> either accept 'free trade' (allow foreign investors to buy up the local industry, commit to IP laws, don't apply tariffs) or no one will be allowed to trade with you or send you aid.

Do multi-national trade agreements (which I believe are the core mechanism for this) actually penalize signatories for trading with non-signatories? Or is it more that trade between signatories is so advantaged that no company within a signatory state would be competitive were it to trade with a counterpart in a non-signatory state?