Mission unfulfilled

This blog series was launched with a sharp opinion by Jan Orbie and Sarah Delputte on the Sustainable Development Goals (SDGs), and in particular on the role of trade in them. Marc Maes (11.11.11-Coalition of the Flemish North-South Movement) agrees that the SDGs do not question the neoliberal paradigm. However, he argues that trade policy does play an important role in the Agenda 2030. He systematically illustrates how the different trade provisions have been barely implemented. Trade policy should not only support the Agenda 2030, but it should also become more sustainable. European Union (EU) trade policy has been failing in this regard. 

On 15 September 2015, the United Nations General Assembly adopted the Agenda 2030 for Sustainable Development. Together with the Paris Climate Agreement of 12 December 2015, it constitutes today’s official global sustainable development agenda. This agenda is far from ideal, it is a compromise and a mixture of existing, ongoing and new processes and arrangements. One of the important pillars of Agenda 2030 is the Addis Ababa Action Agenda (AAAA) on Financing Development of July 2015, which is in itself also a compromise. Trade policy plays an important role in both of them. 

The importance of trade

The AAAA foresaw seven main financing pillars: domestic public finance, private finance and investment, development cooperation, sustainable debt management, innovation and capacity building, global governance (global economic and financial policies, social and environmental commitments) and finally: international trade “as an engine for development”. And this is precisely the main and important role that the Agenda 2030 has assigned to trade: trade is supposed to provide growth and prosperity and thus the means to achieve the 17 general and 169 specific Sustainable Development Goals (SDGs).

It is a fact that trade has increased enormously over the past decades and that it has effectively been a major driver of economic development. Developing countries have greatly increased their share of world trade, not least because of increased trade among themselves. This has indeed led to economic growth and poverty reduction. The biggest player in that story is of course China, which has made a great “leap forward”. Other developing countries also benefited, including the less developed ones that provided the raw materials for this growth. 

But international trade “as an engine for development” has not been going well for some time. The financial crisis of 2007-2009 entailed a decline in global trade, and just when the engine seemed to be back on track (with on outlook on ten percent growth in 2017 and fourteen percent in 2018) a certain Donald Trump started a trade war with the rest of the world and especially with China. The UN lowered the expected trade growth to only four percent in 2018 and 2019. And this was before the Corona crisis started.

Business as usual

Apart from the ups and downs of trade and the economy, the AAAA and Agenda 2030 have in fact provided a comfortable position for trade policy. Trade policy can continue as before: liberalising markets, increasing trade, and facilitating global production chains led by multinationals. Or to put it in the vein of Jan Orbie and Sarah Delputte: Agenda 2030 does not question the neoliberal paradigm, on the contrary. 

Nor do the SDGs require trade policy to become more ‘sustainable’. Its contribution to sustainable development is “providing the resources”. Whether it actually makes sense to expand global production and value chains at the expense of regional and local chains, thus creating more transport and emitting more greenhouse gases, is not considered. That further trade liberalisation and trade growth do not necessarily bring more prosperity, but also create more inequality, is not taken into account either. 

A very comprehensive, intrusive and complex trade agreement such as the CETA agreement between the EU and Canada, for example, would, according to the EU’s own impact study, increase trade substantially, but in terms of economic growth it would only lead to a one-off increase of less than 0.1 percent. Meanwhile, more ships cross the ocean, Canadians drink less local milk, and Europeans eat less local meat. 

10 little SDGs

While financing development may be the most important task assigned to trade by the AAAA and Agenda 2030, Agenda 2030 also contains ten specific trade-related targets. No matter how small in number, it seems that not many of them will be achieved. 

It concerns the following specific development goals. We score each of them with a ‘+’ if the goal has been achieved and a ‘-’ if it has not been accomplished or is not expected to be accomplished soon.

1. The abolition of export subsidies on agricultural products (2b) +

This was an item on the agenda of the so-called Doha Development Round, the comprehensive negotiating round launched by the WTO in Qatar in 2001. This is the only specific trade-related target that has been largely achieved. It was effectively agreed at the tenth WTO Summit in Nairobi 2015, although many of the export credits used by the US have remained.

2. The better functioning of food commodity markets (2c) –

This issue has been put on the agenda by developing countries that are highly dependent on trade in agricultural products such as cocoa, coffee and rice, and that suffer from the sudden fluctuations of the world market. The proposed remedy, namely access to information, will not be very helpful. Markets will not function better as long as monopoly positions of multinationals such as Cargill are not addressed.

3. The ability to produce generic medicine (3b) –

This specific objective refers to a decision of the WTO in Doha in 2001, implying that this “possibility” was already fourteen years old when the SDGs were approved. However, developing countries often lack the means to make effective use of it. Meanwhile, industrialised countries are inventing more and more rules to extend patents on medicines and thus reduce access to generic medicines. Let’s hope that the corona crisis will contribute to more flexible approaches by Big Pharma and industrial countries towards intellectual property rights and medicines.

4. Special and differential treatment of developing countries in trade policy (10a) – 

The entitlement of developing countries to a differentiated approach is an achievement of the 1970s. Despite its inclusion in the SDGs, the principle has come under a lot of pressure. Industrialised countries want to level the bar as far as possible and to limit “special and differential treatment” to the weakest developing countries.

5. Encourage development aid and foreign direct investment in countries most in need (10b) –

Increasing development aid and investment for the least developed countries (LDCs) is an old idea. It has not really been successful, because LDCs also have a lack of absorption capacity, which means that more aid and investment goes to richer developing countries. “Remittances”, i.e. money sent home by migrants, remains the most important flow of financial support to LDCs.

6. Elimination of subsidies for fishing that maintain unsustainable practices (14c) –

This is also an item on the agenda of the Doha Round. After almost twenty years of negotiations, not much has happened. The most harmful and the majority of fisheries subsidies are granted by the EU, China, Japan and Korea to large industrial vessels fishing at very long distances. However, LDCs and vulnerable island states fear that a level playing field will be imposed and that support for their artisanal and subsistence fisherfolk will come under pressure.

7. Strengthening global support for combating trade in protected species (15c) – 

This appears to be a question of border surveillance and customs control rather than trade policy. In any case, despite many efforts, illegal trade in endangered species unfortunately continues to increase. The corona crisis also reinforces calls within the EU to ban wildlife trade

8. The promotion of an open and equitable global trading system and the successful conclusion of the Doha round of negotiations in the WTO (17.10) –

The WTO Doha Round has become a specific SDG in itself. Paradoxically, at the tenth WTO Summit in December 2015 (barely three months after the solemn adoption of Agenda 2030), the industrialised countries, led by the US, but with the support of the EU, tried to push the Doha Round aside. They were not entirely successful: the Doha Round was not abolished but not confirmed either. It is neither dead nor alive, a zombie as it were.

9. Doubling the share of least developed countries in global exports by 2020 compared to their share in 2010 (17.11) –

This specific target, which was apparently thought to be possible in five years’ time, will certainly not make it this year. LDCs’ share indeed almost doubled from 0.54 percent in 2000 to 1.03 percent in 2011, but it subsequently declined again to 0.89 percent in 2015. Since then it has again surged up to 0.99 percent in 2018, but a doubling by 2020 was no longer realistic. This failure has to do with the slowing international economic growth that is partly due to the trade wars of the Trump Administration. That implies that the SDG commitments counted on the fact that LDCs would benefit from international growth. Also, it is clear that not many initiatives have been taken to advance their exports, as will be shown in the next point.

10. Tariff-free and quota-free market access for Least Developed Countries (LDCs) (17.12) –

This is an old promise from the rich countries that was also included in the Doha Round. It has to be said that the EU has already implemented this as early as in 2001 under its ‘Everything but Arms’ initiative! However, other rich countries, including the US, did not.

The failure of trade policy on these specific targets is typical. Trade policy has the greatest difficulties in focusing on specific sustainability goals, as this could soften some offensive and defensive economic interests. It is much easier to radically go for trade liberalisation and claim that everyone benefits from it, than to make trade policy itself more sustainable. 

Aid for Trade

Aside from the ten points above, reference is also often made to specific objective 8a: “the increase of Aid for Trade for developing countries, in particular the least developed countries” (score: + /-). Aid for Trade is actually not trade. It is development aid to support trade policy. Aid for Trade originated in 2005 in the context of the Doha Round to compensate developing countries for negative effects from the proposed trade liberalisations. Since 2005, Aid for Trade has effectively grown to 30 (!) percent of global development aid. However, its impact on poverty and inequality is the same as the impact of trade itself: it can have positive or negative effects, depending on the approach.

Trade policy must become more sustainable 

What is special about Agenda 2030 is that the 17 goals and 169 targets form one agenda and that everyone is responsible. Everyone should therefore contribute to achieving them, including trade policy actors. It is therefore not enough to say that trade finances the whole agenda or that trade policy is concerned with a number of specific trade-related goals. Hence, those responsible for trade-policy-making should ask themselves what trade can contribute to each and every of the objectives. What can EU trade policy do for a poor farmer in Africa, an artisanal fisherman in Asia, and a street vendor in Central America, in terms of health, social protection, food security, etc.?

Yet, Agenda 2030 is only a compromise. It is a selective and above all a temporary programme running from 2015 to 2030. There are still many challenges ahead and beyond. Trade policy must also consider these and evolve. But it does not.

Sustainable Impact Studies: too little too late

In order to assess the impact of its trade policy on sustainable development, the European Commission has for years been commissioning a Sustainability Impact Assessment (SIA) for each negotiation. It often likes to refer to these studies in order to highlight its concern for sustainable development. However, first of all, before starting new negotiations, the Commission carries out an economic impact study. The main purpose of this study is to identify the EU’s offensive and defensive economic interests. Offensive interests concern market access or policy changes that the EU receives from its trading partner through a trade agreement, such as the liberalization of government procurement. Defensive interests concern trade protective measures or other policies that the EU wants to maintain towards its trading partner, for instance high tariffs on beef imports.

On the basis of these economic impact studies, the Commission draws up negotiating directives which are adopted by the EU’s Council of Ministers. Only when the negotiations are underway does the European Commission order a Sustainability Impact Study. The latter then examines whether the trade agreement in question may cause social or environmental problems. However, if a SIA identifies a negative impact, this information cannot overrule the negotiating directives. It cannot direct the negotiations, it can only give guidance on possible accompanying and mitigating measures.

Therefore, a SIA does not even look for the best trade measures to promote sustainable development. It does not change the course of negotiations and it can only lead to remedial action, often turning the responsibility for this over to the trading partner itself. Hence the EU does not explicitly look for specific trade measures that contribute concretely to the reduction of poverty and inequality, or to the broad Agenda 2030, or to sustainable development in the broader sense.

Sustainable Development Chapters: dressing up

Another flagship of European trade policy is the so-called chapter on sustainable development that the European Commission has included in its trade agreements since 2010. This chapter does not change the content of the other chapters which remain at the service of offensive and defensive economic interests. The chapter on sustainable development calls on the partners to respect the social and environmental treaties to which they have subscribed, and not to reduce their social and environmental standards in order to obtain a trade advantage. 

The chapter is not enforceable, unlike the other chapters in European trade agreements. No sanctions can be taken if the commitments made in the sustainable development chapters are not respected. Once again, as with the SIAs, this chapter is a dress-up that does not make the direction and content of trade policy itself more sustainable.

And yet trade policy cannot continue to pretend that its interventions in society are neutral. Through trade, the EU places a disproportionate burden on the planet’s natural resources. Europe’s ecological footprint is enormous. Does it still make sense to organise more trade and to send more products and parts around the world? Is it sustainable to continue multiplying global production chains, or should we move to more regional and local chains? 

Glory of the economy

Shouldn’t we move towards a circular economy and take the necessary trade measures to achieve this? Does it make sense to organise free competition for the production of food, which takes place under very different conditions worldwide? Can trade and investment policy continue to liberalise and protect fossil energy production? Can digital platforms continue to skim off revenue without a local presence and without paying taxes? Can companies continue to avoid taxes through financial constructions? Can the gap between income from capital and labour continue to widen? 

Can companies continue to produce without respecting fundamental labour rights? Can they continue to evade their responsibility for human rights violations through complex holding constructions? Can we allow our consumer protection in the context of trade agreements to be weakened in order to serve business interests? 

For us, the answer to each of these questions is no. Trade policy cannot remain an outsider with the sole mission of liberalising trade to the glory of the economy and business, while leaving the rest of the world to go around, without changing itself. Trade policy must serve everyone and help build the necessary transition to a social and sustainable society. To achieve this, trade policy must first become more open and democratic and shake off companies’ privileged access to decision-making. Sustainable development ought to be more than ten small SDGs and economic growth. 

Marc Maes is the Trade Policy Officer of 11.11.11-Coalition of the Flemish North-South Movement since 1999. He represents 11.11.11 in various national and international civil society networks that monitor EU trade policy form the perspective of sustainable development.

The Dutch version of this post was published on MO*Magazine.