Everyone agrees trade is a climate tool. Almost no one means the same thing

Governments held the first formal dialogue on trade and climate ever convened under the United Nations Framework Convention on Climate Change (UNFCCC) in June, during the 64th session of its Subsidiary Bodies in Bonn, Germany. For a subject kept at the edges of climate negotiations for three decades, simply bringing the conversation to the table was significant. What that conversation revealed — and why its lack of any clear conclusion matters — is the real story.

Developing countries have been trying to bring trade onto the climate agenda for more than 30 years. Article 3.5 of the 1992 climate convention states that measures taken to combat climate change must not become a disguised restriction on international trade. Developing countries have invoked that clause for decades to argue that trade belongs on the climate agenda, and for thirty years the negotiations kept it out. Bonn is where that finally changed. The question raised by the dialogue is no longer whether trade belongs in the climate regime, but who gets to define what it does there, and on whose terms.

The room agreed on one thing: trade is a climate tool. Governments accept that trade can serve climate goals. But almost none of them mean the same thing by it. The same words carry several competing visions of what ‘trade as a climate tool’ actually requires.

That disagreement is the real finding from Bonn. The divergence reaches beyond the negotiating hall because the terms settled here will shape green industrialisation: who gets to build the clean-economy industries, and under what conditions, within the convention’s framework of equity and differentiated responsibility.

The energy transition is remaking global trade in critical minerals, green steel, batteries and the machinery of decarbonisation. The governments in that room are negotiating far more than tariffs and standards. They are negotiating how the costs, capacities and industrial futures of the transition will be distributed, and under which rules.

Carbon borders and contested fairness

The clearest illustration is the European Union’s Carbon Border Adjustment Mechanism, a charge on imports for the emissions embedded in them. Brussels regards it as climate policy: a way to meet its own targets without simply pushing factories, and their emissions, offshore. Much of the developing world regards the same instrument as a trade barrier painted green, one that hands the bill for the transition to countries least responsible for the problem. China captured the objection sharply: you cannot raise the price of the ferry to make people cross the river faster when you never gave them a boat.

The same fracture runs through the principle called common but differentiated responsibilities and respective capabilities. This is the idea that countries should shoulder the climate burden according to their history and their means. It reads as a single rule. In Bonn, however, it functioned as three.

The African Group invoked it to defend the right to industrialise, to add value to their own resources rather than remain exporters of raw ore. The Group of 77 and China invoked it to warn against cost-shifting through unilateral measures that quietly transfer the price of the transition, and sometimes extract revenue, from countries least responsible for the crisis. The Like-Minded Developing Countries invoked it to describe those same measures as protectionism and economic coercion, a way of privileging wealthy nations’ technologies and carbon markets over everyone else’s.

Fairness here is not a single demand. It is many demands, each shaped by where a country stands.

Technology transfer, or technology production?

The divergence runs deepest on technology. When the European Union argues that trade should spread climate technology, it often means interoperability: aligning standards and reporting systems so that markets can communicate.

When the Least Developed Countries use the same phrase, they mean the capacity to make the technology, to manufacture, operate and repair it at home. That depends on patent flexibilities and the right to license production. One side asks for systems that connect. The other asks for the ability to produce. Until that difference is stated plainly, every exchange about ‘technology transfer’ remains two monologues that merely sound like a dialogue.

A divided room

The choreography of the room told its own story. China arrived with a full delegation and a five-point plan, making it both the most organised presence and the one that reframed the debate. The Arab Group and the Like-Minded Developing Countries drew the sharpest line, arguing that unilateral measures should either end or be matched by compensation.

The European Union and its allies followed a quieter division of labour. Europe legitimised the measures, South Korea re-anchored them in trade law, Japan and Canada made the argument more technical, and Switzerland steered it towards fossil fuels.

Brazil took the role others did not. It tried to build a bridge by treating trade as a means of implementing climate goals, and by proposing that any measure be judged by a double test: consistency with trade rules and coherence with climate aims, with evidence required before assertion.

The dialogue settled nothing, and that is exactly why it matters. It exposed something deeper than a dispute over any single tax or tariff: governments do not yet share a common understanding of what it means for trade to serve the climate. They use the same words, but mean different things to them.

Many forums, few answers

None of this is unfolding in a single venue. The climate-trade question is being pursued across a constellation of forums: the World Trade Organization; the United Nations Conference on Trade and Development; the Organisation for Economic Co-operation and Development; the International Trade Centre; and newer, informal bodies outside the official machinery.

One of these, the Informal Forum on Climate, Trade and Competitiveness, launched by Brazil and Australia at the 30th Conference of the Parties (COP 30) to the UNFCCC, was meant to be inaugurated that same week in Bonn. It was not, as governments could not reach consensus for political reasons that went beyond trade.

That failure is, paradoxically, the strongest argument for the dialogue that did take place. When even a flexible, informal forum stalls on politics, the case for an anchored, principle-based conversation under the UNFCCC only grows. Loose arrangements drift with the political weather. A conversation rooted in a treaty, with agreed principles to fall back on, can hold.

Over the next two years, the question is not whether delegates agree. They will not, at least not soon. The question is whether the divergence I have described narrows or hardens: whether ‘technology’, ‘development’ and ‘cooperation’ come to mean roughly the same thing across the room, or continue to mean different things beneath shared words.

Trade and climate finally met in Bonn. Whether that meeting becomes genuine cooperation or hardens into one more fault line is a story still being written.

Luísa Bianchet is energy transition diplomacy analyst at the E+ Energy Transition Institute, Brazil.

Views expressed are the author’s own and don’t necessarily reflect those of Down To Earth