Sustainability and the Future of International Trade

Sustainability and the Future of International Trade challenges the conventional wisdom that free trade is universally beneficial and that today's trading system operates on the comparative advantages of countries. The author demonstrates through the role of regulatory variance across four domains (labour, environment, climate, and taxation) that international trade is more often explained by the absolute or ownership advantages of multinational firms, which exploit regulatory differences across countries. In a world where multinational firms orchestrate approximately 80% of international trade, the main benefit is not the physical movement of goods, but rather how production is organized and transferred through knowledge flows in the international trading system. The main challenge therefore is the market power of these same firms - a power that remains largely unregulated outside the European Union. The book explains why existing trade institutions combined with low standards in emerging economies now frequently undermine sustainability and why small, incremental adjustments within the current framework will be insufficient. The author argues that regulatory divergence drives vicious circles of lowering standards in the four domains, leading to a race-to-the-bottom including carbon leakage. The latter contributes significantly to the climate crisis while creating detrimental health impacts on less developed countries. After presenting the main actors of the system, the multinational firm, the nation state, the European Union, the WTO and the ILO, the author discusses and weighs the pros and cons of different trade political instruments, both traditional and more modern, in terms of achieving sustainable trade. The book offers an integrated analytical and policy framework, with clear relevance for academics, researchers and policymakers concerned with global public goods, climate change, and trade governance.