For the past 500 years in which capitalism has been the dominant economic system, continuing profit accumulation has been dependent on the unsustainable use, commodification, privatization, and destruction of natural resources on the one hand, and exploitation of human resources on the other. While natural resources have always fueled the metaphorical fire of capitalism, the Industrial Revolution greatly increased the ease and speed with which they could be destroyed. It is scientifically proven that greenhouse gas (GHG) emissions are the main cause of climate change, with carbon dioxide (CO2) that results from the burning of fossil fuels as the number one source of warming and methane (largely emitted by the industrial agriculture sector) at number two.1 Trade in particular has contributed to climate change: international trade alone accounts for an estimated 20–30% of annual GHG emissions.2
International trade alone accounts for an estimated 20–30% of annual GHG emissions.
The current structural configuration of the economy, with trade at the center, is fundamentally incompatible with the reduction of GHG emissions. Free trade aims to expand the volume of trade in terms of production as well as consumption, so as to increase the potential gains to countries from participating in international trade— as established by Ricardo’s theory of comparative advantage.3 But this theory pays no attention to the distributional impacts of free trade, or its environmental impacts. Trade-related production activities are often hugely detrimental to the environment and come at the price of forever contaminating or destroying essential ecosystems. Since all modes of transport— air, land, sea, and train shipping— are fossil fuel-dependent, an increase in consumption necessarily means an increase in GHG emissions. Gasoline and diesel power every form of shipping; maritime transport, fueled by diesel, makes up the majority of international trade in terms of both volume and value.4
Widespread trade liberalization has facilitated the consolidation of economic power, leading to worsening wealth inequality that directly corresponds to unequal responsibility for the climate crisis. Rapid and uneven economic growth over the last ~200 years has come at the cost of the environment and the majority of people: 157 multinational corporations (MNCs), the majority of which are based in the Global North, are responsible for up to 60% of global industrial emissions, and 20 fossil fuel corporations have contributed more than one third of total GHG emissions.5 These corporations also hoard wealth: owned and managed by some of the richest people on the planet, they systematically exploit workers, consumers, and states to increase their own profits. The wealthiest 1% of people contribute as much to GHG emissions as the poorest 66% of the global population.6
Widespread trade liberalization has facilitated the consolidation of economic power, leading to worsening wealth inequality that directly corresponds to unequal responsibility for the climate crisis
Despite impending climate disaster, trade (dominated by MNCs) continues to be oriented towards increasing profit, consumption, and market control via liberalization and export promotion.7 In the meantime, socioeconomic inequality is continuing to grow, and the situation of women and girls is drastically worsening, especially those living in developing countries (least developed countries LDCs and small island developing states SIDS in particular), as structural gender inequality intersects with both economic inequality and worsening climate change to further marginalize women. Critically analyzing the intersection of climate and trade from a feminist lens points out structural issues with the governance of both regimes, and highlights the urgency to take action on the “twin challenges” of worsening climate change and inequality.8
Global governance systems have been set up to enable the continuing access of MNCs to markets and resources in the Global South so they can continue producing in the South for consumption in the North. As such, a key defining feature of both trade and climate governance is corporate capture by Northern-based MNCs and the Northern private sector more generally. Transformative climate policy agendas have been derailed by Northern MNCs, the private sector, and their governments, who want to continue with business as usual to preserve their profits and financial dominance even in the face of rapidly accelerating climate change.9 These profits are built on the back of some of the world’s poorest women, whose labor forms the foundation of intricate global value chains (GVCs) and special economic zones (SEZs), two pillars of 21st century economies. Meanwhile, for decades, progressive economic agendas put forward by both states and civil society have been buried by these same actors for the very same reason. As a result of these stalled agendas of progress, both climate and trade policy have been widely criticized as ineffectual, the former for failing to bring about meaningful action to meet emissions targets, and the latter for failing to fulfill promises of shared prosperity and development.10
MNCs’ continued dominance would be gravely threatened by any legislation that takes meaningful action on either trade imbalances or climate change. The widespread mandated adoption of trade liberalization and related asymmetrical policy packages in the Global South has completely opened up markets to MNCs so they can dump cheap, industrially produced exports, albeit eliminating local producers across goods and service sectors.11 Loss of livelihoods has caused poverty to increase, but chronic revenue shortfalls created by massive debt servicing and trade liberalization preclude government stimulus and investment in productive transformation, including climate action measures such as investing in renewable energy technology development. The investment protection and facilitation provisions contained in trade agreements have enabled natural resource grabs (including land, water, critical minerals, and agricultural raw materials) by corporations, and threatened both domestic value addition and trade on the one hand, and conservation and climate measures on the other. A lack of jobs relative to job seekers enables MNCs to get away with pervasive labor rights violations and provides them with a steady flow of cheap labor. On the climate legislation side, voluntary emissions reporting requirements and lack of systematic regulation shields MNCs from having to face accountability, allowing the cycle to continue repeating.
MNCs’ continued dominance would be gravely threatened by any legislation that takes meaningful action on either trade imbalances or climate change.
International financial institutions (IFIs) such as the World Bank have argued that “trade can help shift production to areas with cleaner production techniques,” and that trade “promotes the spread of critical environmental goods and services that can help reduce emissions and improve environmental management.”12 These claims propose no changes to the volume of trade while only slightly altering the composition, which barely scratches the surface of trade’s GHG emissions. Moreover, a key obstacle standing in the way of trade prompting any positive change on climate mitigation and adaptation is intellectual property rights (IPRs) legislation that is meant to safeguard profits through restrictive patents.13 Given that most climate-related technology (especially renewable energy) has been patented by Northern corporations, technological innovation in the South has been limited if not impossible in most contexts.14 So, while North-South technology transfer through trade is possible in theory, practical and regulatory barriers (such as the TRIPS agreement) have prevented it. Even in climate discussions, the transfer of necessary technology has proved to be the biggest barrier of all.
The dominance of the private sector in both climate and trade governance has replaced public priorities with private ones. The small changes to the economy currently being proposed pay lip service to the threat of climate change while doing nothing to address inequality (either between people or between countries) and repackaging the “same old approach of high consumption of goods, services, and energy.”15 Also referred to as green industrialism or green colonialism, most existing proposals for economic reforms to mitigate climate change use climate concerns to entrench and exacerbate existing power imbalances in the economy. Structural changes urgently need to be made to both trade’s volume and composition; yet these are not on the table at the multilateral level.
A growing number of climate measures are being incorporated into the trading system, supposedly to respond to concerns about the environmental effects of particular trade activities or agreements. Without significantly adapting their own production or consumption methods, or acknowledging their own historical climate debt, developed countries scapegoat the relatively low GHG emissions of developing countries as the main cause of climate change. A crucial way this fallacy is supported is through trade- related environmental measures (TREMs), which protect Global North interests under the guise of climate mitigation.
When TREMs were first introduced at the WTO shortly after its establishment in the 1990s (purportedly to address climate change), trade fundamentally changed.16 The pollution haven hypothesis developed by heterodox economists draws a link between the migration of ‘dirty’ industries to developing countries and environmental regulation in developed countries, which has created a systemic dependence of developing countries on pollution-intensive industries.17 Since Northern demand for these ‘dirty’ goods never went away, environmental regulations simply displaced their production. At the same time, TREMs proposed by Northern member states have sought to impose ‘sustainability standards’ which penalize developing countries for producing these goods while favoring Global North corporations who can produce and comply with those standards. Such frameworks are now being pushed into the WTO and in bilateral and regional trade agreements.
Adopting criteria related to PPMs would give trading partners license to discriminate between otherwise identical products, and given the unequal distribution of ‘clean’ technology and ‘dirty’ production, would have disproportionate negative impacts on Global South countries.
The concept of distinguishing between products based on processes and production methods (PPMs) was one of the first TREMs introduced at the WTO by Northern member states, but has ultimately not succeeded since it has been argued by Global South member states that PPM clauses would violate the WTO principle of non-discrimination.18 Adopting criteria related to PPMs would give trading partners license to discriminate between otherwise identical products, and given the unequal distribution of ‘clean’ technology and ‘dirty’ production, would have disproportionate negative impacts on Global South countries. Similarly, the ‘food miles’ controversy in the mid-2000s saw Northern member states argue that producing food for export (which accounts for a large portion of Global South countries’ trade) was resulting in excess pollution, which justified levying tariffs on food imports.19 On the contrary, most food exports from the Global South have smaller carbon footprints even with added emissions from shipping than food industrially produced in the Global North, and the countries who account for the bulk of food exports have very small overall carbon footprints, often exponentially smaller than those of the importing countries.
Even though PPMs, ‘food miles’, and other similar proposals have not been incorporated into legislation at the WTO, individual member states have sidestepped the WTO by adopting legislation which enforces these principles in all but name. The EU’s Carbon Border Adjustment Mechanism (CBAM), for example, imposes a tariff on carbon-intensive products including cement, iron and steel, aluminum, fertilizers, energy, and hydrogen imported by the EU. The EU claims that the intent of the CBAM is to “encourage industry worldwide to embrace greener technologies.”20 The US followed suit, introducing its own version of the EU’s CBAM through national legislation in 2022.21 Despite the CBAM’s growing popularity in the North, governments of the least developed countries (LDCs) have contended that given their specialization in carbon-intensive primary commodities, their economies will be disproportionately affected. According to UNCTAD, a $44 per ton carbon tax would result in a $2.5 billion increase in developed country incomes and a $5.9 billion decrease in developing country incomes.22 The CBAM is just the latest in a long string of Global North countries’ transparent attempts to manipulate the global economy for their own benefit.
The supposed goal of the CBAM is crucial to achieve in order to mitigate climate change and could be legitimately achieved through direct finance and technology transfer. Technology remains an important part of the solution but implementing the CBAM without lifting IPR restrictions will produce chronic revenue shortfalls that further curb investment in development and fail to produce structural change because the necessary adaptation technology is patent protected. Moreover, the EU’s clean energy transition is dependent on carbon-intensive mineral extraction from the Global South (especially lithium and cobalt)– meaning that their demand for these products plays a major role in their production and related GHG emissions, which the CBAM is penalizing.
Food insecurity is one of the most devastating manifestations of global economic inequality and is significantly worsening in the face of the climate crisis. The intrinsic importance of access to nutritious, affordable food has been overridden by the desire to accumulate wealth: trade in food was worth $1.7 trillion as of 2021, yet 783 million people are food insecure worldwide.23 Trade in food is dominated by MNCs located in a small group of developed countries (‘agribusiness’); these MNCs are some of the richest in the world, and the single largest methane emitters.i, 24 Many of the most profitable food products for MNCs, including coffee, cocoa, and tea, are intensively farmed in the Global South by smallholder farmers; these farmers provide the raw materials that form the first link of trillion dollar value chains, yet the majority live in poverty and food insecurity.25 Combined with chronic state underinvestment in smallholder productive capacity, rural economies– with women as the main economic agents in them– have been devastated by free trade. The livelihoods of hundreds of millions of smallholder farmers, along with agricultural production for domestic consumption, have been decimated by MNCs. Their continued dominance and profits have come at the cost of the health of the environment and created food insecurity and poverty across the Global South.
...rural economies– with women as the main economic agents in them– have been devastated by free trade.
Smallholder farmers manage 60% of global food production and 80% of total arable land.26 In Africa, 70% of the economically active population is engaged in small-scale agriculture but this labor contributes an average of only 25% of national GDPs; as an average across Africa and Asia, small-scale agriculture provides an estimated 80% of domestic food production.27 As an average across Latin America and the Caribbean, smallholder farmers contribute an estimated 50% of domestic food production, and in rural areas an average of 55% of the economically active population is engaged in small-scale agriculture.28 Despite the crucial role they play, smallholder farmers in the Global South are some of the poorest people in the world, especially women smallholder farmers, who make up more than half of the small-scale agricultural workforce and who tend to produce less than male farmers due to their caring responsibilities.29
With markets pried open by trade liberalization and related inequitable policy packages, cheap imports of industrially produced, heavily subsidized food from the Global North have been systematically dumped into the South, suppressing the price of food and preventing farmers from receiving fair prices for their crops.30 At the same time, agriculture is one of the most climate-vulnerable sectors, as climate change impacts such as changes to atmospheric makeup, water availability, and weather patterns determine soil health and crop yields.31 Government subsidies in developing countries that could support both production and livelihoods have been targeted and constrained by WTO trade rules and agreements, including the Agreement on Agriculture (AoA), leaving farmers and farming economically vulnerable. Without government support and sufficient financial resources, smallholder farmers can do little to mitigate the impacts of climate change on their crop yields, leading to worsening poverty rates and food insecurity, with women being the most impacted. Unilateral ‘sustainability standards’ being imposed (such as the CBAM) further exacerbate these challenges for the Global South.
Government subsidies in developing countries that could support both production and livelihoods have been targeted and constrained by WTO trade rules and agreements, leaving farmers and farming economically vulnerable.
Similarly, fisheries across the Global South are already seeing significant decreases in fish stocks due to overfishing driven by MNCs which is compounded by climate change impacts such as biodiversity loss, ocean acidification, rising sea temperatures, and coral bleaching.32 This is particularly an issue in SIDS where small-scale fisheries have traditionally provided a source of livelihood for many of the poorest people, as well as a traditional component of local diets. Although women account for less than half of the people involved in small-scale fishing activities, they are disproportionately informally employed in the sector, leading to higher rates of job and food insecurity among women, as well as systematic discounting of women's contributions to and challenges in the sector.ii, 33 Across the Global South, it is women farmers and fisherfolk who are disproportionately impacted by changing productive capacities of land and oceanscapes, in both their paid and unpaid work.34 These are the people who would benefit the most from subsidies and preferential treatment provisions; as such, they are the most impacted by continuing injustice in WTO trade rules and recent negotiations on a fisheries agreement which would place similar constraints on developing countries’ subsidies to domestic fisheries.
In the case of both agriculture and fisheries, reductions in food production across the Global South due to climate change are further exacerbating dependence on industrially produced food imports.35 Dependence on imports has huge macroeconomic effects as it makes states extremely vulnerable to external shocks and fluctuations in commodity prices, whether due to inflation or to economic crises. This leads to a cycle of debt creation at IFIs so states can pay for basic necessities such as food imports, that then leads to loan conditionalities which call for trade liberalization and pave the way for privatization, which in turn increases inequality, especially gender inequality.36 Without intervention in the form of progressive trade legislation, this cycle endlessly repeats, as the loans and conditionalities were never intended to ‘solve’ any problems but rather to lock in and exacerbate existing ones.
As trade liberalization continues to accelerate, deepening inequality and ushering total ecological collapse closer and closer, multilateralism is flailing. There is a lack of willingness on the part of the Global North to engage with historical injustices, including the financial and climate debt they accumulated during colonialism and during their own industrialization processes. Despite the widely publicized ‘win’ constituted by establishment of the Loss and Damage Fund, there have been major issues in capitalizing the fund, including disagreement over previously agreed yearly targets. Even contested spaces such as the WTO are losing their power as member states feel emboldened to sidestep multilateral precedents, processes, and rules altogether and implement unilateral measures. Poverty, climate change, food insecurity, economic inequality, and gender inequality are all worsening, while a select few continue to get richer. To breathe new life into stalled climate and economic agendas of transformation, progressive policy measures need to be passed and implemented within a challengingly short period of time. As such, policy recommendations include:
- Abandon trade liberalization as a blanket policy goal. By prying markets open before domestic industries have been sufficiently nurtured– which has in developed countries consisted of significant subsidies and protectionism, antithetical to the current model of trade liberalization being pushed by the same countries– developing countries have faced unfair competition from foreign products and been systematically deprived of trade revenue. Lack of policy space due to unfair trade rules has restricted their ability to improve their terms of trade, and precluded necessary investments in productive transformation, economic diversification, decreasing gender inequality, and climate adaptation and mitigation. Abandoning trade liberalization as a blanket policy goal facilitates a balanced pursuit of all three dimensions of sustainable development– economic, social, and environmental– through trade policies.
- Revise relevant trade rules and agreements, including the WTO’s AoA, to allow developing countries to provide subsidies to their agriculture and fisheries sectors. As food production plays a major role in the economies of developing countries, as well as global food security, states must have the policy space to provide subsidies to their farmers and fisherfolk, most of whom are smallholders. Subsidies will improve not only the livelihoods of small-scale producers, and therefore their food security, but also their productive capacity and their ability to invest in sustainable technologies and productive assets. This is particularly necessary for small-scale women producers, who are burdened by unequal responsibility for care work and struggle to produce as much as men. If combined with investment in increasing domestic productive capacity, more food can be produced for domestic consumption, and reliance on food imports from the Global North can decrease. This would have broad stabilizing effects across national economies, making balanced, gender-responsive development possible. At the same time, industrial agriculture and fishing need to be disciplined by future agreements to prevent further loss and damage in the Global South.
- Invest in public services. This will raise the general wellbeing of the entire population but will be particularly transformative for women as it will decrease their burdens of unpaid care work which are growing as they face rising poverty, food insecurity, and displacement in the face of climate change. Furthermore, MNCs have begun privatizing what should be state-led processes such as adapting food systems to meet the changing needs of populations in light of climate change, presenting the danger that corporations will cement their hold over the Global South once and for all through the climate crisis. Only an active state can discipline corporations and prevent what is sure to be a disastrous course for the Global South, and particularly for women.
- Waive IPR restrictions, including the commitments under the TRIPS Agreement and bilateral and regional trade agreements, on climate-related technology. Such a waiver has been a long-standing call of developing countries in various multilateral fora, as it is crucial to ensuring necessary technology transfer from developed to developing countries.37 Although the need for transfer of climate- related technology is included as a binding requirement in the 2016 Paris Agreement– and in various non-binding multilateral agreements including the 1997 Kyoto Protocol and the 2001 Doha Ministerial Declaration– in practice developed countries have not shown willingness to engage in non-commercial technology transfer, meaning beyond the expectation that such transfer will occur through trade.38 Since stringent IPRs are the main obstacle standing in the way of technology transfer, waiving IPR restrictions on climate-related technology is necessary to enable fulfillment of existing commitments, both binding and non-binding.
- Integrate common but differentiated responsibility (CBDR), which is a well-recognized principle in climate negotiations, as a core principle in all trade agreements and policymaking. Developing countries have historically contributed very little to climate change and therefore should not be the primary targets of trade-related environmental sustainability efforts. It is developed countries who continue to be the largest emitters and the largest consumers, and their adaptation must be the subject of regulation. Developing countries have the right to develop their economies in light of climate constraints at their own pace and in their own ways, while addressing social concerns. Integrating CBDR into all trade negotiations– in particular to negotiations on agreements that involve environmental sustainability as an objective– would act as a countermeasure against unilateral TREMs passed by member states which unfairly penalize developing countries and disregard historical climate debt.
i) Methane is the second-largest contributor to climate warming, after only carbon dioxide. Atmospheric methane levels have more than doubled in the last 200 years, which is estimated to be correlated to 20-30% of total warming. See NASA 2024 for more information.
ii) There is a long-standing debate about how ‘fisheries’ are defined, as a more narrow definition tends to exclude fishing activities women are overrepresented in. See FAO, Duke University, and WorldFish 2023 for further discussion.
1. IPCC 2023.
2. WTO 2022.
3. Rodrik 2018.
4. Balogh and Mizik 2021.
5. Haddad, Steenbergen, and Saurav 2023; Taylor and Watts 2019.
6. Khalfan et al. 2023.
7. Fremstad and Paul 2022; Williams and Bandele 2019.
8. Khalfan et al. 2023, ix.
9. Christensen et al. 2023; Gunderson, Stuart, and Petersen 2018.
10. See for example: Gilbert, Beladi, and Oladi 2015; Gunderson, Stuart, and Petersen 2018; Orasche et al. 2024; Siddiqui 2015.
11. Hormeku-Ajei 2018.
12. Brenton and Chemutai 2021, ix.
13. Littleton 2008; Khor et al. 2017; Yu 2009; Zhou 2019; ‘t Hoen 2016.
14. Hutchinson 2012; Khor et al. 2017; Littleton 2008; Taubman and Watal 2010; Yu 2009; Zhou 2019.
15. Feffer 2023; Greenwood 2021.
16. Khor 2010; Third World Network 1994.
17. See for example: Akbostanci, Tunç, and Türüt-Asik 2007; Feffer 2023; Mani and Wheeler 1998.
18. Khor 2010.
19. Lewis and Mitchell 2014.
20. European Commission 2023.
21. Reinsch and Duncan 2022.
22. UNCTAD 2021.
23. UNCTAD 2024; WHO 2024.
24. Changing Markets Foundation and IATP 2022; Greenpeace 2023; Gura and Meienberg 2013.
25. Jain 2023; Khalfan et al. 2023; Liu, Semrau, and Hanley 2021; Oxfam 2023.
26. Loukos and Arathoon 2021.
27. Odiwuor 2022.
28. Loukos and Arathoon 2021.
29. Ibid. See also: Jafry 2012.
30. Banerji and Willoughby 2019; Murphy and Hansen-Kuhn 2017.
31. Arora 2019; Malhi, Kaur, and Kaushik 2021.
32. FAO, Duke University, and WorldFish 2023; Wolfenden and Sengupta 2021.
33. FAO, Duke University, and WorldFish 2023.
34. Cohen and van der Meulen Rodgers 2021; Goldsworthy 2010; Jafry 2012.
35. Clapp 2009.
36. Meijers and Brachet 2021; Williams and Bandele 2019.
37. Khor et al. 2017.
38. Ibid.
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Produced by: Regions Refocus with Pacific Network on Globalisation (PANG)
Written by: Erica Levenson (Regions Refocus) with inputs from Maureen Penjueli (PANG), Adam Wolfenden (PANG), and Ranja Sengupta (Third World Network). The authors give their thanks to Mariama Williams (Global Afro-Descendant Climate Justice Collaborative), who reviewed various versions of the article and provided helpful feedback.
Republished by: Developing Economics
