Is International Cooperation on Trade the Future of Development?

North-South cooperation is undergoing rapid change. In 2025, the Organisation for Economic Co-operation and Development estimates that official development assistance declined for the second consecutive year, driven by cuts from major aid providers such as the US, Germany, the UK, and France, with potentially significant health and development impacts. While these cuts were partly a response to domestic fiscal pressures and a shift in spending towards defence and security, they also reflect changing political narratives and emerging geopolitical tensions. Populist and nationalist discourses long associated with a backlash against globalisation have generated mounting political pressures related to job insecurity, migration, and cultural identity. Growing geopolitical rivalry fuelled by competitiveness and security concerns is prompting calls to reshore economic activities and reduce dependencies on foreign suppliers, while pursuing strategic autonomy in key supplies like critical minerals for the energy transition and digital transformation.

Moving away from the long-standing narrative on liberalisation and open trade, a growing number of governments are implementing trade restrictions – in the form of tariffs, subsidies, export bans, or local content requirements – as part of re-emerging industrial policies.  In today’s highly integrated global economy, these tensions crystallise in the international trade arena, as illustrated by the erratic imposition of tariffs by the US administration on virtually all of its trading partners. Moving away from the long-standing narrative on liberalisation and open trade, a growing number of governments are implementing trade restrictions — in the form of tariffs, subsidies, export bans, or local content requirements — as part of re-emerging industrial policies. While some aim at countering China’s growing dominance in certain strategic sectors by diversifying supply chains, others focus on bringing manufacturing jobs back. Faced with the imperative to respond to growing environmental threats, some governments are also harnessing trade-related policies — in the form of due diligence requirements, standards, and regulations, or border carbon adjustment mechanisms — to address climate change, pollution, or biodiversity loss.

For many developing countries finding themselves at the receiving end of these policies, such measures are often perceived as protectionist, extraterritorial, discriminatory, or unfairly putting the burden of adjustment on them. Concerns are especially acute in countries lacking the fiscal space to support large-scale transformations in their economies or secure affordable access at scale to relevant technologies and finance, at a time when development assistance is sharply declining. As countries seek to comply with these new requirements, they simultaneously need to adapt to the effects of climate change in sectors like tourism, agriculture, fisheries, or trade infrastructure and find ways to sustain the environmental assets vital for their food security, livelihoods, and development. For resource-endowed developing countries, a further critical challenge lies in capitalising on surging demand for critical minerals by promoting value addition and diversifying their economies.

Managing these growing tensions inevitably requires some form of trade cooperation that addresses sustainable development imperatives and global challenges. In recent decades, however, members of the World Trade Organization (WTO) have struggled to reach consensus on new trade rules to address emerging issues. As the US retreats from multilateral processes, new narratives have questioned the most fundamental principles of the rules-based system, such as the most-favoured-nation principle and the value of multilateralism as a foundation for international cooperation.

While it may sound naïve to expect enhanced cooperation in this context, there are no credible alternative pathways to address today’s global developmental, environmental, and security challenges.  While it may sound naïve to expect enhanced cooperation in this context, there are no credible alternative pathways to address today’s global developmental, environmental, and security challenges. Conscious of this reality, the vast majority of WTO members, including those in Africa, Asia, and Latin America, have repeatedly reaffirmed their commitment to international cooperation and their attachment to a rules-based trading system that serves as a vital — albeit imperfect — safeguard against power imbalances.

With multilateral negotiations in a deadlock, alternative forms of cooperation are emerging. Besides traditional regional and bilateral trade agreements, new initiatives are focusing on green technologies and supply chain resilience, as illustrated by the Indo-Pacific Economic Framework for Prosperity Agreement relating to Supply Chain Resilience and the pathfinding Agreement on Climate Change, Trade and Sustainability. New South-South cooperation models built around shared development challenges or experiences are also emerging, like the BRICS Leaders’ Framework Declaration on Climate Finance and the FAO-facilitated South-South and triangular cooperation framework. Other approaches focus more on developing partnerships, memorandums of understanding, or non-binding principles and guidelines that harmonise behaviour, foster consensus, and facilitate the development of new norms like the G20 Principles on Trade and Sustainable Development or the Future of Investment and Trade Partnership.

Finally, a set of informal and voluntary collaborative platforms has been established to provide high-level political direction or facilitate dialogue, information sharing, and mutual learning on specific areas of cooperation such as the Inclusive Forum on Carbon Mitigation Approaches, the Forest, Agriculture and Commodity Trade Dialogue, the Coalition of Trade Ministers on Climate, and the newly launched Integrated Forum on Climate Change and Trade.

At a time when multilateral cooperation is at an impasse, such initiatives serve as vital incubators, laboratories of new ideas, and testing grounds for new forms of cooperation. They enable governments to act faster and address specific issues such as sustainability concerns, supply chain resilience, or digital transformation. While they may in the short term contribute to enhanced fragmentation, they constitute critical precedents of potential models for multilateral cooperation integrating trade and broader sustainable development considerations — precedents that could ultimately reshape North–South relations according to a new paradigm.