Title
THE AGREEMENT ON CLIMATE CHANGE, TRADE AND SUSTAINABILITY
Preamble
PREAMBLE
The Republic of Costa Rica, hereinafter referred to as "Costa Rica",
Iceland,
New Zealand,
and
The Swiss Confederation, hereinafter referred to as "Switzerland", hereinafter referred to each individually as "Party" and collectively as the "Parties",
ACKNOWLEDGING the urgent action all nations must take to combat climate change as well as loss of biodiversity, pollution and other serious environmental challenges in order to achieve sustainable development objectives;
RECALLING their rights and obligations under multilateral environmental and trade agreements to which they are a party;
AFFIRMING their commitment to take action to reduce greenhouse gas emissions, biodiversity loss and pollution with the aim of strengthening the global response to the serious challenges they pose;
DETERMINED to complement the various efforts to promote closer international collaboration on trade and environment issues, and to further strengthen the multilateral trading system in a way that contributes to sustainable development, building on their respective rights and obligations under the Marrakesh Agreement establishing the World Trade Organization done at Marrakesh on 15 April 1994 (WTO Agreement) and the agreements negotiated thereunder;
RECOGNISING the importance of active stewardship, guardianship and protection of natural surroundings;
EMPHASISING the essential role the environment plays in the well-being of citizens and communities, including Indigenous Peoples, among others, and the importance of their contribution to efforts to pursue sustainable development objectives;
REAFFIRMING their commitment to pursue sustainable development and recognising the importance of coherence and mutual supportiveness of trade and environment in this respect;
DETERMINED to enhance the contribution of trade and trade policy as important levers in the transition to net-zero emissions, more resource-efficient and circular economies, thereby improving economies and raising incomes;
DESIRING also to promote openness, inclusiveness and transparency;
RECOGNISING that trade and trade policy can and must support climate change mitigation and adaptation, pollution prevention and control, and the sustainable use, protection or restoration of biodiversity, ecosystems and natural resources, including water and marine resources;
ACKNOWLEDGING in that regard that tariff elimination on an ambitious and environmentally credible list of goods encourages more environmentally sustainable production, consumption and investment;
AND ACKNOWLEDGING in that regard the contribution of liberalised trade in environmental and environmentally related services based on a credible list;
RECOGNISING that harmful fossil fuel subsidies constitute a major obstacle to tackling climate change, and undermine sustainable development and shared commitments to uphold the objectives of the United Nations Framework Convention on Climate Change (UNFCCC) done at New York on 8 May 1992 as well as the goals of the Paris Agreement done at Paris on 12 December 2015 and the Parties' respective goals to achieve net zero emissions;
RECOGNISING the contribution that high-integrity and high-quality voluntary eco-labelling programmes can make to climate, environmental, trade and sustainable development objectives, building on existing international work on eco-labelling and related issues;
REAFFIRMING the right of each Party to regulate within its territory in order to meet legitimate national policy objectives;
ACKNOWLEDGING the importance of good corporate governance and responsible business conduct for sustainable development, and affirming their aim to encourage enterprises to observe internationally recognised guidelines and principles in this respect, such as the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, the OECD Principles of Corporate Governance, the United Nations Global Compact and the United Nations Guiding Principles on Business and Human Rights;
RECOGNISING the need for a just transition, the particular challenges faced by developing countries and their vulnerability to the impacts of climate change;
RECOGNISING the importance of ensuring an agreement that is able to respond to developments in climate, environmental, trade and sustainable development objectives through the inclusion of additional trade policy actions;
DESIRING to expand participation to this Agreement and provide momentum towards an eventual multilateral set of outcomes;
HAVE AGREED to conclude this Agreement:
Body
Chapter 1. INITIAL AND GENERAL PROVISIONS
Article 1.1. Objective
The objective of this Agreement is to foster the contribution of international trade in addressing climate change and other serious environmental challenges, including loss of biological diversity and pollution, thereby contributing to the achievement of sustainable development, through such actions as:
(a) removing tariffs on environmental goods;
(b) liberalising trade in environmental and environmentally related services;
(c) disciplining and eliminating harmful fossil fuel subsidies in order to mitigate their adverse impact on the environment and contribute to global efforts to rapidly reduce greenhouse gas emissions resulting from production and consumption of fossil fuels; and
(d) providing guidelines for voluntary eco-labelling programmes and mechanisms.
Article 1.2. Geographical Scope
Unless otherwise provided, this Agreement shall apply:
(a) for Costa Rica, to the national territory including air and maritime space, where the State exercises complete and exclusive sovereignty or special jurisdiction in accordance with Articles 5 and 6 of the Constitución Política de la República de Costa Rica and international law;
(b) for Iceland:
(i) to the land territory, internal waters and the territorial sea, and the air-space above the territory of Iceland, in accordance with international law; and
(ii) to the exclusive economic zone and the continental shelf, in accordance with international law;
(c) for New Zealand, to the territory of New Zealand and the exclusive economic zone, seabed and subsoil over which New Zealand exercises sovereign rights with respect to natural resources in accordance with international law, but does not include Tokelau; and
(d) for Switzerland, to the territory of Switzerland, including land, internal waters and air-space, in accordance with international law and its domestic law.
Article 1.3. Definitions
For the Purposes of this Agreement:
(a) “days” means calendar days;
(b) “export duty” means any duty or charge of any kind imposed on, or in connection with, the exportation of a good, except where any suchduty or charge is:
(i) adopted or maintained on that good when destined for domestic consumption; or
(ii) imposed in conformity with Article VIII of GATT 1994;
(c) “Harmonized System” or “HS” means the Harmonized Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes, Chapter Notes and Subheading Notes as adopted and implemented by the Parties in their respective laws;
(d) “GATS” means the General Agreement on Trade in Services, set out in Annex 1B to the WTO Agreement;
(e) “GATT 1994” means the General Agreement on Tariffs and Trade 1994, set out in Annex 1A to the WTO Agreement. For greater certainty, references in this Agreement to articles in GATT 1994 include the interpretative notes;
(f) “import duty” means any duty or charge of any kind imposed on, or in connection with, the importation of a good, except where any such duty or charge is:
(i) in conformity with Article III of GATT 1994;
(ii) an anti-dumping or countervailing duty applied in conformity with GATT 1994, the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, set out in Annex 1A to the WTO Agreement, and the SCM Agreement; or
(iii) in conformity with Article VII of GATT 1994; and
(g) "SCM Agreement" means the Agreement on Subsidies and Countervailing Measures, set out in Annex 1A to the WTO Agreement.
Article 1.4. Relation to other International Agreements
1. Recognising the Parties' intention for this Agreement to coexist with their existing international agreements, each Party affirms:
(a) in rrelation to existing international agreements to which all Parties are party, its existing rights and obligations with respect to the other Parties; and
(b) in relation to existing international agreements to which that Party and at least one other Party are party, its existing rights and obligations with respect to that other Party or Parties, as the case may be.
2. If a Party considers that a provision of this Agreement is inconsistent with a provision of another agreement to which it and at least one other Party are party, the relevant Parties to the other agreement shall, upon request, consult with a view to reaching a mutually satisfactory solution taking into consideration general principles of international law. This paragraph is without prejudice to a Party's rights and obligations under Chapter 7 (Dispute Settlement).
3. As a result of the customs union established by the Customs Treaty of 29 March 1923 between Switzerland and Liechtenstein, Switzerland shall represent Liechtenstein in matters covered thereby.
Article 1.5. Most-Favoured-Nation Application
The Parties affirm their intention to apply this Agreement in accordance with their obligations under paragraph 1 of Article I of GATT 1994 and paragraph 1 of Article Il of GATS.
Article 1.6. Transparency
1. Each Party shall promptly publish, or otherwise make publicly available, its laws, regulations, judicial decisions, administrative rulings of general application as well as its respective international agreements that may affect the operation of this Agreement.
2. Each Party shall respond without undue delay to specific questions and provide, upon request, information to other Parties on matters referred to in paragraph 1.
3. To the extent possible, each Party shall promote public awareness of this Agreement and its related laws, regulations and practices, take the necessary measures to make information relevant to this Agreement easily accessible to the public by electronic means and provide access to the public upon request to such information, in accordance with its laws and regulations. Each Party undertakes to be open to receive and take into consideration input from the public on matters relevant to this Agreement in accordance with its laws and regulations.
4. Nothing in this Agreement shall be construed to require any Party to disclose information, if the Party considers that such disclosure would:
(a) be contrary to the public interest;
(b) be contrary to its domestic law;
(c) impede law enforcement; or
(d) prejudice the legitimate commercial interests of any economic operator.
5. In case of inconsistency between this Article and provisions relating to transparency in other chapters of this Agreement, the latter shall prevail to the extent of the inconsistency.
Article 1.7. Cooperation In International Fora
The Parties shall strive to strengthen their cooperation on trade and environmental issues of mutual interest in relevant bilateral, regional and multilateral fora in which they participate.
Article 1.8. Security Exceptions
1. For the purposes of this Agreement, Article XXI of GATT 1994 shall apply and is hereby incorporated into and made part of this Agreement, mutatis mutandis.
2. For the purposes of this Agreement, Article XIVbis of GATS shall apply and is hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 1.9. Restrictions to Safeguard the Balance of Payments
1. Where a Party is in serious balance of payments and external financial difficulties or under threat thereof, it may:
(a) in the case of trade in environmental goods covered by this Agreement, in accordance with the conditions provided for under GATT 1994 and the WTO Understanding on the Balance-of- Payments Provisions of the General Agreement on Tariffs and Trade 1994, set out in Annex 1A to the WTO Agreement, adopt restrictive import measures;
(b) in the case of trade in environmental and environmentally related services, in accordance with the conditions provided for under Article XII of GATS, adopt or maintain restrictions on services on which it has undertaken commitments under this Agreement, including on payments or transfers for transactions related to such commitments.
2. Any restrictions adopted or maintained by a Party under paragraph 1, or any changes thereto, shall be notified promptly to the other Parties. A notification by a Party in accordance with its international obligations as set out in paragraph 1 shall be deemed equivalent to a notification under this Agreement.
Article 1.10. Taxation
1. for the purposes of this Article:
(a) "tax convention" means a convention for the avoidance of double taxation or other international taxation agreement or arrangement; and
(b) taxation measures do not include import duties and export duties as defined in Article 1.3 (Definitions).
2. Except as provided in this Article, nothing in this Agreement shall apply to taxation measures.
3. Nothing in this Agreement shall affect the rights and obligations of a Party under any tax convention. In the event of any inconsistency between this Agreement and any such tax convention, the latter shall prevail to the extent of the inconsistency. The competent authorities under that tax convention shall have the sole responsibility to determine whether an inconsistency exists between this Agreement and that tax convention. The determination shall be issued within six months of referral to the competent authorities, to the extent possible. An arbitration panel established under Chapter 7 (Dispute Settlement) to consider a dispute related to a taxation measure shall accept as binding a determination of the competent authorities of the Parties made under this paragraph.
4. Subject to paragraph 3, the provisions referred to hereafter shall apply to taxation measures:
(a) Chapter 3 (Trade in Environmental Services); and
(b) Chapter 4 (Fossil Fuel Subsidies).
Article 1.11. Tiriti O Waitangi / Treaty of Waitangi
1. Provided that such measures are not used as a means of arbitrary or unjustified discrimination against persons of the other Parties or as a disguised restriction on trade in goods, trade in services and investment, nothing in this Agreement shall preclude the adoption by New Zealand of measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this Agreement including in fulfilment of its obligations under the Tiriti o Waitangi / Treaty of Waitangi.
2. The Parties agree that the interpretation of the Tiriti o Waitangi / Treaty of Waitangi, including as to the nature of the rights and obligations arising under it, shall not be subject to the dispute settlement provisions of this Agreement. Chapter 7 (Dispute Settlement) shall otherwise apply to this Article. An arbitral tribunal established under Article 7.7 (Establishment of an Arbitral Tribunal) may be requested by another Party to determine only whether any measure referred to in paragraph 1 is inconsistent with its rights under this Agreement.
Chapter 2. TRADE IN ENVIRONMENTAL GOODS
Article 2.1. Objective
The objective of this Chapter is to promote the liberalisation of trade in environmental goods as a means of contributing to the transition to a low-emission, climate-resilient, circular and sustainable economy, and increasing the uptake of, and investment in, relevant technologies and products that address pressing environmental needs.
Article 2.2. Scope
This Chapter shall apply exclusively to trade in environmental goods listed in Annex II (List of Environmental Goods)
Article 2.3. Environmental Goods
1. Environmental goods listed in Annex II (List of Environmental Goods) are goods that substantially contribute to:
(a) climate change adaptation and mitigation;
(b) pollution prevention and control;
(c) the sustainable use, protection or restoration of natural resources, biodiversity and ecosystems;
(d) the transition to a circular economy; (e) the sustainable development objectives of the Parties; or
(e) other wider environmental goals of the Parties.
2. The list of environmental goods contained in Annex II (List of Environmental Goods) is not intended to include goods which significantly harm any purpose referred to in paragraph 1.
3. The list of environmental goods contained in Annex II (List of Environmental Goods) shall be reviewed regularly, including with respect to the matters referred to in paragraphs 1 and 2, with a view to updating the list pursuant to Article 2.10 (Review).
Article 2.4. Conservation and Sustainable Management Relevant for the Production of Environmental Goods
1. Acknowledging the importance to the objective of this Agreement of the conservation and sustainable management of ecosystems relevant for the production of environmental goods, the Parties commit to, inter alia:
(a) promote trade in sustainably produced environmental goods;
(b) ensure transparency of domestic policies and measures pertaining to sustainable production of environmental goods;
(c) foster cooperation on improving and strengthening standards, ptactices and guidelines for sustainably produced environmental goods, where applicable;
(d) strive to ensure that their respective environmental laws and policies provide for and encourage high levels of environmental protection, and continue to improve their respective levels of environmental protection;
(e) engage in discussions on the possible equivalence of relevant domestic sustainability instruments, policies and systems of other Parties as adequately fulfilling the sustainability objectives of their respective standards and regulations, even where the instruments, policies and systems differ from their own (1);
(f) undertake to ensure the conservation and sustainable management of the ecosystems relevant for the production of environmental goods, with the objective of reducing greenhouse gas emissions and biodiversity loss, including those resulting from deforestation, forest degradation, land use and land-use change including for agricultural and mining activities; and
(g) promote the effective use of existing international instruments pertinent to subparagraphs (a) to (f).
2. For greater certainty, the Parties affirm their right to adopt or maintain measures in accordance with their international obligations in order to achieve legitimate objectives in relation to environmental goods under this Agreement, including due diligence systems or certification schemes to verify that the relevant commodities and products have been produced in a sustainable and lawful manner.
3. With regard to environmental goods classified under HS subheadings of Chapter 44 and HS subheading 9406.10 listed in Annex II (List of Environmental Goods):
(a) a Party may adopt or maintain measures referred to in paragraph 2 to verify that such commodities and products have been produced in a sustainable and lawful manner;(2) and
(b) if a Party considers that the elimination of import duties would be detrimental to the conservation or sustainable management of forests and related ecosystems, notwithstanding Article 2.5 (Elimination of Import Duties), it may postpone the elimination of tariffs on such environmental goods for a period of up to 18 months following the entry into force of this Agreement for that Party. That Party may extend the postponement for a further 18 months, if necessary for introducing appropriate instruments to address these concems. Any postponement under this subparagraph shall be subject to prior notification to the other Parties.
Article 2.5. Elimination of Import Duties
1. Each Party shall eliminate import duties on all environmental goods listed in Annex II (List of Environmental Goods), except as otherwise provided for in that Annex.
2. A Party shall not introduce new import duties on any environmental good listed in Annex II (List of Environmental Goods).
Article 2.6. Elimination of Export Duties
1. Each Party shall eliminate existing export duties on all environmental goods listed in Annex II (List of Environmental Goods), except as may be agreed upon accession to this Agreement, to the extent strictly necessary and for a period not exceeding five years, as provided for in Annex II (List of Environmental Goods). A Party that has postponed the elimination of export duties on goods in Annex II (List of Environmental Goods) shall endeavour to autonomously minimise the application and level of those duties.
2. A Party shall not introduce new export duties on any environmental good listed in Annex II (List of Environmental Goods).
Article 2.7. Temporary Special Mechanism
1. Reaffirming their shared aim to encourage increased participation of WTO Members to this Agreement, the Parties recognise that, for some economies, covering critical mass of international trade in environmental goods may be desirable before trade in certain environmental goods is liberalised.
2. Notwithstanding Article 2.5 (Elimination of Import Duties) and provided the conditions in paragraphs 3 and 4 are fulfilled:
(a) a Party may postpone the elimination of import duties on an environmental good at the time it accedes to this Agreement, provided that such postponement is specified in Annex II (List of Environmental Goods); and
(b) if new items are added to Annex II (List of Environmental Goods) in accordance with Article 6.2 (Functions of the Joint Commission), the respective decision by the Joint Commission shall indicate for which of the new items, if any, a Party may postpone the elimination of import duties (3).
3. The temporary postponement of the elimination of import duties is available for a period of 12 years from the date of entry into force of this Agreement, and such import duties once reduced or eliminated shall not be increased or re-introduced.
4. At the time a Party accedes to this Agreement, it may postpone the elimination of import duties on up to 8% of the number of items contained in Annex II (List of Environmental Goods) for a period six years after this Agreement enters into force for that Party, and up to 4% thereafter. Postponement under this paragraph shall in no case exceed the period set forth in paragraph 3.
5. A Party shall not postpone the elimination of import duties pursuant to paragraph 2 on more than half of the environmental goods classified in a single HS Chapter. Where a Party postpones the elimination of import duties pursuant to paragraph 2 on more than one environmental good, it shall not select goods classified in the same HS Chapter. This paragraph only applies where Annex II (List of Environmental Goods) includes more than one item classified in a particular HS Chapter.
Article 2.8. General Exceptions
1. For the purposes of this Chapter, Article XX of GATT 1994 shall apply and is hereby incorporated into and made part of this Agreement, mutatis mutandis.
2. The Parties understand that the measures referred to in Article XX(b) of GATT 1994 include environmental measures necessary to protect human, animal or plant life or health, and that Article XX(g) of GATT 1994 applies to measures relating to the conservation of living and non-living exhaustible natural resources.
Article 2.9. Sub-Committee on Trade In Environmental Goods
1. A Sub-Committee on Trade in Environmental Goods ("the Sub-Committee") is hereby established, consisting of representatives of each Party.
2. The Sub-Committee may consider any matter arising under this Chapter.
3. In relation to a matter referred to in paragraph 2, the functions of the Sub- Committee shall include: