Agreement on Climate Change, Trade and Sustainability (ACCTS) Overview
The ACCTS is a ground-breaking trade agreement that delivers commercial opportunities to New Zealand’s economy, while addressing climate change and sustainability challenges. It is the first trade agreement New Zealand has concluded with Costa Rica, Iceland and Switzerland outside of the WTO.
The ACCTS is a living agreement, and its membership and scope will grow over time. The ACCTS is open to WTO members that are able to meet its standards.
Key Outcomes
The ACCTS goes further than traditional trade agreements by including;
- The most comprehensive list of environmental goods of any international agreement, going beyond a traditional approach to also recognise “land-based” or natural renewable products as environmental goods.
- Tariff elimination on 316 environmental goods at entry into force including for solar panels, wind and hydraulic turbines, electric vehicles, wool fibre, recycled paper and wood products.
- Improved market access for New Zealand wool and wood exports to ACCTS members. These benefits will grow as more WTO members join the ACCTS and the scope of the agreement expands.
- Improved facilitation of trade in services to ACCTS members, providing greater certainty and transparency for New Zealand exporters of sustainable agriculture and forestry consultancy, professional engineering and architecture services.
- A new definition of environmental and environmentally related services covering a wide range of sectors, accompanied by an ambitious and environmentally credible list of 110 environmental and environmentally related services.
- Guidelines to inform the design and implementation of voluntary eco-labelling programmes to promote trade in sustainable products and prevent eco-labels from being inadvertent barriers to trade.
- The first international fossil fuel subsidy definition, building on existing approaches to defining subsidies at the World Trade Organisation.
- A framework of prohibitions, schedules, exceptions, and transparency requirement to address harmful fossil fuel subsidies. This includes lists of prohibited fossil fuel subsidies and goods and energy products considered as fossil fuels.
- A first of-its-kind and innovative mechanism – the Standard Carbon Rate Measurement – enabling members to reflect the impact of climate policy and carbon pricing on fossil fuels.
- Pathways to new members and expansion. Special flexibilities on tariff elimination are built into the agreement to encourage new members to join early.
- A Treaty of Waitangi exception, ensuring the Agreement will not prevent the Crown from meeting its obligations to Māori.
You can find further information on the ACCTS outcomes in the National Interest Analysis.
Why is an Agreement on Climate Change, Trade and Sustainability important ?
New Zealand’s trade policy is focused on doubling the value of our exports over the coming decade. One of the ways we achieve this is through the conclusion of trade agreements, which creates opportunities for New Zealand businesses, in turn boosting the economy. The ACCTS opens new markets for New Zealand exporters and, as an open plurilateral agreement, will grow in commercial benefit over time as new members join.
We also need international trade architecture that is fit for purpose to harness the opportunities offered by the green transition and accelerate global decarbonisation.
New Zealand’s view, and the view of the countries that have joined us as participants in the ACCTS, is that trade policies, practices and rules have an important and substantive role to play in addressing climate change and sustainability issues.
The case for using trade rules to discipline fossil fuel subsidies is particularly compelling. The OECD and IEA estimate in 2022 countries are subsidising fossil fuel production and consumption to the tune of USD 1.4 trillion per year. In contrast, global investment in renewable energy was USD 495 billion in 2022 – half of what was spent subsidising fossil fuels. Subsidies make these greenhouse gas emitting fuels cheaper to produce and buy, acting as an incentive to use and produce&;;nbsp;more. Just as trade rules are used in the World Trade Organization (WTO) context to address industrial and agricultural subsidies, they have an important role to play here also.
The ACCTS illustrates New Zealand's role as a leader in this area by creating rules and best practice that reflect the needs and concerns of New Zealanders.
The ACCTS also strengthens New Zealand’s international trade policy influence, fosters broader connections, and support our interests in the World Trade Organisation (WTO).
How will this help multilateral efforts in trade and climate change?
There is an important role for trade agreements like ACCTS to play as a pathfinder and template for multilateral action on trade and climate change.
The ACCTS demonstrates in practical terms how trade rules can support climate and broader environmental objectives while generating momentum towards an eventual multilateral set of solutions.
The ACCTS complements and builds on other work and processes under way in these areas such as New Zealand’s leadership on fossil fuel subsidy reform (FFSR). New Zealand has taken a lead role in advocating for the reform of fossil fuel subsidies through our establishment of an informal 'Friends' group to promote the benefits of reform, and our work in the WTO, APEC, United Nations Framework Convention on Climate Change (UNFCCC) and the OECD.