International trade and finance rules have, since their inception, remained skewed in favour of the richest nations. Rick Rowden argues that developing nations want measures to right the asymmetries.
Canadian prime minister, Mark Carney, said the quiet part out loud in Davos in January 2026: the “rules-based international order” has always been “partially false” because the strongest countries “exempt themselves when convenient” and trade rules are “enforced asymmetrically.”
That admission matters because Carney is an archetypal insider: a former central bank governor in Canada and the UK, now prime minister, speaking from the World Economic Forum’s main stage. When someone like that concedes the system is tilted, it should stop the room.
Headlines focused on his warning that “economic middle powers” should band together as the old order “ruptures”, driven — he argued — by the Trump administration’s belligerence. But the deeper point was structural: developing countries have long argued that global trade and finance rules were written by and for rich states, and still operate that way.
My recent working paper for the LSE Global South Unit sets out what the Global South is actually asking for – specific, long‑standing reforms to the international trade and financial architecture. These are not radical new demands. They have been raised for decades, acknowledged in principle, and then consistently shelved by the most powerful countries.
Déjà vu
In the 1970s, newly independent states organised at the United Nations and built the Group of 77 (G77), now 134 members, to advance their common economic interests. In 1974, the UN General Assembly adopted a resolution calling for a New International Economic Order – a set of reforms to correct systemicdisadvantages facing developing countries.
To see why the system is “unfair”, start with money. Most developing countries cannot pay for imports in their own currencies.
But, that agenda was derailed in the 1980s by the rise of free market economic orthodoxy and IMF structural adjustment loans. When developing countries tried again to raise their concerns in the trade negotiations at the World Trade Organisation’s Doha “Development” Round of global trade talks (2001-2015), they were promised by the rich countries that their longstanding grievances would finally be addressed. But over the next 15 years, the rich countries did not address their concerns, the Doha Round ended in failure in 2015, and the grievances have been left unaddressed ever since.
The hard‑currency trap
To see why the system is “unfair”, start with money. Most developing countries cannot pay for imports in their own currencies. They must first earn “hard currency” (mainly US dollars and euros) by exporting commodities or low‑value goods, and only then can they buy needed imports such as machinery, medicines, energy, fertiliser and other essentials.
When the IMF and World Bank were established at the Bretton Woods conference in 1944, Keynes proposed establishing an International Clearing Union with a global currency — the “bancor”. All trade payments would be settled through the ICU, where countries’ exports and imports would be credited and debited, respectively, in their bancor accounts. This system would have enabled developing countries to pay for imports using their own currencies, but the U.S. rejected the proposal, and ever since the world has been stuck with this system that compels developing countries to use hard currencies to pay for their imports.
There is also an asymmetry in who must adjust when imbalances build. Countries with trade deficits are pressured to cut demand — through devaluation, wage restraint, and restricting imports — while countries with trade surpluses face little equivalent pressure to adjust. Keynes’ ICU would have required adjustment on both sides, taxing excessive surpluses and encouraging investment in deficit countries to maintain overall balance.
Whiplashed by volatility
Many developing countries also face high degrees of volatility in prices on global commodity markets for the goods they export and import. When economies depend heavily on a few exports, major price swings can be destabilizing. Net importers of essential goods like food and fuel also face these risks. In a nutshell, small economies are often whiplashed by global market fluctuations beyond their control.
Many developing countries today spend more servicing external debt payments than on health or education.
In global finance, many developing countries cannot borrow abroad in their own currencies. They take on dollar‑ or euro‑denominated debt and absorb the exchange‑rate risk. As we’ve seen in recent years, if the Federal Reserve raises interest rates, or their currencies decrease in value, debt service costs can spike. Economist Jane D’Arista proposed practical fixes that could alleviate this constraint: a public international investment fund that lends in local currencies, paired with a new clearing agency that allows repayment in local currencies.
Debt: the crisis that keeps returning
Sovereign debt is where the system’s brutality becomes unmistakable. After Covid, the Ukraine war, and rising US interest rates, many developing countries today face burdens so heavy they spend more servicing external debt payments than on health or education. Climate‑vulnerable countries in particular are forced to choose between investing in resilience and repayment.
The world has done coordinated debt relief before, notably the HIPC initiative around 25 years ago, and today a new cancellation or deep restructuring initiative for heavily indebted countries is needed again.
Another problem is that there is no international “bankruptcy court” for countries. Negotiations on debt restructurings between countries and their creditors are slow and disorderly, and involve negotiating with a fragmented group — private bondholders, banks, multilaterals, bilaterals and newer official lenders — making coordination much harder.
Developing countries have long called for an international Sovereign Debt Restructuring Mechanism (SDRM) that could impose timely, fair burden‑sharing across all of a country’s creditors. It has repeatedly been blocked, largely due to creditor interests in the rich countries. Incremental reforms such as standstillclauses in new contracts, anti‑vulture laws, and the establishment new UN forums such as the 2025 Borrowers Platform and Seville Forum, are important steps forward but do not substitute for a formal international debt workout regime.
Voice without power
When developing countries complain about representation, they mean power, not symbolism. IMF and World Bank voting shares still reflect a 1944 worldview. The United States retains an effective veto; Europe remains over‑represented; and more than 180 other countries share the remaining votes. Borrowers, meanwhile, face policy reforms and loan conditions shaped by institutions where their influence is limited.
Negotiations on key trade deals are shaped in exclusive settings among powerful states and then presented as a fait accompli to most other developing countries.
The Global Financial Safety Net reinforces the hierarchy. The top tier is a set of swap lines among major central banks for a select club; a second tier includes regional financial arrangements that provide only limited crisis support; and a third tier for most developing countries, who can only access liquidity by going to the IMF, often under harsh fiscal austerity loan conditions. Many developing countries respond by hoarding reserves in their central banks as self‑insurance to avoid having to go to the IMF, diverting scarce resources from development.
The WTO also combines formal equality with informal asymmetrical power: negotiations on key trade deals are shaped in exclusive “Green Room” settings among powerful states and then presented as a fait accompli to most other developing countries.
The fight for policy space
Perhaps the most combustible issue is about policy space. Developing countries argue — correctly — that today’s trade and investment rules restrict the use of policy tools rich countries used to industrialise: tariffs, subsidies, technology-transfer and local content requirements on investors, and strategic regulation. WTO agreements such as TRIPS and TRIMS strengthen intellectual property enforcement and constrain performance requirements on foreign investors, slowing technology transfer. And the WTO’s agricultural rules remain skewed, enabling rich countries to subsidize agribusiness while poorer countries’ options are narrowed. Often, even broader constraints are found in bilateral trade and investment treaties.
At the same time, the US, China and the EU are openly violating WTO rules to revive industrial policies for advancing their computer chips, batteries, and green tech industries — while developing countries risk WTO challenges or investor‑state dispute settlement (ISDS) lawsuits if they attempt similar strategies. Climate change intensifies every contradiction: countries that contributed least to historical emissions face the worst impacts, while climate finance remains inadequate and too often arrives as loans that add to countries’ debt crises.
To really pursue green energy transitions, developing countries need greater fiscal space than allowed under IMF programs, more policy space than allowed under WTO rules and development finance that provides more grants than loans.
These constraints are compounded by multinationals’ tax avoidance and illicit financial flows out of developing economies, the inability to tax international e-commerce transactions, biased ratings from the three major credit ratings agencies that raise borrowing costs, limits on the use of capital controls, and an imbalanced ISDS system that lets foreign investors challenge climate change and other public-interestregulations.
What does the Global South want?
The agenda is concrete: new mechanisms to trade and borrow in domestic currencies; broader access to swap lines for their central banks; a fair and fast sovereign debt workout system; increased voting power and representation in the IMF, World Bank, and WTO; much more climate finance delivered primarily as grants; rules that compel adjustment by surplus as well as deficit countries; rebalanced intellectual property and investment regimes to accelerate technology transfer to manufacturers in developing countries; reforming the rules on agricultural subsidies; restored industrial‑policy space for advancing green energy transitions; and the ability to use capital controls and regulation without market punishment or ISDS retaliation.
Carney deserves credit for admitting the unfair asymmetries in the system. But acknowledgements are cheap.
It also includes something quietly radical: the UN‑mandated process to develop a Framework Convention on International Tax Cooperation, aimed at tackling tax avoidance, improving transparency, and securing taxing rights for developing countries.
Carney deserves credit for admitting the unfair asymmetries in the system. But acknowledgements are cheap. The hard question is whether powerful states will continue to defend a system they increasingly admit is biased — or whether public pressure can force them to make a more equitable architecture that works for all?
