A Dutch environmental group claims New Zealand has broken its climate change promises in the free trade agreement with the EU and is lodging the first complaint of its kind through the European Commission.
By Lillian Hanly of RNZ
The group, Both ENDS, is using the complaints mechanism known as Single Entry Point and said this first climate test could be precedent setting.
The most extreme consequences could be losing access to the lucrative European market, but the group is seeking compliance rather than the suspension of trade benefits.
It claims New Zealand failed to uphold its legal commitments in the EU-NZ FTA not to weaken environmental protections in order to "encourage trade or investment", and to effectively implement the Paris Agreement.
But the Trade Minister is firing back, saying it's "not for overseas countries, organisations or lobby groups to tell New Zealand how to meet its obligations".
The group said lodging the complaint was going to be "huge" in the EU because there's such significant public scrutiny about "how our policies are in line with our Paris commitments".
BothENDS said the Single Entry Point exists so that "European civil society can ask the Commission to enforce the sustainability commitments in EU trade agreements".
New Zealand organisations cannot themselves file a complaint, but a number of groups and individuals have added their support as co-sponsors, including Greenpeace, Ngāti Pukenga, Ora Taiao, Environmental Law Initiative, Mike Smith and Professor Jane Kelsey.
The legal commitment from New Zealand comes in the form of a 'non-regression' clause in its trade deal, prohibiting it from reducing environmental protections, and a section on trade and climate change stating the Parties recognise the importance of "taking urgent action to combat climate change and its impacts".
Concerns were raised early in the political term that the coalition risked breaching its trade agreements due to various policies.
Most recently, the Greens wrote to the European Commissioner responsible for trade and economic security, asking the EU to assess whether New Zealand was failing its obligations.
Now, Both ENDS has filed a complaint, seeking compliance rather than the suspension of trade benefits - which the trade agreement allows for at the end of a long process. The group makes it clear a government can stop that outcome by complying.
Two-way trade between New Zealand and EU was worth around $21.5 billion last year. When the deal was signed in 2022, it noted that by 2035, the value of New Zealand exports to the EU would increase by $1.8 billion a year.
The group noted the relevant clauses in the EU-NZ FTA, which came into force on 1 May 2024, specifically Article 19.2(4), Article 19.6(2), Article 19.6(3), and Article 19.7(3). Specifically 19.2(4) which states a "Party shall not weaken or reduce the levels of protection afforded in its environmental or labour law in order to encourage trade or investment". Also, those committing the parties to "effectively implement the Paris Agreement".
At the time the deal was struck in 2022, then Prime Minister Jacinda Ardern described it as containing "ground-breaking commitments on environment, labour rights and gender equality as foundational parts of a trade and sustainable development chapter".
The European Commission also celebrated it as a landmark agreement that included "unprecedented sustainability commitments, including respect of the Paris Climate Agreement and core labour rights".
The complaint's concern was "a pattern, not a single decision, and one that has escalated".
BothENDS said the New Zealand government had taken a "series of connected decisions" since the deal came into force that weakened domestic climate safeguards, naming a range of them as part of the complaint.
The complaint argued the government had no credible plan to meet its climate commitments, with an estimated 84 million-tonne emissions shortfall and a potential $4.4-5 billion cost for offshore mitigation. It noted comments by Prime Minister Christopher Luxon in June that "we ain't sending billions of dollars offshore".
It also highlighted a weakened methane target, removal of agriculture from carbon pricing, reversal of the offshore oil and gas exploration ban, a $200 million Gas Security Fund and planned LNG import facility, and legislation preventing climate-related claims against major emitters.
Regarding oil and gas exploration, it noted the reversal was presented as a way to "reinvigorate investment in petroleum exploration", and in announcing its move to prevent companies from being sued over damage caused by greenhouse gas emissions, the government noted it was committed to "attracting overseas investment".
Why the complaint is significant
Fernando Hernandez Espino, the head of trade and investment policy at Both ENDS, told RNZ the group had been following trade policy of the EU for years, and the climate promises in the EU-NZ FTA were already of interest.
The group monitors all trade agreements signed with the EU.
"What makes this case very significant is that this is the so-called gold standard," he said.
"There is no other trade agreement with the EU where regressing or rolling back on climate policies has consequences like this one, and in this particular case, it's about losing the access to the European market.
"So this is unique."
Hernandez Espino said the Single Entry Point had only been used a handful of times in the context of labour rights violations, "no case has ever reached a panel yet", he said describing the next step in the process, but noted this case wasn't about violation of labour rights or access to markets.
"This is the very first complaint on environmental and climate grounds," he added, saying it was going to be "huge" in the EU because there's such significant public scrutiny about "how our policies are in line with our Paris commitments".
The process was lengthy he said, describing how the EU Commission would first assess the case against the text published. If the group's claims are seen as valid, the Commission would begin talks with the New Zealand government, which would have to respond.
"If that doesn't happen, then an independent panel will be set up, and eventually, if the violations persist, then basically the access to the market will be lost."
But he said he just wanted New Zealand to go back to what it promised.
"What we are observing is not in line with our expectations: the regression of the policy, the denying of access to justice in the context of emitters, the lowering of the standards just to attract trade and investment - it is not what we agreed upon."
Hernandez Espino said they were asking two governments to "keep their word: New Zealand to keep its promises it signed, and Europe to enforce what has been signed".
Government response
McClay told RNZ New Zealand took its international obligations seriously and "always meets them".
"We are compliant with the EU free trade agreement."
He said it was "deeply disappointing" to see New Zealand organisations joining with "foreign actors to attack New Zealand".
"This harms our exporters and the jobs they provide."
McClay referenced the complaint made by the Greens to the European Commission "which was rejected".
"We have always been clear that we are committed to meeting our environment and climate obligations. However, it is for the New Zealand Parliament and our government to decide how we do this.
"It is not for overseas countries, organisations or lobby groups to tell New Zealand how to meet its obligations."
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