As the world struggles to recover from combined challenges of a global pandemic, climate and economic hardship, international cooperation has never been more important. Forces of populism, economic nationalism and intolerance are challenging collaborative relationships across borders, eroding confidence in the rules that govern international trade and investment flows, and their impacts. Yet the imperative of crafting durable international accords that rise to meet the economic, social, and environmental challenges of our day has never been more pressing. How can we ensure the international system is able to address these challenges?
The current international economic system is governed by national economic authorities that regulate trade and investment flows in accordance with the principles and disciplines set out in the agreements of the World Trade Organization (WTO), the UN Commission on International Trade Law (UNCITRAL), the International Centre for the Settlement of Investment Disputes (ICSID), and in an increasingly complex web of hundreds of regional and bilateral trade and investment agreements, among financial and other economic rules. These bodies have the crucial responsibility of shaping myriad aspects of lives and livelihoods, and conditioning efforts to ‘build back better’ in a carbon-constrained world.
As efforts to re-open the global economy intensify, agreements in these global institutions and regional accords may serve to reduce barriers to trade and investment, in turn facilitating economic growth. However, there is also concern that without careful crafting, the terms of engagement on trade and investment could lead to unnecessarily destructive impacts on the environment and on social cohesion. As the UN Conference on Trade and Development (UNCTAD) and others have noted, in certain cases, provisions in trade and investment agreements can exacerbate social and economic inequalities, leaving the poorest and most vulnerable groups worse off.
In order to better understand such risks, many countries use impact assessment techniques to identify potential negative environmental and social effects of trade agreements, mainly prior to concluding trade or investment negotiations. Recent studies consider over 110 such assessments, which may form part of the travaux préparatoires for the accords. Drawing on this growing body of assessments, it is possible to identify key material impacts and also emerging normative tensions of legal concern, evaluating new ways to integrate environment and social development priorities into the economic rules of the treaties themselves.
Sustainable development innovations in economic agreements
The Leverhulme Lecture on Crafting Trade and Investment Rules for Sustainable Development surveys the current landscape of international economic law through a sustainable development lens. It explores procedural and legal provisions related to sustainable development in free trade agreements, based on a review of nearly three decades of WTO negotiations, and also over 110 economic treaties which explicitly commit to sustainable development, considering why and how to integrate environmental and social development considerations into such treaties. Taking a fresh perspective based on these surveys, the Lecture identifies three key tensions affecting trade and investment liberalisation. These situations in which (1) existing obligations can constrain the adoption of new regulations to meet international commitments on sustainable development; (2) pre-existing social and environmental challenges can be indirectly exacerbated by growing trade and investment flows occasioned by a new treaty; or (3) trade and investment agreements may incentivize economic growth of an unsustainable nature.
Turning to the future, the Lecture highlights that States are currently testing innovative measures to address these tensions, by integrating environmental and social considerations into trade and investment accords, through discussions in the World Trade Organization (which holds sustainable development as an objective), and also in regional or bilateral treaties. Through this integration, international economic law could increasingly play its part in guiding global economic recovery, to foster rather than frustrate attainment of the Sustainable Development Goals (SDGs). Restoration of international trade dispute settlement, including in the WTO Appellate Body, could also contribute. The Lecture argues that the study of these innovations offers useful insights for future economic treaty-making among States seeking to achieve the SDGs, as well as a forward looking agenda to advance the reopening of a more just and sustainable world economy. It proposes an explicit commitment to sustainability as a purpose of trade and investment law. This is being proposed for through three key pathways being considered in the World Trade Organization and already being piloted in the treaties surveyed, and supported inter alia by impact assessment and monitoring, inter-agency collaboration, transparency and public participation, more sustainable dispute settlement practices and other procedural innovations.
Finally, the Lecture draws on new legal and policy scholarly analysis to highlight the way trade and investment rules can contribute to achieving the SDGs, offering examples of provisions from recent treaties which address SDGs such as eradicating poverty (SDG 1), ending hunger (SDG 2), and achieving gender equality (SDG 5), to affordable and clean energy (SDG 7) and decent work and economic growth (SDG 8), to responsible consumption and production (SDG 12), climate action (SDG 13), protecting life below water (SDG 14) and life on land (SDG 15), as well as SDG 17, which underpins all other SDGs in calling for a global partnership for the SDGs, and directly addresses trade, investment and development cooperation priorities for sustainable development.
There are grounds for cautious optimism. Research and educational institutions should scale up our own contributions to a deeper understanding of trade and investment law, and its potential to foster not frustrate sustainable development. But the Lecture is an invitation for more sustainable international economic law and policymaking in the future, and for increased engagement in the design, negotiation and implementation of more sustainable trade and investment regimes.
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About the author
Professor Marie-Claire Cordonier Segger, Visiting Professor
Prof Dr Marie-Claire Cordonier Segger, DPhil (Oxon), MEM (Yale), BCL&LLB (McGill), BA Hons (Carl/UVic), FRSA, JFR, is a world-class academic legal expert and policy innovator in sustainable development. Laureate of the prestigious Justitia Fundamentum Regnorum and other international awards, she is Full Professor of International ... Learn more