Can Trade Help Achieve the SDGs?

Article | 18 June 2018

With well-coordinated policies in place the answer is “Yes” in a range of sectors including health, agriculture, and water.

International trade has been a powerful source of both economic and social transformation in Asia and the Pacific in recent decades.

Since the 1990s, countries that embraced export-led growth have seen their economies expand significantly, with millions of people lifted out of poverty and development impacts in areas like health and education, improving markedly.

But international trade can be a double-edged sword bringing risks as well as opportunities, leading some countries and groups to question the benefits of globalization.

Economists have long argued that trade can promote income growth, which can then support sustainable development. But there are more direct linkages. Trade can, for instance, affect the price and availability of important goods and services for development, such as health and education.

Trade policy impacts on health, agriculture, water

Win-Win: How International Trade Can Help Meet the Sustainable Development Goals, a recent publication from the Asian Development Bank Institute (ADBI), explores ways to leverage international trade as a positive tool for development while minimizing negative impacts.

“Free trade in health-related goods and services could potentially improve developing countries' health care access with corresponding positive impacts on people’s lives.”

Edited by Matthias Helble, a senior economist at ADBI, and Ben Shepherd of Developing Trade Consultants, the book examines how carefully calibrated trade policies and other supportive trade-related measures can be a major driver in helping the region achieve the Sustainable Development Goals (SDGs) by 2030.  

The book contains contributions from leading international scholars and presents the latest evidence on the topic of trade and development. As countries look for strategies to open their markets and achieve the SDGs, it offers new insights how to make trade work for development.

“Free trade in health-related goods and services could potentially improve developing countries' health care access with corresponding positive impacts on people’s lives,” the book notes. “The same logic applies to environmental goods and services, where tariff and nontariff barriers increase their cost, hampering the fight against climate change.”

At the same time, freer global trade can cause shifts in the production of goods and services from one country to another, resulting in significant job losses. Supportive government policies, including social protection programs, are needed to cushion the impact of this adjustment and to help workers affected by the changes to retrain and move into new industries and sectors.

In the agriculture sector, critics argue that free trade can cause food insecurity, undermining efforts to reduce hunger. The book argues that freeing up trade in agriculture allows countries with different comparative advantages to focus on their individual strengths, resulting in more efficient food production and less food price volatility. Reviewing and rationalizing non-tariff barriers such as food labeling and food safety rules also supports this process.

Coordination across sectors essential

The book examines the link between global trade and water use management, concluding that with the right domestic policies and international trade systems, trading in water-related services, as well as transfers of technologies, can broaden access to water, sanitation, and hygiene.

“With the right policies, data collection, and accounting methods in place, trade in goods may be a powerful tool to help alleviate the water crisis across countries and regions,” the book notes.

“Opening to international trade carries risks but by managing them and capitalizing on the benefits, trade opening can help to deliver on sustainable development,” it notes. “For trade policy to play this pro-development role it needs to be developed in close coordination with other sectors.”