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).

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Trade and environment goals have not always been easy bedfellows. Measures that support the environment can be seen as restricting trade or raising costs, while expanding economic growth through increased exports has been criticized by some as driving resource exploitation and increasing emissions. By focusing on international cooperation that advances the green economy, however, countries in the Indo-Pacific are looking to bridge these two areas in a way that can advance both policy objectives. 

The priority of these new partnerships is not on market access commitments that are found in traditional trade agreements. Instead, these new generation agreements are addressing behind the border barriers such as aligning standards, building out supply chains, and using investment as a means to achieve greater collaboration and innovation in the green economy—a model that is better suited to this fast-moving sector. The fledgling Future of Investment and Trade Partnership (FIT-P) is an ideal vehicle for expanding further green economy cooperation given its flexible design, broad membership, and objective of addressing contemporary trade issues. 

The green economy is intrinsically difficult to measure, but the World Economic Forum and Boston Consulting Group estimate it has already reached over $5 trillion in annual revenue, and is on track to exceed $7 trillion by 2030. Importantly, much of the new opportunity in this sector is through the supply chain connections that support green industries, rather than direct production alone. 

Singapore and Australia led the way in expanding green economy trade and supply chains across borders in the Indo-Pacific by concluding a Green Economy Agreement (GEA) in 2022. The GEA was described as a “first-of-its-kind agreement” as it brought together into one place trade, economic, investment, and environmental objectives. The GEA includes commitments to collaborate on standards and technical regulations relating to the green economy, and facilitate the flow of green and transition finance between their countries, such as through improving the interoperability of their sustainable finance frameworks. It is also a vehicle for these two partners to work together to grow the skillset for a workforce needed for a successful green economy. 

These countries did not see the two goals of increasing trade and protecting the environment as juxtaposed, instead they sought to use trade as a tool to accelerate the green transition in their countries. The non-binding, “framework agreement” style also reflects the approach of several new trade and economic initiatives in the region, where like-minded partners commit to working together to advance common interests but seek the flexibility, agility, and speed that can be achieved through a non-binding instrument. The GEA provides high-level political “umbrella” support under which more specific, concrete initiatives can be launched as new challenges emerge. 

The corollary of this, however, is that it lacks real “teeth” as there is no enforcement mechanism, and questions are raised as to whether the slated cooperation will translate into meaningful outcomes. Trying to prove the critics wrong, Singapore and Australia, have grown to 21 their joint initiatives under the GEA, with examples of implementation including Jet Zero Australia and Singapore’s Apeiron Bioenergy joining forces to explore options for sustainable aviation fuel, and Singapore and Australian port authorities working together on digitization of shipping. 

The bilateral GEA has since become a catalyst for driving greater green economy cooperation regionally. For example, 13 members of the Indo-Pacific Economic Framework (IPEF) signed in 2024 their Clean Economy Agreement to support the region’s transition to net zero. This agreement was largely cooperation based, with members identifying areas where they would work together, such as clean energy technology development, decarbonizing transport, and strengthening supply chains. Like the GEA, the IPEF agreement has a strong investment element, with the Clean Economy Investor Forum and the IPEF Catalytic Capital Fund leveraging significant funds for green infrastructure and other green economy projects in the region. While IPEF has faded off the radar screen since the second Trump administration took office, it nevertheless sets an important precedent for enhancing green economy links across the Indo-Pacific and recognition of the value of this sector to the Indo-Pacific’s future economic growth.

Meanwhile, Australia has continued to move forward with other bilateral green economy collaborations, such as its Green Economy Partnership Arrangement on Climate and Energy with South Korea in 2024. Singapore also joined New Zealand and Chile to launch negotiations for a trilateral Green Economy Partnership Agreement (GEPA) in 2025. Similar to the earlier agreements, these three countries are seeking to establish an enabling framework that will improve the interoperability of green standards across borders, mobilize green investment and finance, and expand the trade in green goods and services by reducing barriers and creating opportunities in low-carbon solutions. Negotiations are ongoing but the design is slated to be a mix of trade rules, commitments, cooperation initiatives, and concrete projects, and, importantly, with sufficient flexibility to evolve over time given the speed of development in this sector.

This grouping of smaller economies is significant as they have worked together in the past to launch innovative trade instruments that have set cutting-edge standards and grown over time: the Pacific Three Closer Economic Partnership with these three countries was the original catalyst for the Trans-Pacific Partnership, which morphed into the now mega-trade deal Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), whose members now represent around 15% of global GDP and has a queue of 11 economies interested in joining. Singapore, New Zealand, and Chile were also behind the Digital Economy Partnership Agreement (DEPA), the first stand-alone digital trade agreement of its kind, which has since expanded its membership to include South Korea and Costa Rica. This track record of developing pathfinder agreements that establish ambitious rules and practical cooperation, which other countries can (and do) then sign up to later, means that the GEPA is one to watch. The members are aiming to complete the negotiations in 2027.

The Future of Investment and Trade Partnership, established in 2025 and now with 19 small and medium-sized trade-dependent members from all over the world, represents a valuable opportunity to spark further international green economy cooperation. Adding the advancement of the green economy to its work programme would be in line with the original FIT-P Ministerial Declaration that highlighted enabling sustainable economic growth as an objective, and talked of the importance of utilizing technology, enhancing investment, and addressing contemporary trade issues. It would also ensure that FIT-P remained on top of some of the most critical issues facing economies today.

Singapore and New Zealand, as two of the four instigators of FIT-P, could draw on their leadership in this group to push forward a green economy agenda. With FIT-P members Switzerland and Costa Rica also parties to the ground-breaking Agreement on Climate Change, Trade and Sustainability (ACCTS), and more than two-thirds of FIT-P members co-sponsors of the WTO’s Ministerial Statement on Trade and Environmental Sustainability Structured Discussions (TESSD), there should be a groundswell of support for prioritizing action on advancing the green economy. The “pick and choose” model for FIT-P means that all members need not sign up to every initiative, and therefore those less interested in participating in certain aspects of the deal will not hold back progress by others.

As the challenges from climate change become more acute, and traditional trade architecture comes under increasing pressure, green economy partnerships—bilateral and plurilateral—are being devised by countries in the Indo-Pacific who believe that trade and environmental objectives can be pursued in tandem. Once the green economy deals are done, the key test is in implementation. If these deals can reduce barriers to trade, increase cross-border investment, foster growth in the global green economy, and establish frameworks which are embraced by a growing number of economies, then their value will be cemented. If not, they may well join the pile of other well-intentioned political declarations with limited real-world impact.

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Jane Mellsop is Director of Trade, Investment, and Economic Security, Asia Society Policy Institute.

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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. We seek to cultivate solutions-oriented policy analysis for a sustainable future.

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