Agreement on Climate Change, Trade and Sustainability: Forging New Frontiers in Trade and Sustainability Debate

Abstract

The Agreement on Climate Change, Trade and Sustainability (ACCTS) is a historic international trade agreement that weaves environmental considerations into a traditional trade agreement. While only four countries, namely New Zealand, Switzerland, Iceland, and Costa Rica, are Parties to the ACCTS, it is open to new members, and a textual analysis of its review provisions underscores the commitment of ACCTS Parties to ‘design flexibility’. Its Chapters liberalising trade in environmental goods and services, disciplining fossil fuel subsidies and providing voluntary guidelines on ecolabelling mark it as an international trade agreement with many historical firsts. This Article will undertake a legal assessment of the ACCTS in light of existing debates and jurisprudence at the World Trade Organization (WTO), Organisation for Economic Co-operation and Development (OECD), and Asia-Pacific Economic Cooperation (APEC) on environmental goods and services, fossil fuel subsidies and ecolabelling. The Article will conclude by highlighting the potentially impactful aspects of ACCTS that can influence key areas of integration of legal approaches to trade and environment through path dependency and demonstration effect. In particular, in its analysis, this Article draws attention to ACCTS’ exclusion of ‘environmentally harmful’ goods and services from trade benefits through ‘ex-out’ and ‘end-use’ provisions; its cognizance of the ever-evolving nature of environmental approaches through dedicated review provisions; and its use of subsidy discipline against fossil fuel subsidies in contrast to the WTO’s record of disciplining renewable energy subsidies.