Volume 4 - Issue 6 ecdpm’s December 2015/ January 2016 GRATION TRADE REGIONAL INTE AGRICULTURE ECONOMICS GOVERNANCE Sustainable Value Chains WWW.ECDPM.ORG/GREAT Exclusives: With contributions from: “Upgrading Africa’s Implementing Erik Solheim, Chairman participation in global sustainable business OECD DAC and Frans value chains requires through EU aid and trade Lammersen, Principal international rules to policies Administrator, OECD; evolve’’ Marten van den Berg, Prof. L. Alan Winters, H. E. Fatima Haram AcylA Director General, Univ. of Sussex, Chairman AU Commisioner for Ministry of Foreign of the Global Trade and Industry Affairs, The Netherlands Development Network and many others About GREAT Insights Governance, Regional integration, Economics, Agriculture and Trade (GREAT) Insights is ECDPM’s magazine Contents covering a wide range of topics related to economic development in Africa and the developing world. GREAT Insights gathers expert analysis and commentary from a wide variety of stakeholders with different perspectives. GREAT Insights is published by ECDPM Source: Olu Eletu/unsplash.com Editor: Sanoussi Bilal [email protected] Twitter: @SanBilal1 Features Global value chains and natural Executive editor: resources Annette Powell, [email protected] 4 “Upgrading Africa’s participation in global value chains requires 19 Extractives and global value chains: Where Design, layout and does Africa stand? production: Claudia Backes, international rules to evolve” cba@ECDPM ECDPM’s Isabelle Ramdoo talks to H. E. Isabelle Ramdoo, Deputy Head, Economic Mrs. Fatima Haram Acyl, AU Commisioner Transformation and Trade, ECDPM HEAD OFFICE for Trade and Industry 21 Global value chains and resource corridors: Onze Lieve Vrouweplein 21 6 Implementing sustainable business The nexus is regional integration 6211 HE Maastricht through EU aid and trade policies Perrine Toledano, Head of Extractive Industries, The Netherlands Marten van den Berg, Director General Columbia Center on Sustainable Investment Tel +31 (0)43 350 29 00 Foreign Economic Relations, Ministry of 24 The GVCs train should not crush poor Fax +31 (0)43 350 29 02 Foreign Affairs, The Netherlands economies under its wheels Africa Kiiza, Pan African University BRUSSELS OFFICE Rue Archimède 5 Global value chains 1000 Brussels Trade and development Belgium Tel +32 (0)2 237 43 10 8 Sustainability in global value chains: Fax +32 (0)2 237 43 19 Closing the gap between ambition and 27 Aid for Trade works action Frans Lammersen, Principal Administrator, ISSN: 2215-0593 (print) Michael D’heur, Founder and Managing and Erik Solheim, Chairman, DAC, OECD 2213-0063 (online) director of shared.value.chain. 31 Has aid for trade helped African economies For further information 11 Who captures the value in global value achieve structural transformation? or to subscribe to our chains? A perspective from developing Xavier Cirera, Economist, World Bank and E-newsletters, visit countries L. Alan Winters, Professor of Economics, www.ecdpm.org/subscribe. University of Sussex To order a hard copy of an Peter Draper, Managing Director of Tutwa Consulting and Andreas Freytag, Professor 32 Trade liberalisation and poverty: Did we learn ECDPM publication, anything in the last ten years? e-mail [email protected] of Economics, Friedrich-Schiller-University 14 GVC trade and the case for domestic L. Alan Winters, Professor of Economics, In addition to structural economic policies University of Sussex support by ECDPM’s Erik van der Marel, Senior Economist, 34 Mapping the potential of cross-border institutional partners The European Centre for International Political cooperation in West Africa Netherlands, Belgium, Finland, Economy Olivier Walther, Consultant, SWAC/OECD Ireland, Luxembourg, Portugal, 16 Tracing sustainability in global food and Sebastian Vollmer, Statistician, University of Sweden, Switzerland, Austria chains Southern Denmark and Denmark, this particular Arthur Mol, Rector Magnificus and Vice- issue also benefits from Chairman, Wageningen University and funding from the Department Research Centre, and Peter Oosterveer, European policies of International Development (DFID), United Kingdom. Ass. Professor, Environmental Policy Group Department, Wageningen University, 37 Combining forces for more sustainable Copyright: The Netherlands global value chains: A European perspective Prior permission is not required San Bilal and Jeske van Seters, ECDPM for quoting, translating or 40 Business and human rights:Towards a reproducing part of the Regulars German action plan and EU trade and contents of this publication investment agreements provided the source is fully Evita Schmieg, Associate Researcher, German 3 Editorial acknowledged. Institute for International and Security Affairs 42 Talking Points Blog highlights Coverphoto: Container Train Yard, 43 Weekly Compass highlights Cape Town, S.A. Picture: 44 Latest ECDPM publications Ipickmynose/Flickr/CC 2 | GREAT Insights |December 2015/January 2016 Editorial With the Nairobi Ministerial Conference (MC10) of the World The attention on GVCs provides a natural basis for international Trade Organization (WTO) coming in December for the first cooperation, and convergence of efforts. But it should not end time on African soil, the intricate nexus between trade and there. Global and regional value chains should not operate development is attracting special attention for good reason. in a silo, with good behaviour along the chains by only a With the globalisation of production processes, economies few multinational companies and domestic businesses, in a and their trade are increasingly interconnected: 70% of global narrow number of sectors, in a limited number of countries. trade is in intermediate goods and services. Global and On the contrary, efforts to ensure the sustainability of GVCs regional value chains (GVCs) have taken centre stage. should be an entry point to initiate and leverage synergy with development concerns and sustainability concerns in other This has two major implications for development concerns. part - non-tradable sectors or less internationally connected First, the challenge for developing countries is not just to sectors of the domestic economy. The objective should be integrate with, but also to climb up the global value chain to avoid a dual system, a developmental and responsible ladder. This requires addressing not only regulations affecting one along GVCs, with other parts of the economy left open international exchanges, as traditionally done in international to rogue behaviour and poor practices. The issue of policy trade fora such as the WTO, but also focusing on domestic coherence and synergy across issues is thus more than ever, and international conditions affecting production processes at stake. more broadly, including but reaching far beyond conventional trade-related regulatory and logistic issues. Ultimately, it is But beyond loadable principles, it is action that matters more about using global value chains to stimulate industrialisation than words. The challenge is to strike a balance, not only now and the structural economic transformation of developing but also in the longer term, between voluntary commitments economies, while integrating with the world economy. and more coercive approaches, so as to build and stimulate the appropriate incentives and enforcement mechanisms Second, the international interconnection of trade and leading to effective increases in the sustainability and production processes requires a global approach to development impact of global and regional value chains and development, focused on promoting sustainability along global transformative processes in developing countries. value chains and beyond. Given the cross-border nature of the chains, sustainability concerns cannot be limited to one single This issue of GREAT Insights brings a range of reflections and country. They must encompass the various countries and insights on these questions, related to current international stakeholders along the GVCs and related to it, including more dynamics, the various dimensions of sustainability and advanced economies. It is de facto a global agenda. development of GVCs, the need for diversification and upgrading in resource-based developing economies and This universal dimension is now well embodied in the 2030 to foster regional integration. It also highlights some key Agenda for Sustainable Development adopted at the UN considerations on the role of trade policy in general, the role of Summit in September. Enhancing the sustainability and donors, and the EU in particular. development impact of GVCs is an important contribution to the Global Goals, in particular in terms of sustainable We hope you will appreciate these insights and welcome your economic and structural transformation. It is also important for comments and contributions. promoting environmental sustainability to attain the objectives of the 2015 Paris Climate Conference (COP21). This is therefore a critical moment to build on the international momentum generated by the Global Goals, the COP21 and the MC10, to boost efforts towards stimulating the sustainability of GVCs and their development impact. Such endeavours require a multi-country, multi-partner and multi-actor engagement. This includes in particular the private sector. Sustainability and development objectives should not be left to good deeds, with philanthropic actions, and public relations, with enclave corporate social responsibility initiatives. To be impactful and transformative,