Only five countries intend to sign on for New Zealand's new trade agreement to combat climate change, but Prime Minister Jacinda Ardern said this was only the beginning and expected more countries to join.

Ardern announced the launch of negotiations for the Agreement on Climate Change, Trade and Sustainability (ACCTS) at the United Nations in New York this morning.

She was joined by representatives of countries that intend to sign up, including Norway's Prime Minister Erna Solberg, Iceland's Prime Minister Katrín Jakobsdóttir, Fijian Prime Minister Frank Bainimarama and Costa Rica Vice Minister of Foreign Affairs Duayner Salas.

The agreement aims to:


• Remove tariffs on environmental goods

• Establish concrete commitments to eliminate fossil fuel subsidies

• Develop voluntary guidelines for eco-labelling programmes and mechanisms

"There is an urgent and critical need for increased global action if we are to limit global warming to 1.5C above pre-industrial levels," Ardern said.

She said the small number of countries was not reflective of the breadth of the agreement's ambition, and the EU could be next in line.

This morning she had discussed the agreement during her bilateral meeting with Cecilia Malmström, the European Commissioner for Trade, and Ardern said it would be "natural" for the EU to join up, given the work the EU has already done on lowering tariffs on environmental goods.

The announcement has been foreshadowed, and Ardern asked more countries to join the agreement in her national statement to the UN General Assembly yesterday.

"International trade rules are uniquely placed to be part of the solution by removing trade barriers for green products and services and stopping pollution being subsidised," Ardern said this morning.


"For example wind turbine parts and solar panels attract tariffs, despite being good for the environment.

"If trade rules can require subsidies to be removed from things like agriculture, then it is only consistent that they also require subsidies to come off polluting fossil fuels."

United Nations Building in New York is the headquarters of the United Nations organisation. Photo / Supplied
United Nations Building in New York is the headquarters of the United Nations organisation. Photo / Supplied

Jakobsdóttir said the need for action was urgent, and trade was an effective tool for reaching climate change objectives.

"We're entering a new era where we can't really have free trade without climate objectives. We can't have free trade that counteracts climate justice.

"While the nations we represent here are not large in terms of trade flows, we believe we can actually become a significant force for good by leading the way and inviting others to join us."

Ardern and New Zealand have been pushing for fossil fuel subsidies to be cut for some time.

In December 2017, Trade Minister David Parker signed a ministerial statement along with 11 other WTO members that called on the WTO to phase out fossil fuel subsidies.

Ardern also used her address to Apec in Vietnam in 2017 to push the issue.

"Every year governments spend US$500 billion to subsidise fossil fuels, four times the amount we spend on renewable energy," she told Apec.

"We must phase them out. It is incumbent on us to begin incentivising investment in the right technologies."

Today Ardern said that commitments from the G20 and Apec to remove fossil fuel subsidies had led to little action.

ACCTS negotiations are expected to start in February 2020, she said.

Bill Gates, Spanish Prime Minister Pedro Sanchez, Prime Minister Jacinda Ardern and Melinda Gates at the Goalkeeper 2019 event in New York. Photo / PMO
Bill Gates, Spanish Prime Minister Pedro Sanchez, Prime Minister Jacinda Ardern and Melinda Gates at the Goalkeeper 2019 event in New York. Photo / PMO

A 2017 research paper by Terrence Loomis, of the Fossil Fuels Aotearoa Research Network, said that New Zealand subsidised the fossil fuel industry by about $88 million a year.

Loomis said last week that the Government defined a subsidy very narrowly, but he had used a definition more in line with the OECD and IMF which included tax exemptions for drilling rigs and seismic ships, tax deductions for petroleum mining costs, and reduced petrol prices for sectors such as agriculture, forestry and fishing.

The latter, which he called an indirect subsidy, made up the bulk of the $88m figure.

"To the extent that New Zealand continues to provide any type of taxpayer support for the petroleum industry, the Government is at risk of being seen as two-faced on the world stage by calling for all countries to phase out subsidies," Loomis said.

Asked about Loomis' figures last week, Ardern questioned whether they included spending that would not traditionally be called a subsidy.

But she conceded that New Zealand was not free of such subsidies.

"We are subsidising and giving tax incentives for oil exploration. Those are the obvious ones where people will see an argument that you should be phasing out."

Earlier today, Ardern appeared on a breakfast show on CBS, and gave the opening speech at the Goalkeepers event, hosted by Bill and Melinda Gates.

She then participated in a Bloomberg Global Business Forum panel about trade and climate change.