Developing Nations Push Back Against Climate-Linked Trade Measures at Bonn Dialogue

The first-ever UNFCCC Dialogue on Trade and Climate, held on June 13 at the Bonn Climate Change Conference, saw developing country blocs including the G77 and China, African Group, Arab Group, BASIC, and India argue that climate-linked trade measures are creating new burdens on developing economies without commensurate support. The European Union argued that such measures legitimately scale clean technologies and build resilient supply chains.

The Arab Group offered some of the sharpest criticism, citing IMF estimates that measures such as the EU Carbon Border Adjustment Mechanism, CSRD, CSDDD, Digital Product Passport, and EU Deforestation Regulation could generate $141 billion in annual welfare gains for developed countries while imposing losses of $106 billion on developing countries. The group noted that while Annex II countries account for roughly 55 per cent of historical emissions, Arab states account for less than 2 per cent but are expected to bear compliance and market access costs.

India questioned the dialogue's framing, arguing that the guiding questions treated climate-linked trade measures as solutions before examining the problems they create. India's intervention — read by a Ministry of External Affairs official — called for any dialogue to remain consistent with UNFCCC equity principles and CBDR-RC. The BASIC bloc argued these measures should be assessed within the UNFCCC framework against principles of equity and development rather than through a trade governance lens alone.

The dialogue was established as an annual process under the COP30 Belem outcome. Developing countries called for a systematic assessment of the impact of trade-related climate measures, analytical support from international organisations, and regular reporting. Developed countries favoured information sharing and transparency rather than binding outcomes. The Subsidiary Body chairs will consider interventions and determine next steps before COP31, where the question of whether trade-linked climate measures constitute unilateral coercion or legitimate climate policy is expected to intensify.

Key figure — $141 billion in projected annual welfare gains for developed nations from climate trade measures (IMF estimate)