Trade and Sustainable Development: Non-Economic Objectives in the Theory of Economic Policy

States pursue national prosperity and security through external policies spanning a range of instruments. These include trade policy (tariffs, nontariff measures, trade agreements for goods and services), development cooperation (financial grants and loans), regulation of inward and outward direct investment and movement of people (temporary and longer-term migration), access to public procurement markets, and control of trade in dual use technologies and military products. States also use external policies to protect or project their values. This can take the form of production requirements that apply to imports (labour standards; environmental sustainability regulations) and efforts to promote specific values and norms – e.g., political and civil rights, human rights more broadly – through bilateral engagement, or international cooperation to protect the global commons (e.g., reduce greenhouse gas emissions,). Values also drive regulation in new areas such as digital trade and digital technology, e.g., ethics guidelines for trustworthy artificial intelligence, or addressing the potential for online harms and discrimination across age, gender, or ethnicity. In the case of the European Union (EU), the Treaty of Lisbon explicitly calls for trade and investment policy to support and promote EU values and standards relating to human rights, labour rights, the environment, and sustainable development. This is *Prepared for the conference in honour of L. Alan Winters, Economic policy, openness and development, European University Institute, 6–7 September 2022. We are grateful to a referee, Ingo Borchert, Will Dodds, and Maurice Schiff for helpful comments and suggestions. Support from the ESRC Centre for Inclusive Trade Policy (UK) is gratefully acknowledged (Hoekman). © The Author(s), 2023. Published by Cambridge University Press on behalf of The World Trade Organization. This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited. World Trade Review (2023), 22, 463–473 doi:10.1017/S147474562300006X https://doi.org/10.1017/S147474562300006X Published online by Cambridge University Press operationalized by conditioning access to the EU market on the pursuit and realization of non-economic objectives (NEOs), complementing the use of trade policy to achieve economic objectives (EOs). The need to consider both EOs and NEOs when thinking about policy was recognized over a century ago (Pigou, 1920). Over time, the theory was formalized in a way that considers NEOs as constraints, not as goals that should be included explicitly into the objective function and be part of the analysis of policy. This was the subject of two important articles by Alan Winters.1 In this paper, we retrace some of the ground tilled in his work. We first review the place of NEOs in the theory of economic policy (Section 2), discuss the literature (Section 3), propose an alternative representation (Section 4), and discuss the operationalization of approach (Section 5).