Article – The Conversation
A complaint to the European Commission over NZs potentially broken climate promises in the EU trade agreement looks strong. But the legal threshold is high. Vernon Rive, University of Auckland, Waipapa Taumata Rau
New Zealand has long traded on its reputation as a forward-thinking, environmentally and socially responsible international partner. A case now before the European Commission suggests cracks in that reputation may be showing.
Last week, the Dutch environmental justice organisation Both ENDS lodged a formal complaint alleging New Zealand has broken environmental and climate promises it made in its free trade agreement with the European Union.
Supported by a range of New Zealand groups and individuals, the complaint provoked a vitriolic response from some government leaders, including accusations that “traitorous” supporters were joining “foreign actors to attack New Zealand”.
The rhetoric is perhaps explained by the seriousness of the questions raised by the complaint. Could it really cost New Zealand access to the lucrative EU market? And what does it mean for New Zealand’s wider trade and international relations?
What is the complaint?
For trade-related concerns, the EU has created a complaints channel called the “Single Entry Point” within the European Commission. EU-based civil society groups can ask the commission to act, and “co-sponsors” elsewhere can back those requests.
Both ENDS has six New Zealand co-sponsors: three advocacy groups, an iwi trust, and two individuals (iwi leader and climate litigant Mike Smith, and law professor Jane Kelsey).
The commission can decide whether to take a complaint further, and only the EU (as a party to the free trade agreement) can start the formal dispute process. Both ENDS itself cannot take New Zealand to a disputes panel.
Both ENDS argues New Zealand has broken “two promises” it made in the NZ-EU agreement’s chapter on trade and sustainable development:
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an undertaking not to weaken its environmental laws in order to encourage investment
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a commitment to “effectively implement” the Paris Agreement on climate change, including not doing anything that “materially defeats its object and purpose”.
Only a breach of the commitment not to defeat the purpose of the Paris Agreement carries the ultimate remedy of suspending trade benefits. Even then, remedies under the disputes process within the trade agreement would be proportionate to the perceived harm the breach caused.
Negative findings on the other matters could, at most, lead to stern words between trade diplomats, scrutiny by a disputes panel, and perhaps a ruling that New Zealand must put things right in the future.
The ‘final straw’
Both ENDS has stressed its action is not about “a single decision” by the New Zealand government, but rather a pattern “that has escalated”. Of the eight government actions listed in the complaint, three stand out:
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the lowering of New Zealand’s 2050 methane target range from 24-47% to 14-24%
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the 2025 reversal of the 2018 ban on new offshore oil and gas exploration, a change described in government documents as intended to signal New Zealand was “open for business” in petroleum exploration
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an amendment to the Climate Change Response Act removing liability for “emissions-related climate change effects”, which effectively stopped the Smith v Fonterra case proceeding.
This amendment was passed with urgency against the advice of officials and contrary to 93% of the 623 submissions to the justice select committee. The Environmental Law Initiative, co-sponsor of the Both ENDS complaint, called the law change a “final straw”.
NZ has a case to answer
Trade Minister Todd McClay has responded to the Both ENDS filing by saying it’s:
[…]not for overseas countries, organisations or lobby groups to tell New Zealand how to meet its obligations.
Prime Minister Christopher Luxon has insisted the country is “fully compliant” with its international and trading obligations.
It’s correct, of course, that both parties to a trade agreement have the sovereign right to chart their own paths on domestic environmental law and policy.
But having willingly accepted obligations in the Paris Agreement and free trade pacts, New Zealand exposes itself to consequences under international law if it is found to have breached its side of the bargains.
It’s curious McClay should find fault with a compliance process contained in an agreement he lauded during the ratification process.
The strongest parts of the Both ENDS claim relate to the “non-regression” clauses in the trade agreement – the commitment not to weaken environmental regulation to attract trade or investment.
Cabinet records and statements in parliament have openly linked increased investment to various policies, including reversing the offshore exploration ban, limiting legal liability for emissions, and fast-tracking consent processes.
The government’s position is not helped by the leak of an unredacted government report referencing legal advice from the Ministry of Foreign Affairs and Trade. This said reversing the offshore exploration ban “would likely be inconsistent with the obligations in several of New Zealand’s free trade agreements”.
But the claim New Zealand is acting in a way that “materially defeats” the object and purpose of the Paris Agreement is much harder to establish.
Yes, there are solid arguments that New Zealand’s Paris commitments fall short of international expectations. On current projections, New Zealand would rely on buying offshore carbon credits, which Luxon has said he won’t pay billions on.
Even so, the 2030 target in New Zealand’s first Nationally Determined Contribution is still four years off, and the legal threshold here is high.
Under Brussels’ microscope
Unilaterally pulling out of Paris entirely, as coalition partners ACT and NZ First have floated, could jeopardise the free trade agreement. But that remains hypothetical for now.
The likeliest outcome is a slow process that puts New Zealand’s environmental record under Brussels’ microscope, but probably won’t cost it market access.
For example, the only EU sustainability panel to date, which examined South Korean labour commitments in 2021, found a breach but attached no consequences.
Previous complaints have mostly not led to enforcement. New Zealand’s representatives can expect searching questions from EU officials and diplomats, and sustained international attention.
For Both ENDS and its New Zealand co-sponsors, that scrutiny is the point: they say they want compliance, not lost market access. The next government has been put on notice.
Finally, associate membership in the EU (something Canada is exploring) has been hinted at for Australia and New Zealand by European Parliament President Roberta Metsola. If New Zealand ever wants a closer seat at Europe’s table, its record on the promises it has already signed will surely be part of the conversation.
Vernon Rive, Associate Professor of Law, University of Auckland, Waipapa Taumata Rau
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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