The Role of Trade Policy in Achieving Key Sustainability Outcomes in Agriculture

This report seeks to provide greater clarity as to the role of trade policy in achieving key sustainability outcomes in agriculture. First, it provides a brief history of successful efforts to leverage mutual trade goals to effect critical social externalities. The post-war orientation towards supranational organizations and the establishment of rules-based systems of trade is presented as illustrative for the present-day challenge to mobilize an orderly, effective global response to climate change.

Later, there is an examination of the ability of the global rules-based system of trade, administered by the World Trade Organization (WTO), to incorporate sustainable agriculture policies. Specifically, WTO rules related to domestic subsidies and dispute settlements and agreements on Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary Standards (SPS) are studied, with emphasis on the opportunity for collaborative international standard-setting bodies and the importance of strong dispute settlement mechanisms. 

The report continues with a focus on the European Union (EU), whose unilateral, top-down approach to the incorporation of sustainable agriculture into trade policies has drawn criticism from affected parties. This report examines the nature of that criticism in the context of the EU Regulation on Deforestation-free Products (EUDR) and other relevant trade policies. It concludes with a summary of a recent stakeholder roundtable in the EU that attempted to respond to those criticisms and reform the EU’s approach to future initiatives.

The report concludes with the following recommendations to clarify the role of trade policy in achieving key sustainability outcomes in agriculture:

• Encourage political reengagement with the WTO and advocate for necessary reform to restore it to its status as an enforcer of the global rules-based system of trade. Effective dispute settlement mechanisms will be critical for adjudicating differences in sustainability programs.
• Encourage private industry to learn from the TBT and SPS Agreements and seek to form an independent, international science-based standard-setting body for agricultural sustainability standards. The Codex Alimentarius Commission should be particularly considered as an illustrative example of an equitable and effective approach to this process.

• Urge policy makers to take a global, collaborative approach instead of a unilateral, top-down approach. The rollout thus far of EUDR has only further compounded confusion about the intersection of sustainable agriculture and trade policy. By adopting bottom-up, collaborative approaches, greater clarity, equity and efficacy can be achieved.
• Find compromise on reforms to the WTO’s domestic subsidy rules that balances important sustainability considerations and the socioeconomic viability of those employed by agriculture.
• Monitor implementation of the Paris Climate Accords commitments in the EU-NZ FTA and the incorporation of the Strategic Dialogue’s sustainability benchmarking system in future FTAs to determine new possibilities for sustainable agriculture in FTAs.