Submission to the Ministry of Foreign Affairs and Trade: Re-Development of the Framework for Integrating Labour Standards and Trade Agreements

Submission by NZIBF – October 2022

This submission is made on behalf of the NZ International Business Forum (NZIBF), whose members are listed at Annex A[1].  NZIBF is a forum of senior business leaders working together to promote New Zealand’s engagement in the global economy.  As a leadership body, NZIBF leaves to its members the task of identifying specific sectoral issues.  This submission therefore comments on cross-sectoral or wider issues arising from the consultation paper in respect of the Framework for Integrating Labour Standards and Trade Agreements (“Trade and Labour Framework”, or “the Framework”).

Summary

NZIBF supports the goals of “Trade for All”.  We earlier recommended that the initiative should focus on change to make trade policy work better, particularly relating to public understanding and support, as well as reflecting continuity to extend, where possible, the achievements of recent years.  Commitments related to trade and labour in New Zealand’s free trade agreements (FTAs) form part of this. NZIBF believes trade and labour standards should be mutually reinforcing and continuously strengthened.  The 2001 Framework has been remarkably successful in this regard enabling the integration of a variety of approaches, some at the more ambitious end of the spectrum.

NZIBF is cautious about adopting more prescriptive approaches in the Framework based on a model chapter or template. The Framework should continue to reflect multilateral instruments which New Zealand has ratified and which are widely supported by trading partners.  Principles are to be preferred to specific instruments, respecting the trading partner’s continuing right to regulate.  NZIBF agrees that principles in relation to supply chain management issues and addressing modern slavery should be considered as falling within the scope of the Framework.  Domestic advisory groups could play a useful role in providing input into the implementation of the Framework.

About the New Zealand International Business Forum

NZIBF provides a voice to articulate the needs and priorities of New Zealand’s international business community, and in particular the importance of open markets, to the New Zealand Government and public stakeholders.  The NZIBF Board brings together leaders from amongst New Zealand’s largest internationally oriented companies and peak business organisations. (A list of Board Members is at Annex A.)

Incorporated in May 2007, NZIBF works with companies, business organisations and government agencies to implement projects in the international trade and economic sphere, including working to develop New Zealand’s key international business relationships and conducting research relative to New Zealand’s competitiveness.[2]   NZIBF receives no direct government funding for its core operating budget, but from time to time receives funding for jointly-funded projects.  Funding is also provided in respect to the policy advice and support NZIBF provides to the New Zealand members of the APEC Business Advisory Council (ABAC). 

Trade for all

NZIBF welcomes and supports the Government’s “Trade for All” initiative.  Several NZIBF Members participate in the Trade for All Advisory Board.  We would also welcome more information being made available about the Board’s membership and work programme.

NZIBF hopes that the Trade for All initiative will result in enhancing public understanding and support for trade, rebuilding political bipartisan consensus for trade policy and addressing perceived gaps in policy design and delivery.   

Trade and Labour

In relation to trade and labour specifically, NZIBF’s earlier submission to MFAT noted that:

“NZIBF accepts that the objectives of trade and the achievement of internationally agreed labour standards should be mutually reinforcing and that existing provisions relating to trade and the labour need to be continuously strengthened”[3].

NZIBF agrees that it is timely to review the established framework in the light of recent developments both in terms of thinking around the role of trade agreements in respect to labour and the recent FTAs New Zealand has signed.

What should be our approach to a Trade and Labour Framework?

NZIBF considers that the 2001 Cabinet Framework for Integrating Labour Issues into Free Trade Agreements has served New Zealand remarkably well.  Not only did the Framework clearly signal, at an early stage, New Zealand’s clear interest in integrating labour issues, where possible, it provided ample scope for negotiators to reflect this mandate in a way which would be acceptable to different trade partners including those in the developing world.  Basing these discussions on the International Labour Organisation’s (ILO) Fundamental Principles and Rights of Work, which are widely accepted, has enabled the incorporation of a variety of mechanisms and disciplines in successive FTAs negotiated over the period.   

NZIBF notes that these provisions incorporate a range of approaches and that the Framework has not prevented the negotiation over time of more ambitious and in some cases legally binding outcomes.  The NZ/UK FTA incorporates reference to “decent work” and the NZ/EU FTA would require New Zealand itself to take strenuous efforts to adopt two further ILO Conventions[4].  NZIBF is therefore cautious about adopting more prescriptive approaches based on a model chapter or template which could lead to early rejection by some trade partners who could otherwise be persuaded to adopt less rigorous undertakings to be extended further over time.

What international instruments or principles should be reflected in a Trade Labour Framework?

NZIBF believes that the Framework should seek to reflect multilateral instruments which New Zealand has ratified and which are widely supported by our major trading partners. NZIBF is conscious that the detail of some multilateral instruments might give cause for pause in the light of New Zealand’s domestic legislation.  For this reason, it is preferable to express more generally in the Framework the principles to guide the Government’s approach rather than refer to specific instruments, which may be ratified over time.

What new elements or principles should be included in a Trade and Labour Framework?

NZIBF agrees that the Framework should take care not to dispute with a trading partner’s right to regulate in the public interest which is a core element in the exceptions New Zealand commonly seeks in other parts of a trade agreement.

NZIBF agrees that principles for supply chain management and with regard to addressing modern slavery could be considered as falling within the focus of the Framework. 

NZIBF supports the development of domestic advisory groups including business, unions and civil society groups which can provide useful input into the implementation of the Framework.

What should be New Zealand’s approach to enforceability of labour commitments in a Trade and Labour Framework?

In general terms NZIBF prefers specific commitments in FTAs to be subject to enforceability through formal dispute settlement procedures.  In the case of trade and labour principles, it may be preferable if, as the existing Framework states “dialogue and consensus (are) preferred to penalties and sanctions as a way of making progress on labour standards issues”.  As the consultation document notes, this does not preclude the inclusion of more formal undertakings if both partners are in agreement.

Recommendations to the Ministry of Foreign Affairs and Trade

NZIBF recommends that the Ministry:

1. note the NZIBF’s support for the further development of the Trade and Labour Framework
2. consider NZIBF’s specific suggestions for the inclusion of new principles and for enforceability.

[1] The views in this submission are those of NZIBF as a whole.   Individual members may have different views on specific issues covered in this submission.

[2] NZIBF is a successor organisation to the NZ Trade Liberalisation Network Inc which was established in 2001.

[3] NZIBF Submission to MFAT Trade for All Consultation, September 2018

[4] ILO C087 (freedom of association) and C138 (child labour).