“It’s time to make trade agreements sustainable”
“Trade regulations can be a strong lever for change,” says Elisabeth Bürgi Bonanomi, expert in sustainable trade relations at CDE. Trade agreements influence what is produced where, how, and at what price. This regularly sparks controversies, and more and more people are asking: How can and should the state promote trade relations that foster sustainable development of agriculture and the food industry?
Interview: Gaby Allheilig
Trade issues are often contentious – especially when they affect the agriculture and food sector. One example is the planned free trade agreement between EFTA and Mercosur states: The Swiss government and exporters are pushing for a fast agreement; but an alliance of NGOs and Swiss farmers is raising concerns about negative consequences. Can we easily predict who will benefit and who will lose out?
Trade agreements shape markets and influence what goods are produced, in what way, and at what price. So it’s critical how trade agreements are structured. It takes close analysis to find out whom they serve, who the winners are, and who the losers are.
What does that mean concretely?
For example, if we want to relax import regulations on South American meat, the question arises as to what type of agriculture this promotes in our partner countries and what effects it will have on farmers and the environment there. Another question is whether it makes sense – or is justifiable from an environmental and climate point of view – to transport agricultural products over such long distances. Under certain circumstances it may make sense, under others it doesn’t. And we also have to consider what the agreement would mean for our farmers here in Switzerland. Only when all these elements are known can the various interests be carefully weighed up and a sustainable agreement be formulated.
What do you tell people who think it’s not up to Switzerland to worry about production conditions in other countries?
In our globalized world, we have a responsibility to act sustainably at all levels: individually as consumers, in the private sector, and in the public sector. A country like Switzerland, which meets most of its consumptive needs with goods from abroad, has a particular responsibility in this respect.
“Switzerland has a constitutional mandate to contribute to sustainable development through its trade relations.”
The new article 104a in the Swiss constitution contains a clear mandate: Switzerland must engage in trade relations that contribute to sustainable development in the agriculture and food sector – both at home and abroad. This mandate must now be put into concrete terms. Other principles enshrined in our constitution, such as commitments to preserve natural resources and to help alleviate poverty in the world, point in the same direction. All these goals must be considered when we enter into trade agreements with other countries. Trade agreements should serve Swiss economic interests, of course, but not only.
A common practice is to add components to trade agreements in which the partners commit to respecting human rights and environmental conventions. How effective are such sustainability chapters really?
Switzerland has worked with sustainability chapters on environmental standards and labour conditions – for example in the new trade agreement with Indonesia. Failure to comply with the agreed standards triggers a consultation procedure. Opinions are divided as to the benefits of such mechanisms. But they are certainly better than nothing. These procedures can also help give a voice to environmental organizations or trade unions in the partner countries.
“The Fair Food Initiative has shown that there are still many uncertainties about how to distinguish sustainable products from unsustainable ones.”
Alternatively, it is possible to “reward” certain production methods – such as fair working conditions or environmentally friendly production – by improving market access for these products. However, Swiss voters just passed up the opportunity to create more sustainable markets and trade relations by introducing such product differentiation. They rejected the “Fair Food Initiative”.
Product differentiation and sustainability chapters are not mutually exclusive; they would complement each other. But the debate over the Fair Food Initiative showed that there are many uncertainties as to how, precisely, such mechanisms of product differentiation could be designed. Above all, we don’t know how to draw the line between more or less sustainable production. And it’s not clear what policy space WTO member countries actually have. This should be explored in more detail. These issues still require research.
In the past, the WTO hasn’t necessarily stood out as a trailblazer when it comes to social and environmental standards. But this past October, at its Public Forum, it discussed what sustainable trade will look like in the future and how it can be made more inclusive. Has there been a rethink?
For many years, trade specialists focused strongly on the goal of creating “free” markets as far as possible. However, it also has to be said that promotion of sustainable development is enshrined in the WTO agreement. It’s just that, until recently, little thought was given as to how – and whether – it’s possible to reconcile the two objectives of “open markets” and “sustainable development”. Besides, agricultural markets in particular are anything but “open” today.
“Trump’s trade policy has prompted a change in thinking.”
There has been a change in thinking, not least as a result of President Donald Trump’s trade policy: People are alarmed and are looking for new answers that place greater emphasis on sustainability. The aim is to reinvigorate the multilateral trading system. This was also noticeable at the last WTO Public Forum.
So linking tariff preferences to sustainability criteria is not off the table?
The topic was discussed extensively in the 1990s and is now coming up again. The EU is using new agreements to promote legally harvested timber, for example, while discouraging trade in illegal timber. It also applies similar mechanisms of product differentiation to agrofuels – as does Switzerland. In addition to customs regulations, other possible policy instruments, including import quotas and purchase obligations, also need to be examined.
The debate is progressing slowly. But if we don’t differentiate between sustainable and unsustainable products, it will be difficult to shape trade relations in a way that really fulfils the mandate enshrined in Article 104a of the federal constitution.
“The state has a responsibility to find ways of promoting sustainable agricultural and food systems.”
Whose task is it to put this into concrete terms or to provide answers? Is this the responsibility of scientists?
The scientific community needs to examine which criteria can be used to distinguish between sustainable and unsustainable farming systems – in an efficient, proportionate, fair, non-discriminatory, reliable, and context-specific way. It is not a question of pitting different agricultural systems against each other. Ultimately, the question is this: How can we ensure that all systems become more sustainable and that the more diversified systems can exist alongside specialized, monoculture-based ones?
What does that mean?
In the case of industrial farming systems, for example, we need to find out which mechanisms or incentives can encourage them to use less resources, become more animal-friendly, and provide better working conditions. By contrast, in the case of diversified farming systems, the challenge is to find ways of preserving and strengthening them. They are extremely important for global food security and biodiversity – especially in times of climate change. The state has a responsibility to address these questions, both in domestic matters, for example when designing subsidies, and in trade relations with other countries. And that requires research.