Trade and Sustainable Development

Trade Advisory

20 March 2023 • 8 min read

Trade and Sustainable Development

Raghav Sand

Trade and sustainable development are two significant ideas that are intertwined. Particularly in underdeveloped nations, trade can be a key engine for sustainable development.

Trade and sustainable development are two significant ideas that are intertwined. The Sustainable Development Goals (SDGs), which are aims to be met by 2030 in areas including poverty reduction, health, education, and the environment, are reached in large part thanks to the WTO.

The SDGs place a strong emphasis on how trade may advance sustainable development and acknowledge the potential contribution the WTO can contribute to the 2030 Agenda. Trade is recognised as a tool of implementing the 2030 Agenda in development goal number 17.

The targets for achieving this goal include countries promoting a global, rules-based, open, non-discriminatory, and equitable multilateral trading system; increasing exports from developing nations and tripling their export share; and implementing duty-free and quota-free market access for least-developed nations with clear and uncomplicated rules of origin for exported goods.

Trade, especially when it results in economic diversification, can promote economic expansion, job creation, and poverty reduction. To address the problems encountered by the poor, domestic supplementary policies are also required. 

  • Commerce is essential for supporting climate change adaptation and mitigation. By removing tariffs and putting best practises trade facilitation mechanisms into place, trade in environmental goods and services should be facilitated more.
  • Complementary domestic actions can easily reduce the potential negative effects of trade liberalisation on the environment or social welfare.
  • To account for the complexity of trade flows, evaluating trade sustainability necessitates a rigorous and open methodology. Research with insufficient methodology run the risk of showing a very skewed picture of how global commerce affects sustainable development.

It is difficult to evaluate the sustainability of commerce and global value chains since there is an unmistakable, complex relationship between trade, climate change, economic growth, and social justice. Everyone engages in mutual interaction. Long-term consequences may not always be the same as short-term ones.

Although it has been shown that international commerce contributes to both growth and the eradication of poverty, different locations, industries, and demographic groups may benefit from trade liberalisation in different ways.

  1. Trade encourages economic growth and helps create respectable jobs: Trade fosters economic development by giving access to new markets required for economies to expand at a faster rate. A trade liberalisation policy causes countries to achieve an average yearly growth rate that is 1.5% higher than it was previously.
  2. Trade can also increase employment in the long term: While it is true that increased trade does lead to unemployment in the short term, as newly introduced foreign competition makes workers in specific sectors redundant, in the long run, the reallocation of resources to more productive sectors lead to an employment boost.
  3. Trade decreases poverty: Trade also can end poverty as an additional advantage of economic expansion and more chances for respectable employment. This is so that employment prospects and economic output can be expected to improve, which will raise low-income citizens' earnings.

Participating in international trade markets exposes countries to shocks to the world economy, especially when economies are not adequately diversified.

In many ways, standards like those created by ISO can ensure that trade contributes as much as it can to attaining the SDGs. Standards level the playing field on environmental issues, aid in protecting consumers from harmful practises, and increase the competitiveness of small and medium-sized businesses by disseminating technology and best practises. They also increase consumer confidence in the quality and safety of traded products (especially those from developing countries).

Nonetheless, to encourage their businesses to trade more, emerging countries may find it difficult to meet criteria. This is since most businesses in developing nations are small and medium-sized businesses with insufficient managerial expertise, resources, or funding to fulfil recognised worldwide standards. Things get more difficult when standards are poorly written or inconsistent with global norms. Product certification and testing can be expensive and time-consuming. All these elements may make it more difficult for small enterprises to compete or may help the world move closer to achieving the SDGs.

Two stand out among the various causes that contributed to the growth in global trade: innovation and economic policy reform. Advances in information and communication technology, which resulted in a sharp decline in the cost of international telecommunications, as well as new goods and services that lessen the impact of distance and geography and allow the production of many goods in global value chains are some of the well-known technological developments that have supported the growth of global trade (GVCs). 


Trade and sustainable development are two significant ideas that are intertwined. While sustainable development is an approach to economic growth that attempts to meet the demands of the present without compromising the ability of future generations to meet their own needs, trade refers to the exchange of goods and services between nations or regions.

Particularly in underdeveloped nations, trade can be a key engine for sustainable development. Trade may contribute to economic growth and job creation by encouraging exports and luring foreign investment, which in turn can assist to lower poverty and raise living standards.

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