Trade Ministers’ Coalition Seeks to Put Climate Action at the Heart of Global Trade Policies

A Coalition of Trade Ministers on Climate was launched in January 2023 to offer much-needed political leadership for inclusive international cooperation on trade and climate. Led by Ecuador, the European Union, Kenya, and New Zealand, the coalition brings together 56 trade ministers of countries from all regions, levels of development, and climate vulnerabilities. 

In their launch statement, ministers recognize their unique responsibility to drive a trade-related contribution to the urgent task of scaling up climate action and the need for high-level, inclusive political leadership and cooperation on the nexus of trade, climate change, and sustainable development.

The coalition is a timely and important innovation because it forges a space for high-level political dialogue and seeks to break silos between the climate and trade agendas.

Faced with stark evidence that time is running out to avert climate catastrophe, the coalition is a timely and important innovation because it forges a space for high-level political dialogue and seeks to break silos between the climate and trade agendas. Critically, the coalition has a broader membership than fora, such as the G20 or G7 and is open to new members. Already, it has gathered ministers from developing and least-developed countries, as well as small and vulnerable economies, including Small Island Developing States hugely affected by the climate crisis, alongside a number of the largest and mid-sized economies.

The coalition signals political recognition of the need for inclusive leadership on collective trade-related responses to the climate crisis that are ambitious, coherent, and fair.

The coalition’s diversity and inclusiveness are vital because all countries have a stake in fighting the climate crisis, bolstering climate resilience, and ensuring that their citizens and communities have pathways to thrive in a net-zero global economy. Leaving countries behind on the economic transformation needed—and the economic opportunities that are emerging—would undermine the effectiveness of climate action and sustainable development priorities. Critically, the coalition signals political recognition of the need for inclusive leadership on collective trade-related responses to the climate crisis that are ambitious, coherent, and fair. 

Four Key Principles and Five Main Priorities

In their launch statement, coalition members recognize the “escalating pace and devastating impact of the climate crisis on our economies, societies, and environments” and the pressing need for action to achieve the Paris climate goals. On trade, they stress that “international trade can and must make a positive contribution to driving down greenhouse gas emissions” and the importance of “fair pathways toward climate-resilient economic development.”
   
The ministers emphasize their commitment to the following four principles: 

• Cooperation in their contribution to the global response to climate change, including by engaging nationally and internationally with fellow ministers working on climate, environment, finance, and development, among others.  
• Inclusivity in the engagement of ministers and relevant stakeholders from different regions and at different levels of development and climate vulnerabilities.
• Leadership in providing high-level political direction and guidance to bolster inclusive cooperation on the nexus of climate, trade, and sustainable development.
• Transparency for effective climate action built on trust and international cooperation.

Together, the coalition members articulate five broad priorities:

1. Fostering international cooperation and collective action to promote trade and trade policies that pursue climate action across the World Trade Organization (WTO) and relevant multilateral, plurilateral, regional, and sectoral initiatives.
2. Identifying ways to ensure the multilateral trading system contributes to the global response to climate change and promotes a positive contribution to the climate agenda, including through focused attention across sectors on the nexus between climate and trade.
3. Promoting trade and investment that foster the diffusion, development, accessibility, and uptake of goods, services, and technologies that support climate mitigation and adaptation in both developed and developing countries.
4. Identifying trade-related strategies supportive of the most vulnerable developing and least developed countries.
5. Building alliances and partnerships with climate and finance communities and relevant stakeholders to foster climate action, transitions, and climate-resilient development on the ground.

Significantly, the coalition says it will “develop concrete actions to advance these important priorities.” Ministers have committed to an annual meeting to anchor top-level engagement and mobilization. 

A Positive Agenda for Inclusive Cooperation and Collective Efforts Is Vital

The recent assessment of the Intergovernmental Panel on Climate Change issued a “code red” alarm about the huge gap between climate commitments and the pace of transformative action needed to achieve the Paris climate goals. It reminds us that it is what we do this decade—indeed in the coming 6 years—that will determine if we keep global temperature rise to no more than 1.5°C.

As trade ministers step up their contribution to climate action, a positive agenda for inclusive cooperation on trade and climate is needed. This positive agenda would address where existing trade patterns and trade policies exacerbate the climate crisis and how to harness trade and trade policies for urgent transformative change that supports both climate action and sustainable development. 

Leadership, Political Direction, and Trust Are Crucial

A core contribution of the coalition will be to serve as a platform for high-level engagement to diffuse and manage growing tensions at the interface of trade, climate, and sustainable development priorities. Trade fragmentation and decoupling—and, at worst, trade wars—will undermine both climate action and sustainable development priorities. Amid the quest to harness all available policies to avert climate catastrophe, we can ill afford to underestimate the huge economic, geo-strategic, and social tensions that already complicate international cooperation on trade.

We can ill afford to underestimate the huge economic, geo-strategic, and social tensions that already complicate international cooperation on trade.

News headlines provide daily reminders of competitive tensions over the design and implementation of trade-related climate measures. Geo-strategic pressures to bolster supply chain resilience and strategic autonomy now spill over to the climate-trade debate as governments seek control over critical resources and supply chains vital to the green transition. Many developing countries are at a competitive disadvantage on the road to a decarbonized and climate-resilient global economy, facing economic crises and indebtedness, a massive shortfall of climate finance and technologies, a negative legacy of unresolved issues on the global trade agenda, and a growing array of market and government requirements related to climate goals. Meanwhile, the heat is on the world’s major economies to do more, faster, to reduce greenhouse gas emissions.

Failure to cooperate on trade will undermine progress on climate goals.

In this context, “business-as-usual” approaches to trade diplomacy will fall far short of the unprecedented global cooperation, solidarity, and integrated policy-making that tackling the climate crisis requires. Put simply, while not easy, failure to cooperate on trade will undermine progress on climate goals. The urgency of acting now—and the fact that effective climate action is impossible without international cooperation—means that ministers must step up to provide political leadership on new approaches, better manage tensions, and foster shared understandings on principles for trade-related climate action. In this spirit, the coalition provides a much-needed space for inclusive dialogue and trust-building at the highest level across bilateral, regional, and multilateral settings.

The coalition provides a much-needed space for inclusive dialogue and trust-building at the highest level across bilateral, regional, and multilateral settings.

A complementary contribution of the coalition will be to provide political leadership and direction on opportunities for collective action on trade and trade policies. There are huge opportunities for mutually beneficial cooperation that can generate positive outcomes for the climate agenda, for trade, and for sustainable development. 

Here, a starting point would be to focus on how trade and trade policies can be more relevant to and better support the goals and principles of the global climate regime. Trade ministers could start by identifying how they can foster cooperative approaches that support the implementation of nationally determined contributions and national adaptation plans, and contribute to developing countries’ trade-related climate goals and policies. They can also act to support trade-related climate strategies of least developed and vulnerable developing countries facing the triple challenge of decarbonization, adaptation to climate impacts and risks, and loss and damage linked to changing climatic conditions and climate shocks.

Alongside all this, a range of sectoral climate and decarbonization initiatives with trade and supply chain dimensions could benefit from enhanced international trade policy cooperation. A core part of a trade-related contribution will be to harness the power of trade and trade policies to scale up the supply, affordability, and uptake of technologies critical for climate mitigation and adaptation, ensuring they rapidly reach where most needed and that developing countries benefit from the economic opportunities associated with their production and international supply chains.

Breaking Silos and Forging Collaboration

Ministerial-level engagement is key to building support at home and internationally for a trade-related contribution to the climate agenda that is ambitious, fair, coherent, and effective. 

This year, the coalition has important opportunities to break down silos between the trade and climate communities. At COP 28, the coalition can enhance collaboration among trade, finance, and climate ministers through a joint meeting with climate ministers and the Finance Ministers Coalition for Climate Action. The UN Secretary General’s Climate Summit also offers an opportunity to highlight the importance of trade and trade policies to the climate agenda and the readiness of a broad group of trade ministers to contribute positively and collectively to the climate agenda through enhanced international cooperation. 

At the same time, across all of their bilateral, regional, and multilateral engagements, trade ministers can ensure climate action is a top agenda item, seeking regular opportunities to deepen trade-related climate partnerships and support collective efforts with fellow ministers.

Coalition members have signalled their interest in learning from a range of international and regional organizations, relevant stakeholders, and experts active on the climate-trade policy agenda. The coalition's co-leads coupled its inaugural meeting with a stakeholder consultation on the margins of the World Economic Forum’s annual meeting. The coalition will be well served by ongoing consultations with organizations and experts leading climate action and the global climate community on where trade-related cooperation can help. Some good news: the top leadership of the WTO, the United Nations Conference on Trade and Development, the International Trade Centre, and the United Nations Framework Convention on Climate Change have signalled their support.

The coalition will be well served by ongoing consultations with organizations and experts leading climate action and the global climate community on where trade-related cooperation can help.

Trade and trade policies have a central role to play in the transformation to a decarbonized and climate-resilient global economy and in just transitions that leave no one behind. For international cooperation on trade, climate, and sustainable development to advance, political-level investment in fostering trust and dialogue is vital. Guided by principles of cooperation, inclusion, leadership, and transparency, the coalition offers a unique platform and opportunity for ministers to deliver on a positive trade contribution to the climate agenda.

Carolyn Deere Birkbeck is the founder and director of the Forum on Trade, Environment & the SDGs, housed at the Geneva Graduate Institute in Geneva. See more on the coalition at https://twitter.com/trademinclimate.