The Index, commissioned by The Hinrich Foundation and prepared by the Economist Intelligence Unit, is in its second edition after first being published in 2016. It measures the readiness of 20 economies –19 in Asia and the US as an external benchmark— to participate in the international trading system in a manner that supports the long-term domestic and global goals of economic growth, environmental protection and strengthened social capital.

The Jakarta event focused on presenting the 2018 Index findings as they relate to ASEAN countries and Indonesia, engaging event participants in a discussion about ways to make global trade more sustainable and beneficial for all.

Sustainable global trade increasingly important in ASEAN

Professor Hidetoshi Nishimura, President of ERIA, opened the event by underlining the key challenges ASEAN faces due to growing uncertainties in the global economic and geo-political landscape. Prof. Nishimura highlighted the Sustainable Trade Index as a tool to show what factors ASEAN and East Asian countries can improve upon to expand regional trade more sustainably and better encourage international trade and investment in the region.

In his keynote address, Merle A. Hinrich, founder of the Hinrich Foundation, underscored the importance of global trade and its role as the single most important driver of global development — due to its positive impact on economic growth, living standards and poverty alleviation. He reiterated the Hinrich Foundation’s commitment to stimulating positive thinking about global trade and promoting behaviors that will lead to better developmental outcomes, engagement and stability.

On the 2018 Index findings, Mr. Hinrich noted that there is a worrying trend of Asian economies regressing in terms of social and environmental trade sustainability. However, it’s also apparent that companies are increasingly paying more attention to the importance of trade sustainability. He said he expects the Sustainable Trade Index to encourage policy makers to take action in creating sustainable global trade.

Asian economies broadly regressing in terms of trade sustainability

In a presentation of key findings from the 2018 Index, Chris Clague of the Economist Intelligence Unit gave an overview of how the 20 Index economies performed across the three pillars of trade sustainability: economic, social and environmental. Clague explained that although most economies performed well on the economic pillar, sharp drops by some on the social and environmental pillars led to an overall decline.

Hong Kong owes its number one position on the 2018 Index to its strong performance on the economic and environmental pillars, Clague said. While countries like Vietnam, India, and Sri Lanka outperformed on an income-weighted basis. Indonesia showed encouraging improvement on the environmental pillar. Overall, there is still much more work to be done in terms of promoting trade sustainability in Asia, Clague added.

Expert panelists discuss trade sustainability issues

Expert panelists from across the region then gathered to discuss trade sustainability in the context of today’s complex global trade landscape. The panel discussion was moderated by Stephen Olson, Research Fellow at the Hinrich Foundation, who emphasized the need for a more sustainable global trade network to better promote competitiveness in the region.

Panelists included:

Ms Daria Taglioni (Principal Economist, IFC)
Dr Risti Permani (Assistant Director/Head of Analysis and Monitoring on Trade, Industry and Emerging Issues Division, ASEAN Secretariat)
Dr Venkatachalam Anbumozhi (Senior Energy Economist, ERIA)
Mr Chris Clague (Managing Editor, Thought Leadership, Asia, and Global Editorial Lead, Trade and Globalisation, The Economist Intelligence Unit)
Ms Aida Greenbury (Director/Sustainability Adviser, Mitra Puri Hijau/Greenbury & Assc.)

The event closed after an engaging question and answer session with the audience, who asked insightful questions about sustainable trade and its impact on regional growth.

Some of the key questions raised during the panel discussion included:

Whether sustainable trade could generate economic growth
How to encourage responsible consumer demand
Whether a shift from trading raw materials to finished products could help increase trade sustainability or if it resulted only in shifting externalities to other parts of your supply chain
The importance of life cycle production for trade sustainability
The role of financial institution on sustainable trade.