As COP29 heats up, trade and climate pricing policies have become a sticking point. The EU’s Carbon Border Adjustment Mechanism (CBAM)—designed to stop companies from moving operations to places with lower emissions rules—has stirred debate. For many developing countries, CBAM represents an unfair blow to their economies, sparking a larger conversation about how to set fair trade policies that also support global climate goals.
CBAM requires importers to pay a carbon price on goods entering the EU, which levels the playing field with European producers facing strict carbon costs. However, critics argue that while CBAM could motivate cleaner practices, it also adds financial pressure on developing countries that often don’t have the same resources to keep up. This has raised concerns that CBAM could violate UN trade principles meant to keep global commerce fair.
Some experts warn that without a unified approach, individual climate-related trade policies could create a maze of rules that might hit smaller economies hardest. Aaron Cosbey from the International Institute for Sustainable Development points out that these region-specific regulations mean complicated standards that require expensive infrastructure—something many countries aren’t prepared for.
For these countries, CBAM is part of a troubling trend in which richer countries use climate rules to protect their own economies. Faten Aggad from the African Future Policies Hub has called on COP29 to push for trade practices that encourage decarbonization without hurting low-income nations. Her focus is on promoting trade policies that are more balanced and allow countries at different stages of development to play a fair role in climate efforts.
The United States’ stance is also under the microscope. While the Biden administration has supported collaborative climate policies, a possible return to a Trump administration has led to fears of renewed trade friction that could hinder climate progress. Import duties, such as those placed on electric vehicles from China, already add to these concerns and have sparked debate about the viability of trade agreements that support sustainable practices.
In many ways, COP29 is a chance to define what fair climate policies in trade should look like. Delegates argue that success here will depend on creating shared financial and technological support systems that give all countries a fair shot at reaching climate goals.
Ultimately, how leaders approach these trade-and-climate issues at COP29 could determine not only emission cuts but also the fairness of the green shift—a balancing act that will be key to COP29’s impact.
