiency in consumption and production and the decoupling of economic growth from environmental degradation.
Goal 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries
8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labor-intensive sectors
8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small-and medium-sized enterprises, including through access to financial services
8.4: Improve progressively, through 2030, global resource efficiency in consumption and production and endeavour to decouple economic growth from environmental degradation, in accordance with the 10-year framework of programmes on sustainable consumption and production, with developed countries taking the lead
8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value
8.6: By 2020, substantially reduce the proportion of youth not in employment, education or training
8.7: Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms
8.8: Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment
8.9: By 2030, devise and implement policies to promote sustainable tourism that creates jobs and promotes local culture and products
8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all
8.a: Increase Aid for Trade support for developing countries, in particular least developed countries, including through the Enhanced Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries
8.b: By 2020, develop and operationalize a global strategy for youth employment and implement the Global Jobs Pact of the International Labour Organization.
Source, https://unric.org/en/sdg-8/. back to text
- https://docs.wto.org. back to text
- https://www.wto.org/english/news_e/news20_e/trfin_08jul20_e.htm. back to text
- https://www.wto.org/english/thewto_e/whatis_e/tif_e/bey5_e.htm. back to text
- https://www.wto.org/english/res_e/booksp_e/wtr20_e/wtr20_e.pdf. WTO World Trade Report 2020, government policies to promote innovation in the digital age. back to text
- It should be noted that the means and nature of the transfer of technology can be a more contentious issue. There has always been a tension between rewarding inventors and giving others a chance to exploit new inventions. This has come up recently in Member discussions of the best ways to combat Covid 19. back to text
- captured in these charts: https://ourworldindata.org/cheap-renewables-growth back to text
- Mainstreaming trade to achieve the sustainable development goals, at p. 46. back to text