Summary of Presentation to CSR Europe

by Rachel Thompson, Director of Trade and CSR EMEA, APCO Worldwide
November 2003

A Vacuum - Packed With Uncertainty and Unanswered Questions:

Trade needs to be seen and understood in the context of its three constituent parts: production, consumption and investment.

There is a disjunction between the populist view of sustainable trade and the reality of it. It is not possible to make a real assessment of the impact of trade without looking at these three component parts.

It is like a bridge, where trade is the link between producers on one side and consumers on the other. The bridge is supported by a production pillar on one bank, and a consumption pillar on the other. Investment is the tunnel that runs under the harbour. Trade is in a permanent state of delicate balance. The twin pillars must be strong, but if either becomes overloaded the bridge will be in danger of collapse.

Before trying to understand sustainable trade we must understand trade as it stands at the moment. But there is a range of problems getting in the way of that understanding.

One problem is that trade is very high profile. The WTO is highly visible. If it were called the Boring Trade Policy Organisation it would not have attracted so much attention. Yet for all its visibility, the WTO is very poorly understood in the wider world.

Sustainable trade is a means to an end, not an end in itself. The exchange of goods and services is indispensable and is a human right. It has delivered a whole range of economic efficiencies and financial dividends.

But something has changed. It is not the focus on labour, social or environmental issues. Labour standards have been an issue for 50 years - although they clearly made some developing countries nervous when raised in the context of the WTO. What is relatively new is the notion of corporate behaviour. And there is a clear difference again between academic and popular views of corporate behaviour.

Part of the problem lies in a confusion of terms. People use the term sustainable trade, responsible trade, fair trade, ethical trade inter-changeably. This is a linguistic trap and a mistake. In reality responsible trade is a sub-set of sustainable trade.

The sheer scale of trade is one of the reasons it has such a high profile. World trade doubled twice in the 1980s and doubled again in the 1990s. And there is confusion about sustainability at the local and global levels - the reality is that sustainability is mostly about sustaining local production bases. Politicians are elected by people in their local neighbourhoods and that means the debate about global public policy on trade is anchored in millions different local values and goals.

There are also important gaps in perception. One major gap is price; the price at which a product is made and the price at which it is sold and profit margins earned at each point of the process. This remains part of the hidden agenda - the elephant in the room that no-one is looking at.

The competitiveness agenda also creates complexities. Governments lock themselves into export-led growth and competitiveness strategies only to face new competition. Mexico, having benefited from investment, is currently worried about investment in China.

At the corporate level, companies move into some countries where the investment environment is risky to gain a first mover advantage. And business does not always take a consistent line on trade policy. Most companies - however large - favour mechanisms like most favoured nation status. Yet small and medium sized companies often frustrate or hold up trade negotiations.

Following the collapse of the Cancùn ministerial meeting, we are entering a vacuum for multilateral liberalisation of trade. It is a vacuum that will endure.

But it will not be a vacuum in terms of government's own agendas or national politics. In 2004, elections are scheduled to take place in the US, India, South Africa and several other democracies. The European Commission reaches the end of its term of office and will be replaced also. A US Farm Bill is possibly on the agenda in 2004.

Nor will it be a vacuum in terms of activism.

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