Toward a More Equitable Trade System: Empowering Women
This commentary is the first of a four-part series that will examine the intersection between trade and gender. Though the term “gender” can encompass a variety of identities, the series will limit its consideration of gender differences in trade impact to differences between women and men, due to limited data availability and other practical considerations. This installment describes how gender and trade are related and reviews efforts underway to create a more equitable trade system. Over the next several months, CSIS will consider three case studies to inform research on existing gendered trade barriers before producing gender-specific model language for policymakers’ use in future trade agreements.
Q1: What is the nexus of trade policy and gender?
A1: In the words of Anna Hallberg, Sweden’s minister for foreign trade, “Trade policy today benefits men more than women.” The disparity holds despite significant evidence that gender equality would greatly increase growth of trade, the global economy, and gross world product. Indeed, women account for half of the world’s population but contribute only 37 percent of global GDP; McKinsey estimated in 2015 that facilitating women’s access to labor markets could add $12 trillion to world GDP by 2025. The higher participation of women relative to men in both the informal economy and unpaid work sector tells only part of the story. Women around the world also face higher risks and legislative hurdles than their male counterparts when acquiring trade knowledge, accessing trade finance, and facing export costs. The Covid-19 pandemic, as multiple studies have noted, has exacerbated these issues as aggregate demand and global supply chains continue to suffer—negatively impacting everyone, but especially women.
Q2: How can policymakers improve women’s access to the benefits of trade?
A2: Countries can advance work on trade and gender in three main ways. First, a country may domestically implement trade policies that mitigate gender inequity by reducing barriers to trade that women face. For example, a government can remove unneeded barriers to trade in services, a sector that tends to employ more women than men. Second, World Trade Organization (WTO) member states may engage in collaborative efforts to better understand both gender’s impact on multilateral trade and trade’s impact on gender equality. Third, preferential or free trade agreements (FTAs) among two or more countries may serve as levers for reform that advance women’s participation in trade and, consequently, increase mutual economic growth. For example, an FTA can strike down existing non-tariff barriers, such as import quotas or burdensome licensing requirements, which disproportionately hurt women-owned businesses (WOBs) because they tend to be smaller than those owned by men.
Domestically, some countries have begun this work through an approach called gender mainstreaming. As the term suggests, the idea is to “mainstream” gender—to consider policies’ potential impact on women compared to men at the forefront of every deliberation, rather than at the backend as an afterthought or, worse, not at all. Say a member of the U.S. Senate proposes a bill to increase tax cuts for small business exporters—a matter that, on the surface, might not sound gendered. If engaged in gender mainstreaming, the bill’s authors would need to demonstrate the bill’s projected impact on women compared to its projected impact on men. If that analysis were to reveal a likelihood that the bill would lend less support to WOBs than to businesses owned by men, the Senate sponsoring committee would be encouraged—or, with strong standards in place, obliged—to revise the bill. In this way, gender mainstreaming can bring greater awareness and legislative change to a country’s systemic economic disenfranchisement of women. Even more attractive to policymakers may be the fact that gender mainstreaming has tangible economic benefits: by facilitating market access for women, a country increases its exports, lowers its unemployment, and boosts its GDP.
Gender mainstreaming is an especially important tool in the realm of trade policy, where disproportionate gender impacts are often not measured or recognized, let alone understood as a problem. Only a few countries have gone so far as to enact what they call “feminist trade policy,” which relies on gender mainstreaming to ensure that all of their trade policies are gender responsive. In other words, feminist trade policy aims to improve trade opportunities for women, remove legal and nonlegal barriers to trade for women, and weaken existing structures that facilitate men's participation in trade more than women’s.
Meanwhile, internationally, trade policy can address gender primarily through multilateral fora, such as the WTO, or through trade agreements that aim to improve market access between two or more countries. Yet, in the current trade climate, plurilateral and multilateral agreements attract relatively little interest due to their high degree of complexity and politicization. Bilateral trade agreements, therefore, may represent one of the most promising avenues through which to enact trade policy that targets increased market access and business opportunities for women.
Q3: Which international organizations are focused on the issue?
A3: In the trade world, actors at every level have become invested in advancing economic empowerment for women. Some of the most important actors are international organizations, such as the WTO, the United Nations, and the World Bank.
World Trade Organization
The WTO has played a significant role in promoting awareness and understanding of gender inequality in trade. Its research has focused on developing a Gender Aware Trade Policy and assessing the relationship between gender equality and trade through wage, consumption, and welfare data, broken down by gender. (By disaggregating data by gender, researchers can better understand how trade policy affects men and women differently—and policymakers can use that information to reduce bias against and actively promote women’s participation in trade.)
In September 2020, 127 members of the WTO launched the Informal Working Group on Trade and Gender as part of a Joint Declaration on Trade and Women's Economic Empowerment. This followed the 2017 Ministerial Conference in Buenos Aires, where 118 WTO members endorsed the initiative to “share best practices on removing barriers to women's participation in world trade, exchange views on how to apply a ‘gender lens’ to the work of the WTO, review gender-related reports produced by the Secretariat, and discuss how women may benefit from the Aid for Trade initiative.”
The United Nations has presented research on gender equality and trade policy through its Initiative of the Inter-Agency Network on Women and Gender Equality (IANWGE). The United Nations also collaborates with the WTO on this issue through the International Trade Centre (ITC), especially through SheTrades, ITC’s gender-specific initiative. SheTrades works to increase the inclusion of gender considerations in trade agreements, regulations, and general practices at state and local levels. By gathering gender-disaggregated data from participating countries and organizations, the initiative encourages the adoption of gender-focused approaches to trade.
In December 2020, the ITC released a report that shed light on progress made by the WTO’s Informal Working Group on Trade and Gender, outlining 32 best practices for gender-focused trade policy analysis in public procurement, trade agreements, financial inclusion, international value chains, and digital trade. The group aims to present a workplan on gender and trade issues to all WTO members at the 12th Ministerial Conference, which is likely to be held in 2021.
The World Bank has also examined the gender-trade relationship, publishing a joint report with the WTO in July 2020 that constituted, in its own words, “the first major effort” to use a gender-disaggregated labor dataset to research the effects of trade on women. The report found that trade can dramatically boost women’s job opportunities, consumer choice, and bargaining power in society. The World Bank also utilizes its Women, Business and the Law initiative to assess gender equality of countries’ laws, based on criteria such as women’s ability to start their own businesses or legal restrictions that prevent women from accessing credit markets in the same way as men.
Q4: Which governments are focused on the issue?
A4: A few governments, such as Sweden, Canada, and the European Union, are party to trade agreements that clearly commit to improving women's market access. The United States is a notable exception.
In 2014, Sweden was the first country to introduce a feminist foreign policy. Sweden is unique in its explicit adoption of feminist policy specific to trade, which aims to analyze gendered impacts of the European Commission’s legislative proposals, prioritize the advancement of the women-dominated service export sector, and achieve gender-balanced representation in Sweden’s trade policymaking positions.
The United States’ northern neighbor has put gender at the forefront of its trade policy through its Progressive Trade Agenda (PTA). Canada explicitly includes gender as part of its approach to trade through a two-pronged approach in order to engage in gender mainstreaming in several sectors and include chapters in FTAs specific to gender. The country’s recent FTAs with Chile and Israel—which include chapters devoted to gender and trade—are considered particularly progressive in this area.
The European Union explicitly states its responsibility to work toward gender equality and women’s rights, including in trade policy, in its 2015 resolution on the EU strategy for equality between women and men post 2015 and in its updated 2018 resolution, which specifically references the inclusion of gender in EU trade agreements. In addition, the European Union has adopted the WTO effort Aid for Trade (AfT), through which it helps partner countries integrate into and reap the benefits from the international trading system. AfT’s 2019 report demonstrated an increased number of donors toward gender-responsive trade measures relative to previous years, suggesting broadening political interest in increasing women’s market access.
The United States falls behind Sweden, Canada, and the European Union—as well as a number of other countries and economic areas that include gender clauses in trade agreements—in its demonstrated commitment to gendered trade initiatives. The United States is not a part of the WTO’s Informal Working Group on Trade and Gender, nor has it insisted on clauses in its FTAs that promote increased gender equality in trade. The World Bank’s Women, Business and the Law initiative gives the United States a score of 91.3 out of 100 on its gender equality index, ranking below 34 other countries.
Partly to blame is the reluctance of some U.S. policymakers to address this topic, as was evident during negotiations for the United States-Mexico-Canada (USMCA) FTA in 2018 when 46 Republican lawmakers protested a clause protecting workers from “employment discrimination on the basis of sex.” (A footnote was then added to assert that the United States’ existing policies were sufficient to meet this condition.) Domestic U.S. initiatives have not inspired confidence either: the United States’ Women’s Global Development and Prosperity (W-GDP) Initiative, created in 2019 to advance the economic empowerment of women, has been criticized for its narrow scope and failure to address fundamental issues such as equal pay, pensions, and legal rights in parenthood.
Q5: What does a trade agreement that addresses gender issues entail, and what additional research is needed to support the inclusion of gender considerations in trade agreements?
A5: By including discussions of gender in trade, negotiators and policymakers can highlight gender’s importance and enact concrete policy changes to improve women’s market access. Though organizations such as the United Nations Conference on Trade and Development (UNCTAD) and ITC SheTrades have already recommended strategies to include gender considerations in trade, more research is needed to bolster mainstream support for the explicit inclusion of enforceable, gender-specific clauses and chapters in trade agreements.
Indeed, as of 2018, only about one in four regional trade agreements (RTAs) in force and notified to the WTO explicitly reference gender. That number has since grown, but even newer agreements tend to relegate mention of gender to their preambles, chapters on labor, or standalone “Gender and Trade” chapters, which may not be subject to the dispute settlement mechanisms that render other parts of the agreement enforceable. This leaves little incentive for parties to ensure adherence to those clauses or chapters, as they are neither binding nor compulsory. Furthermore, the language of gender clauses often remains hortatory and vague rather than obligatory and specific—making it difficult, if not impossible, to enforce those obligations. A party to a trade agreement faced with a complaint could easily claim that it does “[recognize] the importance of making trade policies more gender-responsive,” for example, as that language does not require any particular policy action. The language also tends to vary noticeably from agreement to agreement not only in enforceability and specificity, but also in type, scope, and structure—hindering efforts to promote the adoption of a uniform template that incorporates effective gender clauses in trade agreements.
Still, the strength of gender-specific language is secondary in importance to the priorities of the negotiators themselves, who must be willing to pursue a strong gender outcome in the first place. Absent significant political pressure or the inclusion of gender mainstreaming as an explicit negotiating objective, negotiators may be unwilling to stake their credibility on the inclusion of specific measures that increase market access for women—particularly if they see focus on this work as less important or less achievable than other potential outcomes. (For example, in the aforementioned complaint about the USMCA’s gender discrimination clause, the Republican lawmakers stated their belief that “A trade agreement is no place for the adoption of social policy.”) Also feeding this political reluctance may be the oft-cited dearth of quantitative gender-disaggregated data. If more data existed on differences between men and women’s ability to access credit to open a business, for example, policymakers might be more likely to pressure negotiators to prioritize the inclusion of gender-specific clauses in trade agreements to remedy the issue.
Therefore, more research is needed to pin down clear, specific language that can be used throughout the entirety of a trade agreement—not just in an isolated chapter or clause that may not be enforceable—in order to support increased market access for women. Research to produce negotiating language may also help encourage the explicit inclusion of gender in trade negotiations that result in agreements.
Over the next several months, CSIS will use two bilateral agreements and one multilateral agreement as case studies to inform research on gendered trade barriers. CSIS also seeks to produce model language for inclusion in trade agreements to facilitate the ability of policymakers—both within the United States and abroad—to prioritize equalized market access for women and men. Renewed attention to existing discriminatory barriers in trade agreements stands to render their removal more politically feasible, increase women’s participation in global trade, and boost the growth of countries that engage in this work to level the gender playing field.
Ally Brodsky is a former research intern and current temporary research assistant with the Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Jasmine Lim is a program coordinator and research assistant with the CSIS Scholl Chair. Jack Caporal is a fellow with the CSIS Scholl Chair.
Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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