Blog post

Unfinished Business: Four Perspectives on Incomplete Inclusivity in Trade

Published 7 March 2024

The diverse ways in which international trade is affecting different groups of people within an economy are still not sufficiently appreciated. Similarly, trade policy is also not typically being formulated based on a broad perception of views by affected stakeholders. A special session organized by the Centre for Inclusive Trade Policy (CITP) at the World Trade Forum1 shone a spotlight on four areas in which inclusivity in trade still appears to be unfinished business. This entails the weak protection of worker rights, low participation rates of women in trade, lack of environmental sustainability in agri-food trade, and indeed, the fact that the general public’s views on trade policy are not well understood, and often not heard in the first place.

Whereas global value chains and the associated foreign direct investment flows are very much in the public eye, little is known about the protection of labour rights in international investment agreements (IIAs), which one might think should go hand in hand with the increased mobility of capital. The assertion, or even advancement, of labour rights is adversely affected by a “regulatory chill”, that is, the unwillingness of national governments to regulate issues that may adversely impact upon foreign investments, or may give rise to Investor-State Dispute Settlement claims arising from labour rights.2

Marx and Mattioli (International Labour Organization 2023, Chapter 2) use the UNCTAD International Investment Agreements Navigator, which allows mapping the occurrence of labour rights relevant keywords across all available IIAs, namely 3,245 agreements up to May 2021. Overall, there is a sustained increase in mentions of labour rights relevant keywords in trade agreements, albeit very weakly in bilateral investment treaties. In particular, there is little evidence of enforcement attempts or implementation provisions. It seems therefore that the potentially negative impact of trade and foreign investment agreements on vulnerable actors and workers’ rights has not been fully tackled, despite an increased mention of workers’ rights in IIAs.

Environmental sustainability is another dimension of inclusivity that international trade agreements are supposed to achieve through their ‘trade and sustainable development’ (TSD) chapters. The EU, in particular, emphasises this aspect in its free trade agreements (FTAs) with developing countries. Yet TSD chapters do not currently seem to achieve the desired effect on sustainability in agri-food trade, judging from a case study on the coffee sector in Vietnam. Interviews undertaken with key stakeholders in Vietnam and the EU reinforced the difficulties and costs of meeting an increasing array of both public and private standards.

Lydgate argues that environment chapters in EU FTAs could facilitate market access and thereby render FTAs more inclusive by becoming a forum to facilitate discussion about EU sustainability regulation. Given financial and capacity constraints in Vietnam, and in developing countries more generally, providing training, information and support to the actors involved in asymmetric trade agreements would also be crucial. The creation of a new working group on Due Diligence & Supply Chains in the case at hand is a good step but is not an emphasis in the new EU Trade and Sustainable Development (TSD) strategy. The use of FTA environment chapters more broadly would allow trade agreements to address EU standards, both ex-ante, that is to feed in third-party concerns and perspectives on the appropriateness of EU regulation; and ex-post, that is to provide training for capacity building to help meet EU standards.

Gender is yet another dimension in which international trade is currently not as inclusive as one would hope. There exists a “gender export gap” in the sense that businesses led by women are less likely to export to foreign markets than those led by men (OECD 2023).3 Moreover, women-led enterprises tend to work within domestic markets, are smaller, and operate mainly in service activities. The determinants of this polarization are to be found in challenges to access finance, networking and navigating trade regulations.

There seems to be ample room for improvement in favour of policies aimed at supporting more diversity in export-led enterprises. These should favour higher returns to skills and resolve more general occupational divides. Notwithstanding some cross-country heterogeneity in the gender bias in trade, a core lesson that can be drawn is that gender biases affect trade and might result in the under-performance of countries when inclusion and diversity indicators are considered.

The under-par participation of women-led businesses in trade, the weak enforcement of labour rights, and the challenges with environmental chapters in FTAs reflect different aspects in which trade flows or trade institutions are lacking in inclusivity. At the same time, the diversity in which different societal groups and stakeholders form views about trade policy is also not well understood. To address this issue, the CITP has recently conducted a series of Citizens’ Juries with citizens deliberating and voting over a simulated trade policy intervention that concerned medical data sharing.

Preliminary results, discussed in detail in Gravey et al. (2023), reveal that citizens considered that lowering trade barriers to cross-border data flows and facilitating medical data sharing might allow improvements in digital health services, advances in medical treatments in areas that require the collection and analysis of high volumes of data, such as rare diseases, and facilitate innovations in health e.g. by pharmaceutical companies. However, such a decision might lead to sharing health data with countries that have lower privacy and data protection standards compared to the UK, thereby potentially resulting in privacy violations and having negative effects on those most at risk from their medical data being shared (such as those with long-term health conditions and refugees). Hence, the cross-border flow of medical data might generally raise the spectre of commercial profiling of consumers and the commercialisation of the NHS. The deliberations showed that the public do attach value to their personal (medical) records and are inclined to share such information only when doing so entails high returns in terms of social value. The deliberations also revealed that the public rely significantly on information coming from “independent experts.”

The public was also prompted to consider on a hypothetical policy scenario that included an FTA with Australia, with a special focus on trade in food and agricultural products and in business services, respectively. This would have had a net positive employment impact for the UK, albeit differently distributed across sectors in the UK, i.e. this FTA might be detrimental to farmers but would provide a significant push to business services. After extensive deliberations, a large majority of participants argued in favour of farmers’ “exceptionalism”, and for protection of “our farmers” as guardians of British culture and more in need of support for long-term sustainability.

This stock-taking of selected aspects of trade confirms that making trade inclusive is challenging, particularly when several dimensions of exclusion and lack of diversity and participation in decisions are identified. As ever, facing these challenges implies that a carefully considered portfolio of policy interventions must be designed to counterbalance unintended consequences of trade that often exacerbate unequal initial conditions, as for instance in the case of gender-unbalanced trade or the lack of provision for vulnerable workers.

Participative processes such as ‘citizens’ juries’ are an established methodology in the ‘citizen science’ literature, for instance, they are used for controversial decisions of science policy (e.g. on prioritising investments in nuclear versus fossil fuel sources). Deploying citizens’ juries in new realms such as trade policy would be a welcome extension of attempts to increase citizens’ participation in policy decisions and may, ultimately, raise the quality and democratic legitimacy of trade policymaking.

Footnotes

  1. World Trade Forum 2023 on “Non-economic objectives and international trade” at the European University Institute, Florence.  We thank the organisers and Bernard Hoekman for hosting this session.
  2. For instance, in 2015 French utility company Veolia Propreté challenged the Arab Republic of Egypt before an arbitration tribunal over Egyptian labour legislation raising the minimum wage.
  3. In addition to the latest OECD SME and Entrepreneurship Outlook 2023, Korinek, Moïsé and Tange (2021) provide comprehensive framework analysis of ‘trade and gender.'

Author Profiles

Headshot of Ingo Borchert

Ingo Borchert

Research Theme Lead for 'People, Firms and Places'

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Headshot of Emily Lydgate

Emily Lydgate

Research Theme Lead for 'Negotiating a Turbulent World'

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Headshot of Maria Savona

Maria Savona

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