New Zealand's climate promises face trade test, says law expert

New Zealand is facing a new test over its climate commitments that could reach well beyond Wellington.

This follows a formal complaint to the European Commission raising questions about whether climate promises in trade agreements can be enforced.

Dutch environmental group Both ENDS has lodged the first climate and environmental complaint under the European Union's trade enforcement mechanism.

Both ENDS argue that New Zealand has breached commitments made in its free trade agreement with the EU.

International law expert Professor Al Gillespie says the case matters because the possible consequences go beyond criticism of Aotearoa's climate policies.

“It's very specific and it's not frivolous either so I think there's a fair chance it could succeed,” he told William Terite on Pacific Mornings.

Listen to Al Gillespie's full interview below.

Gillespie says the process could take years as New Zealand could face reputational damage well before any possible penalty.

“Obviously in terms of substance if we've actually breached our commitment, but in the second way, it's the negative publicity that comes with it because this whole process could take a couple of years to come to fruition and in that time the reputational damage to New Zealand could be strong.”

The complaint says New Zealand has failed to uphold two commitments in the EU trade deal including to effectively implement the Paris Agreement and not weaken environmental protections to encourage trade or investment. The agreement came into force in May 2024.

The Paris Agreement sets the international framework for countries to reduce emissions and respond to the impacts of climate change. Photo/climatechangenews.com

The Ministry of Foreign Affairs and Trade says the Government takes its commitments under the NZ-EU Free Trade Agreement seriously including its environment and climate provisions.

“New Zealand is committed to meeting its international climate obligations and to implementing its commitments under the Paris Agreement,” an MFAT spokesperson said.

The ministry says the agreement includes mechanisms for dialogue and engagement on environmental and climate-related matters.

“The complaint was made to the EU, which will now consider it. We have not received any formal communication on this matter from the EU and it would be inappropriate to comment further at this stage,” the spokesperson said.

The EC is examining the complaint against its published criteria. If it moves forward, there are further stages including discussions with New Zealand and an independent expert panel.

The European Commission is assessing a complaint over New Zealand’s climate and environmental commitments under the NZ-EU free trade agreement. Photo/Wikimedia Commons

Suspending trade benefits is a possible last resort in the event of a serious breach of the Paris Agreement that is not resolved through the earlier stages of the process.

Gillespie says any action is still unclear. “The penalty itself is uncertain what it could be right now because we're in new ground, new area but it's likely to be some kind of tariff on a product.”

Why it matters to the Pacific

The case comes as Pacific leaders continue to push for climate promises to be turned into action.

Fiji's Minister for Information, Environment and Climate Change, Lynda Tabuya, said at the United Nations General Assembly last week that Pacific communities need to see climate commitments delivered on the ground.

“Our people cannot live on climate promises. They need climate action they can see and feel in their communities.”

Speaking at the launch of the COP31 Action Agenda in New York, Tabuya said climate negotiations must deliver practical results for frontline communities and these include safer homes, stronger infrastructure, protected coastlines, secure water and livelihoods.

Fiji’s Minister for Information, Environment and Climate Change, Lynda Tabuya, says Pacific communities need to see climate commitments translated into action. Photo/Facebook/Fiji Ministry of Environment and Climate

“Our job now is to turn those billions discussed internationally into projects on the ground. Climate finance means little to our people if it cannot reach the village, the settlement, the farmer and the fisher.”

Her comments come as Fiji prepares to host the Pacific Pre-COP31 meeting this month.

Palau President and Pacific Islands Forum Chair, Surangel Whipps Jr, has also called for commitments to be followed through, saying: “Climate ambition must be matched with climate finance.

"Commitments must become implementation, and the priorities of our people must remain at the centre of global decision-making," he said during his closing address at the 55th Forum Leaders Meeting in Koror on 4 September.

Gillespie says the Pacific's options would depend on the agreements it has with other countries.

But he says the bigger lesson is that trade deals may become a powerful way to enforce climate commitments.

“So what you're finding now ironically is that the strongest mechanism to enforce climate change is not on the climate change agreements but in trade agreements.”

Gillespie says governments still have freedom over how they meet their climate commitments but once they put those promises into a trade agreement, they have also accepted obligations to uphold them.

“They should have a lot of freedom but if they make a promise that they're going to honour them and then put that into an agreement that they get to deal with another country they should honour that agreement first.”

The European Commission is now assessing the complaint and there is no fixed timetable for the process.