Promoting sustainable trade for a green economy

3 July 2013
ITC News
Integrating green products and services into international markets to encourage biotrade in developing countries and emerging economies

Over the last several years, the Green Economy Initiative of the United Nations Environment Programme (UNEP) has worked with more than 30 developing and least developed countries to assist them in the formulation and implementation of policy reforms and investments that catalyse transitions to a green economy.

What we have found is that all countries, regardless of where they are in the development ladder, can invigorate strategic economic sectors by greening their production processes and seizing trade opportunities in sustainably designed, produced, delivered and consumed goods and services. The latter is critically important for developing countries as they become more integrated in international trade, in particular through the expansion of global value chains.

One such example is biotrade. In Peru, UNEP found in 2012 that national trade liberalization policies implemented in the broader context of macroeconomic stability can be associated with an expansion of market access for the 228 private companies that are exporters of products drawn from local biodiversity. Facilitating and promoting trade in those products has helped Peru to gain access to over 2.3 billion consumers in various key export markets.

According to our analysis, almost 90% of all export-oriented Peruvian companies in the biotrade sector hold either organic or fair trade certification, or both. This illustrates well the contribution of trade towards a green economy vision. Moreover, in a modelled scenario where sustainable biotrade export-oriented production in Peru grows by 40% annually until 2020, international sales would increase from the 2009 level of US$ 110 million to US$ 2.7 billion by 2020. Remarkably, this annual increase would create more than 250,000 new jobs over the next decade, particularly in the poorest regions of the country.

While the Andean highlands have the highest poverty rates in the country, they have some of the most important biodiversity-based resources. Huancavelica, the region with the highest poverty rate in Peru (77.9%), produces resources that are in high demand in international markets, such as quihuicha, quinoa and tara. Communities in other highland regions, such as Apurimac, Ayacucho, Puno and Huánuco, also have endemic biodiversity-based resources with potential for scaling up biotrade. Therefore, the extension of global value chains to impoverished rural areas can be a driving force in the improvement of livelihoods.

In order to help the country achieve these objectives, UNEP will carry out an analysis in 2013-2014 of the biotrade sector in Peru, focusing on specific value chains where there is scope for further performance improvement, regulatory simplification and untapped international demand in key export markets, and aimed at streamlining and helping to prioritize public interventions in support of the sector.

In broader terms, an important aspect of a green economy approach to sustainable trade involves advocating policy reforms and investments that focus on building sustainable supply-side and demand-side capacities, and promoting production methods that conserve biodiversity-based resources for the long-term prosperity of rural livelihoods.

Globally, exports of goods and commercial services have grown at an average rate of 5% annually between 2000 and 2011 (WTO, World Trade Report 2012). In developing countries, exports have increasingly contributed to national gross domestic product (GDP), while South-South trade alone accounted for 50% of developing country exports in 2010, according to the World Bank.

Still, the relationship between trade, economic and social development, and environmental protection is extremely complex, particularly in developing countries and emerging economies. Part of this complexity stems from the fact that many of these countries rely heavily on natural resource-based products and raw materials for export, leading to an urgent need for them to diversify their economies and adopt more sustainable trade practices.

To that effect, UNEP is currently running the Green Economy and Trade Opportunities Project (GE-TOP). The project’s ultimate goal is threefold: (1) to identify trade opportunities associated with the transition to a green economy; (2) to identify policies and measures that may act as facilitators and overcome hindrances to seizing trade opportunities arising from the transition to a green economy; and (3) to assist governments, the private sector and other stakeholders in building capacity to take advantage of sustainable trade opportunities at the national, regional and international levels.

A first key output of GE-TOP is the Green Economy and Trade – Trends, Challenges and Opportunities report, which analyses the role of trade vis-à-vis the green economy and sustainable development. More specifically, the report examines opportunities and challenges in six economic sectors – agriculture, fisheries and aquaculture, forests, manufacturing, renewable energy and tourism, where sustainable trade can have a positive effect on economic competitiveness, resource efficiency and overall social and environmental sustainability.

The report stresses that integrating green products and services into international markets can act as a strong incentive for producers and service providers to go green, while green-economy policies and strategies can create new markets for sustainable goods and services.

In addition, the report confirms that trade in products certified for sustainability, as well as in environmental goods and services, is on the rise in absolute terms. While such trade currently represents only a small fraction of trade globally, these markets grow faster than conventional markets. Driven by increasing consumer awareness and sustainable consumption and production patterns, sustainable trade practices have the potential to improve pressing environmental and social concerns, and in some cases, give developing countries a competitive advantage in terms of economic gains as well.

As UNEP’s new report finds, creating economic incentives to implement sustainability standards and traceability methods that allow for the tracking of products from the source to the consumer fosters sustainable trade. Enabling effective supply chain partnerships with international exporters can particularly benefit small producers, and assist in developing or expanding a sustainable supply chain infrastructure, including storage, packaging and transport. Furthermore, strengthening national institutions and regulatory frameworks can help support these green economy activities and stimulate additional initiatives.

Given the surge in international trade in the past two decades, UNEP’s work to identify the trends, challenges and opportunities associated with sustainable trade is essential to aiding countries in improving their economic, social and environmental well-being and to placing them in a more advantageous position moving forward in the global transition to a green economy.

For more information about GE-TOP or to download the report, visit www.unep.org/greeneconomy/