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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. Norway is also considering(external link) whether to become a signatory of the ACCTS.
The initial ‘new economy’ trade actions will contribute meaningfully to addressing climate change and other serious environmental issues. The first trade actions that will be included in the ACCTS are:
- Liberalisation of trade in environmental goods through tariff elimination. The ACCTS will deliver the most comprehensive list of environmental goods of any international agreement, going beyond a traditional approach focused on industrial goods to also recognise “land-based” or natural renewable goods.
- Tariffs will be eliminated on over 300 environmental goods on entry into force. This includes goods such as solar panels, wind and hydraulic turbines, electric vehicles, wool fibre, recycled paper, electric static converters, and wood products. Tariff elimination will make such products cheaper to buy, incentivising use and investment in related technologies.
- Expanding international understanding of environmental services and environmentally related services. The ACCTS contains an ambitious and environmentally credible list of more than 100 environmentally related services subsectors. This will facilitate trade in environmental and environmentally related services through market access and certainty for suppliers.
- Guidelines to inform the design and implementation of voluntary eco-labelling programmes. The ACCTS includes principles-based guidelines for voluntary eco-labelling programmes and related institutional mechanisms. This will provide an innovative and useful tool to promote trade in sustainable products by helping ecolabels to best achieve their environmental purposes.
- A Framework to discipline and eliminate harmful fossil fuel subsidies: The ACCTS contributes a meaningful definition on fossil fuel subsidies to international efforts alongside clear prohibitions and a limited set of exceptions to safeguard fundamental policy goals, including for energy security and disaster resilience.
Why is an Agreement on Climate Change, Trade and Sustainability important?
New Zealand’s trade policy is focused on doubling 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 will open new markets for New Zealand exporters and, as an open plurilateral agreement, will grow in commercial benefit over time as new members join.
A key example of this is the environmental goods chapter, that eliminates tariffs on over 300 environmental goods. This reduces costs associated with important New Zealand exports such as wood products and timber used in construction, wool fibre, slag wool for insulation, recycled paper, and electric static converters.
Tariff elimination on environmental goods will also ensure New Zealand consumers have better access to energy saving goods, such as LED lamps, light fittings, and rechargeable batteries.
Alongside commercial benefit, the ACCTS brings together some of the inter-related elements of the climate change, trade and sustainable development agendas and demonstrates how they can be mutually reinforcing.
New Zealand’s view, and the view of the countries that have joined us as participants in the ACCTS initiative, is that trade policies, practices and rules have an important and substantive role to play in addressing sustainability issues.
The case for using trade rules to discipline fossil fuel subsidies is particularly compelling. The OECD and IEA estimate(external link) 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(external link) 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 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 helping create rules and best practice that reflect the needs and concerns of New Zealanders.
The ACCTS will also strengthen New Zealand’s international trade policy influence, foster broader connections, and support our interests in the World Trade Organisation (WTO).
How will this help multilateral efforts in trade and climate change?
Multilateral action remains New Zealand’s priority in relation to these issues. While we will continue to make the case for multilateral action, ACCTS countries are ready to act now. We consider that there is an important role for trade agreements like ACCTS to play as a pathfinder and template for action.
Our vision is that ACCTS will demonstrate 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 initiative will complement and build 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. The ACCTS initiative complements our continued advocacy and leadership on this global climate change issue.