Sustainable trade relations for diversified food systems

Asian rice farmers. Photo: shutterstock.com / tong_stocker


Food systems are highly interdependent. Making them more sustainable requires a joint approach. This project examines how governments can promote diversified food systems with sustainable trade relations.

Background

Diversified food systems are ecologically and economically valuable, distribute social benefits equitably, and contribute to a diversified food basket. They are more sustainable than specialized food systems that mainly emphasize quantities of food production.

One key lever for promotion of diversified food systems is the way in which trade relations are structured and implemented. This raises the question of the state’s role in product differentiation: If a domestic government seeks to grant tariff preferences for sustainably produced food, how can it do so in an effective, proportionate, context-sensitive, non-discriminatory, and reliable way, complying with its international obligations and the objectives enshrined in its constitution?

Project goal

The aim of the project is to show how governments can distinguish between more or less sustainably produced food without violating basic principles of the trade framework, including the principle of non-discrimination.

This could enable more nuanced trade regimes and relations that are structured to promote diverse food systems.

Methods

The research project

  • combines comprehensive legal analyses – especially of trade law – with examination of “best practice” examples
  • identifies existing challenges of private certification schemes
  • explores the perspective of farmers
  • analyses new approaches to product differentiation
  • investigates certification issues critically and in context
  • develops transdisciplinary knowledge in workshops on location in Bolivia, Laos, and Switzerland.

Results: How a Swiss federal law on sustainable agricultural trade could be formulated – a concrete example

Article 104a lit. d of the Swiss Federal Constitution obligates the Confederation to create the conditions required for “cross-border trade relations that contribute to the sustainable development of the agriculture and food sector”. This provision still needs to be realized. Simon Mazidi and Eva Maria Belser of the Institute of Federalism at the University of Fribourg explain how this should be done and what needs to be considered:

In their study on Art. 104a lit. d of the Swiss Federal Constitution (SFC) and how to implement it, constitutional law scholars Simon Mazidi and Eva Maria Belser state that the provision establishes a new constitutional mandate in terms of trade policy. This is underscored by the wording, according to which cross-border trade must contribute to the sustainable development of the agriculture and food sector. This new constitutional weighting must be properly considered in implementation.

In this context, it is important to recall that, in 2017, the Swiss population and all cantons approved a constitutional amendment under the heading of “food security”. According to Mazidi and Belser, this led to the erroneous assumption that the provision in Art. 104a lit. d SFC is only intended to ensure access to international agricultural markets that is as stable as possible and free of obstacles – in other words, the belief that the provision is mainly intended to ensure sufficient availability of food in Switzerland.

However, as the two legal scholars explain in their analysis, this interpretation of Art. 104a lit. d SFC contradicts “the importance of sustainability in the constitutional system and the concept of food security itself”. Today, the latter concept recognizes that long-term food security can only be ensured if food production is based on sustainable development. Moreover, conservation of natural resources is one of the explicitly stated objectives in foreign policy under Art. 54 para. 2 SFC.

In their analysis, the two scientists also examine the common interpretation that reducing negative ecological impacts in Switzerland through food imports makes a sufficient contribution to sustainable development. According to the underlying logic, local ecosystems would be massively overtaxed if domestic production had to replace imports.

However, the two authors refute this simplistic interpretation as well, stating that in cross-border trade relations, negative externalities do not stop at national borders. They conclude: “When assessing the contribution of cross-border trade relations to the sustainable development of the agri-food sector, the impacts that occur during production and transport must also be taken into account.”

Finally, the two legal scholars also address Switzerland’s international obligations, for example in the framework of the WTO. As Mazidi and Belser make clear, Art. 104a lit. d SFC should not be understood as permitting measures in contravention of these international obligations. However, they observe, the binding constitutional provision requires the authorities to use the leeway provided by international law to implement measures that can contribute to sustainable development. As an example of how Switzerland could implement Art. 104a lit. d SFC in the context of free trade agreements, they present the case of Switzerland’s agreement with Indonesia, according to which a distinction is made between sustainable and conventional production when importing palm oil. At the same time, they stress that individual clauses in individual trade agreements are not enough to fulfil this constitutional mandate. Instead, the latter fundamentally obligates the Confederation to shape (or restructure) trade relations such that they contribute to sustainable development.

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But why isn’t it easy to comply with this constitutional obligation? On the one hand, it’s partly due to increasingly entrenched narratives which, over the years, have made trade in agricultural products appear unsustainable per se. But from a sustainability perspective, the central question is this: How can the public sector promote sustainably produced goods via improved market access while reducing access to unsustainable products – that is, through so-called product differentiation? A number of important principles for such an approach can be derived from a comparison between the EU/EFTA negotiations with Mercosur and the EFTA-Indonesia agreement, as shown by a CDE study.

To introduce such legislation, the state must be able to distinguish between sustainably and unsustainably produced food. This is easier if there are internationally recognized standards it can refer to. CDE scientist Markus Giger and colleagues show in their study that widely accepted international standards do exist for many aspects of agricultural production. Looking at these aspects, it is possible to speak of a “common understanding of sustainable food systems”. But the authors also point out a number of issues that remain highly controversial:

The study “Elements of agreement and disagreement in recent international debates on sustainable farming systems” identifies a set of key criteria that can facilitate differentiation between sustainable and unsustainable forms of agricultural production. The criteria were drawn from globally agreed international norms. The authors also propose indicators for assessing production systems against the identified criteria. Overall, the study shows the following:

  • Agricultural production systems that meet these norms and related criteria will be clearly distinct from large-scale monocultures or from massive animal farms that depend on feed grown in distant places.
  • Farming systems that meet the identified criteria will contribute significantly to food security, income generation, and fair employment conditions, as well as to the environmental criteria of biodiversity and climate change adaptation and mitigation. They will recycle as much as possible, limit pesticide use, and manage soils sustainably.

Supporting such farming systems through preferential trade regulations could incentivize a transformation towards more sustainable food systems. However, the corresponding indicator framework should not be made too rigid, as this would slow down innovation. Related criteria and indicators should be used not only to differentiate between sustainable and unsustainable systems, but also to measure improvements. Go to publication

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Existing WTO rules make it difficult for states to draw distinctions between sustainable and non-sustainable products in trade or commercial contexts – e.g. through tariff differentiation, label requirements or guidelines in public procurement. Indeed, it is often assumed that WTO rules completely prohibit states from differentiating products according to sustainability. However, in two comprehensive studies, Irene Musselli, Jimena Solar, Theresa Tribaldos und Elisabeth Bürgi Bonanomi demonstrate that states actually have room for manoeuvre – and show how they can best exploit it:

Can countries differentiate between commodities based on sustainability criteria? And can they do so in a WTO-consistent manner? For example, can countries use trade measures to incentivize the import of sustainably produced commodities, while discouraging import of commodities with adverse socio-ecological impacts?

On the basis of two hypothetical laws – one on livestock farming and one on tropical goods – the authors outline the related opportunities and risks from a trade law perspective. In both cases, they conclude that such differentiation is possible in principle under WTO rules, as long as the laws observe certain key design features and implementation practices.

These include, in particular:

  • Be flexible and deferential: Ensure that the sustainability requirements are not designed and applied such that only certain countries/areas benefit from them. Instead, the standard-setting process should be context-sensitive, with variations in sustainability requirements based on legitimate socio-ecological criteria. In other words, it must be acknowledged that "sustainable" agriculture is site-specific. To the extent possible, import restrictions should be linked to requirements enforced in the exporting country.
  • Be rational: Differentiations made in the treatment of distinct products should be "calibrated" to the various sustainability risks stemming from each situation. This means that policymakers need to assess the environmental risks arising in different situations, and make sure that differentiations in treatment reflect the specific risks.
  • Seek cooperation and provide technical assistance: It is important to proactively engage with all potentially affected trading partners and explore cooperative solutions, for example in the form of mutual equivalence arrangements. For developing countries, it is important to link accreditation and equivalence processes with provision of technical assistance and transfers at the local and state level to improve technical and institutional capacity for implementation.
  • Ensure transparency and procedural fairness in the application of trade regulations: In this regard, it is important to establish a transparent, predictable certification process that is open to all potentially eligible members, and to establish procedures for reviewing, or appealing against, denied applications.

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Another widely held belief is that private-sector labels for sustainability or eco-friendliness suffice to promote imports of sustainable goods. In a study on “sustainable” fish, Urs Baumgartner and Elisabeth Bürgi Bonanomi demonstrate that relying on purely private certification schemes is not enough.

Similarly, experiences with voluntary industry alliances for “responsible” sourcing, such as the sector agreement on soy imports, show that this type of initiative is also insufficient. Although the model of importing only GMO-free and certified soy does have some good elements, on the whole, it is not sustainable. Sara Frey and Theresa Tribaldos of CDE explain why in their study on Swiss soy imports from Brazil.

The public sector is also needed

Accordingly, the research team argues that private initiatives must be complemented by public-sector efforts to ensure quality through incentives and regulations. However, while respecting fundamental equity principles and WTO requirements, states must proceed with care. This means they must create incentives and regulate trade in a way that enables context-sensitive solutions.

Today’s market-based certification schemes and related processes for sustainably produced agricultural goods have a number of shortcomings – especially in an international context. One problem is that many smallholder families in tropical countries – producers of coffee or cocoa, for example – cannot afford certification, even though they meet the necessary criteria. Another problem is that guidelines for sustainability certification tend to be exogenous. This means that they are largely defined by actors in industrialized countries and rarely adapted to specific contexts.

So-called participatory guarantee systems (PGS) offer an alternative to these conventional schemes. PGS are self-organized certification mechanisms for sustainably produced goods that are defined by local or regional communities and are based on transparent sustainability criteria. In addition to ecological criteria, they usually also include social and cultural aspects. Johanna Jacobi and colleagues studied PGS in Bolivia. In their article, they describe the opportunities this system offers, discuss the challenges currently still associated with it, and propose ways of overcoming them. Go to publication

The vital importance of context-sensitive solutions for sustainable development is also underlined by two case studies on benzoin resin production in northern Laos by Cornelia Hett and colleagues. Resin from the benzoin species Styrax tonkinensis is used in perfumes, cosmetics, and as a preservative in food products. The case studies take a “sustainable landscape investment” approach. The aim of this approach is to link and jointly promote environmentally sustainable development with human well-being, local people’s socio-economic needs and interests, and their resilience – in other words, to reconcile poverty alleviation in the global South with international environmental conservation goals in agricultural landscapes.

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In a paper on private food certification, authors Stefan Mann and Maria Haller of Agroscope suggest a three-pronged incentive structure to discourage engagement in particularly harmful production methods. Read more

At the same time, a consistent approach is needed that establishes equivalent standards both externally and internally. In her research, CDE’s Bettina Scharrer explains what this could mean for Swiss agricultural policy:

In her “Analysis of Swiss agricultural policy with regard to domestic consistency from the perspective of a diversified agricultural system,” CDE researcher Bettina Scharrer examines the extent to which Swiss agricultural policy can implement the sustainability goals formulated in the Federal Constitution and the Agriculture Act. The study highlights which currently applicable regulations, measures, and strategies help and which hinder the transition to a sustainable food system.

In so doing, the study sheds light on how Swiss agricultural policy has evolved to date, creating one of the world’s most intensive agricultural production systems, with a very high animal density – and with costs to climate and environmental goals. The study also highlights the consequences for Swiss agriculture of conflicting goals and conceptual ambiguities at the legal level (which sometimes follow diametrically opposed rationales in terms of agricultural production). Further, it examines major instruments of agricultural policy regarding sustainability objectives. Here, among other things, it asks: Are lawmakers doing enough to reduce the highly unequal market power relations along value chains? For example, to ensure fairer prices for producers?

Following comprehensive analysis, possible measures are outlined as to how Switzerland could realize a sustainable, locally adapted agricultural sector that helps preserve the natural resource base while supporting national food security through domestically produced healthy food. Go to publication

In a second study, Bettina Scharrer and colleagues illustrate how trust can be restored between agricultural producers and consumers, going beyond certification systems and labels. The emphasis is on marketing systems characterized by short value chains, with one intermediate stage at most, as well as transparency and traceability of goods. (coming soon)

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The main conclusion from this research project is that states indeed have options and tools to make agricultural trade sustainable. In an interview, CDE researcher Elisabeth Bürgi Bonanomi offers a hypothetical federal act on sustainable agricultural trade that summarizes the project’s results. Read the interview

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More information (PDF, 262KB)

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Programme (PDF, 187KB)

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