# 6 / 2020

Why trade supports rather than hinders sustainable development

Thanks to global trade and foreign direct investment, people are doing much better today than they were in 1990. Global poverty has declined massively, and quality of life has increased dramatically. In the long term, trade also has a positive effect on the environment. Swiss companies that export, import or invest abroad are key players in fostering sustainable development in the world. For this to remain so, trade barriers must continue to be dismantled in the future. Of central importance are the intergovernmental organisations (UN, OECD, WTO, etc.) that negotiate and develop sustainability standards. As in the past, Switzerland should continue to play an active role in these organisations.

Executive summary

Sustainability now has a high priority everywhere, and rightly so. Sustainable development is one of the greatest global challenges of our time. However, focusing solely on the environmental aspects of sustainability is insufficient. After all, sustainability also includes economic and social dimensions as well. Therefore, holistic solutions are required, and a strong involvement of business is the key to success in this area. After all, the UN considers international trade to be a driving force for sustainable development. 

Trade in goods and services and foreign direct investment reduce poverty, improve the quality of life of many people and have a long-term positive impact on the environment. This requires good governance in the individual countries and responsible companies. Thanks to their comparably high sustainability standards and premium products, Swiss companies contribute significantly to sustainable development in the world. They are among the most important foreign direct investors, especially in developing countries. This often involves a strong commitment to training and the transfer of modern technologies.

In order to be able to exert a positive influence in the future, Swiss companies must have unrestricted access to global markets. In a time of faltering multilateral trade liberalisation, countries increasingly rely on bilateral free trade agreements. These agreements are essentially economic agreements aimed at reducing trade barriers. Of central importance are also intergovernmental organisations (UN, OECD, WTO, etc.) which negotiate and develop sustainability standards. As in the past, Switzerland should continue to play an active role here.

Positions of economiesuisse

  • Cross-border trade and foreign direct investment have a positive impact on economic and social sustainability. Since 1990, they have led to enormous welfare gains around the world, lifting more than one billion people out of poverty, while also increasing life expectancy in the world’s poorest countries by an average of 13 years.
  • In the long term, world trade has a positive effect on the environment. However, in many countries there is still not sufficient recognition of environmental aspects.
  • With their comparatively high sustainability standards and the export of state-of-the-art technology and innovative products, Swiss companies promote sustainable development worldwide.
  • Global trade and free trade agreements alone do not create a balance between economic, social and environmental sustainability. But trade gains can and should be used to strengthen and better reconcile all three dimensions of sustainability.
  • A holistic approach is needed to strengthen sustainability: bilateral cooperation, regional solutions, international cooperation and multi- or plurilateral agreements can improve sustainability in all three dimensions in other countries, provided local political and economic institutions allow this to happen.