Trade and Labour Standards
As part of a fleeting return to academic life, I have been looking at the Labour chapters in the NZ-EU FTA for a lecture in an international trade law course. The WTO of course prefers to turn a blind eye to labour issues. It sees these as a problem for the ILO, although the WTO wants no formal relationship with the ILO preferring friends such as the IMF and World Bank whose free-market views on labour markets have shown little concern for labour standards or workers.
However Labour Chapters are increasingly common in FTAs which are negotiated outside WTO structures. Their prevalence suggests that at least some countries are interested in labour issues, at least in so far as they may be manipulated to gain either a trade or investment advantage or be used as a protectionist device.Such Chapters usually include undertakings not to derogate from the law existing at the time of entering the FTA and often an undertaking to strengthen the law.
The NZ-EU FTA provides a relatively recent example of such a Chapter.
The EU of course has a relatively progressive approach to worker protections that EU member states must implement, ensuring fair working conditions across the region. These include H&S standards, equal treatment obligations, limits on working hours and minimum annual leave obligations.
The NZ-EU FTA
Article X.2 of the NZ-EU FTA, while recognising the rights of each Party “to establish the levels of domestic …labour protection it deems appropriate and to adopt or modify its relevant law and policies” also requires that regulation must be “consistent with each Party's commitment to the agreements and internationally recognised standards referred to in this Chapter.” The Article goes on too state that the Parties “shall strive to ensure … high levels of … labour protection, and shall strive to improve such levels, law and policies.”
It also provides that “A Party shall not weaken or reduce the levels of protection afforded in its labour law in order to encourage trade or investment.” The qualification to the obligation might raise problems in a dispute even though most attacks on worker rights are usually politically justified in terms of encouraging trade and investment.
Clearly the view that a Party “shall not weaken or reduce the levels of protection afforded” is not one shared by the current Minister! Indeed one wonders if NZ’s trade obligations have even crossed the minds of the current government given its anti-worker legislative agenda. It also seems unlikely that the new definition of a contractor, or the attack on employment security "strive to improve such levels, law and policies".The same could be said for the attack on holiday entitlements and on health and safety.
Among other things the FTA also requires the Parties to promote the ILO Declaration on Social Justice for a Fair Globalization of 2008 and to “respect, promise and realise” the principles of the ILO Declaration on Fundamental Principles and Rights at Work and related Conventions and to “make sustained efforts” to ratify those Conventions if a Party has not already done so.
New Zealand has of course yet to ratify one of the more fundamental of these conventions – Convention 87 on Freedom of Association - and has not indicated any intention to do so.
New Zealand might also take note of the stated obligation in the Social Justice for a Fair Globalization of 2008 Convention which requires “social dialogue on labour matters between social partners and relevant government authorities”
A refusal of the relevant Minister to meet more than once a year and a failure to facilitate any such dialogue would hardly seem to comply with this obligation.
An interesting feature of the FTA is that it has a section dedicated to Trade and Gender Equality.: “The Parties recognise the need to advance gender equality and women’s economic empowerment and promote a gender perspective in the Parties’ trade and investment relationship. Moreover, they acknowledge the important current and future contribution by women to economic growth through their participation in economic activity, including international trade.”
One can only speculate how the reactionary pay equity reforms contribute to “enhancing women’s participation in economic activity” and how it might be justified if the EU was minded to raise the matter.
The discussion above, which points an increasingly cavalier attitude to international obligations, may seem somewhat marginal and unrelated to real-world politics. However the EU does take labour rights seriously.
Modern slavery
One particular example which illustrates a major gap between the current government’s attitude and that of the EU relates to modern slavery.
In NZ modern slavery “is not a priority” according to the Minister who stopped work on dealing with this issue. The private members' Bill currently being debated may partially fill the gap although it is relatively weak.
The EU take a very different approach.
On Dec 14th next year the EU Forced Labour Regulation which entered into force in 2024, will come into full effect.
That Regulation enacts a comprehensive ban on the sale, within the EU, of products made with forced labour. It applies to all products, regardless of their origin, including both imported goods and those manufactured within the EU. The EU Regulation relies on the ILO definition of forced labour “all work or service which is exacted from any person under the menace of any penalty, and for which the said person has not offered himself voluntarily”.
A glimpse of the future
NZ is of course not free from forced labour and in some cases iy exists in export-oriented industries – horticulture and the like. The dispute between Gloriavale and Westland Milk may be well be an indicator of future problems.
Following the Employment Court’s finding relating to Gloriavale’s labour practices Westland Dairy Co Ltd refused to accept milk supplied by Gloriavale (technically Canaan Farming Dairy Ltd). In Canaan Farm's application for an injunction to require milk acceptance to be resumed Westland Dairy explicitly referred to “a developing trend amongst businesses to investigate and require supply chain compliance with corporate social responsibility policies, including with regard to issues of modern slavery and labour exploitation “ as a justification for its refusal.
The High Court (Canaan Farming Dairy Ltd v Westland Dairy Co Ltd [2022] NZHC 2524 decided the balance of convenience favoured Canaan Farming and required Westland to resume accepting milk. The economic and other consequences of not doing this were significant and the balance of convenience clearly favoured Canaan Farming.
One particular factor undermined Westland Dairy's case - the inability to demonstrate that Canaan farming had used child labour. The Court noted that “since the [Employment Court] judgment all relevant government agencies (including WorkSafe and the Labour Inspectorate) have signed off on the legality of Canaan’s commercial operations. It might be noted thata recent news report does, however, suggest that the relevant agencies might have looked harder.
The injunction granted did add the caveat that no one under 18 was to be employed in the dairy operation until the litigation was finalised.
The Court added, in relation to the possibility that Westland’s customers might not accept milk, that “Westland’s customers will recognise that Westland is obliged by law to collect Canaan’s milk supplies. Responsible commercial entities would not likely cancel contracts when they become aware of the actual facts as set out in this judgment."
Given the importance of the milk supply to Westland Dairy and the local economy generally this outcome probably suited all parties.
The future
If nothing else this case shows that at least some businesses realise that there is a clear linkage between trade and labour standards and that at least the more abusive forms of worker abuse may have serious commercial implications. Given the nature and complexity of modern supply chains due diligence is a neccesity, not a luxury or an unecessary burden.
The government might take notice.