Purpose-driven trade

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

A purpose-led trade system can share the benefits and costs of trade more fairly, steering commerce toward regenerating rather than depleting people and planet. Governments can pursue this by facilitating trade in ecologically sound products, building binding trade agreements around a shared ecological and social purpose, and supporting regional alliances that build trust and partnership for people and planet.
 

Overview

The current international trade system — a patchwork of World Trade Organization rules plus thousands of bilateral and regional deals — was mainly designed to expand trade, not to ask what trade is for. It rewards countries and companies for moving goods cheaply and quickly, but largely ignores the social and ecological costs of that movement, which fall disproportionately on majority-world countries.

A growing set of real-world alternatives shows what trade with a purpose could look like instead if governments can:

• Facilitate trade in ecologically sound products. Mutual recognition of sustainability standards can cut the cost of trading sustainably: Chile and Brazil's 2018 memorandum of understanding on organic products, for instance, established mutual recognition of organic certification for goods such as wine and fruit while promoting systems that are designed for smallholder farmers. China and Brazil are taking a broader collaborative approach to combat deforestation through sustainable agriculture supply chains: for example, exploring shared standards and green finance, piloting certified deforestation-free soy shipments, and exchanging lessons on land restoration. 
• Adopt purpose-led trade partnerships. New Zealand, Costa Rica, Iceland and Switzerland signed a trade agreement in 2024 ( titled Agreement on Climate Change, Trade and Sustainability -ACCTS) with a shared purpose to tackle climate and sustainability challenges through a wide range of collaborative approaches such as zero tariff for over 300 environmental goods (from solar panels and EVs to wool and recycled paper), guidelines on eco-labelling, a shared framework to reduce fossil fuel subsidies, easier trade in environmental services, and a new carbon measurement mechanism. The deal is open to new members and builds in ongoing peer support between countries.
• Support regional, trust-based trade collaboration. The Regional Impact Trade Alliance (RITA) brings together territories, local governments, businesses, investors, academia, and civil society to build regenerative rather than extractive regional economies. It focuses on the enabling conditions for purpose-led trade (trust, verifiability, and shared prosperity) so that locally rooted solutions can connect to global opportunities before formal agreements are struck.

Implementation

Making trade purpose-led requires changing how trade policy gets made. Trade ministries, civil servants and negotiators have mainly been trained to focus on market access and defend national industries, not to weigh social and ecological outcomes alongside commercial ones. Bodies like the Coalition of Trade Ministers on Climate, spanning 63 countries, are starting to shift that mindset by giving ministers a forum to treat trade explicitly as a tool for shared ecological goals. 

Success of these agreements depend on building trust through sustained relationship building and dialogue. It requires treating trade negotiation as something to design collaboratively around shared values, rather than a transactional exercise where each side tries to extract the most favourable terms. 

Impacts

Most of these partnerships are still young and their social and ecological impacts aren't yet well studied. Though open-partnerships like ACCTS is already attracting and inspiring other high-ambition governments: for example, Norway and Sweden have signalled intent to join. And its list of 360 green goods and 114 green services is starting to open markets for more regenerative enterprises, backed by ongoing peer review and capacity-building. Bilateral efforts among majority-world countries, such as those between Brazil, Chile and China, are likewise beginning to spur dialogue and innovation on green supply chains, opening markets to more regenerative businesses such as cooperatives.

RITA, meanwhile, has helped 15 territories work through more than 50 potential agreements. Its main achievement so far may be less about signed deals and more about proving a different starting point is possible: regional governments, businesses and civil society taking the initiative on trade, rather than waiting for national governments to act first.

Challenges

• A genuinely complex, collective task: Trade outcomes are shaped by far more than trade rules alone: for example, monetary policies, debts, industrial strategies, and corporate taxation policies all play a part. Governments need to situate trade policy within a wider strategy that navigates both geopolitics and coalition-building within and across borders.
• Powerful incumbents benefit from the current system, and will act to defend it: Incumbent exporters and multinationals have every incentive to lobby against agreements that would constrain socially or ecologically harmful activities. They have vast resources to lobby governments, influence international negotiations and alliances, or derail implementation. 
• Geopolitical competition undercuts long-term cooperation: Countries are increasingly competing for green industrial position in ways that make longer-term partnerships harder to build, even where the case for collaboration is clear.
• Gaps between implementations and visions: Implementation of agreements often lags behind the rhetoric, especially for voluntary, non-binding agreements. Even binding ones can stall if a shift in a partner country's domestic politics diverts resources or attention elsewhere.

Reference and Further Reading

• Forum on Trade, Environment and the SDGs (TESS) collates and shares expert perspectives on emerging trade-and-climate models.
• Researchers at International Institute for Sustainable Development examines ACCTS and its lessons for the future of trade (December, 2024). 

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