International Trade and Investment Agreements and Sustainable Critical Minerals Supply

The report analyzes the role of Free Trade Agreements (FTAs), International Investment Agreements (IIAs), and Memoranda of Understanding (MOUs) in the critical minerals supply chain. It highlights a fundamental tension: exporting countries seek to maximize domestic value addition and industrialization, while importing countries prioritize stable, affordable access to raw materials. Through case studies of Chile, Indonesia, and the Democratic Republic of the Congo (DRC), the report demonstrates that while newer agreements are beginning to incorporate ESG standards and protect policy space for producers, old-generation IIAs still pose significant risks via Investor-State Dispute Settlement (ISDS) mechanisms. The authors recommend that exporting countries reform outdated treaties to secure industrial policy space and that importing countries support value addition in producer nations to enhance overall supply chain resilience.

• There is a fundamental conflict between exporting and importing countries regarding the processing of critical minerals: exporters aim to maximize domestic value addition, whereas importers seek to capture raw minerals at the lowest cost for their own downstream production.
• Free Trade Agreements (FTAs) are increasingly including critical mineral-specific provisions, particularly those involving the European Union, though ESG provisions in these agreements often rely on non-binding language.
• Old-generation International Investment Agreements (IIAs) restrict the ability of mineral-producing governments to implement industrial policies or higher ESG standards due to broad protection standards and the risk of costly Investor-State Dispute Settlement (ISDS) claims.
• Memoranda of Understanding (MOUs) provide a flexible, fast alternative to FTAs for cooperation on critical minerals, but their practical impact is currently limited by vague language and a lack of transparency and implementation frameworks.
• Chile has successfully used reservations in its investment treaties to protect its state ownership of natural resources and preserve space for its National Lithium Strategy.
• Indonesia utilizes aggressive trade instruments, such as export bans on unprocessed nickel ore, to force foreign investment into domestic downstream processing, despite challenges at the WTO.
• The Democratic Republic of the Congo (DRC) faces a disparity between its progressive regional investment instruments, such as the AfCFTA Protocol on Investment, and its restrictive old-generation bilateral investment treaties.
• Importing countries can enhance their own supply chain resilience by designing agreements that allow exporting countries the policy space to develop their own processing and refining capacities.

APA

Baršauskaitė, I., Gubler, J., Moerenhout, T., Nikiema, S., Ostřanský, J., Tipping, A., & Verma, R. (2025). International Trade and Investment Agreements and Sustainable Critical Minerals Supply. International Institute for Sustainable Development. https://www.iisd.org/system/files/2025-04/trade-investment-agreements-critical-minerals.pdf

Chicago

Baršauskaitė, Ieva, Julia Gubler, Tom Moerenhout, Suzy Nikiema, Josef Ostřanský, Alice Tipping, and Rupal Verma. International Trade and Investment Agreements and Sustainable Critical Minerals Supply. International Institute for Sustainable Development, 2025. https://www.iisd.org/system/files/2025-04/trade-investment-agreements-critical-minerals.pdf.

Wikipedia

{{cite report |last1=Baršauskaitė |first1=Ieva |last2=Gubler |first2=Julia |last3=Moerenhout |first3=Tom |last4=Nikiema |first4=Suzy |last5=Ostřanský |first5=Josef |last6=Tipping |first6=Alice |last7=Verma |first7=Rupal |title=International Trade and Investment Agreements and Sustainable Critical Minerals Supply |publisher=International Institute for Sustainable Development |date=April 2025 |url=https://www.iisd.org/system/files/2025-04/trade-investment-agreements-critical-minerals.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{barauskait2025international, author = {Baršauskaitė, Ieva and Gubler, Julia and Moerenhout, Tom and Nikiema, Suzy and Ostřanský, Josef and Tipping, Alice and Verma, Rupal}, title = {{International Trade and Investment Agreements and Sustainable Critical Minerals Supply}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = apr, url = {https://www.iisd.org/system/files/2025-04/trade-investment-agreements-critical-minerals.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }