Presentation setting the scene for a discussion on the roles of government, business and trade facilitation in delivering sustainable development

1. © 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

2. © 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?
.

3. © Copyright 2015 United Nations Economic Commission for Europe..
Aren’t Corporate Social Responsibility, Peer Pressure and
Client Demands Enough?

4. © Copyright 2015 United Nations Economic Commission for Europe..
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

5. © Copyright 2015 United Nations Economic Commission for Europe..
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

6. © Copyright 2015 United Nations Economic Commission for Europe..
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

7. © Copyright 2015 United Nations Economic Commission for Europe..
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)

8. © Copyright 2015 United Nations Economic Commission for Europe..
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.

9. © Copyright 2015 United Nations Economic Commission for Europe..
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

10. © Copyright 2015 United Nations Economic Commission for Europe..
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

11. © Copyright 2015 United Nations Economic Commission for Europe..
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

12. © Copyright 2015 United Nations Economic Commission for Europe..
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?

13. © 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)
virginia.cram-martos@unece.org