Venu Menon
Wellington, July 5,2024
In a trailblazing move linking trade with climate change, New Zealand has signed a landmark agreement with a clutch of like-minded countries to “remove tariffs on hundreds of products that benefit sustainability and the environment.”
Costa Rica, Iceland, Switzerland and New Zealand signed the Agreement on Climate Change, Trade and Sustainability (ACCTS) on July 2, which marked the culmination of 15 rounds of “mostly virtual negotiations to develop an innovative and groundbreaking trade agreement focused on the climate change, trade and sustainability agendas, and which is consistent with their obligations under the WTO [World Trade Organisation],” a Joint Ministerial Statement issued by the trade ministers of ACCTS partner countries said.
“In delivering the ACCTS, we continue to recognise the challenges found by developing countries and their vulnerability to the impacts of climate change,” the statement added.
Removing trade barriers
Trade and Agriculture Minister Todd McClay saw new market opportunities for New Zealand exporters under ACCTS. It removes tariffs on exports such as wood products and wood. Other products include wool fibre, slag wool used for insulation, recycled paper, LED lamps, and rechargeable batteries.
Boost for Renewable Energy
The agreement supports New Zealand’s renewable energy sector by regulating harmful fossil fuel subsidies and setting guidelines for eco-labelling products and promoting sustainable practices across industries.
Increased market access
Minister McClay noted ACCTS marked the first trade deal by New Zealand with countries outside of the WTO framework. As more countries joined, new markets would open up for New Zealand exporters.
Economic impact
Minister McClay underscored the importance of a strong economy in raising incomes, lowering living costs, and ensuring efficient public services for Kiwis. ACCTS opened up a pathway to achieving these economic goals.
Environmental goods and services
According to the Organisation for Economic Co-operation and Development (OECD) and Eurostat (the EU’s statistical agency), environmental goods and services are “activities which produce goods and services to measure, prevent, limit, minimise or correct environmental damage to water, air and soil, as well as problems related to waste, noise and eco-systems.”
Environmental goods include products related to clean energy generation, such as wind turbines and solar photovoltaic cells.
Instruments for measuring air or water pollution are also included on the list.
While environmental goods have been the focus of attempts to lower tariffs over the past two decades, environmental services have tended to receive little attention in international trade negotiations.
Environmental services include companies that keep a watch on the water supplies to cities and help track leaks, and companies involved in installing solar panels and wind turbines. Companies face trade barriers in this sector routinely.
The ACCTS accord eases trading for both environmental goods and environmental services.
Fossil fuel subsidies
The ACCTS accord clamps down on fossil fuel subsidies that promote the production and consumption of fossil fuels resulting in higher emissions of greenhouse gases and dangerous airborne particles.
These subsidies also divert billions of dollars that could be better spent on healthcare or education.
ACCTS fulfils the pledge of the Group of Twenty (G20) and the Asia Pacific Economic Cooperation (APEC) members to “phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption.”
But that pledge, taken a decade ago, remains unfulfilled. ACCTS has taken on the onus of achieving those climate goals that have proved elusive until now.
Coalition of consensus
It is worth noting the four countries that are signatories to the ACCTS accord come from different regions of the world and have different levels of economic development between them. Together, they represent a coalition of consensus that is leading the way for other members of the World Trade Organisation (WTO) to remove the barriers to trade in environmental goods and services.
Venu Menon is an Indian Newslink reporter based in Wellington
