This article is part of a Synergies series on climate and trade curated by TESS titled Addressing the Climate Crisis and Supporting Climate-Resilient Development: Where Can the Trading System Contribute? Any views and opinions expressed are those of the author(s) and do not necessarily reflect those of TESS or any of its partner organizations or funders.

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Climate change is negatively affecting the production of key commodities that many low-income countries depend on for their export earnings. Extreme heat is also affecting workers in agriculture and factory settings reducing their productivity. While the idea of compensation for the impacts of climate change in low-income countries has been agreed and the Fund for Responding to Loss and Damage established, there is an absence of any trade-related adjustments or support mechanisms. Given the need to better assist countries bearing the brunt of a 1.5^oC temperature rise now, this article provides some reflections on how changes to international support measures and trade policy could better support adaptation efforts in developing countries and address the loss of productive capacity induced by climate change.

Increasing climate variability is exacerbating the well-known challenges faced by producers and economies dependent on primary agricultural production and commodity export earnings. It is recognized that low-income countries need support for climate change adaptation and resilience building, with funding beginning to flow through initiatives such as the World Bank’s International Development Association and the Green Climate Fund for example. But these and other sources of finance and development assistance, including aid for trade, need to be well coordinated. Otherwise, there is potential for a proliferation of funds and creation of new silos.

Changes are already underway across some of the national institutional arrangements created by the multi-agency partnership of the Enhanced Integrated Framework to help least developed countries (LDCs) better coordinate, secure, and channel new sources of finance. For example, The Gambia has pioneered through developing an aid for trade project to access trade-related climate finance and its approach is being considered for replication in Rwanda, South Sudan, and Tuvalu. Existing national institutional arrangements should be utilized and strengthened to create country platforms that enable capacity-constrained countries to secure, mobilize, and channel climate finance while avoiding duplication of efforts..

In addition, greater utilization of investment facilitation, including implementation of the Investment Facilitation for Development Agreement at the World Trade Organization (WTO), could facilitate the blending of public and private finance in partnership with development finance institutions to better secure investments in climate-resilient infrastructure in LDCs and small island developing states (SIDS). These investments are needed to address the physical effects of climate change such as floods, droughts, and other extreme weather events that destroy energy and transport infrastructure with resultant impacts on productive capacities.

One outcome from the WTO’s Thirteenth Ministerial Conference (MC13) in early 2024, referred to in the Abu Dhabi Ministerial Declaration, was the reiteration of the centrality of the development dimension in its work. Provisions on special and differential treatment (S&DT) for developing and least developed countries permit deviation from the principle of most favoured nation—many poorer countries rely on S&DT and trade under preferential regimes, including the European Union’s Generalised Scheme of Preferences (GSP). However, preferences tend to have low utilization rates and there is a recognized need for change. Only recently has greater consideration of environmental vulnerability begun to feature more prominently within some countries’ preferential trade arrangements.

One recent innovation, the United Kingdom’s Developing Countries Trading Scheme, refers specifically to environmental vulnerability criteria when determining which countries receive enhanced trade preferences. This has expanded the scope of eligible countries and meant that LDCs like Bangladesh—one of the most climate vulnerable economies in the world—has not faced the spectre of increased tariffs as it moves to graduation (a process which should be celebrated and not feared). The EU could reflect on this innovation and emulate it as the trading bloc reviews and updates its GSP.

There is a need for greater reflection on how existing tools like the GSP but also broader S&DT provisions can adapt to built-in environmental vulnerabilities. Currently, the GSP does not fully extend to services trade. While progress has been made on initiatives such as the LDC services waiver at the WTO, uptake remains low. Moreover, there is no similar type of waiver for climate vulnerable small economies. The MC13 Ministerial Decision related to the Work Programme on Small Economies—which refers to climate change—is suggestive of greater appetite to consider better tailored support measures in response to vulnerability.

Within the climate change arena, the issue of so called “climate visas” for extremely vulnerable economies, in view of the losses in productive capacity wrought by climate impacts, has been proposed but is controversial. Equally, within the global trade arena, mention of politically sensitive issues like migration remains challenging. But innovative research suggests mutual gains from new approaches on progressive labour mobility policies to support national green transitions. There is increasing demand for skillsets to develop green industrial hubs for example. Facilitating the movement of labour to support implementation of climate mitigation and adaptation goals—even if controversial—deserves further attention by WTO members to enable learning and the development of human capital.

Transfer of technology is an area of focus for both the WTO and climate discussions under the United Nations Framework for Climate Change (UNFCCC). There are a growing range of technologies that can support LDCs and SIDS on climate change adaptation, including in implementing their national adaptation plans. These technologies include meteorological early warning systems, climate resilient crops, irrigation technologies, and artificial intelligence to model the impacts of change among others. But accessibility alongside absorptive capacity are key to enable effective transfers.

In their February 2025 submission on trade-related climate measures to the WTO Committee on Trade and the Environment, LDCs prioritize technology transfer, and recent surveys across WTO members similarly suggest a greater need to focus on climate-related technologies. Tangible outcomes are needed and the relationship between the WTO and institutions that support technology needs assessments and action plans, including the UNFCCC and the United Nations Technology Bank for the Least Developed Countries, should be further explored to facilitate access to relevant technologies for adaptation in climate vulnerable economies.

Both increased flows of finance and implementation of agreed policy frameworks are vital to adaptation and part of overall economic resilience building. Looking ahead, progress on the implementation of the agreement reached on investment facilitation for development, accompanied by more tailored support at the next WTO ministerial conference, could provide a much-needed boost to export diversification and efforts to adapt to the realities of built-in climate change for the most vulnerable economies.

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Jodie Keane is Senior Research Fellow, ODI Global.

Bernardo Arce is Research Officer, ODI Global.

Laura Kelly is Director of Sustainable Markets, International Institute for Environment and Development (IIED).

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Synergies by TESS is a blog dedicated to promoting inclusive policy dialogue at the intersection of trade, environment, and sustainable development, drawing on perspectives from a range of experts from around the globe. The editor is Fabrice Lehmann.

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