Re-orienting back to sustainable markets with strategic public spendings and trade policy

Insights from the 4th Flagship Report by UNFSS Coordinator and UNCTAD Senior Economist, Mr. Santiago FernandezdeCordoba

The global economic collapse resulted from the COVID-19 pandemic has prompted governments to develop aggressive stimulus packages. The European Commission for example, presented a €750 billion economic stimulus plan that should help mitigate the aftermath of the coronavirus pandemic towards a sustainable future.

Sustainable public procurement and trade are economic policy tools that are not only based on a cost-benefit analysis, but with a wider view to maximizing net benefits for the local economy and the world at large. It reflects broader goals linked to resource efficiency, climate change, social responsibility, economic resilience etc., which are just as crucial today as it was pre-pandemic period.

Public procurement represents, on average, 12% of GDP in the Organisation for OECD countries, and up to 30% of GDP in developing countries. The size of such spending, in combination with the aggravating need for sustainable production and consumption, and the reversal effect of COVID-19 on the decade-long progress to fight poverty, justify why the time to consider public procurement and trade agreements as policies tools to drive sustainable development is now.

However, integrating sustainable development in public procurement may seem easier said than done. Governments are often challenged by the complexity of introducing sustainability criteria in their procurement approaches as well as the need to be highly effcient about the products they are purchasing. These challenges surpassed with the perceived higher costs and the lack of available sustainable options at certain parts of the world makes it even more difficult for developing countries to look across the entire product lifecycle as opposed to value for money at the time of purchase.

Hence, there is a strong case in which public procurement and trade policy should be looked upon as market transformation towards sustainable development and even innovation objectives to meet long-term goals.

There is a great potential in the government’s purchasing power to push markets towards higher standards of sustainability. The concept of Sustainable Public Procurement (SPP) encompasses social- and environmental-friendly public procurement policies. Given the huge amount spent on public procurement, it can potentially constitute an enormous force for market transformation. Therefore, pursuing objectives such as innovation and sustainability can arguably become a case for SPP to be taken into consideration.

Trade policy through trade agreements have evolved over time, both in number and content. According to the UNFSS’s forthcoming 4th Flagship Report, there are currently 301 free trade agreements (FTA) that are in force. FTAs started to emerge in the 1970s with the liberalisation of markets, and have experienced a sharp increase in the 1990s, corresponding to the end of the Cold War and the opening up of developing economies like China or India. By using FTAs as a function to promote economic cooperation, FTAs have also evolved in terms of content, more specifically as they increasingly include non-trade objectives, such as sustainable development chapters or social and environmental protection provisions.

The COVID-19 pandemic has not only affected many issues of our daily life but many others such as globalization, global value chains, and even how we approach sustainable development. The UN Secretary-General has called upon climate-related and human rights actions to shape the recovery of this pandemic as well as to help developing countries achieve the SDGs. Though it may prove challenging in the current juncture, steering sustainable public procurement and trade policies can lead economies to be better positioned in tackling the sustainable development challenges in order to restore themselves from a post-pandemic world.

The UNFSS 4th Flagship Report on ‘Scaling Up Voluntary Sustainability Standards (VSS) through Sustainable Public Procurement (SPP) and Trade Policy’ is now available at https://unfss.org/home/flagship-publication/

The United Nations Forum on Sustainability Standards (UNFSS) is a joint initiative of 5 UN Agencies (FAO, ITC, UNCTAD, UN Environment and UNIDO) that seeks to address these challenges. It is a demand-driven forum for intergovernmental actors to communicate among each other and engage with key target groups (producers, traders, consumers, standard-setters, certification-bodies, trade diplomats, relevant NGOs and researchers) to address their information needs and influence concerned stakeholders. It aims to provide impartial information, analysis, and discussions on VSS and their potential contribution to facilitate market access, strengthen public goods and achieve Sustainable Development Goals (SDGs). Most importantly, the UNFSS focuses on potential trade or development obstacles VSS may create, with particular emphasis on their impact on SMEs and less developed countries.

%d bloggers like this: