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Trade policy starting to do better on gender, says UNCTAD

As the reciprocal relationship between trade and gender has started to receive increased attention, those responsible for trade policy have moved from being gender-blind to recognising the need to address the differential impacts trade has on men and women, according to a new publication by the United Nations Conference on Trade and Development (UNCTAD).

The analytical and policy framework, titled Linking Trade and Gender towards Sustainable Development, explores the ways in which trade affects women’s wellbeing and equality in society both positively and negatively, and how these issues are being addressed within trade policy circles.

While globalisation through increased trade and investment has been associated with rising employment and entrepreneurial opportunities for women, trade openness has different impacts on their economic roles as workers, entrepreneurs and consumers, the UNCTAD report says, adding that women may face positive effects as wage workers in some sectors, while experiencing negative effects in others. Similarly, women entrepreneurs may face increased income earning opportunities in some sectors, but not in others.

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As an example, trade openness can help improve the wellbeing of poor women engaged in subsistence agriculture and informal and low-skilled services by providing them with wage employment opportunities in sectors such as agriculture, industry and services. However, with women wage workers dominating the pool of low-wage and flexible labour in developing countries, trade liberalisation can also worsen gender inequality by locking in both the horizontal and vertical segregation of female labour.

Meanwhile, although women entrepreneurs benefit from trade openness through expanded export markets and integration into global value chains, supply-side constraints that reduce productivity prevent small businesses, especially those owned by women, from fully benefiting from these opportunities.

Policy through a gender lens

Trade policy actions to address these inequalities have been increasing rapidly since 2016, says UNCTAD, with a rising number of trade agreements that incorporate gender considerations.

Today, at the global level, the UN body finds that more than 20% of trade deals include explicit provisions relating to gender equality, although there are significant differences across the world in this regard. Almost four-fifths of the European Union’s trade agreements contain at least one gender-explicit provision, compared to North America’s 38%. In Africa, South America and Asia Pacific, this figure falls to 32%, 20% and 14%, respectively.

In addition to the increase in the number of gender provisions in trade agreements, the level of detail in such provisions has also expanded over time, the publication says, including general statements of intent, affirmations to act, reaffirmations to other international instruments, undertakings and objectives, and reservations and waivers.

Besides explicitly introducing gender considerations in a chapter dedicated to gender, more and more trade agreements are covering the issue in chapters on other relevant issues such as labour, the report says. The United States-Mexico-Canada Agreement (USMCA), which entered into force in 2020, is one such example. USMCA does not have a gender chapter but contains language recognising the importance of gender equality, such as in the chapter on small and medium-sized enterprises, in which the parties agree to collaborate on promoting small businesses owned by underrepresented groups, including women.

This heightened awareness of gender issues within trade policy circles “tells a story of hope”, says UNCTAD, adding that the inclusion of gender language has significantly raised the profile of gender equality issues in trade discourse and encouraged broader participation by civil society and the private sector in trade policy formulation and in monitoring how trade agreements play out in practice.

The explicit gender lens in trade agreements has also enhanced the co-operation of other ministries with trade officials, the report says, citing as an example Chile, where the ministry of women and gender equity now participates in trade negotiations.

However, UNCTAD also highlights that more needs to be done to ensure policy is effective in helping ensure that women benefit from trade liberalisation.

“In most trade agreements, gender provisions are non-binding, drafted with non-mandatory verbs, and use soft language,” the report says. “Most gender provisions are placed in co-operation chapters, which are excluded from the dispute settlement mechanism in most agreements. Instead, the parties are called on to make efforts to resolve any issues through dialogue and consultations. It is also the case that most gender provisions are quite soft in the sense that there is little scope for any disputes to arise.”

Beyond policy

Despite its critical role, trade policy cannot address all the gender inequality issues that are relevant for women’s successful participation in international trade, says UNCTAD.

Women make up half of the world’s population, but – according to research by the International Finance Corporation –  own only a fifth of its exporting companies, and these account for less than 1% of the total global procurement spend by large corporations.

Numerous complex and interrelated factors contribute to the lower involvement of women-led businesses in international trade and supply chains. Systemic gender inequalities result in inequitable access to productive resources, infrastructure and procurement opportunities, while legal barriers that prevent women from accessing credit and financial services remain prevalent – as illustrated by the World Bank’s 2023 Women, Business and the Law index, published last week. The index, which assesses 190 countries’ laws and regulations in eight areas related to women’s economic participation, rose just half a point to 77.1 versus last year, indicating women, on average, enjoy barely 77% of the legal rights that men do. This, the World Bank says, constitutes a serious impediment to economic growth at a critical time for the global economy.

“At a time when global economic growth is slowing, all countries need to mobilise their full productive capacity to confront the confluence of crises besetting them,” says Indermit Gill, chief economist of the World Bank Group. “Governments can’t afford to sideline as much as half of their population. Denying equal rights to women across much of the world is not just unfair to women; it is a barrier to countries’ ability to promote green, resilient, and inclusive development.”

And even for those women who do make it past the barriers, lack of access to finance often holds them back from exporting. In its most recent global trade finance gap research, the Asian Development Bank (ADB) found that about 70% of women-owned firms’ applications for credit were totally or partially rejected.

“In general, access to finance is difficult for entrepreneurs because banks tend to ask for things that we simply don’t have,” said Uruguayan SME exporter Maria Bouvier, speaking to GTR from the sidelines of the World Trade Organization (WTO) Public Forum in October last year. During the event, WTO director general Ngozi Okonjo-Iweala, International Trade Centre executive director Pamela Coke-Hamilton and Institute of Export and International Trade director general Marco Forgione highlighted the urgent need for further investment into capacity building to support more female entrepreneurs to enter the world’s most competitive exporting industries.

Although the rise in gender-focused trade policies identified by UNCTAD is a positive sign for the increased participation of women in trade, it isn’t enough. To create the inclusive, equitable global trade ecosystem of the future, all stakeholders must address the constraints that hold women back – because gender equality is not only good for women, but also benefits society and the economy.

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