Poisoning International Trade
Despite the growing popularity of “fair and equitable trade” as a catchphrase in international forums, global realities increasingly diverge from these ideals. The landscape is defined by the U.S. waging a “Reciprocal Tariff War,” China assertively expanding its global influence and challenging American dominance, while Europe navigates between the two powers, pursuing competitiveness through deregulation, strategic autonomy, and state-backed innovation. In such a climate, fairness and equity in trade risk becoming rhetorical rather than real.
One troubling trend, especially in recent U.S. trade practice, is the proliferation of “poison pill” provisions, as seen in the 2025 United States-Malaysia and United States-Cambodia Agreements on Reciprocal Trade (ART). These clauses empower the U.S. to terminate agreements if its partners conclude pacts that allegedly “jeopardize essential U.S. interests” or “pose a material threat” to U.S. security, a concept first introduced in the 2018 USMCA, now expanded in scope and severity. Poison pills effectively act as loyalty tests, pressuring smaller economies to align their trade policy with U.S. geopolitical priorities.
Such provisions stand in stark opposition to foundational principles of the international trade regime, especially the World Trade Organization’s most-favored-nation (MFN) and non-discrimination obligations. By restricting countries like Malaysia or Mexico from negotiating free trade agreements with so-called “non-market economies” (widely understood to mean China), these clauses prevent the extension of equal benefits and concessions to all WTO members. They thus contravene the MFN principle, designed to guarantee equality and predictability in trade relations.
Crucially, poison pill clauses incentivize the emergence of exclusive, politically motivated trade blocs, eroding the multilateral and rules-based order upon which the WTO is built. Rather than promoting openness and mutual benefit, they serve as instruments for dominant powers to advance their foreign policy agendas at the expense of legal commitments and the autonomy of smaller states. In doing so, they undermine the very spirit of justice, equality, and rule of law that is essential for truly fair and equitable global commerce.
To address these challenges and restore the integrity of the rules-based trading system, international trade governance must prioritize transparency and multilateral oversight. The WTO and other global trade institutions should work to develop clear guidelines that prohibit discriminatory provisions like poison pills and reinforce the primacy of core WTO principles. Expanding dispute settlement procedures to include review of exclusivity clauses would empower smaller economies to challenge such unfair practices. By strengthening institutional checks and fostering genuine dialogue among diverse stakeholders, the international community can move toward a more just, competitive, and equitable system of trade law.
Bibliography
Gil Lan, “The "Poison Pill" in the USMCA: The Erosion of WTO Principles and its Implications under a US-China Trade War”, 53 Vanderbilt Law Review 1265 (2021) Available at: https://scholarship.law.vanderbilt.edu/vjtl/vol53/iss4/3
Simon Evenett, “Can Trading Partners Still Hedge? U.S. Poison Pills and the Limits of Dual Engagement”, Zeitgeist Series Briefing #77, 31 Oct 2025, Available at: https://globaltradealert.org/reports/US-poison-pills ● Peter Foster, Owen Walker and A. Anantha Lakshmi “US adds ‘poison pills’ to Asia trade pacts to counter China”, The Financial Times, 6 Nov 2025, Available at:https://on.ft.com/4oyyVTD
Nick Beams, “"Poison pills” extend Trump’s trade war”, World Socialist Website, 7 Nov 2025, Available at: https://www.wsws.org/en/articles/2025/11/08/bdkx-n08.html
Chen Bo, ““Poison Pill” Goes Global? The US-Vietnam Trade Deal and Beyond”, EAI Commentary No. 95, 13 Aug 2025, Available at: https://research.nus.edu.sg/eai/wp-content/uploads/2025/08/EAIC-95-20250813.pdf