EU trade and the environment: Development as the missing side of the triangle

This policy brief, published in collaboration with Europe Jacques Delors as part of their Greening Trade series, addresses what the authors consider the critical blind spot in the EU’s green trade policy: its impact on developing countries. Written ahead of the WTO’s EU trade policy review, the publication argues that the development dimension of the EU’s greening of trade needs far more attention and policy action than it has received.

The brief argues that the EU has historically approached the trade-environment-development nexus – or the “triangle” – in a piecemeal fashion, addressing trade and environment linkages through one set of instruments and trade and development through another, without adequately integrating the three dimensions into a coherent policy framework. The result is a growing perception among the EU’s trading partners that Europe’s green trade agenda serves primarily protectionist interests, undermining the legitimacy and effectiveness of its environmental objectives.

The authors highlight that the EU’s ambitious unilateral environmental measures — including the Carbon Border Adjustment Mechanism (CBAM), the EU Deforestation Regulation (EUDR), and due diligence obligations — inevitably generate adjustment costs for trading partners, and that these costs risk falling disproportionately on countries with limited financial, institutional, and technical capacity. Developing countries and least developed countries (LDCs) face particular challenges in complying with the EU’s sustainability requirements, given their dependence on carbon-intensive exports, limited access to green technologies and finance, and fragmented regulatory frameworks.

To address these negative spillovers, the authors propose several policy recommendations. These include systematic impact assessments of EU sustainability measures on developing countries, with particular attention to vulnerable sectors and populations, as well as more proactive engagement in the design phase of new regulations, stronger financial and technical support mechanisms to assist partner countries in meeting EU requirements; and greater use of bilateral and multilateral forums to build shared understanding and ownership of the green trade agenda.

The paper concludes that the EU can only credibly claim global leadership on the green transition if it takes development impacts seriously and moves toward a more inclusive approach that integrates environmental ambition with fairness and solidarity.