It is a pleasure to join you today to deliver remarks on behalf of the World Bank Group. My remarks will focus on the Sustainable Development Goals and the role standards play in achieving them. I will begin by outlining the importance of the SDGs and will then turn to the links between trade, international standards and the achievement of the SDGs.
World Bank Group and the SDGs
For those asking what the Sustainable Development Goals, or SDGs, are – they are a set of seventeen aspirational "global Goals" with 169 targets between them which was spearheaded by the United Nations, through a deliberative process involving its 193 Member States, as well as global civil society. The SDGs provide all the key international, regional and national development institutions with a clear focus and mandate to address sustainable development by 2030.
Achieving the ambitious targets articulated in the SDGs is a high priority for the World Bank Group, and our senior management has been heavily engaged in all the different international summits related to preparation of the 2030 agenda. The SDGs are closely aligned with the World Bank Group’s twin goals of ending extreme poverty within a generation and boosting shared prosperity by improving the incomes of the poorest 40% of the world.
Our experience in supporting the implementation of the Millennium Development Goals (MDGs), the precursors to the SDGs, leads us to focus our work on three pillars that we believe are essential.
The first of these pillars is data. To achieve the SDGs, we need a more rigorous and systematic approach to collecting and utilizing data to allow government policymakers and development agencies and practitioners to make fact-based decisions. We need better data to diagnose problems, design policies and programs for local conditions, monitor progress, make mid-course adjustments, and scale up the approaches that work.
The second pillar is financing. Official development assistance (ODA) is still important, especially for the poorest nations, but it’s not enough to achieve the targets set in the SDGs. As part of the 2015 Addis Ababa Action Agenda, the multilateral development banks have agreed to a collective mobilization of $400 billion over a 3-year period. But even that amount falls far short of what is needed.
Development financing will need to be complemented by a much greater focus on domestic resource mobilization. Attracting productive private investment will be essential. Here standards will have a key role to play. Countries that can develop a standards infrastructure that facilitates the adoption of international standards by their firms will be more attractive destinations for investment – and standards will also have a role to play in ensuring that the investments made by such firms are able to contribute to national sustainability objectives.
The third pillar of the Bank Group’s support for the SDGs is implementation at the country level, backed by partnerships. As the world’s leading multilateral development agency, we need to build a shared commitment to the 2030 Development Agenda at the country level. At the same time, we need to help countries leverage global partnerships to deliver on these commitments. Existing partnerships must be strengthened, new partnerships must be formed -- and the private sector must be an integral part of these new arrangements.
In the context of partnerships, we are proud to have recently signed a memorandum of understanding (MOU) with the International Organization for Standardization (ISO), and it is heartening to note that ISO addresses a number of the SDGs directly. For instance, the ISO 26000 on social responsibility addresses sustainable development in a coherent and complete way on core subjects and issues such as human rights, labor practices, the environment, fair operating practices, consumer issues and community involvement. It is the most comprehensive guidance of what an organization should do to contribute to sustainable development. More broadly, ISO’s portfolio of more than 18,000 standards provides practical tools for all three dimensions of sustainable development: economic, environmental and societal.
Trade and the SDGs
A number of key global trends are likely to impact on our collective capacity to achieve the ambitious targets. These include: demographic change; urbanization; pressure on resources; climate change; and the evolution of globalization. Without dwelling on these trends in detail, it’s important to note that all of them are likely to both shape the environment for standards and are also be shaped by standards.
For example, the evolution of globalization, with the ongoing increase in participation in trade by developing countries, has created the need for a far wider number of firms to adopt accepted international standards. And at the same time, the adoption of standards has facilitated an ever-increasing participation by developing countries in global value chains, feeding further the evolution of globalization.
Take for example the experience of our host country, China. As its capacity to meet the high standards required to sell in international markets has grown, this has sustained an ever-increasing involvement in trade and global value chains. It has, at the same time, created new opportunities for other countries to supply goods and services to meet the demands of a growing Chinese domestic market. This is part of a much wider shift toward developing country participation in trade serving both developed and developing countries. South-South trade is a key feature of the new international trade landscape. As evidence of this, global value chain-related trade between developing countries has quadrupled in the last 25 years.
It is clear that trade will have a central role to play in achieving the SDGs. When I say “trade” it is really shorthand for many of the issues central to the international standards agenda: not just trade of goods and services, but also investment, as well as flows of technology, ideas, and people. Central to this is the role international cooperation on standards plays in building the confidence that underpins these different exchanges.
Trade will enable the achievement of all the SDGs – not just those where it is specifically mentioned. Let me focus on a few:
- Goal 1 on ending poverty. Trade is a critical driver of growth and poverty reduction as underlined by the experience of countries in East Asia. Trade contributes directly to poverty reduction by opening up new employment opportunities, for example for agricultural producers, with the expansion of export sectors, and by bringing about structural changes in the economy that increase employment of low-skilled, poor workers.
- Goal 2 on hunger, food security, nutrition and sustainable agriculture is clearly linked to trade. Target 2.a – which focuses on limiting agricultural export subsidies – is an objective that is shared by the international community. But achieving Goal 2 will also require a reduction in barriers and distortions that still heavily impact on international trade in agriculture. For example, in Africa, trade barriers have meant that only five per cent of the continent’s food staples are sourced from within Africa itself – while there is potential for African agricultural production to meet the continent’s food security needs.
- Goal 8 on economic growth, employment and work will be supported by efforts to lower trade costs. According to World Bank Group research, low-income countries face trade costs that are around three-times higher than those faced by advanced economies. These high trade costs essentially mean that many firms that might otherwise invest in developing country markets simply go elsewhere, cutting many of the world’s poorest off from investment needed to achieve the SDGs.
There are several other SDGs that highlight the critical role of trade – for instance, in boosting gender equality through the creation of economic opportunities (Goal 5); about the importance of global value chain-based trade in fostering innovation (Goal 9); about the role an equitable multilateral trading system can play in removing inequalities within and among countries (Goal 10); or the way trade can help spread standards that promote responsible production and consumption (Goal 12). However, I think the idea is clear – that trade is relevant to the SDGs not just in those places where it is directly mentioned, but through the way it enables the achievement of a sustainable future.
Of course, this will not happen automatically. We will need to work hard to ensure that an increasingly integrated global economy contributes to the vision of a sustainable future set out in the SDGs. For the International Standards community, assembled here today, this has real significance. Once we understand the centrality of international trade to achieving the SDGs, we know that standards will have a key role to play in this.
The role of standards in trade and the SDGs
To restate points that we are all well aware of, international standards can have a big impact in that they:
- Support sustainable economic growth and productivity gains. Enterprise- level surveys conducted by the World Bank Group in developing economies found that ISO 9000 certification achieved average productivity gains between 3 % and 18 % for three Central American economies and 5% in China.
- Help to facilitate the adoption of good regulatory practice and create economies of scale that are particularly beneficial for small and medium enterprises;
- Promote open international trade by reducing technical barriers and building confidence in the quality and safety of traded products, and increasingly also services ;
- Promote innovation and technology diffusion ;
- Level the playing field on environmental and societal issues, and codify international agreements ;
- Provide common ground for understanding and agreement on difficult issues – for example, social responsibility;
- Help to protect communities and consumers from unsafe and harmful products and practices.
Boiling these many issues down, I think there are two main ways in which standards help trade make the greatest positive contribution possible to achieving the SDGs.
First, standards have a direct role in enabling greater developing country participation in trade – and greater participation in higher value segments of trade. ISO standards have established themselves as the “passport” of international trade.
However, the capacity to meet standards is one of the leading challenges for developing countries wanting their firms to participate more in trade. A 2013 OECD-WTO survey of lead firms in agribusiness global value chains asked multinationals to identify the key barriers to greater investment and sourcing from developing countries. The clear leading response was “Ability to consistently meet product specifications” (in other words, to comply with standards). This was seen as the top barrier to greater investment in, and sourcing from, developing countries.
The majority of firms in developing countries are small and medium enterprises with limited management capacity, knowledge and financing available to meet the standards required to supply to lead firms or to export directly. The testing and certification they face are often burdensome and costly. A survey of firms in developing countries showed that 44% of firms had to conduct significant duplication of testing procedures to meet foreign requirements after domestic requirements had been met, while 30% of firms had to conduct complete duplication of testing procedures. Close to 70% of firms cited testing and certification costs as an important reason for not exporting.
It is for this reason that the World Bank Group has been expanding its support to building the capacity of SMEs, enhancing linkages between foreign direct investors and SMEs, and strengthening, at the national level, the capacity of governments and private sector organizations to adequately test, inspect and certify products and services. We do this by supporting National Quality Infrastructure (NQI) programs focused on developing solid legal and regulatory frameworks and supporting NQI agencies to achieve excellence. We do this in countries as diverse as Peru and the Kyrgyz Republic.
Second, standards can be used in a targeted way to support the implementation of specific SDGs, with trade playing a key role in supporting the dissemination and adoption of standards internationally.
Specific standards relate to particular goals and targets including, for example: on women’s participation in the economy; on labor standards; and on environmental protection. Through the participation of global networks of firms and suppliers in trade, the use of specific standards can support the achievement of these goals.
To provide a few examples of World Bank Group support in this area, we are implementing a pilot initiative with ISO in Egypt, as part of the MOU that our two organizations signed. We will assist the Ministry of Trade and Industry of Egypt through “STEP Egypt”, a program that will contribute to the country’s path towards energy efficiency through a Standards and Labeling Program as well as a Clean Technology Promotion Program. Both of these will include implementing ISO standards. There is strong interest from many of our clients and partner governments in this kind of approach.
Our project in Turkey on green industrial zones is exploring how ISO standards on energy management can boost performance of firms and lower emissions in industries. We are also exploring ways in which ISO standards can help developing countries increase their ability to export their products.
I would like to reiterate that at the World Bank Group, we stand firmly behind the achievement of the Sustainable Development Goals. While I have focused my remarks today on the central role of trade and standards in achieving the SDGs, I also want to reinforce that the World Bank Group is addressing the SDGs in many other ways by focusing on specific solutions in health, education, infrastructure, etc. Globally, we are intensifying our work, in collaboration with our partners, in the three core areas of data, financing and, most importantly, implementation.
As we also intensify our work in the area of standards, together with the ISO and many of you represented here today, we will be looking for ways to strengthen partnerships. Standards will have an important role to play in achievement of the SDGs – but closer cooperation and support, especially for developing countries, will be needed to maximize the opportunities that exist. I look forward to our discussions on this topic today and in our future work together.