Global trade runs on invisible exploitation – but the era of hidden harm is ending. Arham Mehta, MBA participant at IIM Bangalore argues that justice must become the currency of commerce, not just efficiency. From cobalt mines to fishing wars, the system is rigged – yet the tools to fix it already exist. The real question isn’t whether trade can be fair, but whether we’ll demand it before the planet burns

Your solar panel might be clean, but the cobalt in it was mined by underpaid Congolese workers, shipped by polluting vessels, and assembled in a factory powered by coal. Global trade has delivered prosperity, but it has also outsourced its costs. While the Global North enjoys cleaner skies and higher growth, much of the environmental degradation and labour exploitation that fuels its economy remains hidden in complex international supply chains.

Trade, in its current form, externalises harm. This reality calls for a radical rethink: sustainability in trade cannot merely mean carbon accounting or green certifications–      it must mean justice.

To understand this, we must see global trade as a BGS system–     a dynamic interplay between Business, Government, and Society. Businesses seek scale and profit, governments write rules and treaties, and society often bears the long-term consequences. As a Canadian currently studying in India, I personally experience this imbalance. Countries like mine debate climate targets in glass towers, while nations like India struggle to balance sustainability with development. To build a future that is fair, we must shift from “free trade” to “fair trade”: trade governed not just by efficiency, but by ethics.

Trade is Not Neutral: It Externalizes Harm

The modern global trade system has allowed many countries to increase their GDP while seemingly reducing domestic emissions or labour abuses. But this progress is often illusory.

Wiedmann and Lenzen (2018) show that between 10–70% of global pollution, child labour, and biodiversity loss are embodied in exports. Trade, they argue, enables affluent nations to ‘clean’ their domestic economies by outsourcing production to countries with weaker regulations, where environmental and social harms are less visible but often more severe. Their life-cycle assessment of global trade revealed that many goods exported from the Global South to the Global North carry the hidden cost of social injustice and environmental degradation. Most notably, their study concludes that no country currently meets basic human development needs without exceeding safe planetary boundaries- a finding that fundamentally challenges the sustainability claims of current trade models.

Similarly, Pelletier et al. use life-cycle social sustainability analysis to expose social risk hotspots embedded in European imports. Their work draws on the Social Hotspots Database to map where in global supply chains the most significant risks of labour exploitation, gender discrimination, and health and safety violations occur. Products from textile hubs in Bangladesh, electronics from Southeast Asia, and agriculture from Latin America frequently carry these hidden costs, making it clear that consumers in the Global North benefit from goods whose production often undermines human rights and basic dignity. The study underscores the need for data-driven trade governance, arguing that without tools to trace social harm across supply chains, even well-meaning trade policies will fall short of delivering justice.

From a BGS lens, businesses pursue low-cost sourcing; governments fail to internalise sustainability through policy, and society, particularly in the Global South, pays the price.

Justice Gaps in Trade Governance

Efforts to “green” trade have grown but often fail to address justice. Free Trade Agreements (FTAs) include sustainability chapters, but enforcement is weak and often symbolic. Labour clauses are rarely triggered; environmental commitments lack teeth.

The Regional Comprehensive Economic Partnership (RCEP) and the United States-Mexico-Canada Agreement (USMCA) offer contrasting models in scope and substance. RCEP, involving fifteen countries across Asia-Pacific and accounting for around 30% of global GDP, has been criticised for omitting enforceable environmental and labour provisions, instead relying on general commitments to sustainability that lack binding dispute mechanisms.

In contrast, the USMCA incorporates a labour value content rule and allows for state-to-state dispute settlement on labour issues, marking a step toward enforceability. The EU–Vietnam Free Trade Agreement (EVFTA) includes dedicated chapters on sustainable development, environment, and labour rights, with commitments to uphold ILO standards and the Paris Agreement. However, its enforcement relies largely on consultation-based mechanisms and lacks punitive measures for non-compliance, limiting its practical impact.

These examples highlight a core governance issue: while sustainability is increasingly acknowledged in trade deals, few are structured to hold actors accountable when those commitments are breached.

George and Kirkpatrick (2004) argue for Sustainability Impact Assessments (SIAs) that evaluate trade deals for GDP outcomes and social and ecological impacts. These assessments should be mandatory, participatory, and transparent, but they remain rare and underutilised.

To improve implementation, national governments and regional trade blocs should lead the effort to standardise and mandate SIAs.

Some progress exists. For example, the WTO’s 2022 Fisheries Subsidies Agreement curbs harmful subsidies for illegal and overfished stocks. However, its impact will depend on enforcement and whether it shifts subsidies toward small-scale, sustainable fishers, who today receive less than 20% of global support despite supplying most of the world’s seafood (UNCTAD, 2023). From a BGS perspective, the imbalance lies in the regulatory lag (government), profit-seeking incentives (business), and limited societal recourse or voice (society).

The Global South Deserves a Seat at the Table

Global South refers broadly to countries in Africa, Latin America, Asia, and Oceania that are historically less industrialised and often excluded from global economic decision-making. While diverse in context and culture, these nations share a common legacy of colonial exploitation and current vulnerabilities to climate and economic shocks.

Today, the Global South is not just a demographic majority- it is increasingly the driver of global demand, provider of critical raw materials, and labour backbone of global supply chains. Its importance in trade justice is undeniable.

Trade rules are largely written in rooms where the Global South has limited say. This imbalance has led to trade structures that amplify rather than reduce inequality. For instance, intellectual property regimes often restrict the ability of developing countries to manufacture clean energy tech or vaccines.

The 2024 UNCTAD report highlights how South-South trade now accounts for 23% of global trade- a signal that a parallel system is emerging. These trade flows can foster context-sensitive policies, technology transfer, and mutual capacity building without the conditionalities often imposed by the Global North.

The WTO and regional alliances should initiate structural reforms that expand the decision-making power of the Global South within global trade governance.

Rewriting the Rules: From Trade Efficiency to Trade Equity

Trade policy must move from minimising tariffs to maximising justice. This begins with redefining trade success – not as more trade but as better trade.

One approach is to make sustainability chapters in FTAs enforceable through penalties and arbitration. This would level the playing field and protect ethical producers. Regional trade blocs and ministries of commerce must champion such enforcement reforms.

Another is to expand Aid for Trade and climate finance programs that support transitions in developing economies – ensuring that green upgrades do not displace livelihoods. A notable example is the Global Environment Facility (GEF), which has financed sustainable infrastructure and capacity building in over 170 countries. Similarly, the Just Energy Transition Partnership (JETP) in South Africa exemplifies a blended finance model involving donor nations and multilateral banks to move away from coal while preserving employment. This effort should be led by a combination of multilateral banks, donor nations, and civil society coalitions, with frameworks tailored to country-specific development contexts.

Tools like life-cycle social risk analysis and SIAs should be institutionalised. These can inform decisions on tariffs, non-tariff measures, and product sourcing. For instance, lower tariffs on clean energy goods from countries meeting labour and environmental thresholds could promote ethical trade.

We must also rethink global trade architecture. South-South trade, which now accounts for 23% of global flows (UNCTAD, 2024), offers opportunities for more equitable and context-aware partnerships. These ties can promote technology sharing, local value addition, and shared sustainability standards beyond the donor-recipient dynamics of North-South trade.

Case Study: The Ocean Economy & Fisheries Subsidies

UNCTAD’s Trade and Environment Review (2023) highlights the fisheries sector as a microcosm of the broader trade justice problem. Industrial fishing fleets, often from wealthier countries, receive billions in subsidies that allow them to overfish distant waters, undercutting local fishers in developing nations.

The WTO’s recent agreement marks progress. It bans subsidies for illegal, unreported, and unregulated (IUU) fishing and overfished stocks. However, implementation remains a challenge, especially in regions with limited monitoring capacity. For small-scale fishers- often women, Indigenous peoples, and rural communities- this reform could be transformative if they are supported.

UNCTAD calls this a “triple win opportunity”-enhancing environmental health, restoring livelihoods, and boosting equitable trade.

Toward a Trade System that Measures What Matters

Global trade today is still primarily evaluated using outdated and narrow metrics- GDP growth, export volumes, and market access dominate how success is defined. But these indicators fail to capture the deeper question: Who benefits, and at what cost?

To embed justice into trade, we must shift toward impact-based evaluation, where social and environmental outcomes are front and centre. A justice-oriented trade system would reward not just volume and speed but resilience, equity, and well-being.

This includes measuring:

• Social risk exposure across supply chains, such as forced labour, wage suppression, or unsafe working conditions.
• Environmental degradation linked to exports, including emissions, deforestation, and biodiversity loss.
• Access to clean technologies, health, and decent work in exporting communities.
• Inclusivity in trade policymaking processes, especially the participation of marginalised groups and Global South voices.

In recent years, multilateral actors have started responding. The OECD’s Trade and Agriculture Directorate, for example, is piloting frameworks to evaluate trade’s alignment with the SDGs. Similarly, the UNCTAD BioTrade initiative includes criteria for biodiversity protection, benefit sharing, and community rights – moving beyond profit to planetary metrics.

As we rethink the future of trade, we must ask not just how much we trade but whether the outcomes are fair, sustainable, and restorative. Measurement is power- and what we measure reveals what we value.

The Future is not Free – It is Fair

Trade is often presented as apolitical, as if the flow of goods and capital were natural and value-neutral. But as we have seen, who benefits, who pays, and who decides are all deeply political questions. Sustainability without justice is incomplete and, ultimately, unsustainable.

The world must move from treating justice as a “co-benefit” to making it the benchmark for trade. This means giving developing countries a voice in rule-setting, aligning trade with SDGs, and recognising that prosperity built on invisible exploitation is not prosperity at all.

In a fractured world, trade could become the thread that weaves global justice if we let it.

Useful links:

• Link up with Arham Mehta on LinkedIn
• Read a related article: From Conflict to Catalyst — Can Trade Wars Accelerate the Green Revolution? 
• Download this and other articles in the special issue Global Voice magazine #32
• Discover IIM Bangalore
• Apply for an MBA at IIMB.

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