Impacts of Climate Change Policies on Developing Country Export Markets

Overall, net-zero commitments and circular economy packages are likely to have significant impacts on exports of developing countries. The most immediate impact potential is on exports of fossil fuel products. The risks for agricultural products may not be as pronounced but will affect a much higher number of LDCs and African countries. Finally, countries relying on metals and minerals may benefit from increased demand associated with renewables and battery production, at least in the short to medium terms, but in the long term, demand for secondary raw materials and recycling requirements may affect export prospects.

These trends will force developing countries to accelerate their efforts to diversify their export basket and comply with new requirements in OECD countries and emerging economies. Besides technical assistance and capacity building for example under the Aid for Trade initiative, the promotion of South-South trade in the context of regional integration including the African Continental Free Trade Area offers significant prospects to offset the negative impacts associated with net-zero commitments or circular economy package and support economic diversification.