Negotiations for the trade agreement between the EU and New Zealand began in May 2018. It took a total of four years and twelve rounds of negotiations until the EU Commission and the New Zealand government reached an agreement in June 2022. A year later, in July 2023, the trade agreement was signed - now the ball is in the corner of the European Parliament. Due to a key change, the agreement is of particular interest: For the first time, it will be possible to impose sanctions for breaches of obligations regarding the chapter on "Trade and Sustainable Development" (TSD), as is the case with all other chapters in trade agreements.

On track for sustainable trade?
However, a new study commissioned by AK on the EU-New Zealand Agreement is sobering. Thomas Fritz, author of the study, analyses that sanction options are only provided for in certain sections. In case of violations against the objectives of the Paris Climate Agreement and ILO Core Labour Standards (e.g. prohibition of forced labour), trade restrictions can be imposed in the future as a last resort. However, the majority of the TSD chapters, such as commitments on gender equality, biodiversity, deforestation and sustainable supply chain management, will remain without sanctions.

Another point of criticism is that only the contracting parties, i.e. the government representatives of the EU and New Zealand, can initiate intergovernmental dispute settlement procedure with the option of sanctions. However, if trade unions or NGOs identify violations of labour rights or environmental sustainability requirements, they cannot take independent action against them. Thus, the monopoly of power remains with those who did not advocate stricter regulations in the first place.

Furthermore, Thomas Fritz emphasises the incoherence between the sustainability claim and the planned market openings. Agriculture and the processing industry will particularly benefit, whereby environmentally harmful behaviour and wage and social dumping are unfortunately widespread there. This is precisely what should not be rewarded with expanded trade opportunities.

Criticism remains
From the point of view of the Chamber of Labour, the trade agreement between the EU and New Zealand is not gold standard, but substandard. AK advocates a socially just and climate-neutral trade policy, which can in no way be achieved with this agreement. Fundamental reforms of the EU trade regime are needed. Sustainability and the rights of workers and consumers must come first. The option to impose sanctions must be extended to all labour and sustainability requirements. Due to the fact that they are on site and know best about breaches of contract, it must be possible for trade unions and NGOs to initiate sanction procedures. The EU must live up to its self-imposed goals, such as being the first climate-neutral continent by 2050.

In a statement, the European Consumer Organisation (BEUC) highlighted positive aspects of the agreement, such as increased protection for consumers when buying online; however, they too would not describe the EU-New Zealand trade agreement as a “model of sustainable trade”. For example, BEUC sees a conflict between the goals of the EU Green Deal and those of trade policy. The import of environmentally and climate-damaging products is promoted by the trade agreement. Their increasing consumption will certainly not advance the fight against the climate crisis.

What happens next?
The trade agreement was already approved by the EU Council before the summer, the only missing link now is the European Parliament. The latter will vote on the agreement in the Committee on International Trade at the end of October and probably in the plenary sessions in November. If Parliament approves and New Zealand also declares the completion of its ratification process, the agreement will enter into force. However, it is highly doubtful whether this will actually mark a change of course in EU trade policy.

Further Information:
A&W Blog: EU–Neuseeland: Das fortschrittlichste Handelsabkommen aller Zeiten? (Only in German)
AK Wien: On track for sustainable trade?
EU Commission: EU and New Zealand sign ambitious free trade agreement
BEUC: EU-New Zealand Trade Agreement