Trade between developing countries and regions—known as “South–South trade”—is growing rapidly. In the past couple of decades, its value has grown almost tenfold, from USD 600 billion in 1995 to USD 5.3 trillion in 2021.
A new report from the International Institute for Sustainable Development (IISD) explores how governments in developing countries are using voluntary sustainability standards (VSSs) in their trade policies to ensure this growth benefits small-scale producers, communities, and the environment.
VSSs are private or public initiatives that set requirements for producing, consuming, and trading products more sustainably. However, small-scale producers in developing countries can face challenges participating in them, such as high certification costs and a lack of support, incentive, or information on how to adopt their practices.
“Governments in developing countries are increasingly recognizing the benefits of working with VSSs to promote trade that supports more sustainable production practices while also addressing some of the concerns associated with their adoption,” said Steffany Bermúdez, Policy Advisor, IISD.
The report outlines five examples of developing country governments and regional blocs in the Global South that are integrating VSSs in trade policy and explores how successful they have been. From a Memorandum of Understanding seeking to boost the trade of organic certified products between Chile and Brazil to the development of a recognition system for VSSs across the African continent, they illustrate the role that governments can play in enhancing VSSs’ potential to deliver positive sustainability outcomes and generate trade opportunities for small-scale farmers and small and medium-sized enterprises (SMEs.)
“We found that integrating VSSs in South–South trade policies can help reduce some barriers to trade for small-scale producers and SMEs,” said Florencia Sarmiento, Policy Analyst, IISD. “It can also encourage trust and recognition in VSSs, lower the costs of compliance, increase demand for VSS-compliant products, and promote harmonization between different standards.”
While the impacts of the examples showcased are context dependent, they suggest that national or bilateral initiatives tend to have more success, likely because regional initiatives take longer to develop and require consensus among a greater number of partners with competing interests. However, including VSSs in regional processes has greater potential to increase trade within—and potentially between—regions in the Global South.
The report concludes with recommendations on how to unlock VSSs’ potential to increase and promote more sustainable practices and enhance market access for smallholders and SMEs through trade policy. Experts will be presenting and discussing the findings of the report during a public webinar on September 27.
