This article is part of a Synergies series on Next generation trade arrangements for environment and sustainable development. Any views and opinions expressed are those of the author(s) and do not necessarily reflect those of TESS or any of its partner organizations or funders.

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Since the start of US President Donald Trump’s second term, the United States has announced the conclusion of more than a dozen trade “deals” in which other governments have promised certain concessions in exchange for a loose commitment from the United States to a maximum tariff rate for goods imported from those countries. These arrangements differ considerably from traditional free trade agreements in ways that make many trade lawyers and economists nervous. But, importantly, what these new deals have in common with the old are their innovations. While it may be difficult to discern now, those innovations hold promise for future models of trade cooperation on sustainability in economic instruments.

As economic agreements evolve, they create space for a multidimensional trade-and-sustainability practice: one that operates both along a state-to-state dimension, as always, as well as along a state-to-company dimension. In short, these novel instruments may be able to achieve long-sought-after sustainability aims, especially those championed by advocates in the business and human rights realm. Yet, doing so will not be easy. It will require, first, appreciating an opportunity in an otherwise problematic ecosystem; second, rewiring practice groups and offices in law firms and governments; and third, reimagining the “trade and” aspirations and the fundamental contours of what trade law is for.

There are many critiques of the Trump administration’s approach to international economic law, and its many violations of longstanding rules. Many of those critiques are, no doubt, justified. That problem also presents with it an opportunity for new thinking, and for mobility and increased nimbleness among international economic lawyers, even if out of necessity. It is a moment to break open old institutional design paradigms in search of alternatives that may better serve sustainability needs.

This work starts at the core: international trade law, by definition, is concerned with intergovernmental relations. States have focused on negotiating market access for broad categories of goods and services —government to government. And, governments have ensured compliance by companies. When governments failed at upholding those commitments, they have been subject to limited dispute settlement procedures. 

By contrast, the opportunity at this moment is to identify ways to direct trade agreement attention to companies that may be engaged in behaviour contrary to social sustainability aims. To be sure, it is not that trade policymakers have not experimented with new mechanisms in the past. What is different here and now is the direct applicability for businesses. Now, governments may be able to negotiate company-by-company market access and worksite-by-worksite enforcement. It is an opportunity to redesign trade agreements to be more firm-centric.

Social sustainability tools have not occupied a ready place in economic agreements to date. They tend, instead, to be the province of soft law instruments. But the United States has begun to innovate in that space, most recently in the United States-Mexico-Canada Agreement (USMCA). In USMCA, and in some free trade agreements that preceded it, the United States has incorporated mechanisms that allow the US government, and other governments likewise, to police multinational corporations in their activities at home and abroad. The USMCA features a special annex that allows the United States to take trade action against a company in Mexico when the US government believes that the company is violating Mexican labour law. This Facility-Specific Rapid Response Mechanism is the first of its kind in creating such an extraterritorial instrument within a trade agreement for the enforcement of mutually agreed labour norms. 

A similar tool in the US-Peru Trade Promotion Agreement gives the United States the ability to block shipments of illegally harvested timber from Peru. And another mechanism in the Indo-Pacific Economic Framework Supply Chain Agreement seeks to call out facilities that persist in violating international labour law.

If policymakers seize the opportunity to reimagine trade agreements this way, some reconfiguration of the trade law system is required. First, there is the challenge of asking domestic regulators to police all the way down the supply chain. Trade administrators must scale up, and it is not obvious that many governments have the capacity to make this change. A turn to multidimensional trade agreements is a major transformation of work with respect to scale and skills. Civil servants and policymakers are not unaccustomed to shifts in approaches to governance and new programmes. But this shift is not so simple. One risk is that multidimensional trade agreement tools are dominated more by experimentation and haphazardness than by accountability and rule-of-law values.

Such a reconfiguration also has implications beyond the trade administrative state, including for the private sector and for the courts. With respect to the latter, economic agreement mechanisms that bring sustainability objectives into sharper focus, including through national regulators, will undoubtedly lead to a rise in litigation as businesses seek relief. Locating trade law within domestic law has never been straightforward, but now domestic courts may face cases on topics related to, for example, forced labour—well beyond the traditional trade remedies and customs classification or valuation cases that have previously served as the primary workload for a domestic trade bench.

These implications are magnified at the businesses themselves, and among lawyers. The portfolio of a trade compliance officer, whether at a small firm or large multinational company, has greatly expanded. Likewise, trade lawyers now must be specialists not just in customs law or international trade rules, but also in areas as far from their expertise as labour law. Law firms now work across practice groups, and new hybrid practices may emerge.

Thinking about trade agreements multidimensionally will require new entrants to the field to be prepared across multiple areas of law. Already, to be prepared to understand supply chain law in the present environment requires knowledge of bankruptcy, competition, contract law, arbitration, customs, due diligence, tax, maritime law, and national security law, among others. Trade law students would benefit from a multidisciplinary and multidimensional curriculum beyond the traditional World Trade Organization texts, including one that introduces advanced concepts of social sustainability.

New economic deals are experimenting with their targets and their penalties. In so doing, they are changing the content of the field. Lawyers now must be more versatile and cross-cutting. The new trade law landscape is putting together multiple practices for a multidimensional defence (and sometimes offence) against what was once considered just a trade and customs problem.

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Kathleen Claussen is Professor of Law, Georgetown University Law Center.

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Synergies is an online platform featuring expert commentary and opinions curated by TESS. We foster dialogue and incubate ideas on how to shape a global trading system that effectively addresses global environmental crises and advances sustainable development. Synergies draws on perspectives from leading experts and practitioners across policy communities from around the world.

The Executive Editor is Fabrice Lehmann.

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