Sustainable Trade in a Globalized World: The time to reconcile development opportunities is now

On Wednesday, 26 October 2022, the United Nations Forum on Sustainability Standards (UNFSS) held its conference on Sustainable Trade and Development Opportunities in Brussels, Belgium to call on the expertise of the Chair of the European Parliament’s Committee on International Trade, Bernd Lange; Jamaica’s Ambassador-designate to Belgium and Head of Mission to the EU, Symone Betton Nayo; and ISEAL’s Director of Programmes, Kristin Komives; and moderated by Director and Professor of the Global Economics at the Robert Schuman Centre for Advanced Studies, European University Institute, Bernard Hoekman, to unravel the many sustainability challenges faced by developing countries posed by international trade.

The world is currently facing many crises which confronts the achievements of the 2030 sustainable development agenda, including climate change, debt and food crisis as well as the disruption of international trade. There is clearly a significant need for a more profound transformation in order to the meet the Sustainable Development Goals.

Sustainable Trade, which is undoubtedly an integral part of this solution, has yet to be explored to its full potential.

“Developing countries export 40% of the world total exports, and yet they are the most vulnerable to shocks. This makes Sustainable Trade even more significant, and that Voluntary Sustainability Standards have the potential to change baseline calculations of global supply chains performances.” – Mr. Santiago Fernandez de Cordoba, Chief Voluntary Sustainability Standards Programme and UNFSS Coordinator, UNCTAD.

Some of the contributors of the UNFSS 5th Flagship Report

During the dialogue, the UNFSS launched its 5th Flagship Report entitled “Voluntary Sustainability Standards, Sustainability Agenda and Developing Countries Opportunities and Challenges” which aims to investigate the opportunities and challenges associated with Voluntary Sustainability Standards (VSS) for developing countries. The report covered the governance gaps between developed countries (where these standards are set) and developing countries (where these standards are adopted); as well as the multiplicity of standards and harmonization from the establishment of national sustainability standards by developing countries.

“Due to the increasing influence of VSS as an important tool to govern value chains, the research on the area of VSS is expanding and policy makers are increasingly recognizing its significance. The report sets an avenue to link the world of academics with the policy makers.” – Axel Marx, Deputy Director, Leuven Centre for Global Governance, KU Leuven.

The report was co-authored by 15 contributors from both the policy and academia métier with an interdisciplinary approach, discussing and exploring the role of VSS in broader regulatory framework, i.e national initiatives, due diligence, policy mixes.

While developing countries face some challenges related to the cost of certification, lack of incentives, socio-political resistance to VSS, and the problem of maintaining certification over time, VSS were also proven to help them increase their market access and income.

Some recommendations that came out of the report include

  • the need to advance transparency and research on VSS, and their impact,
  • the need to reduce market imperfections, the need to provide support to producers to cover certification costs and promote the uptake of VSS,
  • the need to establish cooperation and mutual recognition, and
  • the need to prepare for continuously changing developments which require dialogue and collaboration among development partners. 

“VSS were promoted by the European Union for a long time, however on the consumer side, there might be a lack of transparency as labels were not clear and known to consumers. There might be a lack on the information of the design side on what sustainability issues these labels correspond to.” – Bernd Lange, Chair of the European Parliament’s Committee on International Trade.

On the supply side, the evidence that VSS impacts the global trade raises important dimensions that such external factors, including the multiplicity of standards, must not be ignored and are undoubtedly crucial for developing countries.

The distinguished panelists

“Developing countries are usually standard takers, it is important to govern private standards in a way that ensures developing countries aren’t worse off, and thus, must bear in mind that some standards requirements may be completely new for developing countries.” – Symone Betton Nayo, Jamaica’s Ambassador-designate to Belgium and Head of Mission to the EU.

While there have been efforts by governments in developing countries to look at ways to make it easier for smallholder farmers to get certified within the country, there may also be cases where the certification systems develop other types of risk approaches that may undermine “easy” access to become certified.

“Mutual recognition has been a term widely used to reconcile the longstanding issues of multiplicity of standards. However, the systems behind the certifications are usually the barrier, more so when the assurance system are not harmonized, i.e some self-assessment, some with 3rd party, which makes mutual recognition particularly challenging.” – Kristin Komives, Director of Programmes, ISEAL.

VSS are expected to contribute to sustainable development. Overall studies gathered in the report found a positive impact of VSS on the different sustainability dimensions, however, these effects remain mixed results and highly context specific.

This dialogue is calling for action.

Action that allows the community to understand better when do VSS have positive impact and what are the conditions to meet this. The current state of research on VSS impacts highlights trade-offs in sustainability improvements, as some studies have found a positive effect on environmental outcomes but not on social or economic outcomes, or the other way around.

The UNFSS is committed to keep this topic at large. The sustainable trade ambition to ensure greater coherence of trade rules with the SDGs is very much reflected at multilateral level. By engaging different stakeholders, we can work towards fulfilling our sustainable development commitments.

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.

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