PROPOSED GREEN ECONOMY JOINT WORKING GROUP WITH CHILE AND SINGAPORE
MARCH 2025
Introduction
- This submission is made on behalf of the New Zealand International Business Forum (NZIBF), whose members are listed at Annex A[1]. NZIBF is a forum of senior business leaders working together to promote New Zealand’s engagement in the global economy.
- NZIBF is an organisation representing larger export sectors and key business associations. We are a multi-sector organisation with strong representation from the agriculture, horticulture, wine, and seafood industries, all of whom have significant credentials and investments in sustainability. For NZIBF members, individual companies, and “NZ Inc” generally, sustainability credentials are of increasing relevance to global customers and consumers. Ensuring that New Zealand continues to be seen as a sustainable producer is of paramount importance. Developing a compelling and coherent narrative around trade and sustainability can help support individual company and sector strategies to secure high value returns for our products.
- NZIBF supports the proposal to develop a Joint Working Group (JWG) with Chile and Singapore. With a tight focus, this could provide a useful platform to develop innovative policy with a like-minded group and expand New Zealand’s green trade credentials. It also builds on the foundation of existing partnerships, such as the Digital Economic Partnership Agreement (DEPA), signed in 2020 and involving all three economies. That said as with DEPA, and CPTPP before it, the success of the partnership in terms of impact on global policy making will require the accession of other members to the JWG over time.
Summary
- There is a growing nexus between trade and sustainability issues which creates both risk and opportunity for New Zealand exporters. NZIBF is convinced that trade and investment, done well, can contribute to a more sustainable planet and help the world to address the challenges of climate change and environmental degradation. New Zealand, Singapore and Chile, while small economies, are regional partners with complementary interests and strengths and a track record of working well together.
- Establishing an agreed set of principles to guide the group’s work and using them to develop a tightly focused and coherent framework for policy measures and commercially relevant trade and investment initiatives would be key tasks for the JWG. This includes technical work to develop agreed science-backed and internationally agreed standards and reporting as well as digital (paperless) compliance mechanisms for critical metrics such as the broader chain of custody assurance.
- NZIBF believes there is an opportunity for the three partners to develop a useful work programme which would identify mutually supportive trade and sustainability tools, opportunities for growing sustainable trade and investment and addressing green protectionism. The JWG offers complementary strengths in associated fields such as green shipping and the opportunity to develop the necessary new businesses and skills that more sustainable economies will require. This should assist in attracting new members to join the partnership which will boost the success of the initiative.
Trade and a greener planet[2]
- NZIBF believes that trade and the environment can and must be mutually reinforcing. For example, trade can support reductions in carbon emissions by making the technologies, goods and services to achieve reductions more accessible and efficient, and by providing incentives to shift production and consumption patterns to become more sustainable, unlocking significant business opportunities and supporting greater inclusion.
- The proposed JWG dovetails well with work that ABAC New Zealand has been developing in this space for several years. ABAC New Zealand Members have been at the forefront of supporting and advocating for the adoption of a set of climate leadership principles and urging greener trade frameworks within APEC as a voluntary and non-binding plurilateral forum. The JWG should review this work.
Developing a set of agreed principles
- Policy partnerships such as the proposed JWG are long term in nature and can be costly to develop. Given the other budgetary pressures on the Ministry, NZIBF believes the JWG needs to be tightly focused. We suggest a primary task of the JWG should be to adopt a set of principles to govern its approach to sustainable trade and investment, as MFAT has done through its refreshed Trade and Environment Framework. Similarly, NZIBF also welcomes also MPI’s further work with industry and other stakeholders through the GROW Initiative to develop a strategy and a set of principles. We view this work as a useful mechanism to build a common and collaborative approach to the development of policy and regulation across markets. A similar approach could work well in the JWG context.
- The principles and resulting framework should be WTO-consistent, build on undertakings in earlier free trade agreements and seek to avoid the risks of green protectionism.
Potential areas of focus for the Joint Working Group
- NZIBF sees several potential areas of focus for the JWG, including:
- continuing to champion sustainable food systems by addressing proliferating non-tariff barriers in the trade and environment space, encouraging the use, where required, of digital and paperless methods for demonstrating compliance and eliminating environmentally harmful and trade distorting subsidies
- promoting trade and investment in environmental goods and services, building on work undertaken in APEC and the WTO and ACCTS (the Agreement on Climate Change, Trade and Sustainability), including the inclusion of wool and wood and other lower carbon products as environmental goods
- helping facilitate trade in lower carbon products that are produced in a more sustainable way, including by working for a coherent and consistent international standards system that captures what is to be measured, how this is done and for what purpose
- exploring ways to decarbonise the maritime industry, including enhancing supply chains for low-carbon fuels for shipping
- sharing insights into policies and programmes that build business collaboration especially between SMEs, develop green skills and support greater inclusion of marginalised groups.
Green standards
- The increasingly close linkage between global trade and sustainability is resulting in a proliferation of sustainability-linked government policies, regulations, and private standards. Well-developed, internationally agreed standards can drive positive environmental outcomes, ensure access to customer portfolios and shelf-space, and in some instances help build competitive advantage. There is, however, real risk that standards will proliferate across markets, creating cumbersome regulations for New Zealand exporters, evolving into non-tariff barriers to trade or discriminating in favour of other countries’ domestic industries. NZIBF’s concern is that the inter-section between trade, climate and sustainability could become a new form of protectionism, especially if not advanced according to WTO disciplines.
- The EU’s Deforestation Regulation (EUDR) is a case in point. The EUDR came into force on 29 June 2023 but an agreed delay on a start date sees it applying from 30 December 2025 for large companies, while MSMEs have an additional six months. The regulations require operators and traders to prove that products do not come from deforested land or contribute to forest degradation. Meeting the requirements of the EUDR and the need to provide data imposes a heavy burden on New Zealand’s farmers and primary producer groups.
Environmental credentials supported by trusted data sharing
- Substantiating the sustainable nature of exported products has become increasingly important in international trade. Without efficient digital data sharing mechanisms in cross-border trade this is an onerous task. Proof of having met requirements – by showing products’ sustainability credentials to many parties along the value chain is increasingly required. This will allow the demonstration of such things as food having been produced in a demonstrably sustainable food system and ensuring lower carbon products meet the claims that have been associated with them.
- Singapore is a global leader in the digital economy. Singapore and Chile are both involved in paperless trade pilots through APEC. Paperless trade allows product producers to share a ‘stack’ of information about a product throughout its journey through the supply chain – including its sustainability credentials – and have that information trusted by those who need to receive it. New Zealand, as NZIBF has expressed separately in recommendations to Ministers, is something of a laggard in this regard. While we have, for example, adopted digital and paperless trade undertakings in our FTAs we have been slow to implement them. The JWG is therefore an opportunity for New Zealand to learn what these economies are doing to use digital tools to support businesses needing to substantiate their environmental credentials.
- It is important that New Zealand focus both on the “what” (the determination that something is “environmental/sustainable/carbon neutral”, etc.) but also on the “how” of delivery (which is the link to paperless trade).
Subsidies
- There is a clear link between subsidies, negative environmental outcomes and trade distortions. New Zealand must continue to resist environmentally harmful subsidies and acknowledge that trade distortions created by subsidies prevent un-subsidised producers from being able to invest in sustainability practices. New Zealand governments and business have long advocated for abolition of subsidies, whether on trade-distorting domestic support for agriculture, eliminating inefficient fossil fuel subsidies or those that are contributing to the destruction of global fish stocks.
Green shipping
- Shipping is critical for New Zealand’s export-driven economy, carrying 99 percent of the country’s trade by volume and around 80 percent by value. Low-emissions shipping is therefore an essential part of carbon reduction for exporters. Our markets and customers are increasingly demanding that exporters adopt scientific carbon targets and implement plans to lower emissions over time. Low-emissions shipping will therefore be a critical part of achieving the government’s goal of doubling the value of New Zealand’s exports.
- Coordinated action will be required across governments and supply chains, from ports, fuel, and energy companies to shippers to establish a low emission shipping corridor. A green or low-emissions shipping corridor is a route between two major port hubs with the technological, economic, and regulatory feasibility to operate low-emissions ships. That means it has the regulations and infrastructure to dock and fuel low emissions vessels, with low-emissions fuel available in the country along with the infrastructure to bunker and manage these fuels. The JWG could usefully explore how the three economies (and others in future) might advance the concept of green shipping corridors internationally.
Inclusion
- As New Zealand, Chile and Singapore seek to build more sustainable economies there will need to promote new businesses, especially SMEs, and a “green shift” in our respective labour forces. New ways of doing business more efficiently will require new investment in start-up companies and new jobs across the region. Women’s significant under-representation in essential green, digital and STEM education and careers will undermine their ability to access those opportunities. There is an opportunity for the JWG to consider ways to address gender and other barriers in the workforce so that all three economies can meet the demand for a labour force capable of realising the challenge of a green transition as well as ensuring that key groups are not left out. Drawing on the wisdom, insights and skills of Indigenous peoples will also be important.
Linkages with other collaborative efforts
- NZIBF acknowledges the efforts already underway across New Zealand government agencies, notably MFAT, MPI and MfE, which are involved in international policy discussions encompassing both trade and sustainability, including bilaterally, (for example with the European Union) multilaterally (at the WTO, FAO, OECD and COP), and in regional initiatives (such as CPTPP, APEC and IPEF). It is important that New Zealand’s approach to sustainability through the JWG is consistent with our approach across all these fora.
- NZIBF is grateful for the opportunity to participate in this consultation. We look forward to further opportunities to contribute ideas to the JWG work programme.
Recommendations to the Ministry of Foreign Affairs and Trade
- NZIBF recommends that the Ministry:
- note the NZIBF’s support for the establishment of a tightly focused Green Economy Joint Working Group between New Zealand, Chile and Singapore, incorporating other members over time
- note NZIBF’s viewthat the Joint Working Group should seek to establish an achievable and commercially relevant work programme with a joint commitment to implement a set of principles and an agreed strategy
- continue to consult widely with industry stakeholders as the work programme is further developed.
[1] The view in this submission is that of NZIBF as a whole. Individual members may have different views on specific issues covered in this submission.
[2] This section and those following draw on work undertaken by the New Zealand Members of the APEC Business Advisory Council (ABAC) whose work we acknowledge.
