Achieving fair trade through a social tariff regime: a policy thought experiment

This paper pursues a fair trade policy thought experiment that (i) presents the Social Index Tariff Structure (SITS) regime and (ii) simulates a multilateral SITS regime using bilateral trade flow data. A SITS regime seeks to promote strong labour and environmental standards and other initiatives that engender human development, equality and sustainability. It does this by institutionalising both the incentives and means for countries to enhance their performance in these areas. We demonstrate that a multilateral SITS regime would generate substantial and stable flows of development funds while incentivising an international 'race to the top' in labour and environmental standards and, more broadly, in human development, equality and sustainability.