Trade Forum Features

Formulate trade policy as if the SDGs really matter

17 February 2016
ITC News
Is the multilateral trade system fit for purpose and, if not,
what needs to be done?

2015 will be remembered as a year in which global economic tides shifted. The concept of sustainable development began to rise with the adoption of the Sustainable Development Goals (SDGs) – or the Global Goals – in September followed by a substantial climate agreement in December. The year ended with a sense of hope that maybe, finally, we can make real progress towards sustainable development.

On the other hand, the tide of multilateral trade policy continued to ebb. The World Trade Organization (WTO) entered the 15th year of negotiations in the Doha Round, though few believe there is any realistic prospect of an honourable conclusion any time soon. Indeed, many observers have concluded that the round is dead; the challenge now is to find a coroner willing to certify the fact. At the WTO Ministerial Conference last December, the conference chair went so far as to state that the negotiation function of the WTO is no longer working and that, perhaps, it should simply be closed down.


Meanwhile the momentum of trade policy has clearly shifted to other forums – principally the so-called ‘mega-regional’ trade agreements such as the Trans-Pacific Partnership (TPP) or the Transatlantic Trade and Investment Partnership (TTIP), though in reality their dynamism impresses only by comparison with the WTO. TTIP is far from a conclusion and it begins to look as if TPP faces problems at the ratification stage. 

This is a significant reversal. It was not so long ago that the sustainable development community trembled before the newly minted WTO and its power to sweep away obstacles to trade, including those based on environmental or social considerations. If indeed the age of sustainable development has dawned and the age of aggressive globalization is faltering, what are the lessons for trade policy? What are the prospects of the long dreamed-of goal of mutual supportiveness between trade and sustainable development policies? 

On one level, the past years have been positive. The expected – and dreaded – challenge of environmental and social achievements by the trade system never occurred. Instead environmental and, to a lesser extent, social issues are now an accepted part of trade policy. Any new agreement or implementation of existing trade agreements that ignored or undermined these would encounter a swift and effective challenge.

The WTO dispute settlement body has showed commendable regard for intergovernmental environment agreements and there have been few challenges to national environmental standards and regulations. 

Further, bilateral and regional trade agreements now routinely include environmental side agreements or strong provisions for environmental cooperation. Many also include guarantees relating to human rights and labour standards. It can therefore safely be said that trade and sustainable development no longer begin or proceed from a posture of hostility, but instead assume mutual compatibility, though in the details this may not work as well as one might assume. That, however, is insufficient. 

The question is this: in light of the firm commitment of all UN member states to implement the Global Goals by 2030, is the multilateral trade system fit for purpose and, if not, what needs to be done? I propose two alternative answers.

First, trade is very much part of the SDG package. There are many ways in which expanded, rules-based trade can speed SDG implementation, not least through the positive impact of trade growth on developing country economies. Trade measures and trade-related policies are fully a part of the Global Goals package. Optimizing the development benefits of trade is, in theory at least, within the scope of the multilateral trading system and such optimization would contribute to reaching the agreed-upon goals.


However, there is a second way of looking at this. The SDGs amount to a call for global transformation and in many ways only a genuine global transformation will place development on a sustainable footing. Yet if the Global Goals are deemed necessary, it is because the present economic paradigm has signally failed to deliver sustainable development. Indeed, in essential ways we are further from it than we were before the neo-liberal paradigm took root.

The multilateral trading system has been a faithful servant of the present economic paradigm – promoting neo-liberal economics based on the Washington consensus. If that model is a problem for the Global Goals, the trading system as currently conceived and organized is also a problem. If we are moving in the wrong direction, accelerating progress in that direction is not desirable.

Some years ago, Harvard University professor Dani Rodrik wrote a paper for the United Nations Development Programme entitled ‘The Governance of Global Trade as if Development Really Mattered’. In it he pondered what a trading system would look like if the equitable development of all countries and their populations were the only objective of trade policy. The conclusion, of course, was that the trade system would look very different. Now, 15 years later, this conclusion can be asserted with even greater authority. 

We cannot have, on the one hand, SDGs that call for a global transformation and a new economic paradigm and, on the other, a trading system that slavishly serves the older, failed paradigm. We need a new analysis: the governance of global trade as if implementing the SDGs really mattered. 

Nothing short of such a roadmap and its faithful implementation will ensure the attainment of the global transformation called for in the Global Goals and on which the future of humanity depends.