July 29: The first formal dialogue on trade and climate under the United Nations Framework Convention on Climate Change (UNFCCC), held during the 64th session of its Subsidiary Bodies (SB64) in Bonn, Germany, revealed broad agreement that trade can support climate action but sharp differences over how that role should be defined and implemented.
The discussions marked the first time trade was formally placed on the UN climate agenda, despite developing countries pushing for its inclusion for more than three decades. Delegates agreed that trade is an important tool for achieving climate goals, but disagreed on issues including carbon border measures, technology transfer, green industrialisation and climate equity.
A major point of debate was the European Union’s Carbon Border Adjustment Mechanism (CBAM), which imposes charges on imported goods based on their carbon emissions. The European Union defended the measure as a way to prevent carbon leakage and support domestic climate targets. Developing countries, however, argued that such unilateral measures function as trade barriers that shift the financial burden of decarbonisation onto nations with lower historical responsibility for climate change.
Different country groups also presented contrasting interpretations of the principle of common but differentiated responsibilities and respective capabilities (CBDR-RC). The African Group stressed the need to preserve the right to industrialise and add value to domestic resources, while the Group of 77 and China raised concerns over climate related trade measures that could increase costs for developing economies. Like Minded Developing Countries described such policies as protectionist and economically coercive.
Technology transfer emerged as another area of disagreement. Developed countries generally viewed it as harmonising technical standards and facilitating international cooperation, whereas least developed countries argued that technology transfer should include access to manufacturing capabilities, patent flexibility and the ability to produce clean technologies domestically.
Negotiating positions also differed among major economies. China presented a detailed proposal on trade and climate, while Brazil advocated for a balanced approach that would assess climate related trade measures based on both consistency with international trade rules and alignment with climate objectives.
The dialogue concluded without any formal outcome, highlighting the absence of a shared understanding of how trade should contribute to climate action. Experts said the discussions demonstrated that future negotiations will shape not only global trade rules but also the distribution of technology, investment opportunities and industrial development during the global energy transition.
The issue is expected to remain a key topic in future climate negotiations as governments continue discussions across international platforms, including the World Trade Organization (WTO) the United Nations Conference on Trade and Development (UNCTAD) and upcoming UN climate conferences.