TRADE LAW: Modern slavery risks in trade

ON SEVERAL occasions, I have written and presented on the importance of modern slavery issues in the supply chain, as part of wider concerns to address environmental and social Governance (ESG) issues.

As international trade and its supply chains have expanded, so have the concerns as to the way in which goods and services have been produced and provided. That concern focusses on whether those goods and services have been produced or provided, in part or in whole, by modern slavery and what should be done to prevent production and supply of such goods and services.

The aim of this article is to remind readers of these issues and to report on recent significant developments both in Australia and worldwide.

So, what is modern slavery?

Modern slavery has been defined as:

“Forcing someone to work, marry or do other things through coercion (like manipulation, control or violence), threats or lies.”

The Australian Government's Modern Slavery in Australia website goes on to provide the following outline:

In situations of modern slavery, one person uses their power over another to control or use them for their own benefit. It takes away someone’s freedom to make choices for themselves.

Modern slavery can take many forms. These include:

• human trafficking

• slavery

• slavery-like practices:

• forced labour

• forced marriage

• servitude

• debt bondage

• deceptive recruiting

Modern slavery also includes the worst forms of child labour.

Modern slavery in the Australian supply chain for goods and services

Australians buy and use products and services which have been produced or supplied using modern slavery. The readers of this publication will be most interested in the impact of modern slavery concerns in the supply chain. Again, the modern slavery website provides valuable guidance.

Modern slavery can occur in every industry and sector and seriously harms victims. It is often linked to other harmful activities, such as corruption and environmental damage.

Modern slavery distorts global markets, undercuts responsible business and can pose significant legal and reputational risks to organisations.

The extent of modern slavery means it may exist in the global operations and supply chains of Australian businesses. This means that modern slavery could be used to produce and supply Australian goods and services.

Businesses have a responsibility to respect human rights, as outlined in the United Nations Guiding Principles on Business and Human Rights.

Taking action against modern slavery also makes good business sense. Organisations that do this can improve the integrity and quality of their supply chains and protect against harm to their reputation. They can also increase profitability, investor confidence and access to financing opportunities.

Accordingly, the reality is that such issues are now entrenched in supply chains both here and overseas. There are several international conventions which already seek to prohibit slavery, forced labour, trafficking of people or related activities. The international prohibitions are also reflected in several free trade agreements (bilateral, plurilateral and regional) which deal with modern slavery, ESG issues and human and labour rights. Australia is already party to such agreements including the Australia – EU Free Trade Agreement (A – EU FTA) where negotiations recently have been completed. The A – EU FTA includes provisions which will require Australian business wishing to trade in the Un to recognise and implement including the Forced Labour Regulation and Corporate Sustainability Due Diligence Directive.

Further, many other countries (including other trading partners) have already adopted other extensive legislative and procedural provisions taking action to intervene against goods and services believed to be the product of modern slavery. For example, the United States has taken extensive steps against goods entering the country which are believed to be the product of modern slavery including authorising the United States Customs and Border Protection Service (USCBP) to seize goods at the border which are believed to be the product of modern slavery and requiring the importer to verify that the goods are not the product of modern slavery, failing which the goods are destroyed. Reports suggest that USCBP has seized and destroyed goods valued more than US$1 billion. Other countries have enacted legislation allowing intervention against goods possibly the product of modern slavery. Concerns as to ESG issues including modern slavery are in place around the world. It is the interests of all parties to ensure issues are best identified and managed in an effective way. I now want to turn to developments which have increased the level of attention to modern slavery issues in Australian trade.

While New South Wales had created its own modern slavery legislation in 2018, it did not start until 1 January 2022 and established reporting requirements like those in Commonwealth legislation. As we are reviewing international trade issues I will focus on that Commonwealth legislation.

The Modern Slavery Act 2018

Following extensive public and Parliamentary consultations, the Commonwealth Modern Slavery Act 2018 (Act) entered into force on 1 January 2019. The Act established a national modern slavery reporting requirement. This reporting requirement applied to large businesses and other entities in the Australian market with annual consolidated revenue of at least $100 million. The reporting requirement supports the Australian business community to identify and address their modern slavery risks and maintain responsible and transparent supply chains.

Entities that must comply with the reporting requirement, including the Australian government, must prepare annual Modern Slavery Statements.

These statements must set out the reporting entity’s actions to assess and address modern slavery risks in their operations and supply chains. The Australian government publishes these statements on the Modern Slavery Statements Register.

Statutory review of the Modern Slavery Act 2018

On 25 May 2023, the Australian government tabled a report on the statutory review of the Act. It reviewed the first three years of the Act's operation, in accordance with section 24 of the Modern Slavery Act. The review made 30 recommendations for government consideration to strengthen the Act. Some of the key recommendations were to:

• Introduce penalties for non-compliance with statutory reporting requirements.

• Lower the reporting threshold from $100 million to $50 million.

• Require entities to report on modern slavery incidents or risks.

• Amend the Modern Slavery Act to require entities have a due diligence system in place.

• Strengthen the administration of the Act through proposed legislative amendments and expanded administrative guidance.

• Propose functions for the federal Anti-Slavery Commissioner in relation to the Modern Slavery Act.

The review was informed by an extensive public consultation process. This involved 38 targeted consultations with 285 government and non-government organisations, including from business, civil society and academia. On 2 December 2024, the government released its response to the report of the statutory review of the Modern Slavery Act. The government response agrees (in full, in part, or in principle) to 25 of the 30 recommendations and noted five recommendations.

The Commonwealth Government has appointed officers responsible for modern slavery issues including the anti–slavery commissioner (appointed in November 2024) and the Ambassador to Counter Modern Slavery, People Smuggling and Human Trafficking (August 2025).

More recent developments in 2026

There have been subsequent significant developments already in 2026 which demonstrates the focus on modern slavery and related issues.

The commissioner issued recommendations to strengthen modern slavery laws. These included a mandatory risk–based modern slavery due diligence obligation for reporting entities and the Act and creation of a process for the commissioner to declare that a product, service or industry carries a high risk of modern slavery and requires regulated entities to consider the declarations in their due diligence and reporting obligations.

In its concluding remarks on Australia’s commitments to Human Rights by the UN Committee on Economic, Social and Cultural Rights in March 2026, the Committee urged the Australian government to introduce mandatory human rights due diligence and report back in 24 months on its progress. The Committee also recommended that Australia develop a national action plan for business and human rights and stronger monitoring and enforcement mechanisms under the Act including proportionate penalties for non–compliance and improved access to remedies for victims of business–related human rights abuses.

On March 16, 2026, as part of the Trump Administration’s tariff strategy to replace IEEPA tariffs removed after a decision of the Supreme Court of the United States, the office of the United States Trade Representative initiated extensive Section 301 Investigations into 60 countries targeting “Excess Capacity and Failures on Forced Labour”. Australia is one of those 60 countries. The Investigation reports could include findings that Australia has a regime which is deficient in actions against forced labour causing excess labour capacity adversely affecting US interests by the unfair production of unreasonably cheap products. That could then support the imposition of new tariffs on goods the product of such unfair forced labour practices.

Possible consequences for the Australian international supply chain

The inexorable conclusion of the developments summarised above is that there will be significant additional legislative and other regulatory changes focussed on identifying and eliminating the production, supply and import of goods and services produced in part or in whole by modern slavery, forced labour or related activities. That will impose positive obligations on parties to undertake extensive due diligence to identify such products and services.

At the border, this is likely to include due diligence on employment practices of vessels arriving in Australia and prohibitions against the import of offending goods or use of offending services. Compliance will be assessed by a variety of relevant government agencies with penalties and related action levied against parties who have breached their obligations. Sanctions could be imposed against countries where such modern slavery and forced labour are allowed (or endorsed) by way of thematic sanctions.

While the world presses for trade enhancement and facilitation as well as multi–lateral trade liberalisation, we live in a world where reality must also play a part — including sensible and effective measures against the products and services created in part or in whole by modern slavery, forced labour and related practices.

This article appeared in the April | May 2026 edition of DCN Magazine