Unece gfp-shanghai shortest 01-06-2016

© Copyright 2015 United Nations Economic Commission for Europe.

Can Sustainable Development be Aligned

with Efficient Trade and Economic Growth?

Virginia Cram-Martos

Director, UNECE Economic Cooperation and Trade Division

Shanghai, GFP Forum, 1st June

© Copyright 2015 United Nations Economic Commission for Europe..

•Unsustainable Development has a cost we cannot afford to pay

•Sustainable Development (SD) also has a cost

• How much will SD cost and who will pay?

.


Aren’t Corporate Social Responsibility, Peer Pressure and Client Demands Enough?


No- Traded Goods Using Shared but Limited Global Resources Suffer from the Tragedy of the Commons

« A dilemma arising from the situation in which multiple individuals, acting independently and rationally consulting their own self-interest, will ultimately deplete a shared limited resource, even when it is clear that it is not in anyone’s long-term interest for this to happen» - Hardin


No - Unfair Competition Can Undermine Quality and Safety

If competitors are cheating, or making un-ethical choices

- Then honest and ethical businesses either cannot survive or can only do so with great difficulty.

19th President of the United States


Current challenges on international markets - Beyond the WTO TFA -

• Deep regulatory fragmentation

• Staggering rates of non-conformity on markets

• Proliferation of low quality and counterfeit:

–Consumer products

–Pharmaceuticals

–High-tech equipment used in plants, factories, aircrafts

–Electrotechnical equipment of all kinds

• In spite of mounting costs for testing & certification


No- Competition Without Minimum Standards can Undermine Sustainable Development

Consumers suffer in countries with - No standards - Significantly lower

standards - No enforcement (has

the same effect as no standards)


No- Because Consumers are Not Always Rational

Examples from Behavioural Economics Research

Non-linear probability weighting: Evidence indicates that decision makers overweight small probabilities and underweight large probabilities

• The "immediacy effect" whereby the present self will care too much about himself and not enough about his future selves. So, if left alone the majority of individuals will not save adequately for retirement.

• Non-linear probability weighting: Evidence indicates that decision makers overweight small probabilities and underweight large probabilities. For example many more individuals purchase life insurance than disability insurance, even though the probability of premature death is much lower than the probability of becoming disabled.


Sustainable Development, Citizens and Business

Need Government

For Regulatory Frameworks and Enforcement that Protect the Environment and Social Goods like Health and Safety

To Create an Even Playing Field Where the Honest, Ethical Business can Succeed


Sustainable Development, Citizens and Government

Need Business for

•Solutions, old and new

• Innovation to lead us into the

future

•Employment to create a future

children and communities

• Infrastructure to deliver services

•Economic development to end

poverty and make other public

goods sustainable over time


Predictable and transparent rules and procedures

Simple and smooth processes and formalities

Means to allow goods to proceed promptly to their final destination

A single control point for all public services

Integrated information flows – especially in global supply chains

What businesses want in order “to deliver”

Source: UNCTAD, 2006


Will Current Efforts to Address These Needs Be Enough?

The WTO and the International Community are supporting trade facilitation in order to deliver much of this – but will it be enough in the face of

- Increased demands for traceability and proofs of sustainability (legality, origin, environmental impact, social impact, etc.)

- Fragmented regulatory frameworks

- Frequently limited enforcement capabilities

- Legal systems that often do not support a «level playing field»

- Other vested political interests?

© Copyright 2015 United Nations Economic Commission for Europe.

What are the answers?

I hope we can discover some of them today

Virginia Cram-Martos, Director, Economic Cooperation and Trade Division

United Nations Economic Commission for Europe (UNECE)

[email protected]