Listen to this article:

There is a particular kind of intellectual vertigo that sets in when one observes the United States imposing sweeping tariffs on imports, the European Union erecting subsidy walls around its green industries, and Western capitals simultaneously lecturing the developing world on the virtues of open markets. The contradiction is not incidental. It is, in a meaningful sense, structural – a recurring feature of how powerful nations have always navigated the tension between universal principles and particular interests.

The historical record is instructive, if uncomfortable. Britain, the original champion of free trade, industrialised behind formidable protectionist barriers in the eighteenth and early nineteenth centuries before discovering the virtues of liberalised commerce once its manufacturers had achieved a decisive competitive edge. The US followed a similar path: high tariffs underwrote its industrialisation through much of the nineteenth century, as economic historian Ha-Joon Chang has carefully documented.

The advocacy of free trade that accompanied the Washington Consensus era, through International Monetary Fund (IMF) and World Bank reforms and later World Trade Organisation (WTO)-led liberalisation, thus emanated from countries whose own rise had been shaped not by unfettered markets, but by varying combinations of protectionism, industrial policy, and state support. This is not to suggest that trade openness is without merit. It is to note that the timing and terms of its advocacy have rarely been disinterested.

Today, the wheel has turned again. Recent developments have reinforced this historical paradox. The Biden administration’s Inflation Reduction Act (2022) offered hundreds of billions of dollars in industrial subsidies, effectively discriminating against non-US manufacturers of electric vehicles and clean technology. The Trump administration’s second term has added punishing tariffs on a wide range of imports, including from longstanding allies. The CHIPS and Science Act of 2022 reflects a deliberate policy of supply-chain reshoring in semiconductors. None of this is necessarily wrong as domestic policy – strategic industrial policy has a long and defensible history. What is striking is the simultaneous insistence, maintained in multilateral forums and bilateral pressure campaigns, that developing economies should refrain from comparable measures. The rules, it appears, are for others.

The pattern repeats with particular sharpness in the domain of climate. The Intergovernmental Panel on Climate Change (IPCC) has established beyond reasonable scientific doubt that the accumulated stock of greenhouse gases in the atmosphere – the primary driver of present warming – is overwhelmingly the product of industrialisation in Europe and North America over the past two centuries. The principle of Common But Differentiated Responsibilities (CBDR), codified in the 1992 UNFCCC framework, acknowledged this historical asymmetry and held that richer countries should bear a larger share of mitigation costs. In practice, this commitment has been honoured more in language than in substance.

The promise of $100 billion per year in climate finance for developing nations by 2020, made at Copenhagen in 2009, was not fulfilled on time and much of what was eventually counted consisted of loans rather than grants. The more ambitious goal of mobilising $1.3 trillion annually in climate finance by 2035, endorsed at COP29 in Baku in 2024, continues to face serious questions regarding additionality, implementation, and the balance between public and private funding.

Meaningful transfer of clean technology – particularly proprietary green technologies held by private corporations in advanced economies – has remained structurally limited. Meanwhile, carbon credit mechanisms, while not inherently flawed in design,........

© The Wire