FIT-P and the Minilateral Future of Trade

September 05, 2025 - Written by Talha Haroon

Since the effective suspension of the World Trade Organisation (WTO) Appellate Body in 2020, the rules-based global trading system has largely faded into oblivion, hastened by the unilateral actions of major powers such as the U.S. and China. Against this backdrop of multilateral drift, a group of WTO members have begun exploring an alternative platform: the Future of Investment and Trade Partnership (FIT-P) – an international investment framework first reported by the Financial Times and led by states such as Singapore, the United Arab Emirates, and New Zealand.

Initially referenced in New Zealand’s ministerial diaries in March 2025 as a “Pro Trade Partnership,” the initiative has since being earmarked as a structured trade-based counterweight to the “napkin deals” emanating in global policy circles. With each founding member contributing a distinct advantage, the grouping promises to have an impact. New Zealand offers regulatory credibility through its leadership of the Digital Economy Partnership Agreement (DEPA); Singapore provides crucial infrastructure through its logistics and finance expertise; and the UAE provides diplomatic reach as a convenor, with a track-record of bridging geopolitical divides. At the time of writing, the partnership’s plans have been formalised, with a virtual launch scheduled for November 2025 and a ministerial meeting planned for July 2026.

Beyond the core founders, the initiative also comprises roughly ten other states, among them Morocco and Rwanda in Africa, Malaysia in Asia, several Latin American economies such as Uruguay, Costa Rica, Panama, and Paraguay, as well as Norway in Europe. This cross-regional composition marks FIT-P as unique compared to the more usual alignments of Western-led or Global South blocs. By presenting itself as a coalition of middle powers and reform-oriented smaller states, the group is bound less by ideology and more through pragmatic interest in sustaining workable trade governance within an increasingly fragmented international system. While the proposed membership may not command immediate market influence, the participation of emerging states underscores the partnership’s underlying rationale: that collective action among modest players can address governance gaps left by larger powers. The central question, then, is whether initiatives like FIT-P can evolve into a sustainable alternative to a multilateral order that is visibly in decline.

Setting the Agenda: Digitalisation as a Trade Strategy

At first glance, FIT-P’s agenda appears narrowly technical: it aims for the adoption of simple measures such as the mutual recognition of digital trade documents and the legalisation of electronic signatures. Yet these measures target a long-recognised roadblock in the smooth flow of global commerce. According to OECD research, trade transaction costs – including documentation and border compliance – can amount to up to 15% of the value of traded goods, with informal and paper-intensive systems disproportionately burdening small and medium-sized enterprises (SMEs) especially in developing countries. By contrast, digital documentation implementation could reduce these procedural frictions and facilitate the movement of capital and goods across borders more efficiently. Moreover, global estimates suggest that the costs associated with international trade are approximately double the costs of domestically traded goods, with non-tariff and administrative barriers accounting for most of that burden. Although  modernising trade documents has been a crucial component of recent trade agreements, FIT-P seeks to expand the usage of digital documentation by crafting its own agenda, taking inspiration from initiatives such as the  Digital Economy Partnership Agreement (DEPA).

Signed in 2020 by Singapore, New Zealand, and Chile, DEPA is widely regarded as the world’s first standalone digital trade agreement. Conceived as a response to the limitations of traditional trade pacts in addressing the digital economy, DEPA introduced modular frameworks for cooperation across areas such as digital identity, data flows, and paperless trade. Crucially, it obliges participating parties to recognise electronic trade documents as legal equivalents to their paper counterparts and to build interoperable systems grounded in international standards. This modular design enables countries to “dock” onto specific components (e.g. digital identity, e-commerce) without needing to adopt the entire agreement, making it more accessible for economies at different stages of regulatory readiness.

In many ways, FIT-P builds on the precedent that DEPA has cemented: it seeks to extend the logic and ease of digital trade governance to a more diverse set of states across multiple regions. Consequently, by targeting the intersection of digital finance and trade for middle-income countries, FIT-P differentiates itself through pragmatic decision-making and deliberation. Rather than being caught up in consensus-based outcomes that have plagued WTO decision-making, the group aims to pursue “low-barrier” reforms that can be operationalised and scaled quickly across regions.

This functional orientation echoes what Amrita Narlikar, a noted authority on WTO scholarship, has described as the strategy of “small states” – relying on norm-setting (the process through which international organisations establish standards, rules, and guidelines) rather than economic weight to gain influence. By advancing precedents in digital trade facilitation, FIT-P’s members may be able to shape regulatory templates that larger economies are eventually compelled to engage with, either through adoption or contestation.

Whether this strategy can be scaled, however, remains uncertain. FIT-P is unlikely to replicate the scope of mega-regionals such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), but it could evolve into a successful attempt to translate the modular logic of initiatives like DEPA into a cross-regional framework that, if proves workable, could signal a new model of cooperation in trade governance.

FIT-P as a Microcosm of Minilateralism

Though still in the early stages of its establishment, FIT-P joins a growing effort of cohesive minilateral trade arrangements that have proliferated in light of systemic rivalries in global trade. Scholars have noted that this “minilateral turn” is partly a functional response to the WTO’s consensus paralysis, as small groups of states pursue narrower but more actionable forms of cooperation that can later diffuse into wider regimes.

For example, the CPTPP commits members to eliminate tariffs on nearly 99% of tariff lines, generating binding market access across a wide range of sectors, and embedding extensive provisions on investment, intellectual property, and services liberalisation. By contrast, cases like the Indo-Pacific Economic Framework for Prosperity (IPEF) – announced by the United States in 2022 – eschews tariff reduction entirely, instead framing its agenda around four pillars: trade facilitation, supply-chain resilience, clean energy/decarbonisation, and tax/anti-corruption standards.

Against this backdrop, FIT-P stands out by deliberately emphasising its modest scale and pragmatic focus; a non-ideological platform for technical, return-based cooperation. Rather than binding tariff schedules or security-aligned frameworks, FIT-P concentrates on facilitating digital trade systems and allowing interoperability between members. This focus on granularities that may impede the efficiency of global trade allows states with uneven regulatory and institutional capacities (a core issue in emerging economies) to participate without assuming comprehensive treaty obligations: a feature that scholars of “flexible institutional design” identify as crucial to sustaining cooperation under conditions of global fragmentation.

Geopolitically, FIT-P seeks to build trade resilience among its partner countries – many of which have been hit by U.S. import tariffs. Under the “Liberation Day” policy, states without exemptions face a universal 10% reciprocal tariff, yet several prospective members confront even steeper rates: Malaysia at 19%, Norway at 15%, and Rwanda at up to 32%. By pooling regulatory innovations in areas such as digital trade documentation and cross-border data flows, FIT-P offers these economies a means of cushioning against the volatility of U.S. trade policy and the broader supply-chain bifurcation driven by the U.S.–China rivalry.

For smaller and middle powers, such initiatives are a form of what Finnemore and Sikkink term ‘‘norm entrepreneurship’’: the idea of using international norms to strengthen their position in domestic debates. In other words, it is “a two-level game” where both domestic and international norms are increasingly linked. Consequently, FIT-P is less about the sheer size or influence of its members and more about reshaping the terrain of global trade governance through incremental yet meaningful steps – benefiting all participating nations, regardless of their economic weight.

Challenges and Prospects

The newly formed group injects a crucial note of optimism into the global trade debate, but the capacity to translate FIT-P’s ambitions into durable institutional outcomes remains uncertain. Key questions abound: Will FIT-P remain a digital-focused forum for the exchange of best-practices, or evolve into binding commitments with enforceable rules? Which member at the forefront will host the secretariat? And can the modular approach promoted by FIT-P align with ongoing plurilateral initiatives on commerce and investment facilitation, or will the group’s goals remain peripheral to the multilateral system?

The challenge of coherence across diverse membership is another fundamental challenge. FIT-P’s heterogeneous membership – spanning advanced OECD economies such as Norway and New Zealand alongside lower-income states like Rwanda and Paraguay – creates a wide field for cross-regional experimentation, but also risks slowing consensus once negotiations move into contested areas of trade governance. As with groupings like BRICS+, FIT-P could reflect the weaknesses of regime complexes marked by diverging interests and weak enforcement mechanisms.

However, even modest outcomes could carry significant symbolic weight. As the Financial Times noted, quoting former EU trade commissioner Cecilia Malmström, “[FIT-P] shows that many countries want to trade within clear rules and transparency. This group could co-operate with EU-CPTPP and together push for plurilateral global rules.” In this vein, by advancing a cross-regional agenda, the FIT-P initiative demonstrates how minilateralism can function as a strategic instrument for reshaping trade norms in times of crisis. Whether it evolves into a durable institution or recedes into the background of trade diplomacy, its push to restore the Most Favoured Nation (MFN) principle underscores the shifting dynamics of global trade governance in an era defined by fragmentation and uncertainty.

Written by Talha Haroon

Analyst and Editor