Can the SDGs Right Global Trade’s Wrongs?

  • May 19, 2016
  • 12:00 am
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“Is the global playing field unfair? Yes.”

Rana Foroohar, TIME Magazine, 11 April 2016

Rana is not alone in her analysis that “after decades of consensus, the value of global trade is being contested”. I contest it thus: it is difficult to conceive of Global Trade as actually contributing to the achievement of the UN Global Goals (formerly, and hereinafter, known as the ‘SDGs’). Both in spirit and in practice, our current system of Trade is arguably the greatest obstacle to planetary equity.

There is no doubt that trade is an engine for growth, but global realities show that how it allocates and distributes wealth, particularly in developing countries is generally unfair, imbalanced and inequitable. If trade is how governments engender businesses to create wealth and employment, then how can such an unholy alliance ever deliver what the SDGs demand? This dilemma is at the heart of any suggestion that trade can help achieve the SDGs. The challenge is important to understand for businesses and governments, because they shape our domestic and global trading systems and each is urgently enlisting the other to ‘implement’ the SDGs.

In global governance, politics and trade ‘meet’ at the SDGs. The very same governments that negotiate treaties (like human rights or climate change agreements) also sign trade agreements (such as TPPA and TTIP). There is a fascinating schizophrenia to how governments dramatise the necessity for ‘inclusion of the people’ before they make political decisions (national referendums, global consultations and such), yet operate with double-secret probationary stealth when negotiating trade agreements. No wonder regular folk and their meddlesome civil society groups suspect that agents of trade conspire to control the world by institutionalising economic division and slavery through the persistence of poverty. This is both possible and probable.

Using GDP, a universal measure of the value of trade by countries, we can explore how blind the SDGs are to the problem of where they must begin. Ideally, and correctly, the SDGs cannot ‘care’ where on Earth you are born, so (for example) whether you are Swiss or Kenyan makes no difference to the quality of life and global equity the SDGs expect you to enjoy.

But the reality of whether you are Swiss or Kenyan looks like this: Kenya, an important African and Global South economy, is the world’s leading exporter of black tea. In 2012 Kenya earned $1.45 billion from cultivating tea, which employed over 150,000 estate workers and 600,000 smallholder households. Tea contributed 20% of Kenya’s GDP and the industry impacted a significant number of the population of 44 million. To the north, Switzerland earned $1.9 billion from making chocolate in 2013. Only a tiny fraction of the 8 million Swiss may have anything at all to do with chocolate, and I’m sure none of them grew either cocoa or sugar.

When we put the GDPs of Kenya and Switzerland side-by-side we see that tea contributes 20% or $1.45 billion of almost $6 billion in GDP, whereas the $1.9 billion contribution of chocolate barely registers at less than 0.5% of over $217 billion in GDP. So a boutique sector in Switzerland earns almost half-a-billion dollars more than all the tea in Kenya.

Meanwhile, the World Bank tells us that in the 30 years between 1980 and 2010 Kenya’s per capita GDP per doubled from $500 to $1,000. In the same 30 years Swiss per capita GDP quadrupled from $20,000 to $80,000.

So to represent it realistically, the value of 8 million Swiss relative to the value of 44 million Kenyans in terms of trade actually looks like this.

What this tells me is that the SDGs may be making the same promises to Kenyans and Swiss, but trade has established an insurmountable inequality from where they must each start their journey to SDG achievement.Can the very same global trade and governance systems that enable Kenya and Switzerland to coexist on our planet with this level of inequity be viable frameworks for achievement of the SDGs? Is it likely that continuing trade or governance as we currently practice it will deliver the outcomes that the SDGs seek?

Within this desperate and hopeless outlook I believe businesses starting to build themselves now may have a unique opportunity to be a naïve agent of, and for, global change – if entrepreneurs carefully consider the levels where some people must begin and respond in the spirit of the SDGs. The layman’s difference between ‘trade’ and ‘business’ is that one uses borders to enclose and extract wealth, while the other is enterprise to create wealth to transcend borders. Neither particularly cares for ‘people’, except perhaps businesses need producers and consumers, while trade only seeks markets and prices.

For the SDGs to work all actors, especially businesses, should champion a free and open democracy, Rule of Law, and open and accessible global markets. And for as long as national governments exist they should have the unfettered ability to take balanced action to ensure a level playing field for their businesses in the global value chain.

We are disturbed when we see in the same city how the wealth of one citizen is paid for by the poverty of a hundred others. But disparity of such proportions is entirely accepted between countries. Is it the destiny of some to always grow tea for others? For the sake of the SDGs and whatever global society we may aspire to, I hope not.

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The views I express in this article are entirely my own. The choice of Kenya and Switzerland as examples are purely for convenience and not necessarily because the comparison between these two economies is any more sensational than any other two economies were one to be drawn from the Global North and the other from the Global South.

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