International Fair Trade Town Conference 2021
18 November 2021
Strengthen fair consumption in cities. Empowering farmers and producers in a build back fairer time
Dear Friends of the Fair-Trade Movement,
I am very happy to be part of this conference today that has the objective of strengthening fair consumption in cities.
It is also an occasion to celebrate the good collaboration between UNCTAD and the Fair Trade movement, both driven by similar roots and philosophy. Many of you are too young to remember that in 1964, UNCTAD was established with the precise mandate of boosting Trade for Development. And from day one, the focus was very much put on the idea that the best way to help developing countries grow should come not simply from distributing Aid, but through encouraging their Trade.
A similar philosophy was also behind the Fair Trade movement, at the early times of its development, when it was only a visionary project.
This collaboration was almost self-evident: UNCTAD and the Fair Trade movement were both born on the basis of the -Trade Not Aid- motto, striving to turn trade into a driving force for an inclusive and sustainable development.
UNCTAD colleagues, has been working for many years on alternative modes of trade that would simultaneously be profitable for small producers, contribute to the local communities they live in and use natural resources in a sustainable manner. To this end, we believe that sustainability labels have a great potential and in 2012 we established the United Nations Forum on Sustainability Standards (UNFSS), together with UNIDO, ITC, UN Environment, and FAO.
As you may know, the Forum has several functions, such as: conducting research and raising awareness on voluntary sustainability standards (VSS), support work of national VSS platforms or serves as an interagency platform for greater coherence among the multiplicity of VSS.
It is good news to observe that for many European buyers for instance, certification now often receives as much or even more attention than the product itself and this can be addressed by FairTrade Standards.
However, obtaining a sustainable label is sometimes difficult – and you know this very well - for small producers/exporters who must meet the requirements and be certified for VSS can be a challenge as well as a cost. Therefore, an active participation in the Forum can help, forging partnerships is also essential in this "parcours du combattant".
We must all fight for fairer trade as it does ensure equitable trade practices at every level; it offers transparency and traceability in global supply chains.
You know this very well my Friends, small producers and workers have suffered from marginalization. And yet, farming is the single largest employer in the world providing livelihoods for a large population today. It is important to secure living conditions for smallholder farms and their families.
Let me now touch on another priority for UNCTAD that I know is close to your hearts: Promoting trade at the regional level. This priority of our mandate has taken even more weight since the pandemic and the disruptions we have observed in the global value chains. It became very tangible, a year ago, when we ran out of face masks and hand sanitizers. The effects of COVID-19 have caused great disruptions in many supply chains, leaving producers with sourcing bottlenecks, stopped operations, empty warehouses and difficulties for consumers to find the products they need.
The question we can ask here today is: Is COVID-19 a real game changer? A sufficiently solid game changer, forcing for a more sustainable and fairer production system in the long run?
According to the UNCTAD´s latest Global Trade Outlook, the COVID-19 pandemic has introduced a substantial uncertainty into the operations of many global value chains, providing incentives to scale down segmentation and shift production closer to consumers. Developments in international trade demonstrate a tendency for reshoring and nearshoring trends. Companies now have an incentive to consider nearshoring some or all of their key supplies.
But we have to admit that it far from easy: it implies rescission of contracts with foreign suppliers to recreate them in home country. It is thus a long, costly and complex process leading to a retreat of GVC’s. Reshoring means also a higher degree of self-sufficiency in the production of vital goods and for partial decoupling of supply chains from factory Asia. Another option is a regionalization strategy meaning shorter value chains, increasing in suppliers and thus allowing diversification which can increase resilience of operations and distribution channels. For sure, regionalization will make cooperation with neighbors on industrial development, trade and investment of critical importance.
In a nutshell, restructuring GVCs is far from easy. Reality shows that only a few key industries – notably the electronics one – showed some diversification to neighbors, while other labor-intensive industries already started to move to lower cost economies well before the pandemic. This illustrates the importance of global value chain linkages as key determinants of firms’ investment decisions.
Another important aspect is of course what we call a “green recovery”. Supply chains have an increased part to play - more regional production could certainly reduce harmful emissions caused by global shipping and flying.
Whether or not COVID-19 has changed the dynamics of global trade and that the need to consider “green recovery” by reshoring is in many recovery agenda, it is equally important to shift the debate and move forward on three parallel levels to make effective gains in sustainability.
- First, initiatives must, from their inception consider these decisions as an opportunity to improve the social and environmental footprint of the value chain as a whole.
- Second, global regulatory mechanisms such as multi-stakeholder initiatives, international framework, carbon tax at borders can accelerate awareness and contribute to decrease social and environmental dumping.
- Third, multi-sourcing strategies, reshoring or offshoring may help with risk management to make global chains more resilient with greater agility in assigning resources and organization processes. This would mean diversifying supply sources dynamically to reduce exposure to risks that are specific to certain geographical regions or suppliers.
Environmental conservation and social justice stand at the heart of UNCTAD Member states. At the recently concluded UNCTAD15 Conference, member states adopted “The Bridgetown Covenant: From inequality and inequality to prosperity for all”, an agreement to promote inclusive and resilient economic recovery in developing countries as they grapple with unequal access to COVID-19 vaccines, a debt crisis, the climate emergency and other unprecedented challenges.
At this conference UN Member States called for decoupling economic growth from environmental degradation to ensure sustainable progress and to reduce vulnerability. Furthermore, they called for sustainable and resilient value chains as global response to the COVID-19 pandemic ensuring the smooth flow of global trade and multilateralism.
Moreover, in the Bridgetown Covenant, Member States recall that certain past and present production and consumption patterns have proven to be unsustainable and compromise global prosperity. Clearly, this situation presents a significant challenge regarding how to ensure an increase in prosperity without unsustainable production and consumption patterns along sustainable value chains.
UNCTAD has in fact been ahead when it comes to promoting sustainable value chains with the application of Voluntary Sustainability Standards (VSS). UNCTAD has been providing multi-faceted capacity building programmes to help developing countries understand the role of VSS and facilitate its uptake as a precursor to better and more sustainable trade practices.
And I can assure you here today that it is our intention to continue doing so and doing so with you.
I thank you very much for your attention and I wish you a fruitful Conference. I do hope that next time, we can be together in the same room and continue exchanging with a “fair trade” coffee after the debates.
