Shaping trade policies to support climate change adaptation

On April 9 in Hanoi, the Department of Climate Change (under the Ministry of Agriculture and Environment), in collaboration with the International Institute for Sustainable Development (IISD), organized a seminar titled “Trade policy in support of climate change adaptation".

Weak link between trade and climate change adaptation

This weak link was the central issue discussed at the seminar. Vietnam has an open economy with a high level of trade integration and is heavily affected by climate change. However, according to experts, the adaptation aspect is almost absent from Vietnam’s current trade policies, particularly in sectors such as consumer goods production, exports, and trade services.

Ms. Katharina Schmidt, Head of Trade at IISD, noted that climate change is directly impacting agricultural production, available resources, energy demand, and consumer preferences, leading to shifts in supply and demand across various sectors.

In addition, trade is highly dependent on infrastructure, and it is evident that extreme weather events and rising sea levels have caused significant damage to facilities, factories, transportation routes, and vehicles. Governments may introduce new regulations to promote sustainable development and enhance resilience to climate change impacts, which in turn could affect the cost and operation of trade in certain goods. A prime example is the European Union’s green policies, most recently including regulations on deforestation-free products and the Carbon Border Adjustment Mechanism (CBAM).

Looking at it from a positive perspective, economic growth driven by trade can provide financial resources for investments in climate change adaptation. It can also generate more employment opportunities, enhance the diversity of imports and exports, and reduce a country’s dependency and vulnerability to climate-related risks. Through trade, essential goods and services for implementing adaptation solutions, disaster prevention, and post-disaster recovery can be delivered in a timely manner.

Ms. Mai Kim Lien, Deputy General Director of the Department of Climate Change (MAE), emphasized that trade can become a powerful tool in supporting national and global efforts to adapt to climate change. Despite this great potential, Vietnam’s current trade policies still show significant gaps when it comes to incorporating climate adaptation elements. Therefore, it is necessary to incorporate climate change adaptation into next-generation trade agreements to better connect trade and climate resilience in a more effective and cohesive manner.

Vietnam has developed a National Adaptation Plan (NAP) with the overarching goal of reducing vulnerability and risks associated with the negative impacts of climate change. The plan also aims to minimize losses and damages while promoting the integration of adaptation measures into relevant strategies and planning processes across sectors.

According to Mr. Tran Toan Thang from the Central Institute for Economic Management (the Ministry of Planning and Investment), the implementation of adaptation priorities outlined in the NAP presents a crucial opportunity to strengthen the link between trade and climate adaptation. He emphasized that by identifying ways to integrate these adaptation priorities into trade policies, Vietnam can better leverage the benefits of international trade to support its climate adaptation objectives.

Agriculture is the first sector to benefit

According to Ms. Anne Hammill, Vice President of IISD, Vietnam is highly integrated into global trade but also highly vulnerable to climate risks. In this context, climate change adaptation is no longer an option; it is an urgent necessity. The agricultural sector is among the most directly affected by climate change. These impacts not only reduce agricultural output but also disrupt supply chains for raw materials that are critical to various industries, especially those tied to export markets.

International trade can offer important opportunities to support adaptation in agriculture. Through global trade channels, Vietnam can gain access to climate-resilient crop varieties and livestock breeds, advanced irrigation systems and water-saving technologies, and modern infrastructure that enhances the sector’s ability to withstand climate shocks.

In the national adaptation plan, 27 priority tasks for agriculture have been outlined to address the challenges posed by climate change. Specific actions that can be implemented include the transfer of goods such as climate change-resilient crop and livestock varieties, environmentally friendly fertilizers and pesticides, water-efficient irrigation systems, advanced agricultural technologies and equipment, aquaculture breeds, animal feed, and veterinary medicines for aquatic species.

Additionally, in the services sector, priority should be given to developing and strengthening meteorological and hydrological forecasting systems, as well as early warning systems for natural disasters. There is also a need for climate risk assessments, the provision of consultation services on adaptation solutions, climate risk insurance, and agricultural extension services, along with training programs for the transfer and application of adaptation technologies.

Experts emphasize that trade policies should be adjusted to ensure that farmers and cooperatives have easier access to goods and services that are resilient to climate change. This includes creating an enabling environment for the transfer of climate adaptation technologies. Specifically, policies should connect multiple sectors and promote transparency throughout the value chain, ensuring a reliable supply of raw materials.

Looking ahead, it is anticipated that the relevant authorities will expand discussions on inter-sectoral policies, which will gradually integrate climate adaptation into broader trade policies. This will encompass the formulation of strategies, trade agreements, and both tariff and non-tariff policies.