Sustainable trade

Sustainable trade implies a trading system that does not harm the environment or deteriorate social conditions while promoting economical growth.

Background

Trade is critical to global economic development and it has major implications for ecological sustainability and equity issues. Increased revenues from trade will be necessary to finance sustainable development in most Southern countries.

A new round of multilateral trade negotiations was launched in Doha in November 2001. The Ministerial declaration provides a mandate for negotiations on 21 subjects and reaffirms its commitment to sustainable development. It seeks to offer a greater market-access for developing countries.

Since 1999 the EU has been committed to conducting

Sustainability Impact Assessments (an assessment of the economic, social and environmental impact of a trade agreement) as part of its trade policy-making process.

Issues

Trade and environment:

The EU is pushing for the inclusion of environmental standards into the WTO. The great majority of other Members are opposed to such negotiations. Developing countries’ objections were primarily due to concerns that environmental negotiations might restrict market access for their goods. The US and Canada are chiefly concerned about the potential for the EU to use an environmental mandate to slow down agricultural subsidy reform or to further restrict entry of agricultural goods — including genetically-modified organisms (OGM) — via eco-labelling or the precautionary principle.

Multilateral environmental agreements (MEAs) and WTO rules: a critical issue in the trade and environment debate is the relationship between trade rules and multilateral environmental agreements (MEAs), such as the Kyoto Protocol on climate change, the Biodiversity Convention, th e Convention on International Trade in Endangered Species, and the Convention on Persistent Organic Pollutants signed in May, 2001. On 20 February 2003, the World Trade Organisation (WTO) decided to allow officials from the United Nations Environment Programme (UNEP) and secretariats from Multilateral Environmental Agreements (MEAs) to attend WTO negotiations on the environment on an ad hoc basis to promote information exchange. 

Trade of environmental goods and services: negotiations are underway to reduce trade barriers to environmental goods and services. In parallel, WTO experts are trying to find a clear definition of what is meant by environmental goods. Environmental services cover sewage, refuse disposal, sanitation and ‘other’, the EU has argued that this classification no longer reflects market developments.

Trade and social issues:

Trade and labour rules: The vast expansion in trade and investment, particularly in the 1990s, has had profound effects on labour standards around the world. While some regions have benefited, the negative effects are obvious in some parts of Asia and South-America where minimum labour standards are regularly violated and trade union organisers are forbidden entry. This has lead to discussions to determine whether the international community should establish a link between the right of nations to engage in international trade and respect for the basic rights of labour?

Development of fair trade: "fair trade" means an equitable and fair partnership between marketers in the North and producers in Asia, Africa, Latin America to provide low-income artisans and farmers with a living wage for their work. It also promotes new methods to encourage trade in environmentally friendly products, such as organic produce, and eco-labeled production. In 1997, the turnover in the EU of fair trade products was estimated to be in the region of EUR 200 to 250 million. Overall, 11% of the EU population buy fair trade products and surveys show that there is high demand for such products.

Positions

The European Union supports measures to bring international trading standards in line with MEAs. In Cancýhe EU will try to forge an agreement incorporating environmental protection into WTO rules. Some of the aspects covered include the precautionary principle and clear labelling laws. The EU would also like to see reduced tariffs for environmental goods and services.

In an own-initiative report on behalf of the Parliament's Development Committee, Luisa Morgantini (EUL/NGL, I) stresses that the EU must reform its agricultural and trade policies, as well as its fisheries policy in order to pursue a consistent policy on development aid for developing countries. She calls on the Commission to strengthen or, where necessary, re-establish, the systems guaranteeing minimum prices for certain products that are crucial to the survival of millions of people in the developing countries, as in the cases of coffee and cocoa. MEPs in the Development committee, call on the EU to defend, above all in the WTO, the position that certain essential goods such as water and land cannot be left to market forces alone.

The business community considers that the economical pillar of sustainable development should not be neglected, arguing that growth is essential to financing measures aimed at creating better social and environmental conditions.
Adrian van den HOVEN from UNICE, the Voice of Business in Europe, considers that 'there must be a balance between the three pillars of sustainable development. Governments must promote multilateral economical cooperation. Exchanges must be further liberalised and procompetitive rules , such as the Lisbon process, must be put in place. Without growth, societal needs can not be fulfilled and financed".
The Foreign Trade Association, considers the Sustainability Impact Assessment (SIA) a helpful instrument for sustainable trade, provided it puts the same emphasis on the economic impact as on the social and environmental impact. But SIA must not become the source for new barriers to trade and should not be a "conditio sine qua non" for start and process of international negotiations. The threshold of tolerance (when is a negative impact unbearable and when can it be tolerated) should not be too high, in order to meet the development needs of third countries.

NGOs express a great variety of views, with some being very critical to liberalisation and others seeking to find a compromise between sustainable development and trade liberalisation.
The International Institute for Sustainable Development recommends making the trade regime and the international environmental regimes fully compatible and mutually supportive. It suggests to conduct sustainability reviews of existing and new trade agreements and to find ways for developing countries to participate more equitably in the work of the WTO.
The environmental NGO Friends of the Earth Internationalconsiders that "the current trade rules as administered by the WTO encourage unsustainable resource use and an inequitable distribution of resources. They undermine biological and cultural diversity and are still based on the pursuit of profit regardless of social and environmental costs; and inequitable access to and the overuse of limited natural resources. For these reasons, Governments should agree on developing a new framework for the regulation of trade based on the principles of democracy, equity, reduced consumption, co-operation and precaution. 

Timeline

  • 10 to 14 September 2003: Fifth WTO Ministerial Conference in Cancun, Mexico (stocktaking conference)
  • 1 January 2005: end of the negotiations on the Doha round 

Further Reading

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