Guest blogger Mark Halle explains why and how global trade should be harnessed for a global green transition.
President Obama’s chief of staff, Rahm Emmanuel, is famous for saying that we should “never let a good crisis go to waste”. And let’s make no mistake about it, we are in crisis. While the world’s attention is largely focused on the financial meltdown, with a side order of climate change, we may soon need to face up to the fact that we are living what Australian environmental business expert Paul Gilding calls “The Great Disruption” – the confluence of a major economic breakdown and the unraveling of the global environment. And, while our leaders are busily wheeling out stimulus packages in a desperate attempt to kick-start the faltering economy, the same is not possible for the global environment. In the words of Glen Prickett of Conservation International: “Mother Nature doesn’t do bailouts”.
It would be idle to hope that the G-20 leaders will seriously re-dedicate themselves to the sustainability goal their predecessors all adopted at the Earth Summit in 1992. We are still overly bound to short-term considerations. What we can and must expect is that they should dedicate the economic revival to a wider goal for humanity. Economic stimulus, economic growth, trade liberalization, investment – all these are tools, means to an end. It is time we define the end that we wish to serve in as clear terms as possible. Sustainable development, or something like it, would be an acceptable goal. It is hard to imagine any other that would not be either unacceptable or hopelessly partial.
The WTO Preamble contains a statement that commits the multilateral trading system to serve the wider goal of sustainable development, but this commitment has generally been considered to moral rather than legal value and it has largely been ignored. It is partly for this reason that the Doha negotiations have taken their place in the wider panorama of crisis. Had the WTO genuinely pursued a form of trade liberalization that sought to reduce social marginalization, alleviate poverty and level the playing field between North and South, it is probable that the Doha Round would have been concluded by now and at least one element of our international macro-economic institutional infrastructure would remain intact. With the collapse of the economic paradigm that WTO has slavishly served, it is hard to see how it will get out of the ditch without a genuine attempt to harness the power of world trade to the goal of sustainable development.
There can be no doubt that the top political challenge is one of vision and leadership. Never before have the G-20 leaders been faced with such a challenge – or such an opportunity. The pat political statements that have characterized too many past political summits will no longer do. Nor will the promises of bold action by 2050 when most of the leaders will be dead and the rest deep into retirement. Nor will the determination to tighten a few screws and adjust a few bolts and return to the halcyon days of the recent economic growth path.
The real political challenge is to accept that the game is up, the economic paradigm to which we were all taught to pay obeisance is dead, having not only failed to deliver social justice, poverty alleviation and environmental responsibility, but having failed even to deliver rigorous economic management. The rich did indeed get richer, but the poor got poorer as well as we built massive pyramid schemes of wealth divorced from productivity, marginalized millions and drove our climate over the cliff.
The world faces only two alternatives now, and only one of them is acceptable. It can relaunch the economy on a green basis, decoupling growth from energy use, de-carbonizing the economy, accelerating the transition to a sustainable globe; or it can relaunch the kind of consumption that will further compound our environmental problems, marginalize many more millions, push the climate into an irretrievable tailspin and kiss goodbye to the prospects of future generations. The former path is attractive but unfamiliar – it reshuffles all of our card decks, from economic interest groups to trade advantage – and we are not sure how it will play out for each of us. We can be sure, however, that it will lead us to a more hopeful future and that it is achievable.
The other path – familiar to the point of nausea – means planting our political heads deeply in the sand and pretending that the economic system with which we are familiar is the only one that is viable, and that incremental adjustments will, finally, make it work. We cannot afford to indulge that fantasy. We can only hope our leaders will see that too.
The governance of the WTO displays considerable inertia in favour of the status quo. A country or trading bloc’s influence in crafting the system or negotiating its extension is linked to the volume of its trade and the size of its market share. Given that trade negotiations are based on “hard-ball” horse trading with only the vaguest deference paid to the non-commercial needs of member countries, the outcome of negotiations also favours those who wield the greatest trade clout.
If the present global crisis has demonstrated one thing it is how interlinked our economies have become. Never before has the image of us all sharing the same lifeboat been so close to reality. So as the trading system thinks through how trade can best be harnessed to revive the world economy, it must ask itself towards what kind of world economy it wishes to pull us. If it is to resume the same track that took us over the precipice, we should shun it. But putting trade on a different track will require a dedication to an ulterior goal for the rules-based multilateral trading system that has so far not been in evidence.
The trading system needs to play a key role in accelerating the transition to a green economy, to a world characterized by growing equity and respect for social justice and human rights, and one that provides strong incentives to manage the environment for long-term health. A priority, then, would be to identify those trade-related obstacles to this desirable transition – such as subsidies that distort trade and undermine sustainable development – and greatly strengthen the WTO’s ability to challenge them and ensure that they are redirected or eliminated.
Similarly, it should develop robust screens – tests – that ensure that all measures adopted and all proposals in the negotiations will genuinely advance the trading system towards a position of genuine support for an equitable and environmentally-responsible world.
Mark Halle is Executive Director of the International Institute for Sustainable Development in Europe. His most recent books are Process Matters: Sustainable Development and Domestic Trade Transparency (2007), co-authored with Robert Wolfe and Envisioning a Sustainable Development Agenda for Trade and Environment (2007), co-authored with Adil Najam and Ricardo Meléndez-Ortiz.
This article is part of a forthcoming compilation on a trade agenda for G20 leaders edited jointly by Dr. Carolyn Deere Birkbeck (Global Economic Governance Programme) and Ricardo Meléndez-Ortiz (International Centre on Trade and Sustainable Development (ICTSD)). The compilation will be published on 23 March 2009.
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