Opinion: The New Zealand-European Union Free Trade Agreement, which will take effect on Wednesday May 1, and the NZ-UK Free Trade Agreement, operational since May 31, 2023, signify more than just economic opportunities for New Zealand businesses. Embedded within these agreements are critical provisions aimed at eradicating modern slavery in supply chains and promoting responsible business conduct.
As New Zealand aims to double trade exports over the next decade, it is clear this ambition hinges on more than just financial transactions. Compliance with modern slavery legislation becomes not only a binding obligation but a strategic necessity for New Zealand businesses navigating the global marketplace and exporting their products at a higher capacity than ever before.
While these free trade agreements serve as frameworks for economic collaboration, their significance extends far beyond this. They are an opportunity to raise labour standards, enforce human rights, and foster a culture of responsible business conduct on a global scale. By seeking consistency and complementarity across various policy frameworks, these agreements aim to maximise efficiency while mitigating conflicts and tensions between different reporting tools.
The EU and the UK are well ahead of New Zealand in responsible business conduct and have strong modern slavery and responsible business conduct provisions in the agreements that will inevitably pull New Zealand to a higher standard. The NZ-UK agreement states that each party should adopt or maintain measures to facilitate private and public sector entities to identify and address modern slavery in global and domestic supply chains which may include proposing laws and regulations.
The NZ-EU agreement states that parties to the agreement should prioritise labour rights in the supply chain and promote corporate social responsibility and responsible business conduct, including responsible supply chain management, by providing supportive policy frameworks that encourage the uptake of relevant practices by businesses.
In essence, to ensure New Zealand can make the most of these agreements, it is imperative for the New Zealand government to publicly commit to enacting modern slavery legislation and prioritise its implementation to assist local companies in complying with free trade agreement provisions. A breach could lead to trade sanctions, tariffs, and damage to diplomatic relationships and reputation.
Furthermore, the EU Corporate Sustainability Due Diligence Directive was approved last week, which will make human rights and environmental due diligence mandatory for big New Zealand companies operating within or doing business with the EU. Non-compliance could result in penalties of up to 5 percent of annual revenue.
Given these developments, it is a commercial necessity for New Zealand to implement modern slavery legislation to stay competitive, especially with the NZ-EU agreement starting this week, which will likely result in more New Zealand companies wanting to export to the EU.
New Zealand companies want this. Let’s not forget that more than 100 of them kicked off the call for modern slavery legislation in 2021 in an open letter to the government requesting this along with World Vision New Zealand, TradeAid and WalkFree. More recently, New Zealand investors representing more than $295 billion in Kiwi investments, wrote to Workplace Relations and Safety Minister Brooke van Velden this year also asking for modern slavery laws with robust due diligence requirements.
It’s time for the Government to make a public commitment to prioritise the enactment of modern slavery legislation to protect our businesses, uphold human rights, and maintain our standing in the global marketplace.
It is unreasonable for us to enter into more free trade agreements without equipping New Zealand companies with the necessary tools and frameworks to comply with the very provisions we are signing up for. Our economic success and global reputation depend on it.
