A constructive path to sustainable trade reform

The challenge

In the post-World War II era, trade has served as an engine of global prosperity. Average GDP per capita across the world increased nearly sixfold—from about $4,600 per person in 1950 to over $21,000 today in 2021 constant dollars, as trade rose from about $60 billion to $35 trillion. For decades, the international trade system has driven poverty reduction and economic development at an unprecedented scale.

Yet the benefits of that growth have not been evenly shared, leading to growing unhappiness with the status quo. Driven by political turmoil, rapid technological change, and frustration with economic stagnation, over the past year, simmering discontent has bubbled over, with multilateralism more generally, and the World Trade Organization (WTO), specifically, in the firing line.

Doubts about the legitimacy of the WTO have only intensified as recent disruptions—COVID-19, the wars in Ukraine and the Middle East—have strained supply chains and undermined the positive-sum economics that once characterized the trading system. Structural power imbalances among trade partners, and the United States’ recent move to explicitly link market access with other geopolitical goals, have added to the sense in both developed and emerging economies and societies that the current system is badly broken.

While the moment is right to reconfigure WTO rules and procedures to be fit for purpose in the 21st century going forward, the institution’s foundational importance should not be overlooked, nor the value of an open, multilateral, rules-based trade system taken for granted. Indeed, despite recent turmoil, an estimated 72% of the global trade in goods in 2025 was conducted on most-favored-nation terms under WTO rules.

Moreover, the problems the world now faces demand precisely the kind of international cooperation the trading system was designed to enable. Climate change, biodiversity loss, and resource depletion are transnational challenges that no country can address alone. Yet trade—when it functions well—is one of the few tools capable of responding at the necessary scale, allowing economies to adjust as conditions shift, spreading clean technologies faster, and stabilizing prices after climate shocks. Emerging research suggests that greater trade openness could substantially reduce the welfare costs of climate change in low-income economies. Done well, the alignment between trade and sustainable development becomes a mechanism for collective adaptation and shared prosperity.

Efforts to achieve this alignment are not new—and have long generated resistance. For thirty-five years, since the Uruguay Round, some observers in developing countries have feared that linking trade and environment leads to new barriers to their economic progress. But many others have noted that expanded trade without sustainability safeguards has caused real environmental harm. These dueling grievances compound the broader crisis of confidence in the trading system itself.

While there is now widespread consensus that reform is needed—addressing both the system’s basic architecture and its relationship with sustainable development—opinions on the substance of those reforms vary widely. Given the urgency of climate change and biodiversity loss, and the persistence of extreme poverty, waiting for the present global divides to be bridged and a consensus to emerge before acting represents a luxury the world cannot afford. What’s needed is an approach that builds trust for a sustainability-focused trade system through demonstrated progress—where small steps forward create the conditions for larger ones over time.

To address this challenge, leading experts in trade, sustainable development, and international cooperation across sectors convened as part of Room 17—a working group linked to Sustainable Development Goal 17 on partnerships for the goals—within the broader Brookings Institution-Rockefeller Foundation 17 Rooms initiative that seeks to advance progress on the U.N. Sustainable Development Goals. Through a rapid sequence of intensive virtual meetings, participants examined how the global trading system could be reconfigured to deliver a sustainable future: the obstacles to reform, the pathways already emerging, and an approach that builds trust through demonstrated progress.

The Room agreed on the need to harness growing dissatisfaction in global trade to drive the deep reforms to WTO rules and procedures that can make it fit for purpose for the challenges of the 21st century. Yet delivering that reform will require a mixture of ambition and pragmatism and will require those within the system to confront long-held redlines and positions, such as the rigid view of consensus, that stand in the way of reform and a more functioning system.    

To this end, the Room proposed a politically viable reform and engagement strategy driven by a coalition—starting with key emerging societies and middle powers with an inherent interest in upholding the trade system—that can deliver an ambitious package of trade system reforms.

A pragmatic approach to revitalizing trade

Participants agreed the international trading system must be revitalized and reconfigured to be fit for purpose—both to preserve the gains from trade, especially for emerging market economies, and because a regeared trade system represents critical policy leverage for delivering the Sustainable Development Goals (SDGs). But a wholesale restructuring of the WTO will be challenging in the short term. While reform is top of the WTO agenda, geopolitical tensions and domestic political constraints mean those discussions are likely to be hard fought and slow.

This context demands a more realist strategy of laying the foundation for transformative change through constructive incrementalism. This approach recognizes that waiting for a full package of negotiated reforms requiring universal consensus means potentially waiting indefinitely. Instead, coalitions of willing countries move forward on shared priorities, creating models and precedents that others can join when political conditions permit. Targeted agreements, whether involving a handful of countries, a specific region, or a specific sector, create momentum for broader ones. Proof of concept in one domain opens possibilities in others.

Such coalition-building is more viable today than it would have been three decades ago. When the WTO was formed, the United States and Europe dominated global trade governance, but the membership of the WTO has expanded in recent decades, including through targeted efforts to include Least Developed Countries (LDCs). Today, we live in a multipolar world where a new set of rising middle powers —Brazil, India, Indonesia, Mexico, Malaysia, South Africa, Thailand, Chile, Türkiye, South Korea, and others—account for a growing share of global output and trade. These countries are no longer policy takers; they increasingly shape the pattern and scope of international trade.

At the same time, there is a trend toward strengthened regional trade integration, as a counterweight to big economy trade dominance. For a trade and sustainable development agenda, this opens new pathways, but also offers potential challenges, as the European Union’s Carbon Border Adjustment Mechanism (CBAM) and Deforestation Regulation (EUDR) have illustrated. These efforts are intended to address real challenges around competitive advantage that might accrue to those (companies and countries) who flout sustainability standards, resulting in increased greenhouse gas emissions, degraded biodiversity, and other environmental harms. Many observers thus see the trade system’s enforcement mechanisms—including penalty tariffs—as essential for ensuring sustainability commitments are kept. But their implementation has generated friction. Emerging economies fear these rules will become barriers to their trade and development, hampering the economic gains required to reduce poverty, create jobs, pay down debt, and generate resources for investment. The result is that measures with legitimate environmental intent, when imposed unilaterally rather than co-developed, risk widening the very divide they need to bridge.

Constructive incrementalism also addresses the paralysis created by the WTO’s consensus-based decisionmaking. Originally designed to ensure that all countries, large and small, had a voice and could not be steamrolled by major powers, the strict consensus approach under which WTO processes currently operate now effectively gives every member a veto over every item under discussion. The result is that the organization struggles to address contested issues, producing lowest-common-denominator outcomes or outright paralysis. The Doha Round’s failure to deliver a comprehensive agreement, despite two decades of negotiation, illustrates this dynamic. Smaller coalitions, whether on a regional, mini-lateral, or plurilateral basis, offer a way forward when multilateral consensus remains elusive.

The advantages of constructive incrementalism are practical: speed, feasibility, and flexibility. Smaller coalitions can move faster, adapt more readily, and serve as laboratories where different approaches can be tested before broader adoption. When such initiatives succeed, they create demonstration effects and generate pressure for wider participation—much as the WTO’s Information Technology Agreement grew from 29 initial participants to 82 members covering 97% of global IT trade.

Historical experience supports this approach. After World War II, six European countries created the European Coal and Steel Community (ECSC) to merge control over coal and steel production. The ECSC was conceived as a first step; its success led to the European Economic Community and ultimately the European Union. Even the WTO itself arose from a plurilateral beginning: the original 1947 General Agreement on Tariffs and Trade among just 23 countries—intended as a temporary arrangement when the more ambitious International Trade Organization failed—eventually became the foundation for today’s 164-member organization.

These examples demonstrate how pragmatic cooperation among willing partners can build institutions and trust that facilitate wider integration over time. But constructive incrementalism carries risks: fragmentation, exclusion of emerging societies, and loss of global legitimacy that more formal multilateral processes were seen to confer. A pragmatic strategy for reforming the global trade system should address these risks directly. Room 17 participants agreed on the following principles as a guide to balancing short-term pragmatism with a long-term vision.

Eight principles for a constructive path to sustainable trade reform

1. Reaffirm the trade system’s core purpose and importance. The Marrakesh Agreement that launched the WTO in 1995 committed member states to sustainable development as an overarching goal for the organization. But in practice, the system’s rules and work program largely focused on trade liberalization—tariff reduction, market access, and the expansion of trade flows. The world needs a transparent, multilateral, rules-based trade system as a mechanism for managing international economic interdependence and supporting global commerce as an engine of economic development. Today’s circumstances have evolved considerably—and the WTO needs to be reconfigured to meet the needs of the current moment. In this regard, the WTO must now get serious about the Marrakesh mandate that sustainable development be recognized as the system’s animating purpose—above and beyond the value of economic efficiency or the logic of comparative advantage. A trade system that undermines humanity’s long-term future for short-term economic gains will lose political legitimacy. Conversely, a system that demonstrably advances sustainable development and which effectively supports developing countries to adapt to a shifting trade landscape, such as the growth of services trade, can rebuild the broad coalition of public support from countries across the world that international cooperation requires.
2. Adopt a realist approach to building broad foundations for bigger changes later. There is no silver bullet or single pathway to a sustainable trade future. A wide range of initiatives and approaches is needed that together can build momentum for a trade system that advances sustainability with all its elements, including equity, inclusion, and environmental protection, as a foundation for a global economy that will promote human flourishing across the world. The realist approach requires working within existing constraints while expanding the boundaries of what is possible. It means recognizing and building upon the reform efforts that leaders of core trade organizations—WTO Director-General Ngozi Okonjo-Iweala, UNCTAD Secretary-General Rebeca Grynspan, and International Trade Centre Executive Director Pamela Coke-Hamilton—are already making.
3. Design for trade system expansion, not exclusion. Constructive incrementalism should aim to deepen cooperation. Agreements designed to enable willing countries to move faster together—while keeping the door open for others—build momentum for reform that others might later join. This principle argues for open accession provisions, provisions that accommodate diverse capacities and stages of economic development, and incentive structures that make participation attractive. Regional agreements, plurilateral initiatives, and other first-mover coalitions should be understood not as an alternative to multilateralism—but rather a means of building toward it.
4. Advance reform efforts based on a strategy of variable geometry, which encourages flexibility and action by those willing to step forward. Some reforms can be advanced through plurilateral, sectoral, and regional initiatives that do not require universal participation. Regional blocs are already moving: Africa’s Green Industrialization Initiative, APEC’s sustainability-driven trade pilots, and emerging efforts in the Caribbean, Pacific, Asia, and Latin America. New coalitions are forming, such as the Agreement on Climate Change, Trade, and Sustainability (ACCTS) among New Zealand, Costa Rica, Iceland, and Switzerland. Sectoral opportunities exist in agriculture, food security, environmental goods and services, and emerging areas like green steel and green hydrogen. These initiatives create laboratories for innovation that can inform broader multilateral efforts when political opportunities present themselves.
5. Respect and bolster regional integration of sustainable trade relations. It is crucial that engagement and negotiation occur with and within regional trade blocs, not around them. The African Continental Free Trade Area represents a historic achievement—a continent-wide commitment to economic integration. Yet some trading partners continue to pursue bilateral arrangements that fragment the bloc rather than engaging with the AfCFTA as a unified negotiating partner. The recent agreement of an EU-Mercosur trade deal demonstrates that bloc-to-bloc negotiation, while slower, can produce more durable and wide-ranging results. Constructive incrementalism should strengthen regional integration, not undermine it.
6. Invest in leveling the playing field. Sustainability standards and baseline requirements should be adopted whenever possible on a consensus basis—and not asserted unilaterally. Where parties believe unilateral measures are required to protect their essential interests, those moving forward should invest in capacity building so that all producers will be able to meet the standards being established. In this regard, some sustainability requirements—such as border carbon (GHG) adjustment approaches and deforestation regulations—are already coming into effect, requiring more emphasis on transition support, technical assistance, and ongoing refinement of the standards is essential to both legitimacy and effectiveness—not optional add-ons. Such support should be additional to existing development assistance, not redirected from other priorities. One option is to recycle some of the revenues raised through border carbon adjustment strategies to support the countries that are paying the tariffs. Such efforts would ensure that the standards and rules being advanced are understood to be sustainability-oriented and not green protectionism.
7. Broaden technology transfer initiatives. Capacity building will not be sufficient if firms and governments cannot access the underlying technologies. A credible package should also expand pathways for technology diffusion, including workable licensing partnerships, joint ventures, and other mechanisms that help lower-capacity producers cover the cost of meeting sustainability standards.
8. Rebuild shared trust by demonstrating opportunities for shared progress and equitable burden-sharing. Sustained effort in rebuilding trust by the parties to the trade system is essential. Progress in this regard will require sustained dialogue, demonstrated fairness in burden-sharing, and visible evidence that sustainability measures create opportunities for emerging economies rather than barriers alone. Research on green competitiveness suggests that many developing countries could gain significantly from a trade system oriented around sustainability—through advantages in renewable energy, sustainable agriculture, and other sectors. Making this case persuasively is essential to shifting the political dynamics of trade system reform.

Pathways already in motion

Multiple pathways illustrating constructive incrementalism are already emerging, demonstrating how progress can be achieved outside the constraints of full multilateral consensus.

Brazil’s Integrated Forum on Climate Change and Trade, emerging from COP30, creates a structured space for dialogue between trade and climate communities. It brings together countries willing to explore how trade policy can support climate objectives—without requiring agreement from those who are not ready to engage. The forum can surface shared interests, identify specific opportunities, and build relationships that make future agreements possible.

The ACCTS offers another model. This agreement among four small countries—New Zealand, Costa Rica, Iceland, and Switzerland—aims to eliminate tariffs on environmental goods, establish disciplines on fossil fuel subsidies, and develop guidelines for voluntary eco-labeling. The coalition is small, but the ambition is high. Success would create a template others could join.

Regional blocs are also integrating sustainability into their trade frameworks. ASEAN and RCEP members are discussing the addition of green trade chapters in upcoming agreement upgrades. The Africa Green Industrialization Initiative links trade and climate within the AfCFTA framework. CARICOM is exploring similar approaches. These regional efforts allow like-minded countries to move faster together while remaining open to broader participation.

Sectoral coalitions offer yet another pathway. Efforts such as the Industrial Deep Decarbonization Initiative, for example, bring together countries with shared interests in decarbonizing heavy industry. Such sectoral approaches can make progress on specific value chains without requiring comprehensive agreement on all trade issues.

The recently agreed EU-Mercosur agreement illustrates how phased implementation can unlock progress. After more than two decades of negotiation, the parties are adopting a phased approach: a first step that could be implemented relatively quickly, followed by a second step allowing for domestic adjustment. This gradualism enables a deal that a full-front consensus could not achieve. The model suggests that phased implementation, with built-in adjustment periods, can unlock progress on contentious agendas.

The 14‑country Future of Investment and Trade (FIT) partnership, spearheaded by Costa Rica and Singapore, offers one such laboratory for constructive incrementalism in practice. By bringing together a coalition of small and medium-sized, outward‑oriented economies committed to open, rules‑based, and sustainable trade, FIT can pilot concrete initiatives on supply‑chain resilience, sustainable investment, and trade‑related technologies that—if successful—create precedents and political momentum for wider multilateral uptake through the WTO over time.

Near-term priorities

The WTO Ministerial Conference 14 in Cameroon in March 2026 will be the beginning, not the end, of a process toward comprehensive reform, helping to plant seeds for future progress. MC14 should be used to establish an agenda of reform elements, build alliances, and surface areas where incremental progress may be possible.

Advancing procedural reforms at MC14 could also create space for progress by enabling more flexibility. Singapore and other nations have proposed a Responsible Consensus approach that calls on countries to balance national interest with the systemic interests of the WTO. WTO practices should also be revised to make it easier for plurilateral agreements to be officially recognized within the multilateral framework. These procedural changes would not solve substantive disagreements, but they would create more space for willing coalitions to move forward.

Launching a consultative process around food security, which is a natural bridge issue and concern for every country, could build trust and demonstrate the potential of constructive engagement. It touches agriculture, climate adaptation, subsidy reform, and development. It is an area where even the poorest countries have contributions to make—not just demands. The Consultative Forum on Cotton Development Assistance, which demonstrated that inclusive dialogue, where all parties articulate what they can contribute and what they need, can produce practical outcomes and offers a model.

There is also potential for progress on reducing subsidies that are both trade obstacles and harmful to the environment. Establishing criteria for differentiating between subsidies that advance sustainable development and those that result in environmental harms would be a good first step. Subsidies that accelerate the green transition, for example, should be treated differently from those that entrench fossil fuel dependence or encourage over-fishing. Launching discussions to develop a new WTO subsidies framework would be a significant achievement.

Expanding support for capacity building and transition does not require consensus to deliver. Multilateral development banks and bilateral funders should expand investment in capacity for emerging market economies to meet new sustainability standards and grow their share of environmental goods and services trade. The International Trade Centre should play an expanded role in this effort. Critically, such investments help promote win-win paths forward and can ease the backlash against measures like CBAM and the EUDR. A concerted effort from donor countries, directly and through their positions as MDB shareholders, could help restore trust, and countries that feel supported in transition are more likely to engage constructively in reform discussions.

Finally, it is essential that the case for a rules-based trade system that promotes sustainable development be made more explicitly. This means telling stories of trade’s contributions to development, elevating voices from middle powers and regional blocs, and engaging the business community as champions for reform. The alternative narrative—that trade must entail a zero-sum competition where some must lose for others to gain—will prevail if it goes unanswered.

Conclusion

The international trade system was built for the post-WWII moment. Some of its core elements—including commitments to a cooperative approach to international relations, an approach to trade that offers positive-sum economic outcomes, and thoughtful management of economic interdependence remain vital. But in other regards, the 21st century demands something different: a system that draws in a wider variety of voices, creates opportunities for widespread economic gains, and places sustainable development at its core. That transformation will not happen through a single negotiation or a comprehensive multilateral agreement—not in the current political environment. It will happen through constructive incrementalism: targeted coalitions, regional initiatives, sectoral pilots, and phased agreements that build trust and demonstrate what is possible.

The foundations for this approach are already being laid. Brazil’s climate and trade forum is creating space for dialogue. The ACCTS coalition is testing disciplines on fossil fuel subsidies and environmental goods tariffs. Regional blocs from Africa to Southeast Asia are adding sustainability chapters to their trade frameworks. The EU-Mercosur phased approach shows that gradualism can unlock deals that all-or-nothing demands cannot.

MC14 in Cameroon offers an opportunity to build on this momentum. Ministers and negotiators gathering there can advance dialogue on food security, signal support for procedural reforms, and commit to the capacity building that emerging economies need to meet new sustainability standards. By using MC14 to advance a practical reform agenda, encourage coalitions of the willing to go forward, and demonstrate that progress can be made incrementally within existing structures, WTO Members can put the trading system on a credible path to deliver both broad-based development and sustainability.