Brazil’s COP30 Presidency has proposed a new forum on climate and trade.
Developing countries warn against repeating inequities seen in 1990s trade–environment debates.
Unilateral EU measures such as CBAM and deforestation rules risk undermining climate justice.
Tariff weaponisation and curbs on industrial policy shrink the Global South’s policy space.
Calls grow for any new forum to centre equity, justice and the interests of the Global South.
A proposal by Brazil’s Presidency for 30th Conference of Parties (COP30) to the United Nations Framework Convention on Climate Change (UNFCCC) to create a new forum to discuss climate and trade is a timely intervention and reflects responsiveness to spotlight crucial discussions during their tenure at the helm of the COP process. However, its consideration must weigh ongoing debates over the roles of the World Trade Organization (WTO) and UNFCCC and ensure that the development priorities of the Global South are central. Any such space must be built with the Global South’s buy-in to safeguard equity, climate justice and development needs.
The 1990s saw the convergence of the environment-trade agenda with global concerns for sustainable livestock rearing, fishing, forestry and air pollutants permeating trade discussions, often at the expense of trade and industry in developing countries, many of whom were and continue to be, indebted and poor. The result was an outcry from developing countries who occupied subordinate positions in global growth and governance.
In their 1992 book Towards a Green World, Anil Agarwal and Sunita Narain of Delhi’s Centre for Science and Environment (CSE) cautioned: “How does one decide in what circumstances are trade related actions justified for preventing environmental damage and when do these become arbitrary or protectionist? From the developing country viewpoint, an added concern is the growing power of international economic decision making and its own relative powerlessness in the process. This is just another thin edge of the wedge towards the erosion of national sovereignty”.
While environmental harm has not been resolved, the climate question has risen in prominence in recent decades, in tandem with escalating greenhouse gas emissions and climate impacts. It is entangling itself with the trade agenda due to key policy interventions — mainly by the Global North and is playing out in ways uncannily similar to the 90s. Trade itself is deeply contested; adding climate, with its own political divides and power imbalances, creates a cross-cutting arena of diverging visions.
As an observer of the converging trade-climate nexus at the multilateral level, I have outlined below five emerging dynamics that characterise this debate and that must be examined urgently.
Unilateral trade measures
Unilateral trade measures such as the carbon border adjustment mechanism and the deforestation regulation imposed by the European Union are likely to hit developing countries with additional costs and potentially hamper their trade competitiveness. In the event of non-provision of financial and technical assistance to make the transition, these measures shift the burden of environmental action to the Global South and violate the principle of common but differentiated responsibilities. Meanwhile, the positive impacts on their stated aims — reducing emissions and addressing deforestation — remain unproven and is likely to be negligible.
Weaponisation of tariffs
Arbitrary and politically motivated tariffs imposed by the United States are hitting exports in developing countries, with already visible impacts on small and medium-sized enterprises and producers. In bilateral trade discussions, the use of ‘energy diplomacy’, i.e. forcing countries to buy US-produced fossil fuels will hurt climate goals, while coercive rollback of key industrial policy tools such as mineral export bans will hurt growth prospects and shrink policy space further.
Green industrialisation agenda
The WTO-led trade regime penalises subsidies and import and export barriers that developing countries rely on to nurture new industries — tools once widely used by today’s developed nations, as noted by economist Ha-Joon Chang. Green industrialisation in the South faces hurdles in the form of persistent dependencies. For example, as of 2010, five patent offices in the North plus China held 85 per cent of clean energy patents. While China’s lead in green tech supports global climate goals, it also risks creating new dependencies, relegating the South to importing technology from the North and China while exporting raw materials and low-value goods.
Commodities trade: Minerals, forest and agriculture-based commodities
For commodities needed for the climate transition such as ‘critical’ minerals and commodities vulnerable to climate impacts such as forest products, unequal trade relations can lead to the upholding of status quo even in new deals that are being negotiated. Developing countries remain exporters of primary or raw materials without moving up the value chain and building domestic industries to benefit from their resource endowments.
Legacy fora exist, a new one may not solve old tensions
The paralysis of the WTO by the US and its limited provision to deliberate on climate change have left trade-climate issues homeless and in need of a multilateral space for discussion. The UNFCCC, having been ahead of its time, is certainly equipped to discuss trade, having written in trade considerations under Article 3.5. But the European Union has thus far prevented trade discussions from advancing at COP, despite the G77 — the largest bloc of developing countries — spotlighting the issue at recent climate summits.
There is no guarantee that a new forum will resolve old tensions — even more so if the forum is not a multilateral space and rather follows the current trend of smaller plurilateral groupings.
All is not lost, however; as awareness of the interlinkages between trade and climate grows, considerations of justice and equity can still be elevated to ensure that the Global South is not shortchanged. There is time yet to shape something that accounts for the best interests of the global majority.