Promoting sustainable trade in the Commonwealth Small States

The Project at A Glance

Sustainability pertains to three main areas of development: social, economic, and environmental considerations. Trade has potential benefits and drawbacks for sustainable development and the link between sustainable development and trade has been on the periphery of trade negotiations for the last two decades.
In this context, International Economic (IEC), with funding from the Commonwealth Secretariat, conducted a study to assess the sustainability of production and trade practices in Commonwealth small states and delivered a set of targeted recommendations for mainstreaming sustainability across trade agreements.

What We Found

As part of this study, the IEC team analysed 23 free trade agreements (FTA) based on their coverage of trade and sustainable provisions. The key dimensions considered include the environment, labour rights, Small and medium-sized enterprises (SMEs), transparency, development cooperation, gender, health, anti-corruption, and responsible business practices. Each FTA was scanned to assess the chapters pertaining to sustainability and any general references made in other chapters such as the preamble.
It was found that trade and sustainable development concerns were predominantly limited to labour rights and environmental areas.
Few trade agreements included provisions relating to gender, health, SME participation and transparency. Even if these provisions did exist, they were generally not legally binding. As for provisions on labour and the environment, there are generally more substantive commitments. In certain instances, the trade agreements also allowed trading partners to have recourse to dispute settlement mechanisms, sanctions, and remedies.

Our Strategy and Impact

Taking into consideration the current efforts by the Commonwealth Member States, our Team made a series of practical recommendations for countries to use trade and trade practices for the achievement of sustainable development, including through the negotiation of trade agreements.
Our first recommendation was the creation of harmonised frameworks in FTAs to address the link between trade and sustainable development. As observed in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), it is advisable for FTAs to include dedicated chapters with comprehensive frameworks and guidelines for cooperation, review, monitoring, and dispute resolution for each element pertaining to sustainability. Such approach promotes corporation between countries while also allowing countries to regulate their own issues domestically.

Another approach that can be undertaken in FTAs is positive discrimination i.e. preferential market access granted on the basis of trading partners complying with standards and norms that promote and ensure sustainability. This is an approach that has been put into practice by the European Union.
Moreover, countries should also undertake more efforts to improve and facilitate trade and environmental goods and services. This may include the reduction of tariff and non-tariff measures that act as a barrier to trade; improving market access to businesses with high carbon efficiency; and encouraging the digitalization of trade processes.
Additional steps should also include enhancing and facilitating trade in environmental goods and services, through a reduction in tariff and non-tariff measures that act as barriers to trade; providing businesses with high carbon efficiency to better market access, through the use of environmental goods and services; improving digitalisation of trade processes.

Our Core Solutions

Understanding the sustainability provisions in FTAs is important for businesses as they seek to import or export from certain markets. At IEC, we provide our clients with a detailed analysis of the key impacts of new trade agreements on their operations and competitiveness through an assessment of tariff, and non-tariff tariff barriers, provisions on rules of origin, customs efficiency, the effectiveness of transport networks, and sustainability provisions, among others. We can help assess the opportunities in different markets, determine the feasibility and viability of projects, and benchmark the wider ecosystem to support business growth.