Making trade fairer

👉🏽 This story is developed as part of the Doughnut Economics for Policymakers guide.

Trade agreements and rules today concentrate power rather than distributing it — in the hands of corporations over states, and of wealthy nations over the Majority World. Making trade fairer means governments actively rebalancing these dynamics: reclaiming the authority ceded to investors, and building collaborative trade relationships among Majority World countries.

Overview

Trade agreements and rules today systemically create and reinforce:

• Unequal power between state and corporations or investors: Many trade and investment treaties let foreign investors sue governments over laws that reduce their expected profits, through "Investor-State Dispute Settlement" (ISDS). These cases are heard in closed-door tribunals with no right of appeal, and only investors can bring a case. Corporations have already won over $114 billion through ISDS as of December 2023, with over $100 billion awarded to the fossil fuel and mining industry alone. Many countries have reportedly scaled back ambitions to tackle ecological crisis including climate change and biodiversity loss for fear of being sued.
• Unequal power amongst countries: Since colonial times, trade has moved raw materials and labour from the Majority World to Western nations through unequal exchange. Majority World countries are routinely discouraged, by wealthy trading partners, the World Trade Organisation (WTO), and the International Monetary Fund (IMF), from using the same tools (like subsidies, local content requirements, export taxes) that Western nations used, and still use, to develop and maintain their own power.

Making trade fairer means rebalancing these power dynamics. Some emerging alternatives include:  

• Rebalancing power between states and corporations. Brazil has never ratified an investment treaty containing ISDS. Instead, its Cooperation and Facilitation Investment Agreements pair a multi-stakeholder joint committee and government ombudsman to resolve disputes before they escalate, with state-to-state arbitration as a last resort. Such agreements also set out standards for investors to contribute to the sustainable development of host communities, showing a more balanced dispute resolution system is possible for all parties. A growing number of governments are reclaiming the authority ISDS took away: South Africa, India, Indonesia, Ecuador and Bolivia have terminated investment treaties they judged were not in their national interest. Colombia announced in 2026 that it intends to withdraw from the ISDS system entirely to support its transition away from fossil fuels. Australia and New Zealand have pledged to exclude ISDS from future agreements, while most Western countries, including the US, Canada and EU members, have been removing ISDS from investment treaties among themselves. 
• Forging strategic trade partnerships among Majority World countries: Countries in the Majority World are strengthening trade and partnerships among themselves to reduce dependence on unequal exchange with Western countries. For example, The African Continental Free Trade Area (AfCFTA), established by African Union in 2012, aims to build regional value chains and reduce African economies' dependence on raw commodity exports, potentially serving as a platform for regional industrial coordination. The ten BRICS member countries are growing the trade they conduct in their own currencies, to reduce reliance on the US dollar that currently dominates most global trade. Guided by shared social and ecological visions, bilateral trade efforts among countries like Brazil, China and Chile, the plurilateral Agreement on Climate Change, Trade and Sustainability (ACCTS, which openly welcomes new members), and regional alliances like The Regional Impact Trade Alliance (RITA) are showing what collaborative, purpose-led trade can look like.  

Implementation

Rebalancing power in global trade requires Majority World countries to develop their own strategic economic visions and the capacity to deliver on them — and more countries willing to work collaboratively toward shared goals. Pioneers like Brazil, which has demonstrated a viable alternative to ISDS, coalitions of like-minded governments like those behind ACCTS, and multi-stakeholder alliances like RITA can all help establish these new norms for a more collaborative and inclusive trading system.

Impacts

These reforms are recent, and their social and ecological impacts are hard to isolate from other financial and domestic reforms happening at the same time. Even taken together, they don't yet add up to a systemic shift in power: for instance, sunset clauses mean fossil fuel and mining investors can likely keep filing ISDS claims for years yet even as new cases slow; Majority World trade and BRICS local-currency settlement are growing but remain far short of the scale needed to loosen the dollar's grip. The US, European countries and multinational corporations still hold immense power over global trade relationships.

Shifting power further will likely take more than these early reforms scaling up on their own. Governments can draw inspirations from proposals put forward by the civil society and engage actively in the debate and search for alternative trade models. For example, the proposed Clearing Integrated Monetary Area would let countries trade in their own currencies; the Alternative Trade Mandate Alliance sets out an alternative vision for European trade policy that puts people and planet first; and Our World Is Not For Sale calls for a sustainable, socially just, democratic and accountable multilateral trading system, endorsed by more than 200 civil society organisations around the world. 

Challenges

• Reform on paper doesn't always mean reform in practice. Sunset clauses — which let investors keep suing for five to twenty years after a country formally exits, unless both parties agree to waive them — consensus requirements at the WTO, and the sheer number of existing treaties mean that even a government with the political will to rebalance power can find itself still exposed to the imbalances of the current system. 
•  The governments and firms who benefit most from the current system have the deepest pockets to defend it. Western governments and large multinationals have far more capacity than small producers and Majority World governments to shape negotiations, litigate disputes, impose sanctions or frustrate reform efforts.
• A more fragmented global economy cuts both ways. As decision-making shifts from consensus-based multilateral bodies toward bilateral and plurilateral deals, smaller economies risk being left out of new agreements.
• Capacity is the binding constraint almost everywhere. Whether negotiating new agreements, pushing reform through bodies like the WTO, coordinating industrial policy regionally, or enforcing rules against corporations that violate them, the countries most in need of fairer trade rules are often the ones with the least institutional capacity to design, implement, and defend them.

Reference and Further Reading

• IISD’s report on Investment Treaty and Investor-State Dispute Settlement reform explains how the system works, why it needs to change and proposes how to reform the system in an assessable Q&A format (March, 2025).
•  "A Trade Regime for the New Economy" published by Partners for a New Economy (P4NE) explores alternative foundations for a purpose-driven trade system (May, 2025).
• Jason Hickle and Dylan Sullivan’s paper challenges the conventional narrative in international development and gestures toward a new development paradigm for the Majority World to ensure people and the planet thrive together (July, 2026).
• The Divide: A Brief Guide to Global Inequality and its Solutions by Jason Hickel 
• Bad Samaritans: The Guilty Secrets of Rich Nations & the Threat to Global Prosperity by Ha-Joon Chang 

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