Overview

As the climate changes, so too should global trade. Europeans have long been defenders of the existing trading system, with the multilateral governance of the World Trade Organisation (WTO) at its centre. At the same time, the European Union recognises that this system must reform if it is to be compatible with the need to decarbonise. Achieving this has become a high priority for European policymakers. But, when using trade policy to serve its ambitious climate agenda, the EU has at times risked undermining its multilateral credentials.

For example, the most prominent of the EU’s initiatives in the trade-plus-climate area, its carbon border adjustment mechanism – which will apply higher tariffs on carbon-intensive goods entering the bloc – is proving highly controversial among the countries of the global south (like India and South Africa). So too are recent directives on deforestation and corporate sustainability due diligence. The EU’s agricultural subsidies (which are seen by many countries, especially those in Africa, as unfair and hampering their economic growth) are also weakening its credibility when it seeks to discuss trade-plus-climate policies with others.

Still, unlike the United States – whose climate actions frequently clash with the rules of the WTO – the EU is at least trying to ensure that its climate-related trade instruments do not undermine multilateralism. The EU is also seeking to align the trade and climate regimes, an issue that the WTO has so far struggled to provide solutions to, despite some efforts. But the EU needs partners to jointly set out how to reconcile trade and climate policies, for instance, when it comes to carbon pricing and green subsidies.

The EU has already invested in building some stronger and more diverse coalitions. Alongside Ecuador, Kenya, and New Zealand, it co-sponsored the recently established Coalition of Trade Ministers on Climate, which promisingly includes eight African states. But most countries are neither strongly aligned with the EU on trade-plus-climate matters; nor are they particularly relevant for reconciling these two agendas. The EU should therefore pay particular attention to countries that are either well aligned with the bloc on these matters, or that could be influential in addressing its trade-and-climate concerns, or both.

Among our list of “untapped” countries, Mexico, Morocco, and Colombia score particularly high in terms of their existing alignment with the EU on these matters. But so far, only Colombia is part of the Coalition of Trade Ministers on Climate, which is symptomatic of the others’ more limited involvement in these debates.

Conversely, countries that are the most relevant for tackling the trade-plus-climate challenge (such as South Africa, Russia, Egypt, Indonesia, and India) tend to be very weakly aligned with the EU on these issues, making them unlikely partners. However, there are promising exceptions – such as Kazakhstan and Malaysia (and Mozambique, which, due to lower scores in most other areas, did not make it to our final dozen) – whose involvement would not only make a significant difference to decarbonisation efforts but which also appear to be within the EU’s reach, given their reasonable alignment with the EU. And finally, there are countries like Indonesia and, to a lesser extent, Nigeria, whose high relevance would justify efforts to seek closer cooperation, despite weak alignment.

The EU understands the relevance of building more inclusive partnerships. This is evident in its Global Gateway initiative on deforestation-free value chains, as well as its participation in Just Energy Transition Partnerships with Indonesia and South Africa.

But in its effort to build stronger partnerships, the EU will need to pursue more diverse strategies tailored to the country in question. Some countries – like Indonesia or Nigeria – may be suspicious of the EU’s climate plans but could be open to closer cooperation as long as it serves their development objectives (for instance, in terms of energy security, support for green industrial development, or access to the EU market). Others – like Mexico, Malaysia, the Philippines, or Kazakhstan – do not need to be convinced by the relevance of fighting climate change and defending an open trading system. But they do need the EU to prove its commitment to broader bilateral relations, if they are to become dedicated allies in overcoming the trade-plus-climate challenge.