Trade policy and the post-2015 agenda

7 February 2014

With the expiry of the Millennium Development Goals (MDGs) coming up in 2015, the UN system is in the process of pulling together a post-2015 global development agenda. The final outcome is expected set the course for international development work for the following fifteen years. In recognition of the interconnected nature of most development challenges, UN members have mandated that the post-2015 agenda, including a single set of Sustainable Development Goals (SDGs), should integrate and balance environmental, social, and economic concerns. UN members have also decided that the SDGs will be an agenda for universal action, in other words: global goals that are relevant to all countries, supported by national targets. Countries, UN agencies, and NGOs are lobbying hard to have their priority issue included, from MDG priorities like health and hunger, to new issues like urban settlements, decent work, or peace and security.

Viewing the debate from Geneva, where the helpful (or harmful) effects of trade policies on the environment, economic growth, and human development are debated every day, it is striking how little trade policy is part of the post-2015 debate. UNCTAD calls trade "the most reliable and productive way of integrating into the global economy and of supporting the efforts of poorer countries to become less aid dependent." [Ref 1]

Expanding this thought, trade not only connects but shapes economies, communities, and the environment; it drives changes in employment and production, as well as the use of natural resources that production depends on. Trade policy is therefore an important part of the solution to balancing environmental protection, economic growth and human development. Trade policy is also a tool of universal action, as virtually every government faces the challenge of defining what its trade policy settings should be.

Background briefs produced by a Task Team of UN agencies to inform the creation of the SDGs touch briefly on the role of trade, citing it as an enabler of growth and as a way of diffusing technology. Country statements at meetings of the UN Open Working Group tasked with developing the SDGs have referred to a number of trade-related issues including agricultural and environmentally harmful subsidies. But there has been very little - if any - attempt to tie this together to answer the broader question: what role should trade and trade policy play in the post-2015 development agenda?

MDG8, the problem child
The MDG framework consisted of eight headline goals agreed to by all the world's countries, as well as leading development institutions. Trade policy was included in Millennium Development Goal 8: Develop a global partnership for development. Along with targets on overseas development assistance (ODA) and debt sustainability, Targets 8A and 8B refer to developing further an open, rule-based, predictable, non-discriminatory trading and financial system, as well as addressing the special needs of least developed countries (LDCs). The trade-related targets were accompanied by indicators to measure market access provided by developed countries for developing country exports, agricultural subsidies in OECD countries, and the proportion of overseas development assistance (ODA) allocated to help build trade capacity.

MDG8 was problematic on a number of levels. It is often considered to have been an afterthought of the negotiating process - a grab-bag of economic issues that were acknowledged to be important but for which delegates felt ill-equipped (or simply ran out of time) to deal with properly. The targets under MDG8 are also less specific and less measurable in comparison with the other goals. Assessing target 8A for example, the further development of the international trading system, is vague, and requires multilateral action, making it simultaneously everyone's responsibility and no-one's. Target 8B similarly sets no objective measure of achievement, simply stipulating LDCs' needs be addressed. Unsurprisingly, opinions about whether MDG8 has been met or not vary widely.

Finally, there is very little connection between MDGs 1 through 7 and MDG8. ODA, debt relief, and trade preferences were apparently simply assumed to help developing countries achieve the first seven goals. Perhaps as a result, several developing countries have argued for the means of implementation of the new SDGs to be identified as part of the framework for each new goal. Means of implementation could include traditional ODA from developed to developing countries, South-South aid, or domestic financing. One of the underlying challenges for the SDGs process, then, will be to identify not only what the world's development goals should be, but also who should fund the work to achieve them, and how.

SDGs, new kids in town
The process of creating the SDGs provides an opportunity to re-think the structure of the MDGs. As discussed above, the SDGs are meant to pursue an integrated approach to advancing human development, economic growth, environmental protection, and (some experts argue) peace and security issues simultaneously. Stakeholders have put forward various conceptual approaches to building this integrated framework. Colombia has advocated a bottom-up approach by which critical targets across a multitude of areas would be identified first, and then grouped into the relevant macro-level goals.

The UN Global Compact - a policy initiative designed to engage business in development - submitted a document to the SDGs process that groups issues under broad themes; The Resource Triad theme for example pairs food and agriculture, water and sanitation, energy and climate as synergistic goals, as set out in Diagram 1:

The UN High Level Panel of Eminent Persons (HLP) - a group convened by the UN Secretary General to advise on the post-2015 agenda - suggested a set of 12 issue-specific goals supported by 54 clear and measurable targets, several of which pinpoint multiple dimensions of development. The HLP's draft goal Ensure Food Security and Good Nutrition, for example, includes human development targets on hunger and stunting, an economic target around agricultural productivity, as well as an environmental target on sustainable fish stocks.

The task of putting together the first draft framework of SDGs has been given to the Open Working Group (OWG) on the Sustainable Development Goals of the UN General Assembly. The OWG notionally has 30 seats, but several of these are shared, meaning that some 70 countries are represented. Other UN member states and civil society stakeholders contribute to the OWG's work by submitting statements and input papers.

The OWG has met regularly since early 2013 to take stock of issues, options, and members' positions on a series of sustainable development issues. After their final session in February 2014, delegates will begin work on an output document, to be sent to the UN General Assembly in September 2014. This output document will join many other reports from a range of groups working on different aspects of the post-2015 development agenda. The central issue of financing sustainable development, for example, is being discussed by an Intergovernmental Committee of Experts on Sustainable Development Financing.

The General Assembly will then bring all of these inputs together to craft the final post2015 development agenda. It is not yet clear how the various inputs will be combined into a single coherent agenda and whether the OWG's draft SDG framework will then be re-opened for further negotiation. The OWG is broadly representative, however, so it is fair to assume that its report will carry some weight. The next few months of negotiation around its output document are therefore an important opportunity to shape the core of the post-2015 agenda.

Trade policy and the environment in the SDGs
Trade policy could play a number of roles in the SDG framework. The simplest option would be similar to the role it played in the MDGs: as an enabler of economic growth mainly through improved market access for developing country exports. This could be achieved by rolling over the goals and targets of MDG8; increasing aid for trade, lowering tariff barriers, lowering developed-country agricultural subsidies, and gradually improving the rule-based trading system.

Such an approach could also be updated by establishing more specific targets for the market access provision. Countries could establish national targets for either full, or a specific percentage of, duty-free and quota-free (DFQF) market access for exports from LDCs, for instance. This variation would offer added value in three important ways. Firstly, it would make the market-access based contribution of trade policy more universal, reflecting the importance of South-South trade as well as the growth of huge markets in developing countries. A second gain would be in increased measurability, read enhanced accountability. Third, countries would be able to set targets consistent with national circumstances.

But while this update could be an improvement on MDG8, the integrative nature of the SDGs presents an opportunity to further leverage what trade-related policy could contribute towards attaining sustainable development objectives. Under a more integrated approach, trade-related targets or indicators could be included across the SDGs framework wherever they could contribute to improved environmental and human development outcomes, from addressing climate change to food security and nutrition. The objective would be to identify specific areas of trade policy reform which, done carefully and gradually, could support progress towards particular sustainable development goals. Such an approach would reflect the fact that trade policy is a universal tool and could help countries involve trade policy in coherent national policy frameworks.

There are already some signs of this approach filtering into the SDGs debate. The UN Secretary General's report to the UN General Assembly on the MDGs and the post-2015 development agenda, "A Life of Dignity for All," includes trade as an essential component of promoting inclusive and sustainable growth, together with decent employment. In another example, several countries in the OWG have underlined the continuing importance of reductions in agricultural subsidies in the developed world in the context of improving food security and ending hunger.

Others have argued for reductions in environmentally harmful subsidies. The HLP's draft goal around Secure Sustainable Energy, for instance, includes a target for phasing out inefficient fossil fuel subsidies that encourage wasteful consumption, reflecting the fact that improving access to renewable energy depends not only on its price but also on the price of competing fossil fuel alternatives. In addition to agricultural and fossil fuel subsidies, the reform of capacity-enhancing subsidies to fisheries would contribute to reducing pressure on fish stocks, helping to restore their ability to provide a sustainable source of food security and nutrition. Demand for fish as food is likely to increase by between 20 and 30 percent by 2030, but only 12.7 percent of global fish stocks have room for further expansions of catch [Ref 2]

Countries in favour of reforming environmentally harmful subsidies also emphasise that this could generate further means of implementation for other goals. At the domestic level, they argue, this might involve recycling the funds previously used for subsidies into investments in sustainable infrastructure and production patterns. The funds could also be redirected towards ODA, where relevant. Linked to this, UN member states could consider the potential for Aid for Trade to have a broader, environment-related role in the integrated structure of the SDGs. MDG Target 8.9 refers to the proportion of ODA provided to help build trade capacity. As economic activity is shaped by changes in climate patterns, however, the objectives of supporting exporting capacity and adapting to climate change are increasingly related. For example, ICTSD research has looked at how adaptations to climate-change induced variations in agricultural growing conditions, including improving irrigation and the use of drought-resistant crop strains, could be supported by trade-related financing. This and other complementarities between different means of implementation could help to address economic, environmental, and social development objectives in a more coherent way.

Trade as an enabler across the sustainable development goals
The post-2015 development agenda will not impose obligations on UN member states; no country will be legally bound to implementing the targets agreed. If they are anything like the MDGs, the SDGs and the post-2015 development agenda will act as influencers - focusing political attention on priority areas, as well as acting as a lightning rod for funding flows.

The SDGs' integrated design and universal application provide a real opportunity to make development, environment, and economic policies, including trade policy, more coherent and mutually supportive. Trade-related ideas are already part of the debate in New York, but there is still space to define a coherent, constructive, and cross-goal role for trade policy in the new sustainable development agenda.

[Ref 1] UNCTAD (2013) Trade and development and the global partnership beyond 2015, UN System Task Team on the Post-2015 Development Agenda Thematic Think Piece, United Nations Conference on Trade and Development, Geneva, p3.

[Ref 2]: Lee, B., Preston, F., Kooroshy, J., Bailey, R., and Lahn, G. et al (2012), Resources Futures, Chatham House, London.

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