Australia-EU Free Trade Agreement: More Trade, Greater Forced Labour Scrutiny

The Free Trade Agreement (FTA) between Australia and the European Union (EU) will bring welcome export opportunities for Australian businesses, but will also result in increased scrutiny of how Australian businesses manage modern slavery risks, including forced labour, across their operations and supply chains.

Two new EU regulatory measures – the Forced Labour Regulation (FLR) and the Corporate Sustainability Due Diligence Directive (CSDDD) – will impact Australian exporters either directly or through their business relationships. Under the FLR in particular, allegations of worker exploitation in the production of goods from any country may trigger investigation and, ultimately, the loss of EU market access for goods found to be made with forced labour.

Together, these laws will increase scrutiny from EU regulators, buyers, and investors on how Australian businesses identify and manage forced labour risks. As a result, Australian businesses seeking access to the EU market will increasingly need to demonstrate effective due diligence on forced labour risks to meet EU stakeholder requirements. This is particularly relevant for sectors that rely on higher-risk components sourced from overseas, such as textiles and electronics, as well as sectors in Australia employing migrant workers who are vulnerable to exploitation, such as meat processing, viticulture and horticulture.   

The Australian Anti-Slavery Commissioner, Chris Evans, said, "Securing access to the EU market will require Australian businesses to meet EU standards. Without stronger laws to drive improved modern slavery due diligence, these opportunities may not be realised."

"Australian businesses and government will need to step up to meet these evolving expectations. Strengthening due diligence to address modern slavery risks will be critical to maintaining access to key markets. Forced labour import bans are already in place in the United States, Canada and Mexico, and the US is increasingly encouraging its trading partners to adopt similar measures."

The Commissioner reiterated the need for the Australian Government to strengthen Australia's modern slavery framework, including through the introduction of a risk-based modern slavery due diligence obligation for large businesses, aligned with international standards.

"Aligning Australia's approach with key international frameworks will support better outcomes for workers while ensuring Australian businesses remain competitive in global markets."