A Dutch NGO has filed the first climate complaint under the European Union’s trade rules, arguing that New Zealand violated the environmental provisions of its free trade agreement with the bloc by weakening its climate regulations.
The case will test whether binding climate provisions in the EU’s free trade deals can be enforced to hold governments accountable to their climate obligations, experts told Climate Home News.
The EU-New Zealand free trade agreement, which came into force in 2024, was the first in the world to include legally-binding climate provisions and possible sanctions for violating them, as the EU seeks to use its trade partnerships to advance greater environmental protection.
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A Dutch NGO has filed the first climate complaint under the European Union’s trade rules, arguing that New Zealand violated the environmental provisions of its free trade agreement with the bloc by weakening its climate regulations.
The case will test whether binding climate provisions in the EU’s free trade deals can be enforced to hold governments accountable to their climate obligations, experts told Climate Home News.
The EU-New Zealand free trade agreement, which came into force in 2024, was the first in the world to include legally-binding climate provisions and possible sanctions for violating them, as the EU seeks to use its trade partnerships to advance greater environmental protection.
Under the deal, both parties committed not to weaken their environmental law to promote trade or investment and to “refrain from any action or omission that materially defeats the object and purpose of the Paris Agreement”.
At the time the agreement was signed, EU Commission President Ursula von der Leyen said the agreement included “unprecedented social and climate commitments”. But experts warned it was unclear how the Paris Agreement provisions would be enforced.
The EU included a similar “trade and sustainable development” clause in 14 other bilateral trade deals in recent years, with several others, including with China, awaiting ratification or being negotiated.
Climate activists at the Dutch NGO Both ENDS argue that the New Zealand government breached these terms by reopening its waters to offshore oil and gas exploration, releasing a climate plan that barely requires any emissions reductions, and passing a law that prevents corporations from getting sued over climate damages.
“Here, we have a so-called gold standard for free trade agreements with sustainability provisions but we have a trading partner that is doing exactly the opposite: regressing, as all the evidence points to, away from the Paris Agreement,” said Marius Troost, a senior policy advisor at Both ENDS.
Can the EU enforce its climate trading rules?
The Dutch environmental group filed the complaint under the EU Commission’s Single Entry Point, a mechanism that allows civil society to request enforcement of the bloc’s trade commitments.
The EU-New Zealand trade deal includes the possibility of suspending beneficial trading arrangements between the two parties in response to serious violations of its climate provisions. This, Troost said, is a “unique” tool to enforce both parties’ obligations under the deal.
“This is an opportunity for the EU and New Zealand to show that they are actually serious about these commitments,” he told Climate Home News.
A spokesperson for New Zealand’s Ministry of Foreign Affairs and Trade denied any violations of the agreement and said the government hadn’t received formal notice of the complaint. The country, they said, “takes its commitments under the NZ-EU Free Trade Agreement seriously, including the agreement’s environment and climate-related provisions”.
An EU Commission spokesperson said it will start a preliminary assessment of the complaint and engage with NGO Both ENDS. “Sustainability is a central pillar of the EU-New Zealand relationship,” they added.
The EU is New Zealand’s second-largest trading partner after China, with about 14% of the country’s exports going to the European market. Agricultural products like meat, diary, fruit and vegetables are the country’s biggest exports to Europe.
New Zealand is ‘having its cake and eating it’
Eliza Prestidge-Oldfield, a senior legal researcher at the New Zealand-based Environmental Law Initiative, which is supporting Both ENDS’s claim, told Climate Home News that if the EU upholds the complaint, both parties would begin a negotiation process.
“The idea is to try and resolve this positively with the New Zealand government acknowledging areas where it needs to change its actions in order to comply with the agreement, and get that change in place as soon as possible,” she said.
But New Zealand’s right-wing coalition government said it won’t take any directives from foreign actors regarding its policies. Trade minister Todd McClay told local media that it was “not for overseas countries, organisations or lobby groups to tell New Zealand how to meet its obligations”.
Prestidge-Oldfield argued the complaint isn’t about “Europe telling anyone what to do at all”, but rather stressing the conditions under which they are willing to import goods from New Zealand. “The New Zealand government is trying to have its cake and eat it too,” she said.
If New Zealand refuses to adjust its policies in line with the agreement, the complaint will be assessed by an independent panel, which can require the country to make changes. If those changes are not implemented, the panel could decide that New Zealand should lose its preferential EU market access.
A negotiated resolution is more likely, however, with no prior labour-related complaints to the EU having ever reached the panel stage.
Alexander Gillespie, a law professor at the University of Waikato in New Zealand, said sanctions would be a “last resort”. “This is a test case, which will generate considerable attention – as it is not just about climate change, but how free trade and environmental sustainability have been woven together,” he said in a statement.
Trade deals as tool for climate accountability
Experts said the case could set a precedent for how trade deals can be used to hold governments accountable on climate action. The EU has enacted similar “trade and sustainable development” clauses in its trade agreements with Canada, Japan and South Korea.
While still pending ratification, the EU’s 2024 trade agreement with Mercosur – which encompasses Argentina, Brazil, Paraguay and Uruguay – also includes climate provisions, including a commitment to “effectively implement” the Paris Agreement and promote low-carbon trade.
In addition, legal researcher Prestidge-Oldfield noted that last year’s landmark advisory opinion on climate change by the International Court of Justice (ICJ) laid out stronger climate obligations for developed countries like New Zealand and could strengthen allegations of violations of the terms of the trade deal.
“It will be an interesting area to watch how the EU free trade agreement is interpreted in the light of this advisory opinion,” she said.
