Table of Contents

  • The interface between trade and climate change – both from the perspective of mitigation and adaptation – has entered the international high-level policy arena. The interests and concerns of developed and large emerging economies in this area have received significant attention. However, the prospects and perspectives of smaller developing countries – including small and vulnerable economies, least developed countries and small island developing states – remain obscure. Addressing that gap, this publication provides an analysis of trade and climate change concerns from the broad perspective of the economies of least developed countries, small and vulnerable economies and small island developing states, and goes on to examine a range of relevant sectoral and policy concerns in greater depth.

  • This chapter is intended primarily as an introductory guide to the debate on trade, climate change and sustainable development – a bird’s eye view of the linkages between climate change, on the one hand, and trade and sustainable development on the other, with some guideposts as to what might constitute an effective response. It provides in a non-technical and over-arching manner, a summary of the likely impacts of climate change on development in least developed countries (LDCs), small and vulnerable economies (SVEs) and small island developing states (SIDS) – that is, smaller developing countries (SDCs) – and how some of the impacts might affect the trade of these countries. This discussion is of vital importance to these smaller developing countries because as Paul Roberts has noted, ‘Worse, climate change is not an equalopportunity disaster. Whereas the northern, and richer countries might suffer relatively minor detriment or might even benefit in certain ways from global warming, the severest effects will be felt disproportionately in Africa, in parts of Asia and among some of the tiny island states’.

  • Achieving sustainable levels of development, characterised by conditions of economic and social equity, remains the fundamental foundation for undertaking effective societal responses to trade and climate change adaptation.

  • The international transport sector, including shipping and aviation, is of a particular nature, as reducing their greenhouse gas emissions does not fall directly within the jurisdiction of any country. Traditionally, the emissions have been out of sight and out of mind, and so regulation in international transport has been lagging. Discussions are now ongoing within the UNFCCC and the International Maritime Organization (IMO), and voluntary approaches are being considered within the International Civil Aviation Organization (ICAO).

  • There is a growing international consensus that enhanced energy efficiency is the principal means economies have at their disposal to satisfy energy requirements while diminishing unwanted energy-related environmental impacts. Many recent high-level analyses (for example, the World Energy Outlook1 ) have demonstrated there is a very substantial cost-effective potential to improve the energy efficiency of end-use equipment, which if realised would bring large-scale benefits in terms of reduced energyrelated greenhouse gas emissions, lower-cost energy services and lower energy dependence. This potential is particularly important for developing countries with high energy-import bills, be they least developed countries or remotely located small island developing states.

  • Agriculture currently contributes significantly to the economy of many LDCs, SVEs and SIDS. On average, agriculture contributed about 2 per cent of GDP in developed countries in 2004, 11 per cent in developing countries and an average of 40 per cent in Africa (World Bank, 2007b). Globally, about 85 per cent of rural people derive their livelihoods from agriculture. In Africa, where more than 80 per cent of the population is rural, subsistence agriculture accounts for the livelihoods of about 90 per cent of this population, most of which live below official poverty lines.

  • Climate-related border measures to address industrial competitiveness concerns have been under discussion for several years. Border measures are highly controversial, as they are seen as ‘sticks’ rather than ‘carrots’ to encourage an inclusive approach to deal with the problem. Their legality under the World Trade Organization (WTO) has also been questioned. There are three dimensions to the border measures that are under consideration in the EU and US: the form the measures would take, the covered industries and the source countries covered.

  • Least developed countries, small vulnerable economies and small island developing states already face the development challenge in its full complexity. Many are struggling to achieve the Millennium Development Goals, particularly since they are poor and lack the necessary financial and technical resources to achieve their goals. The development conditions and economic resource constraints of smaller developing countries often exacerbate their economic and climate change vulnerabilities and inhibit their ability to adapt to climate change in social, technological and financial terms. Already, many are being left behind in terms of trade growth and competitiveness, and the development and maintenance of trade-related infrastructure might also become more difficult as countries struggle to cope with climate impacts and adaptation demands.