Research Fellow discusses trade sustainability at UNESCAP event

The event, organized by United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), took place online due to the COVID situation. Olson spoke on trade sustainability in a session, titled 'Regional integration in the 21^st Century: What are Major Trends and Challenges for Sustainable Development?'.

The session introduced the important issues of regional integration in the current economic environment. Through panel discussion and Q&A, the session addressed the range of considerations that policymakers must deliberate upon when using regional integration as a modality to achieve sustainable development. Panelists included:

• Cyn-Young Park and Rolando Avendano, Regional Cooperation and International Division at ADB. They spoke on regional integration in Asia and the Pacific (based on Asian Economic Integration Report 2019/2020).
• Stephen Olson, Research Fellow at the Hinrich Foundation. He spoke on trade sustainability.
• Yann duval, Trade Policy and Facilitation Section (TPFS), Trade, Investment and Innovation Division (TIID) at ESCAP. He spoke on regional integration in the era of digital economy.

Olson commenced his presentation by defining sustainable trade. Sustainable trade is engaging in international trade in a way that it not only generates balanced economic growth, but also strengthens social capital and provides for environment stewardship.

He argued that although trade is an indispensable ingredient in economic development, it cannot be sustainably pursued without responsible environmental stewardship and a commitment to fully developing social capital.

In his presentation, Olson introduced the Hinrich Foundation’s Sustainable Trade index (STI), that evaluates 19 Asian economies and the USA across three pillars – economic, social and environment. The index has 15 indicators under economic pillar, 5 under social and 7 under environmental pillar. The pillars and indicators are equally weighed.

On the impact of COVID-19 on trade, Olson said that the most important impact will be on the already faltering confidence in trade. Traditionally, tremendous confidence across business and government in trade allowed it to consistently grow at roughly twice the rate of global GDP growth. It had deeper economic integration and interdependence.

On the impact of coronavirus on sustainable trade, Olson pointed out two indicators from Hinrich Foundation STI, namely, export market concentration and export product concentration. Olson said, “over reliance on a single market as an export destination is unsustainable and over reliance on single market as a source for either intermediary goods or finished products is unsustainable as well.”

“The coronavirus pandemic has highlighted some of the risks and vulnerability we see as a result of countries on one or a small number of countries for their medical supplies or pharmaceuticals to the extent that the pandemic leading towards a reconsideration and a greater emphasis on diversification of export markets and sources of supply that suggests we could see a strengthening in sustainable trade.”

He also pointed out that pandemic will also impact environment as people will adopt to remote work and travel less in public transport and airplanes. This will to some extent provide an environment dividend, he added.

However, Olson said there will be negative impact of coronavirus on sustainable trade as well. There will be rise in trade barriers, higher level of labor and environment standards and higher income inequality.

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