Implementation of Trade and Environment Provisions in Preferential Trade Agreements (PTAs): The New Zealand Experience

Statement by New Zealand at the Regular Session of the Committee on Trade and Environment (CTE) of 30 June 2016

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1  Introduction

1.       New Zealand's approach to trade and environment provisions in preferential trade agreements (PTAs) reflects a policy position that is grounded in the Government's belief that such agreements are not ends in themselves. They are a means to an end. Specifically, they are intended to enhance opportunities for economic growth in order to improve living standards, thereby contributing positively to sustainable development.

2.       It is in this context that the approach to trade and environment in New Zealand's trade policy is intended to ensure the mutual supportiveness of such inter-related provisions. New Zealand places considerable emphasis on securing legally-binding treaty-level outcomes and this informs the process of implementation. In this regard, it is important to emphasise that securing the mutual supportiveness of trade and the environment in practical terms through New Zealand's PTAs is contingent on the effective implementation of the negotiated outcomes, including the relevant PTA's trade and environment-related provisions and instruments. The following sections are divided into three inter-related components. The first section outlines the New Zealand context for the way it approaches this important issue. The second identifies how New Zealand seeks to implement the trade and environment provisions negotiated through its PTAs. The third section briefly summarises the institutional mechanisms that are utilised, with the fourth section providing some detail on the practical cooperation that is undertaken through these instruments. The concluding section highlights the fundamental importance New Zealand attaches to ensuring that trade policy, including through PTAs, can contribute to positive environmental outcomes and notes the importance of looking ahead to consider how trade might contribute to addressing some of society's wider concerns, including on climate change, fish stocks, environmentally harmful subsidies such as fossil fuel subsidies and so on. What is also clear from the New Zealand experience is that "one-size" does not always fit all.

2  The New Zealand Context

3.       New Zealand has previously presented to the Committee on Trade and the Environment in detail on the trade and environment provisions that we have included in or alongside our PTAs, including our rationale for doing so. In sum, New Zealand includes trade and environment provisions in our PTAs for three inter-related reasons, including to:

•           show the commitment of the parties to the principles of sustainable development in the context of trade, and acknowledge increasing international interest in how goods and services are produced;

•           ensure that each party is able to benefit from its legitimate comparative advantages and compete on a "level playing field"; and

•           provide a means by which the parties can engage on trade and environment issues of shared interest and benefit.

4.       We achieve these objectives by negotiating the following types of provisions:

·                common understandings and/or commitments as they relate to trade and the environment, including the "classical" trade and environment provision which seeks to prevent the use of environmental standards as a disguised form of trade protectionism; and seeks to prevent the lowering of environmental standards for a trade advantage.

·                a framework and appropriate mechanism for cooperation; and

·                a means of communication and consultation between the parties on relevant trade and environment-related issues.

5.       New Zealand has concluded nine PTAs since the launch of the Doha Round in 2001, all of which either include Trade and Environment chapters or have Trade and Environment side instruments associated with them. Currently there are nine operative environment chapters/instruments with 11 countries. The first such instrument was with Thailand (entered into force in 2005), followed by the agreement with P4 partners (Brunei Darussalam, Singapore and Chile, 2006) and then with China (entered into force in 2008). The most recent is with the Republic of Korea (entered into force on 20 December 2015). With the exception of the instrument agreed with Thailand, all of the outcomes are legally binding and Treaty-level. 

3  Implementation of trade and environment provisions

6.       It is of course one thing to agree such provisions, their real value is in whether and how the Parties implement and use the trade and environment provisions of their PTAs.

7.       New Zealand's strategy to guide the implementation of trade and environment provisions in PTAs focuses primarily on the gains from cooperation for mutual benefit. These are delivered through the range of institutional provisions that are built into each agreement and which are then deployed following ratification of the agreement itself.

8.       Each partner is dealt with on a case-by-case basis where cooperation programmes are based on an agreed set of trade and environment-related priorities. These may build on the commitments and understandings or potential projects outlined in the agreement itself.

4  Institutional Mechanisms

9.       A successful relationship based on cooperation is possible only if the parties are able to communicate effectively. Regular meetings of the parties and regular contact between the national contact points are important aspects of this. In our experience, this helps build trust and confidence which not only facilitates project development and implementation, but also makes it easier to discuss any issues of concern that might arise.

5  Cooperation Activities

10.    Since 2006, New Zealand has completed more than 90 cooperation projects with Thailand, Chile, Singapore, Brunei Darussalam, Philippines, Malaysia, Indonesia and China.

11.    These projects have used a range of cooperation formats, such as capacity-building workshops, seminars, study tours, peer reviews, exchanges of experts, exchanges of information, and joint research projects. This one-size does not fit all approach seeks to be responsive to and reflect the interests, needs and resources of the participating partners.

12.    The New Zealand experience has been that projects evolve as partners' needs evolve, particularly in regards to the types of trade and environment-related challenges that need to be addressed.  For example, over time in the development of the cooperation arrangements from the agreement, there has been a discernible shift away from specific capacity-building projects towards assistance – in both directions - with policy development and implementation.

13.    Consistent with the framework that guides negotiators, New Zealand's preference remains projects that provide both environmental and trade benefits.  These have covered a range of issues such as freshwater management, air quality standards and management, environmental governance, climate change mitigation and adaptation, biodiversity, vehicle emissions, biofuels, renewable energy development, energy efficiency, and environmental impact assessment.

14.    New Zealand takes a broad and inclusive approach to implementation. Engagement with partner countries is led by the Ministry for the Environment working in conjunction with other New Zealand government agencies including those responsible for foreign affairs and trade, conservation, agriculture, forestry and fisheries, and economic development. In addition, local authorities, and non-government organisations including Crown Research Institutes, universities, iwi/Māori authorities, and businesses are also involved. Policy coherence is a touchstone for all engagement in the implementation of environmental provisions.

15.    By engaging with a broad range of stakeholders who can contribute funding and their own specific expertise, we can often mitigate as far as possible the challenge all partners have faced with regard to limited resources – both human and financial.

16.    Cooperation activities often begin with small scale, short term projects that help to build confidence amongst the parties through quick and practical outcomes that deliver benefits. As the relationship matures, New Zealand looks to engage in larger scale, longer term projects involving multiple stakeholders to deliver durable and sustained benefits that can enhance both trade and environment policy outcomes with local, regional and international effect.

17.    A recent example is a four year project with China where the New Zealand and Chinese Environment Ministries together with agricultural research organisations, universities and private sector firms collaborated to trial alternative methods of safe disposal of dairy effluent to land. The successful outcome provides the basis for a policy change regarding sustainable land management and opens the way for large scale dairy development in China that avoids further pollution of waterways.

6  Conclusion

18.    Trade and environment provisions are an important part of New Zealand's approach to PTAs, but New Zealand's commitment to these issues does not end with the conclusion of negotiations. Effective implementation of PTAs - through a range of institutional mechanisms and approaches which help to deliver practical cooperation activities – can reinforce the mutual supportiveness of trade and the environment. The practical approach New Zealand and its partners take to the implementation of the outcomes that have been negotiated underscores a shared commitment to ensure that trade policy in general and PTAs in particular can support and contribute to meaningful and practical outcomes that help drive sustainable development. Importantly too, the New Zealand experience suggests that a one-size-fits-all approach is not practical. Rather, bespoke approaches are needed to ensure effective and efficient delivery of sustainability-related objectives.

19.    More broadly, both bilaterally and multilaterally, New Zealand's experience in negotiating trade and environment provisions has reinforced the importance of mutual supportiveness in this area. It is clear too that trade policy can and should contribute to addressing global challenges. In this context, New Zealand's Minister of Trade, the Hon. Todd McClay recently observed that we should "consider how trade can help us achieve the UN Sustainable Development Goals (UNSDGs) agreed by world leaders in September 2015."^[1] He observed that several of the SDGs touch on the nexus between trade and the environment. UNSDG 12, for instance, touches on the issue of fossil fuel subsidies. There is a question as to how reform in this area might be secured and what role trade policy might play. Similarly, UNSDG 14 is about protecting the oceans and global fish stocks. This can be achieved, including through the development of disciplines on fish subsidies. The WTO is already contributing with ongoing negotiations in this area and the provisions contained in the recently concluded Trans-Pacific Partnership Agreement are similarly seeking to address this urgent challenge. Clearly, as the New Zealand Minister concludes "trade agreements can contribute to solutions to the most pressing global problems of our times."

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