Gavin van der Nest, tralac Researcher, discusses the role of trade in improving quality of life and promoting sustainable development

On Day 1 of the recent World Trade Organization Public Forum 2014 (1-3 October 2014) the emphasis was on the power of trade to improve the quality of people’s lives. In his opening address for the Forum, UN Secretary General Ban Ki-moon highlighted the remarkable impact trade has had on accelerated growth, prosperity and the reduction of poverty globally.

It is clear that trade matters and the challenge is to use trade to be a better driver of equitable, sustainable development. He argued that trade needs to be championed to benefit as many as possible, especially women, the young and the least advantaged. It needs to drive equitable distributions of income. He reiterated the integral part that international trade plays in ensuring food security, promoting economic development and eliminating poverty.

One may argue that trade in itself has the potential to involve communities in their economic development through fostering an entrepreneurial spirit, creating cooperation between regions and be a strong driver of regional integration. Multilateral trading systems are particularly important when taking sustainable development goals (SDGs) into account as it provides a framework for international cooperation and symbiotic development. It avoids the dominance of the most vulnerable developmental smaller countries by other larger ones and allows for global cooperation in working in tandem towards achieving the SDGs.

General Ban-Ki-moon further argued that least developed and land-locked developing countries need to be integrated into the global economy through open, non-discriminatory and equitable trade. These are particularly key factors in ensuring the diversification of their economies and increasing their stability and resilience. The UN Secretary General highlighted that 2015 will clearly be an important year for the global development agenda:

• Firstly, the end of 2015 is the date set for the fulfilment of the promise of the Millennium Development Goals (MDGs).

• Secondly, it is the year in which Member States of the UN need to agree on a meaningful and universal climate change agreement.

• Thirdly, it is the year in which Member States embark on a transformative, universal post-2015 developmental agenda in the hope of eradicating extreme poverty and supporting sustainable development.

Not only will progress made towards the MDGs be reviewed and the impact thereof measured in 2015, it will also be the year in which it is hoped that the UN will finally agree on a global climate change agreement. It is only through global commitments and cooperation that climate change may be properly addressed as this threat knows no boundaries. This will require strong political will and careful considerations of each country’s unique developmental concerns.

However, there can be significantly negative effects of trade on the environment when taking climate change into account. This is particularly as a consequence of the production, transport and consumption of traded goods which may all contribute to the release of a considerable amount of carbon emissions. This is why it is particularly important when addressing the SDGs that Member States have clear policy integration between the economic, financial, and trade systems. This should be coupled with environmental sustainability to encompass the climate change agreement. It is the hope that such policy coherence would allow for trade rules that contribute to and not detract from regulations protecting the environment.

It is imperative to coordinate and promote international trade, through the advancement of openness, economic development and the reduction of trade barriers, as this will be a key driver of sustainable development. There is therefore a strong requirement for an enabling environment to do so.

The key question that remains is how does Africa exploit its abundant natural resources which have driven commodity trade and economic growth in Africa without further harming the environment? It is important to develop and to invest in technologies, methodologies and education to equip the continent with the necessary tools and strong expertise to deal with the multidimensional problem of climate change.

Educating consumers about the effects of their consumption choices will be a key driver of sustainable consumption. It is essentially the decision by consumers to buy certain products and make use of certain services that have a direct impact on the environment and by extension people’s lives around the world. However, there is asymmetric information as consumers are not given enough information about the product’s production path and what its impact is on local communities. It therefore falls to the trading community to communicate such information effectively and show what trade means for ordinary people. This is also a public policy and regulatory issue and the question remains what information should companies be required to provide to consumers?

This ties in with the negotiations for a plurilateral Environmental Goods Agreement (EGA) which took place in July 2014. This involved fourteen WTO members which together account for 86 percent of global trade in environmental goods, namely the United States, Canada, China, Costa Rica, the European Union, Hong Kong, Japan, Korea, New Zealand, Norway, Singapore, Switzerland and Chinese Taipei.

The participants at the talk promoted the importance of green growth and sustainable development as well as providing a motivation for the conclusion of the Doha Round. The participants at these talks would apply the results in accordance with the most-favoured nation principle. At the talks work was done to further reduce tariffs and build on a list of 54 environmental goods put together by the Asia-Pacific Economic Cooperation (APEC) Forum in 2012.

The EGA seeks the elimination of tariffs on environmental technologies such as wind turbines, water treatment filters, and solar water heaters. Through tariff eliminations on such goods it is hoped that they will become cheaper and more accessible to everyone, levelling the playing field for exporters and supporting more green employment. A global agreement on environmental goods would allow for the world’s traders and emitters to commit to environmental standards and in which trading countries’ trade and environmental objectives may be advanced.

It is clear that trade has the ability to improve the quality of life. However, there is a fine balance that needs to be struck between economic development and the preservation of the environment. Carbon is released in the production, transport and consumption of goods. The environment is also particularly at risk through badly managed mineral extraction techniques and the pollution of the hydrosphere (water bodies). It will require strong political cooperation between governments to come up with a comprehensive global agreement on climate change best practices as well as the political will to act swiftly against transgressors. 2015 will be an important year in moving towards these goals.

Tell us what you think.

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References:

World Trade Organization, 2014, ‘Day 1 of Public Forum focuses on how trade affects the quality of people’s lives’, News item, 1 October 2014, accessed 6 October 2014, Available at: http://www.wto.org/english/news_e/news14_e/pfor_01oct14_e.htm

World Trade Organization, 2014, ‘Azevêdo welcomes launch of plurilateral environmental goods negotiations’, News item, 8 July 2014, accessed 7 October, Available at: http://www.wto.org/english/news_e/news14_e/envir_08jul14_e.htm