Introduction
As climate imperatives reshape the global trade architecture, the nexus between decarbonisation and trade governance demands renewed analytical and policy attention. Instruments such as the EU’s Carbon Border Adjustment Mechanism (CBAM) and the Inflation Reduction Act in the US are not merely technical tools – they represent a broader reconfiguration of international political economy, wherein trade policy is increasingly harnessed to achieve environmental objectives. Yet their design and deployment have exposed deep tensions between industrialised and developing countries, particularly concerning fairness, policy space and the distribution of adjustment burdens. At the World Trade Organization (WTO) – especially during the 13th Ministerial Conference in Abu Dhabi – Brazil and South Africa voiced concerns that such measures risk entrenching green protectionism and undermining the principle of common but differentiated responsibilities and respective capabilities (CBDR-RC).
Both countries have called for transparent rulemaking, transition support and greater multilateral oversight of climate–trade interactions. Their interventions, often coordinated through plurilateral forums such as BASIC1Brazil, South Africa, India and China. and BRICS,2Brazil, Russia, India, China and South Africa, and recently expanded to include Indonesia, Ethiopia, Iran, Egypt and the United Arab Emirates. reflect the broader struggle to align environmental ambition with developmental equity and to embed climate action within a multilateral trading system that remains institutionally and historically asymmetrical. As countries of the Global North ramp up their climate ambitions, there is an increasing call for their trade partners to do the same, regardless of their capacity. Recently, calls have taken the form of trade measures. The most prominent of these is the CBAM – a policy that seeks to prevent carbon leakage by ensuring that the carbon price of goods entering the EU market is equivalent to that of goods that are manufactured in the EU. The implementation of the CBAM is expected to result in a shift in EU importer preferences – from importing from carbon-intensive countries to sourcing from within the EU or importing from countries with more stringent emissions regulations.
As developing countries have limited green economy capacity, the CBAM is viewed as punitive, and there is growing dissatisfaction among countries of the Global South. Generally, developing countries consider international climate policies unfair, since the commitments prevent them from achieving prosperity in the same manner as developed countries did during their process of industrialisation, ie, by exploiting fossil fuel-intensive processes. The argument is that using fossil fuels will allow equitable development without prior large investment in green energy technology.
Adding to developing countries’ frustrations is the fact that developed countries, particularly the US and some in the EU, are historically responsible for the majority of cumulative greenhouse gas (GHG) emissions. This while developing regions, including Africa, Asia and Latin America, disproportionately experience the detrimental impacts of catastrophic climate events.3Leandro Vigna and Johannes Friedrich, “9 Charts Explain Per Capita Greenhouse Gas Emissions by Country”, World Resources Institute, May 8, 2023; UN Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, The Impact of Climate Change on the Development Prospects of the Least Developed Countries and Small Island Developing States, Report (N-OHRLLS, 2009). Increasing costs imposed on carbon-intensive imports entering the EU adds insult to injury, particularly within the context of significant shortfalls in the climate funding made available to developing countries from their developed counterparts. Given the impacts of climate change on developing countries, insufficient financing has been delivered both for adaptation and towards compensating for loss and damage.
Due to the manner in which the CBAM has been designed, some scholars have argued that it goes against key principles of important multilateral agreements, including those of the WTO and the UN Framework Convention on Climate Change (UNFCCC). Despite a multitude of concerns raised, within the WTO forum and outside it, the international trade rules body remains ambivalent on the CBAM issue – indicating support for carbon pricing while stating that it must be non-discriminatory.4Non-discrimination is a key principle behind the current (if fragmented and increasingly distorted) world trade system. One of the major misgivings regarding the CBAM is that it may constitute a convenient non-tariff barrier to trade, which is essentially discriminatory.
In partnership with the South African BRICS Think Tank and the National Institute for the Humanities and Social Sciences, the South African Institute of International Affairs (SAIIA) has initiated a research project entitled ‘BRICS Shaping Economic Cooperation for Green Growth, Development and the Just Transition: Partnership between Brazil and South Africa’.
