Increasing sustainability standards through trade deals

FFA2021 Regional Event Pre-read

Monday, May 10, 2021

This blog serves as pre-reading material for those interested in the second part of the FFA2021 Regional Portugal morning event which will explore sustainability and trade.

Lifting sustainability standards in international trade represents not just a critical component of delivering on global commitments on the environment, but also on labour conditions, the rights of indigenous peoples, and contribution to halting and reversing the climate emergency. In the wake of such commitments as the UN Sustainable Development Goals, the 2030 Agenda of Sustainable Development, and the EU’s new trade policy strategy, it is clear that the global community is trying to move past the age of outsourcing pollution, dumping, and the erosion of global labour standards.

The current difficulties surrounding the full ratification of the EU-Mercosur trade agreement provide a case in point. After 20 years of negotiations, the results are a historic moment for both trade blocs and should have served as a demonstration of global free trade in the face of a global withdrawal from such large-scale agreements. However, deforestation and wildfires in the Amazonian region in the last two years have rallied public opposition to the deal. While the European Commission has repeatedly assured governments and the broader public that the Trade and Sustainable Development chapter of the agreement addresses such concerns, the EU Ombudsman has recently concluded that the Commission’s handling of the possible environmental impact amounted to ‘maladministration’. Given that unanimity, including at the national parliament level, will be required to fully ratify the trade agreement, the current outcome remains uncertain.

Balancing economic gains with the possible negative externalities generated by increased economic activity remains one of the most difficult aspects of international trade. Agriculture and land use are often at the heart of such disputes, not just due to the emotional impact that food generates in the public, but also as they often generate real visibility for the consequences of global trade.

Furthermore, the land use footprint of the global agricultural food system is such that it has an outsized impact on global sustainability.
However, many actors in the public and private sectors are seeking to go above and beyond minimum requirements set out in trade deals and by national governments. Responsible supply chain management, contractually obligations for local suppliers, as well as bespoke arrangements such as extra payments for environmental stewardship are becoming more and more common. While such actions are often undertaken in the face of public scrutiny, many actors are now seeing the importance of trade when it comes to combating climate change and delivering on environmental protection.

Clearly, the future of international trade relations will need to embody not just the potential economic gains, but also take full account of the environmental, climate, and social consequences of any agreement. Even existing trade deals could, in future, become subject to revision as new science and unforeseen consequences trade relations become manifest.

During this session, we will ask the panel to discuss how to increase sustainability standards in European and global trade deals, the responsibilities of the public and private sector when it comes to enforcement of any sustainability chapters, and how to prevent dumping and outsourcing of environmental and climate consequences.

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