Key recommendations building more resilient economies and communities

The primary principle which underpins sustainable trade is balance – balance between economic goals and the need to strengthen social capital and environmental stewardship. Trade cannot be pursued solely on the basis of economic gains. The pandemic has highlighted the importance of balancing these goals, especially as we endeavour to build back better.

Countries that have allowed their trade relationships to become overly dependent in pursuit of the greatest economic gains have found themselves in highly vulnerable situations. This was most dramatically illustrated in the case of medical supplies and medicines but in the early days of the pandemic, automotive factories in South Korea also had to shut down when factory closures in China cut off their only supply of a single intermediary component. It is now acknowledged as well that rapid deforestation and poor environmental resource management have elevated the risks of zoonotic diseases such as Covid-19.

While the original intention behind the STI was not necessarily to serve as a tool for crisis prevention, it has now taken on that dimension. The Index 2020 identifies four areas policymakers, business leaders and NGOs should address for building back better in a post pandemic world:

Reducing inequality. International trade has been a driving force behind decades of economic growth in Asia. The region has lifted 1.3 billion people out of poverty by capitalizing on a more integrated global economy. However, according to the IMF, the pandemic could reverse up to 30 years of progress in fighting poverty and the numbers of “new poor” and very poor are now rising very rapidly. Unless significant steps are taken now to address the issue, the gap between rich and poor will only widen further when the next crisis comes, making sustainable trade all the more difficult.
Improving education. Without progress in education, many countries in the STI may find themselves left behind, particularly as trade digitalization progresses.
(Re)lowering barriers to trade and investment. None of the developing countries (in the STI) have the internal demand or the capital base to grow, let alone grow in a manner that will alleviate poverty and create a middle class. Trading, and trading sustainably, are really their only paths. That means keeping their economies open and welcoming the kind of foreign investment that supports those goals.
Building on the environmental benefits of the pandemic. Governments have an opportunity to apply the environmental lessons learned from the crisis to their policy decisions and ask themselves questions about how to retain the gains already made. In particular, they will need to confront the question of how to build upon and accelerate the drop in emissions that the world will see in 2020.