NAFTA 2.0

Better to have separate U.S., Mexico agreements if CUSMA collapses: trade lawyer

ByAnam Khan
Published: February 12, 2026 

Lawrence Herman, international trade lawyer at Cassidy Levy Kent LLP, joins BNN Bloomberg to discuss the likelihood of U.S. ending CUSMA.

Separate bilateral agreements could still be beneficial if the Canada-United States-Mexico Agreement (CUSMA) falls apart, explains an international trade lawyer.

His comments come after reports that U.S. Trade Representative Jamieson Greer suggested this week that the U.S. is considering negotiating separate trade deals with the two countries rather than maintaining the trilateral pact up for review on July 1.

The possibility of this even happening was envisaged from the very start, when there were talks of CUSMA coming under review, Lawrence Herman, international trade lawyer at Cassidy Levy Kent LLP, told BNN Bloomberg.

Herman said separate bilateral deals would not be easy, but could be done.

“There are a lot of provisions in the CUSMA that could be used in a bilateral agreement with Canada, as well as a separate bilateral agreement with Mexico,” said Herman.

‘We will have an aggressive partner on the other side’

Negotiations will be difficult whether they are three-party or bilateral between Canada and Mexico, said Herman.

“The point is, we will have an aggressive partner on the other side,” said Herman.

“I think Canada has to be prepared to say, you know, these are the red lines, and there are certain things that Canada cannot accept.”

At the end of the day, he said Canada must decide how much longer it can remain at the table if the other party is unwilling to reach a mutually satisfactory arrangement.

“The priority is to ensure that we get out from this volatile, uncertain, unstable relationship,” said Herman.

He also said many major companies in the U.S. are dependent upon free trade and fair trade with Canada, highlighting Michigan Governor Gretchen Whitmer’s recent pushback after U.S. President Donald Trump threatened to block the opening of the Gordie Howe International Bridge. She called it “a really important part of our economy.”

‘Canada has been regrettably wedded to the U.S. market’

Canada has opportunities to expand in other markets, and the government has been looking at those opportunities to diversify its trade, but the reality is, “Canada has been regrettably wedded to the U.S. market,” said Herman.

“It is always a bad business practice to be so dependent on one customer, because that customer can turn ornery, as this customer, the U.S. has done so,” said Herman.

“There are so many things that tie Canada and the U.S. together that I cannot see things going forward without some kind of agreement.”

Canada is already in another agreement with Mexico

Herman noted that Canada and Mexico already have a trade agreement outside of CUSMA called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes 11 Pacific Rim countries. The U.S. withdrew from the original agreement in 2017.

“Mexico is party to the CPTPP, and so there would be an ongoing arrangement between Canada and Mexico,” said Herman.

He also said it would be better to have a straight bilateral agreement if the whole trilateral CUSMA falls apart.


Anam Khan
Journalist, BNNBloomberg.ca

Former U.S. State Department official optimistic CUSMA will be renewed

ByThe Canadian Press
 February 11, 2026 

A lapel pin featuring the flags of Mexico, the United States, and Canada, is seen on the jacket of a speaker at the 2024 North American Manufacturing Conference, in Ottawa, on Wednesday, Nov. 20, 2024. THE CANADIAN PRESS/Justin Tang

CALGARY — A former U.S. State Department official says he’s optimistic the Canada-U.S.-Mexico free trade agreement will be renewed.

Edward Fishman, author of “Chokepoints: American Power in the Age of Economic Warfare” shared his outlook during a luncheon hosted by the University of Calgary’s Haskayne School of Business.

The Columbia University adjunct professor says he can imagine Canadians feel like “sitting ducks” as their closest trading partner bombards adversaries and allies alike with tariff threats.

But he says the trading relationship doesn’t just flow one way and the U.S. would suffer significant economic harm if trade with Canada were to be cut off.

Fishman says U.S. political and business leaders — even those with a conservative bent — feel strongly about the importance of cross-border trade and are likely to temper President Donald Trump’s daily whims.

He says the countries that have been best able to withstand U.S. tariffs have been the ones that have shown the most resolve, resilience and willingness to retaliate, citing India, Brazil and China as examples.

This report by The Canadian Press was first published Feb. 11, 2026.

Lauren Krugel, The Canadian Press

‘He says different things at different times’: Hillman on whether Trump wants to keep CUSMA

By Spencer Van Dyk

February 08, 2026 

Former Canadian ambassador to the U.S. Kirsten Hillman. (Allen McInnis)

Amid a year-long trade war, Canada’s outgoing ambassador to the United States says she doesn’t know whether U.S. President Donald Trump hopes to keep the Canada-U.S.-Mexico Agreement (CUSMA) in place, because his messaging around the deal has been inconsistent.

The agreement, inked during Trump’s first term, is up for review this year. In 2018, Trump called it the “most modern, up-to-date, and balanced trade agreement in the history of (the United States),” but just last month called it “irrelevant.”

“I don’t think I can answer that question,” Kirsten Hillman told CTV Question Period host Vassy Kapelos in an interview airing Sunday, when asked if she believes Trump wants to keep CUSMA in place.

“I think if the president has a strong view around the U.S. being able to do more itself, how that translates with respect to this treaty, I don’t know,” she added. “He says different things at different times.”

U.S. President Donald Trump, left, pumps his fist as he is greeted by Kirsten Hillman, Canadian Ambassador to the United States, right, as he arrives in Calgary, Alta., Sunday, June 15, 2025, to attend the G7 Leaders meeting taking place in Kananaskis. THE CANADIAN PRESS/Jeff McIntosh

The U.S. and Canada remain in the throes of a trade war, which began last February when Trump imposed a slate of sweeping tariffs on Canadian imports.


Hillman, meanwhile, announced in December she would be stepping down as ambassador to the United States. She has represented Canada in D.C. for nearly six years and played a lead role in the renegotiation of the North American Free Trade Agreement (NAFTA) before that.

“I think for Canada, what’s important is that we just keep working consistently with those — and there are so, so many of them in all three countries — that understand factually why that treaty keeps American business more competitive, creates more jobs and keeps their economy in a good place,” Hillman said of the future of CUSMA. “And I think that a lot of people are getting that message to the president.”

Goldy Hyder, President and Chief Executive Officer of the Business Council of Canada, makes remarks at the Canadian Global Affairs Institute Procurement Conference, in Ottawa, on Monday, Nov. 25, 2024. THE CANADIAN PRESS/Justin Tang

In an interview for CTV Question Period last month, Business Council of Canada president and CEO Goldy Hyder said he’s optimistic, based on his dealings with U.S. officials and business leaders, that CUSMA can be salvaged despite recent rhetoric.

“Yes, there’s a lot of noise; it’s not straight line,” he said. “Yes, it’s going to be complicated to get there. But there’s a recognition that this agreement is important for all three countries.”

And, this week, Conservative MP — and longtime friend of U.S. Vice-President JD Vance — Jamil Jivani travelled to Washington for a solo diplomatic mission to meet with senior U.S. officials, calling the conversations “productive.”

Asked if she were staying in the ambassador role, what would be keeping her up at night, Hillman said Canada has to “find a way to have serious, professional, technical trade discussions with the Americans,” while working toward making the Canadian economy more self-reliant.

“I think we need to not take our foot off the gas on either of them, while at the same time trying our best not to get knocked off course by the inevitable sort of distractions and diversions that always come up here in Washington,” Hillman said.

‘Geography can’t be undone’: Hillman

Asked to reflect on her time as ambassador and the state of the Canada-U.S. relationship, Hillman said it’s important people understand the degree of interaction and co-operation between the two countries’ administrations.

She said 13 different ministries are represented at Canada’s embassy in Washington, pointing to transport, energy, environment and finance as examples.

“Something comes up every day, and it’s not always problems,” she added. “Often it’s good things that we’re trying to celebrate, that we’re doing together.”

“I think geography can’t be undone,” Hillman also said, when asked whether that interconnectedness and interdependence is hard to undo.

Ambassador to the United States Kirsten Hillman, left, and Intergovernmental Affairs Minister Dominic LeBlanc prepare to leave following a meeting between Prime Minister Mark Carney and U.S. President Donald Trump at the White House in Washington, D.C., Tuesday, May 6, 2025. THE CANADIAN PRESS/Adrian Wyld

The outgoing ambassador said while there are “a lot of feelings” and “a lot of disruption” in the relationship because of Trump’s policies, people-to-people ties “are deep and wide.”

“I don’t think we’re going to go back to where we have been in the past with the United States,” she said. “I don’t think that’s necessarily a bad thing.”

“I think, in large part, both of our countries took each other for granted,” she added. “I don’t think that’s the case anymore, but that doesn’t mean that those relationships that are so broad and deep won’t continue to be a source of inspiration as we chart whatever this new path is with our neighbour.”

After she officially wraps up her tenure as Canada’s ambassador to the U.S. this month, Hillman is set to return to Ottawa, though she has not announced which role she’ll take on next.

Canadian ambassador to the U.S. Kirsten Hillman, Prime Minister Mark Carney and Canadian financier Mark Wiseman are shown in this combination photo.

Canadian business executive Mark Wiseman is set to take on the role of Canada’s ambassador to the United States later this month.


With files from CTV News senior political correspondent Mike Le Couteur

Spencer Van Dyk
Writer & Producer, Ottawa News Bureau, CTV News

Carney and Thucydides at Davos

Michael F. Duggan

 February 10, 2026

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Thucydides Mosaic from Jerash, Jordan, Roman, 3rd century AD at the Pergamon Museum in Berlin – Public Domain

You gotta love a speech that opens with Thucydides.

For those of us steeped in the ideas of George Kennan, Canadian Prime Minister Mark Carney’s call for “value-based realism” and a “third way” of middle powers at the Davos Summit, sounded too good to be true. On its face, it was a great speech, a call to arms with Canada in the lead. Carney is being hailed as “Churchillian” and the “new leader of the Free World,” his speech, “historic”—one for the books. But how realistic is his realist prescription? Let’s hope that he understands the implications of his1 Thucydides quote.

At last, I thought, a national leader who speaks my language. Carney blew the lid off of the “rules-based international order” that gave us 80 years of undeclared wars of choice, dozens of regime change efforts, and the de facto imperialism, disparities, and wage slavery of economic globalization. He spoke of not going back, of a “rupture” with a past that he called out as the emperor’s new clothes enabled by the “go along to get along” compliance of second-tier nations. He shamed European nations for their fealty and offered a plausible-sounding middle way of “greater strategic autonomy” for middle nations based on a diversified scheme of “principled pragmatism” and a “variable geometry” of alliances. A brave man, I thought, an honest and rational man—a man with a plan.

Shattering the possibility of a return to the recent past of middle-powers subservience, he starkly heralded the arrival of the new world order we already knew was here and stood up to the U.S. administration without mentioning names. Since Davos, he has reaffirmed his position. And yet Carney seems unaware of a powerful internal contradiction in his vision that could scuttle it: Realism is based in part on the idea of bilateral agreements of independent sovereign nations acting unfettered in their own interests. But in order to be effective, the middle powers would presumably have to band together into an aggregated great power through multilateral agreements tailored to the interests of its constituent nations. He also spoke of linking the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with the European Union (EU), which sounds like the very apotheosis of multilateralism.

Under the neoliberal world order, multilateralism had been a part of the problem, yet in order for Carney’s plan to work, middle nations would have to comprise one of the poles of the emerging multipolar world by becoming a united front conglomerate speaking with a single voice. This is because there is safety and power in numbers, and by definition, middle powers fill the gap between great powers and the lesser powers. They tend to be technologically advanced with prominent middle classes, but are smaller than the monster nations. Too small to “go it alone,” they would have to enter into a multilateral pacts of “variable geometry,” depending the agreement and its signatories. Such a league would also, by the Prime Minister’s account, act as a brake on hegemonic rivalries. Medium-sized nations would also have to do business with the monster nations as sovereign states (as witnessed by Canada’s new “strategic partnership” with China), even though Carney admits that great powers typically have the advantage.

Someone who has already identified this problem of middle states acting as unencumbered sovereigns, is the University of Chicago professor and standard-bearer of neorealism, John Mearsheimer. Mearsheimer’s school of offensive realism, holds that the direction and nature of the global order is determined by the competition of great powers, and not by leagues of middle-tier nations. The question is whether or not Mearsheimer is right in this overarching observation.

I prefer Kennan’s brand of realism based on intuition, a broad, deep, and nuanced understanding of history, culture, and human nature, to the determinism of Mearsheimer (to be fair, Mearsheimer’s vision is also based on a profound historical understanding). If Mearsheimer was merely saying that the world tends to be governed by the rivalries of great powers, I would tend to agree with him. If he was saying that great powers act most effectively when they act in the moderate and rational furtherance of their perceived interests, or that they usually do (or do not at their own peril), then I would also agree with him. If by contrast, he is asserting a law-like “hidden hand” phenomenon at work, like the physical constants of physics, then I say that his view is too mechanistic, too historicist for the real (read: chaotic) world. As Oliver Wendell Holmes, Jr., a realist in the law, observes in a different context that “General propositions do not decide concrete cases.” Piecemeal problem-solving is preferable to grandiose meta theories.

That said, and in spite of his broader views, I have found that Mearsheimer is usually spot on in his proximate analyses of events large and small (his 2014 Foreign Affairs article, Why the Ukraine Crisis is the West’s Fault,” predicting a war with Russia over Ukraine in response to the eastward expansion of NATO, has proved prescient, as have his analyses of events in Ukraine since the Russian invasion). But the central tenet of objective realism is too deterministic and does violence to the complexities of a disorderly world based on power struggles that are guided, not only by reason and interest, but also on ideology/eschatology, “morality,” human caprice, and irrationality. Error is frequently a driver of events, and history is as much of sequence of screwups as successes. The human world is not governed by mechanistic principles or “laws” of history, but by currents and tendencies, which may be strong or weak. Human interaction is both a randomizing factor as well as an ordering principle, and history takes on a will of its own that is beyond human intentions.

But let us assume for a moment that Mearsheimer’s historical Newtonianism holds true in this instance—that middle nations cannot run the table as individual players or as brokers of consolidated power. This would mean that they would have to act collectively as a league of sort of powerful states. As retired Colonel Douglas Macgregor recently observed, NATO—that great pact of middling vassal states—was (and is) too diverse in its interests and agendas to function effectively: “NATO remained exactly what it was: a chorus of competing voices that could not agree on much of anything.” The impotence of the NATO’s “limited liability partnership” in respect to the Russo-Ukrainian War, is just a recent example of Macgregor’s point (on a side note, Carney’s ”coalition of the willing”—which is willing to fight to the last Ukrainian—sounds a lot like the phenomenon he is criticizing, but let that go). Macgregor’s criticisms of an overly-diverse military alliance may find parallel in economic alliances of self-interested middle powers a la Carey.

The question then is whether or not Mearsheimer’s great powers principle and Macgregor’s observation on the inverse relationship of nation interest diversity and efficacy, apply to the present case and whether great powers geopolitics will preclude Carney’s prescription. In the words of the Zen master in the parable from Charlie Wilson’s War, “We’ll see.”

The Thucydides Trap

Carney’s Thucydides quote that “The strong do what they can, and the weak suffer what they must,” must be taken in the context of another famous quote by the Greek historian on the cause of the Peloponnesian War: “The growth of the power of Athens, and the alarm which this inspired in Sparta, made war inevitable.”

This illustrates another dynamic at play in the world—another inverse relationship—that is sometimes called the “Thucydides Trap” (or as I used to call it: the Problem of the Declining Hegemon). It refers to the inherent danger of periods in which a waning hegemon is confronted with a rising or reinvigorated hegemon, and tends to support Mearsheimer’s position. In Greece in 431 BC, the rising power was Athens and the declining power was Sparta. In the first half of the 20th century, the declining hegemon was the British Empire and the rising powers were Germany and Japan (and the US as an industrial trading partner of Britain). This was also the period of the World Wars.

Today the declining hegemon is the United States. As it slides into political decadence and senescence, we can only imagine where the Lear-like policies at home and abroad will lead. The primary rising power is China, in cooperation with Russia, Iran, and perhaps India. These powers would have competed with the West for the favor and resources of the Global South as the Earth’s biosphere continues to degrade. But now Carney has made a unified Western alliance problematic by encouraging its intermediate constituent states to peal off from the occidental pole.

With the help of erratic U.S. policies, the West could split, with modern, technologically-advanced nations like Canada and Australia poised to go their own way or as leaders of “variable geometry” alliances of similarly-situated nations. But will it work? After all, the most subservient client states of the United States—those of Western Europe—appear to have stood up to the U.S. over Greenland. But was this a one-off? Was the rhetoric over Greenland a bridge too far, even for Western Europe? With an American president who seems content to abandon Europe, could Canada realistically position itself as the senior partner of the NATO alliance? We’ll see.

We know of Canada’s new trade treaty with China, but as a general program, we need details of what the third way is and how it is supposed to work. Would the middle nations compete or cooperate or would they adhere to one of the oldest realist tenets of all: nations compete when they must and cooperate when they can. Would they band around one of the poles of the great powers, and if so, how would what would be a new approach? Would Carney’s third way provide the basis for a BRICS-like league for middle powers? Would it be a balancing factor or a potential spoiler in the competition of great powers? We need more answers on how the new way will work if we are to assess if it will work.

If I had to guess, I would say that Carney’s middle way will not fully materialize in the way he would like, and that the tenet of Thucydides he quoted, if extrapolated, will hold true, that in terms of power, middle nation are just better versions of lesser powers, and diverging interests will undermine any effort for them to assert themselves en masse as a collective great power. Another possibility is that the differing interests of middle powers will form an elaborate, overlapping, kaleidoscopic array of ever-shifting alliances and “buyers’ clubs” depending on the specifics of interests and threats in question. Whether such a busy system of alliances will work is anybody’s guess.

A final possibility is that Carney and Canada will lead the charge and nobody will follow. When Theodore Roosevelt gave the initial order to attack the Spanish forces on Kettle Hill, only five men followed because they could not hear him over the din of battle. The difference is that everybody heard Carney at Davos. To be fair, Roosevelt and his men took Kettle and San Juan Hills (at the cost of one fifth of the regiment). Is Carney a new Churchill or TR? We’ll see.

The world order is shifting with abrupt ruptures from the past and a United States that appears to have taken the Madman Theory of foreign policy taken to a chaotic extreme. With China on the ascendance, and the U.S. in what appears to be in a state of steep and perhaps permanent decline, which will win the the Global South? Let’s hope that the middle nations of the West and Pacific rim will embrace Carney’s proposal, and that combinations of them can allow their members to punch above their weight as a force for stability and sanity in the world.

Of course the overarching question is whether or not an increasingly volatile U.S. can navigate the new geopolitical seas in peace. Russia has shown great restraint vis-a-vis Western meddling in the proxy war on its front doorstep. Likewise, the Western Pacific, where Mearsheimer and others believe a great powers struggle with China might be in the offing in the future, is currently pacific. By contrast, as Macgregor asks, “Who has stopped, boarded, and seized a [foreign-flagged] commercial vessel? We have.”

Conclusion

The emerging world order, like a great Shakespearean tragedy, denotes a crisis-within-a-crisis: a shift of power away from the United States as other powers rise and allies are driven away. This shift exists within the greater crises of the environment. If the world is to effectively address these existential crises, it will require a critical mass of great, medium, and lesser powers cooperation. As I have written elsewhere, the world can no longer afford the infantile rivalries of the Great Game. The problem with the Great Game is the game itself.^[1]

It is a tall order for a great speech, even one beginning with Thucydides, to launch a new geopolitical era. And if successful in doing so, there is no guarantee that the new order will play out anything like the way the author intended. Given the greater crises that loom above humankind and which now threaten us all, what would be the impact of Carney’s middle prong of the new world order? If it materializes, it could provide a source of moderation and balance in the world. Or it could be just another axis in a balkanizing world order at a time when greater cooperation is needed. We can hope for the best, but should not expect it. We shall see.

NOTES

1. See Michael F. Duggan, “Realism and Regionalism: The United States in a Multipolar World,” Chicago Journal of Foreign Policy, April 24, 2024. ↑

Michael F. Duggan blogs at  realismandpolicy.com.

 

New trade routes in a fractured world

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By bne IntelliNews February 6, 2026

US President Donald Trump has upended the liberal world order that promoted free trade agreement and cooperation, for a more selfish protectionist “me first” mindset. Trump is actively dismantling the rules-based international order, restricting competition and turning tools like tariffs into political weapons. As part of an new economic paradigm that is a return to a pre-world war imperialistic transactional approach he is also trying to divide the world into spheres of influence again as part of his updated Monroe Doctrine outlined in his National Security Strategy released at the end of last year. 

The result is a scramble to diversify away from US trade. In her speech announcing what she called the “mother of all trade deals” with India in January, European Commission President Ursula von der Leyen said the motivation was that “trade has been weaponised”. 

After 20 years of negotiation, the EU suddenly felt compelled to close the agreement, which will slash duties on Indian imports and pry open a long-protected market. Brussels feels exposed to the increasingly unpredictable US, Europe’s biggest trade partner, accounting for 20% of exports and $4.5 trillion in annual trade.

In the same week, the EU also moved to finalise a near-identical deal with Mercosur in Latin America, likewise decades in the making. Neither deal offsets reliance on the US market, but both mark the start of a long process to spread risk and diversify global business.

However, the process started well before Trump took office. After two decades of prosperity fuelled by “globalisation” following the collapse of the socialist experiment in 1991, the “rise of the rest” reached a point at the start of this decade where tensions between east and west were starting to grow as countries like Russia and China began to flex their economic muscles.

That led a fractured world where smaller countries began to coalesce into groups in either the US-led or China-led camps. This process was accelerated by the global pandemic in 2020 when companies suddenly had to shorten supply chains and reshoring operations. Trump has only catalysed a breaking up of global trade that was already well underway, amply illustrated by the slow death of the WTO, which at one point a decade ago was supposed to be regulator of globalised trade, but today is totally dysfunctional.

Russia’s invasion of Ukraine and ensuing sanctions further redirected investment into new Eurasian trade routes. The Middle Corridor, linking Europe and East Asia via Central Asia and the Caucasus while skirting Russia’s southern flank, has gained prominence. Trump has only catalysed a fragmentation of global trade that was already underway, illustrated by the slow decline of the WTO, once the regulator of globalised trade, now largely paralysed.

South-South trade grows

As bne IntelliNews has reported, the Global South is now rapidly forming alternatives to the Western-led global order, which Chinese President Xi Jinping and Russian President Vladimir Putin has criticised as the “unipolar” world – a US hedgemony. In their alternative multipolar world order, Global Emerging Markets Institutions (GEMIs) are being rapidly rolled out or beefed up to manage geopolitics, trade and security – new institutions that the Western powers are largely excluded from such as the BRICS+ or G20.  It’s still a work in process, but trade is already rapidly shifting to follow the contours of the new realities.

Entering 2026, trade tensions are rising between the US and its partners, while trade is on the increase within partnerships and blocs that do not include Washington, as set out in a map shared by analysts from research firm BMI in a recent webinar.

 

A new report from the United Nations Conference on Trade and Development (UNCTAD) also says that global trade “enters 2026 under mounting pressure from slower growth, geopolitical fragmentation, accelerating digital and green transitions and tighter national regulations”. 

According to UNCTAD, “These forces are reshaping trade flows, investment decisions and global value chains, with the greatest risks and opportunities concentrated in developing economies … Nearly two-thirds of global trade now occurs within value chains reshaped by geopolitics, industrial policy and new technologies.”

UNCTAD data indicates a sharp rise in South-South trade over the last three decades, from $0.5 trillion in 1995 to $6.8 trillion in 2025. More than half of Africa’s exports, for example, now go to other developing countries. The share of Brazil’s imports coming from Asia rose sharply after Trump’s tariffs were announced. 

However, as UNCTAD points out, interregional trade outside Asia, particularly between Africa and Latin America, remains underdeveloped. Strengthening these linkages could become a key driver of resilience in global trade networks.

Moreover, interdependence can fuel tension as much as growth, as shown by frictions in trade within Asia. As supply chains deepen locally and governments lean on industrial policy, economies increasingly clash, not only with the US or Europe, but with one another.

India has expanded anti-dumping duties and quality controls, hitting imports from China, Vietnam and South Korea, arguing the measures protect domestic manufacturing and reduce import dependence in electronics, chemicals, and steel. China has responded with similar tools, tightening controls on critical minerals and technologies, reverberating across Japan, South Korea and Southeast Asia. Since late 2025, much of China’s trade friction has targeted Japan following Prime Minister Takaichi’s comments on Taiwan.

In Southeast Asia, Indonesia’s restrictions on raw minerals and push for onshore processing have unsettled Japan and South Korea. Thailand and Vietnam face complaints over pricing in sectors from tyres to solar panels. Even within ASEAN, competition for investment is rising.

Yet trade is still expanding in digital services, finance, tourism, EVs, batteries and semiconductors, as companies hedge risks by spreading production. Australia is warming to trade with China again, and LNG supplies to Japan have risen with the Santos gas project. Trade agreements such as RCEP and bilateral deals, including Japan-Vietnam and South Korea-Indonesia, keep channels open despite disputes.

Europe’s trade partners 

As bne IntelliNews has reported, the EU has rushed to seal long-planned agreements with both India and the Mercosur bloc, while leaders of EU countries are also courting China. 

After more than 20 years of negotiations, the EU and Mercosur — Argentina, Brazil, Paraguay, Uruguay — concluded a major trade partnership in January, creating one of the world’s largest free-trade areas, covering roughly 700mn people.

The agreement is designed to dismantle up to 91% of tariffs on European goods entering Mercosur markets and 92% of levies on South American exports to the EU. The deal will significantly expand the access of European goods and companies to the South American market and resources, including rare earths. Brussels estimates it will save European exporters over €4bn annually in duty payments.

Safeguards are included for sensitive sectors, with final approval depending on a decision by the Court of Justice of the European Union.

The EU-India free trade agreement, finalised on January 27 after two decades, cuts duties on 97% of EU exports and grants preferential access for 99% of Indian exports, while protecting sensitive sectors like European automobiles.

Leaders from both sides framed the accord as a landmark step following intensified negotiations as India and Europe sought supply chain resilience together. Under the pact, tariffs on almost all EU goods exports to India will be removed or reduced, delivering up to €4bn in annual duty savings. 

India will gain improved access for textiles, leather and marine products, while lowering barriers on automobiles, and wines and spirits over time for consumers globally. The is part of India’s broader trade diversification, as New Delhi increasingly uses free-trade agreements (FTAs) and bilateral trade deals as an important tool to increase its geo-economic influence. 

Crossing Eurasia 

Efforts to improve transit times between Europe and East Asia across the Eurasian landmass have been underway for years, but Russia’s invasion of Ukraine and subsequent sanctions have altered priorities, in particular raising the emphasis on the Middle Corridor. 

China’s Belt and Road Initiative (BRI) spans over 140 countries with estimated investments up to $8 trillion, linking Asia, Europe, Africa and parts of Latin America. Going far beyond trade, it covers transport, energy, industrial, urban, digital and space projects. In the first half of 2025, Chinese firms committed $124bn to BRI projects, highlighting its ongoing strategic importance, according to a report by Australia’s Griffith Asia Institute. However, while some participants have benefitted from enhanced growth, concerns have been raised about debt and governance challenges.

The Middle Corridor (Trans-Caspian International Transport Route) links western China with Europe via Central Asia, the Caspian Sea, the South Caucasus, and Turkey. Bypassing Russia and the Suez Canal, it shortens journeys by 2,500 km and cuts transit times to 10-15 days. Trade is rising quickly, spurring investment in ports, railways and logistics hubs. However, capacity, costs, and political risks remain constraints.

The International North-South Transport Corridor (INSTC) links the Indian Ocean and Persian Gulf with Russia and northern Europe via Iran, the Caucasus and Caspian Sea. It can reduce transit times between India and Europe by 40% and freight costs by 30%. Growing cargo volumes and new agreements highlight the corridor’s rising geopolitical and economic significance.

Russia’s partners

As sanctions have reduced trade with Western countries, Russia has pivoted east, bolstering its relations with China, India and other countries from the Global South. 

When Russia and China declared a “no limits” partnership in 2022, the symbolism was powerful — but the economic reality has proven very different. Despite deepening ties in energy, defence and diplomacy, the commercial relationship is now showing signs of strain across trade, investment and financial channels.

Bilateral trade surged to a record $244bn in 2024, but has since contracted by around 10% in the year to September 2025. China remains Russia’s dominant trading partner, accounting for 30% of its exports and half its imports. Yet Russia accounts for just 3% of China’s goods exports.

The strong relationship between Russia and India was highlighted by Russian President Vladimir Putin’s visit to Prime Minister Narendra Modi of India in December 2025, as Putin has broken with the West completely and taken a big bet on the Global South Century.

As bne IntelliNews reported, Putin brought a planeload of big Russian businessmen with him, with the aim of setting up Russian JVs — to find a use for the pile of rupees accumulated from Russian oil sales to India and supercharge India’s industrial and manufacturing prowess at the same time.

South-South blocs 

Reflecting the increase in South-South trade, blocs uniting countries across Asia, Latin America and Africa have grown in prominence, and also attracted interest from outside the region. 

The Regional Comprehensive Economic Partnership (RCEP) unites 15 Asia-Pacific economies that together account for about 30% of global GDP, trade, and population. It brings together the ten ASEAN states with China, Japan, South Korea, Australia, and New Zealand. Signed in 2020 and in force since January 2022, RCEP is widely seen as strengthening Asian supply chains and deepening intra-regional trade, while enhancing China’s economic influence. The bloc has opened to new members, with Sri Lanka advancing its accession bid in 2025.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) links 12 Asia-Pacific and European economies, eliminating tariffs on over 99% of goods and easing trade in services, digital commerce, and investment. The UK joined in 2024, and several other countries including Indonesia have applied or expressed interest.

Uniting Africa 

Despite recent growth, trade between African countries remains modest as a share of total trade, but the African Continental Free Trade Area (AfCFTA) is intended to change this pattern. 

It unites all 55 African Union member states and eight regional blocs. Its goal is to form a single continental market of around 1.3bn people with a combined GDP of about $3.4 trillion. As a flagship initiative of the AU’s Agenda 2063, it supports Africa’s long-term transformation and global competitiveness. AfCFTA seeks to remove trade barriers, expand intra-African trade, and promote value-added production and services. By strengthening regional value chains, it encourages investment, job creation, and industrial development. The agreement entered into force in May 2019, trading began in January 2021, and its secretariat is based in Accra, Ghana. 

The Economic Community of West African States (ECOWAS) is a regional bloc founded in 1975 under the Treaty of Lagos to promote economic integration, political cooperation, and stability across West Africa. Headquartered in Abuja, it unites 15 member states, with Nigeria, Ghana, and Côte d’Ivoire as its largest economies. Its mandate spans trade, transport, energy, agriculture, finance, and social policy, but progress toward a fully integrated market has been uneven, with intra-regional trade remaining low due to tariff resistance and fiscal concerns. ECOWAS has also become a key regional security actor, notably through its ECOMOG interventions in Liberia and Sierra Leone. Today, it enforces a zero-tolerance stance on military coups, threatening sanctions and intervention as instability spreads in the Sahel, where junta-led states have formed a rival bloc aligned with Russia.

The Southern African Customs Union (SACU) comprising Botswana, Eswatini, Lesotho, Namibia and South Africa is the world’s oldest functioning customs union. Revenue-sharing is vital to smaller members. Trade represents over two-thirds of GDP, and the bloc maintains agreements with the EU, UK, MERCOSUR, Mozambique, and the US.

The East African Community (EAC) — Burundi, the DRC, Kenya, Rwanda, Somalia, South Sudan, Tanzania and Uganda — has strong intra-regional trade. Cross-border digital payments and plans for a single regional currency by 2031 signal growing integration and dynamism. The region has also adopted the East African Payment System (EAPS), a real-time gross settlement system designed to ease cross-border payments and facilitate trade.