Transformative trade policy - a missing link post-2015?

It would appear that trade policy has disappeared from the radar screen of the discourse on the post-2015 development agenda, says Gabriele Koehler. The need for international policy space for a transformative trade agenda is clearly vital.

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IN 2012, the outcome document of the UN Conference on Sustainable Development held in Rio de Janeiro, 'The future we want', noted that 'sustained economic growth for reduction of poverty, inequality and vulnerability will require strengthened partnerships among governments, the private sector and civil society to make sure that international trade, and national and foreign direct investments contribute to productive employment creation, economic security and investments in health, education, rural development, water and sanitation while safeguarding human rights and empowering women'. The Rio document speaks of a fair and stable global trading system as an enabler of such development.

Discussions on a new sustainable development agenda are now in full swing. The co-chairs of the UN Open Working Group (OWG) leading the Sustainable Development Goals (SDGs) process have just issued a revised list of 19 focus areas, with updated goals and targets.1 There has been much progress in terms of core human development and human rights issues, and core issues - decent work and employment, the care economy, social protection, sexual and reproductive rights, and sustainable production and consumption - have been inserted, based on creative contributions and concerted argumentative pressure from progressive groups.

But how has the aspiration of a fair, employment-oriented trading system filtered through into the current SDG negotiations? Trade is included in the draft SDG text under the themes of economic growth [focus area (FA) 8] and promoting equality (FA 12) - which is welcome in that it signals the implications of trade for equitable outcomes. The text uses language from the Doha Development Round of trade talks, i.e., 'promoting an open, rules-based, non-discriminatory and equitable multilateral trading system' (FA 10, item i), but otherwise avoids any reference to the Round. It calls for trade facilitation and preferential market access for least developed countries (FA 10, item j; FA 12bis, item a). Technology transfer is mentioned (FA 10, item l), as is the need to abolish harmful subsidies (FA 2 on food security, item m; FA 7 on energy, item e; FA 12bis, item c). Market access for 'industrial products and processed commodities of developing countries' is in focus area 9: Industrialisation. Affordable medicines - which depend on trade and intellectual property rights regimes - are listed in connection with health and population dynamics (FA 2).

So, issues related to trade policy are included in the text, but trade does not feature as a standalone area. The topic of trade - in the past so central to development theory and policy, and subject of decades of intergovernmental negotiations - appears peripheral, because the references are weak, thin and scattered. And as in much of the text, one misses an analytical underpinning.

For example, the current SDG draft speaks of global supply chains only once (FA 14 on sustainable consumption and production), and thus lacks an analysis of the internationalisation of production processes. In so many industries, these are outsourced to global value chains which include an informal economy where there are no labour rights or standards. The horrifying events in Bangladesh's garment factories were one example of such processes. The text also lacks a clear critique of systemic harmful commodity price speculation that has undermined food security of the poor, by first drastically raising food prices and then making them unpredictable. Nor does the SDG text properly address the international financial disarray that has been throwing countries off track, including in terms of their trade competitiveness. It would appear that trade policy has disappeared from the radar screen of international discourse. Three steps could help re-establish a more analytically aware and politically progressive stance.

Revalorising knowledge from the past

In earlier development agendas, international trade and investment were on the front stage. Critical and evidence-based analysis of the often inequitable, immiserising functioning of international trade used to drive development theory and advocacy. The terms-of-trade debates in the UN, the UN Economic Commission for Latin America and the Caribbean (ECLAC) and the UN Conference on Trade and Development (UNCTAD), their analyses of the commodity economy, and their research on industrial strategy are eloquent examples. These debates were passionate in their concern over unequal exchange, and were devoted to devising policies to overcome the structural disadvantages of low-income, low-productivity countries.

The developmentalist stance of the 1960s-80s did nevertheless have a crucial shortcoming. It generally remained at the macroeconomic and nation-state level, and did not look at the multidimensional effects of international trade or investment within the country: on classes of people, communities, households, let alone on women, men or children. The debates on the factors contributing to the success of the 'tiger economies', for example, tended to gloss over class interests, the role of trade unions, the contribution of women workers, or the right of all people to democracy. Environmental sustainability was not on the radar screen; there was no concern over ecologically harmful production and consumption patterns, or the acceleration of physical trade and its carbon footprints.

Structural or dependency theory was pushed aside, however, not because of its insufficient attention to equity and human development or to the environment. It was blamed for stagnation in economic growth, attributed to too much state intervention, and displaced by a neoliberal infatuation with markets. Eventually, neoliberal economic theory and policy was made more 'palatable' with the reorientation to social development issues offered by the Millennium Development Goals (MDGs). However, the human development and MDG agenda too, with its focus on the individual and household level, has an inherent shortcoming: it underplays the overall political economy of societies and economies.

The SDG and post-2015 development agenda processes would benefit from revisiting the knowledge, overcoming the blinkers, of the 'old' structuralist theory, and integrating it constructively with a progressive, transformative agenda. They could bring together the - professed - commitment to sustainable human development with the analysis of structural dependency (see, for example, Langer and Stewart, 2012, 'International trade and horizontal inequalities: conceptual and empirical linkages', European Journal of Development Research, Vol. 24 No. 5). The SDG focus areas on industrialisation (FA 9) and employment and decent work for all (FA 11) could be excellent entry points.

Scratching beneath the surface

The share of profits in gross national product (GNP) has risen steadily over the past decade, and austerity budgets are making the situation for the lowest income quintiles worse on a daily basis (see Ortiz and Cummins, 2011, 'Global inequality: Beyond the bottom billion. Rapid review of income distribution in 141 countries', UNICEF Social and Economic Policy Working Paper, www.unicef.org/socialpolicy/files/Global_Inequality.pdf). Startled by the ever-increasing income inequities within and between countries, and in reaction to the dominance of financial markets, a rhetoric that sounds left-wing - about the need to tame the markets and to address inequalities - has emerged in mainstream development economics discourse. It has even managed to capture the attention of the Davos World Economic Forum and the International Monetary Fund (IMF).

Indeed, the SDG draft - and discussions on the post-2015 development agenda - does not merely recognise inequality as an issue, the OWG text is driven by this concern, which is an enormous achievement of the negotiating groups. However, there is a gap between the acknowledgement of inequities and a critical analysis of the political economy of inequality. What is missing is a theory in the background that would help to analyse economic and political powers, be they landholders who exploit the landless; enterprises that grab resources, avoid labour standards, shrug off environmental responsibility or evade taxes; or governments that cave in to unfair agreements in trade, investment or intellectual property, or land rights. The next round of OWG discussions would need to examine why the top income quintile has seen such an increase in its share of GNP, despite efforts in many countries to improve social policy.

The post-2015 development agenda analyses could also be more critical and dissect the dynamics of globalisation as it impacts on equitable and sustainable human development. To develop an agenda on equity in trade, it would be necessary to question the terms under which the landless poor, smallholder farmers, the informal sector and the working poor produce and sell their products, and to revisit the way low-income, low-power countries are positioned in global value chains and investment deals and interface with the economic superpowers.

It would be necessary to examine the trade agenda not only from the angle of nation-state interests, but from the interests of the poor and excluded in South and North. The gendered impact of trade is one issue that has found wider recognition (see UNCTAD, 2014, 'Trade, gender and the post-2015 development agenda', Post-2015 Policy Brief No. 3) and is reflected in the focus area on poverty eradication (FA 1), but the effects of the prevalent international trade, investment and intellectual property regimes on socially excluded groups need to be assessed more widely. Global rules are challenging public provision of essential goods and services across the developing world (see Third World Network, 2013, 'Do not dilute G33 proposal'). This needs to be addressed. Recent International Labour Organisation (ILO) conventions, such as the Convention on Home Work or the Indigenous and Tribal Peoples Convention, could provide helpful policy pointers for the SDG discussions.

Working the current contradictions

The SDG and post-2015 development agenda discussions are taking place in a very complex economic and political environment, making the above suggestions on revalorising structuralist theory or introducing political economy approaches sound unrealistic or even counterproductive. The discussions are tough, and progressive coalitions are having a difficult time in getting transformative positions into the negotiated texts. The political environment is very different from that in the rebellious 1960s, when the G77, UNCTAD and the South Centre were established, or the compassionate late 1990s/early 2000s, when the MDGs were conceptualised as the outcome of a series of socially sensitive global summits, notably the World Social Summit of 1995 and the Children's Summit of 2000.

Today, many developed countries - still power brokers in the international development game - are led by conservative parties concerned primarily with their individual country's economic prowess. Many of the post-2015 development agenda experts appointed by the UN Secretary-General come from politically and socially conservative backgrounds. These governments will ultimately focus on ensuring national interests. Despite a rhetoric around eradicating poverty and inequities, they would not readily push for a genuine shift in the North-South political economy.

The South is fragmented, with sets of countries having conflicting trade and investment interests, making it almost difficult to speak with one voice in international fora. The 'soft powers' of the South, the BRICS countries, have been progressive in advancing social protection, but not in looking into more equitable trade measures, even for their immediate neighbours, or into environmental policy. So is there international policy space for a transformative trade agenda?

There are several important countercurrents to build on. For example, a number of countries, notably in Latin America, have progressive governments. The economically weaker countries, such as the least developed countries, the landlocked and the island states, have come closer together on climate change issues, in terms of both analysis and global advocacy. Across the world, critical parliamentarians, trade unions, agriculture organisations, grassroots groups representing informal economy workers, women's groups and the '99% movement' are becoming an articulate force, representing the interests of the poor and marginalised in South and North. These groups could perhaps coalesce and serve as a force for a more complete transformative development agenda. This would address human rights more proactively, and combine the hopefully agreed goals of good governance, social justice and sustainability, decent work and social protection for all with a vision of genuinely equitable, transformative trade and investment policies, since these are a prerequisite to sustainable human development.                                                     

Gabriele Koehler is a development economist and currently a Visiting Fellow at the United Nations Research Institute for Social Development (UNRISD). She is also a board member of Women in Europe for a Common Future (WECF).

Endnote

1     The focus areas are about to be clustered into several interrelated groups.

*Third World Resurgence No. 283/284, Mar/Apr 2014, pp 33-35