Trade and investment for sustainable development

Project description

Title: Trade and investment for sustainable development
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Global
Overall term: 2020 to 2023

Context

Trade is considered key to sustainable economic growth and prosperity. If designed properly, it contributes towards sustainability, employment and poverty reduction. This creates opportunities, as the proportion of developing countries and emerging economies participating in world trade has increased greatly in recent decades, amounting to around 45 per cent in 2018.

However, trade also poses risks. Opening up markets can lead to increased foreign competition for local producers, as well as lower customs revenues, exploitative working conditions in places, environmental degradation, and greater gender inequality. If trade is implemented sustainably, it is possible to minimise the risks and harness the potential, trade is a lever of implementing the 2030 Agenda for Sustainable Development.

Objective

A rule-based, open and fair trade and investment system integrates developing countries into global value chains. It enables these countries to make better use of the opportunities that trade offers for sustainable economic growth, employment, poverty reduction and gender equality.

Approach

Commissioned by the German Federal Ministry for Economic Cooperation and Development (BMZ), the project has been in existence since 2002. The focus is on accompanying the implementation of the German strategy for trade-related development cooperation ‘Free and fair trade as a driver for development’ (Aid for Trade) and the Marshall Plan with Africa.

The project supports BMZ here in two closely related priority areas:

1. Shaping trade-related development cooperation: In addition to the international obligations under the Aid for Trade initiative, this also includes the issues of digital trade (e-commerce), quality infrastructure and fair trade, not to mention trade and the environment.
2. Mainstreaming development policy aspects in international trade policy: This priority area relates in particular to the EU’s Economic Partnership Agreements with African, Caribbean and Pacific countries (ACP states). This comprises the prioritisation of sustainability issues, the relevance of investments and services trade for developing countries and questions of regional economic integration, especially in Africa.

Results

BMZ has successfully contributed to several national and international processes and discussions. Successes include fleshing out future investment agreements with African states, mainstreaming human rights in European Union (EU) free trade agreements and discussing a reform of the international investor-state dispute settlement (ISDS) system.

Together with other German development cooperation projects, the project has piloted and disseminated innovative approaches towards various trade issues. This includes the Pan-African E-Commerce Initiative, which improves the prerequisites for participation in digital trade for companies in selected African countries as well as the Alliance for Product Quality in Africa, which aims to improve product quality in African partner countries.

The diverse work performed by the project is helping to put partner countries in a position to make better use of trade potential for their economic and social development, while also enabling them to get appropriately involved and position themselves in the relevant processes and committees.

Last updated: November 2020