Delivering Solutions –

Responding to market realities

in developing countries
WTO Symposium, Geneva, 16 June 2003

Ritu Kumar
Sustainable Trade and Innovation Centre
The sustainable trade trajectory
 The integration of trade and sustainability factors is a
structural trend

 Market initiatives moving further, faster than regulation

 Critical to go beyond “green protectionism” and “green

trade opportunities” stereotypes

 Time for the South to ‘take control’ of the agenda

 STIC a developing country-led initiative

Presentation

1. Market Realities

2. Case Study: Clothing

3. Sustainable Trade and Innovation Centre

Market Realities
 Market realities
 Sustainability factors are being mainstreamed in key
international supply chains

 Brand reputation rather than consumer demand or

regulation is the major driving force

 Dynamics differ between sectors and markets

 Producers are price and standard-takers

 Business voices from the South

“In five years from now, there will be no access to

international markets for companies that do not show
respect for the environment. It is becoming
fundamental to international trade”

Rafael Wong, Executive Vice President,

Favorita Fruit Company, Ecuador
Pressures for change

 Regulatory(WEEE)
 Civil Society (bans, boycotts)
 Consumer demand (organics)
 Supply chain management (codes of conduct)
 Pioneering producers (Beximco)
 The Sustainable Trade Iceberg

Regulation

Ecolabels

Certification

Codes
A breakdown of trust

• Developing countries excluded from the process of

standard setting (voluntary and mandatory)
• Lack of transparency on changing requirements in
export markets
• Limited management and innovation capacity
• High costs of labelling, certification and compliance
• Inadequate understanding of Southern capacities in
the developed world
Clothing
 Clothing

 Convergence of trade reform and business

outsourcing generating savage price deflation
 Rapid expansion producing environmental ‘hot spots’
(Tirupur…)
 Health, social and environmental conditions
becoming a basic ‘entry ticket’ to EU/US
 Driven by risk and reputation not consumer demand
-- so few price premia
 MFA phase out is bringing new competitive
challenges
Responding to the challenge

 International dialogue between Asian suppliers and

EC retailers: January 2002
 Need for a uniform code developed in partnership
with Southern suppliers
 Information dissemination is essential
 Training and capacity building for compliance and
certification
Lessons
 Value added requires a dedication to innovation and
connection to market trends
 Globally excellent companies are emerging as
market leaders
 But industry wide initiatives are critical to exploit
opportunities
 Dialogue with buyers to implement sustainability
measures is essential
The Sustainable Trade and
Innovation Centre
STIC - Goals

• Launched at WSSD

• Goal: to assist developing countries to respond to,

anticipate and ultimately shape the agenda

• Objectives:
1.Exchanging information
2.Building capacity
3. Co-designing codes of conduct
STIC - Governance

• Chaired by Minster of Science, Technology, Arts,

Culture, South Africa

• International advisory board

• Broad-based membership
STIC - Activities

• Regional consultations

• Pilot projects: information dissemination, innovation

• Dialogues
 STIC
network partners Core Secretariat

Objectives Information
exchange/awareness Co-evolution of Innovation &
creation Voluntary Codes Skills Development

1) Producers, 2) Retailers, Producers in

Beneficiaries traders, importers, Producers in developing countries,
Target official official developing countries, Scientific and Industrial
Audience agencies, agencies in buyers/importers, Research Institutes,
NGOs in industrialised government agencies, Companies of
developing countries NGOs Developed and
countries Developing Countries

STIC B2B
Possible Facilitation Facilitate R&D
products B2G Certification
- Textile for SMEs
and services - Electronics SME’s access
- Food to New
- Forestry Financial Tools
- Tourism
 Website

www.oneworldmarket.nl