Will the Inclusion of Voluntary Standards in Trade Agreements Lead to More Sustainable Trade?

The report analyzes the growing prevalence of voluntary sustainability standards (VSSs) in free trade agreements (FTAs), noting a significant increase in references since 2018. It identifies five common rationales for their inclusion: cooperation, promotion, recognition, guidelines, and support. While VSSs can complement public regulations and drive innovative trade policy—such as using sustainability criteria for preferential tariffs—the report warns of pitfalls, including vague terminology, lack of enforcement, and the risk of VSSs becoming de facto market barriers for small-scale producers in developing countries. The authors argue that the effectiveness of VSSs depends on their credibility and the establishment of clear multilateral guidelines.

• References to voluntary sustainability standards (VSSs) in free trade agreements (FTAs) have grown significantly, with 29 out of 61 analyzed agreements concluded between 2018 and 2023 referring to them, compared to only 17 FTAs before 2018.
• Governments use VSSs in FTAs through five primary rationales: cooperation (exchanging information), promotion (facilitating trade in certified goods), recognition (acknowledging VSSs as complements to national regulation), guidelines (encouraging credible private mechanisms), and support (using VSSs to implement specific agreement requirements).
• The EFTAIndonesia CEPA represents an innovative use of VSSs by requiring that vegetable oils and derivatives comply with specific standardssuch as the Roundtable on Sustainable Palm Oil (RSPO), International Sustainability and Carbon Certification (ISCC Plus), or Palm Oil Innovation Group (POIG)to receive preferential tariff treatment.
• The report identifies several critical challenges to the effectiveness of VSSs in trade policy, including ambiguous terminology, a lack of enforceable requirements, and the risk that VSSs may become "de facto requirement for market access," creating barriers for small and medium-sized enterprises in developing countries.
• To ensure VSSs actually advance sustainable trade, the report emphasizes the need for credibility assessments using tools like the ISEAL Credibility Principles or ISO 14000, as referencing a VSS in an FTA does not automatically guarantee its effectiveness.
• Integrating VSSs into FTAs can provide benefits by acting as complementary mechanisms to public regulations, fostering innovative trade policy, and improving VSS design through increased cooperation between policy-makers and VSS organizations.

APA

Bermúdez, S., & Sarmiento, F. (2024). Will the Inclusion of Voluntary Standards in Trade Agreements Lead to More Sustainable Trade? International Institute for Sustainable Development. https://www.iisd.org/system/files/2024-04/ssi-voluntary-standards-agreements-sustainable-trade.pdf

Chicago

Bermúdez, Steffany, and Florencia Sarmiento. Will the Inclusion of Voluntary Standards in Trade Agreements Lead to More Sustainable Trade? International Institute for Sustainable Development, 2024. https://www.iisd.org/system/files/2024-04/ssi-voluntary-standards-agreements-sustainable-trade.pdf.

Wikipedia

{{cite report |last1=Bermúdez |first1=Steffany |last2=Sarmiento |first2=Florencia |title=Will the Inclusion of Voluntary Standards in Trade Agreements Lead to More Sustainable Trade? |publisher=International Institute for Sustainable Development |date=April 2024 |url=https://www.iisd.org/system/files/2024-04/ssi-voluntary-standards-agreements-sustainable-trade.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bermdez2024will, author = {Bermúdez, Steffany and Sarmiento, Florencia}, title = {{Will the Inclusion of Voluntary Standards in Trade Agreements Lead to More Sustainable Trade?}}, institution = {International Institute for Sustainable Development}, year = {2024}, month = apr, url = {https://www.iisd.org/system/files/2024-04/ssi-voluntary-standards-agreements-sustainable-trade.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }