New Zealand has been named as a "source country" for sex trafficking of underage girls and a destination country for forced labour in a sharply critical report released by the US State Department.
US Secretary of State Hillary Clinton released the annual Trafficking in Persons report in Washington DC this morning.
It accuses New Zealand of having a small number of girls and boys, often of Maori or Pacific Island descent, who are trafficked domestically as street prostitutes.
They can be the victim of gang trafficking rings, the report said.
Foreign women from China and Southeast Asia are recruited to become prostitutes in New Zealand and may be at risk of coercive practices, it said.
The report also takes aim at violent and abusive conditions in place on some foreign-flagged fishing vessels in New Zealand waters.
Fishermen from Indonesia, Cambodia, Vietnam and Thailand are subjected to conditions of forced labour, including debt bondage, imposition of significant debts, physical violence, mental abuse and excessive hours of work, it said.
Other foreign workers reported experiencing unjustified salary deductions and restrictions on their movement, having their passports confiscated and contracts altered or having their working conditions changed without their permission - all indicators of human trafficking.
Ms Clinton said sex trafficking and exploitative labour practices were examples of "modern slavery".
New Zealand was named as a "tier one" country in the report, meaning it complies with minimum standards for protecting trafficking victims.
Tier two countries do not comply with the standards, but are making efforts to implement them, while tier three countries are criticised for not moving toward increased protections.
Despite its placing, the New Zealand Government was urged to make greater efforts to assess the extent of sex and labour trafficking and to enact legislation increasing punishments and prohibitions for trafficking offences.
Current New Zealand law contains a narrow definition of trafficking as a transnational offence, the report said.
Other provisions in the 1961 Crimes Act outlaw slavery, but fail to bar forced labour through debt, law, custom or agreement prohibiting a person leaving employment, it said.
"Because the prohibition of trafficking is limited to transnational actions such as the abduction, use of force or threat, or force, coercion, or deception to arrange entry into New Zealand - and does not include reference to exploitation, there appears to be no legal prohibition on the domestic recruitment, transfer, or transportation of adults for the purpose of exploitation."
Government recently introduced measures to cut down reported abuse on foreign-flagged fishing vessels.
It announced all foreign-flagged fishing vessels will be reflagged to New Zealand, meaning the full range of New Zealand law, including employment relations and workplace health and safety law, will automatically apply and be enforceable.
Other initiatives, including a nationwide Immigration New Zealand operation monitoring brothels for victims of human trafficking, were praised in the report.