While U.S. tariffs directly impact Latin American economies, the real risk may lie in China's policy response to those tariffs, especially for countries heavily dependent on commodity exports. 

U.S. tariffs announcements on all its trading partners have been a rollercoaster. The Trump administration announced new, very high tariffs aimed at penalizing countries with which the United States has large bilateral deficits. These tariffs were paused on April 9 for 90 days, while maintaining a 10% tariff floor for all countries (universal tariffs), with the exception of China, Canada, and Mexico. Tariffs on China were first raised to 125% and then temporarily reduced to 10% on May 12, a change valid for 90 days. In addition to country-level tariffs, sector-specific tariffs targeting certain products, particularly steel, aluminum, automobiles, and auto parts, have been announced and increased over time. 

Legal disputes have deepened tariff uncertainty. One court ordered their removal, but a same-day appeals court stay allowed the government to appeal to the Supreme Court. This back-and-forth has deepened the unpredictability of the final tariff outcome. 

The universal tariffs affect all Latin American countries, despite the United States' bilateral trade surpluses with the region (excluding Mexico) since 2010 (see Figure 1). 

Among Latin American countries, Mexico (together with Canada) was particularly targeted by the U.S. administration through the imposition of the so-called "fentanyl tariffs" of 25%, citing illegal cross-border flows of fentanyl as justification. Does this mean that Mexico effectively faces much higher tariffs than other Latin American countries? Not necessarily, as we explain below. 

Distinguishing Effective Tariffs From Announced Rates

To gauge which Latin American and Caribbean countries are most affected by the tariff increases, it is essential to consider the list of exempted goods. Announced tariffs generally do not accurately reflect effective tariff rates (ETRs), as reciprocal tariff announcements have often been accompanied by product exemption lists and other special tariffs. In addition to being subject to the fentanyl tariffs, Mexico is distinguished from other Latin American economies by the fact that goods included in the U.S.–Mexico–Canada trade Agreement (USMCA) are exempt. This includes some steel and aluminum products. 

Taking into account all exceptions and special tariffs, we can estimate the effective tariff rate faced by all countries. For this purpose, we use trade data detailed at the 10-digit product level, according to the Harmonized Tariff Schedule of the United States. Matching each product code with the most recent information on whether it is subject to a tariff or exempt, we estimate the effective tariff rate. At the Center for Global Development, we have developed a tracker that regularly updates our estimate of the effective tariff rate for all countries worldwide as new tariffs are announced. 

At the time of writing, with the exception of Mexico, the announced universal tariffs for Latin America remained at 10%. Tariffs on steel and aluminum were at 50% and those on auto parts were at 25%. Effective tariff rates for all countries in Latin America are presented in Table 1. Details on the methodology can be found in the tracker. 

There are several significant findings. 

First, although very high, the effective tariff in Mexico is significantly lower than the 25% "fentanyl tariff" rate. The main reason is that close to half of the products exported by Mexico to the United States are compliant with the U.S.–Mexico–Canada Agreement and, therefore, exempt from the tariffs. 

Second, along with Mexico, Brazil and most Central American countries are hit the hardest, with effective tariff rates above 10%. Although close to one third of Brazil's goods exports to the United States are exempt from the tariffs, the high effective tariff rate is due to the country’s large exports of steel to the United States. There are a few tariff exceptions for goods exported by Honduras, Nicaragua, the Dominican Republic, El Salvador, and Guatemala. However, their exports of steel (El Salvador and the Dominican Republic), aluminum (El Salvador and the Dominican Republic), and auto parts (El Salvador, Honduras, the Dominican Republic, Guatemala, and, especially, Nicaragua) raise their effective tariff above 10%. 

Third, Mexico and Central American countries (including Costa Rica and Haiti) not only have the highest effective tariffs but also the largest share of their exports destined for the United States among countries in the region, clearly making them the most affected countries. 

Fourth, mostly because of exemptions, the remaining Latin American and Caribbean countries face an effective tariff rate below 10%. For example, Bolivia, Ecuador, Colombia, and Chile benefit from lower effective tariffs due to their exports of tin (Bolivia), oil (Ecuador and Colombia), and copper (Chile). In addition, Guyana and Venezuela face the lowest effective new tariffs among Latin American countries. This is because nearly 90% and 95% of Guyana's and Venezuela's (respectively) exports to the United States are oil, which is exempt from the tariffs. 

Thus, on the whole, the situation is mixed. Latin America hosts some of the countries with the highest effective tariffs worldwide (Honduras and Mexico) and some with the lowest (Guyana and Venezuela). Also, in many South American countries, the share of exports destined for the United States as a percentage of total exports is not very high (with Bolivia, Argentina, and Paraguay below 10%), which lessens the direct effects of the tariffs in these countries. 

Beyond Direct Tariffs: The China effect 

However, direct effects cannot tell the whole story. The tariffs will also affect countries indirectly if these measures impose significant losses in GDP growth in key trading partners. This is the case with China. While the United States has traditionally been the primary trading partner for Mexico, Central America, and the Caribbean, this is no longer the case for South America. Over the past 25 years, increased trade and investment flows between South America and China have positioned China as the main trading partner for most South American countries. As of 2024, China accounted for around 28% of South America’s total exports, surpassing the United States' share of 16% (see Figure 2). This shift indicates that developments in China have a significant effect on the subregion. 

Minerals, metals, and energy products are key South American exports, and China is the primary destination for these commodities. For instance, in 2023, China consumed more than 50% of Chile's non-precious mineral exports. Similarly, in 2024, China was the main destination for mining exports from Argentina's Northwestern provinces, capturing 44.9% of total exports during the first 11 months of the year. 

A major slowdown in China's economy would likely reduce its demand for such commodities, potentially lowering commodity prices and adversely affecting South American economies. 

How probable is a severe China slowdown? The new U.S. tariffs on China remain very elevated. Our estimates indicate that the effective new tariff rate stands at 32.2%, the highest in the world. However, given the uncertainty about the evolution of tariffs, it is not possible to determine their overall impact on China's growth. What is clear, nonetheless, is that without an adequate policy response, China’s slowdown could be significant, as forecasted by the International Monetary Fund. 

China's ability to mitigate the economic impact will depend on its capacity to implement countercyclical fiscal and monetary policies. On the fiscal front, China has already increased its fiscal deficit from 3% to 4% of GDP, but no substantial fiscal stimulus to bolster economic growth has been announced. China faces the challenge of avoiding exacerbating concerns about debt sustainability, as the ratio of public debt to GDP is already 100%. To be effective, fiscal policies would need to be accompanied by structural reforms addressing local governments’ heavy reliance on land sales and debt accumulation. 

On the monetary front, the People's Bank of China could cut interest rates to support the economy. But the authorities face a problem: local banks are already experiencing very low margins due to previous government pressure to lower lending rates in response to problems in the property market stemming from excessive debt among developers. Low margins reduce banks' profitability and risk their financial stability. Resolving the property crisis is, therefore, a necessity to give the People’s Bank of China room to undertake countercyclical monetary policies. 

The evolving global trade landscape presents Latin America with a twofold challenge: direct exposure to U.S. tariffs and indirect vulnerability to China's policy response. While headline rates grab attention, the deeper risk lies in how these dynamics interact, particularly for countries heavily reliant on commodity exports or U.S.-bound manufacturing. Policy-makers across the region must look beyond bilateral trade data and prepare for broader spillovers, especially those tied to China's growth path and macroeconomic choices. In an increasingly uncertain global economy, vigilance and adaptability will be essential for sustaining stability and growth. 

This article is an updated version of a piece originally published by the Center for Global Development and is republished by the International Institute for Sustainable Development with the organization's permission. 

Liliana Rojas-Suarez is the Director of the Latin American Initiative at the Center for Global Development, and Ignacio Albe is a Program Assistant for the Adrienne Arsht Latin American Center at the Atlantic Council.

During the 2025 summer heatwave, the Inter-American Court of Human Rights (IACtHR) delivered its much-awaited advisory opinion on the climate emergency and human rights. The San José court's decision has direct implications for investment governance and the ongoing reform of investment treaties. In particular, it highlights the potentially negative consequences of the old-generation treaties for investment protection and investor–state dispute settlement (ISDS) on climate action. 

The IACtHR is a regional human rights tribunal whose task is to interpret and apply the American Convention on Human Rights, also called the Pact of San José, Costa Rica. It is one of three regional human rights tribunals, together with the European Court of Human Rights and the African Court of Human and Peoples' Rights. These advisory opinion proceedings on the obligations of states in responding to the climate emergency were initiated by the governments of Chile and Colombia in January 2023. 

On the heels of this decision, the International Court of Justice (ICJ) is expected to deliver its advisory opinion on the Obligations of States in respect of Climate Change later this month. Will this be the year in which international law finally aligns investment treaties with sustainable development? Here are a couple of initial takeaways for investment policy from the IACtHR's climate emergency decision. 

1. The tension between investment treaties and climate and environmental obligations is not inherent; it depends on the regulatory design of investment treaties. 

In its opinion, the court noted that more recent investment treaties include environmental protection and climate action provisions (para. 162). This implies that older-generation treaties that focus exclusively on investment protection are more likely not to be in harmony with climate and sustainable development goals (para. 163). 

The tension between investment treaties and climate and environmental obligations depends on the regulatory design and use of ISDS mechanisms (para. 163). This aligns with our view that we need to move beyond investment protection and rethink investment treaties—their functions, goals, and designs—as reflected in the International Institute for Sustainable Development's (IISD's) ongoing consultation on Rethinking Investment Treaties. 

2. Treaties should be designed to avoid regulatory chill and allow for experimentation. 

The opinion underlines that avoiding an eventual deterrent effect on climate regulation, so-called "regulatory chill," should be a key consideration when states design investment treaties to ensure they support climate action (para. 164). Regulatory chill refers to a situation in which the simple possibility of challenging regulations in ISDS can dissuade host states from adopting the necessary climate action policies. 

3. The ISDS practice of high damages is detrimental to climate action. 

The IACtHR recognizes that imposing onerous damages awards on states that lose ISDS claims, regularly forcing governments to pay millions of USD to investors, may discourage states from implementing public policies aligned with their environmental and climate obligations (para. 164). IISD has been emphasizing that reforming the calculation of damages in ISDS is timelier than ever. 

4. States should review their existing investment treaties and ISDS mechanisms. 

The court gave a clear signal to the states to align their ISDS mechanisms in treaties with sustainable development "to ensure that they do not limit or restrict efforts in climate change and human rights" (para. 352). The considerations relevant to applicable law in ISDS have also been spelled out by the court (para. 287), such that the investment arbitration tribunals that rule on ISDS cases should no longer be able to avoid environmental and climate change law considerations. 

5. States must regulate corporate behaviour to address the climate emergency, and companies must expect that such regulation will be implemented. 

While recognizing the duty to regulate corporate behaviour to prevent human rights abuses falls on states, the court was clear that these obligations must be fulfilled by companies. Companies must avoid their actions causing or contributing to human rights violations and adopt measures aimed at their remedy (para. 345). 

Companies "have obligations and responsibilities with regard to climate change and [its] impacts ... on human rights," it writes (para. 346). Notably, this should be an important consideration by ISDS tribunals when assessing potential investors' "legitimate expectations." The arguments voiced by the court might also be relevant for implementing legally sound fossil fuel phase-outs. 

6. Investment policy cannot be considered in isolation from the wider economic law and policy landscape. 

The court observed that various areas of international economic law beyond investment consider the environmental and climate impacts of economic activities (e.g., international finance, paras. 165–170). Various multilateral development banks have adopted policies and projects promoting resilience, adaptation, and climate mitigation. 

For instance, the court noted that "the International Monetary Fund (IMF) gradually incorporated climate risks and opportunities into its public policy advisory mechanisms, capacity building (para. 165)." This reasoning is in line with our view that investment treaties must be considered part of the broader set of policy tools for states to allocate economic and political risks linked to investment projects. 

7. States need to adopt holistic energy transition regulation, especially in the context of investment incentivization and during the extraction of critical minerals. 

Investment treaties are but one element of regulating the activities of foreign investors. The court highlighted that states have the need to protect human rights from violations that may occur during the energy transition (para. 342). On incentives to promote investment, states should adopt "measures to foster and attract investments in innovation in low-emission activities, as well as to develop new tools and standards to strengthen green finance; and ... policies that favor green investments and facilitate the transition of polluting sectors" (para. 342). 

8. Domestic law is the primary vehicle for regulating corporate behaviour. 

The court also noted that states have a duty to establish corporate obligations on climate action in their domestic legal frameworks (para. 346). Such obligations relate to, for instance, carbon disclosures and discouraging greenwashing (para. 347). 

The opinion highlights that states can order sanctions for economic activities carried out in contravention of environmental regulations, including the cessation of conduct and compensation for environmental damage (para. 356). This can inspire policy-makers when they reform their national investment laws and regulatory frameworks. 

9. Some corporations have greater responsibilities than others when it comes to climate action. 

The court considered that states should differentiate between corporations when imposing burdens through domestic regulations based on current and past contributions to climate change. These burdens may, for instance, be expressed through taxes or contributions (paras. 350 & 352). For the court, this means putting into practice the "polluter-pays" principle. 

Importantly, the court highlighted that imposing those burdens should consider "economic conglomerates and transnational corporations, so that States can attribute legal responsibilities to parent companies" (para. 350). 

10. Environmental impact assessments (EIAs) are mandatory whenever there are risks of significant environmental damage. 

The court went to some length to determine the details of EIA obligations and the discussion of best practices in this area (paras. 358–362). EIAs and related tools, such as Environmental and Social Management Plans, are critical components in legal frameworks for mining and other high-risk activities, both to minimize the negative impacts and optimize the positive contributions of the investment. This decision will complement the already existing guidance available to governments on reforming and implementing EIAs. 

Paving the Way for a Historic ICJ Ruling on Climate 

This decision breaks ground by interpreting the obligations of states, as well as corporations and investors, in response to the climate emergency. It makes a clear case for why investment policy-makers cannot ignore considerations related to climate change and the environment when designing and implementing investment policies. 

While this decision produces direct legal effects only within the inter-American human rights system, it can serve as an inspiration for similar legal initiatives beyond the region. At least as important, it can pave the way for a robust decision by the ICJ on states’ obligations to tackle climate change when the world court delivers its much-anticipated verdict later this month.

The COP 30 Presidency is placing adaptation at the top of the agenda for the United Nations Framework Convention on Climate Change (UNFCCC) talks in Bonn, and a key focus will be the Global Goal on Adaptation—the Paris Agreement’s political commitment to drive and enhance global progress on climate change adaptation. 

Tracking the progress, effectiveness, and equity of adaptation actions is complex because, unlike mitigation, adaptation cannot be measured by a single global metric. However, at COP 28, parties adopted the United Arab Emirates Framework for Global Climate Resilience (UAE FGCR), outlining the framework to assess collective progress on the Global Goal on Adaptation. 

With a clear set of targets and cross-cutting considerations, the UAE FGRC provides the global community with a direction of travel for advancing adaptation efforts. 

What it doesn’t do is clarify how progress toward these targets will be assessed. For this, countries also established at COP 28 the 2-year UAE-Belém work programme, under which nominated expert groups have been working to identify and develop a set of indicators that can be used to track progress toward the targets. 

In this article, we review the recently released “long shortlist” of indicators, analyze how well gender responsiveness has been integrated, and share our recommendations.

Why Adaptation Must Address Gender Inequality

It’s well established that the impacts of climate change affect people differently based on their gender, as well as a range of other factors such as age, race, Indigeneity, migrant status, and disability. 

Recent analysis from UN Women estimated that, under the worst-case scenario, climate change could push up to 158 million more women and girls into extreme poverty. The Intergovernmental Panel on Climate Change concluded in 2022 that inequities linked to gender exacerbate vulnerability and that these inequities could be worsened if adaptation actions do not address harmful power dynamics. They point to the need for adaptation efforts to be grounded in equity and justice for better outcomes. 

This is recognized in the UAE FGCR, which encourages countries to adopt gender-responsive and participatory approaches, taking into consideration vulnerable groups and communities. It also emphasizes the need for adaptation to apply locally led and intersectional approaches, along with the best available science and Indigenous and Traditional Knowledge. 

Put simply, if adaptation efforts are to be effective, they must address gender inequality, and the indicators established to track progress must enable assessment of how gender responsive adaptation processes and outcomes are. 

 

The recently released shortlist of indicators does show attempts at integrating gender considerations, with extensive work from the expert working groups and engagement with civil society and parties. Unfortunately, it falls short of addressing gender considerations systematically and in a way that countries can easily implement through their national monitoring, evaluation, and learning (MEL) systems for adaptation. 

Integration of gender equality and social inclusion has already been identified as a weakness in current MEL systems for adaptation globally. A lack of integration of gender in the UAE-Belém work programme risks creating a set of indicators that do not capture equity in measuring the impacts of adaptation efforts on different groups, including many women and girls who experience higher vulnerability due to structural barriers driven by gender inequality. 

We do recognize that gender is not the only social factor that exacerbates vulnerability to climate change. However, it is a factor with a strong foundation within the UNFCCC process, with the Lima Work Programme on Gender first adopted in 2014, and the Gender Action Plan since 2017. Gender also provides an important starting point for consideration of equity in outcomes from adaptation action. While here we focus on gender responsiveness as a key entry point for integrating social factors, we strongly encourage efforts to address other factors such as age, race, Indigeneity, migrant status, and disability.

Gender in the Existing “Long Shortlist” of Indicators: What’s there?

The UAE FGCR identifies 11 targets for adaptation, including seven thematic targets focusing on key priorities and four targets that focus on the stages of the iterative adaptation cycle (IAC). These are:
•    impact, vulnerability, and risk assessment 
•    planning 
•    implementation 
•    MEL 

The expert groups have identified a “long shortlist” of 490 indicators linked to these 11 targets. These are meant to guide countries’ efforts to track and report on adaptation efforts, using their national MEL systems to report and communicate via UNFCCC instruments, such as biennial transparency reports, adaptation communications, and national communications. 

Consideration of gender is especially important in the indicators for the dimensions of the IAC, as much of what makes adaptation plans, policies, and actions gender responsive relies on the processes through which they are developed, implemented, and assessed. In establishing targets for the IAC, the UAE FGCR helpfully recognizes that adaptation is an ongoing, iterative process. However, when it comes to the indicators that have been identified for the IAC, it’s a mixed picture in terms of how they incorporate gender dimensions. 

While we welcome the inclusion of specific gender-related indicators or sub-indicators for planning, implementation, and MEL, their quality could be improved in terms of clarity, consistency, and feasibility.  The suggested indicator for gender-responsive adaptation plans includes multiple elements, some of which overlap with indicator content that should be tracked in the implementation and MEL phases. 

For the implementation dimension, the proposed indicator refers to implementation “with a gender focus,” which is not the same thing as gender responsive, while under MEL it simply refers to “MEL systems that are gender-responsive.” Without clearer definitions and guidance, these indicators risk being impossible to for countries to consistently operationalize, and therefore difficult to analyze globally. 

When it comes to the thematic targets, some efforts have been made to incorporate disaggregated data in relation to particular indicators. However, disaggregation is currently neither consistent nor systematized. For example, some indicators focus on disaggregation by gender, some on sex, and some on women, and in some cases, pregnant women specifically. 

What’s Needed?

The gender-related indicators in the “long shortlist” provide a starting point, but a more systematic approach is needed to effectively support the integration of gender considerations into the tracking and reporting of progress on adaptation. As the set of indicators is discussed at the 2025 Subsidiary Body meeting in Bonn, it will be important that parties maintain and improve on what is already there, recognizing that this is essential for an effective UAE FGCR.  

We highlight four key considerations for ensuring a set of indicators that works:

• qualitative indicators to assess gender responsiveness: Recognizing that there are many ways to integrate a gender-responsive approach, flexible but structured qualitative methods will enable countries to assess the gender responsiveness of their adaptation efforts. We recommend a three-point scale often used in scorecards (for example, in the Tracking Adaptation and Measuring Development approach). Here, we suggest the following: no evidence of integration of gender considerations; some evidence of integration of gender considerations; evidence of systematic integration of gender considerations. This can be applied across the four IAC targets.
• evidence-based approach: To support the application of qualitative indicators to assess gender responsiveness, countries will need to consider a range of different types of evidence. We highlight four key types of evidence that countries can incorporate into their MEL systems to assess gender responsiveness in their adaptation processes:
  • evidence of a commitment to a gender-responsive process
  • evidence of inclusion of gender experts, institutions, and/or organizations
  • evidence of integration of gender-disaggregated data and gender analyses
  • evidence of uptake of gender considerations in the outputs in adaptation processes and actions
• complementary guidance on reporting for feasibility:  The suggested gender-related indicators for the IAC require simple methodologies that can be consistently applied, while maintaining flexibility to capture the diversity of country contexts and their unique adaptation journeys. For this reason, we suggest that guidance be provided that encourages countries to include an accompanying narrative that describes the evidence they used to conduct their assessment of gender responsiveness. In addition to strengthening the robustness of their reporting, this will aid in identifying good practices and learning across countries. This guidance should be integrated into the guidelines for biennial transparency reports, adaptation communications, and national communications for coherence when reviewed.
• consistent gender disaggregation in the thematic targets: Efforts have been made to incorporate gender-disaggregated data; however, this is not systematic, and there is a lack of consistency in the way gender issues are captured. A clear, consistent approach to disaggregation by gender—and other, often intersectional, social factors—is recommended across all relevant indicators.

By addressing gender considerations throughout the UAE-Belém indicators, we increase the likelihood that gender-related issues will be prioritized in decision making and that gender-differentiated needs and priorities will be addressed. In short, when defining a final set of 100 indicators, parties and experts should remember that gender-responsive adaptation is a must-do, not a should-do, and this needs to be reflected. Ultimately, this is crucial for outcomes of adaptation actions to be equitably distributed across people of different genders and social groups.

Global momentum on nature-based solutions (NbS) has steadily grown over the last decade. The idea of harnessing the power of nature to solve social, economic, and environmental challenges facing us is, at times, almost intuitive. 

Yet, NbS is not without its fair share of criticism and debates. How exactly are these terms defined? What safeguards are needed? And how can we ensure that the design and implementation of these solutions deliver genuine social, economic, and environmental benefits while protecting people’s rights and ecological integrity? 

The most recent United Nations Environment Assembly (UNEA-5) in early 2024 discussed the potential for creating multilaterally negotiated guidance for the implementation of NbS, but ultimately, parties did not reach a consensus on a resolution. 

While there is ample guidance and materials on NbS for practitioners and policy-makers to choose from, two stand out as the most prominent: the International Union for Conservation of Nature’s (IUCN’s) IUCN Global Standard for Nature-Based Solutions and the Secretariat of the Convention on Biological Diversity’s (CBD’s) Voluntary Guidelines for the Design and Effective Implementation of Ecosystem-Based Approaches to Climate Change Adaptation and Disaster Risk Reduction. 

How do these two documents compare? And how should practitioners navigate them when they are planning and implementing an NbS project? 

The International Institute for Sustainable Development (IISD), in collaboration with the Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ), recently published a background note analyzing the two key international documents on NbS. 

The note compares the principles, safeguards, and implementation requirements of the two guidance documents and highlights the similarities, differences, and gaps, as well as the interrelationships and commonalities, between the two existing international standards. This article explores some of the background note’s key findings and what they mean for policy-makers and practitioners working on NbS and the climate–biodiversity nexus. 

Why do we need these standards and guidelines for NbS? 

Over the past few years, NbS has become increasingly visible in countries’ environmental and development policies. More and more countries’ nationally determined contributions, national adaptation plans (NAPs), and national biodiversity strategies and action plans feature NbS as approaches that will help them achieve their commitments under different multilateral environmental agreements. 

In a recent analysis by the NAP Global Network, 77% of the countries’ submitted NAP documents contain the terms “nature-based solutions” or “ecosystem-based adaptation,” and all of them include at least one action related to protecting, conserving, restoring, and sustainably using and managing natural ecosystems among the identified adaptation options. 

But, with its growing popularity, concerns have emerged over the concept’s human-centric perspective and the risks of commodifying nature , along with the potential for greenwashing and human rights violations during their planning and implementation.

These concerns sparked the need for a formal definition of what constitutes NbS, as well as the safeguards and guidelines practitioners should follow. Having these standards and guidelines helps practitioners and policy-makers ensure that the outcomes of their NbS interventions are effective and deliver genuine social, economic, and environmental benefits for people of all backgrounds while also preventing their misuse and protecting people’s rights and ecological integrity.

What are the two key international standards and guidelines in place? 

In 2016, the International Union for Conservation of Nature’s (IUCN’s) World Conservation Congress defined NbS as “actions to protect, sustainably manage, and restore natural or modified ecosystems, that address societal challenges effectively and adaptively, simultaneously providing human well-being and biodiversity benefits.” Following this resolution , IUCN’s NbS Group developed the IUCN Global Standard for Nature-Based Solutions, which represents a high-level, practical, and user-friendly framework for the verification, design, and scaling-up of NbS. It sets out eight criteria with 28 associated indicators to help practitioners improve their NbS projects while enabling funders and other stakeholders to assess the effectiveness and safeguards of the interventions. 

At roughly the same time in 2016, parties to the CBD requested that the secretariat develop a set of voluntary guidelines for the implementation of ecosystem-based adaptation (EbA) and ecosystem-based disaster risk reduction (Eco-DRR)—two types of NbS that focus on climate change adaptation and disaster risk reduction. The voluntary guidelines provide a set of principles, safeguards, and overarching considerations for planning and implementing EbA and Eco-DRR. They also provide practitioners with a list of tools and case studies on mainstreaming EbA and Eco-DRR across different sectors. 

What does the comparative analysis reveal? 

Our analysis looks at the different aspects of the two guidance documents, including their definitions and the scope of NbS, how they characterize benefits from NbS, what environmental and social considerations are integrated, aspects of adaptive management, mainstreaming and monitoring and evaluation, their accessibility and operationality, and how they are perceived and accepted by countries. 

It found that, overall, both guidance documents are highly compatible with each other and, in some respects, complementary. 

 

Both of their definitions and scopes of NbS therein, as well as the principles and criteria they proposed, are aligned with the multilaterally recognized definition of NbS adopted by UNEA-5. They both also emphasize critical considerations during the design and implementation of NbS, such as social and environmental safeguards and adaptive management, as well as the need to mainstream nature and biodiversity considerations into social and environmental policies and planning. 

However, these two guidance documents do differ in their structure and granularity. The IUCN Global Standard offers a high-level, practical framework that is suitable for providing umbrella guidance for a wide range of NbS activities—and not simply those focused on climate change adaptation. It also offers indicators to support the verification, design, and scaling-up of NbS. Conversely, the CBD Voluntary Guidelines focus on EbA and Eco-DRR, providing further technical details of these two types of NbS. The guidance offers targeted, stepwise advice and useful tools and resources for every phase of an EbA/Eco-DRR project. But it is also important to point out that while the CBD Voluntary Guidelines target EbA and Eco-DRR interventions, their guidance and tips are also applicable to other types of NbS. 

In summary, the IUCN Global Standards and the CBD Voluntary Guidelines each serve different but complementary purposes. 

 

When used together, they can provide practitioners and policy-makers with comprehensive guidance to ensure proper environmental and social considerations are integrated at each step of the project cycle, as well as the effectiveness of their NbS interventions. 

What does this mean for practitioners and policy-makers? 

Here are our recommendations. Read our background note for more in-depth suggestions for practitioners designing and implementing NbS interventions, as well as policy-makers involved in the international conversation on developing standards and guidelines for NbS.

• Strong, coherent criteria, norms, standards, and guidelines for designing and implementing NbS are important for improving the outcomes of NbS interventions and avoiding  adverse environmental and social impacts. However, there is no one-size-fits-all guidance on NbS. Selecting and adapting guidance on designing and implementing NbS interventions should be flexible and inclusive. There are many more guidance products beyond the IUCN Global Standards and the CBD Voluntary Guidelines, and they all have varying levels of acceptance among different countries and stakeholders, as well as different focus areas and scopes. Practitioners and policy-makers should apply the most appropriate frameworks within their policy and project contexts, taking into account local, national, and regional circumstances and managed adaptively.
• Avoiding duplication of work and additional burden within workstreams is key to the ongoing international discussions on NbS. Policy-makers may wish to consider compiling existing guidance and standards documents across different types of NbS and encourage countries and practitioners to plan and implement NbS with the most appropriate guidance and resources for their specific policy and project contexts.
• The ongoing and planned review and update of both the IUCN Global Standard and the CBD Voluntary Guidelines could present opportunities to align different guidance frameworks and tools and integrate the UNEA definition for NbS for better coherence. 

In December 2023, the 28th UN Climate Change Conference concluded with a landmark decision from 198 governments to "transition away from fossil fuels" in a just, orderly, and equitable manner. Phasing out fossil fuels is vital to avoid the catastrophic impacts of climate change. 

Economic factors also underscore the importance of phase-out strategies. Amid geopolitical uncertainty, prioritizing renewable energy and reducing dependence on imported fossil fuels helps protect economies from volatile energy markets. As clean energy technology costs continue to decline, fossil fuel demand is becoming increasingly uncertain. This means that countries that rely on hydrocarbon revenues must adjust their oil, gas, and coal production plans to ensure long-term economic and fiscal stability. Proactively managing production declines is key to mitigating adverse transition effects on producer economies. 

Some governments have already taken action. Denmark, France, Italy, Schleswig-Holstein in Germany, Quebec in Canada, and the United Kingdom have ended the licensing of new exploration and, in some cases, approved new field development as well. 

However, the threat of investors suing under ISDS clauses in investment treaties can pressure governments to scale back their fossil fuel phase-out ambitions. ISDS is a legal mechanism included in many treaties that allows foreign investors to sue governments before arbitration tribunals. It is frequently used to sue states for perceived violations of international obligations, which are often interpreted broadly and inconsistently. 

For example, ISDS provisions under the Energy Charter Treaty have been invoked in Germany, the Netherlands, Slovenia, and other EU countries to challenge decisions to phase out fossil fuels and related infrastructure. ISDS is frequently criticized for being opaque, unpredictable, inconsistent, and very costly—often requiring governments to pay billion-dollar compensation. Consequently, ISDS is widely recognized as a major obstacle to climate action. 

This issue has led UN agencies, civil society organizations, and think tanks, including IISD, to call for a reform of ISDS. There is an urgent need to align it with the need for ambitious climate action. 

Yet governments cannot afford to delay phase-out policies until ISDS reforms are complete. IISD's recent report explores concrete strategies for governments to move ahead with fossil fuel phase-outs, specifically in oil and gas production, while mitigating ISDS risks. 

Analyzing arbitral tribunal decisions on fossil fuel and nuclear phase-outs, as well as drawing on consultations with experts, the report finds ISDS risks vary depending on which stage of the oil and gas life cycle is targeted. Risks are notably higher for measures affecting later stages of the production cycle (such as the production phase) compared to earlier ones (such as the acquisition and exploration phases). 

Oil and gas production life cycle and associated ISDS risks

Source: Schaugg et al. 2025, adapted from Trout 2023. 

Timely interventions targeting the earlier life-cycle stages—such as ceasing the award of new exploration licences—carry lower arbitration risks. Delaying these measures, in contrast, exacerbates tensions between avoiding legal risks and achieving climate targets.

Every delay shrinks the remaining carbon budget available to prevent warming, breaching the Paris Agreement's 1.5°C goal. Postponed action increases the need for harsher, legally riskier measures at a later stage to avert catastrophic climate change. 

While ISDS risks are significantly higher at later stages in the life cycle, governments can still employ effective mitigation strategies. Policy-makers should clearly reference international climate obligations and point to evidence on why production restrictions are essential for achieving greenhouse gas emissions targets, among other strategies. 

The report outlines five essential principles for policy-makers:

• no new licences. Stop creating new exploration and production rights. This is the single best way to prevent new arbitration risks from arising.
• manage expectations. Set a long-term framework for phasing out oil and gas production, signalling the end date well in advance. Avoid making any official statements that could be interpreted as encouraging investment in the sector.
• build broad authority. Implement phase-out policy through legislation rather than executive orders. Ground policies in scientific evidence, national constitutions, and legally binding international treaties wherever possible.
• use existing powers. Leverage existing environmental or social regulations. In recent years, courts have also been driving a wider consideration of the climate impacts of new fossil fuel projects.
• be consistent. Apply a phase-out policy equally to all investments in the sector, irrespective of investor nationality. 

Governments are already applying some of these approaches in practice. In 2020, Denmark became the first important producer to set an end-date for oil and gas exploration and extraction, 2050, referencing the country’s commitments under the Danish Climate Act. In 2024, the German state Schleswig-Holstein announced that it would end oil exploration and development in the Wadden Sea, a UNESCO-designated natural heritage area, while the Canadian province Quebec has codified an oil and gas development ban into law referencing its obligations under the Paris Agreement, commitment to carbon neutrality, and membership in the Beyond Oil and Gas Alliance. 

Prompt action, grounded in international obligations with clearly communicated production end dates, not only maximizes the likelihood of limiting warming to 1.5°C but also significantly reduces the risks of ISDS suits threatening phase-out action. 

You can download the report here.

Senegal is known as a fishing nation. Can you give us an overview of the importance of fishing for Senegal, both economically and socially?

Senegal's more than 700 kilometres of coastline offer outstanding ecological conditions and a wealth of biological diversity. The fisheries sector provides thousands of jobs (more than 600,000 jobs according to some estimates) and significant foreign exchange earnings while contributing over 3% of GDP. Landings are estimated at 500,000 tonnes annually, with 80% of this amount being supplied by artisanal fishing, and the export value of fisheries products is estimated at CFA 300 billion (about 10% of total exports). [Annual per capita] consumption of fisheries products is around 29 kg on the national level and can reach 40 kg in coastal cities.

Fishing is a true pillar of the Senegalese culture and identity, and an integral part of the daily lives and lifestyles of the country's coastal populations.

Beyond its socio-economic importance, fishing is a true pillar of the Senegalese culture and identity, and an integral part of the daily lives and lifestyles of the country's coastal populations.

What are the main challenges facing Senegal's fisheries sector, especially in terms of sustainability?

Several types of challenges exist, arising primarily from a lack of control over access to fisheries resources and from imperfect knowledge of the harvesting potential. As a result, there is a mismatch between fishing efforts and the ability of fish stocks to regenerate themselves. This is why we are faced with excess capacity, overharvesting, and depletion of fisheries resources. This deterioration can even lead to the collapse of certain fish stocks.

We are faced with excess capacity, overharvesting, and depletion of fisheries resources.

Weak governing and management bodies and improper fishing practices—particularly illegal, unreported, and unregulated (IUU) fishing—must also be noted, along with climate change, ecosystem degradation, pollution, and coastal erosion.

The fisheries sector is, therefore, confronted with an accumulation of often interrelated pressures, which means that relevant solutions and enhanced governance are needed to ensure its continuity.

How does Senegal leverage regional and international cooperation to promote the protection of oceans and the sustainable harvesting of marine resources?

Senegal is a member of several subregional, regional, and international organizations. It has signed and/or ratified a number of conventions focusing on ocean protection and the sustainable harvesting of marine and coastal resources. Within these bodies, Senegal plays a very active role and has often brought forward initiatives aiming at improving sustainability. In particular, it played a significant role in the UN negotiations to protect high seas biodiversity, as well as in World Trade Organization (WTO) negotiations on fisheries subsidies, which led to very important international agreements. In this way, Senegal is working to harmonize ocean protection and resource-harvesting policies, using international cooperation and the tools that go with it to make collective progress toward the sustainable management of marine resources.

For Senegal, achieving the United Nations Sustainable Development Goals (SDGs) for 2030 is also a priority, and as we all know, one of these goals is SDG 14, which deals with the conservation and sustainable use of the oceans.

Finally, Senegal has worked hard for the adoption of Target 3 (30x30) of the Convention on Biological Diversity's Global Biodiversity Framework, which calls for the protection of 30% of oceans and land by 2030.

As you mentioned earlier, the WTO adopted the Agreement on Fisheries Subsidies in 2022, and Senegal ratified it more than a year ago. Why was it important for Senegal to ratify this agreement?

Fisheries subsidies are important public policy tools, but they can cause adverse effects and negative externalities. Harmful subsidies are one of the main factors behind overfishing, which is a real challenge for Senegal. The ratification and implementation of the Agreement on Fisheries Subsidies will, among other things, help protect the oceans and combat the decline in fish stocks by dealing with the issue of overfishing. Bearing in mind the economic and social importance of its fisheries sector, Senegal has a duty to ensure that its fisheries resources are harvested in a sustainable, lasting way, which is why it has ratified the agreement and continues to work toward its effective implementation.

What benefits can we expect these new rules to bring to Senegal and, more broadly, to West Africa?

As discussed earlier with regard to Senegal, fishing is of paramount importance for the populations and economies of many other West African countries. This sector makes an essential contribution to food security, community livelihoods, payment balances, and so on. For example, in some countries of the region, fish accounts for more than half of the population's animal protein intake, and this is a national-level average; for some coastal communities, this share can be even higher. Ensuring the sustainability of the sector is therefore crucial.

These new rules will help protect the oceans and combat the decline in fish stocks by tackling the problem of overfishing. Indeed, some subsidies increase the pressure on fish stocks, driving their depletion while also encouraging the global scourge that is IUU fishing. The African continent is no exception to this rule; on the contrary, it suffers estimated annual economic losses of between USD 7.5 billion and USD 13.9 billion due to IUU fishing.

The African continent suffers estimated annual economic losses of between USD 7.5 billion and USD 13.9 billion due to IUU fishing.

WTO members have therefore agreed to ban these detrimental forms of subsidies and to ensure that the financial support provided by governments to fishing fleets is consistent with the sustainable management of marine resources. The implementation of these rules will not only enable West African countries to engage in an essential process of reflection on how best to support their fisheries sector and their coastal communities but should also help to combat the harmful fishing practices of certain foreign fleets in the waters of the region. This is an important point because some of these foreign fleets are frequently involved in IUU fishing activities, and they also target specific fish stocks that are considered to be overharvested, often to the detriment of local fishing communities.

In view of implementing these disciplines, the various countries will be able to benefit from technical assistance and capacity development through the WTO Fisheries Funding Mechanism. This fund, which has already been set up, will become available to all developing countries that have ratified the agreement once it comes into force.

Can you tell us what Senegal has put in place to prepare for the implementation of this agreement?

Senegal became actively involved in the implementation of this agreement at a very early stage. International workshops and working groups were organized prior to the adoption of the agreement. These efforts have continued since the agreement was adopted. Following the ratification of the agreement, two workshops were held to prepare for its implementation. Senegal carried out a self-assessment to identify and evaluate its deficiencies for the implementation of the agreement, as well as its needs in terms of technical assistance. To do this, it used the Self-Assessment Tool for the Implementation of the WTO Fisheries Subsidies Agreement designed by the International Institute for Sustainable Development. All these activities have helped make Senegal ready to move forward, and I hope the country will receive support from the Fisheries Funding Mechanism in the form of technical assistance and capacity development so it can more effectively implement the agreement.

For the least developed countries, it will be important for international assistance to step in to support these implementation efforts. In your opinion, which obstacles will these countries need to overcome, and in which areas will this support be the most needed?

Technical assistance and capacity development will be essential for the least developed countries as they work to implement the agreement. These countries will first need to identify and evaluate their shortcomings in an objective manner. This will allow them to clearly target the areas requiring technical assistance and capacity development. The actions needed to achieve compliance may vary from one country to another, but a good understanding of the agreement and its challenges is crucial at this stage.

It can be argued that the application of the rules of the agreement will require a range of measures. They include the collection and reporting of certain types of information, the establishment of coordination mechanisms between various government agencies, and the creation of rules and/or procedures ensuring that no prohibited subsidies are granted. More generally, the overall effectiveness of the agreement will also depend on the ability of developing countries to improve their fisheries management system with a view to ensuring sustainable harvesting. All these implementation issues mean that resources, which can be limited for least developed countries, will need to be mobilized. Technical support and assistance will, therefore, be essential to help these countries honour their commitments.

Subsidies are a crucial topic, but the sustainable harvesting of fisheries resources depends on many other factors, too. What kind of policy approach is needed, in Senegal and elsewhere, to tackle this goal in a holistic manner?

The sustainable harvesting of fisheries resources depends on many factors at once, so the best way to achieve it is by uniting all of these components within an intersectoral approach. In a context as complex as fisheries, with economic, social, and environmental challenges at stake, such an approach is crucial. It requires cooperation between various departments and actors with the aim of integrating, coordinating, and harmonizing efforts, from the planning stage all the way through to practical implementation. In the quest for integrated management of marine resources, all stakeholders have to be identified and to work together; no relevant actor must be left out.

Mamadou Diallo is a Senegalese expert.

The World Trade Organization (WTO) Agreement on Fisheries Subsidies, adopted in June 2022 after more than two decades of negotiations, marked a significant milestone for promoting sustainable development in the fisheries sector and was celebrated as a historic achievement. This key international instrument requires governments to avoid financially supporting fishing in situations where there are acute concerns about the sustainability of such fishing. WTO members are still negotiating additional rules on fisheries subsidies.

What would these add, and where exactly are we in that negotiating process? This article offers a concise state of play of the current WTO process on the topic, as of March 2025.

Fish 1: The 2022 Agreement on Fisheries Subsidies

When WTO members sealed a multilateral deal to curb the most harmful forms of government subsidies to the fishing sector in 2022, they drew applause from around the world. Harmful fisheries subsidies are a serious challenge in terms of sustainable development. They encourage levels of fishing pressure that marine resources cannot bear, threatening not only marine ecosystems but also the food security and livelihoods of hundreds of millions of people who depend on fishing—often in vulnerable coastal communities in developing countries.

By prohibiting the provision of fisheries subsidies when they can be most damaging, the 2022 WTO Agreement on Fisheries Subsidies (hereafter "the 2022 agreement," also often called Fish 1) is expected to help align government subsidy policies with sustainability imperatives in the fishing sector. This is a much-needed shift in the face of the ever-increasing share of fish stocks being exploited beyond sustainable levels globally (38%, according to the latest estimates by the Food and Agriculture Organization) and the well-known role of subsidies as a driver of such overexploitation.

More precisely, the treaty prohibits subsidies in three types of situations: (1) when fishing activities are illegal, (2) when fish stocks are in an overfished condition—that is, their biomass is alarmingly low—and no measures have been introduced to help them recover, and (3) when fishing occurs on the high seas outside of any collective management arrangement, which essentially means that no collective entity has the responsibility to ensure the sustainable management of these activities. In addition, the rules include a softer obligation for governments to be particularly cautious when providing subsidies to vessels that do not fly their flag and for the fishing of stocks whose sustainability status has not been assessed, as well as transparency requirements with regard to subsidies and other fisheries-related information.

The treaty now needs to be ratified by 111 WTO members to enter into force; 94 members have done so already, so 17 more ratifications are still needed. Once in force, the new set of rules will become legally enforceable. WTO members must thus also prepare to implement their new legal obligations—which they can start doing by using IISD's Self-Assessment Tool for the Implementation of the Fisheries Subsidies Agreement. A dedicated fund has been set up at the WTO to provide developing country members with the financial support they need to implement the agreement.

Fish 2: Toward further, broader rules

All of this is promising, but it also begs the question of why WTO members are still negotiating to conclude additional rules on fisheries subsidies (often called Fish 2). The answer lies in the focused nature of the rules agreed 3 years ago. The 2022 agreement is essential in its own right, but the problem of subsidized overfishing is broader than the specific situations targeted by its prohibitions. Even when fishing operators do not engage in illegal activities or when stocks are not (yet) in an overfished condition, fisheries subsidies can be harmful. They often encourage the development of oversized fishing fleets and incentivize excessive levels of fishing pressure, which can eventually lead to fish stocks being overfished or even severely depleted. The original mandate for the negotiations recognized the scope of the problem: it required negotiators to discipline those subsidies that contribute to overcapacity and overfishing.

The rules would aim to address more directly the root cause of the problem rather than waiting for the most acute manifestations of that problem to appear.

This is precisely why WTO members are negotiating further, broader rules on fisheries subsidies: to prevent subsidies from contributing to overfishing and fleet overcapacity in the first place. In other words, the rules would aim to address more directly the root cause of the problem (when subsidies start to encourage overcapacity and overfishing) rather than waiting for the most acute manifestations of that problem to appear (when overfishing has been going on for so long that stocks are in an overfished condition).

Such broader rules were also on the table at the WTO's Twelfth Ministerial Conference (MC12) in Geneva, where the 2022 agreement was adopted, and their conclusion was crucial for many WTO members. However, members did not manage to agree on all the parameters of these disciplines. Rather than throwing the entire agreement overboard, they decided to conclude a smaller—but critically important—package and continue negotiating on these additional rules to prohibit subsidies that contribute to overcapacity and overfishing more generally. Now they are working to finish the job.

How Far Have We Come?

WTO talks on fisheries subsidies resumed in 2023, with a very busy schedule of negotiating meetings. The goal was to agree on additional provisions on fisheries subsidies by—or at—the WTO's Thirteenth Ministerial Conference (MC13), held in Abu Dhabi in late February and early March 2024. Members began by reconsidering various possible approaches to these broader rules. As the discussions progressed, the chair of negotiations, Ambassador Einar Gunnarsson of Iceland, tabled draft disciplines. This initiated a process of gradual convergence among members on most of the key elements in the rules, as reflected in a revised text issued at the end of 2023. Further negotiating meetings in early 2024 allowed members to continue narrowing gaps between positions and find further convergence on several outstanding issues. This progress was captured in a draft text for additional provisions that many members hoped to adopt at MC13.

But despite intensive talks in Abu Dhabi and an unprecedented level of convergence on virtually all issues on the table, members could not reach full consensus at the ministerial meeting. The work undertaken in Abu Dhabi, nonetheless, generated some of the building blocks needed to conclude the talks. First, it led to another revision of the draft text (later circulated formally here, and see IISD's analysis of it here), which brought WTO members even closer to consensus. Second, it allowed particular members to work bilaterally and find common ground on very sensitive issues on which they held diametrically opposed positions. Finally, the last hours of MC13 saw a diverse group of members undertake efforts to find compromises on several outstanding issues, and the adjustments suggested by this group in a so-called floating text are likely to prove important in finding a landing zone.

After hearing members' views again in the months following MC13, many of which emphasized how close they were to landing a deal in Abu Dhabi, Gunnarsson attempted to conclude negotiations in July in Geneva. He issued a slightly amended text, suggesting a possible landing zone on outstanding issues based on the floating text from MC13 and put the decision to members at the July meeting of the WTO's General Council—the organization's highest decision-making body outside of the ministerial conference. Some members still had reservations about certain aspects of the disciplines, and further discussions explored possible solutions to these concerns. Despite this gap-closing work, it became evident that consensus would again prove elusive.

A similar scenario occurred in the last months of 2024. After consulting members, Gunnarsson decided to explore again whether negotiations could be concluded at the General Council's December meeting. He circulated a version of the negotiating text that was revised based on the July discussions. Almost all members again signalled that they were ready to conclude talks based on that text, possibly with relatively minor tweaks, but full consensus could not be achieved. Two large developing country members, in particular, indicated that they wanted to see more major changes to the text before they would be open to adopting the proposed disciplines.

The current situation is a study in contrasts. On the one hand, WTO members have never been so close to consensus on the actual substance of these additional rules. And the overwhelming majority would like to conclude the negotiations as soon as possible based on the current draft text, possibly with limited adjustments. On the other hand, full consensus has not yet materialized, and at least two members have explicitly called for more substantial changes to the rules. For members to be able to deliver this crucial deal, a change in current political dynamics will be needed.

What Disciplines Are We Looking At?

The draft text on the table reflects members' gradual convergence on a "hybrid" approach that combines elements from several proposals made by different members and groups of members over the years. The structure of the rules is quite similar to the set of disciplines that was already being considered in the lead-up to MC12, yet with a few important changes.

The main rule broadly prohibits subsidies that contribute to overfishing and overcapacity.

The main rule broadly prohibits subsidies that contribute to overfishing and overcapacity. It includes a list of subsidy types that are presumed to be harmful (and thus prohibited) but is also accompanied by two types of exemptions. First, the subsidizing member can keep subsidizing when it can show that fisheries management measures are in place to keep fish stocks healthy, with stricter demonstration requirements for developed members, distant water fishing nations, and large subsidizers. This differentiation between members—that is, tougher requirements for those with more industrialized and subsidized fishing sectors—is one of the key changes made to the draft rules over the last 2 years. Second, the main rule is tempered with a series of temporary and permanent exemptions for developing country members or groups of developing country members as special and differential treatment. Another key evolution in the draft rules since MC12 has been the gradual widening of some of these flexibilities for developing countries, especially regarding an exemption for subsidies given to artisanal fishers.

This main prohibition is accompanied by a similar, conditional prohibition of subsidies that target fishing activities beyond the subsidizing member's waters, which is accompanied by a more general obligation to refrain from providing such subsidies when possible. This additional rule includes a dedicated process for monitoring these subsidies. Finally, the draft text also includes additional transparency obligations.

Are These Rules Worth Concluding?

A central question for WTO members, as they consider their next steps in these negotiations and how they could be brought to a successful conclusion, is what the rules on the table mean in sustainable development terms. At least three central considerations should guide this reflection. (For a slightly more detailed version of these key considerations, see the final section of IISD's analysis here.)

First, agreeing on these new rules is essential to protect both marine ecosystems and the communities that depend on fishing for nutrition, jobs, and livelihoods. The suggested provisions are broader than those agreed in the context of the 2022 agreement, and so is their potential impact. These additional disciplines are key to better addressing the underlying role of subsidies as a driver of overfishing, beyond the specific situations that are already addressed in the existing agreement.

Second, the rules on the table are neither perfect from a sustainability perspective nor the ideal result from any member's point of view. Precisely because of the breadth of the impact that these new disciplines could have, negotiations have been very intense and complex. The suggested rules are the result of painstaking work to find compromises between governments with very divergent initial positions. And after years of hard negotiating work, the draft text reflects the best set of disciplines on which members have managed to find convergence. Among the options that have been proposed and discussed, some would have been more ambitious from a sustainability perspective, but they did not generate as much support as the current text.

Third, the draft disciplines represent a lot of value in sustainable development terms. They would prohibit the riskiest types of subsidies when no credible fisheries management measures are in place. And while the temporary exemption for developing country members' subsidies to large-scale fishing is very wide, it would only apply for a period. The permanent exemptions for very small fishing nations and for developing countries' subsidies to small-scale fishing would have a much smaller impact. Eventually, fisheries management would need to accompany most subsidies to large-scale fishing.

At a global governance level, the disciplines would subject fisheries subsidies and their sustainability to scrutiny that does not exist today, putting the issue explicitly on the ongoing international agenda in a WTO committee.

The disciplines could change what society at large expects of policy-makers across the globe—and, as a result, how policy-makers behave—as they define the support that their government provides to the fishing sector.

Most importantly, the disciplines could change what society at large expects of policy-makers across the globe—and, as a result, how policy-makers behave—as they define the support that their government provides to the fishing sector. Fisheries subsidy policies would be expected to align with sustainable development objectives, a principle that would be enshrined in a multilateral, binding set of rules for the first time.

As members consider how to use 2025 to build toward a text that might be able to gather consensus, it's worth remembering that the suggested rules are not perfect. But from a sustainable development point of view, they hold a lot of value that should not be simply left on the table.

In June 2022, governments around the world took a big step forward in protecting the world's ocean by adopting the World Trade Organization's (WTO's) Agreement on Fisheries Subsidies, known in WTO parlance as "Fish 1." The deal establishes binding global rules that, for the first time, require governments to consider the legality and sustainability of the fishing activities they subsidize.

However, the WTO's work to curtail harmful fisheries subsidies is not finished. Two-thirds of the organization's 166 members must ratify Fish 1 for it to enter into force. As of March 2025, 94 of the required 111 members had done so. Trade ministers also agreed in 2022 to continue negotiations on outstanding additional rules—called Fish 2—to regulate subsidies that incentivize overfishing and overcapacity. These discussions are yet to conclude. Although Fish 1 includes rules intended to limit the provision of subsidies in specific situations that trigger immediate concerns around the legality or sustainability of the fishing activity that is being subsidized, they leave unaddressed the wider contribution of subsidies to overfishing.

The WTO's work to curtail harmful fisheries subsidies is not finished.

Broader rules, like those that would be established under Fish 2, would require governments to phase out the subsidies that drive excessive capacity of fishing fleets and propel fishing beyond what is sustainable. These harmful subsidies artificially lower fuel, vessel construction, and other operational and capital costs, enabling fleets to go farther out to sea for longer periods of time and catch more fish than is sustainable. Many of these fleets would not be viable without government subsidies.

According to the United Nations Food and Agriculture Organization's 2024 State of World Fisheries and Aquaculture report, the percentage of fish stocks being unsustainably fished rose from 35.4% in 2019 to nearly 38% in 2021, the most recent year for which reliable data are available. Governments still provide fishing fleets with USD 22 billion each year in subsidies that encourage overfishing. Subsidies primarily go toward industrial fleets (about 80% of the USD 35 billion in global subsidies), while only 19% goes to small-scale fishers. Scientists around the world support the completion of Fish 1 and the additional rules of Fish 2. Before Fish 1 was adopted, nearly 300 scientists signed a letter in the journal Science calling for the completion of the agreement. And last year, more than 300 scientists signed a letter calling for the completion of Fish 2. Further, the Stop Funding Overfishing Coalition, a group of 180 civil society organizations supporting limits to harmful fisheries subsidies, has issued a statement calling for the swift completion of Fish 2.

From Fish 1 to Fish 2: The importance of a comprehensive agreement

Marine ecosystems are essential to global biodiversity, providing food, livelihoods, and climate regulation. However, only a healthy ocean can provide these benefits, and overfishing severely undermines ocean health and resilience. That's why Fish 1 is designed to help course-correct for the long term. The agreement disallows subsidies in situations where they are most dangerous for sustainability. Specifically, Fish 1 prohibits the provision of subsidies when (a) illegal, unreported, and unregulated fishing has been identified, (b) a fish stock has been assessed as overfished, and no fisheries management measures are implemented to rebuild the stock to healthy levels, and (c) fishing targets unregulated stocks on the high seas—that is, outside the competence of any relevant regional fisheries management organization or arrangement. In addition, Fish 1 provides a foundation for increasing data transparency, enforcing accountability, and introducing the groundwork for long-overdue discipline into fisheries subsidies practices.

Broader rules are needed to phase out the subsidies that incentivize excessive capacity of fishing fleets and unsustainable levels of fishing beyond the more targeted prohibitions of Fish 1.

However, as noted above, adopting Fish 1 will not address the capacity- and effort-enhancing subsidies that cause economic distortions that deplete marine resources by lowering the fixed costs of productive capital and the variable costs of production itself. As a result, broader rules are needed to phase out the subsidies that incentivize excessive capacity of fishing fleets and unsustainable levels of fishing beyond the more targeted prohibitions of Fish 1.

Adopting and implementing a Fish 2 agreement that includes a broad prohibition on all subsidies that contribute to overcapacity and overfishing would give WTO members an opportunity to make a targeted yet crucial contribution to ending the global overfishing challenge. On the other hand, continued delays in its adoption risk undermining the important progress that has already been made through negotiations. The recent Fish 2 draft agreement texts demonstrate a possible balance, including exemptions for well-managed fisheries and allowances for developing countries to ease implementation. They showcase the political will of WTO members and reflect the compromises that could be found after years of complex and difficult negotiations.

Distant-water fishing—a practice where countries fish beyond their territories—further illustrates why the WTO needs to adopt Fish 2. Although Fish 1 prohibits governments from subsidizing fishing in the unregulated high seas, they can still support the exploitation of resources in other countries' waters. In 2018, five economies alone—China, the European Union, Japan, South Korea, and Chinese Taipei—together spent an estimated USD 1.5 billion in harmful subsidies on distant-water fishing.

The good news is that substantial progress has been made toward the conclusion of the new Fish 2 rules over the last 2 years—and this progress must continue. By the end of last year, the Chair of the negotiations circulated a new draft text that garnered widespread support but failed to secure unanimous approval, thus preventing the conclusion of negotiations. India, in particular, raised objections to various elements of the draft Fish 2 text and has circulated detailed papers outlining its concerns, preventing members from reaching the consensus required to adopt the text.

A Delicate Situation

The protracted nature of the Fish 2 negotiations has been a rollercoaster for many participants and observers alike as members have inched closer to consensus. In the meantime, the status quo continues to harm ocean health and the communities that rely on sustainable fish stocks for food and livelihoods.

The status quo continues to harm ocean health and the communities that rely on sustainable fish stocks for food and livelihoods.

WTO members have secured hard-won compromises in their work to meet the agreed mandate to establish a comprehensive framework to curtail harmful fisheries subsidies.

The draft agreement represents a significant advancement over the current situation, in which subsidized overfishing also harms small-scale fishers and the most vulnerable communities dependent on healthy fish stocks for their livelihoods and nutrition. To that end, the agreement calls for establishing a general prohibition on capacity-enhancing subsidies that are harmful and contribute to overfishing unless credible management measures are in place. It also imposes greater responsibility and accountability on major subsidizers while offering flexibility to those who contribute less to the global overfishing crisis.

These elements of the draft must not be lost as negotiations continue. Given the major ecological impacts of distant-water fishing and the transboundary effects of high-seas fisheries, it is also crucial to maintain a specific discipline on subsidies that drive fishing in areas beyond national jurisdiction.

Finalizing Fish 1 and Fish 2 will be important to accomplish other multilateral goals. The Global Biodiversity Framework, in which nations pledged to phase out and reform USD 500 billion annually in harmful subsidies by 2030, adds pressure to advance the WTO discussions. A positive first step toward that goal would be cutting the estimated USD 22 billion governments provide each year in harmful fisheries subsidies. Completing and implementing both Fish 1 and Fish 2 would be key steps toward reallocating resources to protect ocean ecosystems and support fishing communities more effectively. As the year progresses, it will be important to maintain the momentum toward these twin goals.

United Nations Ocean Conference Presents a Range of Opportunities

One opportunity to keep fisheries subsidies on the global radar is the third United Nations Ocean Conference (UNOC3), scheduled to take place in Nice, France, in June. This meeting offers a global stage to elevate ocean conservation and assess the progress of the Sustainable Development Goals (SDGs), particularly SDG Target 14, which focuses on conservation and sustainable use of the ocean. Target 14.6 calls for ending subsidies that contribute to overfishing and sets a deadline of 2020 for the conclusion of the WTO negotiations. We are now 5 years overdue.

UNOC3 provides an opportunity to galvanize global momentum and foster high-level commitments, including a commitment to finalize the Agreement on Fisheries Subsidies. It is a moment for global leaders and WTO members to demonstrate urgently needed leadership in addressing the overfishing crisis and accelerating collective action. The entry into force of Fish 1 at Nice would showcase tangible progress and set the tone for addressing outstanding issues in the ongoing Fish 2 negotiations.

It is a moment for global leaders and WTO members to demonstrate urgently needed leadership in addressing the overfishing crisis and accelerating collective action.

What's more, UNOC3 provides the opportunity to reinforce the interconnectedness of ocean health and human well-being. WTO members, civil society, and anyone interested in ocean health should leverage the conference's high-profile platform to emphasize the urgency of implementing Fish 1 and getting Fish 2 over the finish line as key steps to help reverse the degradation of marine ecosystems.

WTO disciplines on fisheries subsidies are not mere trade issues; they are fundamentally about the long-term sustainability of fish populations and ecosystems on which billions of people depend. With so much on the line, WTO members must act decisively to adopt the additional provisions that contribute to achieving the SDGs at the earliest possible opportunity. Doing so would also greatly enhance the credibility and relevance of the WTO as a forum for addressing global challenges and promoting multilateral cooperation.

With UNOC3 approaching, this is the time for the global community to reaffirm its commitment to curtail harmful fisheries subsidies, protect the progress that has already been achieved, and, crucially, accelerate action. The time to finish this marathon is now.

Anna Holl Buhl is a senior policy adviser with WWF and Megan Jungwiwattanaporn is an officer with The Pew Charitable Trusts.

Fish Resources Are Precious and Should Be Protected to Benefit Future Generations

Fisheries provide food and livelihoods for many millions of people and are especially important for poor coastal communities in developing countries. However, while fish are a renewable resource, they are also mobile and often fragile; strong cooperative management systems are thus needed to avoid overfishing and ensure the benefits of fishing can be equitably and sustainably shared. Moreover, fish are vulnerable to environmental changes, notably ocean warming, which can affect their availability through space and time. Ensuring the health of fish resources is also critical to provide ecosystem services from the ocean.

Governments often take an active role in the fisheries sector, notably by managing where, how, and by whom fishing is allowed and by funding goods and services for the sector. This active role is referred to as government support to fisheries. It can take many forms, from undertaking stock assessments and controlling fishing activities at sea and in ports, to building community centres in fishing villages or subsidizing the purchase of new vessels. Support therefore includes subsidies, but it is also broader, because it goes beyond what most definitions of a "subsidy" cover. Typically, governments use many different types of support policies that, when taken together, make up the support policy mix.

Understanding what is supported and how government funding is allocated to the sector is important because these can affect fishers' behaviour by incentivizing fishing effort and investment in fishing capacity, and consequently the status of the fish resources they harvest. Support can even influence the extent to which illegal, unreported, and unregulated (IUU) fishing occurs.

Why Is Reforming Government Support Important?

Ensuring the sustainable development of fisheries requires that they are managed in a way that is environmentally sustainable, economically productive, and socially inclusive. Government support to fisheries can influence all these dimensions.

Different types of support affect the sector differently, and some have a higher risk of leading to unintended outcomes. Some forms of support can improve the sustainability of the sector by strengthening the capacity to monitor the health and productivity of fish stocks and accordingly manage fishing in ways that do not compromise the future abundance of fish. However, other forms can have the opposite effect if they lead to fishing effort increasing to the point where excessive quantities of fish are harvested and the resource is overexploited. Beyond the environmental impacts on fish and the ecosystems they are part of, support policies that result in overfishing and depleted resources can also have broad negative socio-economic impacts, such as disrupting the local and regional food systems and undermining the well-being of the fishers and communities that depend on the overexploited fish stocks. Further, overfished resources ultimately compromise fishers' incomes, potentially making them more dependent on support in the process.

The design of fisheries support policies can be important to fishers and consumers well beyond the national waters of the supporting countries.

Many fish stocks straddle the waters of more than one country or move between national and international waters. Consequently, poorly designed fisheries support that undermines the sustainability or productivity of fish resources can have impacts beyond the countries giving the support, potentially exacerbating existing tensions or even creating new ones. For example, fisheries support that leads to overfishing in one country can reduce the amount of fish available to fishers in another country that shares the same stock. This issue will likely grow in importance as climate change leads to more stocks moving across national boundaries. In addition, fish is one of the most traded food commodities, so the impacts of fishing policies in one country can directly affect food availability and access to food in others. Therefore, the design of fisheries support policies can be important to fishers and consumers well beyond the national waters of the supporting countries.

Recognizing these issues, many countries have prioritized fisheries support reform that moves away from policies that have negative impacts on sustainability. The same is true of international discussions, as reflected in Sustainable Development Goal target 14.6, which calls for eliminating harmful fisheries, and World Trade Organization (WTO) negotiations to agree on disciplines binding members to do so. A first agreement reached at the WTO in June 2022 prohibits fisheries subsidies when sustainability is most at risk, and a second, broader set of rules is still under negotiation. (See Tristan Irschlinger's article on the state-of-play of fisheries subsidies negotiations in this issue of the Trade and Sustainability Review.)  

What Do We Know About Government Support for Fisheries?

The OECD collects data on government support to fisheries across 41 countries and territories, including most OECD members and some other large fishing nations that, together, account for about 70% of global fishing. The Fisheries Support Estimate (FSE) database offers a consistent framework that allows the OECD to track the nature and the extent of support provided across different countries and over time.

The latest update of the FSE database, published with the OECD Review of Fisheries 2025, identifies USD 10.7 billion of annual government support to fisheries from 2020 to 2022. This equates to 10.6% of the value of marine capture fisheries production in countries and territories covered by the database, or an average of USD 552 per fisher. Large fishing nations are also the largest subsidizers. Six economies accounted for 84.6% of the support recorded in the OECD FSE database: China (36.1%), Japan (12.4%), the United States (11%), Canada (10.7%), European Union member states (combined; 8%), and Brazil (6.4%).

Despite a recent upward trend, spending on fisheries support is slightly lower than it was a decade ago when average annual spending totalled USD 11.1 billion (from 2010 to 2012). How governments spend their money has also changed. For example, support to income has almost doubled over the same period, with most of the increase during and after 2020, as governments sought to mitigate the impacts of the COVID-19 pandemic on fishers. Spending on management, monitoring, control, and surveillance has also climbed in recent years, with more than two-thirds of the countries in the FSE database spending more in absolute terms and with respect to their fleet size in the years 2020–2022 than a decade earlier. Conversely, support for fuel consumption in fisheries has fallen, driven primarily by reforms in China. However, the lack of detailed information on support to fuel that is granted to fisheries alongside other sectors (sometimes referred to as "non-specific" support) means the true scale of fuel support and how it is changing over time remain uncertain.

Where Is Reform Needed?

The first step in reforming fisheries support to ensure the sector's sustainability and resilience is to understand how the various types of government support affect fishers and fishes. Building on the FSE, the OECD has developed a framework for assessing the risks that different types of support policy will lead to unsustainable fishing (Figure 1).

This so-called risk matrix, first published in the 2022 edition of the OECD Review of Fisheries, identifies the risks posed based on the type of support policy and the policy context. This is important because, as shown by Martini and Innes (2008), while different types of policies have higher or lower risk of encouraging unsustainable fishing, per se, the context in which they are applied ultimately defines their impacts. Three factors can determine whether the risk of unsustainable fishing is translated into actual unsustainable fishing:

1. Management effectiveness: If fisheries management systems can effectively control and constrain fishing effort and capacity at sustainable levels—and prevent IUU fishing—the risk of unsustainable fishing is reduced, even for support policies that would otherwise incentivize more fishing or more investment in fishing capacity.
2. Current fishing pressure: If resources are underfished when support is provided, any additional fishing effort or capacity incentivized by support is less likely to lead to overfishing, at least in the immediate term.
3. Policy design: If the support targets specific subgroups of fishers or areas where stocks are underfished, and/or fishing is effectively managed and controlled, the risk of unsustainable fishing is also reduced.

Hence, the risk matrix should be considered as a rule-of-thumb guide to policy-makers looking to quickly identify where there are risks of unsustainable fishing. Understanding the impacts of specific policies in detail will require additional research.

The matrix classifies the risk of overfishing into different categories based on how directly different policies create incentives to invest in fishing capacity, intensify fishing effort, or engage in IUU fishing (altogether referred to as unsustainable fishing).

High-risk policies directly reduce operating costs, making it possible for more vessels to fish more intensively and at longer distances. If management is ineffective, such support can boost (or maintain) levels of capacity above what is required to exploit the resource sustainably.

Moderate-risk policies have an indirect and potentially less-distorting impact on the economic incentives facing the sector. As a result, these types of support present a more moderate risk of encouraging unsustainable fishing in the absence of effective management, but still have the potential to increase fishing effort and capacity in ways that could harm fish stocks.

Policies classified as uncertain risk are those for which the implications are unclear as they can be designed and applied in various ways with very different impacts, and are, therefore, even more context-dependent than others. For example, education and training can reduce fishing pressure if they provide new skills for fishers and create opportunities outside the sector. They can also reduce fishing pressure if they promote the uptake of more sustainable fishing practices. However, education and training could also increase fishing pressure if the training focused, for example, on improved efficiency in the use of vessels and gears in the absence of effective regulation of the fishing pressure.

Finally, no-risk policies, which help ensure that fish resources are suitably managed and regulations are enforced, present no risk of encouraging unsustainable fishing. Where effectively implemented, they are instrumental in improving stock status by providing a better understanding of the state of fisheries resources, better aligning capacity and effort with the resources available, monitoring and controlling fishing activities, and ensuring that catches are controlled.

In the 2025 edition of the OECD Review of Fisheries, we applied the risk matrix to the most recently collected data on government support included in FSE database, and found that 65% of total support to fisheries (2020–2022 average)—that is, nearly USD 7 billion annually—presented a risk (moderate or high) of encouraging unsustainable fishing. Support that poses no risk accounted for 29% of the policy mix in recent years (or USD 3.1 billion annually) and was largely made up of spending on management, monitoring, control, and surveillance. Compared to the 2010–2012 average, high-risk support declined by 57% and moderate-risk support grew by 77%, while no-risk support rose by 14%. In short, the level of risk posed by the global fisheries support policy mix has declined over the last decade. While this is encouraging, it remains considerable, and further reform is needed.

At the individual country level, risk profiles vary considerably. They range from reassuring policy mixes combining little (to zero) high-risk support with high levels of no-risk support, to more concerning policy mixes with little (to zero) no-risk support, which essentially means very limited spending on management and monitoring, control, and surveillance, combined with substantial levels of high- or moderate-risk support.

In more than half of countries and territories covered by the FSE database, the proportion of high- or medium-risk support in the policy mix has fallen since 2010–2012, while the proportion of no-risk support has increased, reflecting the positive trend seen at an aggregate level (Figure 2). However, in 2020–2022, more than 50% of support was still of a high- or moderate-risk nature in 15 countries and territories in the FSE (which together accounted for 66% of total support in the same period). Progressing toward sustainable fisheries objectives means transitioning away from these forms of support, irrespective of the case-specific policy context (for more country-level detail, please see Chapters 6 and 7 in the latest edition of the OECD Review of Fisheries).

What Can Be Done?

The OECD's analysis results (discussed in detail in the OECD Review of Fisheries 2025) indicate the need to support policy reform in three priorities.

First, governments should favour support policy types that do not risk encouraging unsustainable fishing. Support policies can only be unambiguously beneficial to fishers and society when they help ensure fishing is sustainable and safeguard resources and ecosystems. This is the case of investment in stock assessment, fisheries management, and enforcement. Conversely, support risks encouraging unsustainable and illegal fishing when it distorts the economic environment within which fishers operate. Fuel and vessel subsidies are among the policies that present a high risk of encouraging unsustainable fishing. In addition, support that lowers the cost of fuel can transfer a relatively low proportion of the money to fishers (due to capture by intermediaries), while also being inequitable, by reducing the competitiveness of smaller-scale fishers who use relatively less fuel (and thus receive less support) than larger fishing operations, ultimately making them worse off than they would have been without the support. Put simply, more of each dollar spent by governments would benefit fishers if lower- or no-risk forms of support were used instead of fuel support.

Second, support policies should be designed carefully to target the provision of support to sustainable fisheries and fishing practices. The policy context and eligibility conditions matter: the risks of support-driven unsustainable fishing can be limited if fishers are eligible for support only if they operate in fisheries that are demonstrably sustainably managed and subject to effective enforcement and control. This is precisely one of the issues the additional WTO rules on fisheries subsidies currently under negotiation would aim to ensure.

Governments should mitigate any risk inherent in the support policy mix by allocating adequate and sufficient funding for sustainable fisheries management.

Finally, governments should mitigate any risk inherent in the support policy mix by allocating adequate and sufficient funding for sustainable fisheries management, including through regular fish stock assessments that provide evidence of how stocks are responding to the fishing pressure and external environmental pressures—notably as a consequence of climate change. This is crucial, because it is likely not possible to avoid all policies that create a risk of unsustainable fishing. For example, targeted and time-bound income support can be an essential lifeline for fishers dealing with the impacts of climate change on stocks for whom alternative livelihood options are tricky to find.

Using government support better is crucial for both the sector's long-term sustainability and the well-being of fishers. Importantly, governments can use the risk approach pioneered by the OECD to target policy reforms and any risk mitigation measures in a nuanced and flexible way, to ensure that fishers do not end up bearing the costs of the reforms. Recent reforms have shifted the balance of support in the right direction, as governments have moved away from the riskiest types of policy. But important opportunities remain to reduce the risks of unsustainable fishing from fisheries support through reforms and greater investments in fisheries management.

Claire Delpeuch, Head of Unit, Fisheries & Aquaculture at the Organisation for Economic Co-Operation and Development (OECD), Will Symes, Policy Analyst at the OECD, and James Innes, Consultant to the OECD.

The energy and digital transitions are driving unprecedented demand for critical minerals like lithium, cobalt, and nickel. Projections indicate that the demand for some key minerals could increase by up to seven times by the end of this decade. It goes without saying that mineral-rich developing economies have a unique opportunity to benefit by engaging in responsible mining and processing practices, but they also face challenges in attracting investment for these projects.

Mineral-rich countries have a unique opportunity to capture more economic benefits from their resources through responsible mining and processing.

While offtake and commercial agreements are important to secure access to minerals, governments also have a role to play. Government-to-government trade and investment agreements are critical in shaping relationships between mineral-exporting and mineral-importing countries. These agreements must balance economic development, environmental sustainability, and supply chain resilience. Historically, trade and investment agreements often prioritized securing the importing country’s access to natural resources and protecting investments over fostering value addition and sustainability in exporting countries. This is changing, but not as fast as it should.

The core challenge: Conflicting objectives

Every trade and investment agreement between resource-exporting and importing countries represents a balance between their different interests. While they share the objective of maximum sustainability to the extent possible, exporting countries aim to maximize domestic value addition and diversify export markets. Importing countries such as the United States, the European Union (EU), and China prioritize affordable and stable access to raw materials, often because they also want to maximize domestic value addition. These opposing goals lead to trade-offs, especially around downstream processing and refining.

Exporting and importing countries both want to maximize domestic value addition, which leads to difficult trade-offs.

Key trends in free trade agreements and investment agreements

Free trade agreements (FTAs) are evolving to include critical mineral-specific provisions. Most of these provisions still focus on securing reliable access to raw minerals for importing countries, but there are exceptions where exporting countries have secured space for policies to promote local value addition. In agreements with the EU, Chile secured protection for its dual pricing systems for lithium, and Indonesia successfully defended policy space for its export controls on key minerals. However, because this protection runs counter to the interests of importing countries, it comes at a price in negotiations. To move beyond this zero-sum approach, governments should see FTAs as a tool to build resilience along the value chain, multiplying locations for sourcing raw materials and value addition.

Investment agreements struggle with legitimacy. The so-called “old-generation” investment agreements unduly protect foreign investors at the expense of policy space for countries hosting foreign investment. Yet they bring few tangible benefits to the host countries. Newer agreements aim to mandate investors to comply with environmental, social, and governance (ESG) standards and try to better balance investment protection with sustainability, but these provisions often suffer from enforceability issues. Countries like Indonesia and Chile have taken steps to renegotiate or terminate older agreements to prioritize national development.

Progress through softer instruments: Memoranda of Understanding

Memoranda of Understanding (MOUs) provide a quicker, less formal mechanism for international cooperation on critical minerals. They are negotiated and conducted left, right, and centre. They allow countries to focus on priority issues, but at the same time, they lack the enforceability of trade and investment agreements. As a result, MOUs are only as strong as their implementation frameworks. Unfortunately, many MOUs currently lack the transparency to assess their process, progress, and outcomes. For example, MOUs between the EU and mineral-rich countries like the Democratic Republic of the Congo have fostered the exchanges of experts but still fall short of the practical implementation of economic opportunities and ESG standards.

ESG provisions

As consumer demand for responsible minerals rises, one would expect to see more and stronger provisions on mining ESG in FTAs. This is a case of more but not stronger: While ESG considerations are increasingly included in agreements, they are typically phrased in voluntary, non-enforceable language. Embedding robust ESG standards with measurable goals and accountability mechanisms in trade and reformed investment agreements will be crucial to ensure more responsible mining practices eventually.

Recommendations for mineral-exporting countries

To capture more economic benefits and achieve higher mining standards, mineral-rich countries should

1. evaluate their domestic policies on critical minerals supply chains, offensive and defensive interests, and negotiation leverage before entering into a negotiation;
2. use trade agreements strategically, including at a regional level, to maximize opportunities to add value and establish a competitive position within the global value chain;
3. reform or terminate old-generation investment agreements that overly constrain their policy space; and
4. prioritize enforceable ESG standards to ensure sustainable practices

Recommendations for mineral-importing countries

To ensure resilient and responsible supply chains, importing countries should

1. support value addition in mineral-producing countries, including through regional supply chains, to enhance resilience along the supply chains of their imports;
2. include enforceable ESG commitments in agreements to align foreign investments with the sustainability goals of both investors and producing countries; and
3. support the reform of old-generation investment agreements to deliver fairer and more balanced outcomes for mineral-producing countries.