The Human Rights Impact of the World Trade Organisation 9781472564016, 9781841136936

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Acknowledgments I am grateful to many people who have assisted in the preparation of this book and have fired my imagination with their ideas. Particular thanks to ErnstUlrich Petersmann for his guidance and support throughout the project and his willingness to endlessly debate the issues. Thanks also to John Morijn, Simon Walker, Francesco Francioni, Sheldon Leader, Giorgio Malinverni and Gráinne De Burca for many insightful comments on earlier drafts. Thanks to all those who assisted me more generally in my research at the European University Institute and for inspiring many of the ideas that appear in the book, in particular, Pierre-Marie Dupuy, and Antonio Cassese. At the University of Nottingham Human Rights Law Centre, I was grateful for the time I was given to complete this project, as part of my work as Head of the Trade, Business and Human Rights Unit. I would like to thank in particular the co-directors, David Harris and Michael O’Flaherty for their support of my endeavours while we were involved in so many other projects. At HRLC, I am also particularly grateful to Alessa Goller whose research assistance and editing has helped me greatly. I am also grateful to the British Academy, whose grant funding allowed research to be undertaken which greatly enhanced chapter twelve as well as positively impacting upon the book throughout. Finally, I would like to thank my family who have been a great source of support throughout. In particular, thanks to Michael Harrison, Kay Turner (my father and mother) and Ian Cross for many hours of proof reading. Most of all I would like to thank my wife Mary-Ann for supporting me through the long nights I have been working on this book, and still being a source of inspiration to discuss the ideas with me in the morning! This book is dedicated to you and our daughter, Eleanor.

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List of Abbreviations AB AoA CEDAW CESCR DSB DSU EC ECJ ECHR ECtHR EPZ EU EUI FAO FDI FTA GATS GATT GDP GMO GSP ICCPR ICESCR ILC ILO IMF IP IPR KPCS LDC MFN NAFTA NGO OECD OHCHR

Appellate Body Agreement on Agriculture Convention on the Elimination of Discrimination Against Women Committee on Economic, Social and Cultural Rights Dispute Settlement Body Dispute Settlement Understanding European Community European Court of Justice European Convention on Human Rights European Court of Human Rights Export Processing Zone European Union European University Institute Food and Agriculture Organisation foreign direct investment free trade agreement General Agreement on Trade in Services General Agreement on Tariffs and Trade Gross domestic product Genetically Modified Organism General System of Preferences International Covenant on Civil and Political Rights International Covenant on Economic, Social and Cultural Rights International Law Commission International Labour Organisation International Monetary Fund Intellectual property intellectual property right Kimberley Process Certification Scheme least developed country most favoured nation North American Free Trade Agreement Non-governmental organisation Organisation for Economic Co-operation and Development Office of the High Commissioner for Human Rights

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xvi List of Abbreviations Report on AoA

OHCHR, Globalisation and its impact on the full enjoyment of human rights Report of the High Commissioner, E/CN.4/2002/54, 15 January 2002, Report on GATS OHCHR, Human Rights, trade and investment—Report of the High Commissioner, E/CN.4/Sub.2/2003/9, (2 July 2003) Reprt on Investment OHCHR, Human Rights, trade and investment— Report of the High Commissioner, E/CN.4/Sub.2/2003/9 (2 July 2003). Report on TRIPS OHCHR, The Impact of the Agreement on TradeRelated Aspects of Intellectual Property Rights on human rights, Report of the Commissioner, E/CN.4/ Sub.2/2001/13, (27 June 2001) SC Security Council SIA Sustainability Impact Assessment SPS Agreement Agreement on the Application of Sanitary and Phytosanitary Measures TBT Agreement Agreement on Technical Barriers to Trade TEU Treaty of the European Union TRIPS Trade Related Aspects of Intellectual Property Rights UDHR Universal Declaration on Human Rights UK United Kingdom UN United Nations UNCTAD United Nations Conference on Trade and Development UNDP United Nations Development Programme UNESCO United Nations Educational, Scientific and Cultural Organisation UNICEF United Nations Children’s Fund US United States USTR United States Trade Representative WHO World Health Organisation WIPO World Intellectual Property Organisation WTO World Trade Organisation

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1 The Justice Dimension of the WTO I. INTRODUCTION

T

HIS BOOK EXAMINES the impact of international trade rules on the promotion and protection of human rights. It presents the methodological differences between the international trade and human rights systems, analyses current approaches to how these differences are dealt with and makes proposals for how international trade rules could in future be interpreted so as to more appropriately and systematically take into account human rights norms and standards. The first three chapters of this book set out some of the key conceptual issues in international trade law and human rights law which are the basis for the interaction between the two legal systems. The rest of chapter one sets out the rationale behind the world trading system and the elements of world trade rules that will be of particular importance when considering its impact on the protection and promotion of human rights. Chapter two presents the human rights methodology that will be utilised throughout this book. Chapter three explains why this human rights approach is an important mechanism for assessing the social justice impact of the international trading system. The following six chapters analyse the current policies and practices of the World Trade Organisation (WTO) with regard to human rights. Chapter four sets out a legal framework for analysing different types of issues that arise in the international trade law context from a human rights perspective. Chapters five to nine then provide an in-depth analysis of how those different types of issues impact on the protection and promotion of human rights in different scenarios. The final three chapters present some future strategies for the protection and promotion of human rights in the international trade law context. Chapter 10 draws some conclusions about how successfully the current system of international trade law rules protects and promotes human rights and some of the lessons that can be learned from this. Chapter 11 presents proposals for how explicit human rights arguments could be raised and adjudicated upon in WTO dispute settlement proceedings. Chapter 12 examines some of the broader systemic issues outside the dispute settlement process that need to be addressed if trade law rules are to appropriately take into account the full range of human rights issues which arise in the trade law context. Some concluding remarks then sum up the key findings of the book.

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4 The Justice Dimension of the WTO

II. THE BROADER CONTEXT

This work adopts a legal approach in that it assesses how international trade law and international human rights law interact and where there are the potential for conflicts between the two systems. But it recognises that the academic legal debate on this subject takes place against the background of much broader social, economic and political discussions about the legitimacy of international trade law rules and in particular, the WTO as the forum where international trade law rules are negotiated and regulated. The issue of international trade and the way it affects the societies in which we live has, particularly over the last decade, leapt to prominence in the public and political consciousness. Highlighted by the anti-globalisation protests in Seattle in 1999, the role of the WTO, as the intergovernmental organisation where international trade rules are created and enforced, has been under increasing scrutiny. The protestors in Seattle represented an extraordinary breadth of different interests—from US teamsters and steelworkers to small farmers and farm workers from both developed and developing countries; from environmental and human rights activists to representatives of all major religions, as well as elected officials, and concerned citizens from many countries.1 It has been often commented since that these groups were held together far more by their shared opposition to the WTO, than by a common ideology.2 However, despite the lack of any clear message, the protests were largely credited with being an important factor in the unravelling of trade talks at the meeting. Whatever their precise impact in terms of the negotiations, there is a broader significance of the protests at the Seattle meeting; that is how the protests themselves (rather than the violence that accompanied them) were supported by large sections of the population in many countries.3 What those various interest groups in Seattle represent is a plethora of social concerns about the effect of globalisation, and in the context of trade, the role of the WTO and its Member States in designing the rules under which international trade takes place. The common concern of the protestors was in essence the idea that the WTO is a forum where decisions are made on the rules 1 For categorisations of the different groups see J Smith, ‘Globalizing Resistance: The Battle of Seattle and the Future of the Social Movements’ in Smith and Johnston (eds), Globalization and Resistance: Transnational Dimensions of Social Movements (Lanham, Rowman & Littlefield Publishers, 2002) 207–27 at 212. 2 For instance US unions were well represented (American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) and United Steel Workers of America) as were groups representing third world activists (eg Third World Network), whose agendas in terms of attitudes to world trade rules are largely contradictory. Examining this contradiction in the context of the Singapore Ministerial Meeting, see R. O’Brien, A M Goetz, J A Scholte and M Williams, Contesting Global Governance: Multilateral Economic Institutions and Global Social Movements (Cambridge, Cambridge University Press, 1998) at 87–8. 3 L Gomes, The Economics and Ideology of Free Trade, A Historical Review (Cheltenham, Edward Elgar, 2003) at 323.

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The Broader Context 5 under which the world trades, which have wide-ranging ‘social justice’ ramifications. Whether or not the individual complaints of each of the different protestor groups were justified, directed at the right organisation or even mutually compatible, they tapped into a general public feeling that there were various social justice issues related to world trade rules that were not being addressed. Since Seattle, the WTO has struggled to conclude negotiations on the Doha Development Round; five years on, the WTO Ministerial Meeting in Cancun ended without agreement on how to make progress. Once again, lack of considerations of fairness and social justice, particularly with regard to treatment of developing countries, were widely reported as important reasons for the breakdown in negotiations.4 Modest progress was made at the Hong Kong Ministerial Meeting in November 2005. But at the time of this book going to press at the end of 2006, there are doubts as to whether the Doha negotiations will be successfully concluded. Negotiators from different country groupings are far apart in terms of what they would see as a ‘fair’ outcome for the round. More fundamentally, proponents of the WTO’s negotiating agenda appear no closer to convincing public opinion across its Member States that new, as well as existing trade rules will have widespread economic and social benefits. The legal issues raised within this book should be seen very much as part of this wider debate about the extent to which international trade law rules are adequately considering and taking into account legitimate social justice concerns. We take as a starting point for analysis the increasingly universal recognition that international trade law, in common with all national and international legal systems, is only legitimate in as much as it promotes justice as a central objective of the system.5 This justice requirement is not simply an abstract obligation, to be fulfilled as part of a set of theoretical components of an optimally functioning system. The WTO needs to be seen to be a system of organising global trade that conforms to recognised principles of justice if it is to maintain sufficient support among its constituents for its ongoing survival and development. As a recent history of the world trading system concludes its analysis: If too many people doubt that [trade] openness works for them, political support for open, integrated economies can ebb away. The nation-state has not withered away. Political sovereignty is still in place to reverse the process.6 4 Such reporting of the Cancun Meeting can be found on many non-govenmental organisation (NGO) websites including at http://www.commondreams.org/views03/0916-01.htm and http://www.oxfam.org.uk/what_we_do/issues/trade/interview_alovett.htm both accessed on 7 Dec 2006. 5 For an extensive and far reaching analysis of the need to promote justice (under a number of different normative frameworks) as an intrinsic goal of the international trading system see F J Garcia, Trade, Inequality and Justice: Toward a Liberal Theory of Just Trade (New York, Transnational Publishers, 2003). With regard to international institutions more generally see T M Franck, Fairness in International Institutions (Oxford, Oxford University Press, 1995). Making this point specifically with regard to the need for a human rights framework to address justice issues in the WTO, see E-U Petersmann, ‘Theories of Justice, Human Rights and the Constitution of International Markets’ (2003) 37 Loyola Law Review, 407–59, at 408. 6 L Gomes, above n 3, at 325.

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6 The Justice Dimension of the WTO On the other hand, there is a need to weigh and balance the WTO system against possible alternatives. This book will therefore consider the role of other relevant organisations (eg UN bodies, the International Labour Organisation (ILO) etc.) in dealing with the human rights issues raised by the international trading system, as well as considering the global implications of the increasing prevalence of regional and bilateral trade agreements. One of the key problems that has bedevilled all these discussions of the international trading system is the polarised way in which it is perceived by different actors whose methodological tools and resultant findings about the impact of the WTO on the well-being of populations around the world are so far apart. So, on the one hand, many of those who campaign against the WTO, view WTO obligations as irreconcilable with broader social justice frameworks, while those who support the system sometimes appear to view WTO policies and practices as almost inexorably leading to increased welfare for all.7 It is against this background that the current study attempts to utilise a human rights framework to assess some of the social justice aspects of the world trading system. The fact that, as will be demonstrated, this system impacts upon the protection and promotion of human rights in a number of different ways, means that a human rights methodology can be utilised in order to examine the extent to which trade law rules are compatible with the promotion of protection of human rights.8 The social impact of the WTO can quite clearly be considered without recourse to any specialised system of legal discourse. However, the advantage of a legal methodology with which to examine some of the social justice aspects of the international trading system is that it allows a comparative assessment of the issues under discussion—how such issues are weighed and balanced under the legal norms and standards of human rights law on the one hand, and international trade law on the other.

7 Eg On the question of provision of essential services such as water, the WTO Secretariat and the Organisation for Economic Cooperation and Development (OECD) both argue that there are no dangers with regard to the General Agreement on Trade in Services (GATS) as it would be illogical for governments to give up the regulatory autonomy they need to provide essential services. On this point, see A Lang, ‘The GATS and Regulatory Autonomy: A Case Study of Social Regulation of the Water Industry’ (2004) 7 Journal of International Economic Law 809. Whereas for instance see report by World Development Movement Out of Service: The development dangers of the General Agreement On Trade in Services (Mar 2002) arguing that the GATS is intrinsically dangerous to the provision of essential services. 8 It is only in recent years that a number of commentators have begun to recognise the links between international trade rules on the promotion and protection of human rights, and this is reflected by the explosion in the number of academic articles on trade law and human rights in recent years. For a list of some of the most important articles on this subject see G Marceau, ‘WTO Dispute Settlement and Human Rights’ (2002) 13 European Journal of International Law 754 (fn 1). More recently, see two multi-contributor volumes on this issue; T Cottier, J Pauwelyn and E Burgi (eds) Human Rights and International Trade (Oxford, Oxford University Press, 2005); F M Abbott, C Breining-Kaufmann, and T Cottier (eds) International Trade and Human Rights: Foundations and Conceptual Issues (Michigan, University of Michigan Press, 2006).

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The Development of the International Trading System 7

III. THE DEVELOPMENT OF THE INTERNATIONAL TRADING SYSTEM—HISTORY AND ETHOS

In order to understand the rationale behind the WTO it is necessary to consider the reasons why the organisation came into being. The General Agreement on Tariffs and Trade (GATT), the predecessor to the WTO, was established in the aftermath of the Second World War. It was a far more limited substitute for the original proposal—the International Trade Organisation—but was part of a package of measures (the creation of the International Monetary Fund (IMF) and the World Bank being the others) designed to prevent the reoccurrence of the collapse of the international economic order that occurred during the interwar period, and which was an important factor in the progression towards the Second World War.9 During the late 1920s, as a result of both growing deflation and US negotiating tactics with regard to reciprocal tariff concessions, international negotiation on tariff barriers had gradually broken down.10 As a reaction to the Wall Street Crash of 24 October 1929, and the onset of the depression, the US then enacted the Smoot–Hawley Tariff Act, which raised the tariffs on a wide range of different products. The Act raised the average duty on manufactured imports to 60 per cent (near the all-time high of 62 per cent reached in 1830). In the two years after its enactment, the volume of US imports fell over 40 percent. But the Act also led to many other countries enacting similar measures to protect their own domestic markets and to retaliate against US measures. The effects of this blanket unilateralism were hugely damaging—in three years (1929–32) the real value of world trade fell by over 60 per cent. Imposition of greatly increased taxes on imports had led to a collapse in trade between nations, and undoubtedly this greatly fuelled the economic depression of the 1930s.11 Following the Second World War, when the twenty-three nations who accounted for 80 per cent of world trade at the time met and agreed to the GATT Treaty, the spectre of such protectionism was still fresh in their minds. They initially cut tariffs by an estimated 20 per cent. More members joined as a result of the success of these negotiations and, by the start of the Uruguay Round of negotiations in 1986, the cumulative effect of previous rounds resulted in an average tariff rate of about 4 per cent on most industrial products. The GATT can therefore be seen to have been founded on the principles of creating global trade rules aimed at preventing the use of increased barriers to 9 B Hoekman and M Kostecki, The Political Economy of the World Trading System: From GATT to the WTO (Oxford, Oxford University Press, 1995) at 12 and L Gomes, above n 3 at 297. 10 See L Gomes, above n 3 at 269. 11 For a more detailed account see L Gomes, above n 3 at 270, and, making a similar point, see K Dam, ‘Cordell Hull, the Reciprocal Trade Agreement Act, and the WTO’ in Petersmann (ed), Reforming the World Trading System: Legitimacy, Efficiency and Democratic Governance (Oxford, Oxford University Press, 2005).

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8 The Justice Dimension of the WTO trade by individual nation states, and the reduction and eventual elimination of barriers to trading between nations in the international community. The potential for global disaster caused by the imposition of increased barriers to trade, followed by retaliation from other countries, could be clearly seen through the example of the 1930s. By tying countries into a system of multilateral trade rules, which gradually reduce trade barriers and thereby ‘liberalise’ trade, the GATT aimed at reducing the likelihood of a recurrence of such a phenomenon. It is not just the fear of foreign retaliation, however, that is the motivation behind a rules-based world trading system. Such a system also helps to mitigate against the effects of powerful lobby groups within individual nation states arguing for their own interests.12 The essential problem has been described thus: producer interests, which are concentrated and easy to mobilise and typically wish to protect their interests from international competition, tend to be much better organised and effective in lobbying governments and swaying public opinion towards protectionist ends than the disparate interests represented by consumers.13 Governments are often politically swayed into making protectionist decisions, not on the basis of the overall welfare of their populations, but rather on the basis of the strength of protectionist lobbying.14 In a system of global trade rules, governments can invoke the rules that are in place in order to justify a refusal to provide assistance for particular interest groups at the expense of overall national welfare. These political rationales for the benefits of a global trading system aimed at reducing barriers to trade have been supported from an economics perspective by statistical analysis which has led the majority of economists to conclude that trade liberalisation is an essential part of the economic welfare of nation states as well as being vital for overall global economic wellbeing.15 It has, over the last twenty years, become an accepted part of global mainstream policy advice that a strategy of trade openness leads to increases in growth and prosperity.16 Some caveats to this economic analysis will be presented in chapter three. But for now it is sufficient to conclude that the justifications for the world trading system 12 On Cordell Hull’s realisation of the domestic importance of reduction in barriers to trade in the US in the 1920s and 1930s see K Dam, ibid. 13 Described by J Bhagwati, Free Trade Today (New Jersey, Princeton University Press, 2002) at 48, citing Mancur Olson as the originator of this theory in his book The Logic of Collective Action (Massachusetts, Harvard University Press, 1965). 14 The US Smoot–Hawley Tariff Act is also a good example of this phenomenon. This Act was introduced on the basis of massive political lobbying, and involved congressman each providing ‘made-to-measure tariffs’ for their constituents, exacerbated by congressmen also adopting an ‘I’ll vote for your tariff if you vote for mine’ attitude, leading to massive overall increases in tariffs on foreign goods. For a more in depth analysis see L Gomes, above n 3 at 270. 15 Eg, J Sachs and A Warner, ‘Economic Reform and Global Integration’, (1995) 1 Brookings Papers on Economic Activity 1–95; J Bhagwati, In Defense of Globalizaton (Oxford, Oxford University Press, 2004) 60–64; D Dollar, ‘Outward-orientated Developing Economies Really do Grow more Rapidly: Evidence from 95 LDCs, 1976–1985’ (1992) 40 Economic Development and Cultural Change 523–44. 16 Making this point see N McCulloch, A Winters and X Cirera, Trade Liberalisation and Poverty: A Handbook (London, Centre for Economic Policy Research, 2001) at 5.

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The Formation of the WTO 9 have very much developed along the lines outlined above—global rules that gradually liberalise trade between nation states create stability in the global trading system, act against protectionist lobbying and create overall increases in global economic welfare.

IV. THE FORMATION OF THE WTO

The single instrument of the GATT that was the driving force behind trade liberalisation from the mid–1940s onwards was replaced in the mid–1990s by a far more complex arrangement of trade agreements. It was the Uruguay Round of trade talks (1986–94) that led to the creation of an organisation, the WTO, to administer trade agreements, to act as a forum for trade negotiations and to settle trade disputes between Member States. The Uruguay Round also produced a massive expansion of existing global trading rules, with numerous new agreements negotiated. These included agreements on liberalisation commitments in trade in goods in particular areas—eg the Agreement on Agriculture (AoA) which contains commitments to reduce support for and protection of the agricultural sector in three areas—market access,17 export subsidies18 and domestic support;19 and the Agreement on Textiles and Clothing which aims at reducing barriers to trade in the textiles and clothing industries. It also included a number of technical agreements which set rules concerning what constitute legitimate restrictions on trade, most importantly concerning food safety and animal, plant and health regulations20 and technical standards.21 But as well as new agreements governing trade in goods, the Uruguay Round also led to agreements covering several other subject areas. Of particular importance for the discussion here are the two multilateral agreements that were negotiated22— The General Agreement on Trade in Services (GATS) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The GATS sets out a framework for the liberalisation of trade in services. It has the potential to cover all internationally-traded services (with two exceptions23), 17 This is achieved through the removal of tariffs and non-tariff barriers such as quota restrictions on imports. 18 Export subsidies are subsidies provided by governments for produce that is exported to foreign countries. 19 Domestic support consists of subsidies provided for produce produced in that country. However, for a description of how domestic subsidies can also act as a subsidy to export see S Tangermann, ‘How to Forge a Compromise in the Agriculture Negotiations?’ in Petersmann (ed), Reforming the World Trading System: Legitimacy, Efficiency and Democratic Governance (Oxford, Oxford University Press, 2005). 20 Agreement on Sanitary and Phytosanitary Measures (SPS Agreement). 21 Agreement on Technical Barriers to Trade (TBT Agreement). 22 There were also a number of plurilateral agreements negotiated including the Agreement on Trade in Civil Aircraft and the Agreement on Government Procurement. The latter has important human rights implications. 23 Art I (3) of the GATS excludes ‘services supplied in the exercise of governmental authority’. These are services that are supplied neither on a commercial basis nor in competition with other

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10 The Justice Dimension of the WTO including well-recognised commercial services such as banking and telecommunications, but also such sensitive areas as health, education and water services.24 The TRIPS Agreement is concerned with the protection of intellectual property (IP) and sets out detailed minimum standards for the protection and enforcement of IP systems in terms of requirements for the grant of rights, the time limitations on protection, permitted exceptions to the use of rights and modes of enforcement to be implemented by each WTO Member. A further occurrence as a result of the Uruguay Round was the development and augmentation of the system of dispute settlement between Member States.25 The WTO’s dispute settlement procedure is contained in the Understanding on the Rules and Procedures Governing the Settlement of Disputes otherwise known as Dispute Settlement Understanding (DSU). Under this procedure Member States can bring claims against other Member States for breach of their WTO obligations under the covered agreements. The DSU first mandates consultations between the disputing parties. If there is no agreement, a dispute settlement panel is constituted which adjudicates on the dispute. The decision of the panel can then be appealed to an appellate body. This dispute settlement system is binding on Member States and it has the power to authorise countermeasures against States found to be in breach of treaty obligations. The dispute settlement system of the WTO is what sets it apart from other international organisations, and ensures compliance with its treaty obligations. It is widely recognised as the most advanced form of dispute settlement available in international law.26

V. CONCEPTS OF JUSTICE IN THE WTO

Largely as a result of the Uruguay Round, there are now global trade rules that cover agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial standards, product safety, food sanitation regulations, intellectual property, and much more. Furthermore, the legal obligations that these agreements entail are supported by a strong system of dispute settlement. There is a growing realisation among scholars and practitioners that suppliers. Cases in point are social security schemes and any other public services, such as health or education that are provided at non-market conditions. Also, the Annex on Air Transport Services exempts from coverage measures affecting air traffic rights and services directly related to the exercise of such rights. 24 The GATS has two parts: the framework agreement containing the general rules and disciplines; and the national ‘schedules’ which list individual countries’ specific commitments on access to their domestic markets by foreign suppliers. 25 The original GATT also contained a dispute settlement mechanism but was less timely, automatic and binding. For more details on this see Bernard Hoekman and Michel Kostecki, Above n 9, at 46. 26 For a more detailed explanation of the strengths of the WTO system of dispute settlement see B Hoekman and M Kostecki, The Political Economy of the World Trading System: The WTO and Beyond (Oxford, Oxford University Press, 2001) at 74 ff.

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Concepts of Justice in the WTO 11 both the breadth and the strength of the WTO system are such that it is increasingly likely to be an important organisation in dealing with concerns broader than its core trade mandate. Trade rules aimed at liberalising or regulating international trade in so many different areas are almost bound to impact on a number of non-trade issues, including human rights.27 Furthermore, the WTO dispute settlement system: can be triggered easily and quickly, and panels and the Appellate Body will often be expected to make rapid rulings, arguably at the exclusion of other jurisdictions and on any WTO-related complaint.28

Many examples of such issues and how they are dealt with under the WTO system will be presented during the course of this book. It is sufficient at this stage to simply recognise the breadth of issues potentially arising in the WTO context, and the power of the WTO dispute settlement body to make binding rulings on them. It is in this context that consideration now turns to the underlying principles within WTO Agreements that allow judgements to be made about whether WTO Member States are abiding by their international trade law commitments. The international trading regime, from the inception of the GATT and as now embodied in the rules of the WTO, has developed a number of key norms and standards by which to adjudicate on the legality of actions by Member States. While there are numerous technical regulations on a huge range of subject matters within the many WTO Agreements, these key principles still form the basis of much of WTO decision-making. They arise again and again when considering issues in the WTO context that are also important for the protection and promotion of human rights. The fundamental question to be asked is whether these principles are sufficient to balance and adjudicate upon all the issues that arise in a trade-related context, and for the purposes of the arguments presented here, whether they are able to support, or do in fact lead to conflict with human rights norms and standards. An exhaustive discussion of the key trade law principles is not attempted here,29 but it is important to highlight the fundamental trade law principles that will be discussed with respect to a number of different human rights issues throughout this book. There are ‘three core GATT disciplines’30 which form the central rules of the world trading system for trade in goods. Article I of the GATT deals with mostfavoured-nation (MFN) status. It states that no WTO Member can give to the products of one Member State better treatment than it does to those of any other Member, thus requiring countries not to discriminate between goods on the 27 J Pauwelyn, Conflict of Norms in Public International Law: How WTO Law Relates to Other Rules of International Law (Cambridge, Cambridge University Press, 2003) at 20. 28 G Marceau, above, n 8 at 757. 29 For a comprehensive treatment of the principle of non-discrimination in WTO and EU law, see F Ortino, Basic Legal Instruments for the Liberalisation of Trade, A Comparative Analysis of EC and WTO law (Oxford, Hart Publishing, 2004). 30 Using these terms see S Charnovitz, ‘The Moral Exception in Trade Policy’ in Charnovitz, Trade Law and Global Governance (London, Cameron May, 2002) at 329.

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12 The Justice Dimension of the WTO basis of their origin or destination. ‘National Treatment’ (Article III GATT) requires imported products to be treated no less favourably than domestic products, thereby aiming to ensure non-discrimination between domestic and foreign products. Article XI forbids quantitative restrictions such as quotas, import bans and export bans. This system attempts to ensure that all trade restrictions take the form of quantifiable ‘taxes’, which can then be measured against one another to ensure that ‘like’ foreign products31 are not receiving discriminatory treatment, either with respect to other foreign products or domestic products. The fundamental aim of the GATT system is therefore to attempt to ensure equality in terms of equal treatment of products from all WTO Member States, whatever their origin or destination. But the GATT also recognises that there are situations where equal treatment of all products may not be appropriate, and so there are permitted exceptions in certain circumstances, which allow governments to pursue policy objectives that would otherwise be prohibited under the GATT rules. Most importantly for our purposes, there are a number of provisions in the GATT that allow for exceptions to these general principles on the basis of justifiable reasons of public policy and national security.32 There are also provisions that allow special and differential treatment for developing countries in view of their less advanced stages of development.33 Similar rule constructions are utilised in the other major WTO Agreements that will be considered in the work which follows—non-discrimination provisions balanced against exception clauses to allow for specific policy objectives, and special and differential treatment for developing countries.34 Such rules can be explained by economists as instruments for ensuring that there is no ‘cheating’ on the bargains made between Member States, while 31 What represents a ‘like’ product is a very important issue in determining the coverage of this rule, and the extent to which WTO Member States can justifiably distinguish between products, and as a result treat them differently. The WTO dispute settlement body has developed a complex legal test for determining when products are ‘like’. See EC—Measures affecting asbestos and asbestoscontaining products, Report of the Appellate Body, WT/DS135/AB/R, adopted 12 Mar 2001. It is also a controversial issue from a human rights perspective. Is a fork made using forced child labour ‘like’ a fork made using paid adult labour? This is one of the issues that will be explored later in this book. 32 The national security exception is contained in GATT Art XXI, which is considered in ch 6. Other general exceptions are contained in GATT Art XX. The applicability of this clause for dealing with human rights issues is given in depth consideration in ch 12. 33 Applicable to the GATT there is the Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries (GATT Doc. L/4903 (Nov 1979)—popularly known as the ‘Enabling Clause’, which allows for developed countries to utilise Generalised Systems of Preferences (GSP) (see discussion in ch 7). 34 The GATS contains non-discrimination provisions (Arts II and XVII), general exceptions and security exceptions (Art XIV). Art IV of the GATS relates specifically to the treatment of developing countries. The structure of the TRIPS Agreement is different in that it contains positive regulatory requirements to provide minimum standards of protection to intellectual property (for the implications of this different rationale see discussion in ch 3 and in depth analysis of the TRIPS Agreement in ch 10), but it still contains obligations not to discriminate against foreign nationals (Art 31) and exception provisions that allow for the rights otherwise granted under the agreement to be withdrawn and most importantly for our purposes, for compulsory licensing (Article 31). With regard to developing countries, there are for instance longer implementation periods.

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Concepts of Justice in the WTO 13 allowing a degree of justified regulatory diversity. But WTO adjudicators have utilised these rules to seek an interpretation of WTO obligations that can be seen as fair between the parties and to the wider community, and therefore they have become the building blocks of justice within the world trading system.35 When parties are in a dispute, the dispute settlement body of the WTO is charged with interpreting the many complex rules of various WTO Agreements to produce an interpretation which can be regarded as a ‘fair’ interpretation by both the parties to the case and by all the other WTO Members who will adopt the decision, according to the negative consensus procedure. How does WTO dispute settlement achieve results that are fair, predictable, and adhere to basic principles of justice? They rely on fundamental principles of the world trading system, and in particular the non-discrimination provisions described above, together with permitted exceptions from those rules, in order to make ‘fair’ decisions over whether there have been breaches of WTO obligations.36 But are the principles that form the basis of WTO decision-making sufficient to cope with all the issues that arise in a trade-related context? Particularly with the tendency that has been identified for trade issues to be linked with other subject areas, such as human rights, it is important to ask whether existing WTO norms and standards have sufficient capacity to take into account important societal values and concerns. Do WTO rules allow decisions to be made that reflect modern conceptions of justice including human rights norms and standards, or else successfully reserve appropriate issues for other organisations that are more suited to decision-making on those issues? A second equally crucial issue is whether lack of certainty about the nature and extent of WTO legal obligations would ever prevent WTO Member States from taking action on other issues such as the protection and promotion of human rights. These will be central questions throughout this book. It should be recognised at this stage that this question is not simply a moral and philosophical one. From the technical legal perspective, the WTO and its Member States are required to consider wider international law norms and standards in all aspects of their work within that organisation. Rules of international law make clear that ‘international organisations are bound by any obligations incumbent upon them under general rules of international law.’37 There is practically universal agreement among academic writers that the rules of WTO law are part of 35 R Howse, ‘Human Rights in the WTO: Whose Rights, What Humanity? Comment on Petersmann’ (2002) 13 European Journal of International Law 621–50 at 654, referring to A Kojeve, Outline of a Phenomenology of a Right (Lanham, Rowman & Littlefield Publishers, 2000) and Steger, ‘The Trade and . . . Conundrum—A Commentary’ (2002) 1 American Journal of International Law 135. 36 As will be clarified at several stages during this book, there are various other mechanisms relevant to the protection and promotion of human rights that WTO Members can use to clarify their legal obligations that do not rely on these fundamental principles eg Declarations or Waivers of obligations. 37 Interpretation of the Agreement of 25 March 1951 between the WHO and Egypt, Advisory Opinion of 20 Dec 1980 (1980) ICJ 73 at para 37.

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14 The Justice Dimension of the WTO the wider body of international law.38 This approach is also confirmed by the WTO Agreement itself,39 several decisions of the WTO Dispute Settlement Bodies (DSB),40 and an analysis of the law of treaties.41 Given that human rights are part of international law, in the form of international treaties and customary law, relevant provisions of international human rights law must be taken into account when countries are operating in the WTO. This is also the position adopted by intergovernmental human rights organisations: all States have responsibilities to ensure that they adhere to their international human rights commitments, and they are not released from their human rights responsibilities simply because they are operating within the framework of another international organisation.42 Thus, the WTO, as an intergovernmental organisation is required to create rules and make decisions with due respect for human rights norms and standards. The precise mechanisms that the WTO should utilise to properly take account of these norms and standards will be addressed in later chapters.

VI. INTERNATIONAL HUMAN RIGHTS LAW OBLIGATIONS IN A TRADE LAW CONTEXT

There are a vast range of human rights issues that could be discussed with regard to the international trade law system. The subject matter discussed here, however, is limited in scope to consideration of whether WTO rules and regulations can be applied and interpreted in a way that allows WTO Member States also to undertake their obligations under international human rights law. The 38 See J Pawelyn, above, n 27 at 25 for a range of references. Also see G Marceau, above n 8 at 775; J E Alvarez, ‘How Not to Link: Institutional Conundrums on an Expanded Trade Regime’ 7 Widener Law Symposium Journal (2001) 1–19; S Skogly, ‘Human Rights Obligations of the World Bank and the International Monetary Fund’ (London, Cavendish Publishing, 2001) at 81 and 107 talking about the human rights obligations of States in the context of the World Bank and IMF, where similar principles apply. 39 Art 3.2 of the WTO DSU. 40 Eg United States—Standards for Reformulated and Conventional Gasoline, Report of the Appellate Body, WT/DS2/AB/R, adopted 22 Apr 1996 at 17—stating that GATT cannot be read in ‘clinical isolation from public international law’ 41 A detailed analysis of the Vienna Convention on the Law of Treaties (Vienne Convention) will be undertaken in ch 11. On this point, see L Bartels, ‘Art XX of GATT and the Problem of Extraterritorial Jurisdiction: The Case of Trade Measures for the Protection of Human Rights’ (2002) 36 Journal of World Trade 353–403, at 354; also making a similar point see J Pawelyn, above, n 27 at 29. 42 Specifically in the WTO context see OHCHR, Liberalisation of trade and services and human rights—Report of the High Commissioner (25 June 2002), E/CN.4/Sub.2/2002/9, para 5. The European Court of Human Rights (ECtHR) has also held that States cannot, by establishing an international agreement of organisation thereby be absolved from their human rights responsibilities: ‘The legitimacy and legality of all government measures, including rules and decisions of intergovernmental organizations, depend also on their respect for human rights as defined in national constitutions and international law.’ TI v United Kingdom [2000] App No 43844/98–III European Human Rights Reports at 15 as cited in Ernst-Ulrich Petersmann, ‘Theories of Justice, Human Rights and the Constitution of International Markets’ (2003) 37 Loyola Law Review 407–59 at 410. See also the Commission on Human Rights in its Resolution 2002/24 para 7 calling on all State Parties to the International Covenant on Economic, Social and Cultural Rights (ICESCR) to ‘ensure that the Covenant is taken into account in all of their relevant national and international policy-making processes.’

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Human Rights Law in a Trade Law Context 15 reason that this question is addressed is because it is a sine qua non of human rights observance, as well as being fundamental to a unified as opposed to fragmented system of international law. If international trade law rules do not allow countries the regulatory autonomy to protect and promote human rights, then there would appear to be a clear conflict between the two legal systems. This does not mean that such regulatory autonomy is sufficient for human rights observance. There are a number of further procedural and substantive measures that must be taken in order to ensure that international trade law rules do not actually violate human rights law norms and standards. These will be addressed to a limited extent in the later chapters of this book.43 There are also wider questions of the inter-linkage between human rights and trade that will not be addressed here in detail. Of particular importance, there are human rights concerns about the extent to which the international trading system and its Member States are sufficiently pursuing the core mandate of the system—ie reductions in barriers to trade and other market distortions. The failure sufficiently to reduce barriers to trade in areas of vital importance to the world’s most disadvantaged people, in particular agriculture, has clear social justice implications which can be (and have been) addressed utilising human rights terminology.44 While the moral consequences of such failures are obvious, the legal frameworks within which such issues should be considered are considerably more complex than those discussed here. The question of whether WTO rules prevent WTO Member States from carrying out their other international legal obligations, including their international human rights obligations is one that allows some fairly concrete conclusions to be drawn about the compatibility of the two sets of legal norms. Where, on the other hand, international human rights norms and standards might demand that more should be done within the WTO framework to pursue its core mandate, such as in the liberalisation of agriculture, it is more difficult to specify the additional legal obligations to which a human rights approach gives rise.45 However it is hoped that the type of analysis provided here may prove a starting point for consideration of such issues within legally-based human rights frameworks in the future. 43 Due to the state-centred nature of the WTO system, this work concentrates on States’ conduct under international law, but international human rights law imposes further obligations, which transcend this state-centred conception. See discussion of this issue in ch 12. 44 See T Pogge, World Poverty and Human Rights (Cambridge, Polity Press, 2002) which provides many human rights based arguments from a moral perspective concerning the requirements upon developed countries to take action to eradicate poverty in poorer developing countries. In particular at p 18 he argues that there are clear human rights concerns about the agricultural subsidies that developed countries grant to their farmers, which act as a barrier to trade for produce from developed countries. Developed country farm subsidies in 2000 amounted to 245 billion dollars. It is estimated that the loss of export revenues due to protectionist measures in developed countries amounts to 700 billion dollars. This figure is 12.5 times the annual overseas development assistance from all donor countries combined, or 11 % of the gross national income combined of developing countries. 45 For instance see T Pogge, ibid for an analysis of the defects of the current international trading system with regard to, inter alia, agricultural subsides. His arguments are moral rather than legally-based.

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2 A Human Rights Methodology for Analysis I. INTRODUCTION

T

HIS CHAPTER WILL set out the human rights approach that will be adopted throughout the rest of this book, and highlight some of the important aspects of a human rights methodology in the context of analysing international trade law rules. The approach to human rights that will be adopted here is primarily a legal positivist approach, although such an approach, it will be argued, is also based upon shared conceptions of human rights in various moral and philosophical writings. Of particular importance in the context of international trade, it will be stressed that a human rights methodology must be based on equal concern for the protection and promotion of economic, social and cultural rights alongside civil and political rights.

II. A LEGAL POSITIVIST APPROACH TO HUMAN RIGHTS

Throughout this book, a legal positivist approach to human rights is adopted— the impact of the WTO and international trade rules are assessed on those human rights that have been codified in legal instruments. Since it addresses the impact of international trade law rules on the protection and promotion of human rights, it will primarily be based upon those rights which are codified in international human rights declarations, conventions and covenants,1 as well as 1 These are primarily, but not restricted to the Universal Declaration on Human Rights, the International Covenant on Civil and Political Rights the International Convention on Economic, Social and Cultural Rights, International Convention on the Elimination of All Forms of Racial Discrimination, Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment, Convention on the Rights of the Child, Convention on the Prevention and Punishment of the Crime of Genocide, and the International Convention on the Suppression and Punishment of the Crime of Apartheid. Also particularly important in this context is the 1986 UN Declaration on the Right to Development which clearly has ramifications for the trade and human rights debate. However there are difficulties about how to conceive the right to development as a legally enforceable right, in terms of the content of the right or who the rights and obligations bearers are. See C Tomuschat, Human Rights: Between Idealism and Realism (Oxford, Oxford University Press, 2003) at 24 and 50ff for the problems of the Right to Development as a legally enforceable right. And NJ Udombana, ‘The Third World and the Right to Development. Agenda for the Next Millennium’ (2000) 22 Human Rights

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18 A Human Rights Methodology for Analysis human rights principles that have become part of international customary law, since these are the rights that are most widely recognised as having universal applicability.2 As has been argued by a leading human rights campaigner: Unless there are concrete and broadly understandable reasons to deviate from existing law, we must defend human rights law largely as written if we are to have any legitimacy and force to our work.3

It is submitted that such an approach should also be adopted in the academic sphere when utilising a human rights methodology to assess the social impact of international trade. The adoption of such an approach avoids problematic divergences in conceptions of human rights as articulated by numerous philosophers, religious teachers, political scientists, lawyers, and others. As one of the leading international human rights lawyers Philip Alston has observed, there are a substantial number of disagreements between such protagonists advocating one conception of human rights over another one, or seeking to include or exclude particular rights from those that should be protected and promoted. There have been numerous attempts to come up with ‘organising principles’ and ‘central rights’ from which all other human rights can be derived. But it is precisely because of ‘the heterogeneity and seeming irreconcilability’ of the foundations of human rights that there is a need to rely on human rights that have been formalised and legalised in international treaties.4 A number of scholars have argued that the value system of human rights is one that finds its origins in the nature of humanity itself, and that this therefore gives rise to ‘facts’ about the nature of human rights. It is argued that the universality of human rights is demonstrated by extensive anthropological literature and moral philosophical writings which show that within every culture and civilisation there are certain common moral directives which have recognised the need to protect certain fundamental rights of each human being. So Manfred Nowak argues that: The value system manifested in human rights is not a specifically European one, but is found in all the major cultures and religions worldwide. Human life, dignity, freedom, equality and property were protected above all by moral commandments (‘thou shalt Quarterly 753 for a more optimistic view. Also relevant to this discussion are numerous ILO Conventions which codify labour rights at the international level. 2 See discussion in ch 4 on human rights that have achieved this status. 3 K Roth, ‘Defending Economic, Social and Cultural Rights: Practices and Issues Faced by International Human Rights Organisations’ (2004) 26 Human Rights Quarterly 63–73 at 64. 4 Alston, ‘Core Labour Standards’ and the Transformation of the International Labour Rights Regime’ (2004) 15 European Journal of International Law 457–521 at 483. At a lecture as part of the Academy of Law Course at the European Institute in Florence Alston recalled that the United Nations Educational, Scientific and Cultural Organisation (UNESCO) had attempted to put together a group of international scholars from a variety of different cultural backgrounds to write a multi-contributor volume expounding upon the universality of the moral basis for modern conceptions of human rights. This effort was abandoned when it became clear that their conceptions of the moral basis for human rights were so varied and even conflicting.

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Differentiating Human Rights from Other Moral Theories 19 not kill’, ‘thou shalt not steal’), standards of criminal law and justice maxims, such as the Golden rule found in all religions.5

But it is difficult to sustain arguments that modern conceptions of human rights are built on principles that are common to all civilisations throughout time and space. Although many human rights advocates have made foundational appeals, these are always open to external or ‘ontological’ challenges. For instance, modern international human rights instruments make a foundational appeal to the dignity of the human being. But, it is not illogical or irrational to argue that the category of ‘human being’ is arbitrary and should be extended to other creatures, nor as many societies have argued throughout history, should be restricted to certain categories of persons. Most civilizations prior to the last few centuries, even if they have advocated a rights-based approach, have explicitly limited those rights to specific categories of human being, generally excluding slaves, women, foreigners and others. Human rights make their strongest claims when they argue that it is ‘morally unreasonable’ in the modern world to, for example, deny rights to certain categories of persons because of their race, religion etc.6 It is therefore argued here that anthropological and religious arguments are of limited value in justifying a modern, universal and holistic human rights methodology. Given the considerable diversity in conceptions of human rights, there is no single incontestable ‘foundational’ moral principle on which to base human rights claims. As Jack Donnelly argues: Many societies have denied the moral centrality, even the existence, of our common humanity on thoughtful and carefully justified grounds. Moral and political arguments require a firm place to stand. But that place appears firm largely because we have agreed to treat it as such.7

A legal positivist approach, such as that advocated here, helps to overcome many of the philosophical differences that would otherwise undermine the usefulness of a human rights methodology in the trade law context.

III. DIFFERENTIATING HUMAN RIGHTS FROM OTHER MORAL THEORIES

Adopting the legal positivist approach to human rights as set out above does not, however, preclude consideration of the ethical and moral rationale for utilising a human rights methodology. All human rights theories have a number of key features that differentiate them from other moral theories. Any moral 5 Eg M Nowak, Introduction to the International Human Rights Regime (Leiden, Brill, 2003) at 9. For more detailed arguments in the same vein see J Finnis, Natural Law and Natural Rights (Oxford, Oxford University Press, 1980). 6 Eg J Donnelly, Universal Human Rights in Theory and Practice (New York, Cornell University Press, 2002). 7 J Donnelly, ibid at 19.

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20 A Human Rights Methodology for Analysis theory that does not recognise these features is thereby incompatible with modern conceptions of human rights.8 Most fundamentally, common to all human rights discourses is the recognition of human beings at the centre of the moral system, and human rights as accruing to each human being by the very nature of their human personhood. This conception of human rights as applying to all persons by nature of their common humanity can be tied specifically to the human rights approach found in international human rights treaties and is encapsulated in the preamble to the UDHR: [R]ecognition of the inherent dignity and of the equal and inalienable rights of all members of the human family is the foundation of freedom, justice and peace in the world.

It continues in Article 1: ‘All human beings are born free and equal in dignity and rights.’9 In common with all approaches to human rights in moral philosophy,10 the UDHR recognises that the inherent dignity of each person requires protection by means of a set of minimum standards that need to be met for every human being. It mandates that human rights constitute legal claims, through which human beings become the subjects rather than the objects of legal systems. A human rights methodology therefore has specific differences when compared to other systems of justice. Of particular relevance here is the comparison between a human rights system of justice and that of utilitarianism,11 since the latter system forms the basis of the welfare economics approach which is the traditional ‘moral’ justification for world trade rules.12 Whereas a system of human rights is a deontological theory of justice—it emphasises the importance of rules of action—utilitarianism is a consequentialist theory that determines the morality of acts according to their consequences for aggregate utility.13 Utilitarianism is therefore primarily concerned with the net sum of utility as 8

Making a similar point see J Donnelly, above n 6 at 41. See the text on the official website at http://www.unhchr.ch/udhr/lang/eng.htm. 10 This is a feature of all conceptions of human rights from the earliest universal rights-based theories of 17th and 18th century Europe, found in the writings of philosophers such as John Locke, Thomas Paine and Jacques Rousseau. For a more detailed discussion, see J J Shestack, ‘The Philosophical Foundation of Human Rights’ in J Symonides (ed ), Human Rights Concepts and Standards (Aldershot, Ashgate, 2000) 31–66 at 38. 11 Utilitarianism is particularly associated with the writings of Mill and Bentham. In particular see J S Mill, Utilitarianism (1863) and J Bentham, An Introduction to the Principles of Morals and Legislation (1789) and for a modern recapitulation of these views R E Goodin, Utilitarianism as a Public Philosophy (Cambridge, Cambridge University Press, 1995). 12 See F J Garcia, ‘The Global Market and Human Rights: Trading Away the Human Rights Principle’ (1999) 25 Brooklyn Journal of International Law 51–97 providing a detailed analysis of this differentiation in approaches. See also T Cottier, ‘Trade and Human Rights, A Relationship to Discover’ (2002) 5 Journal of International Economic Law 111–32 at 115. 13 F J Garcia, ibid at 63ff. A distinction can be made between act utilitarianism and rule utilitarianism. The former judges the utility of each individual act separately, the latter permits the creation of rules calculated on a utilitarian basis that are then used to judge individual acts. It is beyond the scope of this research to discuss the important differences between these two approaches. Of importance for this purpose is that they both differ markedly from a human rights methodology. 9

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Challenges to a Human Rights Method for Assessing Trade Law 21 opposed to a human rights approach which gives precedence to certain basic needs of each individual person. Classical utilitarianism defined utility as ‘happiness’. Modern theories of utilitarianism, which form the basis of the welfare economics approach, rather tend to define utility in terms of (rational) preferences—utility will be maximised when the maximum number of preferences of individuals are satisfied.14 Economists have further refined the theory so that preference satisfaction is based on the sum of individual welfare levels, but it still fundamentally differs from the human rights approach by arguing that actions are justified by their consequences in terms of maximising aggregate welfare; international trade law rules are generally justified on the grounds that efficient, non-discriminatory, economic exchanges promote increased aggregate welfare consequences,15 but their distributive effects in terms of fulfilling certain basic human needs of each individual are very difficult to ascertain utilising this utilitarian approach (see discussion in next chapter). So, a distinction will be made throughout between these two moral systems, the differing obligations that they impose and how they determine what represent ‘just’ and optimal international trade law rules.

IV. CHALLENGES TO THE USE OF A HUMAN RIGHTS METHODOLOGY FOR ASSESSING TRADE LAW RULES

An important question that arises from the legal positivist justification of human rights as set out above is the extent to which modern conceptions of human rights, as codified in international legal instruments, do in fact represent a universally accepted framework for analysing some of the social justice aspects of international trade law rules. Challenges have been made to the universal applicability of human rights over the last twenty-five years, arguing on the basis of ‘cultural relativism’.16 This theory argues that the human rights system cannot possibly have universal applicability given that the principles on which moral behaviour should be judged are relative to the society in question. Since there is such great cultural variation between different societies, it is impossible to make a judgement about the validity of moral decisions in other cultures by means of a globally applicable moral system.17 The particular 14 ‘Preferences’ is a wide-ranging term which includes those interests and desires that individuals seek. See F J Garcia, Trade, Inequality and Justice: Toward a Liberal Theory of Just Trade (New York, Transnational, 2003) at 57ff for a summary of some of the literature on this. 15 Eg J L Dunoff, ‘Rethinking International Trade’ (1998) 19 University of Pennsylvania Journal of International Economic Law 347–89. 16 The starting point for this discussion was A Pollis and P Schwabb, ‘Human Rights: A Western Construct with Limited Applicability’ in their ed Human Rights: Cultural and Ideological Perspectives (New York, Preager Publishers, 1979). 17 For this and related arguments see A Pollis and P Schwab, Towards a Human Rights Framework (New York Preager Publishers, 1982) and A Pollis, ‘Cultural Relativism: Through a State Prism’ (1996) 18 Human Rights Quarterly 316–43; John Ruggie, ‘Human Rights and the Future International Community’, (Wellington, Deadulus, 1983) 93–110 at 98–100.

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22 A Human Rights Methodology for Analysis critique of human rights is that an essentially Western set of values is being foisted upon other regions of the word—in particular Asia, Africa, and the Arab regions—whose own cultural and ideological backgrounds make human rights an unsuitable moral system. Support for such arguments is found in the Western origins of the international human rights system. The UDHR, the foundational international legal instrument on which modern conceptions of human rights are based, was created in the aftermath of the Second World War by a world organisation of only 56 States, with little African or Asian representation. It is therefore argued that it is a Western document reflecting primarily Western, rather than globally applicable values, and that those that were not involved might be entitled not to accept that the UDHR represented a declaration of the universal values of mankind.18 The above arguments are rejected here on a number of grounds. There is some disputing the Western origins of the UDHR,19 but, in any case, a Treaty or Declaration’s origins do not necessarily limit the applicability of the values contained therein. The increasing universality of international human rights norms and standards can be seen by the growing numbers of States who have signed up to later human rights treaties and declarations. The UDHR was followed twenty years later by the ICCPR and the ICESCR adopted by a process that involved 106 delegations from different States coming from all over the world.20 Worldwide recognition of human rights is today more entrenched than ever. The universality of the international human rights framework was endorsed by 171 States at the Vienna World Conference on Human Rights in 1993, where States agreed that all human rights are a legitimate concern of the international community and a priority objective of the United Nations.21 In the context of international trade law rules, all WTO Members have ratified at least one international human rights instrument, with the vast majority having ratified many more.22 The United Nations human rights treaties therefore represent a set of rights that have been adopted by the vast majority of nations across the world. This process of adoption adds to the status of human rights because sovereign States themselves have assigned to them the status of international legal instruments. The adoption of human rights instruments is reinforced by the fact that almost all States ‘regularly proclaim their acceptance of and adherence to international human rights norms.’23 This is not to say that there are never violations of 18

Presenting these arguments, see C Tomuschat, above n 1 at 63. See J Donelly, above n 6 at 22 fn 2, stating that: ‘In addition to twenty Latin American states thirteen “non-Western” countries voted for the Universal Declaration. . . . In other words ‘Western’ states . . . made up only a third of the votes for the Universal Declaration. Muslim states provided half as many votes to the final total as Western states.’ 20 C Tomuschat, above n 1 at 64 arguing that this also increased the universal recognition of the values contained therein. 21 M Nowak, above n 5, at 27. 22 OHCHR, Liberalisation of Trade and Services and Human Rights—Report of the High Commissioner (25 Jun 2002) E/CN.4/Sub.2/2002/9 (Report on GATS), at para 5. 23 J Donnelly, above n 6 at 1 and 41. 19

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Challenges to a Human Rights Method for Assessing Trade Law 23 human rights norms by State Parties to the international treaties in question.24 But there is widespread acknowledgement that human rights are norms and standards that no State that wishes to be considered a member of the international community can ignore.25 On those few occasions when governments have denied the applicability of human rights on cultural relativist grounds, a strong critique has been made that such arguments are a political construction, undertaken for political ends, rather than because of deep-rooted cultural differences between societies. There is an extensive literature on this issue.26 This is not to say that the current corpus of international human rights instruments is fixed in stone, and this is reflected by the fact that their codification is an ongoing and never ending process both nationally and internationally.27 Conceptions of basic human needs change, and new challenges are recognised, and this includes codification of rights that are of particular importance to States that had less influence in the original drafting of international instruments. So, the Declaration on the Right to Development was produced mainly at the behest of African States, and recognises the requirement to have a focus on the needs of people in the developing world.28 Conceptions of human rights also change in response to new ‘threats’, for instance as a result of new scientific technology such as human cloning.29 Nor does the principle of universality rule out some regional or national differences in human rights, due to the different ways in which human rights are conceived in different areas of the world.30 But cultural relativist arguments themselves tend towards over-simplification, as is well summed up by Neil Englehart: Cultures are not unitary, and so treating them in terms of a single model personality is too simplistic. Cultures do not have a single essence . . . cultures do change over time, as people innovate, borrow, and learn from experience—indeed, virtually all of the history of ideas is built on this premise.31 24 A number of human rights campaigners perceive US actions in ignoring international human rights standards in its treatment of prisoners at Guantanamo Bay, Abu Ghraib and elsewhere, while advocating human rights observance to other countries around the world, to be an example of such double standards. See eg Human Rights Watch Report, Getting Away with Torture? Command Responsibility for the US Abuse of Detainees (Apr 2005). 25 J Donnelly, above n 6 at 51ff. 26 See for instance A Sen, Development as Freedom, (Oxford, Oxford University Press, 1999) ch 10, ‘Culture and Human Rights’; J Donnelly, above n 6 at 57–179; C Tomuschat, above n 1 at 59–60 and 75f; N A Englehart, ‘Rights and Culture in the Asian Values Argument: The Rise and Fall of Confucian Ethics in Singapore’ (2000) 22 Human Rights Quarterly 548–68. Also relevant, Kofi Annan’s comment: ‘It was never the people who complained of the universality of human rights, nor did the people consider human rights as a Western or Northern imposition. It was often their leaders who did so.’ Taken from J Lindgren, ‘The Declaration of Human Rights in Postmodernity’ (2000) 22 Human Rights Quarterly 478 at 498. 27 M Nowak, above n 5, at 3. 28 General Assembly Resolution 41/128 of 4 Dec 1986 http://www.unhchr.ch/html/menu3/b/74.htm, accessed on 7 Dec 2006. 29 See Universal Declaration on the Human Genome and Human Rights (1997). 30 M Nowak, above n 5, at 3. 31 N A Englehart, above n 26 at 564 goes on to explain how many of the political and social institutions of modern Asia are founded upon the European model.

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24 A Human Rights Methodology for Analysis In such a culturally diverse world, human rights, and the values contained therein, represent a system of justice that, due to the globalising effects of the very processes under discussion here, are becoming more and more universalised. Such a phenomenon can be seen in the context of this very discussion— the social impact of globalisation and international trade—where a human rights discourse is very widely utilised. A good example of this trend is the recent ILO sponsored report of the World Commission on the Social Dimension of Globalisation.32 The Commission consisted of distinguished politicians, leaders of business, economists, labour representatives, environmentalists and other civic society representatives from a great range of countries across the globe. The report further involved consultations with representatives of government, labour, civil society and international and regional organisations from Asia, Africa, Europe and South America. A striking aspect of the report is the continual usage of human rights language to describe appropriate responses to the social dimension of globalisation.33 A human rights methodology is also widespread among writing that specifically focuses on international trade law rules. In the legal academic analysis human rights norms and standards have been the dominant social justice framework for the critique of international trade law rules.34 But the language of human rights is also pervasive in many other forms of critical analysis. For instance, much of the discourse conducted by NGOs in this field also uses human rights as the standards by which to judge the social impact of international trade rules.35 Nor is it simply NGOs and experts that originate from Western States that use the human rights methodology.36 A number of UN agencies have also realised the impact that international trade law can have on human rights and have begun to explore this area, writing extensively on this 32

Available at http://www.ilo.org/public/english/wcsdg/, accessed on 7 Dec 2006. The term ‘human rights’ itself appears 53 times in the report. See G Marceau, ‘WTO Dispute Settlement and Human Rights’ (2002) 13 European Journal of International Law 753–814 at 754 fn 1 for a list of some of the recent contributions utilising a human rights framework to analyse the world trading system. Two more recent multi-contributor volumes on the issue of human rights and trade are T Cottier, J Pauwelyn and E Burgi (eds) Human Rights and International Trade (Oxford, Oxford University Press, 2005) and F M Abbott, C BreiningKaufmann, and T Cottier (eds) International Trade and Human Rights: Foundations and Conceptual Issues (Michigan, University of Michigan Press, 2006). 35 See eg International Federation for Human Rights (FIDH), a network of 141 human rights groups across the world who have various reports on human rights and trade eg—The WTO and Human Rights (9 Nov 2001). Also see 3D, an NGO specifically adopting a human rights approach to the world trading system at http://www.3dthree.org/en/, accessed on 7 Dec 2006. Also see Oxfam report—Trading away our rights: Women working in global supply chains (2004); J Hilary, ‘The Wrong Model: GATS, trade liberalisation and children’s right to health’ (Save the Children, 2001) Save the Children; World Development Movement, Stop the GATSastrophe!: How basic rights are being traded away under the GATS (July 2001). 36 See Third World Network writing about numerous trade-related topics utilising a human rights methodology at www.twnside.org, accessed on 7 Dec 2006. There is also the International NGO Committee on Human Rights in Trade & Investment, which includes many Southern-based NGOs. Also see Third World Intellectuals and NGOs’ Statement Against Linkages (TWIN–SAL) calling for a balanced human rights approach to trade. 33 34

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Challenges to a Human Rights Method for Assessing Trade Law 25 topic. Of particular relevance to this analysis are the reports of the Office of the UN High Commissioner for Human Rights (OHCHR), which consider the human rights impact of the WTO, focusing on a number of different WTO Agreements.37 The OHCHR reports deal with a wide range of the social justice aspects of trade, utilising human rights norms and standards as a methodology, and provide much evidence for why such an approach is appropriate. So the widespread usage of a human rights discourse as a mechanism for assessing the social justice aspects of the global trading system is a strong reason for rejecting cultural relativist arguments; this human rights discourse is not simply restricted to particular interest groups, ideologies, or regions of the world, but is a form of discourse that is geographically and culturally widespread. The above arguments are, however, an important reason why UN human rights norms and standards have been chosen as the primary focus for analysis of the human rights impact of the global trading regime. It is appropriate to primarily assess the impact of the WTO on globally recognised human rights and the system by which they are protected. Hence it adopts UN human rights treaties as the primary basis for analysis of international trade law rules because of the far more universal acceptance of the values contained therein. The book will not address questions of whether other systems of rights might better protect human rights at the global level than the UN system. In particular it has been argued that the EU system of fundamental rights addresses human rights issues that are largely omitted from UN Treaties, and offers a system of protection that is more holistic than the system operating under UN auspices.38 On the other hand, the arguments made in this book should not be taken as signalling that European, or any other States, cannot go beyond UN standards and commit to additional and higher human rights standards. In which case, it should be possible to ensure that international trade law rules also protect and promote these higher human rights obligations. Such obligations also need to be protected and promoted in the international trade law context. However, as will be explained in the following chapters, such an approach would, to a certain extent, depend on the jurisdictional context in which these human rights standards are being utilised.39 Nor will this book address the possible effects of ‘consitutionalisation’ of human rights within the WTO system, as advocated in particular by 37 In particular—OHCHR, The Impact of the Agreement on Trade-Related Aspects of Intellectual Property Rights on Human Rights (27 June 2001) E/CN.4/Sub.2/2001/13 (Report on TRIPS); OHCHR, Globalisation and its Impact on the Full Enjoyment of Human Rights (15 January 2002) E/CN.4/2002/54 (Report on AoA); the Report on GATS above n22; OHCHR Human Rights, Trade and Investment (2 July 2003) E/CN.4/Sub.2/2003/9 (Report on Investment). 38 See, among many publications by this author, Ernst-Ulrich Petersmann, ‘Theories of Justice, Human Rights and the Constitution of International Markets’ (2003) 37 Loyola Law Review 407–59 at 418–21 arguing that the EU system of fundamental rights protection protects both basic economic freedoms (eg of goods, services, persons) and basic human needs such as consumer protection that are omitted from UN Treaties. 39 This methodology is set out in ch 4, and discussed in detail in the following chs.

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26 A Human Rights Methodology for Analysis Ernst-Ulrich Petermsann, who has written extensively on this issue.40 The focus of this analysis is rather on existing UN human rights law and seeks to ascertain what the impact of trade law rules is on human rights norms and standards.41 The values codified in the UN system of human rights, as well as relevant ILO instruments, would not be defended here without the conviction that, in general terms, the UN system of human rights does encompass all of the rights necessary for human beings to live a dignified existence, in particular through its recognition of civil, political, economic, social and cultural rights as universal, indivisible, interdependent and interrelated.

V. THE IMPORTANCE OF A CONCEPTION OF HUMAN RIGHTS THAT INCLUDES EQUAL RECOGNITION OF ECONOMIC, SOCIAL AND CULTURAL RIGHTS

The rest of this chapter will concentrate on one key feature of international human rights law, as it will be utilised in addressing the international trade regime. It will argue for a conception of human rights that recognises the equal importance of protecting and promoting economic, social and cultural rights alongside civil and political rights. Not only has this issue been one of the more controversial issues in human rights discourse over the years,42 it is also vital to a balanced critique of the human rights impact of the international trading system. In some philosophical, legal and political circles it has been argued that only civil and political rights are ‘real’ human rights and that economic, social and cultural rights are either not rights at all, or else do not give rise to legal claims that are ‘justiciable’. The argument for a conception of human rights that includes justiciable economic, social and cultural rights will be made first on the grounds of their importance to modern philosophical conceptions of human rights, second on their legal equality under international law, and third on the basis of their inherent justiciability as demonstrated by examples from international, regional and national legal regimes. Many modern philosophers, lawyers and other commentators on human rights theories have stressed the need for a comprehensive approach to human rights that includes both liberty rights, (which tend to include more civil and political rights), and redistributive rights (which tend to include more economic, social and cultural rights).43 Perhaps the most famous modern advocate of such an approach is John Rawls in his book ‘A Theory of Justice’.44 Rawls devises 40

See E-U Petersmann, above, n 38. See ch 3 for more discussion of this approach. 42 Making this point, see J Donnelly, above n6 at 27. 43 Although some economic social and cultural rights actually fall within the class of liberty rights, most obviously the right to property. See below for more examples of economic, social and cultural rights that are more similar to classical liberty rights. 44 (Cambridge Mass, Harvard Univ Press, 1971). 41

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Equal Recognition of Economic, Social and Cultural Rights 27 two principles of justice on the basis of which his moral framework operates.45 The first principle stresses the importance of liberty rights, such as political liberty, freedom of speech and assembly, liberty of conscience and thought, freedom of the person, the right to hold property and freedom from arbitrary detention.46 But Rawls acknowledges in his second principle that a person will be unable to take advantage of these liberties and the rights and opportunities they create without a degree of distributive justice. So, poverty, ignorance and other deficits in equitable distribution affect the quality, value or worth of liberty, and prevent people from being able to advance their own particular objectives and desires. It is only by ensuring that both of these criteria are fulfilled that a just society is created.47 Many other important modern theorists have stressed the importance of equitable distribution in any rights based theory. So, for instance Amartya Sen and Martha Nussbaum have both talked of ensuring that human beings have the ‘capabilities’ to be able to enjoy their lives, and that these capabilities are most readily achieved by recourse to rights based claims.48 This approach mandates that rights based theories must consider how constraints such as lack of education and healthcare services will affect the capability of each individual to enjoy their lives. Other important modern writers, each using their own methodology and linguistic terms have described the need for a rights-based moral system to include such a distributive element.49 It is not necessary here to discuss the differences between these authors and their varying conceptions of how rights claims should be conceptualised (as 45 Principles of justice, according to Rawls, provide a way of assigning rights and duties across the basic institutions of society. These principles define the appropriate distribution of the benefits and burdens of co-operation. Rawls expands upon his theory of justice, by calculating what a sensible person would choose for his/her society unaware of their particular placement and standing within it (the veil of ignorance). This allows him to devise two principles of justice which he considers any sensible person, under the veil of ignorance, would consider it in his/her interests to pursue. 46 Rawl’s first principle is that ‘each person is to have an equal right to the extensive total system of basic liberties compatible with a similar system of liberty for all’. 47 Rawls’ second principle is that ‘social and economic inequalities are to be arranged so that they are both (a) to the greatest benefit of the least advantaged, consistent with a just savings principle, and (b) attached to positions and offices open to all under condition of fair equality of opportunity.’ 48 See, eg: A Sen, Development as Freedom, (Oxford, Oxford University Press, 1999); for the importance of rights to a conception of capabilities see A Sen, ‘Rights and Capabilities’, in Resources, Values and Development (Oxford, Blackwell Publishing, 1984) 307–24; M Nussbaum, ‘Capabilities and Human Rights’ (1997) 66 Fordham Law Review 273–300 at 295ff. 49 See for instance T Pogge, World Poverty and Human Rights: Cosmopolitan Responsibilities and Reforms (Cambridge, Polity Press, 2002) at 58 referring to the theories of Sen and Rorty and arguing that ‘a commitment to human rights involves one in recognising that human persons have basic needs, and that these needs give rise to weighty moral demands. The object of each of these basic human needs is the object of a human right’. See also L Henkin, The Age of Rights, (New York, Columbia University Press, 1990) arguing that ‘human rights are rights of individuals of society . . . each human being has legitimate, valid, justified claims upon his or her society to various ‘goods’ and benefits. . . . They are defined particular claims listed in international instruments deemed essential for individual well-being, dignity, and fulfilment that reflect a common sense of justice, fairness, and decency’. (emphasis added throughout)

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28 A Human Rights Methodology for Analysis capabilities, needs, entitlements to enjoy etc). What it is important to highlight is the way that these differing conceptions all stress the importance of what we have termed distributive rights, in addition to liberty rights, in order to ensure the dignity of all human persons. They recognise that a starving person is not satisfied with the right to protest. An illiterate and uneducated person has little hope of engaging in meaningful social progression and asserting his or her political rights. A person with no access to even the most basic health care is unlikely to worry about exercising his or her right to self-determination. Such an approach is in stark contrast to those who advocate a libertarian view of rights, such as Robert Nozick, for instance, who is generally credited as being at the most libertarian end of the rights spectrum, in largely denying the need for a redistributive element to rights based theory.50 It is the former rather than the latter approach that is found in international human rights law. International human rights treaties recognise that in order to ensure the dignity of all human persons, a combination of what we have termed ‘liberty rights’ and ‘distributive rights’ are required. The UDHR includes those rights necessary for ensuring basic human liberties effectively to pursue one’s own ends and objectives. On the one hand it protects rights that allow basic liberties (eg freedom of expression and opinion, and the right to property), and on the other hand it ensures, through ‘distributive’ rights, that everyone has the means by which to pursue these legitimate ends (eg an adequate standard of living, education and healthcare). Later, the ICCPR largely incorporates the former set of rights in terms of civil and political rights, while the ICESCR largely incorporates the latter type in terms of economic, social and cultural rights.51 This formal separation of these two sets of rights into two different legal instruments should not be seen as giving them any kind of different legal status. The recognition that all these human rights must be addressed in order to achieve the human dignity of all human beings has been confirmed by the international community. It was endorsed by 171 States at the Vienna World Conference on Human Rights in 1993 who stated in the Vienna Declaration And Programme Of Action that ‘[a]ll human rights are universal, indivisible, interdependent and interrelated.’ But despite the importance of economic, social and cultural rights for achieving human dignity, and the formal recognition of the equal importance of these rights in international human rights law, a number of commentators have suggested there is a fundamental difference in the nature of civil and political rights on the one hand, and economic, social and cultural rights on the other. It is argued that economic, social and cultural rights are essentially non-justiciable in nature, since they do not have the same legal duties established for the State and the individual, and the individual cannot therefore make any kind of sub50 See R Nozick, Anarchy, State and Utopia (Oxford, Blackwell Publishing, 1975) and for a critique of this approach M Nussbaum, ‘Capabilities and Human Rights’ (2002) 66 Fordham Law Review 273–300 at 297ff. 51 See below, however, for discussion of how some economic, social and cultural rights are not in fact distributive, but are rather what might be described as classical negative ‘liberty’ rights.

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Equal Recognition of Economic, Social and Cultural Rights 29 stantive claim in relation to such rights.52 It is argued that economic, social and cultural rights involve positive funding decisions by governments that are essentially discretionary political acts, involving policy decisions concerning the best use of resources. Education, healthcare and housing are areas of vast public and private expenditure, and it is therefore argued that: [J]udges ‘are thought to be (and perceive themselves to be) particularly ill-suited to substitute their view for that of elected politicians and professional civil servants on how spending on social programmes and other legitimate governmental expenditure (or between different social programmes) should be balanced. This explains why a number of domestic and international protections for social rights are expressly subject to resource considerations.53

Such a view, it is argued, finds support in the UN Treaties; while the ICCPR calls for the immediate protection of civil and political rights, the wording of the ICESCR calls for the ‘progressive realisation’ of economic, social and cultural rights.54 The nature of progressive realisation has been described as ‘a promotional obligation which is not owed to the individual’. Whereas civil and political rights do impose definable legal duties on the State, and may only be restricted ‘in accordance with the requirements warranted in a democratic society’.55 It is particularly important to address such arguments in the trade law context. A great number of economic, social and cultural rights are potentially impacted upon by trade law rules, and a human rights methodology that only considers the impact of trade law rules on civil and political rights narrows the focus in a fashion that is detrimental to holistic human rights protection and promotion. Further, the legal content and therefore justiciability of economic, social and cultural rights is often questioned by trade law experts.56 Such arguments are rejected here on a number of grounds. First, the division of civil and political rights and economic, social and cultural rights is not as clear-cut as is suggested. There are a number of economic, social and cultural rights that are passive in nature and do not require resource expenditure by the State. There are also a number of civil and political rights that contain positive obligations and that require significant resource expenditure. For instance, Article 8 of ICESCR 52 Eg Presenting such arguments see C Tomuschat, above n 1 at 46–7 who argues that ‘it is obvious that judicial and quasi-judicial procedures are not well suited for the vindication of economic, social and cultural rights.’ See also E M Vierdag, ‘The Legal Nature of the Rights Granted by the International Covenant on Economic, Social and Cultural Rights’ (1978) 9 Netherlands Yearbook of International Law 73. 53 I Hare, ‘Social Rights as fundamental human rights’ in B Hepple (ed), Social and Labour Rights in a Global Context: International and Comparative Perspectives (Cambridge, Cambridge University Press, 2002) at 166. 54 See Art 2 of ICCPR and 2.1 of ICESCR. 55 Human Rights Committee General Comment No 29. For a more general discussion on this conception of human rights see C Tomuschat, above n 1, at 38. 56 Eg G Marceau, above n 34 at 786ff. ‘What is the ‘Right to Health’? What is the ‘Right to Food’, and What Does Such a Right Entail in Terms of the Rights and Obligations of States? And Why and How are they Relevant to WTO Obligations?’ See also J E Alvarez, ‘How not to Link: Institutional Conundrums on an Expanded Trade Regime’ (2001) 7 Widener Law Symposium Journal at 10.

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30 A Human Rights Methodology for Analysis recognises the right to join a trade union. Also within ICESCR are Articles 13.3 and 4 (on educational choice) and 15.3 (freedom for scientific research) which are classical liberal rights with no need for positive government action. Furthermore, the right to work includes a government obligation of noninterference with the professional activities of someone earning a living. The right to housing includes an obligation on the State to refrain from forced evictions. On the other hand, there are also a number of civil and political rights which require significant resource expenditure; the right to a fair trial implicitly requires the establishment of a judicial system according to principles of justice and fairness, as does the right to be free from arbitrary detention. The right to life implies various duties of protection and investigation on the part of the State.57 The right to protection against torture requires programmes to train supervise and control the police and security forces. All of these have substantial resource implications. There are some economic, cultural and social rights such as the right to education, health and housing where positive government action could be extended almost ad infinitum to cover all the costs that are incurred. But this does not prevent there from being minimum justiciable levels of provision, and minimum standards being adopted, consistent with a human rights approach that recognises that the full spectrum of basic human needs must be addressed if the objective of a dignified life is to be realised. The resources available to provide for education, healthcare and other essential services in each State will determine the extent of the substantive rights that can be claimed by any person.58 But such resource dependence is also true of many civil and political rights and therefore does not validate claims of inherent injusticiability.59 The justiciability of economic, social and cultural rights is further demonstrated by the way in which such rights have been utilised at the international, regional and national levels. At the international level, the Committee on Economic, Social and Cultural Rights (CESCR), which is the body responsible for monitoring State Parties’ compliance with their obligations under ICESCR, has made it clear that there are minimum core standards to economic, social and cultural rights that give rise to government obligations60 and has set out the 57 The State’s positive obligations to protect the right to life were held by the ECtHR to include an effective criminal law and law-enforcement machinery to prevent, suppress and sanction such conduct (Osman v UK (1999) 29 European Human Rights Reports 245). Further the ECtHR has applied the concept of positive State duties to a number of other rights under the Convention, such as the right to respect for family and private life. 58 Making a similar point, see Justice Yacoob in South Africa v Grootboom (2000) 11 BCLR 1169 at paras 93–4. 59 As has been mentioned, there are also rights in the ICCPR that will depend to an extent on resources, such as those that govern conditions of trial and detention, in these cases conditions will often depend on resources—the right to a fair trial will be differently applied in France and Uzbekistan for instance. In any case, it is not conceptually coherent to deny the inherent justiciability of a set of rights simply because they potentially involve more expenditure than another set of rights. 60 The nature of States Parties’ obligations (Art 2, Para 1, of the Covenant) General Comment No 3 (1990).

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Equal Recognition of Economic, Social and Cultural Rights 31 specific nature of these standards in General Comments covering for instance housing,61 education,62 food,63 and health.64 These General Comments will be analysed further in the following chapters.65 Justiciabilty arguments are further enhanced by assessing the status of economic, social and cultural rights at the national and regional levels. Many countries have included these rights within their national constitutions. For instance, the right to health appears in some form in over 100 national constitutions worldwide.66 Furthermore, there are now a number of examples of courts making decisions to uphold constitutionally protected economic, social and cultural rights when petitioned to do so. At the forefront of such case law has been the Constitutional Court of South Africa, which has found against the South African government in upholding the constitutionally recognised right to housing and the right to health in landmark decisions.67 At the regional level, the African Commission on Human and Peoples’ Rights has found violations of economic, social and cultural rights in a number of cases,68 as have a number of other regional human rights adjudicatory bodies.69 Summaries of many other cases that illustrate the justiciability of economic, social and cultural rights can be found on the website of the International Network for Economic, Social and Cultural Rights.70 Thus, from a moral, philosophical and legal perspective, a human rightsbased approach to international trade law rules requires consideration of a combination of civil, political, economic, cultural and social rights in order to protect and promote a dignified existence for all persons. While there will be far greater scope for non-justiciable resource prioritisation in the case of rights such as those to health and education, there are minimum requirements that must be met in order to satisfy all economic, social and cultural rights. Claims made with regard to these rights are inherently justiciable, as demonstrated by their treatment in international, regional and national legal regimes. The nature of claims 61

CESCR, General Comment No 4 The right to adequate housing—ICESCR Art 11 (1). CESCR, General Comment No 13 The right to education—ICESCR Art 13. 63 CESCR, General Comment No 12 The right to adequate food—ICESCR Art 11. 64 CESCR General Comment No 14 The right to the highest attainable standard of health— ICESCR Art 12. 65 In particular, see ch 8 for an overall analysis of the legal status of the General Comments and ch 10 for a more in depth treatment of the General Comment on the Right to Health. 66 P Hunt, The Right of Everyone to the Enjoyment of the Highest Attainable Standard of Physical and Mental Health, Report of the Special Rapporteur, Addendum, Mission to the World Trade Organisation, E/CN.4/2004/49/Add. 1) (1 Mar 2004) at para 20. 67 Eg Government of South Africa and Other v Grootboom (2001) 1 SA 46 CC and Treatment Action Campaign & Ors v. Minister of Health & Ors (2002) 5 SA 721 CC. 68 Eg for non-provision of safe drinking water, electricity and medicines in Free Legal Assistance Group et al v Zaire, Communication No 25/89. For violation of the right to enjoy the best attainable standard of physical and mental health by the Federal Republic of Nigeria, on account of violations against the Ogoni people in relation to the activities of oil companies in the Niger Delta in Social and Economic Rights Action Centre (SERAC) and The Centre for Economic and Social Rights (CESR) v Nigeria, 2001 Communication No. 155/96, (African Commission on Human and Peoples’ Rights). 69 For a number of examples see P Hunt, above n 66, at para 15f. 70 http://www.escr-net.org./, accessed on 7 Dec 2006. 62

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32 A Human Rights Methodology for Analysis based on economic, social and cultural rights will be even less contentious in the context in which they will be utilised here; it will be argued that States should not, in complying with their WTO obligations be prevented from fulfilling their international human rights obligations, including the obligations accorded by economic, social and cultural rights. Thus adjudication of claims based on economic, social and cultural rights in the context of international trade law rules will not involve adjudicators placing burdens upon governments in terms of decisions about allocation of resources. Rather such claims will recognise the validity of actions taken by WTO Member States in fulfilling their economic, social and cultural rights obligations, and the requirement that these actions should not be invalidated by international trade law rules.

VI. CONCLUSIONS

The human rights as set out in relevant international human rights instruments such as UN Conventions (and with regard to labour rights, ILO Conventions) will form the basis of the human rights approach to international trade law rules adopted throughout this work. International human rights standards are the most globally recognised tool for the assessment of the type of social justice issues considered here. Codification of those standards in UN instruments enhances the status of human rights because, through such codification, sovereign States themselves have assigned to them the status of international legal instruments. But international human rights standards are more than merely legal instruments; they include those rights necessary to ensure that each person can effectively pursue his or her own ends and objectives through, on the one hand protecting fundamental freedoms (freedom of expression and opinion etc), and on the other hand, ensuring through distributive justice that everyone has the means by which to pursue those legitimate ends (an adequate standard of living, education etc). A holistic conception of human rights is of vital importance when addressing the human rights impact of global trade rules; that human rights are universal, indivisible, interdependent and interrelated and that therefore economic, social and cultural rights must be protected and promoted equally alongside civil and political rights. A human rights methodology, does however, need to be aware of the cultural diversity and different levels of development that are present in the world. This does not mean that a human rights model is inappropriate for analysis of international trade law rules. Nor does it challenge the idea that human rights are universal values. But it does mean that we must be sensitive to the ways in which human rights arguments can be utilised within the international trade law system, particularly with regard to the enforcement of human rights in different States with different levels of economic development.

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3 The Rationale for a Human Rights Methodology in the WTO Context I. INTRODUCTION

T

HE PREVIOUS CHAPTER described the nature of the human rights approach that will be adopted in assessing the human rights impact of international trade law rules. This chapter will address in more detail the rationale behind adopting a human rights methodology to assess the international trading system. At the most fundamental level, it has already been argued in chapter one that it is a requirement for the long-term success of the international trading system that it recognises the wide-ranging social justice concerns associated with international trade law rules. This chapter will examine how adopting an explicit human rights approach in the analysis of international trade law can increase and enhance a number of social justice aspects of the international trading system. It starts by discussing existing attitudes to linkage between the two legal systems, before going on to provide a number of rationales for an explicit human rights approach to international trade law rules.

II. TRADITIONAL HOSTILITY TO HUMAN RIGHTS AND TRADE LINKAGE

The origins of the international trade regime were discussed in chapter one. With regard to international human rights protection, until the Second World War, international law did not regulate how sovereign states should treat their citizens or subjects, apart from those specific rules developed under humanitarian law to govern the rules of armed conflict and the limited labour rights regime developed under the ILO. The general principle was one of non-interference in national matters; sovereign immunity. The human rights instruments that had been adopted and developed at the national level in a number of States were the concern of each individual State. The only meaningful relationship was deemed to be between the State and its people, there was neither mechanism nor authority for another State to interfere with the standards of rights and the way they were protected in another sovereign state. It was the shock of the second World War, and in particular the horrors of the holocaust, that led to the emergence of

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34 Rationale for a Human Rights Methodology in the WTO an international human rights regime. The international community was able to reflect on that period of conflict, and recognise that it was in the interest of all States to create internationally agreed standards concerning the way in which each State treats its citizens.1 Therefore the contemporary international system of trade rules and the international system for the protection and promotion of human rights originated largely in the same set of historical circumstances—they were both created in the aftermath of the Second World War. But the organisations that were set up to deal with these issues were established within entirely separate institutional frameworks,2 and there is widespread recognition that international human rights and trade law have grown up in isolation to one another, under two different systems of international law.3 The total separation of these areas of law is reflected in their treatment by scholars writing in these fields. An exploration of the academic literature prior to the last decade, concerning human rights issues on the one hand and trade law issues on the other, uncovers very little which draws a connection between the two subjects.4 The fact that linkage between international trade law and the rest of public international law has been slow to be recognised can be put down to a number of factors, largely based on the one hand, on how international trade law is perceived by outsiders to the trade regime, and on the other, how it is perceived by those who work in the field. From the outsiders’ perspective, trade law has for a long time appeared to many to be a technical subject linked heavily with economists and economic analysis, whose complexities are beyond the scope of analysis of most general international lawyers, its legal framework being the domain of a few specialists.5 International trade law was for a long time considered part of the ‘private’ rather than the ‘public’ sphere because it involves transactions between private actors, and inter-linkages of private actors across State boundaries in a way that appears alien to the concept of sovereignty that has dominated discussion in much of the rest of public international law.6 In fact, closer analysis of WTO law shows that it follows the patterns of public international law in general. Regulation of trade law quite clearly involves governmental rule-making and, at 1

See M Nowak, Introduction to the International Human Rights Regime (Leiden, Brill, 2003) at

21. 2 This is in contrast with the other international financial institutions—the World Bank and IMF that were established as part of the UN system. 3 Making this point see Thomas Cottier, ‘Trade and Human Rights, A Relationship to Discover’ (2002) 5 Journal of International Economic Law 111–32 at 112. 4 See T Cottier, above n 3 at 112. 5 See eg A Cassese, International Law in a Divided World (Oxford, Oxford University Press, 1986) at 317 who states that: ‘international economic relations are usually the hunting ground of a few specialists, who often jealously hold to themselves the key to this abstruse admixture of law and economics’. 6 For a more extended discussion of why international trade law has often been seen as distinct from international public law see J Pauwelyn, Conflict of Norms in Public International Law: How WTO Law Relates to Other Rules of International Law (Cambridge, Cambridge University Press, 2003), at 29ff.

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Re-evaluation of the Trade and Human Rights Relationship? 35 the international level, States are the actors who formulate international trade law rules and who are bound by international trade law obligations. From the insiders’ perspective, several commentators have remarked upon how practitioners of the GATT/WTO have been keen to retain their comparatively functional legal system, and not become embroiled in what seems to be the far more politicised and legally uncertain system of international relations outside it. As Joseph Weiler comments: The GATT successfully managed a relative insulation from the ‘outside’ world of international relations and established among its practitioners a closely knit environment revolving round a certain set of shared normative values (of free trade) and shared institutional (and personal) ambitions. . . . Within this ethos there was an institutional goal to prevent trade disputes from spilling over or, indeed spilling out into the wider circles of international relations.7

From the perspective of the nation state, there is also a general tendency to see international legal obligations in isolation because of the problem of ‘disconnected’ government, whereby even where governments are ideologically in favour of simultaneously meeting all of their international legal commitments, ‘practice shows that one part of Government does not necessarily grasp what another part of the same Government has agreed to do.’8 In the context of trade and human rights, those negotiating and implementing international trade agreements may not even be aware of their simultaneous human rights obligations and the need to ensure that both sets of commitments are met in the formulation of law and policy instruments.

III. THE NEED FOR A RE-EVALUATION OF THE TRADE AND HUMAN RIGHTS RELATIONSHIP?

It is only recently that commentators have begun to fully recognise the linkages between the two sets of legal norms. This is reflected by the sudden increase in the number of academic articles on trade law and human rights in recent years.9 Why has this explosion of interest come about? From a human rights perspective, 7 J Weiler, ‘The Role of Lawyers and the Ethos of Diplomats: Reflections on the Internal and External Legitimacy of Dispute Settlement’ in R Porter et al (ed) Efficiency, Equity and Legitimacy, The Multilateral Trading System at the Millennium (Washington, Brookings Institution Press, 2001) at 337. 8 P Hunt, The Right of Everyone to the Enjoyment of the Highest Attainable Standard of Physical and Mental Health, Report of the Special Rapporteur, Addendum, Mission to the World Trade Organisation, (E/CN.4/2004/49/Add.1) 1 Mar 2004. 9 For a list of some of the most important recent articles on this subject see Gabrielle Marceau, ‘WTO Dispute Settlement and Human Rights’ (2002) 13 European Journal of International Law 753–814 at 754 fn 1. Two more recent multi-contributor volumes on the issue of human rights and trade are T Cottier, J Pawelyn, J and E Burgi (eds) Human Rights and International Trade (Oxford University Press, 2005) and F M Abbott, C Breining-Kaufmannand, T Cottier, (eds.) International Trade and Human Rights: Foundations and Conceptual Issues (Michigan, University of Michigan Press, 2006).

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36 Rationale for a Human Rights Methodology in the WTO there has been an increasing recognition of the strength and breadth of the WTO system and its ability to impact upon issues beyond international trade, as was described in chapter one. But although a number of human rights advocates have begun to realise the importance of the international trading system for the protection and promotion of human rights, the same is not necessarily true in reverse. There are still many within the international trade community who consider that human rights considerations are immaterial to international trade rules. This claim has been made on the grounds of both the irrelevance of the content of human rights to international trade rules, and on the basis that the two legal systems are separate, and no consideration of linkage is required, since international trade law should only take into account its own rules and regulations.10 It is argued by many of those who negotiate international trade law rules that consideration of other values such as human rights in the formulation of international trade agreements will make it much harder to achieve consensus between negotiating parties and therefore reduce the chances of ‘welfare-increasing’ liberalisation commitments.11 Questions of social justice are rarely discussed within WTO bodies,12 and when they are discussed this is done without reference to any social justice frameworks recognised by the international community such as human rights.13 As was noted in chapter one, however, it is increasingly recognised that the system of international trade law, in common with all national and inter10 For a discussion of this position see J E Alvarez, ‘How not to Link: Institutional Conundrums on an Expanded Trade Regime’ (2001) 7 Widener Law Symposium Journal 1 at 10; L Bartels, ‘Article XX of GATT and the Problem of Extraterritorial Jurisdiction: The Case of Trade Measures for the Protection of Human Rights’ (2002) Journal of World Trade 353–403, at 363; and R Howse, ‘Human Rights in the WTO: Whose Rights, What Humanity? Comments on Petersmann’ (2002) 13 European Journal of International Law 651–9 who states at fn 7: ‘At the World Trade Forum in Berne last August, where many of the leading traditional WTO experts gathered to address the question of the WTO law and human rights, several of the most eminent of them even questioned whether any human rights were sufficiently well understood or clearly embodied in international law so as to be relevant in the operation of the WTO.’ 11 This was a view that I often heard expressed by trade ambassadors at two conferences I attended at the European University Institute in Florence where leading academics and trade ambassadors came together to discuss the WTO. The conferences were entitled Challenges to the Legitimacy and Efficiency of the World Trading System: Democratic Governance and Competition Culture in the World Trading System (27–28 Jun 2003) and Developing Countries in the Doha Round: WTO decision-making procedures and WTO Negotiations on Trade in Agricultural Goods and Services (2–3 Jul 2004). 12 E-U Petersmann, ‘The Human Rights Approach Advocated by the UN High Commissioner for Human Rights and by the International Labour Organisation: Is it Relevant for WTO Law and Policy’ (2004) 7 Journal of International Economic Law 605–27 at 611. Also see V Heiskanen, ‘The Regulatory Philosophy of International Trade Law’ (2004) 38 Journal of World Trade 1–36, for an interesting critique of the philosophy behind the WTO regime in terms of the efficiency of the system (eg benefits of regulatory unity (short term economic gains) versus regulatory diversity (long terms gains). 13 For instance, as will be discussed at length in ch 7, despite earlier drafts proposed by a developing country coalition including explicit reference to human rights, the Doha Ministerial Declaration on Access to Medicines contains no explicit human rights reference.

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Re-evaluation of the Trade and Human Rights Relationship? 37 national legal systems, is only legitimate in as much as it promotes justice as a central objective of the system.14 As criticism of the WTO has increased, a greater need has been felt to justify the organisation in terms of external social justice frameworks and specifically in terms of human rights. This attitude can be seen in a recent report by a high level consultative panel composed of leading international trade law, economics and business experts which was set up to advise the Director-General of the WTO on the future of the organisation.15 This report starts by addressing various criticisms made of the WTO by its detractors. The very first criticism that is addressed is whether open trade is a threat to human rights. This in itself is an indication of how potentially damaging such an accusation is seen as being by those presented with the task of outlining a vision for the future of the organisation. But the answer is a resounding negative; it is stated the WTO will only bring benefits to the protection and promotion of human rights. It is worth quoting the concluding paragraph at length: [T]he notion that trade, investment, and the growth of business detracts from noneconomic facets of human rights is the contrary of the truth. Generally the marks of closed economies are lack of democracy and a free media, political repression and the absence of opportunity for individuals to improve their lives through education, innovation, honest hard work and commitment. In the end—and we accept it may take time—the exposure of governments and citizens to an international institutional framework dedicated to openness will have its effects on much more than commerce.16

According to this vision, it is argued, there is no need directly to address the impact of international trade on the protection and promotion of human rights, because it is in the very nature of the existing international trade regime to enhance human rights protection. Thus, an explicit human rights approach to trade is irrelevant because of the inevitable consequence that WTO rules, in pursuing open trade policies, will of themselves promote human rights. This is a view that is widely held among many non-human rights specialists involved in or writing about the international trading system.17 The rest of this chapter will be

14 See also E-U Petersmann, ‘Theories of Justice, Human Rights and the Constitution of International Markets’ (2003) 37 Loyola Law Review 407–59 at 408. 15 WTO, Report by the Consultative Board to the Director-General Supachai Panitchpakdi, The Future of the WTO: Addressing Institutional Challenges in the New Millennium, (Geneva, World Trade Organisation, 2004). The panel consisted of Peter Sutherland, Jagdish Bhagwati, Kwesi Botchwey, Niall Fitzgerald, Koichi Hamada, Jon H Jackson, Celso Lafer, and Thierry de Montbrial. This is a very distinguished panel of trade law, business and economics experts. But, there is a distinct lack of human rights expertise on the panel, given the comments made in the report. 16 Report by the WTO Consultative Board, ibid, at 10. 17 For instance, see R D Anderson and H Wager, ‘Human Rights, Development, and the WTO: The Cases of Intellectual Property and Competition Policy’ 9 Journal of International Economic Law (2006) 707–47. A similar point is made by T Cottier, above n 3, at 125, although in the context of recognising that the interrelationship between trade and human rights is in fact far more complex.

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38 Rationale for a Human Rights Methodology in the WTO spent evaluating the legitimacy of such arguments. It will recognise the potential benefits of international trade law rules for the protection and promotion of human rights but it will also stress the importance of an explicit human rights discourse to assess the effects of those rules and their potentially negative consequences.

IV. THE POTENTIAL OF INTERNATIONAL TRADE RULES TO ENHANCE HUMAN RIGHTS

It is very important for human rights advocates to clearly affirm that international trade law rules can have very significant benefits for the protection and promotion of human rights. There is much confusion concerning how human rights advocates view the global system of trade. This applies to the academic debate as much as the wider political one. It is assumed by some that those who profess concern with any kind of social justice issues view the construction of any global trade rules as an entirely negative occurrence for the promotion of global justice and development.18 But it is argued here that a regulated system of world trade which aims at the reduction of national barriers to trade between countries can be beneficial to the promotion and protection of human rights as long as it is also constructed in such a way that the unacceptable negative social consequences of regulation and liberalisation can be detected and acted upon.19 Advocates of a human rights approach to world trading rules should clearly state that international trade rules can be functionally important in promoting human rights. There is little doubt that successful trade between nations and rules-based trade beyond national borders will often have positive human rights consequences in terms of the increased economic welfare of market participants. The ability of individuals to trade freely on open markets can increase both consumer and producer welfare, by preventing monopolies, unfair competition, and by reducing the price of goods through effective competition. Although the scope of trade law is much narrower than human rights law, the trading system can be effective in protecting and promoting the enjoyment of human rights— civil and political, and economic, social and cultural. As one leading commentator has noted, ‘[t]rade flows generally enhance overall welfare creation (GDP), and welfare is a critical ingredient to develop human rights in society at large.’20 Some of the potential benefits of the international trading system for human rights are highlighted in the OHCHR reports on the impact of the WTO on 18 Thomas Friedman’s famous characterisation of such individuals as ‘a Noah’s Ark of flat earth advocates, protectionist unions and yuppies’ is typical of those who see all those who criticise global trade rules as destructive reactionaries. 19 A number of arguments will be made in subsequent chapters supporting the view that an explicit human rights approach will increase the chances of such balanced regulation. 20 T Cottier, above n 3, at 121. Making a number of related points see R D Anderson and H Wager, Above n 17, at 715f.

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Can International Trade Rules Enhance Human Rights? 39 human rights.21 These reports highlight a number of potential benefits of trade liberalisation and international trade rules in general that will have the effect of promoting and protecting human rights. So for instance, one of the reports quotes a WTO study which highlights the positive effects of trade liberalisation on poverty alleviation and thereby human rights, stating: [T]rade liberalisation is generally a positive contributor to poverty alleviation—it allows people to exploit their productive potential, assists economic growth, curtails arbitrary policy interventions and helps to insulate against shocks.22

The OHCHR reports also focus on the ways in which specific WTO Agreements can serve human rights functions. For instance, in terms of the GATS, it is recognised that there are potential benefits from liberalisation due to the more efficient provision of services which can have a positive impact on the ability of States to provide ‘essential entitlements accepted as human rights such as health care, education and water’.23 It is further recognised that liberalisation in services can also have a number of welfare enhancing possibilities that can to lead to the promotion of human rights—for instance lower prices to consumers and technology transfer to developing countries.24 Examples of the positives of trade liberalisation are great increases in job creation in the computer industry in India (providing employment opportunities for individuals who may well otherwise fall below the poverty line) and the enormous growth in telecommunications coverage in South East Asia (providing, inter alia, the infrastructure for potential improvements in areas such as health and education).25 The potential benefits of the Agreement on Agriculture are also noted: [T]he establishment of a rules-based trading system and the opening of markets can help to guarantee the enjoyment of human rights by improving opportunities for development, economic growth, job creation and the diffusion of technology and capital. Increased levels of trade in agriculture can contribute to the enjoyment of the right to food by augmenting domestic supplies of food to meet consumption needs and by optimising the use of world resources.26 21 In particular—OHCHR, The Impact of the Agreement on Trade-Related Aspects of Intellectual Property Rights on Human Rights (27 Jun 2001) E/CN.4/Sub.2/2001/13 (Report on TRIPS); OHCHR, Globalisation and its Impact on the Full Enjoyment of Human Rights (15 Jan 2002) E/CN.4/2002/54 (Report on AoA); OHCHR, Liberalisation of Trade and Services and Human Rights (25 Jun 2002) E/CN.4/Sub.2/2002/9 (Report on GATS) OHCHR, Human Rights, Trade and Investment (2 July 2003) E/CN.4/Sub.2/2003/9 (Report on Investment). 22 The Report on AoA, ibid, at para 33 where a WTO study is quoted which has highlighted the positive effects of trade liberalisation on poverty alleviation and thereby human rights: ‘trade liberalisation is generally a positive contributor to poverty alleviation—it allows people to exploit their productive potential, assists economic growth, curtails arbitrary policy interventions and helps to insulate against shocks’. 23 The Report on Investment, above n 21, at para 15. 24 The Report on GATS, above n 21, at para 15, quoting from OECD “Open Services Markets Matter”, Trade Directorate, Trade Committee, Working Party of the Trade Committee, (December 2001) (TD/TC/WP(2001) 24/FINAL), at 14 and 16. 25 The Report on GATS, above n 21, at para 48 quoting from World Bank Global Economic Prospects. 26 The Report on AoA, above n 21, at para 33ff.

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40 Rationale for a Human Rights Methodology in the WTO The removal of tariffs and other barriers to free trade can also help developing countries export agricultural produce to previously protected markets and allow them to compete on a more even playing field.27 Examples such as those above highlight that trade liberalisation and the introduction of international trade rules have many potential effects that can be beneficial to human rights. Most fundamentally, there is the potential for a positive effect on poverty reduction with obvious human rights consequences. An analysis of the OHCHR reports and other sources presented above shows that, as well as poverty reduction there are a number of specific aspects of trade liberalisation that have tendencies towards the promotion of human rights: 1. The creation of a rule-based system of international trade can create openness and transparency, prerequisites for human rights observance in the trading system, as well as better conditions for financial investment in essential services which itself has human rights implications. 2. Trade liberalisation and the removal of barriers to trade can create lower prices for consumers, impacting on their ability to obtain essential goods and services. 3. Trade liberalisation and the removal of barriers to trade can also give producers access to wider markets, which is of particular assistance in the agricultural sector for developing countries where access to markets in other countries can lead to increased sustainability in production, and resulting human rights benefits. 4. Trade liberalisation and international trade rules can create conditions for technology transfer to developing countries, particularly promoting the right to development. Human rights advocates should therefore be aware of the power of fairly constructed markets to promote human rights, and be careful not to propose human rights solutions to market problems that actually reduce the potential of markets to be instrumental in the promotion of human rights.28 Those who argue for the total dismantling of the WTO model on social justice grounds should recognise the potential of the system to enhance human welfare in the ways described above. Generally those in favour of such policies fail to offer a credible alternative model to the principles of non-discriminatory and nonprotectionist trade between nation states,29 and until they do so, such arguments should be rejected.

27

The Report on AoA, above n 21, at para 20ff. It is for this reason that careful consideration is needed, for instance, of the pros and cons of liberalisation of services (eg water, health), if such liberalisation can actually be instrumental in furthering universal provision of such services. 29 Making this point see R Howse, ‘The legitimacy of the World Trade Organisation’, in J-M Coicard and V Heiskanen (eds) The Legitimacy of International Organisations (Tokyo, United Nations University Press, 2001). 28

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The Importance of an Explicit Human Rights Discourse 41

V. THE IMPORTANCE OF AN EXPLICIT HUMAN RIGHTS DISCOURSE

The above recognition of the potential human rights benefits of the world trading system does not, however, mean that human rights advocates should accept that an explicit human rights analysis has no value for critiquing international trade law rules, as the WTO consultative panel quoted above appears to suggest. The recognition of benefits does not mean that the current system of world trading rules, as embodied in the WTO system, is always optimal or even beneficial in human rights terms.30 The following sections will therefore go on to describe four grounds for why a human rights approach to trade is a potentially important methodology for analysing some of the failings and potential failings of the current WTO system.

A. Does Open Trade Work in All Situations? From an economics perspective, trade liberalisation has over the last twenty years become an accepted part of global mainstream policy, and is seen as an essential element of global increases in growth and prosperity.31 Economists have estimated the financial impact of trade liberalisation, and have found that there are direct global gains, but these are relatively modest. For instance, using the most expansive figures, the direct gains from the Uruguay Round of Trade Negotiations amount to 0.7 per cent of global gross domestic product (GDP).32 Far more important are the claims made by economists about the effect of trade liberalisation on economic growth, since a strong correlation between the two would indicate that trade liberalisation is an important component of increased prosperity. A number of economists during the 1990s produced studies which found that openness was strongly and positively associated with growth.33 But more recent studies have noted the complications inherent in making this kind of analysis, and have tended to conclude that liberalisation must be tied to a 30 The OHCHR reports (above n 21), for instance, having mentioned a number of the potential advantages in human rights terms that trade liberalisation and WTO Agreements can bring, place immediate and strong caveats on these potential benefits. The specific concerns of the OHCHR reports will be dealt with in ch 8. 31 See N McCulloch, A Winters and X Cirera, Trade Liberalisation and Poverty: A Handbook (London, Centre for Economic Policy Research, 2001) at 5, and also, R D Anderson and H Wager, above n 17, at 716f. 32 Harrison, Rutherfood and Tarr, ‘Quantifying the Uruguay Round’ in Martin and Winters (eds), The Uruguay Round and the Developing Countries (Cambridge, Cambridge University Press, 1996). 33 Eg D Dollar, ‘Outward-oriented Developing Economies Really do Grow More Rapidly: Evidence from 95 LDCs, 1976–85’ (1992) 40 Economic Development and Cultural Change 523–44; J D Sachs and A M Warner, Economic Reform and the Process of Global Integration (1995) 1 Brookings Papers on Economic Activity 1–95; Sebastian Edwards, ‘Openness, Productivity and Growth: What do we really know?’ (1998) 108 Economic Journal at 383–98.

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42 Rationale for a Human Rights Methodology in the WTO number of other policies—eg education, infrastructure, financial and macroeconomic policies—in order to yield strong rates of growth.34 Even more interestingly perhaps, from a social justice perspective, is to look at the correlation between trade, growth and poverty. Here the hypothesis is that trade promotes economic growth, and that growth reduces poverty, so that there is a link between policies of trade liberalisation and poverty reduction. Two World Bank economists have written the most widely cited papers on the benefits of trade ‘openness’ for poverty reduction, concluding that trade is a stimulus for economic growth and that growth in income increases at the same rate for the population as a whole as it does among the poor (defined as those within the bottom 20 per cent of the income distribution).35 Thus, it is concluded, trade openness promotes poverty reduction. However, such arguments have been heavily criticised on methodological and theoretical grounds by a number of other economists,36 showing just how difficult it is to determine the relationships between trading policies and even easily conceptualised and defined social justice issues, such as poverty reduction, due to the number of complexities involved in the economic studies. As Amartya Sen points out, in any case ‘poverty reduction’ is only a crude signifier of welfare levels and does not tell you about eg levels of health and education among the population in question which are in themselves key welfare signifiers, and crucial to holistic conceptions of human rights. Sen often uses the example of Kerala State in India (very low income levels, relatively low mortality rates, high levels of education) and compares this with, for instance, levels of health and education among minorities in the US or other richer countries to demonstrate that gauging welfare is not simply a case of determining income levels.37 As Robert Howse has stated in a paper for OHCHR, drawing on the work of economist Dani Rodick: [T]he evidence suggests that there is no ideal pre-given mix of interventionalist and liberalizing policies that guarantees growth, development and an ultimate end to poverty. Economics offers a tool kit, but no general formula or blueprint for development, much less one based on ‘liberalisation’, pur et dur.38

34 See N McCulloch et al, Above n 31, at 24–6 for a summary of this literature and also R D Anderson and H Wager, above n 17, at 717. 35 D Dollar and A Kraay, ‘Growth is Good for the Poor’ (2002) 7 Journal of Economic Growth 195–225 and ‘Spreading the Wealth’ (2002) 81 Foreign Affairs at 120–33, and Trade, Growth, and Poverty World Bank Policy Research Department Working Paper No 2615, (2000) at http://www.worldbank.org/ research/growth, accessed on 9 Dec 2006. 36 See D Rodrik, Comments on ‘Trade, Growth and Poverty’ (2000) at http://ksghome. harvard.edu/~.drodrik.academic.ksg/Rodrik%20on%20Dollar-Kraay.PDF accessed on 9 Dec 2006. Also see Leonard Gomes, The Economics and Ideology of Free Trade: A Historical Review (Cheltenham Glos, Edward Edgar Publishing, 2003) at 313 who gives references to a number of further critiques. 37 See A Sen, Development as Freedom (Oxford, Oxford University Press, 1999). 38 R Howse, Mainstreaming the right to development into international economic law and policy at the World Trade Organisation, paper prepared for the OHCHR secretariat, (E/CN.4/Sub.2/2004/17) (9 Jun 2004) at para 3.

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The Importance of an Explicit Human Rights Discourse 43 What we might conclude is that there are a number of reasons to support a policy based on trade liberalisation, with the caveat that it is very difficult to ascertain the effects on each individual country, given the number of other factors involved in the process of economic growth and increased prosperity. Even those economists who are strong advocates of trade liberalisation see the need for flexible policies to ensure that liberalisation works in a way that is advantageous to each individual country. So, ‘the optimal speed at which one liberalises is not necessarily the fastest’39 and the pace of liberalisation will depend very much on factors specific to each country. Importantly, trade liberalisation pursued at any pace will not enhance the conditions of all within society. Even in situations where the overall picture of trade liberalisation is one of welfare enhancement, and even if the distribution of increased resources generally tends to include the poorest in each society, there will still be losers, during and as a result of the process, as a WTO study admits.40 It is clear therefore that, the correlation between trade openness and poverty reduction and development is a complex one, and justification of trade openness on consequentialist economic grounds alone is fraught with difficulties, because of the information-based problems of predicting the results of liberalising policies in individual countries with their own individual sets of economic and social circumstances. A human rights methodology is of added value because it focuses on those distributive social justice issues that are not easy to identify utilising a welfare economics model.

B. The Reality of the Current WTO system The second rationale for an explicit human rights discourse concerning the world trade regime is that the WTO is not an organisation which purely seeks increasingly open trade. Such a vision is an over-simplification that fails to take into account the multi-dimensional rationales, as well as the biases and imperfections of the world trading system, a system which is not simply an epitome of ‘trade openness’. As Ernst-Ulrich Petersmann has commented, in explaining the imperfections of the current system, and the need for a human rights based analysis for dealing with them: Trade policies at the WTO remain ‘producer-driven’, subject to numerous discriminatory trade distortions, without adequate disciplines on anti-competitive practices (eg cartels), and are often abused for welfare reducing protectionism. Many GATT/WTO rules serve powerful producer interests (eg in the agricultural, textiles, clothing and pharmaceutical sectors in developed countries).41 39

J Bhagwati, Free Trade Today (Oxford, Oxford University Press, 2002) at 90. D Ben-David, H Nordstrom, and L A Winters, Trade, Income Disparity and Poverty WTO Special Study No 5 (Geneva, WTO, 2000). 41 E-U Petersmann, above n 12, at 611. 40

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44 Rationale for a Human Rights Methodology in the WTO The producer bias inherent in the world trading system means that it cannot be assumed international trade regulation will simply be concerned with the pursuit of openness. Rather, rules and systems are likely to be adopted that are to a certain extent favourable to the most important and influential players— producers.42 It is not simply, however, a matter of rules that are aimed at trade openness being distorted to support powerful interest groups. Today, numerous WTO trade rules themselves are not aimed at ‘openness’. Rather they are aimed at positive regulation of world trade. Unlike the previous GATT rules which were centred upon the unifying principle of liberalisation, a number of WTO Agreements involve the creation of regulatory frameworks whose aim is to place Members under positive regulatory duties on a variety of issues, from the protection of intellectual property to conducting scientific risk assessments of food safety regulations.43 The balance that is required under such regulatory frameworks is far more difficult to ascertain from a welfare perspective than for simple liberalisation requirements.44 How should we balance the rights of intellectual property holders of pharmaceutical drugs, for example, against the public health needs of the general population, or the health benefits of food safety regulations, against the perhaps prohibitive cost of regulation? The answers are likely to require complex balancing processes of many different, and often country-specific, factors. It is therefore important to recognise this transformation of the system of global trading rules from being centred around the unifying principle of trade liberalisation, to increasingly taking on rules that encourage positive harmonisation of national measures (such as the SPS Agreement and the TBT Agreement) or even the creation of a ‘uniform global regulatory infrastructure’ as is argued is happening under the TRIPS Agreement.45 This does not mean that these agreements will necessarily have a negative human rights impact. But this shift in regulatory philosophy from one based simply on trade liberalisation appears more likely to lead to more fundamental questions about the purpose and justice of global regulation (eg why global trade-based regulations on intellectual property law and not labour law?). This in turn increases the need for an external critique of trade law rules, such as that provided by human rights.

42

See J Bhagwati, above n 39, at 48. For an interesting account of the diversity of regulatory aims of various international trade agreements see V Heiskanen, above n 12. 44 R Howse, above n 29, at 365 who argues that new WTO rules are far more difficult to justify from a welfare perspective than traditional liberalisation commitments. For a discussion of this issue with regard to the balance between intellectual property rights and access to medicines under the TRIPS Agreement see ch 10. 45 V Heiskanen, above n 12, at 13–14. 43

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The Importance of an Explicit Human Rights Discourse 45 C. The Added Value of a Human Rights Approach to International Trade But even if international trade law rules were designed to achieve optimal openness, a human rights framework brings additional benefits. As a deontological system of justice based on ensuring the human dignity of all people, it presents us with a methodology for measuring the justice of the world trading system that brings an added dimension to the consequentialist methodology traditional in the welfare economics approach, as explained in chapter two.46 This is not to say that the latter is an invalid gauge of the merits of the world trading system, rather that a human rights methodology provides a different approach that allows us to take into account a range of considerations not forming part of consequentialist assessments. A human rights approach to trade law imposes extra duties upon even the most optimally operating liberalised markets, because it focuses on ensuring that no one loses from the process of liberalisation in a way that affects their fundamental human dignity. From a human rights perspective, it must be remembered that general welfare enhancement is not synonymous with the promotion and protection of human rights. An overall net gain in welfare through global trade policies is not equivalent to human rights compliance. The primary focus of a human rights approach to trade liberalisation must be to concentrate on ensuring that the life and dignity of all human beings is considered. The focus is particularly on the ‘losers’ under global trading rules so as to ensure that their fundamental human rights, necessary to fulfil basic needs for a dignified life are not infringed.47 Thus, it should be stressed that a human rights approach to trade liberalisation entails States having to consider the welfare of their entire populations and whether the autonomy lost by States in ratifying WTO agreements will affect their ability to fulfil their human rights obligations.48 In particular, it is the most disadvantaged communities and individuals whose human rights are likely to be violated by the process of trade liberalisation—for example the poor, the vulnerable, those in remote communities, and groups who are subject to discrimination such as women and racial and ethnic minorities. So even where ‘the net social benefit from trade liberalisation favours the majority in a certain country’ human rights obligations demand action to protect the rights of those who do not benefit.49 Thus human rights offer a mechanism for assessing the impact of global trade rules, by means of standards that must be met with regard to each and every human being, as opposed to the welfare economics approach where

46 See also E-U Petersmann, above n 12, at 611ff questioning whether the utilitarian output legitimacy of WTO Agreements is sufficient for their democratic approval. 47 The Report on AoA, above n 21 at para 34. 48 The report on TRIPS, above n 21, at para 24, The Report on AoA, above n 21, at para 40, The Report on GATS, above n 21, at para 9. 49 The Report on AoA, above n 21, at para 34.

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46 Rationale for a Human Rights Methodology in the WTO the assessment is at least primarily based on aggregate welfare enhancement.50 It is submitted that the latter fails to deal sufficiently with the distributive consequences of global trade rules, and the former is therefore a vital methodology for assessing some of the most important social justice aspects of the way trade rules are constructed.51 What we are presented with is two fundamentally different means by which to assess the benefits and losses of trade liberalisation. While the trade law approach may indicate overall benefits in terms of pure welfare enhancement, there are additional aspects of the human rights law approach that offer an alternative philosophical, moral and legal framework within which to assess trade liberalisation. This does not mean that the two approaches will always be in conflict. They may achieve consistent ends, but this will not necessarily always be the case, hence the need for an explicit human rights approach to trade law rules.

D. The Importance of an Explicit Human Rights Discourse for a Holistic Conception of Human Rights Several commentators have made the point that, while fairly constructed markets do have the power to protect and promote human rights, the reverse is also true. There are a number of human rights that are important in constructing optimally functioning economic markets. Rights such as the right to fair trial and property rights play an important role in the regulation of trade. Countries where human rights are respected are also likely to have respect for the fundamental principles of trade law; non-discrimination and open markets.52 Freedom of expression is important to make the market place transparent, and to reduce asymmetries of information between market place participants.53 Thus, there are functional advantages for the construction of economic markets to ensure that human rights are respected. This in itself might be considered a rationale for an explicit human rights approach to international trade law, in that it would optimise the functioning of the latter system. But one should also be careful that this ‘functionality’ role of human rights does not in fact either detract from the need for an explicit approach, or lead to a market-weighted human rights methodology. The former 50 For a more comprehensive account of the different methodological approaches of human rights and welfare economics see Frank J Garcia ‘The Global Market and Human Rights: Trading Away the Human Rights Principle’ (1999) 25 Brooklyn Journal of International Law 25 (1999) 51–97. Also making a similar argument see Lim, Hoe, ‘Trade and Human Rights, What’s at Issue?’ Journal of World Trade 35 (2001) 275–300, at 298. 51 On the failings of consequentialist forms of justice as justifications for the world trading system see E-U Petersmann, above, n 14, at 410. On the importance of a human rights methodology for impact assessments of the world trading system see ch 12. 52 T Cottier, above n 3, at 127. 53 T Cottier, above n 3, at at 127; EU Petersmann, above n 14, at 443–46.

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Conclusions 47 argument may be made by those who believe that optimally performing markets will in any case arise as a result of the pursuit of economic efficiency; hence human rights are an inevitable consequence of such an approach.54 The latter argument may be made by those who believe that human rights such as those mentioned above do need to be actively sought in order to achieve optimally constructed markets, but are only concerned with human rights for their market functionality.55 In both of the above scenarios there are dangers that human rights which have no instrumental value in the functioning of markets will be not be considered important in the trade law context. The aims of educational policy, for instance, under international human rights law are not the same as the aims of educational policy that concentrates on what is necessary for the constitution of successful markets. Market functionality would suggest limits to the right to education (eg limits to education provision for those who cannot afford it, or who will not be better market actors as a result eg those suffering from mental impairments?) where a human rights approach might advocate the precisely opposite response (affirmative action to ensure full realisation of the right to education for those with disadvantages).56 It is not suggested that a marketorientated approach will inevitably lead to such human rights violations. Rather that it is important to adopt a human rights approach to international trade law that assesses the impact of global trade rules on all human rights and considers the ways in which human rights and trade norms and standards do fundamentally differ so that the added value of a human rights approach can be brought to bear.

VI. CONCLUSIONS

This chapter has argued that while fairly constructed international markets aimed at trade openness can be instrumental in protecting and promoting human rights, the existing system of world trade rules will not always necessarily be beneficial to human rights observance, and therefore an explicit human rights discourse is required. An explicit human rights critique of the world trading system is justified on four grounds; first, that a policy of trade openness alone is not a universally applicable panacea for equitable economic growth and that a human rights methodology focuses on social issues that are not easy to identify utilising a welfare economics model; second, that the current WTO 54

See the views of the Consultative Board cited earlier in this chapter. Such a view appeared to be espoused by Simon Deakin, Robert Monks Professor of Corporate Governance, University of Cambridge at a lecture entitled ‘The Role of Labour Rights in a Globalized Economy’ presented at the Academy of European Law, European Institute (16–27 June 2003). 56 According to CESCR, perhaps the most fundamental aspect of the right to education under the UDHR and ICESCR is that ‘education shall be directed to the full development of the human personality’. This indicates a far broader approach than a market orientated one. 55

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48 Rationale for a Human Rights Methodology in the WTO system is not in fact an optimally functioning system of open market rules and so simple recourse to liberalisation as an overarching principle and justification for such rules is misguided; third, it is questioned whether even optimally functioning open markets will inevitably also be optimal for human rights protection; fourth, that an implicit rather than an explicit human rights approach to trade law rules is likely to produce a ‘market-friendly’ rather than holistic conception of human rights. It is on all of the above grounds that the next section of this book goes on to address the potential for legal conflicts between human rights and trade law rules, and how such conflicts are, and can in the future be resolved.

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4 A Legal Framework for the Analysis of the Human Rights Impacts of the World Trade Organisation I. INTRODUCTION

T

HE FIRST THREE chapters of this book have set out some important aspects of the international system of world trade and the international system for the protection and promotion of human rights. They have explained why an explicit human rights approach to trade is an important tool in analysing some of the most important social justice aspects of the international trading system. The remainder of the book will be concerned with exploring the types of human rights issues that arise in a trade law context and how the WTO does, and should, deal with them when they do occur. This analysis will be conducted on the basis of an assessment of the legal obligations that arise under the two legal systems. In this chapter, we will explore how the two legal systems of international trade law and international human rights law interact. A methodology will be suggested for dealing with human rights issues in the international trade law context.

II. INTERNATIONAL TRADE LAW, INTERNATIONAL HUMAN RIGHTS LAW AND THE INTERNATIONAL LEGAL SYSTEM

International human rights law and international trade law can both be classified as sets of international legal rules that are lex speciales in nature—sub-sets of international law which contain specific regulations in relation to particular areas of international law—in this case, human rights on the one hand and international trade on the other. They have also both been classified as ‘selfcontained regimes’ within international law.1 The term self-contained regime is open to different interpretations depending on the degree of separation from general international law which is supported. But at the least a self-contained regime seems to be a legal system which sets out particular obligations for States 1 B Simma and D Pulkowski, ‘Of Planets and the Universe: Self-Contained Regimes in International law’ European Journal of International Law 2006 17(3) 483–529.

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52 Assessing the Human Rights Impacts of the WTO who have acceded to the regime, and provides that these obligations are interpreted and administered in a specialised way.2 The international human rights regime is based on a series of treaties setting out rights and obligations (as well as rules of customary international law). These treaties fall under the auspices of the UN.3 Interpretation of the rights and obligations under these treaties is primarily undertaken by the UN human rights treaty monitoring bodies (hereafter ‘treaty monitoring bodies’) which hear individual petitions, examine the performance of State Parties to the instruments in question, produce concluding observations and have various other monitoring functions.4 The international trade regime is based on a series of international trade agreements within the overall institutional and legal framework of the WTO, interpreted and enforced by its dispute settlement procedures. Both legal systems therefore contain their own legal instruments, whose rules and regulations are interpreted and applied by their own (quasi-) legal expert bodies. This therefore can lead to them being classified as self-contained regimes. The classification of international human rights and trade law as lex speciales and/or self-contained regimes does limit the jurisdiction of those regimes. WTO law concerns trade-related issues, its agreements contain provisions related to the way in which trade is regulated and its dispute settlement system is limited to deciding upon complaints which allege breaches of WTO rules.5 The same can be said for the international human rights regime. But crucially, this does not mean that other rules of international law do not apply within those systems.6 Neither the international legal regimes themselves, nor the international organisations they empower, nor the States who operate within them are free of their other international legal obligations under other international legal systems: While there is disagreement about the precise mechanisms and scope of 2 International Law Commission (ILC), Report of the International Law Commission Fifty-fifth session, Chapter X: Fragmentation of International Law: Difficulties arising from the Diversification and Expansion of International Law (5 May–6 Jun and 7 Jul–8 Aug 2003) (A/58/10) at para 316. 3 It should also be noted that, with regard to Labour Rights, the ILO and its legal instruments are also of great relevance. 4 There are currently 7 treaty monitoring bodies which each monitor State performance of a relevant UN human rights Convention. These are the Human Rights Committee (HRC), the Committee on Economic, Social and Cultural Rights (CESCR) the Committee on the Elimination of Racial Discrimination (CERD), the Committee on the Elimination of Discrimination Against Women (CEDAW), the Committee Against Torture (CAT), the Committee on the Rights of the Child (CRC) and the Committee on Migrant Workers (CMW). For more details on their roles and functions see http://www.ohchr.org/english/bodies/treaty/index.htm, accessed on 9 Dec 2006. 5 For a more detailed technical analysis of WTO jurisdiction see G Marceau, ‘The WTO Dispute Settlement and Human Rights’ in F M Abbott et al (eds) International Trade and Human Rights: Foundations and Conceptual Issues (Michigan, Michigan University Press, 2006) at 187ff. 6 On the jurisdiction/application distinction see International Law Commission (ILC), Fragmentation of International Law: Difficulties Arising from the Diversification and Expansion of International Law: Report of the Study Group of the International Law Commission, Finalised by Marti Koskenniemi, A/CN.4/L.682 (13 Apr 2006) at para 45. Although the conclusions of the report should not necessarily be attributed to the ILC—see comments of J P Trachtman at http:// worldtradelaw.typepad.com/ielpblog/2006/09/ilc_report_on_f.html#comments, accessed on 24 Nov 2006.

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Trade and Human Rights Law and The International Legal System 53 engagement of different legal regimes in international law, there is consensus that every legal regime at the international level overlaps and intersects with others.7 Rules of international law are also clear that international organisations are bound by any obligations incumbent upon them under general rules of international law.8 In ratifying international treaties, governments take on legal obligations, and they are not released from these obligations simply because they are operating within the framework of another international organisation, or implementing obligations within the framework of other treaty obligations. This is an issue stressed in particular by intergovernmental human rights bodies.9 In chapter one, numerous references were provided to WTO law, jurisprudence and academic writing which confirmed the requirement that the WTO and its Member States must take into account other relevant rules of international law. Relevant provisions of international human rights law must therefore be taken into account when States are operating within the WTO context. Equally, relevant provisions of WTO law must also be taken into account when States are operating in the human rights law context. There are implications of this finding for both the international trade regime and the international human rights regime. Human rights treaty monitoring bodies must take into account international trade law rules, to the extent that they are relevant, when making determinations on, for instance, individual petitions or reports of State Parties. Rules and obligations of international trade law have rarely been raised before the treaty monitoring bodies, and when they have, it has generally been because of fears that trade rules endanger the promotion and protection of human rights, rather than visa versa.10 Perhaps this is because it is difficult to think of situations where international trade law rules would be infringed by international human rights norms and standards. Or perhaps it is because the consequences of a failure to take international trade rules into account would not be perceived as hugely damaging for the international trade 7

B Simma and D Pulkowski, above n 1, at 505. Interpretation of the Agreement of 25 March 1951 between the WHO and Egypt, Advisory Opinion of 20 December 1980 (1980) ICJ 73 at para 37. 9 Specifically in the WTO context see OHCHR, Liberalisation of trade and services and human rights—Report of the High Commissioner (25 Jun 2002), E/CN.4/Sub.2/2002/9 (Report on GATS), para 5. The European Count of Human Rights (ECHR) has also held that States cannot, by establishing an international agreement of organization thereby be absolved from their human rights responsibilities: ‘The legitimacy and legality of all government measures, including rules and decisions of intergovernmental organizations, depend also on their respect for human rights as defined in national constitutions and international law.’ T.I. v United Kingdom [2000] App No 43844/98–III European Human Rights Reports at 15 as cited in E-U Petersmann, ‘Theories of Justice, Human Rights and the Constitution of International Markets’ (2003) 37 Loyola Law Review 407–59 at 410. See also the Commission on Human Rights in its Resolution 2002/24 para 7 calling on all State Parties to ICESCR to ‘ensure that the Covenant is taken into account in all of their relevant national and international policy-making processes.’ 10 Eg see UN Committee on Economic, Social and Cultural Rights, Concluding observations of the Committee on Ecuador (E/C.12/1/Add.100) 7 Jun 2004 and UN Committee on the Rights of the Child, Thirty-sixth session, Concluding observations: El Salvador (CRC/C/15/Add.232) 30 Jun 2004 with regard to the potential negative impact of intellectual property rules of trade agreements on the protection of human rights. 8

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54 Assessing the Human Rights Impacts of the WTO law regime, due to the lack of strong enforcement measures available within the international human rights law system. (Where concerns about conflict do get raised is when human rights norms and standards are enforced through general international law remedies, ie countermeasures, in a way that is perceived to ‘contravene the basic principles of the multilateral trading system’11). In any case, it is largely unsurprising that lack of application of trade law rules in the context of the international human rights system raises little concern from parties concerned with the integrity and status of international trade law. The situation with regard to human rights issues in the context of the international trade regime is rather different. Why are human rights advocates so much more concerned about the protection and promotion of human rights within the international trade regime than visa versa? As was highlighted in the preceding chapters, there is a growing realisation among scholars and practitioners that both the breadth and the strength of the WTO is such that it is increasingly likely to be an important organisation in dealing with concerns broader than its core trade mandate. Trade rules aimed at liberalising or regulating international trade in so many different areas, enforced by the strongest form of dispute settlement in international law, are almost bound to impact on a number of non-trade issues, including human rights.12 Therefore it is important to stress from a human rights perspective that the WTO as an intergovernmental organisation, and the Member States who operate within that organisation, are required to create rules and apply them with due respect for human rights norms and standards.

III. ACCOUNTING FOR HUMAN RIGHTS IN THE TRADE LAW CONTEXT

Beyond saying that the WTO and its Member States must take account of human rights, there is a need to identify more precisely the mechanisms by which international trade law and international human rights law norms and standards interact. When human rights issues arise in an international trade law context, we need a mechanism for deciding how human rights norms and standards should be dealt with. The focus in this study will be on situations where rules of international trade law and international human rights law suggest different ways of dealing with the same issue or problem—cases where there is an apparent conflict between the two sets of laws.13 The question is how we resolve these apparent conflicts, and ensure that human rights issues are properly taken 11 See UN General Assembly Resolution (A/RES/58/198) 30 Jan 2004 which ‘urges the international community to adopt urgent and effective measures to eliminate the use of unilateral coercive economic measures against developing countries that are not authorized by relevant organs of the UN or are inconsistent with the principles of international law as set forth in the Charter of the UN and that contravene the basic principles of the multilateral trading system.’ (emphasis added) 12 For more detail and references on this point see discussion in chs 1 and 3. 13 This wide definition of the term conflict is based upon that utilised in ILC, above, n 6 at para 23ff.

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Accounting for Human Rights in the Trade Law Context 55 into account in the trade law context. Because there is no central legislative function, or a unified international judiciary in international law, there is no inherent hierarchy of rules which allow decisions about the interaction of these two sets of laws to be carried out simply. Thus it is necessary to consider carefully by what mechanisms, and according to what processes, human rights issues should be considered. One possible position is to argue that the WTO does not have the competence to deal with any issues that involve human rights, as such competence has not been attributed to it by its Members.14 Under this conception of WTO law, it would be argued that any matter that raised non-trade issues such as human rights would be deemed to be not within the jurisdiction of the WTO. From a human rights perspective, this could be viewed as a means of preventing human rights related issues from being adjudicated upon in a trade law setting, and would potentially remove any issues with human rights implications from the ambit of international trade law. This position however would stand contrary to the existing jurisprudence of the WTO. The Appellate Body of the WTO has held that it has no discretion to decline to exercise its jurisdiction in a complaint of breach of WTO obligations that has been brought before it.15 Existing WTO jurisprudence includes a substantial number of cases including consideration and evaluation of non-trade issues such as the environment and public health.16 In each of these cases, dispute settlement panels have found themselves to be competent bodies, and Member States have accepted their jurisdiction, despite the fact that cases have had potentially broad social impacts, and, with regard to environmental cases, had substantive impacts on another field of international law (international environmental law). Although it has been extremely rare that human rights issues have been explicitly raised, the WTO has already had to deal with a number of questions that raise human rights concerns. Both at the level of inter-governmental negotiations17 and under the dispute settlement system,18 decisions 14 For a general discussion on the competence of international organisations see J Pauwelyn, Conflict of Norms in Public International Law: How WTO Law Relates to Other Rules of International Law (Cambridge, Cambridge University Press, 2003), at 286–90. 15 Mexico—Taxes on Soft Drinks and Other Beverages, WT/DS308/AB/R, Report of the AB, (6 Mar 2006) at para 57. It should be noted however, that the AB expressed no view as to whether there may be other circumstances in which legal impediments could exist that would preclude a panel from ruling on the merits of the claims that are before it (see para 54). 16 Eg Thailand—Restrictions on importation of and internal taxes on cigarettes, Report of the panel, 7 Nov 1990, (DS10/R—37S/200); EC—Measures affecting asbestos and asbestos-containing products, Report of the AB adopted on 12 Mar 2001 (WT/DS135/AB/R); United States—Import Prohibition of certain shrimp and shrimp products, AB Report, 12 Oct 1998, (WT/DS58/AB/R). 17 Eg see discussion in ch 6 of the Singapore Declaration and the Kimberley Waiver, and in ch 10 of the Doha Declaration. 18 See discussion in particular the discussion in ch 7 of the following cases: United States— Measures Affecting Government Procurement, WT/DS388 and United States—The Cuban Liberty and Democratic Solidarity Act—WT/DS138, adopted 1995 and European Communities— Conditions for the Granting of Tariff Preferences to Developing Countries, Report of the AB, WT/DS246/AB/R, adopted 4 Apr 2004. (EC—Tariff Preferences).

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56 Assessing the Human Rights Impacts of the WTO have been made within the WTO framework that have had significant ramifications for the protection and promotion of human rights. It is therefore clear from its previous treatment of non-trade issues that the WTO will not naturally preclude itself from situations that allege breaches of WTO obligations which also include non-trade issues, including those which have an impact on human rights. Partly, this is because the potential human rights issues raised in the trade context are so numerous, diverse and multifaceted. It must be remembered that there is a distinct difference between raising a human rights issue, and whether or not the human rights claim is actually justified. If all situations where human rights issues were raised were to be excluded from the WTO system, this could lead to use of unfounded human rights claims simply to avoid WTO jurisdiction. Human rights issues do not only arise in dispute settlement. WTO Members have human rights obligations at all stages of the process of trade liberalisation—when negotiating new agreements or revising existing ones, when implementing the rules that have already been negotiated, as well as in monitoring the effects of the agreements they have entered.19 Thus there are a multitude of different entry points for potentially raising human rights issues, including inter alia, before negotiating a new treaty, during treaty negotiation, before and during treaty amendment, with regard to national implementation and in respect to national and international monitoring. It therefore seems impossible to simply divide up human rights and international trade law issues into two separate categories, to be decided upon by different organisations, in different fora and according to different sets of rules and procedures. But the precise mechanisms for dealing with human rights law issues in the international trade law context are unclear. Can the WTO deal appropriately with these issues, properly taking into account human rights law norms and standards, or can particular issues be passed successfully on to more expert organisations, such as UN bodies or the ILO, in a predetermined set of circumstances? It is the position taken here that a detailed examination of different types of human rights issues is required in order to ascertain the most appropriate mechanisms for ensuring that human rights norms and standards are protected in any given situation. But first it is important to examine whether there are any inherent hierarchical frameworks between trade law and human rights law rules which would make the process of determination simpler in particular situations.

IV. DISPUTED HIERARCHIES: HUMAN RIGHTS AND TRADE LAW NORMS AND STANDARDS

There is great uncertainty about the status of human rights norms and standards in the WTO setting. This partly reflects the general uncertainty about how sub19

See The Report on GATS, above n 9, at para 7.

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Disputed Hierarchies: Human Rights and Trade Law 57 systems of the international legal system interact, which has received much scholarly attention in recent times, and has also been the subject of a major study under the auspices of the ILC.20 While many proposals have been advanced for rules which would achieve greater ‘unity’ between different legal sub-systems, there are also many differences in scholarly opinions about how these rules should be formulated, and little that conclusively endorses any of these approaches in terms of judicial reasoning or State practice. More specifically, this uncertainty reflects the lack of explicit linkages between the two legal systems discussed here. There is no mention of human rights in any WTO Agreement. There is no case law that explicitly rules on issues of human rights in WTO dispute settlement proceedings,21 and only one country, to this author’s knowledge, has attempted to make human rights arguments before a Committee of the WTO: Mauritius has argued before the Committee on Agriculture that the right to food ought to be taken into account when continuing to reform the current AoA.22 The attitude of other countries to the human rights implications of their trade commitments is difficult to gauge. In response to questions asked by the Secretary-General of the UN concerning international trade and human rights, Burkino Faso answered that ‘a State can adopt appropriate measures for the protection of human rights even if such measures are contrary to the State’s trade commitments, if the opening of frontiers threatens to cause harm to persons.’23 Such a response suggests that the Burkino Faso government sees the protection of human rights as ‘trumping’ trade rules in any case that would result in harm to the persons concerned. However, since few countries responded to the Secretary-General’s questions, and no other countries addressed this issue of hierarchy, the extent to which such opinions are held by other contracting parties remains unclear. Arguments are, however, made by certain commentators about the priority that should be given to human rights on the basis that they have achieved the status of ius cogens or obligations erga omnes. It is worth, therefore, examining the nature of these obligations in order to ascertain their relevance to the current debate—what does it mean to achieve such a status, and which human rights can be demonstrated to have become part of these special category of obligations? 20 See Fragmentation of international law: difficulties arising from the diversification and expansion of international law on the ILC website for an overview of the project including its mandate and a number of key outputs at http://untreaty.un.org/ilc/guide/1_9.htm, accessed on 20 Dec 2006. 21 Gabrielle Marceau, above n 5, at 789. Since the Marceau article, EC—Tariff Preferences, above, n 18, involved discussion of labour rights conditionality, but this was obiter dicta, the panel and AB were only requested to make a ruling on the legality of the EU’s Drug Arrangements. For a detailed discussion of this case see ch 7. 22 Note on Non-Trade Concerns—Revision G/AG/NG/W/36/Rev.1 (9 November 2000). 23 United Nations, Globalisation and its impact on the full enjoyment of all human rights— Report of the Secretary General 31 July 2001 (A/56/254) at 6. However, there is an immediate caveat to this statement that such action can only be taken in the case of ‘extreme cases of danger to the life of persons’.

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58 Assessing the Human Rights Impacts of the WTO

V. IUS COGENS AND ERGA OMNES OBLIGATIONS

There are certain rights and obligations in international law that have taken on a higher status within the international legal regime, in view of the importance of the values they protect. The Vienna Convention elucidates the concept of a ius cogens obligation as ‘a norm accepted and recognised by the international community of States as a whole as a norm from which no derogation is permitted and which can be modified only by a subsequent norm of international law having the same character.’24 Ius cogens has the effect of creating a higher set of legal norms, binding on the international community as a whole, regardless of treaty obligations. Any State which acts in a way that breaches these norms cannot therefore claim in their defence that they were acting in accordance with, for instance, WTO Treaty obligations, since ius cogens obligations are of a type that cannot be derogated from, on the basis of any treaty commitments.25 Thus any human rights that achieve recognition as having such a status would, as it were, ‘trump’ WTO rules and regulations (as, in theory, would WTO obligations trump human rights if they achieved ius cogens status).26 They could therefore be likened to constitutional limits on the powers of States and intergovernmental organisations. But the human rights which have achieved the status of ius cogens are both limited and disputed. Scholarship on this concept has generally found the concept to be restrictive. So we find, at the most inclusive, lists that comprise genocide, prohibition of slavery and the slave trade, the murder or causing the disappearance of individuals, torture, prolonged arbitrary detention, systematic racial discrimination, or a consistent pattern of gross violations of internationally recognised human rights.27 Many other authors provide far more restrictive versions. Certainly, arguments that the UDHR as a whole has achieved such a customary international law status would be very difficult to uphold; it is clear that it would be impossible to maintain that all civil and political rights are ius cogens, let alone the more controversial economic, social and cultural rights.28 This lack of agreement on the content of ius cogens norms, coupled with indeterminacy over their precise legal effect, has diminished their impact on the international legal system.29 While recent scholarship has attempted to reconceptualise the concept of ius cogens in order to create more legal certainty

24

Art 53 of the Vienna Convention. See J Pauwelyn, above n 14, at 278f. 26 G Marceau, above n 5, at 798. 27 Restatement of the Law Third. Foreign Relations Law of the United States—(St Paul, American Law Institute Publ, 1987), vol 2, 161, para 702. 28 M Nowak, Introduction to the International Human Rights Regime (Leiden, Brill, 2003) at 76. 29 See A Paulus ‘Jus Cogens Between Hegemony and Fragmentation: An Attempt at Re-Appraisal’ Nordic Journal of International Law (2005) 297, at 298 and B Simma and D Pulkowski, above n 1, at 496. 25

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Ius Cogens and Erga Omnes Obligations 59 and precise content to the term,30 potential conflicts between human rights norms and trade law norms are not going to be solved by simple claims of primacy on the part of human rights, apart from in the case of a very limited number of human rights such as the prohibition against genocide and slavery.31 Furthermore, even where a human right has achieved ius cogens status, this does not mean that there is a particular prescribed response for how States should deal with violations in a trade law context. In particular, it is not at all clear that all breaches of ius cogens would merit the imposition of economic sanctions.32 Ius cogens obligations are also a subset of obligations erga omnes. The Barcelona Traction case of the International Court of Justice (ICJ) set down the concept of obligations erga omnes, as those obligations that are owed by States to the international community as a whole, thus being a concern of all States, ‘and in view of the importance of the rights involved, all States can be held to have a legal interest in their protection; they are erga omnes.’33 So, while ius cogens covers hierarchically superior norms, obligations erga omnes are those norms with the widest coverage in terms of parties with an interest in them. All ius cogens norms are obligations erga omnes, but the same is not necessarily true visa versa.34 The Barcelona Traction case gives examples of the types of rights that give rise to such obligations and states that they ‘derive from the outlawing of acts of aggression, and of genocide, as also from the principles and rules concerning basic rights of the human person, including protection from slavery and racial discrimination.’35 Thus the specific examples given by the ICJ indicate the erga omnes status of the prohibition of genocide, slavery and racial discrimination. An expansive reading of ‘the basic rights of the human person’ could perhaps be held to include all those human rights enunciated in international human rights treaties with broad membership.36 However, as with the concept of ius cogens, there is a lack of consensus about the human rights which have attained this status, and this limits its usefulness in terms of assisting in specific conflicts 30 C Tomuschat and J M Thouvenin (Eds) The Fundamental Rules of the International Legal Order: Jus Cogens and Obligations Erga Omnes (Boston, Martinus Nijhoff Publishers, 2005). 31 See T Cottier, ‘Trade and Human Rights, A Relationship to Discover’ (2002) Journal of International Economic Law 111–32, at 114. See also J Pauwelyn, above n 14, at 94ff for a discussion of the lack of formal ‘hierarchy of sources’ in international law. 32 See ch 7 for further discussion of this point. 33 Case Concerning the Barcelona Traction, Light and Power Company Limited, ICJ (1970) 3 at para 33. 34 For an elaboration of this point see ILC, above n 6 at para 188ff. 35 Barcelona Traction, above n 33, at para 34. 36 Another expansive reading of obligations erga omnes might be justified by arguing that rights achieve such a status wherever there is a situation that, although violations do occur, they are not justified by States perpetrating them through legal or moral arguments that attempt to undermine the human rights in question, rather such violations are justified, for instance, by invoking the exceptional circumstances that the country in question is in, or by simply refusing to admit that the violations in question have occurred. (see, C Tomuschat, Human Rights: Between Idealism and Realism (Oxford, Oxford University Press, 2003) at 34 and 81 arguing from case law of the ICJ that various human rights have achieved customary international law status on this basis).

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60 Assessing the Human Rights Impacts of the WTO between international trade law and international human rights law norms and standards; if agreement cannot be reached on the status to be accorded to a particular right, claims of more universal applicability are also likely to be contested. A related argument is made that human rights treaties are erga omnes partes or ‘integral’ which means that the legal obligations they create are collective, i.e. obligations that are owed to all parties to the treaty in question. WTO obligations, by contrast, are argued to be ‘reciprocal’ (ie a series of bilateral treaty relations between parties to the agreement in question that are each detachable from one another). So, it is argued that where the two sets of norms conflict, it will be the human rights norms that will generally prevail in case of conflict, if both parties to any dispute are also parties to each of the relevant treaties.37 No position is taken here with regard to this claim, other than to note that many trade lawyers would dispute this characterisation of trade law and human rights law obligations, and therefore the result in case of conflict. The lack of consensus on the formal status of human rights in the trade law context is reflected in the wide variety opinions of commentators who have argued for a range of different levels of standing for human rights law norms in the international trade law context; at one end of the spectrum, some commentators have argued that human rights hold an almost unique position in international law,38 or that there is a ‘core content’ of all human rights, that cannot be violated.39 But others argue its status is more contested,40 and even that there is insufficient agreement on the content of some human rights to make them binding at the international level.41 Finally, there appear to be some who believe that no human rights are sufficiently well understood or clearly embodied in international law as to be relevant in the operation of the WTO.42 The complexities of the interrelationship between the two legal frameworks therefore needs to be more fully explored before any pronouncements can be 37

J Pauwelyn, above, n 14, at 52ff and 491. R Howse and M Mutua, ‘Protecting Human Rights in a Global Economy: Challenges for the WTO’ Policy Paper for the International Centre for Rights and Democracy (2000) at 5: argues that human rights are on ‘a moral plateau rarely associated with any other area of international law’. 39 Eg S Skolgy, Human Rights Obligations of the World Bank and the International Monetary Fund (London, Cavendish Publishing, 2001) at 153; T Cottier, above, n 31, at 128 has asked whether a set of ‘core rights’ could be constructed with ‘high functional importance’ for transparency of markets, for the rule of law and stability. 40 L Bartels, ‘Article XX of GATT and the Problem of Extraterritorial Jurisdiction: The Case of Trade Measures for the Protection of Human Rights’ (2002) 36 Journal of World Trade 353–403, at 363. 41 J E Alvarez, ‘How not to Link: Institutional Conundrums on an Expanded Trade Regime’ (2001) 7 Widener Law Symposium Journal 1–19, at 10. 42 As noted by R Howse, ‘Human Rights in the WTO: Whose Rights, What Humanity? Comments on Petersmann’ (2002) 13 European Journal of International Law 651–59 at fn: ‘At the World Trade Forum in Berne last August, where many of the leading traditional WTO experts gathered to address the question of the WTO law and human rights, several of the most eminent of them even questioned whether any human rights were sufficiently well understood or clearly embodied in international law as to be relevant in the operation of the WTO.’ 38

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A Methodology for Dealing with Human Rights Issues 61 made about the way the two legal systems will interact in any given situation. Can apparent conflicts between international trade laws and human rights laws be reconciled within the international trade law regime? The examples which are presented in the following chapters will point to the fact that inherent conflicts between the two legal systems are not the greatest problem facing the protection and promotion of human rights. Rather it is the breadth and lack of specificity of many of the trade law rules under consideration, which give rise to a range of possible interpretations, not all of which will protect and promote human rights. It is the position taken here that potential solutions must therefore be examined in the context of particular situations where human rights law and international trade law norms and standards interact. This analysis will be undertaken in the next five chapters, before conclusions are drawn about how human rights arguments should be treated in different scenarios within international trade law frameworks.43

VI. A METHODOLOGY FOR DEALING WITH HUMAN RIGHTS ISSUES IN THE TRADE LAW CONTEXT

It will be demonstrated over the next five chapters that the human rights issues that arise in a trade law context are both varied and complex. It is for this reason that, prior to undertaking this analysis, a methodology will be presented for categorising these issues into three types. The categorisation which is set out below is a State-centred one. Human rights issues are divided on the basis of three different types of human rights measures which States can take to protect and promote human rights in the trade law context, and where there is potential for conflict with international trade law rules. This typology should not be taken as indicating that States are the only relevant actors in either international trade or human rights law. But the nature of the international trade law system is such that States negotiate agreements, are responsible for national implementation and are the parties in dispute settlement. The nature of international human rights law is such that States are also the primary duty bearers for the implementation of human rights. Thus State actors are the natural focus for the current analysis. The following chapters examine three different types of human rights measures which States can take which potentially conflict with their obligations under international trade law, and the mechanisms that are available for dealing with these issues. Three different types of trade-related human rights measures are here described as: 1. Conditionality-based trade-related measures aimed at the protection and promotion of human rights (‘conditionality-based measures’) 43 General conclusions are found in ch 10, and in ch 11 these conclusions are applied more specifically to the context of dispute settlement.

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62 Assessing the Human Rights Impacts of the WTO 2. Compliance-based trade-related measures aimed at the protection and promotion of human rights (‘compliance-based measures’) 3. Cooperation-based trade-related measures aimed at the protection and promotion of human rights (‘cooperation-based measures’). It is perhaps useful at this stage to outline each of these terms, and what types of measures they cover, in a little more detail.

A. Conditionality-Based Measures Conditionality-based measures, as the term is used here, are measures taken by one WTO Member State in order to promote and protect the human rights of persons in another WTO Member State, by making some aspect of its trade with that State conditional on that State’s human rights performance. Such measures include imposing trade restrictions on goods made (or services produced) in another country, or providing incentives for human rights compliance through eg preferential terms of trade with countries who meet specified standards. These trade restrictions or incentives are utilised to try to prevent human rights violations in the production process of goods (eg use of slave labour) in another State, or because of wider human rights violations committed or permitted by the government of that State (eg systematic racial discrimination in South Africa under apartheid). This term can also be utilised to refer to export restrictions imposed on goods to be exported to foreign countries, where there are concerns that those goods could be utilised to perpetrate human rights abuses, or where the intention is to deprive human rights violators of sought-after goods because of the violations they have committed. The potential for conflict between conditionality-based measures and international trade law rules is based on the fact that the core mandate of the WTO is to promote trade liberalisation according to trade law principles of nondiscrimination. Therefore, the imposition of trade restrictions on human rights grounds outlined above is in apparent conflict with core WTO principles, since it involves restricting trade with States that commit human rights violations and therefore creating impediments to trade liberalisation. The State upon whom such measures are imposed therefore might be entitled to argue that such an impediment is contrary to WTO rules.

B. Compliance-Based Measures Compliance-based measures, as the term is used here, are measures where a WTO Member State takes a trade-related measure to protect and promote the human rights of persons in its own country, in order to comply with its own international human rights obligations. As with conditionality-based measures,

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A Methodology for Dealing with Human Rights Issues 63 compliance-based measures can also include trade restrictions that impact on liberalisation commitments with regard to the import of goods from another country. In this scenario, measures are taken by a State, in line with its international human rights obligations, in order to protect the human rights of domestic workers in its own country—perhaps because of a fear that, through increased competition and lower priced goods, workers may lose jobs and would be left in a situation that endangers their basic rights to food, shelter and other basic necessities. There is a need to ensure that States are able to take measures to protect and promote human rights in this way, without being in breach of their trade law obligations. But there is also great potential for other WTO rules and regulations to impact upon the ability of a country to take compliance-based measures aimed at the protection of its own population. So, will a WTO Member State’s liberalisation and non-discrimination commitments under GATS conflict with measures aimed at the provision of essential services such as water, health or education to its own population? Will a WTO Member State’s obligations under the TRIPS Agreement conflict with its obligations to ensure that its own population can obtain access to affordable medicines in accordance with the right to health? It should be clear from these examples that the focus of compliance-based measures are the human rights of a State’s own population, as opposed to conditionality-based measures, where the focus is human rights protection and promotion in another State.

C. Cooperation-Based Measures Cooperation-based measures are those which are taken by a WTO Member State, in cooperation with another WTO Member State, in order to promote or protect the human rights of persons in that other WTO Member State. As with conditionality-based measures, the focus of cooperation-based measures is human rights protection and promotion in another State. But these measures differ from conditionality-based measures in that they do not punish or incentivise trade with another State because of human rights violations. Rather, one State directly assists another State to meet its international human rights obligations through, inter alia, provision of affordable essential goods and services. From a human rights perspective, these measures are particularly important with regard to international assistance for developing countries in accordance with the right to development. So, for instance, measures can include facilitating technology transfer from developed to developing countries to promote innovation leading to enhanced protection of a range of human rights; providing ‘adjustment assistance’ to States whose people are suffering from human rights violations as a result of trade liberalisation; or removing barriers to trade which are preventing countries with low levels of development from accessing markets. Many of these types of measures do not have the potential to conflict

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64 Assessing the Human Rights Impacts of the WTO with WTO rules in the same way as the other two sets of measures described above. But there are occasions where cooperation-based measures may potentially conflict with international trade law rules. For instance, where one State facilitates the export of cheap generic medicines to another State in order to deal with a health crisis such as HIV/AIDS, and thereby protect and promote the right to health in that State, there are potential conflicts with the rules and regulations of the TRIPS Agreement.

VII. RATIONALE FOR THE PROPOSED METHODOLOGY FOR DEALING WITH HUMAN RIGHTS IN THE TRADE LAW CONTEXT

What is the rationale behind this methodology for considering the interrelationship between international trade law and international human rights law norms and standards? First, it allows us to discuss compliance and cooperation-based measures together, as they share many similar features, and conditionality-based measures independently as they form a discrete category which requires separate consideration. They will therefore be dealt with separately in the chapters which follow. Legally speaking, compliance and cooperation-based measures are grounded on clear obligations under international human rights law; all international human rights law instruments make State Parties the primary obligation-bearers with regard to the human rights of persons within their jurisdiction—thus all States have international human rights law obligations to take compliance-based measures, where appropriate, to ensure that their international trade law obligations do not negatively impact upon the protection and promotion of the human rights of their own populations. International human rights law also contains clear obligations with regard to international cooperation and assistance, particularly with regard to economic, social and cultural rights.44 However, the rationale for taking conditionality-based measures is far more complex, and entails separate and careful consideration of international human rights law norms and standards as well as those of general international law. Second, the political and academic debates on this subject area have, from a human rights perspective, largely focused upon the extent to which WTO rules prevent or enable Member States from taking conditionality-based measures to protect and promote human rights.45 This has led to a number of misconceptions about the extent to which, and the situations where, human rights arguments can and should be utilised in a trade law context.46 It has also led to a 44

In particular see ICESCR, Art 2.1. While this author was able to find only a couple of legal articles with more than a superficial treatment of the potential for human rights to be used by States to protect their own populations from the negative effects of international trade law rules, there are numerous articles with in depth analysis of human rights usage for the imposition of trade restrictions, as will become clear in the following chapters. 46 In particular in this regard, see the discussion in J Pauwelyn, above n 14, at ch 12. 45

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Rationale for the Proposed Methodology 65 failure to recognise the broad range of human rights, and in particular ‘distributive’ economic, social and cultural rights, which need to be taken into account when analysing the impact of trade law rules on the protection and promotion of human rights. This methodology for analysis does not however mean that that there are no similarities between all three types of measures. Many of the issues discussed below raise common systematic questions about the way that human rights concerns are treated in a trade-related context, and the mechanisms that are available for ensuring that trade law rules systematically and appropriately take into account human rights norms and standards. The common themes, as well as the differences of approach, will be discussed further in chapter 10. First, conditionality-based measures will be considered in chapters five to seven, and this will be followed by consideration of compliance and cooperation-based measures taken together in chapters eight and nine. The following chapters will give detailed examples of different scenarios under each of these three classifications of measures, and will make arguments in favour of the adoption of this methodology as a basis for analysis. But a number of points need to be made at this stage to clarify some of the more obvious potential misconceptions. First, none of the scenarios outlined above should be taken to suggest that trade law rules never allow for such human rights measures to be taken—ie that all apparent conflicts are real. Rather, there is a need to analyse carefully where there are potential conflicts between the two legal regimes, and whether there are mechanisms to ensure that measures can be, and are being, taken where necessary to protect and promote human rights. Second, it is important to recognise that measures taken must have some basis of legitimacy, and not, for instance, be taken as a form of disguised protectionism, in order to protect particular domestic producer interests (whose human rights are not threatened). Third, some further points will be made at this stage to defend the categorisation of measures that is presented above. No commentators have previously attempted the kind of systematic in-depth of analysis of the interaction between international trade law and international human rights law which is attempted here. But a number of authors have briefly set out methodologies for separating different types of human rights issues in the trade law context, utilising similar schemes to that which is utilised here. The most common methodology has been to separate issues into human rights (or more broadly moral) issues that are ‘inwardly’ focused and those that are ‘outwardly’ focused, and the measures that are utilised to deal with those issues.47 Outwardly focused measures are taken by WTO Member in order to deal with moral/human rights issues in another WTO Member State. Inwardly focused measures are taken by a WTO 47 Eg S Charnovitz, ‘The Moral Exception in Trade Policy’ in Charnovitz, Trade Law and Global Governance (London, Cameron May, 2002) at 330 and Sheldon Leader, ‘Human Rights and International Trade’ in Macrory, P et al (ed) Understanding the World Trade Organization: Perspectives from Law, Economics and Politics (Springer, 2005) at 664–95.

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66 Assessing the Human Rights Impacts of the WTO Member in order to deal with moral/human rights relating to their own populations. The methodology utilised here also divides up measures into those that are focused on a Member State’s own population (compliance-based measures) and those that are focused on other WTO Member States (conditional and cooperation-based measures). But the latter category is sub-divided in order to recognise that different types of measures in foro externo need to be considered very differently in the WTO context, as will become apparent in the chapters which follow. From the broader ‘moral’ perspective, there are clearly some difficulties in dividing up a government’s rationale for action into those measures that are focused on its own population (compliance-based measures) and those that are focused on foreign nationals (conditionality and cooperation-based measures).48 For instance, it could be argued that, when a country bans products made with slave labour, it is doing so in order to prevent its own citizens from becoming morally tainted by purchasing such goods, to prevent its own market from contributing to abuses and to distance itself from the violators. Therefore, is the rationale for such measures to induce compliance with human rights norms and standards in another country, or rather to protect the morality of its own citizens? The reason for the difficulty in finding the root of the wider moral rationale for such trade measures is that there are a multitude of sometimes complementary reasons for measures being taken. These moral objectives contain multiple motivations that could be described as both aiming to protect the morality of a State’s own population as well as that of another State. However, while there may be difficulties in distinguishing between the wider ‘moral’ rationale for trade measures such as those outlined above, a human rights approach will be focused on where the (potential) violations are occurring, and so distinguishing between different measures should always be feasible. For instance where a government bans goods made by slave labour in another State, this is clearly a conditionality-based measure,49 whereas where it restricts importation of foreign goods to protect the human rights of domestic workers or overrides intellectual property rights in order to provide access to essential medicines to people within its jurisdiction, the aim of such a measure is to protect the human rights of its own population, and it is therefore classified as a compliance-based measure.50

48

Arguing this point see S Charnovitz, ibid at 330. The human rights violation of the prohibition of slavery is occurring in another country. This is not to say that there may not also be external human rights effects eg on the property rights of intellectual property owners. The balancing of such rights will be discussed further in ch 10. But the State invoking human rights as a grounds for releasing itself from its trade law obligations will be doing so because of the human rights impact on its own population. 49 50

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Conclusions 67

VIII. CONCLUSIONS

Despite the categorisation of international trade law and international human rights law as ‘self-contained regimes’, they cannot operate in ‘splendid isolation’ from one another. In particular, the international trade law regime has the potential to impact upon international human rights norms and standards because of its wide-ranging subject coverage and relatively strong enforcement mechanisms. But the mechanisms for dealing with human rights issues in a trade law context are complex. Few issues will be solved by resorting to claims about the inherent hierarchical superiority of one set of rules over another. There is a need for a careful examination of the human rights issues which arise in particular situations in order to devise appropriate responses. A methodology has been proposed for how this examination will be conducted in the chapters which follow. On the basis of this, the following three chapters will go on to consider conditionality-based trade-related measures aimed at the protection and promotion of human rights.

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5 Some Background Issues on Conditionality-Based Measures I. INTRODUCTION

T

RADE-RELATED MEASURES aimed at the protection and promotion of human rights have been used by States as a mechanism of human rights enforcement in other States for hundreds of years.1 An early example was in the nineteenth century when a number of countries adopted trade restrictions through treaty and statute to induce the abolition of slavery and the slave trade.2 Since that time, conditionality-based measures have been utilised in many different situations for a number of different moral purposes, many of which can be characterised as aiming at the protection and promotion of human rights in other States. The focus of this book is the role of the WTO with regard to human rights and trade linkage. In the case of conditionality-based trade measures, the fact that the WTO is the organisation through which global trade rules are agreed and enforced means that there are bound to be issues that arise about trade measures invoked on the grounds of human rights violations in other Member States. Will WTO Member States be prevented from using such human rights measures because of WTO provisions which restrict their usage? If they are utilised, is there a danger that such measures will in fact be abused for protectionist ends? Is there also a danger that human rights will be violated as a result of the conditionality-based measures themselves? Should the WTO, as a specialised trade institution, make judgements about the validity of conditionality-based

1 S H Cleveland, ‘Human Rights Sanctions and International Trade: A Theory of Compatibility’ (2002) 5 Journal of International Economic Law 133–89 at 133ff provides a number of examples of trade restrictions that have been utilised on human rights grounds. S Charnovitz, ‘The Influence of International Labour Standards on the World Trading Regime’ in S Charnovitz, Trade Law and Global Governance (London, Cameron May, 2002) 211–232 at 211 gives an extended history of the use of trade restrictions to enforce labour standards including forced labour, with many examples of specific instances where restrictions have been imposed. Philip Alston, ‘Core Labour Standards’ and the Transformation of the International Labour Rights Regime’ (2004) 15 European Journal of International Law 457–521 at 462 also provides a history of labour standards and trade linkage. 2 S H Cleveland, ibid, at 134.

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70 Background Issues on Conditionality-Based Measures measures which are based on human rights standards, or should this role be left entirely to appropriate specialised agencies (eg UN agencies, the ILO etc)? Is it possible for the WTO to successfully disengage from this subject area? These questions will be addressed in the following chapters. Recent usage of conditionality-based trade measures has either been conducted within multilateral frameworks governed by international law, or else has been pursued unilaterally, authorised by domestic legal measures in the State concerned. The following two chapters examine these different types of usage, and the resultant different treatment that they receive under WTO rules. This chapter provides a background to this discussion by setting out some of the important issues that underlie the debate.

II. TYPOLOGIES OF CONDITIONALITY-BASED MEASURES

Too often the debate on conditionality-based measures tends to blur into a generalised discussion about all forms of trade conditionality without dealing with the consequences of different forms of conditionality in terms of protecting and promoting human rights. Multiple contributions to the debate speak of trade ‘sanctions’ without expressly stating what is meant by this term, and what forms of trade conditionality it includes. This contribution utilises the term ‘conditionality-based trade-related measures aimed at the protection and promotion of human rights’ (henceforth ‘conditionality-based measures’) as an inclusive term in order to explicitly recognise that trade conditionality can take a number of different forms. Conditionality-based measures should be taken to include the following types of trade conditionality; import bans, whereby a State places a total bar on the importation of particular goods from another State; export bans, whereby one State refuses to export certain goods to another State; quotas, whereby one State sets a quantitative limit to the amount of certain goods that can be imported from another State; licensing requirements, whereby one State only allows the importation of goods from another State if it meets specified criteria; additional tariff rates whereby States that do not adhere to specified criteria are required to pay additional ‘tax’ in order to import their goods. All of the above represent different types of restrictions on trade with other States. These measures will be collectively termed ‘trade restrictions’. In addition to trade restrictions, there is another type of conditionality-based measure which requires consideration—trade incentives—whereby States that do meet specified criteria are rewarded with better terms of trade than those who do not (primarily through lower rates of taxes on their exported goods). Trade incentives can be differentiated from trade restrictions on the basis that they represent a ‘positive’ form of conditionality by providing incentives for good human rights performance, as opposed to trade restrictions which penalise bad performance. The rationale for considering trade incentives within the overall

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Typologies of Conditionality-Based Measures 71 framework of conditionality-based measures is that, as with trade restrictions, those that are not receiving incentives are suffering from worse trading conditions than those that are receiving them on the basis of relative human rights performance.3 All of the above types of conditionality-based measures can be utilised for human rights purposes. But, they can potentially have very different effects. For instance, a total trade ban on products from a certain State because of human rights abuses may have different effects as opposed to tariff rate reductions for meeting certain human rights requirements. Any conclusions about the desirability or otherwise of conditionality-based trade measures to promote and protect human rights will have to take into account the effects of the specific measure in question. Conditionality-based measures can also differ in terms of the degree to which they are aimed at the specific human rights issue in question. Several commentators have provided a system of categorisation for different types of trade measures (utilising the term ‘sanctions’, but the categorisation works equally well for all types of measures under consideration here). There are measures which are directed only to apply to goods where violations occurred during production. These are known as tailored or targeted measures.4 For instance banning imported products that are made using slave labour is a form of tailored trade restriction, and providing incentives for goods made according to specified labour standards is a targeted incentive. But tailored measures are unable to address wider human rights issues in non-trade sectors, or more general abuses by governments.5 For such matters, general trade restrictions or incentives are required. General trade restrictions are therefore those that are taken against a State which are not directed towards a specific human rights violation, but rather are utilised when a government’s human rights violations have reached such a level that it is considered appropriate to deprive the State of certain goods or services.6 Such restrictions can be comprehensive, as for instance in the case of Iraq,7 or they can be selective, for instance as was the case with many of the early forms of restrictions placed upon South Africa by many States during the apartheid era. Similarly, general trade incentives are incentives awarded based on a government’s overall human rights performance, rather than only on goods produced for export. The new EU GSP Scheme, which provides reduced tariff rates on a range of products for States 3 Making a similar point, see J Pauwelyn, ‘Human Rights in WTO Dispute Settlement’ in T Cottier et al (eds) Human Rights and International Trade (Oxford, Oxford University Press, 2005). 4 Commentators generally use the word ‘sanctions’, but the term ‘restrictions’ is used here for the reasons set out above. 5 S H Cleveland, above n 1, at 140. 6 S H Cleveland, above n 1, at 142 lists examples of general sanctions used by the US. 7 UN Sub-Commission on the Promotion and Protection of Human Rights, The Adverse Consequences of Economic Sanctions on the Enjoyment of Human Rights, A Working Paper prepared by Marc Bossuyt, E/C.4/Sub.2/2000/33 (21 Jun 2000) at para 11(a).

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72 Background Issues on Conditionality-Based Measures who ratify a range of human rights conventions, is a good example of this type of measure.8 Semi-tailored measures fall somewhere between the two categories outlined above. They do not focus upon human rights performance in the production of specific goods. But the measures are crafted so that there is still a nexus between the goods and the measures, as they are targeted so that those who are committing the abuses will be affected by the measures. Thus, they may target a trade sector if substantial labour rights abuses occur in that sector, or punish states (or non-state parties) for human rights violations by withholding goods that impact upon the government’s ability to commit human rights violations. So, for instance, banning the importation of so-called ‘conflict-diamonds’ is an example of a semi-tailored restriction, since the proceeds of sale of such diamonds are often then used to purchase weapons which are then used to perpetrate human rights atrocities.9 The discussion that follows will by and large distinguish between general and tailored trade restrictions, since it is here that the greatest differences occur in the way measures are treated in the WTO context. Semitailored measures will in some circumstances be more similar in design to general restrictions and in others share more in common with tailored restrictions, and will therefore be grouped accordingly. Throughout the following two chapters, different types of conditionalitybased trade measures aimed at the protection and promotion of human rights will be identified and distinguished. Recommendations for the WTO role with regard to these trade measures will be very much contingent on the type of measure under consideration. It should also be recognised that there are a number of other types of measure that can be utilised other than trade measures in response to human rights violations. Financial restrictions, which place restrictions on monetary business are discussed further below. Restrictions can also take the form of travel, diplomatic, military and cultural sanctions.10 These will not be the subject of discussion, as at the current time there is far less potential for such measures to be impacted upon by WTO rules. For the purposes of the discussions in the following chapters it is worth analysing current views on the appropriate use of different forms of conditionality-based trade measures among scholars and relevant international 8 See Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee—Developing Countries, international trade and sustainable development: the function of the community’s generalised system of preferences (GSP) for the ten-year period from 2006 to 2015 COM(2004) 461 Final, Brussels 7.7.2004 at 39, and Proposal for a Council Regulation, European Commission, COM(2004) 699 final, 20.10. 2004 and Council Regulation (EC) No 980/2005 of 27 June 2005 applying a scheme of generalized tariff preferences which sets out the legal regulations for how the scheme will operate over the first three years of the 10 year period, commencing in July 2005. See detailed discussion of this system in ch 9. 9 Banning of conflict diamonds occurs under the Kimberley Process Certification Scheme (KPCS). The text of the scheme can be found at http://www.kimberleyprocess.com:8080/site/ ?name=kpcs&PHPSESSID=051dcf9734e6cc3fe9d4ee0186dc3c5c, accessed on 12 Nov 2006. For a detailed discussion of the scheme, see ch 6. 10 M Bossuyt, above, n 7, at paras 13–17.

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General Trade Restrictions 73 organisations. A number of authors who discuss the role of the WTO with regard to trade restrictions write about their use as though any human rights advocate would support any kind of trade restriction that were imposed for human rights reasons.11 Others write as if the effectiveness or otherwise of specific trade restrictions in specific circumstances can be put to one side while arguing about their legitimate application.12 However, it is the position taken here that consideration of the effectiveness of all forms of trade measures and in particular trade restrictions in meeting their intended aims—the protection and promotion of human rights—is absolutely necessary before going on to discuss their legitimacy, and the extent to which the WTO should be involved in regulating their usage. To what extent are different types of trade measures recognised as appropriate responses to human rights violations? The following discussion provides a synopsis of some of the current thinking about the usage of general and tailored trade restrictions. It concentrates on trade restrictions as opposed to trade incentives. This is where the literature on the subject is focused, as use of trade restrictions is far more widespread and considered more controversial. But some of the conclusions reached have more general application for all types of conditionality-based measures, as will be explored in later chapters.

III. GENERAL TRADE RESTRICTIONS

General trade restrictions have been much utilised both multilaterally and unilaterally over recent decades to respond to alleged human rights violations. They form a part of what is generally termed ‘economic sanctions’, the other part being financial restrictions.13 There have been occasions where the use of such trade restrictions has been widely credited as having a major effect on bringing about an end to major human rights abuses. The most obvious example of this were the trade restrictions imposed against South Africa as a response to the apartheid era. But, more recently, particularly in the case of general trade restrictions that are comprehensive or widespread (i.e. covering all or a large part of trade with the State concerned), the negative consequences in human rights terms are now recognised as potentially very significant. The UN Commission on Human Rights, and Sub-Commission on Human Rights, the World Food Programme, the United Nations Children’s Fund (UNICEF) and the World Health 11 Eg C M Vazquez, ‘Trade Sanctions and Human Rights—Past, Present and Future’ (2004) 6 Journal of International Economic Law 797–839 at 805ff. T Cottier, ‘Trade and Human Rights, A Relationship to Discover’ (2002) 5 Journal of International Economic Law 111–32 at 123 where he simplifies the argument by stating that national sovereignty is the main impediment to introduction of economic sanctions for the purpose of enforcing minimal human rights standards, and does not consider the adverse consequences of trade restrictions from a human rights perspective. 12 S H Cleveland, above n 1, at 137. 13 M Bossuyt, above n 7, at para 11.

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74 Background Issues on Conditionality-Based Measures Organisation (WHO) have all expressed their concerns in recent years.14 The negative consequences are particularly felt by the civilian populations of the targeted State, where there are grave dangers that economic sanctions may themselves lead to violations of economic social and cultural rights.15 Furthermore, from the economic perspective, it is argued that higher trade barriers tend to exacerbate problems of low economic growth and poverty in the targeted State.16 The UN Secretary-General has noted the problems of trade restrictions in tending to affect the general population rather than those that they are targeted against, particularly in authoritarian regimes, where the restrictions may actually be utilised for political advantage:17 When robust and comprehensive economic sanctions are directed against authoritarian regimes, a different problem is encountered. Then it is usually the people who suffer, not the political elites whose behaviour triggered the sanctions in the first place. Indeed, those in power, perversely, often benefit from such sanctions by their ability to control and profit from black market activity, and by exploiting them as a pretext for eliminating domestic sources of political opposition.

As well as the serious dangers of human rights abuses to the general population as a result of such trade restrictions, questions are increasingly being asked about how successful trade restrictions are in achieving their aims, including the prevention of human rights violations. This is a very difficult question to answer, and has provoked much academic and policy debate.18 Particularly with regard to semi-tailored and general restrictions it is very difficult to ascertain what amounts to success.19 However none of the analysis presents a particularly healthy picture. Thus one review of the literature states: [E]ven the most optimistic point to only about a third of all restrictions having even ‘partial’ success, while others looking at the data have come up with a 5 per cent success rate, and a dismal 2 per cent success rate for restrictions against ‘authoritarian regimes’. . . . In addition it has been noted that financial restrictions alone have a greater success than trade restrictions or combined trade and financial restrictions . . . the severity of sanctions is statistically insignificant in determining their success, and the longer a sanctions regime stays in place, the lower its success . . . when the economic elite are targeted, there is a significant increase in success (citations omitted).20

14

M Bossuyt, above n 7, at para 6. See CESCR General Comment No 8 The relationship between economic sanctions and respect for economic, social and cultural rights (12/12/97) E/C.12/1997/8. 16 J Bates, ‘International Trade and Labour Standards’, Policy Report (Apr 2000) cited in K Addo, ‘The Correlation Between Labour Standards and International Trade. Which Way Forward?’ (2002) 36 Journal of World Trade 285–303 at 297. 17 UN, Millennium Report of the Secretary-General of the United Nations, (New York, UN Department of Public Information, 2000) at 50. 18 M Bossuyt, above n 7, at para 51 cites a number of participants in the debate. 19 Making this point, see S H Cleveland, above n 1, at 173. 20 M Bossuyt, above n 7, at para 51. See also K Addo, above n 16, at 298 on evidence of the ineffectiveness of sanctions. 15

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General Trade Restrictions 75 Because of worries about both the effectiveness of general trade restrictions, and the potential for human rights violations that they may themselves cause, there are increasing moves to ensure that such restrictions are utilised only with the utmost caution, are effectively targeted, tightly circumscribed and regularly monitored and reviewed.21 The importance of understanding the ways in which such restrictions ought to be utilised is highlighted by a series of reports produced by broad coalitions of academics and policy-makers providing guidelines for future usage.22 Proposals for ‘smart sanctions’ have also been developed which target the political elites in a State.23 Under this system, measures are taken against the personal foreign assets of political elites that are perpetrating human rights abuses, and/or they are denied access to foreign markets. The assets of government owned businesses may be frozen and investment in those businesses prohibited. Imports of luxury goods, and other goods, generally only consumed by the ruling elite are also banned.24 Increasingly, academic analysis of specific sanctions regimes suggests that ‘smart’ sanctions will be more effective in terms of inducing change in the targeted State, while reducing the negative human rights impact on the general population.25 It is not the purpose of this contribution to comprehensively evaluate what constitute effective general trade restrictions. This brief synopsis of the current debate is included to demonstrate that the use of such trade restrictions is deeply contested, and that various initiatives within the international community are currently working on developing systems of trade restrictions that will make them more effective and less harmful to the general population of the targeted State. Current thinking appears to be moving away from an approach based on widespread trade restrictions, towards one that is based upon financial restrictions, and certain selected trade measures targeted at the elites of the States concerned. Therefore, in discussing the role of the WTO with regard to general trade restrictions from a human rights perspective, consideration needs to be given to the inherent complexities involved. Decisions about their usage need to be based upon in-depth knowledge of human rights law and its consequences. There are clear dangers inherent in a trade law forum validating or invalidating such restrictions, without a detailed understanding of the consequences of

21 Eg Informal Working Group of the Security Council on General Issues of Sanctions Nonpaper/Rev 10, (26 Sept 2002). 22 T Biersteker (coordinator) Targeted Financial Sanctions: A Manual for the Design and Implementation. Contributions from the Interlaken (Providence: Watson Institute, Brown University, 2001); M Broska (ed) Design and Implementation of Arms Embargoes and Travel and Aviation Related Sanctions: Results of the ‘Bonn–Berlin’ Process (Bonn, 2001); P Wallensteen, C Staibano and M Eriksson (eds) Making Targeted Sanctions Effective Guidelines for the Implementation of UN Policy Options: Results from the Stockholm Process on the Implementation of Targeted Sanctions (Uppsala University Department of Peace and Conflict Research, 2003). 23 M Bossuyt, above n 7, at para 52–3. 24 M Bossuyt, above n 7, at para 54f. 25 Eg A E Torbat, ‘Impacts of the US Trade and Financial Sanctions on Iran’ (2005) 28 The World Economy 407–34.

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76 Background Issues on Conditionality-Based Measures utilising them. Such considerations need to be borne in mind during the discussions in the chapters that follow.

IV. TAILORED TRADE RESTRICTIONS

Tailored restrictions are those that are directed to only apply to goods where violations occurred during production.26 There has been far more academic debate over the use of trade restrictions to enforce human rights standards in the production of goods than there has been over any other form of human rights and trade linkage.27 It would be fair to say that there is great disagreement as to the effectiveness of this form of trade conditionality in promoting compliance with human rights standards.28 Since the rights that are involved in the production of goods are generally termed ‘labour rights’, a first issue to clarify is the relationship between labour rights and human rights. Since the current analysis focuses on human rights and trade linkage, can labour rights be categorised as types of human rights which are therefore suitable for analysis in this context? The fact that labour rights come under the auspices of the ILO, rather than the UN agencies means that they are sometimes considered to be an entirely different set of rights and standards. However, some labour rights obviously correlate to human rights—eg the prohibition against slave labour is clearly both a human rights and labour rights issue. Concerning other labour rights there may be more confusion. Several authors have however undertaken analysis to show that all the core labour standards of the ILO can be correlated to human rights in international human rights instruments.29 It is proposed therefore to assume that all the key labour rights that are subject to discussion in terms of the trade linkage debate can be viewed as human rights. 26 Tailored restrictions also include export restrictions which apply only to exports that will be used for human rights violations, but the focus of the debate in the context of international trade law rules is almost entirely import restrictions. 27 T Cottier, above n 11, at 112. 28 For a variety of such views from a legal perspective see C M Vasquez, above n 11, at 803ff and 817; C Dommen, ‘Raising Human Rights Concerns in the World Trade Organization: Actors, processes and possible strategies’ (2002) 24 Human Rights Quarterly 1–50 at 4; R N Block, K Roberts and M J Roomkin, ‘Models of International Labor Standards’ (2001) 40 Industrial Relations 258–92. From an economic perspective see D K Brown, A V Deardoff and M R Stern, ‘Pros and Cons of Linking Trade and Labor Standards’, Research Seminar in Economics, School of Public Policy, The University of Michigan, Discussion Paper No 477 (6 May 2002). From a policy perspective compare Nicola Bullard Social Standards in International Trade, Report for the Deutscher Budestag Commission of Enquiry, (Jul 2001) with S Polaski, Trade and Labor Standards, A Strategy for Developing Countries (Washington, Carnegie Endowment for International Peace, 2003). 29 H-M Wolffgang and W Feuerhake, ‘Core Labour Standards in World Trade Law: The Necessity for Incorporation of Core Labour Standards in the World Trade Organisation’ (2002) 36 Journal of World Trade 883–901 at 889–91 correlates all core ILO labour standards to human rights in the UDHR; J M Diller and D A Levy, ‘Child Labor, Trade and Investment: Towards the Harmonisation of International Law’ (1997) 91 American Journal of International Law 663–96 at 668ff also correlates a number of labour rights with human rights. Also see more generally P Alston (ed) Labour Rights as Human Rights (Oxford, Oxford University Press, 2005).

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Tailored Trade Restrictions 77 When discussing the implementation of enforceable standards at the international level for human rights abuses in the production process, there are a number of related arguments that are made to justify such an approach. But for every argument made for standards, there are equal and opposite arguments made against. In very general terms, there are two sets of issues around which the debate revolves. First there is the specifically human rights argument— whether trade restrictions that are imposed for violations of human rights are actually effective in improving human rights in the State targeted. Second, there is the argument about the ‘race to the bottom’—whether trade restrictions are needed to enforce labour standards because otherwise companies will compete to find the lowest standards, or whether such measures are merely protectionist, and aimed at keeping out goods from foreign markets. This second argument also has important human rights implications; if lack of enforceable international labour standards leads to those standards being gradually lowered over time, this has implications for the ‘progressive realisation’ of human rights. Starting with the first issue, if imposition of enforceable labour standards at the international level would clearly benefit the human rights of those involved, then surely they can be justified in human rights terms? Unfortunately, there is very little clarity or agreement on this issue. There is a vast literature which addresses the issue of whether, and in what circumstances trade restrictions are a helpful response to failure to adhere to international labour standards. The contrasting positions of neo-liberal economists, trade lawyers, human rights lawyers and others on this issue are well presented by Philip Alston: At one extreme, many neo-liberal economists argue that trade liberalisation itself is the key to improvements in working conditions and artificial attempts to raise standards through rights-based interventions are bound to fail and may well be counterproductive. At the other, some labour lawyers argue that linkage between trade policy and labour standards is an imperative. Many occupy different shades of the middle ground.30 A number of writers who make generalised pronouncements about the appropriateness or otherwise of trade restrictions to enforce labour standards utilise only a very limited number of studies to back up their claims about the effects of trade conditionality, while ignoring studies that suggest the situation is more complex.31 The most widely quoted analysis of this issue is a 1996 OECD study which has argued that adherence to core labour standards will have little or no effect on export markets for developing countries, while at the same time, there does not appear to be competition between countries on the basis of labour standards. This study has therefore been used by both sides of 30 P Alston, ‘Core Labour Standards’ and the Transformation of the International Labour Rights Regime’ (2004) 15 European Journal of International Law 457–521 at 471ff. 31 Eg R Howse, ‘Back to Court after Shrimp/Turtle? Almost but Not Quite Yet: India’s Short Lived Challenge to Labor and Environmental Exceptions in the European Union’s Generalized System of Preferences’ (2003) 18 American University International Law Review 1333–81 at 1362; A N Cole, ‘Labor Standards and the Generalized System of Preferences: The European Labor Incentives’ (2003) 25 Michigan Journal of International Law 179–209 at 200.

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78 Background Issues on Conditionality-Based Measures the debate as evidence in favour of their position: Proponents of conditionality argue that there are no economic downsides to linkage, only the upsides that increased adherence to labour standards will bring to working conditions. Those that oppose it argue that since there is no competition on the basis of labour standards, there is therefore no reason that they should be imposed at the international level. Unfortunately many authors simply quote this study as support for their arguments, without critically analysing the extent to which this one survey is reliable evidence for the link between labour standards and trade.32 One review of the OECD study was extremely critical of the standards of the research, and concludes that the study is very disappointing and ‘provides little added value to the ongoing international debate.’33 It is lacking in terms of both the data that has been collected, and the way in which it has been analysed.34 The small amount of research that there is which investigates the micro-level effects of standards on workers and firms in developing countries suggests that the effects of labour standards are likely to be complex and depend on country and industry-specific factors. Much more empirical work is therefore needed on such standards taking into account various developmental variables.35 The basis of the second set of arguments for enforceable labour standards are that States who do not uphold labour standards are gaining an unfair competitive advantage, because their labour costs are going to be cheaper as a result of not maintaining standards. This will mean that the prices of their products are likely to undercut the prices of products in countries which maintain higher standards, and there will be a number of other knock-on effects. Investment will go to the countries with the lowest labour standards, as they will be more competitive. Producers will relocate from countries with higher, and therefore it is assumed more costly, labour standards to countries with lower standards. This in turn will lead to workers in countries with higher standards being laid off, or to a race to the bottom where governments compete with each other by reducing labour standards, and seeking investment. It is argued that national governments are thereby losing their ability to set their own levels of social 32

Eg R Howse, ibid, at 1362. S Charnovitz, ‘Trade, Employment and Labour Standards: The OECD Study and Recent Developments in the Trade and Labour Debate’, Ch 10 in S Charnovitz (ed), Trade Law and Global Governance (London, Cameron May, 2002) at 257. 34 See S Charnovitz, ibid, at 235ff arguing that the study is silent with respect to how strong the link is between ratification and compliance with ILO standards, and there is no real assessment of the effects of Export Processing Zones (EPZs). Further criticism is made in terms of interpretation of the data used. The study measures trade performance by the change in percentage of a country’s share in exports in world markets between 1980–1990. The study says there is little relationship between changes in export market shares and these core standards. But Charnovitz points out that the data in fact shows that in manufacturing, countries with deficiencies in core labour standards do better. 35 A Singh and A Zammat, ‘Labour Standards and the ‘Race to the Bottom’: Rethinking Globalization and Workers’ Rights from the Developmental and Solidaristic Perspectives’ (2004) 20 Oxford Review of Economic Policy 85-104 at 94. 33

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Tailored Trade Restrictions 79 policy, due to the competition they face from other countries. Political pressure for lower standards will increase from employers in higher standards countries so as they are able to compete effectively with countries with lower standards. Also, there will be rising income inequality in developed countries as low-wage workers in labour intensive industries experience increased competition and job losses. There are clear human rights consequences if such a phenomenon were to occur.36 Such views are backed up by what developed country citizens see happening in their own countries and the economic hardships that they face, which many directly relate to competition from overseas countries with lower labour standards.37 It has been argued that free trade without labour standards conditionality has been responsible for the decline in the real value of wages of American workers over the last 30 years, as well as a number of other negative effects.38 But there are also counter-arguments that deny linkages between low labour standards and unfair competition. It is argued that patterns of traded goods and foreign direct investment (FDI) do not reflect differences in labour standards.39 Further, there is some scepticism about the degree of competition between the developing and developing world. Higher US wages are not in competition with lower developing world ones because of higher rates of US productivity.40 It is argued that there is in fact little empirical evidence to connect labour market problems in developed countries with competition from developing countries with lower standards.41 A coincidence of timing, in terms of increased globalisation and global competition does not necessarily mean that a link has been 36

Making many of the above points see R N Block, et al, above n 28, at 260. A Singh and A Zammat, above n 35, at 90: ‘The growth rate of the average real wage in the US economy was 0.25 per cent a year during the 1980s and 1990s, compared with a historic norm of 2 per cent a year. Wage dispersion and income inequality in the USA greatly increased during the 1980s and 1990s, after having remained steady or declined for almost 50 years before.’ 38 R Bhala, ‘Clarifying the Trade Labor Link’ (1998) 37 Columbia Journal of Transnational Law 11–56 at 18 citing R Batra, The Myth of Free Trade (Pymble, Simon & Schuster, 1993) who also cites the Economic Policy Institute estimates that the increased US trade deficit with Mexico and Canada since the North American Free Trade Agreement’s (NAFTA) implementation has cost 420,208 American jobs. But at page 25 presents contrary evidence that NAFTA has had no discernable effects on US employment. 39 A Panagariya, ‘Trade-Labour Link: A Post-Seattle Analysis’ in Z Drabek (ed) Globalisation Under Threat: The Stability of Trade Policy and Multilateral Agreements (Cheltenham Glos, Edward Elgar, 2001) at 105; R M Stern, and K Terrel, Labour Standards in the World Trade Organisation, Discussion Paper No. 499, University of Michigan (Aug 2003) at 4ff. 40 R Bhala, Above n 38, at 21. 41 R Bhala, Above n 38 at 27–8 cites a 1995 an International Trade Commission study on ten developing countries and their increased imports to the US showing that this was not based on unfair advantages due to labour standards. Sectors with bad labour standards were not generally exporters, and conditions were worse in non-trade sectors. There was a race upwards in terms of product quality, not a race downwards in terms of price. US foreign direct investment is not typically concentrated in countries with low labour standards. Wages and working conditions in developing countries have been exhibiting positive trends which are in line with productivity changes. See also S Tay, ‘Trade and Labor: Text, Institutions, and Context’, ch 45 of B Hoekman, A Mattoo, and P English (eds), Development, Trade, and the WTO: A Handbook, (Washington, World Bank, 2002) 463–71 at 465 quoting industrial studies showing that industrial migration is not happening. 37

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80 Background Issues on Conditionality-Based Measures proved in terms of causation. Rather, ‘de-industrialisation in the North is mostly a product of economic and technological developments internal to these economies, and it has very little to do with trade with developing countries.’ Labour-market rigidities and ‘a decline in the trend rate of growth of real demand and of output during the last two decades, compared with the 1950s and 1960s are also factors.42 As with the above discussions on general trade restrictions, this synopsis of the debate on tailored restrictions has been included in order to show the inherent complications of this issue. There is great disagreement about the extent to which a lack of enforceable international standards creates a ‘race to the bottom’ whereby the standards in all States will suffer. There is also a great deal of disagreement concerning whether enforceable international standards will raise working conditions for those with the lowest standards, who are generally in developing countries. The above discussion has set out the nature of the debate on labour standards taken as a whole. Unfortunately, such discussions rarely examine how different forms of trade restrictions imposed as a result of different types of labour issues affect the nature of the arguments made. One clear finding from considering individual labour standards is that they need to be addressed at the labour situation country-wide if they are to be effective. For instance, there is a small amount of available research which suggests that unionisation can raise wages by 5–10 per cent.43 There is, however, also evidence to support the fact that despite the lack of trade unionisation in EPZs, there are in fact generally better working conditions in EPZs than in the rest of the economy.44 This reflects the fact that there are worse working conditions among smaller domestic contractors than exporters,45 and that wages are generally higher in export orientated industry, than in other alternatives.46 Consideration of EPZs shows the potential limitations of tackling labour issues through international standards relating to exports. It is only effective in terms of its impact on those sectors of the economy that are involved in exporting products to other countries, which is only generally a small part of the overall economy. This is also shown by the fact that only about 5 per cent of children employed worldwide are employed in export industries.47 Because of the large size of the informal economy in most developing countries, labour standards 42

A Singh and A Zammat, above n 35, at 90. A Singh and A Zammat, above n 35, at 94. 44 S Tay, above n 41, at 466 arguing that wages in EPZs are generally higher because foreign firms invest, train staff, and then generally want to keep them. Also see A Singh and A Zammat, above n 35, at 98 citing research which indicates that firms in EPZs generally have higher standards than those elsewhere, and that the vast majority of EPZs are covered by national labour laws of their own States. 45 N Kabeer, ‘Globalisation, Labour Standards and Women’s Rights: Dilemmas of Collective (In) Action in an Interdependent World’ (2004) 10 Feminist Economics 3–35 at 15. 46 N Kabeer, above n 45, at 16. 47 The Economist 13 Jul 1999. 43

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Conclusions 81 limited to those working in export industries would amount to ‘giving privileges to those who are already privileged’48, and lead to increased inequality. The worst abuses of workers’ rights do not occur in export industries.49 One author concludes her detailed examination of the advantages for women of working in the export-orientated garment industry by arguing that international labour standards on imported goods are ineffective because they fail to impact upon wages and conditions that prevail in alternative forms of employment, as well as the prospect of not having a job at all if the export industry is no longer sufficiently productive.50 Consideration should therefore be given to measures that tackle human rights standards in countries as a whole rather than those that simply target export sectors.

V. CONCLUSIONS

The above discussion has demonstrated that there are a broad range of conditionality-based trade-related measures aimed at the protection and promotion of human rights. While these measures share important characteristics, there are differences between them which always need to be considered, when they are being deliberated in the WTO context. In particular, the utility of using trade restrictions to protect and promote human rights is greatly disputed. Engagement of the WTO with this area needs to take into account just how contested the issues are. Furthermore, as we will see in the following chapters, it is almost always developed countries that are imposing trade restrictions on developing countries. Thus, there are often arguments made by developing countries, that developed countries, driven by their domestic producer interests, are more concerned about protecting their industries than they are about protecting the human rights of individuals in other countries.51

48

A Singh and A Zammat, above n 35, at 96. P Alston, ‘Linking Trade and Human Rights’ (1980) 23 German Yearbook of International Law 126–58. 50 N Kabeer, above n 45, at 25. 51 For further discussion of this issue see C Dommen, above n 28, at 19ff; and Statement of Third World Intellectuals and NGOs’ Statement Against Linkages presented before the Seattle Ministerial Conference which gives a synopsis of the reasons why many in developing countries are against such linkage in the WTO http://www.cuts-international.org/linkages-twinsal.htm, accessed on 9 Dec 2006. 49

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6 Conditionality-Based Measures in Multilateral Frameworks I. INTRODUCTION

I

T IS CLEAR from the discussion in the preceding chapter that the use of conditionality-based measures, and in particular trade restrictions, in order to enforce human rights standards in another State is a very contentious issue. The WTO should therefore be careful in passing judgement on the validity of such measures, given its extremely limited expertise in this area. However, it is not necessarily obvious that the WTO’s mandate will allow it to entirely sidestep these issues. For instance, in a case where trade restrictions have been imposed by State A on State B for alleged violations of human rights, State B could in theory bring a case to the WTO alleging that State A had violated its WTO obligations by imposing these restrictions. This situation arises because there appears to be a prima facie conflict with various non-discrimination principles as was explained in chapter one. State B will, on this basis, be able to argue that the trade restrictions imposed are discriminatory because they provide less favourable treatment to its products than ‘like’ products from other States. There are however, a number of mechanisms that have been, and can be utilised in order to ensure that these core principles of the WTO can be potentially reconciled with other international and national legal rules under which conditionality-based measures are permitted. The mechanisms used will depend on a number of factors, but one of the clearest delineations is between situations where measures are utilised multilaterally or unilaterally: trade measures can either be utilised within multilateral frameworks governed by international law, or else can be pursued unilaterally, authorised by domestic legal measures in the State utilising the trade restrictions. This chapter will consider measures utilised under multilateral frameworks, while the next chapter will consider those utilised unilaterally. In the multilateral context of this chapter, it has been demonstrated in chapter four that the WTO and its Members are required to consider wider international law norms and standards in their decision-making processes. It is therefore important to consider how conditionality-based measures that are imposed on human rights grounds are treated under other international legal

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84 Conditionality Measures in Multilateral Frameworks regimes, as this will have significant relevance for their legal standing in the WTO. There are two international organisations by which the imposition of trade measures can be authorised: the UN and the ILO.1 A third multilateral mechanism is where a group of States come together specifically in order to create a multilateral legal framework over a particular human rights-related issue or set of issues where trade measures are part of that framework. A recent example is the Kimberley Process Certification Scheme (KPCS) the details of which are presented below. As trade incentives have not, as yet, been authorised under such multilateral frameworks, discussions in this chapter will be limited to trade restrictions. II. TRADE RESTRICTIONS AUTHORISED BY THE UNITED NATIONS

The Charter of the United Nations contains rules concerning the use of ‘economic sanctions’. There does not appear to be any universally accepted definition of the term economic sanctions, since definitions tend to impute a motive to the sanctioning party, and such motives are often highly contested.2 However, as noted in the previous chapter, economic sanctions are clearly a form of trade or financial restriction imposed upon a particular State or States. In the trade context, UN economic sanctions tend to involve a ban on the import or export of goods, and can be classified as a form of general restriction, as the sanctions imposed do not generally relate to a specific sector where the human rights violations have occurred. Under Chapter VII of the Charter, Article 39 and 41 together allow the UN Security Council (UNSC) to take measures, including trade restrictions, to ‘maintain or restore international peace and security’, following its determination that there exists a threat to, or breach of, the peace or an act of aggression. The UNSC has invoked Chapter VII of the UN Charter to impose sanctions against a number of States at different times on the basis of the above criteria.3 Although there must be a genuine threat to international security before sanctions can be imposed, the UNSC has nevertheless made an indirect connection between human rights and its sanctions policy in so far as it views grave and 1 Mechanisms available under regional schemes are not considered here. So, for instance the EU has powers to impose restrictions on countries that do not observe fundamental human rights—the Union can suspend certain rights of a Member State deriving from the application of the Treaty, if it has determined the existence of a serious and persistent breach of these principles by that State (Art 7 of the Treaty of the European Union (TEU)). Candidate countries have to respect these principles to join the Union (Art 49 TEU) and the European Court of Justice (ECJ) is given the power to ensure the respect of fundamental rights and freedoms by the European Institutions (Art 46 TEU). 2 See E Davidsson, ‘Towards A Definition of Economic Sanctions’ http://www.aldeilis.net/jus/ econsanc/definition.pdf (rev version 2003), accessed on 12 Nov 2006. 3 The list includes Afghanistan, Angola, Ethiopia and Eritrea, the Federal Republic of Yugoslavia/Kosovo, Haiti, Iraq, Liberia, Libya, Rwanda, Sierra Leone, Somalia, South Africa, Southern Rhodesia, Sudan and the former Yugoslavia. This list is taken from the website of the UN Office for the Co-ordination of Humanitarian Affairs at http://ochaonline.un.org/webpage. asp?Page=901, accessed on 12 Nov 2006.

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Trade Restrictions Authorised by the UN 85 systematic human rights violations as threats to international peace, most obviously, for instance, in the case of the former apartheid policy in South Africa. Where human rights are not explicitly mentioned as grounds for the imposition of sanctions in the relevant UNSC Resolution, in many cases human rights abuses were clearly an issue. Economic sanctions against the Federal Republic of Yugoslavia, Iraq, Kosovo, Liberia, Rwanda, Somalia and South Africa have all been imposed on the basis of internal matters and their ‘impact on human beings’,4 and could therefore be described as being imposed on human rights grounds.5 Under Chapter VII, the ability to impose economic sanctions is not unlimited. As well as the necessity to show that there is a genuine threat to international security, Article 1 paragraph 1 of the UN Charter requires that sanctions, in common with all other measures, must be ‘effective’ and must be ‘in conformity with the principles of international law.’6 Therefore, there are potentially a number of grounds for a challenge to a UNSC Resolution; there is no genuine threat to international peace and security, the restrictions are ineffective, or they are not in conformity with the principles of international law. Recent writing by scholars concerning UN sanctions in such cases as Iraq and Haiti would suggest that UN sanctions could be challenged on the above grounds.7 Others have questioned whether there is in fact any consistency, and therefore legal predictability in the imposition of UN sanctions.8 Certainly, given the analysis presented in the previous chapter, there appear to be grounds for arguing that, where widespread trade sanctions are imposed, there may be more effective and legitimate alternatives from a human rights perspective; instead efforts should be directed towards creating sanction regimes that as far as possible avoid the suffering of the general population of the sanctioned State. But the particular question from the WTO perspective is whether economic sanctions, authorised on human rights grounds by the UNSC, could be challenged under WTO law? It seems highly unlikely that such a challenge would ever occur. Primarily this is because UN Member States have agreed that, in cases of conflict with other international legal regimes, the Charter shall prevail.9 The pre-eminence of UN obligations is confirmed by Article XXI(c) of the

4 G Marceau, ‘WTO Dispute Settlement and Human Rights’ (2002) 13 European Journal of International Law 753–814 at 812. 5 This is not to say that these economic sanctions necessarily always did protect and promote human rights. The complications inherent in this issue have been discussed in the previous chapter. 6 For a discussion of this limitation and others implied by the Charter, see UN Sub-Commission on the Promotion and Protection of Human Rights, The Adverse Consequences of Economic Sanctions on the Enjoyment of Human Rights, A Working Paper prepared by Marc Bossuyt, E/C.4/Sub.2/2000/33 (21 Jun 2000) at para 19ff. 7 Eg ME O’Connell, ‘Debating the Law of Sanctions’ (2002) 13 European Journal of International Law, at 63–79. 8 Eg MJ Aznar-Gómez, ‘A Decade of Human Rights Protection by the UN Security Council: A Sketch of Deregulation?’ (2002) 13 European Journal of International Law at 223–41. 9 UN Charter, Art 103.

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86 Conditionality Measures in Multilateral Frameworks GATT. Article XXI contains a number of ‘security exceptions’ to the GATT and Article XXI(c) states that; [n]othing in this Agreement shall be construed . . . to prevent any contracting party from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.

Article XXI(c) has never needed to be invoked by a WTO Member State as a justification for economic sanctions authorised by the UN. Article XXI has been invoked several times by States imposing restrictions unilaterally on grounds of national security under other subsections of the Article including; by the US, against Czechoslovakia in 1949, and later against Cuba and Nicaragua, by Ghana against Portugal, by the European Communities against Argentina during the Falklands War, and by Germany against Iceland.10 However, there has been no authoritative determination of the scope of any sub-section of Article XXI through dispute settlement or governmental declaration. Two cases were brought by Nicaragua against the US for its economic sanctions regime, but in neither case did the US raise Article XXI as a defence in the dispute settlement process.11 It has been argued that Article XXI is an entirely ‘self-judging provision’—allowing the WTO Member invoking it to do so on whatever grounds it wishes, free from challenge from the State affected. But such a position would open up the possibility of protectionist abuse, contrary to the spirit of the GATT and there is no indication that the parties to the GATT intended this when they drafted this Article. In fact the ‘legislative history’ of the provision indicates that it was not intended to be excluded from dispute settlement.12 In theory, WTO panels could therefore, if requested, analyse specific UNSC Resolutions in order to decide whether they contained ‘legal’ trade restrictions, as defined within the UN Charter. But WTO panels would rightly be extremely wary of undertaking an examination of the legality of any UNSC Resolution. Many recent UNSC Resolutions under Chapter VII contain a standard clause which invokes the pre-eminence of obligations they create over all other rights and obligations, and the International Court of Justice has also supported this interpretation.13 Whereas a case involving unilateral invocation of security measures would only involve reviewing the actions of a single WTO Member, if WTO dispute settlement bodies (DSBs) undertook a review of a UNSC Resolution they would 10 For full references to these and other invocations see M Matsushita, T J Schoenbaum and P C Mavroidis, The World Trade Organization: Law, Practice and Policy (New York, Oxford University Press, 2003) at 221. 11 See United States—Import of Sugar from Nicaragua, Report of the Panel, (L/5607–31S/67) adopted on 13 Mar 1984 and United States—Trade Measures Affecting Nicaragua, Report of the Panel (L/60530), 13 Oct 1986. 12 See M Matsushita et al, above, n 10, at 223. 13 See Case Concerning Questions of Interpretation and Application of the 1971 Montreal Convention arising from the Aerial Incident at Lockerbie (Libyan Arab Jamahiriya v the United Kingdom) (Provisional Measures) (1992) ICJ 3, at paras 39–40.

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Trade Restrictions Authorised by the ILO 87 be risking becoming a review mechanism and appeals chamber for UNSC decisions, which is clearly not an appropriate role for an organ of the WTO. So DSBs would be likely to accept such Resolutions as expression of Charter obligations.14 Therefore, in cases where trade restrictions are explicitly authorised by UNSC Resolutions, such restrictions would almost certainly be viewed as legal under international law, and WTO non-discrimination obligations would be subject to the exception set out in Article XXI(c).15 Whatever views one holds about the legality (or morality) of particular UN authorised trade restrictions, such a deferential approach on the part of the WTO is clearly appropriate given its comparative lack of expertise on the issues.

III. TRADE RESTRICTIONS AUTHORISED BY THE ILO

The ILO is the international organisation, which is responsible for the promotion and protection of labour rights at the international level. In respect of the authority to impose economic sanctions, the ILO Constitution authorises action that may be taken in the event of non-compliance with findings of breaches of ILO Conventions: In the event of any Member failing to carry out within the time specified the recommendations, . . . the Governing Body may recommend to the Conference such action as it may deem wise and expedient to secure compliance therewith.16

Despite the vague wording of this provision, it is clear that the Governing Body can recommend to its Members that they take economic sanctions against a Member who fails to comply with the ILO’s recommendations. Such a recommendation has for a long time been considered in the case of Burma/Myanmar,17 although after a long process that is generally viewed as an ineffective enforcement procedure.18 14 Under Art 52 of the UN Charter, regional organisations are authorised to ‘achieve pacific settlement of local disputes’ without the express consent of the Security Council ‘provided that . . . their activities are consistent with the purposes and principles of the United Nations’. The imposition of economic sanctions could be envisaged as a permitted course of action under this provision, in which case, the legality of the sanctions imposed may be more contested in the WTO context. 15 S Charnovitz, ‘Rethinking WTO Trade Sanctions’ (2001) 95 American Journal of International Law 792–832 at 800 arguing that for this reason trade restrictions imposed on Sierra Leone do not violate WTO law. 16 ILO Constitution, Art 33. 17 See Press Release, ILO, Forced Labour Persists in Burma/Myanmar: ILO Applies Extraordinary Constitutional Procedures (Mar 29, 2000), available at www.ilo.org/public/ english/bureau/inf/pr/2000/9.htm, accessed on 10 Dec 2006. See also Report of the Commission of Inquiry Appointed Under Art 26 of the Constitution of the International Labour Organization to Examine the Observance by Burma/Myanmar of the Forced Labour Convention 1930 (No 29), ILO Official Bulletin v81 1998 (Series B, Special Supp) (Jul 2, 1998) describing allegations made by the ILO that the Burma/Myanmar Government facilitated forced labour practices. 18 C Thomas, ‘Should the World Trade Organization Incorporate Labor and Environmental Standards’ (2004) 61 Washington and Lee Law Review 347–403 at 350ff. Also see The Economist, 17 Mar 2005, ‘Soft on Forced Labour’.

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88 Conditionality Measures in Multilateral Frameworks A recommendation of trade restrictions against Burma/Myanmar would be the first time that the ILO has utilised this power.19 What would happen if a challenge was to occur to such a recommendation within the WTO system? It is important in this context to consider how labour standards have been treated within the WTO framework. Since its inception there have been regular periodic attempts to have labour conditionality included within the GATT and subsequently the WTO. This has often been as a result of proposals put forward by the US, and supported by various other developed countries.20 Developing countries have always been very opposed to such conditionality, for reasons that were discussed in the previous chapter. The issue became particularly prominent in the run up to the WTO Ministerial Conference in Singapore, where it became a major stumbling block for the trade negotiations as a whole, and a particularly contentious topic.21 The following WTO Declaration was produced as a result of that meeting: We renew our commitment to the observance of internationally recognised core labour standards. The International Labour Organisation (ILO) is the competent body to set and deal with these standards, and we affirm our support for its work in promoting them. We believe that economic growth and development fostered by increased trade and further trade liberalization contribute to the promotion of these standards. We reject the use of labour standards for protectionist purposes, and agree that the comparative advantage of countries, particularly low-wage developing countries, must in no way be put into question. In this regard, we note that the WTO and ILO Secretariats will continue their existing collaboration. (emphasis added)22

This statement seems to be indicating that the ILO is the proper institution for dealing with labour rights issues, and that the WTO should not be taking on a role with regard to enforceable standards that would allow States to impose

19 R N Block, K Roberts and M J Roomkin, ‘Models of International Labor Standards’ (2001) 40 Industrial Relations at 258–92 at 269: Only 22 complaints were submitted in the years 1961–94, and in 20 cases the government concerned accepted the Commission’s recommendations. There were no restrictions in the other two cases. Also see S Charnovitz, ‘The International Labour Organisation in its Second Century’, in S Charnovitz (ed), Trade Law and Global Governance (London, Cameron May, 2002) at 287ff. 20 S Charnovitz, ‘The Influence of International Labour Standards on the World Trading Regime’ in S Charnovitz (ed) Trade Law and Global Governance (London, Cameron May, 2002) at 223ff; F Weiss, ‘Internationally Recognised Labour Standards and Trade’ in Denters, Weiss and de Waart (eds), International Economic Law with a Human Face (Leiden, Brill, 1998) at 92. 21 V A Leary, ‘The WTO and the Social Clause: Post-Singapore’ (1997) 1 European Journal of International Law 118–22 at 119, reports that at the Conference, an invitation to the ILO to speak was withdrawn because of objections from developing countries who did not want any discussion of labour issues at the meeting. 22 WTO, Singapore Ministerial Declaration, para 4 WT/MIN(96)/DEC/W (13 Dec 1996). An earlier draft of this Declaration, discussed in Geneva, and serving as a starting point for negotiation in Singapore, included the sentence: ‘We recall that all members have subscribed to the Universal Declaration on Human Rights’. The reference to human rights was dropped in the final draft of the Declaration.

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Trade Restrictions Authorised by the ILO 89 trade restrictions.23 But this did not stop further attempts to revisit the institutional arrangements for dealing with labour rights issues. Again trade and labour linkage within the WTO became an issue leading up to the Seattle Ministerial Conference in 1999. The breakdown of the conference was to a certain extent due to proposals for enforceable labour standards within the WTO framework.24 Most recently, at the Fourth Ministerial Conference at Doha, WTO Members reaffirmed their Declaration at Singapore that the ILO was the competent body to set and deal with labour standards.25 So, the current position of the WTO membership on the international institutional arrangements for dealing with labour rights issues appears to be that the ILO is the competent authority, although this is clearly a very contested issue. Certainly there is little immediate prospect of any rules or regulations being adopted within the WTO framework which enforce labour standards.26 But situations might still occur where the ILO Governing Body were to recommend that sanctions be imposed against a particular State, such as Burma/Myanmar which is a WTO Member, and another WTO Member then imposed sanctions on the basis of that recommendation. What would then be the position if Burma/Myanmar brought a case before the WTO, alleging that non-discrimination provisions of the GATT were being infringed? The argument of Burma/Myanmar would be that its products were being discriminated against, viz a viz ‘like’ products of other States, in contravention of Articles I and/or XI and/or XIII of the GATT. The question is then what legal force the ILO Recommendation coupled with the Singapore Declaration would have in the WTO context as a defence for the sanctioning State? Taking the Singapore Declaration first, its legal effect on WTO Members is unclear—it certainly does not grant a waiver or specifically authorise any other form of departure from WTO rules, as the Kimberley Waiver does (see the discussion below). It is not a mechanism by which all Members have agreed to formally bind themselves by rulings of the ILO. Rather it can be considered as evidence of the intentions of WTO Members when it comes to issues of labour 23 R O’Brien, A M Goetz, J A Scholte and M Williams, Contesting Global Governance: Multilateral Economic Institutions and Global Social Movements (Cambridge, Cambridge University Press, 1998) at 90 reporting however, that there were differing interpretations of this statement, with the US in particular seeing it as enshrining the linkage between the ILO and WTO while Britain, India, other Asian states viewed it as saying trade and labour standards would not reappear at the WTO. Also S Charnovitz, ‘The Influence of International Labour Standards on the World Trading Regime’ in S Charnovitz (ed), Trade Law and Global Governance (London, Cameron May, 2002) at 258ff for a more detailed description of the process leading up to the Singapore Declaration and its aftermath including US reaction. 24 S Charnovitz ibid, at 279ff. A Panagaryia, ‘Trade-Labour Link: A Post-Seattle Analysis’ in Z Drabek (ed) Globalisation Under Threat: The Stability of Trade Policy and Multilateral Agreements (Cheltenham Glos, Edward Elgar, 2001) at 102. Also see K Addo, ‘The Correlation Between Labour Standards and International Trade. Which Way Forward?’ (2002) 36 Journal of World Trade 285–303 at 288. 25 K Addo, ibid at 285. 26 But see discussion in next chapter of the increasingly common provisions on labour standards in bilateral and regional trade agreements.

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90 Conditionality Measures in Multilateral Frameworks rights, and should therefore be taken into account in determining WTO obligations in accordance with Article 31(3)(a) of the Vienna Convention which states that: There shall be taken into account together with the context . . . [a]ny subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions.27

With regard to recommendations of trade restrictions by the ILO, Joost Pauwelyn has argued that such recommendations might prevail over any WTO prohibition on the basis of both lex specialis and lex posterior.28 An ILO Recommendation would be both the more specific and later rule covering the issue, and might therefore ‘trump’ WTO earlier, less specific non-discrimination provisions. The ILO Recommendation would indeed be more specific to the circumstances at issue and the later instrument; it would authorise trade restrictions against a specific ILO Member contemporaneously as opposed to the WTO provisions which apply generally to all WTO Member States on the basis of rules created in the 1940s at the inception of the GATT.29 The question is whether this would be sufficient for the ILO Recommendation to prevail over the GATT rules in the WTO context. The lex posterior maxim finds its legitimacy from the fact that, in a case of conflict, there is a presumption that the latter rule of law better reflects the ‘present will of the relevant actors’.30 But this is a situation where it would be difficult to argue that one of the key actors—Burma/Myanmar—had ever agreed to abide by the later ILO Recommendation. The most that could be argued would be that Burma/Myanmar had signed up to a mechanism whereby Recommendations could be made against it. Furthermore, the ILO Recommendation is merely a mechanism for enforcing a prohibition on forced labour. Therefore, if lex posterior is the rule by which we decide which norm prevails, we need to ask when Burma Myanmar signed up to the system of ILO Recommendations or even the prohibition on forced labour, and what date it signed up to the GATT/WTO, and ask which of these two events occurred later.31 The date when the party imposing the restrictions on Burma Myanmar signed up to both instruments would surely also be relevant. The lex specialis rule is also so widely accepted because a rule which is more specific to the set of circumstances under consideration regulates those circumstances more effectively than a rule which is more general in application. Thus, it can be assumed that States wished their behaviour to be regulated 27

Art 31(3)(a),Vienna Convention. J Pauwelyn, ‘Human Rights in WTO Dispute Settlement’ in T Cottier et al (eds) Human Rights and International Trade (Oxford, Oxford University Press, 2005) at 219. 29 Although these rules were reaffirmed at the inception of the WTO. 30 ILC, Fragmentation of International Law: Difficulties Arising from the Diversification and Expansion of International Law: Report of the Study Group of the International Law Commission, Finalised by Marti Koskenniemi A/CN.4/L.682 (13 Apr 2006), at para 226. 31 Convention from the International Labour Organisation (No 29) Concerning Forced Labour of 28 June is dated 1930. Myanmar ratified this in 1955. Myanmar joined the WTO on 1 Jan 1995. 28

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Trade Restrictions Authorised by the ILO 91 by the more specifically applicable provision. But both rules seem to have limited value in this type of situation. Here we are dealing with two legal rules aimed at promoting the underlying ideologies of the two legal systems (non-discriminatory trade versus promotion of labour standards). Determination of the more specifically applicable rule depends, at least to a certain extent, upon what weight one gives to particular features of the circumstances (eg importance of taking punitive action against breaches of fundamental labour rights versus dangers of trade protectionism and the benefits of open trade).32 States signed up to both legal regimes in good faith on the basis that they would abide by both sets of legal norms wherever possible. Both legal systems have the tools to weigh and balance these factors and make their own determinations. It is difficult to argue that either set of rules should be set aside on the basis that they contain provisions less relevant to the set of factual circumstances under consideration, or which treaty was ratified by both parties later. Another argument in favour of the primacy of the ILO Recommendation is to argue that it would be based on an obligation erga omnes or even ius cogens (the prohibition of forced labour). Therefore in a case of conflict with a reciprocal WTO obligation, it would prevail. Leaving aside the problems of determining whether norms such as the prohibition of forced labour have achieved the status of ius cogens or an erga omnes obligation, it is unclear whether an action taken by an individual State on the basis of an ILO Recommendation would obtain protection from the nature of the norm that had been originally transgressed by Burma/Myanmar. Even when a human right has achieved ius cogens status, this does not mean that there is a prescribed course of action under international human rights law or international labour law for how one State should respond to another State’s violation, and so such measures must at least be capable of limited scrutiny in some forum to judge their proportionality and effect on the protection of fundamental human rights.33 On the above grounds, it seems likely that the sanctioning State would not be able to argue on the basis of a conflict of norms that the ILO Recommendation prevails over conflicting WTO obligations. Were a case to be brought by Myanmar/Burma before the WTO, the sanctioning State would need to defend its trade restrictions, rather than argue WTO law should be disapplied entirely. Given that WTO Members have specifically agreed in the Singapore Declaration that the ILO is the competent body for dealing with labour standards, a Recommendation of the ILO’s Governing Body that sanctions be imposed would seem to be highly persuasive, according to Article 31(3)(a) of the Vienna Convention, in the WTO context. The Singapore Declaration coupled with a recommendation of the ILO for sanctions should be sufficient to allow 32

Making a similar point see ILC, above n 30, at para 113ff. For a discussion of the need for trade restrictions to adhere to these standards, see the discussion in the next chapter in the context of unilateral trade restrictions. On the issue of ius cogens, see C M Vazquez, ‘Trade Sanctions and Human Rights—Past, Present and Future’ (2004) 6 Journal of International Economic Law 797–839 at 821. 33

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92 Conditionality Measures in Multilateral Frameworks any WTO dispute settlement panel to adopt an interpretation of WTO law which finds the sanctions to be lawful. As Article XXI(c) should allow measures of the UNSC to be found legal under WTO law, WTO members should not be able to successfully challenge the action of other Member States who are imposing restrictions on the basis of an ILO Recommendation, as this would amount to the WTO acting as a review or appeal body of the ILO, when competence has been explicitly agreed on labour issues by WTO Members. But it does seem that such a position would be reached on the basis of a reading of WTO law that seeks harmonisation with ILO rulings, rather than the latter trumping the former. The specific mechanisms by which such arguments would be raised and adjudicated upon will be discussed in detail in Chapter 11. There, it will be argued that a case could be made that products from Burma/Myanmar and products from other States are not ‘like’ products because of the conditions under which they were produced. Products from Burma/Myanmar, produced using forced labour differ from products produced in other States where forced labour is not utilised. Failing those arguments ‘exceptions’ clauses could be utilised—most obviously that actions in taking sanctions against Burma/Myanmar are ‘necessary to protect public morals’ under Article XX(a) of the GATT. As such arguments have never been raised in dispute settlement proceedings, it is impossible to give a definitive answer as to how dispute settlement panels would rule. But it will be argued that the existence of an ILO Recommendation differentiates this scenario from the case of purely unilateral trade restrictions, to be discussed in the next chapter, where there is no explicit recommendation by the ILO and the situation becomes somewhat more complex.

IV. THE KIMBERLEY PROCESS CERTIFICATION SCHEME

In addition to utilising trade restrictions in the multilateral institutions discussed above, there may also be scenarios where States come together to create a multilateral legal framework over a particular issue or set of issues where trade restrictions are part of the agreement. A recent example of such practice is the Kimberley Process Certification Scheme (KPCS). The KPCS is a system developed by the international community to deal with the issue of so-called ‘conflict diamonds’.34 Conflict diamonds are rough diamonds that are ‘used by rebel groups or their allies to finance conflict aimed at legitimate governments, as described in relevant UNSC resolutions.’35 These rebel groups are often

34 The text of the scheme can be found at http://www.kimberleyprocess.com:8080/site/ ?name=kpcs&PHPSESSID=051dcf9734e6cc3fe9d4ee0186dc3c5c, accessed on 12 Nov 2006. 35 J Pauwelyn, ‘WTO Compassion or Superiority Complex: What to Make of the WTO Waiver for “Conflict Diamonds”’ (2003) 24 Michigan Journal of International Law 1177–207 at 1179.

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The Kimberly Process 93 responsible for appalling human rights violations against the civilian population.36 Trade in conflict diamonds therefore provides financial support for groups who are involved in the most extreme forms of human rights abuses, violating the right to life, the prohibition against torture or cruel, inhuman or degrading treatment or punishment, and various other human rights norms and standards. It is clear therefore, that allowing conflict diamonds to be freely traded across national borders potentially breaches fundamental human rights standards. It is therefore an interesting test case for how the international community should and can deal with the requirements of both the international human rights and trade regimes. The KPSC aims to ensure that no conflict diamonds are traded internationally, thus depriving rebel groups of a crucial source of income. It does this by restricting trade between Kimberley participants to certified non-conflict diamonds only, and prohibiting trade between Kimberley participants and nonKimberley participants, since the latter have not agreed to certify that their diamonds do not originate from the targeted rebel groups. It is not proposed here to undertake a detailed assessment of the workings of the scheme, or the degree to which it has succeeded in its aims, as this has been done elsewhere.37 What is clear, however, is that this scheme has the backing of the vast majority of relevant countries, and that it is aimed at preventing widespread and extreme human rights abuses.38 But does the scheme breach the obligations of WTO Members? There certainly appears to be a prima facie conflict with the non-discrimination principles of GATT Articles I, XI and XIII. This is because it will involve discrimination in terms of different treatment of ‘like’ products—the Kimberley Scheme prevents non-Kimberley WTO Members from importing or exporting diamonds, in a way that discriminates against them as opposed to WTO Members who are Kimberley participants.39 36 See, eg: Global Witness, A Rough Trade: The Role of Companies and Governments in the Angolan Conflict, Dec 1998 at http://www.globalwitness.org/reports/show.php/en.00013.html, accessed on 12 Nov 2006, and K Nadakavukaren-Schefer, ‘Stopping Trade in Conflict Diamonds: Exploring the Trade and Human Rights Interface with the WTO Waiver for the Kimberely Process’ in T Cottier et al (eds) Human Rights and Trade (Oxford, Oxford University Press, 2005 ). 37 For a detailed examination of the functioning of the scheme see C Wright ‘Tackling Conflict Diamonds: the Kimberley Process Certification Scheme’ (2004) 11 International Peacekeeping 697–708; Andrew Grant and Ian Taylor, ‘Global Governance and Conflict Diamonds: the Kimberley Process and the Quest for Clean Gems’ (2004) 93 The Round Table 385–401; K Nadakavukaren-Schefer, above n 36. 38 Current participants as of 22 March 2005 are Angola, Armenia, Australia, Belarus, Botswana, Brazil, Bulgaria, Canada, Central African Republic, China, People’s Republic of Congo, Democratic Republic of Cote D’ Ivoire, Croatia, European Community, Ghana, Guinea, Guyana, India, Israel, Japan, Korea, Republic of Lao, Democratic Republic of Lesotho, Malaysia, Mauritius, Namibia, Norway, Romania, Russian Federation, Sierra Leone, Singapore, South Africa, Sri Lanka, Switzerland, Tanzania, Thailand, Togo, Ukraine, United Arab Emirates, United States of America, Venezuela, Vietnam, Zimbabwe. 39 For a more detailed description of the ‘like products’ debate and its relevance to human rights, see ch 11.

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94 Conditionality Measures in Multilateral Frameworks Several commentators have argued that it is quite possible to interpret WTO obligations in such a way that they are in conformity with the Kimberley scheme, in particular utilising the general exception clauses under Article XX of the GATT.40 The potential for Article XX to be utilised in such a way will be addressed in Chapter 11. However, what actually happened in the case of the KPCS was that a waiver was sought and obtained from the WTO by the scheme participants, allowing them to exempt themselves from their WTO obligations under Articles I, XI and XIII of the GATT, with regard to non-participants in the Kimberley Scheme. The WTO General Council specifically cites in the waiver as one of the reasons for granting the waiver that it recognises: [T]he extraordinary humanitarian nature of this issue and the devastating impact of conflicts fuelled by the trade in conflict diamonds on the peace, safety and security of people in affected countries and the systematic and gross human rights violations that have been perpetrated in such conflicts. (emphasis added) 41

Here we have specific recognition by an organ of the WTO of the importance of allowing trade restrictions on human rights grounds. But would WTO obligations have been violated by the Kimberley Scheme without this waiver? In particular, Canada and the US made it clear that without an explicit waiver from their WTO obligations, they would not be joining the scheme, which suggests that there were at least some doubts as to its WTO compatibility.42 However, it is clearly stated in the waiver that no prejudgement is implied concerning the incompatibility of the Kimberley Scheme with WTO Member States’ WTO obligations. The waiver is simply being utilised for the sake of legal certainty. The EU has stated that there is no reason to believe that there is in fact a conflict between the obligations of the Kimberley Scheme and those of the WTO.43 What can be said for certain is that this is one mechanism by which States can ensure the compatibility of their human rights and international trade obligations. Taken at face value, this waiver is a positive step for ensuring that WTO Member States are able to observe their human rights obligations without violating WTO rules. It signifies that when countries take part in a multilateral initiative which is targeted at widely recognised human rights abusers, the WTO recognises the need to take action to ensure that measures can be taken to protect and promote human rights. By using such a waiver it is able to create legal certainty that WTO obligations will not be utilised to block such initiatives, instead of requiring the issue to go to dispute settlement in order to find out whether there has been a violation of obligations. The latent uncertainty involved in the latter approach can have potentially negative consequences for the protection of human rights. Agreements such as the Kimberley Scheme may 40

K Nadakavukaren-Schefer, above n 36 at 425ff and J Pauwelyn, above, n 35. Waiver Concerning Kimberley Process Certification Scheme for Rough Diamonds—Decision of 15 May 2003 (WT/L/518). 42 See K Nadakavukaren-Schefer, above n 36, at 394. 43 J Pauwelyn, above n 35, at 1183. 41

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Conclusions 95 never be struck in the first place, if policy-makers cannot be certain that they are not breaching their other international legal obligations. There are, however, negatives to utilising this approach as a systemic mechanism for dealing with clashes between WTO obligations and other multilateral frameworks which utilise trade restrictions as a mechanism for protecting and promoting human rights. A waiver is only a temporary measure, applicable only as long as certain circumstances exist, which must be renewed after a certain time period. It is difficult to see it as a long-term solution to multiple clashes between trade and human rights issues. It would also be much less likely that there would be consensus (or the necessary three-quarters majority if consensus cannot be achieved44) in favour of granting a waiver where measures were directed against Member States breaching human rights norms as opposed to this scenario whose measures were primarily directed at non-state parties (rebel groups) who do not have standing at the WTO, and would be unlikely to find support from the governments they are fighting against. To that extent the KPCS represents a very particular set of circumstances where it was highly unlikely that there would be any protest about the measures that were adopted to ensure WTO compatibility. The Kimberley waiver could set a precedent that waivers also be required in other cases where there is a prima facie conflict between human rights standards and free trade principles.45 Prior to the Kimberley waiver, the US House of Representatives approved legislation to stop importation of conflict diamonds, in support of the Kimberley Scheme, but the Bush Administration opposed this legislation on the grounds that it (as well as the Kimberley Scheme) would violate the GATT.46 Will other such schemes that do not obtain a WTO waiver be treated in similar fashion within domestic frameworks? Do all trade restrictions imposed on human rights grounds require a waiver from WTO obligations before WTO Members can be sure that such measures are consistent with their obligations? Or are there situations where countries can, and should be able to create multilateral frameworks for imposing trade restrictions on human rights grounds without violating WTO provisions?

V. CONCLUSIONS

In the case of trade restrictions that are specifically authorised by the UNSC or that are in accordance with a Recommendation of the ILO, it seems clear that such measures should not be able to be successfully challenged through the WTO. But in the case of ad hoc multilateral frameworks, the situation is not so obvious. The waiver granted to the KPCS does show the capacity of the WTO 44

See Marrakech Agreement Establishing the World Trade Organization, Art IX (3). See J Pauwelyn, above n 35, at 1198ff. 46 S H Cleveland ‘Human Rights Sanctions and International Trade: A Theory of Compatibility’ (2002) 5 Journal of International Economic Law 133–89 at 134. 45

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96 Conditionality Measures in Multilateral Frameworks to be institutionally sensitive to efforts to protect and promote human rights. But it is difficult to see, for the reasons set out above, how this instrument could become the institutional WTO mechanism for dealing with similar issues in the future. The use of such a waiver has also led to a lack of consideration of the substantive issue—ie in what circumstances trade restrictions are justified by the stated aims of protecting and promoting human rights—which has potential negative consequences for future schemes. But the institutional problems inherent in this approach are more readily apparent when assessing the legality of unilateral trade restrictions in the WTO context, which is the subject of the next chapter.

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7 Unilateral Conditionality-Based Measures I. INTRODUCTION

U

NILATERAL CONDITIONALITY-BASED measures are defined here as those that are adopted independently by a single country, or by a group of countries independently of each other. They are not authorised by any multilateral framework, and so they can be differentiated from the types of trade restrictions presented in the previous chapter. This chapter explores the impact of the WTO system on the way in which countries utilise unilateral trade measures as a response to human rights violations in other countries. It first considers unilateral trade restrictions and asks what the position is more generally with regard to unilateral restrictions under international law. It then examines existing WTO law to find out how unilateral measures have been considered and identifies two problematic issues from a human rights perspective—on the one hand the tendency for WTO law to deter countries from employing trade measures without consideration of the human rights rationale for them, and on the other hand the tendency for certain types of trade measures to be utilised with very little supervisory overview from the WTO or any other international organisation. II. TREATMENT OF UNILATERAL TRADE RESTRICTIONS UNDER GENERAL INTERNATIONAL LAW AND INTERNATIONAL HUMAN RIGHTS LAW

Rules of general international law and international human rights law are silent on the practice of using trade incentives to promote and protect human rights in other States. Therefore the discussion here focuses on unilateral trade restrictions. The practice of States with regard to unilateral trade restrictions seems, when taken at face value, to suggest that they are considered to be a generally permissible mechanism for responding to human rights violations in other countries. Unilateral tailored, semi-tailored and general trade restrictions have been utilised in response to alleged human rights violations by other countries for centuries. This mechanism has been used commonly by more powerful States for which such measures are more effective. The US has imposed the largest number of unilateral trade restrictions; as many as 75 States were subject to US restrictions at the beginning of 2001 (not all on human rights grounds).1 1 Figures taken from the Global Policy Forum at http://www.globalpolicy.org/security/sanction/, accessed on 12 Nov 2006.

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98 Unilateral Conditionality-Based Measures For instance, the US has used tailored and semi-tailored restrictions to bar products of convict labour since 1890 and other forced labour since 1930.2 More recently, section 307 of the US Tariff Act has been used to exclude the importation of products because they were manufactured with convict, forced or indentured labour, for instance from China or Mexico.3 In 1997, the US Congress ‘forbade border officials from allowing importation of products made by forced or indentured child labour.’4 The US in particular, but also other States in the international community, have also often utilised general trade restrictions against repressive regimes, and practices that they wished to condemn. For instance, many States utilised unilateral trade restrictions against South Africa during the apartheid era, prior to the agreement of multilateral sanctions by the international community.5 The US banned all exports and imports with Uganda after the massacres perpetrated by Idi Amin until the Ugandan regime stopped committing gross violations of human rights. Further trade restrictions were imposed against Poland in 1982 following the suppression of the Solidarity labour union movement, and in Panama in the 1980s until freedom of the press and other constitutional guarantees had been returned to the people. More recently, the US, Canada and the EU have all suspended trade benefits against Burma/Myanmar as a result of that country’s use of forced labour and suppression of democracy.6 Such examples show how unilateral trade measures have been much utilised by more powerful nations to react against the human rights violations of governments in other, generally less powerful, countries. This reflects the fact that suspension of trade is likely to be far more effective when this is carried out by a powerful trading nation against a less powerful trading partner. The latter is more likely to be reliant on its trade with the former, and so such trade restrictions will be more damaging. The question remains whether such State practice occurs on the basis of (or has developed into) any formal rules of international law. There are no general rules of international law which prevent a State from regulating access to its own market in any way it pleases. According to general international law, it is within the sovereign power of each State to make decisions about its trade relations with other States, including from where it accepts imports and to where it exports goods. Therefore, if State A chooses not to trade with State B on the basis that State B has committed human rights abuses, then under rules of general international law this action is taken entirely at the discretion of State A. This position is confirmed by the expert paper prepared for the UN Sub2 S H Cleveland, ‘Human Rights Sanctions and International Trade: A Theory of Compatibility’ (2002) 5 Journal of International Economic Law 133–189 at 134. 3 S H Cleveland, above n 2 at 139. 4 S Charnovitz, ‘The Moral Exception in Trade Policy’ in S Charnovitz, Trade Law and Global Governance (London, Cameron May, 2002) at 331. 5 S H Cleveland, above n 2 at 178. 6 S H Cleveland, above n 2 at 134; S Charnovitz, above n 4, at 331ff.

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Unilateral Trade Restrictions under International Law 99 Commission on the Promotion and Protection of Human Rights on the adverse consequences of economic sanctions on the enjoyment of human rights, which was unable to find any prohibition under general international law preventing a State from utilising trade restrictions to enforce human rights standards in other States.7 Issues only arise under the rules of general international law if a State, in imposing trade restrictions, is potentially breaching its other international legal obligations in so doing. Examples are if it is imposing trade restrictions in disregard of its international trade obligations under international trade agreements, breaking off air links in disregard of bilateral aviation treaties or freezing assets of foreign nationals in disregard of international investment agreements.8 In such circumstances, it is necessary to consider whether general international law rules, or international human rights law rules offer us any guidance as to whether, and in what circumstances, trade restrictions and other measures are a legitimate response to breaches of international human rights norms and standards, and therefore might justify breaches of other international legal commitments of States. The starting point for this kind of analysis are the ILC’s Draft Articles on Responsibility of States for Unlawful Acts,9 which were developed as a result of detailed studies of existing law and practice in the field. This instrument allows for ‘invocation of responsibility by a state other than the injured state’ where ‘the obligation breached is owed to the international community as a whole’.10 Such obligations would appear to correspond to obligations erga omnes, and therefore would allow invocation of responsibility for a range of human rights.11 States invoking such responsibility with regard to another State are entitled to claim for ‘cessation of the internationally wrong act’ and reparation for the benefiaries of the obligations (in this case the persons whose rights have been violated within that State).12 Where the offending State is found responsible for breach of such obligations, and reparation or cessation is not forthcoming, countermeasures, which would include the imposition of trade restrictions, can be imposed. The authority to impose countermeasures is however limited. The ILC Articles stress that any countermeasures need to meet a proportionality test. This is in accordance with extensive previous case law and literature on 7 UN Sub-Commission on the Promotion and Protection of Human Rights, The Adverse Consequences of Economic Sanctions on the Enjoyment of Human Rights, A Working Paper prepared by Marc Bossuyt, E/C.4/Sub.2/2000/33 (21 Jun 2000) at para 98. Also in support of this stance see: F Francioni, ‘Environment, Human Rights and the Limits of Free Trade’ in Francioni (ed), Environment, Human Rights and International Trade (Oxford, Hart Publishing, 2001) at 8. 8 See ILC, Third report on State responsibility by Mr James Crawford, Special Rapporteur, Addendum (A/CN.4/507/Add.4) 4 Aug 2000, at para 391 for a series of examples. 9 See Resolution adopted by the General Assembly (A/RES/56/83) 28 January 2002 which contains the draft arts in Annex 1. 10 Above n 9 at Art 48.1(b). 11 As was discussed in ch 4, the precise range of rights included within the ambit of erga omnes obligations is unclear. 12 Above n 9 at Art 48(2).

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100 Unilateral Conditionality-Based Measures the issue which stresses that such measures must be proportionate, although the nature of the proportionality test to be applied is less well defined, and will depend on the type of situation that led to the imposition of the countermeasures.13 In the case of violation of human rights, this will include an obligation that countermeasures are primarily designed to put a stop to the human rights abuses occurring.14 In addition, the ILC Articles state that the power to impose countermeasures does not relieve States of their ‘obligations for the protection of fundamental human rights’ and so they must consider the consequences in human rights terms of the countermeasures which are imposed.15 With regard to any human rights that are not deemed to have achieved erga omnes status, the mandate for trade restrictions is less clear. In order to find positive obligations to respond to human rights violations, we are largely relying on treaty law. Sarah Cleveland, who has written extensively on this issue, argues that certain international human rights instruments could be interpreted to authorise the use of trade restrictions as a mechanism for enforcing human rights obligations.16 So, the 1957 Slavery Convention and 1973 Apartheid Convention both talk of States adopting all legislative and other measures necessary for the achievements of the aims of the Conventions.17 Other treaties contain weaker mutual enforcement obligations, such as reporting abuses by other States that appear harder to argue as authorising the imposition of trade restrictions.18 But the overall picture is that there is little specific authorisation of trade restrictions as a response to human rights violations in international human rights instruments. While certain instruments may be interpreted to permit the use of trade restrictions, they certainly do not mandate them in any given situation. We can conclude therefore that there is no general international or human rights law prohibition against using unilateral trade restrictions. But where States are utilising trade restrictions which would otherwise be in breach of other international legal obligations, the ILC draft articles indicate that those trade restrictions will only be justified if they are proportionate and do not in themselves lead to widespread violations of human rights. The draft articles cannot be considered binding law, but they are a guide to evolving norms and standards in the field. 13 See E Cannizzaro, The Role of Proportionality in the Law of International Countermeasures, 12 European Journal of International Law (2001) 889–916 at fn 1 for a summary of the case law and literature on this point, and more generally on different types of situations giving rise to countermeasures. See also ILC, Draft Articles on Responsibility of States for Internationally Wrongful Acts with Commentaries (2001) at 284ff. 14 E Cannizzaro, above n 12, at 909. 15 Above, n 9 at Art 50.1 (b). 16 S H Cleveland, above n 2 at 153. 17 Supplementary Convention on the Abolition of Slavery, the Slave Trade, and the Institutions and Practices Similar to Slavery, 7 September 1956, Art 1 and International Convention on the Suppression and Punishment of the Crime of Aparteid, 30 November 1973, Art IV. 18 S H Cleveland, above n 2 at 153–4.

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Unilateral Trade Restrictions under International Law 101 A number of authors argue that trade restrictions are a justified response to violations of any human rights that have achieved ius cogens status. For some authors they are also a valid response for a wide range of other human rights violations, because all States have a duty to protect and promote human rights. These authors generally give very little consideration to whether such trade restrictions are a proportionate response that will improve the situation of those that are having their rights violated.19 The potentially adverse consequences of trade restrictions, particularly regarding economic, social and cultural rights have already been noted in chapter five, and from an international human rights law, as well as general international law, perspective should always be central to consideration of the legitimacy and legality of unilateral trade restrictions.20 With these considerations in mind, there are certainly still strong arguments for a prohibition against trade which directly aids and abets a government committing violations of human rights standards that have achieved ius cogens status such as genocide or widespread torture, although the effects of the measures taken should still be an important consideration in determining their legitimacy.21 But the situation is less obvious where the nexus between the trade restrictions and the violation of even a ius cogens norm is not so clear-cut. For instance, if a prohibition against racial discrimination or child labour was held to be ius cogens, human rights law norms would not automatically demand a prohibition on any trade with any State where racial discrimination or child labour was occurring. It has already been argued that trade restrictions, particularly when they are widespread, are not always necessarily the best response to such violations. It is important to recognise that even when a human right has achieved ius cogens status, this does not mean that any course of action is justified in response to the violation under international human rights law.22 In such situations, and certainly where the human rights in question have not achieved ius cogens status, States imposing trade restrictions should assess whether the trade restriction imposed is proportionate and also likely to lead to a cessation of the human rights abuses at some point. Further, in all cases, any trade restrictions that are imposed must respect ‘obligations for the protection of fundamental human rights.’ 19 H-M Wolffgang and W Feuerhake ‘Core Labour Standards in World Trade Law: The Necessity for Incorporation of Core Labour Standards in the World Trade Organisation’ (2002) 36 Journal of World Trade 883–901 at 891: ‘As the core labour standards correspond to contents of [the UDHR], their world-wide application is not only justified from the standpoint of international law, but is also necessary.’ See also D S Ehrenberg, ‘The Labor Link: Applying the International Trading System To Enforce Violations of Forced and Child Labour’ (1995) 20 Yale Journal of International Law 361–418 at 364 and J M Diller and D A Levy, ‘Child Labor, Trade and Investment: Towards the Harmonisation of International Law’ (1997) 91 American Journal of International Law 663–96. 20 Making this point, see E Cannizzaro, above n 13, at 910. 21 Eg widespread economic sanctions may not be as effective as ‘smart’ sanctions, and have more negative human rights effects, in which case a human rights approach would favour the latter method. 22 See C M Vazquez, ‘Trade Sanctions and Human Rights—Past, Present and Future’ (2004) 6 Journal of International Economic Law 797–839 at 821.

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102 Unilateral Conditionality-Based Measures

III. TREATMENT OF UNILATERAL TRADE MEASURES UNDER WTO LAW

It has already been noted that, in the context of WTO law, trade restrictions give rise to prima facie conflicts with various non-discrimination principles of WTO law; a Member State might argue that the unilateral trade restrictions imposed are discriminatory because they provide less favourable treatment to its products than ‘like’ products from other States. The position with trade incentives is less obvious and will be discussed below. The question is whether the WTO system is able to reach decisions about the legality or otherwise of unilateral trade measures which are appropriate from the perspective of international human rights law norms and standards, and their enforcement through general international law principles on countermeasures.

IV. THE POTENTIAL FOR WTO RULES TO PREVENT UNILATERAL TRADE RESTRICTIONS

There is significant uncertainty as to the extent to which unilateral trade restrictions on human rights grounds are permitted under WTO law. The WTO has not directly considered a case which involved the use of unilateral trade restrictions to enforce human rights, but disputes have arisen that have been settled prior to arbitration involving trade restrictions relating to human rights issues. First, there was the case brought by the EU against the US Cuban Liberty and Democratic Solidarity Act (more popularly known as the Helms–Burton Act).23 That Act allowed cases for damages to be brought against any company (including any non-US company) that was conducting business in Cuba, because of Cuban confiscation of property belonging to US citizens under the government of Fidel Castro.24 The EU argued that this Act was in breach of GATS and GATT non-discrimination requirements.25 Several commentators have seen the human rights implications of this case, in that the Helms–Burton Act could be interpreted as imposing trade restrictions in response to violations of the property rights of US citizens by the Cuban government (see below for a critique of this approach from a human rights perpective).26 But there was never any decision regarding the legality of these restrictions, as the EU withdrew the case 23

United States—The Cuban Liberty and Democratic Solidarity Act—WT/DS38. See J H Jackson, Helms–Burton, the US, and the WTO, ASIL Insights, Mar 1997 at http://www.asil.org/insights/insight7.htm, accessed on 12 Nov 2006. 25 See Request for Consultations by the European Communities WT/DS38/1. 26 J Pauwelyn, Conflict of Norms in Public International Law (Cambridge, Cambridge University Press, 2003) at 20, S H Cleveland, above n 2 at 136. This case is characterised by both commentators as a case where the human rights approach would have been to impose trade restrictions, and WTO law was preventing such an action. The case was not decided, so it is impossible to know what WTO dispute settlement proceeding would have held. However, as will be discussed below, it is far from clear that the ‘human rights approach’ would have been to impose sanctions. 24

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The Potential for WTO to Prevent Unilateral Trade Restrictions 103 after bilateral negotiations with the US on the basis that the US agreed not to enforce the provisions of the Act against EU firms. The second case was brought by the EU and Japan against the US on the basis of a Massachusetts law which prevented all firms doing business with Burma/Myanmar from obtaining public procurement contracts.27 The law was enacted in Massachusetts because of the Burma/Myanmar government’s welldocumented human rights abuses. It was alleged by the EU and Japan that this case violated the non-discrimination provisions of the WTO Agreement on Government Procurement (GPA); Massachusetts was not permitted under WTO law to discriminate between those companies who did and did not do business with Burma/Myanmar.28 The case was only averted as a result of a US Supreme Court Decision invalidating the Massachusetts ban.29 The fact that these cases were settled means that, contrary to the views of some commentators, we do not know how they would have been handled in WTO dispute settlement.30 We do not therefore have a definitive interpretation of WTO obligations in this regard. Much will depend on the specific facts of the case, and the way dispute settlement panels interpret relevant provisions of WTO law. A number of commentators have argued that the general exception clauses in GATT Article XX (as well as the GPA Article XXIII) provide a mechanism for arguing that trade restrictions are in fact justified in such cases. The potential of this and other mechanisms for raising human rights concerns in WTO dispute settlement proceeding is considered in chapter 11. However, the fact that domestic legislation involving trade restrictions was challenged, and the case was only settled by the nullification of the offending trade-restricting provisions suggests, at the very least, there is the danger that laws such as those enacted by Massachusetts will be revoked, or not enacted in the first place at the domestic level through fear of WTO incompatibility. This may occur without due consideration of whether they are justified from a human rights perspective, and therefore whether international trade rules are sufficiently taking into account international human rights standards. While the Massachusetts case was pending, similar legislation was proposed in Maryland which would have prohibited the state from doing business with the military dictatorship of Nigeria or with firms operating there. The Clinton administration lobbied heavily against the law and a State Department official is alleged to have testified: All State and local sanctions are perceived to violate the rules [of the WTO], they can cause counterproductive disagreements. . . . [W]e would like to work with you to ensure that we don’t expose ourselves to a potential WTO challenge. 27

United States—Measures Affecting Government Procurement WT/DS95. See United States—Measure Affecting Government Procurement, complaint by Japan (WT/DS95/1) 18 July 1997. 29 Crosby v National Foreign Trade Council, 530 US 363 (2000). 30 S H Cleveland, above n 2 at 136 who cites these cases as evidence of the fact that ‘recent WTO decisions appear to eliminate many forms of trade sanctions as an option for promoting human rights compliance.’ 28

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104 Unilateral Conditionality-Based Measures The law had initially been favoured to pass; after the Clinton lobbying campaign, it lost by one vote.31 Further evidence of the potential for WTO rules to have indirect influence over trade restrictions on human rights grounds can be found in other recent US policies. The Bush administration’s attitude to the Kimberley Scheme prior to the WTO waiver (see discussion in previous chapter) is one example of how WTO rules are viewed (rightly or wrongly) as preventing trade restrictions aimed at human rights violations. Another example is that of US policy on China. The US changed its policies in order to pave the way for China joining the WTO. The US had, since 1974, reviewed China’s human rights performance on a yearly basis before deciding whether to grant most favoured nation (MFN) status, and had responded, for instance, to China’s use of prison labour with trade restrictions. In 2000, however, the US revoked this power, because of fears that once China joined the WTO, such conditionality would be incompatible with WTO rules.32 It does appear that WTO rules can therefore have the effect of deterring States from utilising trade restrictions to combat serious human rights violations. Recent case law of the WTO in other subject areas also indicates that WTO Members have to be very careful about imposing countermeasures for breach of international obligations, without ensuring that they comply with WTO rules and procedures. Mexico—Soft Drinks33 concerned the legality of Mexico imposing additional taxes on certain types of soft drinks. Mexico’s defence in part rested on invocation of other international obligations (NAFTA) as a justification for imposing the measures. The Appellate Body rejected this argument (partly) on the narrow grounds that the WTO provisions raised by Mexico in its defence were only applicable to ‘measures’ taken on the basis of domestic legislation, rather than on the basis of international obligations.34 However, the Appellate Body did comment unfavourably on the unilateral imposition of trade restrictions by a WTO Member, on the basis of a breach of another WTO Member’s international obligations. The Appellate Body observed that such action ‘would allow WTO Members to adopt WTO-inconsistent measures based upon a unilateral determination that another Member has breached its WTO obligations’.35 Rather, the WTO Member in question should follow 31 See What’s Wrong with the WTO? You Must Subordinate Human Rights to Free Trade at http://www.speakeasy.org/~peterc/wtow/wto-hrs.htm, Accessed on 12 Nov 2006. See also Africa Action website, Africa Policy E-Journal, Nigeria: Maryland Sanctions at http://www.africaaction.org/docs98/nig9804.mar.htm, Accessed on 12 Nov 2006. 32 S H Cleveland, above n 2 at 133. 33 Mexico—Taxes on Soft Drinks and Other Beverages, WT/DS308/AB/R, Report of the AB, 6 Mar 2006. 34 Mexico invoked GATT Art XX (d) which states that ‘. . . nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures: . . . necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement, . . .’ (emphasis added). The AB found that laws or regulations refer to domestic legislation and not international agreements. 35 Mexico—Soft Drinks, above n 33 at para 77.

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The Potential for WTO to Prevent Unilateral Trade Restrictions 105 WTO procedures in full before adopting countermeasures. This ruling may therefore discourage WTO Members from taking unilateral action to protect human rights for fear of cases being brought against them through the WTO. Whatever the GATT does or does not make illegal in reality, it has a broad reach and a tendency to promote non-discriminatory trade, with only limited and generally worded exceptions to cover derogations from this principle. This is bound to lead, at the least to confusions about the legality of measures, and perhaps at times even attempts to utilise the GATT as a scapegoat for failures to take action. It is examples such as those presented above that lead to arguments by some that the use of unilateral restrictions is diminishing as a result of the GATT/WTO regime. In particular the use of general restrictions to target ius cogens human rights abuses is directly threatened by current WTO approaches. Perhaps the WTO will therefore become a shelter for those perpetrating human rights violations?36 In a world where existing multilateral and regional human rights regimes do not at this time have the coercive power of restrictions, it is argued that unilateral restrictions can act as a catalyst for international action. For instance, UN action regarding South Africa was preceded by years of action by individual States.37 On the other hand, should WTO Members be allowed to raise ‘human rights’ grounds for the imposition of trade restrictions without any kind of review of whether such a justification is satisfactory? It was argued in chapter five that trade restrictions can often have very negative consequences for the human rights of the population that is targeted. For example, US sanctions against Cuba under the Helms–Burton Act have clearly had negative effects caused by the trade restrictions on the Cuban population in terms of the right to food, health and other economic, social and cultural rights.38 A human rights approach to such trade restrictions would almost certainly have come to the conclusion that they were illegitimate because the negative effects of the restrictions on the fundamental human rights of the Cuban population outweigh any potential benefits in terms of enforcing the property rights of US citizens. What the evidence appears to show, however, is that WTO law is having a ‘chilling’ effect on trade measures that are aimed at protecting and promoting human rights. This is preventing any weighing and balancing of whether individual measures are legitimate or not in human rights terms. Instead measures are nullified, or are not undertaken in the first place because of fears that they are not in accordance with WTO law. Thus the decisions of illegitimacy are made on trade law grounds only, without human rights considerations being taken into account.

36 37 38

S H Cleveland, above n 2 at 148. S H Cleveland, above n 2 at 178. M Bossuyt, above, n 7 at para 91ff.

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106 Unilateral Conditionality-Based Measures

V. THE POTENTIAL FOR WTO RULES TO ALLOW UNILATERAL TRADE RESTRICTIONS

What almost all of the above examples have in common is that the trade restrictions in question were having an effect on strong trading nations or groups of nations. The cases involving Cuba and Burma/Myanmar both affected multinational companies based in the EU. Similarly, the US revocation of its power to review China’s human rights policy was almost certainly based on the fact that China is another very powerful trading partner. In all of these situations, therefore, the US was potentially worried about action being taken by powerful trading partners who, under WTO rules, would have been entitled to impose reciprocal trade measures if the WTO dispute settlement bodies had found that the US was in breach of its WTO obligations. On the other hand, where the other State is a much smaller and weaker trading partner, the situation is very different. The power to impose reciprocal trade restrictions is only going to be effective when used by stronger countries whose trading flows are going to have a meaningful impact on other economies. The nature of the WTO system of enforcement of trade rules is, therefore, that it favours larger economies over smaller ones.39 If a small developing country were to win a WTO case against a large trading partner and it was held that trade restrictions imposed on human rights grounds were illegitimate, the imposition of reciprocal restrictions as a remedy is likely to be totally ineffectual. On the other hand, a small developing country (particularly if it is heavily import-dependent) will be heavily affected by the imposition of restrictions from a trading partner such as the EU or the US. Thus, the consequences of non-compliance are heavily skewed in favour of the more powerful countries, (although perhaps less so than if they acted outside the WTO system altogether).40 States have utilised the WTO framework to limit one US unilateral trade mechanism—Section 301 of the US Trade Act of 1974 (amended by the Omnibus Trade and Competitiveness Act) which authorises the President of the US to target foreign traders and to retaliate by raising tariffs on imports or other

39 S Charnovitz, ‘Rethinking WTO Trade Sanctions’ (2001) 95 American Journal of International Law 792–832 at 816; The Future of the WTO: Addressing Institutional Challenges in the New Millenium Report by the Consultative Board to the Director-General Supachai Panitchpakdi, (Geneva, WTO, 2004) at para 242ff. 40 One potential amelioration of the problems of the current WTO system would be for a different system of remedies, such as a multilateral response in the form of the collective suspension of specified concessions by all WTO Members against the violating country. Proposing this approach, see S Charnovitz, above n 39 at 822. This would allow cases to be brought by smaller traders that would have a meaningful effect on their more powerful trading partners. But, it will be argued below that in the absence of a viable alternative mechanism, there is a need from a human rights perspective, to consider how the use of unilateral trade measures to enforce human rights standards can be judged according to objective standards.

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The Potential for WTO to Allow Unilateral Trade Restrictions 107 import restrictions. In its first 25 years of operation Section 301 ‘had been the basis of more than 120 complaints against some 35 countries.’41 However, although a dispute settlement panel ruling on the use of Section 301 in 1999 held that Section 301 was not in violation of Article 23 of the DSU,42 the US administration stated, with approval of Congress, that its discretion is limited with respect to the application of Section 301 to measures declared inconsistent with WTO law by the DSB.43 It has not therefore been utilised as a mechanism for enforcing human rights standards on other countries.44 But, despite the potential of the WTO to limit such unilateral measures, many developing countries are still concerned about the use of unilateral economic sanctions as a mechanism for ‘political and economic coercion’ as demonstrated by a UN General Assembly Resolution urging the international community: [T]o adopt urgent and effective measures to eliminate the use of unilateral coercive economic measures against developing countries that are not authorised by relevant organs of the United Nations or are inconsistent with the principles of international law as set forth in the Charter of the United Nations and that contravene the basic principles of the multilateral trading system.’ (emphasis added)45

A. Human Rights Linkage in Regional and Bilateral Trade Agreements and Generalised Systems of Preferences The ongoing pressure to condition trade on the basis of human rights and labour rights observance can be seen particularly in other trade mechanisms that are allowed under WTO rules but are not subject to such strict scrutiny by WTO dispute settlement proceedings. WTO rules leave scope for human rights conditionality, in particular, in two fora where they have become increasingly prominent: Regional and Bilateral Trade Agreements (RTAs) and Generalised Systems of Preferences (GSPS). It has been explained in chapter one that MFN

41 R Sherman, ‘Targeting Democracies: Regime Type and America’s ‘Aggressively Unilateral’ Trade Policy’ (2002) 83 Social Science Quarterly 1063–78. For a view on the wider dangers of ‘section 301’ for the international trading system see J Bhagwati and H T Patrick, Aggressive Unilateralism, America’s 301 Trade Policy and the World Trading System (Michigan, Michigan University Press, 1990). 42 United States—Sections 301–310 of the Trade Act of 1974. Report of the Panel, WT/DS152/R, adopted on 27 Jan 2000. 43 United States—Section 301, ibid, at para 7.109. 44 A petition was lodged under this mechanism by AFL–CIO, for the first time alleging that repression of internationally recognised workers’ rights by China’s constitutes an unfair trade practice, and that such repression ‘burdens or restricts US commerce’. The petition was dismissed by the government, which argued that the remedies sought would have worsened ‘the very problems they are trying to solve’. See United States Trade Representative (USTR), Statement of US Trade Representative Robert B. Zoellick on US–China Trade Relations (28 Apr 2004), at 4. This action does however demonstrate the domestic pressures that exist to utilise unilateral trade restrictions measures to enforce labour rights in other countries. 45 Resolution adopted by the General Assembly (A/RES/58/198) 30 Jan 2004.

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108 Unilateral Conditionality-Based Measures means that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services from all its trading partners. This fundamental provision creates legal difficulties for those who wish to utilise human rights conditionality in global trade agreements, because it is in potential conflict with provisions that place restrictions on trade for those who did not comply with the human rights conditionality in the agreements. But there are certain provisions of the GATT and other WTO Agreements that allow exceptions to the MFN principle. Of particular importance for this discussion are Article XXIV of GATT which permits ‘preferential trading agreements’ (RTAs) between States, and the ‘Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries’46— popularly known as the ‘Enabling Clause’—which permits GSP by which developed countries can grant additional tariff preferences to developing countries. Both of these permitted derogations from the MFN principle have also allowed countries to include human rights conditionality in RTAs and GSPs in a way that is not otherwise permissible at the global level.

B. Regional and Bilateral Trade Agreements RTAs are agreements between WTO Members for additional trade concessions above and beyond their WTO obligations, either on a regional or bilateral basis. Many commentators have recently expressed concern about the proliferation of such preferential trade agreements from the WTO perspective. It is argued that there is a tendency for such treaties to fragment international law by increasingly breaking down the coherence of the WTO system and weakening principles such as MFN on which the WTO system is founded.47 With so many countries conducting trade under such agreements on different and preferential terms with numerous trading partners, questions are increasingly being asked as to what degree the world trading system can be effectively regulated by one set of rules governing all States. The broader arguments are beyond the scope of this book, but this is also a specific issue for the various forms of conditionality that are utilised in RTAs, including human rights conditionality. A number of RTAs include various forms of human rights conditionality arrangements whereby countries that are party to the agreement agree to comply with human rights standards. Although such systems are in a formal sense reciprocal, they are in effect a one-way form of trade conditionality, since the human rights provisions in the agreements will only ever in reality be enforceable by the more powerful trading partner. The focus here will be on agreements involving the US 46

GATT Doc. L/4903 (Nov 1979). Eg P Sutherland, ‘The Doha Development Agenda: Political Challenges to the World Trading System—A Cosmopolitan Perspective’ in E-U Petersmann (ed) Reforming the World Trading System (Oxford, Oxford University Press, 2005) at 47ff. 47

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The Potential for WTO to Allow Unilateral Trade Restrictions 109 and the EU and their trading partners.48 These two have developed differing models of human rights conditionality in their trade agreements. During the 1970s and 1980s, US and EU trade and development policy came under increasing pressure to include conditionality provisions so that third countries had to take on obligations with regard to key social and political issues in order to obtain the economic benefits of trade/development assistance. For instance, in the 1970s, the US made MFN status for communist countries conditional on their respect for the right to travel, and a number of policies were adopted making development assistance conditional on a country’s human rights record. In the late 1970s, the EU also faced increasing pressure to ensure that development assistance and other economic benefits were not being afforded to regimes committing serious human rights abuses, in particular Uganda.49 With regard to trade agreements, these policies were formalised over the following decades into human rights and labour rights clauses that are inserted into trade agreements, thereby authorising action to be taken in response to abuses. The focus and methodology of EU and US policy, however, developed differently. During the early 1990s, the EU encountered legal problems with attempts to impose sanctions on Haiti in response to the military coup there, and also in response to the armed conflict in Yugoslavia.50 These events, combined with increasing attempts to engage on human rights issues in Eastern European and with developing countries, led to the adoption of a Commission Communication providing guidelines for the inclusion of human rights clauses in all economic and cooperation agreements with third countries.51 A human rights clause is now inserted in the vast majority of its trade agreements with third countries,52 and the EU has concluded or is negotiating agreements which contain human rights clauses with approximately 150 countries.53 The effectiveness of such clauses is, however, open to question. Analysis of the usage of the clauses has shown that they are not applied by utilising legal processes to target human rights abuses of 48 Human rights and labour rights clauses can also be found, most notably, in trade agreements of Canada, Mercosur (a regional trade agreement between Brazil, Argentina, Uruguay, Venezuela, and Paraguay) and the European Free Trade Association (EFTA). See L Bartels, Human Rights Conditionality in the EU’s Trade Agreements (Oxford, Oxford University Press, 2005) at 237. 49 For a detailed discussion of these developments see L Bartels, ibid at 8f. 50 M Bulterman, Human Rights in the Treaty Relations of the European Community: Real Virtues or Virtual Reality? ( Intersentia, Oxford, 2001) at 2. 51 Communication on the inclusion of respect for the democratic principles and human rights agreements between the Community and third countries COM (95) 216 FINAL (1995). 52 The standard human rights clause to be inserted into all economic and cooperation agreements reads: ‘Respect for democratic principles and human rights inspires the domestic and external policies of the Community and of [third country] and constitutes an essential element of this agreement.’ For analyses of the usage of these clauses see M Bulterman, above n 50 and F Hoffmeister, Menschenrechts und Demokratieklauseln in den vertraglichen Außenbeziehungen der Europäischen Gemeinschaft, (Berlin, Springer Berlin, 1998). For a more detailed analysis of the evolution of human rights clauses in EU trade agreements and variations between different clauses in different agreements, see Bartels, above n 48, at ch 1 and at 33f for agreements without human rights clauses. 53 L Bartels, above n 48, at 33.

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110 Unilateral Conditionality-Based Measures a specific degree of magnitude, but are rather ‘political’ instruments, used to respond to serious violations of democratic processes in the States concerned.54 Further analysis shows that the clauses have been utilised only against the very poorest African, Pacific and Caribbean countries and that ‘the reason for the selective application of these clauses is essentially geopolitical.’55 While arguments can be made that the clauses have provided a useful backdrop to informal action (eg political dialogue) on human rights issues with a wider range of States,56 their formal use against only the poorest African, Carribean and Pacific (ACP) countries demonstrates the dangers of utilising human rights clauses without clear and universally applicable legal standards governing their use. US RTAs in recent years have largely concentrated on labour rights conditionality. For instance, NAFTA (between the US, Canada and Mexico) contains a side accord on labour rights—The North American Agreement on Labour Cooperation. This model is very different from the EU one, in that it places obligations on all parties to effectively implement their domestic labour laws, rather than meet international standards. More recently, the US has started bringing labour standards conditionality into all of its RTAs. In August 2002, the US Congress approved ‘trade promotion authority’, which includes labour standards as trade negotiating objectives and endorses ‘equivalent’ dispute settlement procedures and remedies for labour and environmental objectives as there are for commercial objectives.57 Since then the US has negotiated a number of bilateral trade agreements including with Jordan, Chile and Singapore which include provisions in the main text on labour rights, subject to settlement procedures, and providing for fines if the parties do not enforce their own labour laws. While such clauses recognise the importance of the trade and labour standards linkage, it remains to be seen whether such clauses will be utilised uniformly and appropriately in response to specific labour standards violations. For instance under the US–Jordan bilateral trade agreement if consultations do not resolve the dispute, the complaining party is authorised ‘to take any appropriate and commensurate measure.’ This leaves a very broad discretion of action, and therefore perhaps the danger of protectionist abuse. But the labour obligations themselves are very weak—countries only have to strive to ensure that domestic laws are consistent with internationally recognised labour rights. The Republican controlled House of Representatives only agreed to approve the Agreement after an exchange of letters between the countries’ trade representatives saying they would not use the dispute settlement measures.

54

M Bulterman, above n 50, at 268–69. L Bartels, Above, n 48, at 40. 56 L Bartels, Above, n 48, at 39ff. 57 K A Elliot, Can labor standards improve under globalization? (Washington, Institute for International Economics, 2003) at 85; S Polaski Trade and Labour Standards, A Strategy for Developing Countries, A Paper for the Carnegie Endowment for International Peace (Washington, Carnegie Endowment for International Peace, 2003) at 11. 55

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The Potential for WTO to Allow Unilateral Trade Restrictions 111 Now there is disagreement between Democrats and Republicans over whether they are enforceable.58 Philip Alston has argued that dealing with labour standards in RTAs in this way is, from a legal perspective, ineffective.59 They can instead be used only at the political convenience of more powerful trading nations, particularly, as is the case with the US Agreements, where the rights are defined in domestic terms, without effective adherence to recognised international standards.60 Concerns such as these have led to calls for labour issues to be excluded from such regional and bilateral agreements.61 Other authors argue that the US views the labour conditionality in their RTAs as prototypes for trade conditionality in the multilateral system.62 As more States, particularly in the developing world, sign up to such trade deals, they will become less resistant to global systems of conditionality, thus opening the way for such conditionality at the global level. There is a danger that labour rights conditionality is thereby entering the global trading system ‘through the back door’. But, if such conditionality was not considered appropriate for entry through the front door, is this process desirable?63 It is for these reasons that there are question marks over the degree to which trade agreements should be made conditional on labour standards, as currently under the US model. With regard to both the EU and the US, pressure for trading partners not to receive economic benefits from trade if they do not meet certain human rights or labour rights standards has led to RTAs including (differing forms of) conditionality. On the one hand, this can be seen as a positive development, in that it provides incentives for human rights observance. But in both cases there are concerns about both the effectiveness of such clauses, and the criteria utilised in invoking them. As we will see below, similar concerns are raised by human rights conditionality with regard to GSP.

C. Generalised Systems of Preferences GSP is a mechanism developed countries have utilised to respond to developing country concerns over inequality in their stages of development and economic capacity. As explained above, they are authorised under the WTO system by 58

S Polaski, ibid at 8; K A Elliot, ibid at 86. P Alston ‘ ‘‘Core Labour Standards” and the Transformation of the International Labour Rights Regime’ (2004) 15 European Journal of International Law 457–521 at 499ff. 60 P Alston, ibid, at 509. 61 P Alston, above n 59, at 473 citing work by Carnegie Endowment for International Peace. 62 A Singh and A Zammat, ‘Labour Standards and the ‘Race to the Bottom’: Rethinking Globalization and Workers’ Rights from the Developmental and Solidaristic Perspectives’ (2004) 20 Oxford Review of Economic Policy at 86 and 97. 63 This question is posed in the Report by the Consultative Board to the Director-General Supachai Panitchpakdi, The Future of the WTO: Addressing Institutional Challenges in the New Millenium (Geneva,WTO, 2004) at para 87. 59

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112 Unilateral Conditionality-Based Measures means of ‘the Enabling Clause’.64 GSP therefore accord preferential treatment (trade incentives) to developing countries in the form of lower tariff rates on imports to the developed countries concerned. Once again the US and the EU are in the forefront of such programmes and have developed different systems for granting their preferences. 1. The US GSP The US GSP system implemented workers rights conditionality in 1984. All countries taking advantage of the GSP must be taking steps to ‘afford internationally recognised workers rights’ including, freedom of association, the right to organise and collectively bargain, a prohibition against forced labour, a minimum age for child labour, and acceptable conditions of work, including minimum wages, hours, health and safety. Discrimination in employment is not, however, covered.65 Under the scheme businesses, unions, private sector groups and NGOs can petition to challenge the eligibility of specific products or beneficiary countries.66 More than 100 petitions were lodged in the first decade, of which the greatest number were filed by unions.67 Is this a system that is able to have a beneficial, non-discriminatory effect on labour standards in other States or is it subject to protectionist pressures? The system is certainly procedurally dubious in that domestic US firms and unions are bound aggressively to seek out abuses by foreign competition, whether or not they are really worthy of trade restrictions,68 and because affected countries do not normally get the right to have their cases heard.69 There is some evidence that the US GSP system does succeed in changing labour policies because the target States are mostly small and poor, and they therefore weigh up the perceived costs of restrictions versus the perceived costs of compliance and conclude that it is in their economic interests to comply with US demands.70 But it is recognised, even by advocates of the system, that trade restrictions are far more likely to succeed ‘when they directly target imports of particular goods produced under identifiably abusive conditions and where it is relatively easy to define the remediation measures.’71 However, this will not 64 For a detailed explanation of the development and key features of the Enabling Clause see article by this author: J Harrison, ‘Incentives for Development: The EC’s Generalized System of Preferences, India’s WTO Challenge and Reform’ (2005) 42 Common Market Law Review 1663–89. 65 S Charnovitz, ‘The Influence of International Labour Standards on the World Trading Regime’ in S Charnovitz (ed), Trade Law and Global Governance (London, Cameron May, 2002) 211–32 at 223. 66 K A Elliot, above n 57 at 75; F Francioni, above n 7 at 7. 67 K A Elliot, above n 57 at 75. 68 D K Brown, A V Deardoff, and R M Stern, Pros and Cons of Linking Trade and Labor Standards, Discussion Paper No 477, School of Public Policy, (University of Michigan, 6 May 2000) at 22. 69 F Francioni, above n 7 at 8. 70 K A Elliot, above n 57 at 78. 71 K A Elliot, above n 57 at 80.

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The Potential for WTO to Allow Unilateral Trade Restrictions 113 always be the case, and there is a danger that some governments will not have the technical ability to implement change. At best the results of such agreements for the promotion of labour rights could be described as mixed72 and a recent 20 year review of the system found that it was inconsistently applied because of geopolitical and foreign policy concerns and sensitivity to the economic interests of US multinationals.73 2. The EU’s GSP 74 The EU GSP scheme operates in 10 year cycles. The most recently completed cycle commenced in 1995, and expired in 2005. It is proposed to consider this scheme in more depth as it has been the subject of scrutiny in a recent and important WTO case.75 The findings of the Appellate Body in this case, and the EU’s reaction in implementing its new 10 year scheme for 2006 onwards, provide some interesting insights which are important when considering unilateral trade measures more generally. The legal provisions for the 1995–2005 scheme are contained in Council Regulation (EC) no. 2501/2001.76 Five different ‘arrangements’ operated for beneficiary countries, each offering different levels of tariff reduction. There was the general scheme, the special scheme for least developed countries (LDCs), and, of particular relevance here, three special incentive schemes for the protection of labour rights, the protection of the environment, and to combat drug production and trafficking.77 With respect to the special incentive schemes for the protection of labour rights, the EU granted additional tariff preferences to countries whose national legislation ‘incorporates the substance of’ the core conventions of the ILO.78 Therefore, developing countries did not need to have signed and ratified these conventions, but must have incorporated the substance of them into their domestic laws, and needed to be able to demonstrate to the EU that the relevant laws were being effectively applied. Since any developing country could apply to obtain the benefits of these special incentive arrangements, a procedure was put in place for application, assessment, review and withdrawal of these benefits; 72 R N Block, K Roberts and M J Roomkin, ‘Models of International Labor Standards’ (2001) 40 Industrial Relations 271. 73 L Compa and J Vogt ‘Labor Rights in the Generalized System of Preferences: A 20 Year Review’ (2001) 22 Comparative Labor Law and Policy Journal 199–238 at 237. 74 The analysis of the EU’S GSP and India’s WTO challenge has been developed from a previous article by this author—James Harrison, above, n 64. 75 European Communities—Conditions for the Granting of Tariff Preferences to Developing Countries, Report of the AB WT/DS246/AB/R, adopted 4 Apr 2004. (EC—Tariff Preferences). 76 Applicable for the period 1.1.2002 to 31.12.2005. 77 For a more detailed description of the EC GSP Scheme see James Harrison, above n 64, at 1666f. 78 Council Regulation (EC) No. 2501/2001 (10 Dec 2001) Official Journal L346/1, Article 14. The core conventions are Conventions No 29 and 105 on the elimination of all forms of forced and compulsory labour, No 87 and 98 on the freedom of association and recognition of the right to collective bargaining, No 100 and 111 on the elimination of discrimination in respect of employment and occupation, and No 138 and 182 on child labour.

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114 Unilateral Conditionality-Based Measures when the EU received a request from a developing country that wished to take advantage of these arrangements, it published a notice in the Official Journal of the European Communities, inviting parties (in particular relevant organisations or agencies such as the ILO, international trade unions etc) to make comments and submit information.79 The authorities of the applying State were involved throughout the evaluation process, but the EU reserved the right to demand such things as spot inspections, to ensure that standards were actually being met. Both the EU and the applicant country could exclude certain sectors in which the requirements of the conventions were not fulfilled. Once accepted, developing countries had to certify that individual shipments exported to the EU complied with the requirements. Preferences could be temporarily withdrawn on a number of grounds, including forced labour practices, as occurred in relation to Burma/Myanmar under a previous version of the GSP system.80 As was argued in chapter five, trade conditionality that focuses only on human rights violations that occur in export industries (such as under the US GSP system) can only have a limited impact on the overall human rights and development situation of the population. Because it can only tackle labour standards in the export sector, there is a danger that it will fail to make any difference to working conditions in the usually much larger informal and nonexport sectors. The EU approach over the 1995–2005 cycle had the potential to affect not just export industries, but to some extent, labour standards throughout the countries concerned because it demanded that beneficiary countries adopt the substance of core ILO Conventions into their national law. It is also thereby more directly tied to international standards than the US GSP. But whatever the merits of the EC system, it was relatively under-utilised in comparison with the US system, and few States applied to take advantage of the additional preferences available.81 In addition, there are doubts over the extent to which the system was actually applied in a way that upheld international labour standards.82 D. India’s WTO Challenge to the EU’s GSP The validity of the European GSP system (1995–2005) with regard to WTO law was considered in WTO dispute settlement proceedings in a case brought by India against the EU (EC—Tariff Preferences).83 It is worth considering this 79 User’s Guide to the European Union’s Scheme of Generalised Tariff Preferences, (Feb 2003), at section 8. 80 See L Bartels ‘Conditionality in GSP Programmes’ in T Cottier et al, Human Rights and International Trade (Oxford, Oxford University Press, 2005) at 466. 81 Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee—Developing countries, international trade and sustainable development: the function of the Community’s generalised system of preferences (GSP) for the ten-year period from 2006 to 2015 COM(2004) 461 final, Brussels 7.7.2004 at 9. 82 See P Alston, above n 59, at 492. 83 Above, n 75.

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The Potential for WTO to Allow Unilateral Trade Restrictions 115 case in some depth as it suggests that WTO dispute settlement bodies may be willing to play some role in the regulation of such schemes. Some of the findings of this case may have application for the regulation of human rights conditionality in trade agreements more generally. EC—Tariff Preferences involved a challenge by India against the special incentives offered by the EU under the GSP intended to help States in their fight against illegal drugs. There are many interesting aspects to the findings and reasoning of the Appellate Body in the EC—Tariff Preferences case that are beyond the scope of the discussion here, but have been discussed by this author elsewhere.84 The case was decided on specific grounds that were relevant only to the drug incentives: The Appellate Body found the special incentives on drugs to be inconsistent with the Enabling Clause because they were only available to a closed list of 12 beneficiaries; thus, other countries not on the list had no mechanism for seeking to obtain the preferences. Nor did the EC provide any evidence of objective criteria or standards by which the 12 beneficiary countries could be differentiated from other developing countries. The Appellate Body specifically distinguished the Drug Arrangements from the special incentives for the protection of labour rights and those for the protection of the environment. In the latter arrangements, the Appellate Body found that there were ‘detailed provisions setting out the procedure and substantive criteria that apply to a request by a beneficiary’85 Further, in the case of both special incentives, any developing country could apply, so the conclusions with regard to the closed list were also inapplicable.86 Despite the lack of direct applicability of the findings to the other special incentives arrangements, the legal approach of the Appellate Body in this case does have broader ramifications concerning the compatibility of the whole EU GSP system of special incentives with WTO law, including provisions on labour rights and human rights. First, it is clear from this case that differential treatment provided under GSP systems must meet a number of legal conditions as set out in the relevant WTO rules that govern the functioning of those schemes (ie the Enabling Clause). This is an important finding since, prior to this judgement, there was considerable discussion as to whether the Enabling Clause was legally binding, and as to whether a number of its provisions (eg on non-discrimination) were enforceable or merely aspirational.87 84 See J Harrison, above n 64, and L Bartels, ‘Conditionality in GSP Programmes’ in T Cottier et al, Human Rights and International Trade (Oxford, Oxford University Press, 2005). 85 EC—Tariff Preferences, above n 75, at para 182. 86 It has been argued that these differentiations would mean that the AB would look more favourably upon the latter type of special arrangements. See S Charnovitz, L Bartels, R Howse et al, ‘Internet Roundtable: The Appellate Body’s GSP Decision’ (2004) 3 World Trade Review 239–65 at 248. This opinion was expressed by Robert Howse and subsequently commented on by S Charnovitz. Certainly it seems there is greater potential for the other special arrangements to be found compatible with the Enabling Clause. 87 See eg: R Howse, ‘Back to Court after Shrimp/Turtle? Almost but Not Quite Yet: India’s Short Lived Challenge to Labor and Environmental Exceptions in the European Union’s Generalized System of Preferences’ (2003) 18 American University International Law Review 1333–81 at 1353ff.

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116 Unilateral Conditionality-Based Measures The Appellate Body found that there was a requirement for GSP systems to be non-discriminatory to qualify under the Enabling Clause.88 The Appellate Body further considered that the obligation contained within the Enabling Clause on developed countries to design their GSP systems, and if necessary modify them, to ‘respond positively to the development, financial and trade needs of developing countries’ to be evidence that differential treatment could be justified. Since it was agreed that not all developing countries had identical development needs, and that development would necessarily happen at different speeds in different countries, ‘responding to the “needs of developing countries” may thus entail treating different developing country beneficiaries differently’89. The Appellate Body goes on to provide some guidance on when differentiating between developing countries in terms of preferences might be justified. Thus the Appellate Body states that: In granting such differential treatment . . . preference granting countries are required, by virtue of the term ‘non-discriminatory’, to ensure that identical treatment is available to all similarly-situated GSP beneficiaries, that is, to all GSP beneficiaries that have the ‘development, financial and trade needs’ to which the treatment in question is intended to respond.90

The Appellate Body also provides some explanation for how to interpret the phrase ‘respond positively to the development, financial and trade needs of developing countries.’ It is made clear that it is not sufficient for a preferencegranting country to merely assert such a need: Rather . . . the existence of a development, financial or trade need must be assessed according to an objective standard. Broad-based recognition of a particular need, set out in the WTO Agreement or in multilateral instruments adopted by international organisations, could serve as such a standard. (emphasis added)91

This appears to be the beginning of the development of a legal ‘test’ by which the legitimacy of human rights conditionality in GSP schemes could be gauged. There are many questions as to how this test might be interpreted in future WTO proceedings. But it does seem that human rights conditionality in GSP schemes would be more likely to be considered to be legitimate if preferences were granted, reviewed, and withdrawn on the basis of international human rights conventions, rather than according to unilaterally determined standards. In addition, utilising the expertise of supervisory mechanisms of relevant inter88

EC—Tariff Preferences, above n 75 at para 148. EC—Tariff Preferences, above n 75 at para 163. In support of this argument, the AB cite the preamble to the WTO Agreement (para 161) which recognises the need for positive efforts to be taken to ensure that developing countries secure ‘a share in the growth of international trade commensurate with the needs of their economic development.’ It further recognises that ‘Members’ respective needs and concerns at different levels of economic development’ may vary. Both these statements appear to support appropriate differential treatment. 90 EC—Tariff Preferences, above n 75 at para 173. 91 EC—Tariff Preferences, above n 75 at para 163. 89

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The Potential for WTO to Allow Unilateral Trade Restrictions 117 national agencies would certainly help to demonstrate that States were impartially applying objective standards. Further, the Appellate Body found that the tariff preferences accorded under the scheme should also ‘effectively address’ the development needs of developing countries.92 This may lead to consideration of the type of issues set out in chapter five: Any trade incentives that are offered under the GSP scheme would be judged to see whether they are in fact beneficial to the human rights of the population in question. This is particularly important in view of concerns about the overall benefits of GSP schemes discussed below. At this stage it is difficult to predict to what extent this case may signify the beginnings of a more intrusive approach by WTO dispute settlement bodies regarding the use of unilateral trade measures. This judgement only has direct ramifications for the EU GSP scheme.93 But it could also lead to the formulation of standards that might be applicable more generally to the issue of the legitimacy or otherwise of conditionality-based trade measures that purport to protect and promote human rights.

E. The EU’s GSP 2006–15 The EU has recently adopted a new GSP scheme which will operate from 2006–15.94 The overall extent and precise ways in which the Appellate Body’s decision in EC v India has affected the new arrangements are impossible to know for sure. The Commission explicitly justifies the new scheme by saying that it simplifies the previous arrangements, and that the new scheme reflects ‘the integral nature of the concept of sustainable development’, which is stated as the key objective of the new arrangements.95 But, the new scheme is clearly written with due consideration for the Appellate Body’s decision. The Commission’s 10 year guidelines recognise, in language which replicates that of the Appellate Body in EC—Tariff Preferences, that: Any WTO Member which intends to grant additional tariff preferences under its GSP scheme would have to identify on an objective basis the special ‘development needs’ of developing countries which can effectively be addressed through tariff preferences.96 92

EC—Tariff Preferences, above n 75 at para 164. There is not the same scope under Art XXIV of the GATT for a WTO review of the use of human rights conditionality under RTAs, and so such reviews are unlikely to occur within the WTO framework. But a substantive review of GSP preferences might encourage further debate as to the way human rights conditionality is utilised under RTAs as well. 94 See Communication from the Commission to the Council, Above n 81, at 39, and Proposal for a Council Regulation, European Commission, COM(2004) 699 final, 20.10. 2004 and Council Regulation (EC) No 980/2005 of 27 June 2005. 95 Explanatory Memorandum to the Proposal for a Council Regulation, European Commission, COM (2004) 699 final, 20 Oct 2004, section 4. 96 Communication from the Commission to the Council, above n 81, at 6. 93

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118 Unilateral Conditionality-Based Measures The Commission went on to explicitly link its core aim of sustainable development to adherence to international human rights and labour rights standards, thereby justifying the use of such standards as the basis for human rights conditionality under the new GSP Scheme, again in terminology reminiscent of the WTO Appellate Body. The Commission stated: Multiple international conventions and declarations have acknowledged the link between development and basic human and labour rights, of the environment, and of the principles of governance. The failure to honour these basic standards, which are specified in various international conventions, entails particular problems for developing countries. It is therefore appropriate to address these special development needs positively through granting additional GSP preferences to those developing countries which have taken on board the major international conventions in those areas.97

In the Regulation implementing the scheme, the Commission lists the conventions which developing countries will need to ‘ratify and effectively implement’ in order to qualify for the special incentives. These include eight UN human rights conventions98 and eight ILO conventions99 which must be ratified and effectively implemented. Furthermore, the new Regulation specifies that ‘the monitoring and review mechanism envisaged in the relevant conventions and related instruments’ (for instance the ILO on labour issues and appropriate UN agencies on human rights issues) will be utilised in order to make decisions about eligibility for GSP Plus, and will be the point of departure for investigations into subsequent withdrawal of the benefits of the arrangements, if there are serious and systematic violations of the principles laid down in the conventions.100 Thus far, it seems that many more States will be utilising the scheme than the old special incentives on labour standards. For the period 2006–08, the following countries are thus far set to benefit—Bolivia, Colombia, Costa Rica, Ecuador, Georgia, Guatemala, Honduras, Sri Lanka, Republic of Moldova, Mongolia, Nicaragua, Panama, Peru, El Salvador and Venezuela.101 The suc97

Communication from the Commission to the Council, above n 81, at 10. International Covenant on Economic Social and Cultural Rights, International Convention on the Elimination of All Forms of Racial Discrimination, Covenant on the Elimination of Discrimination Against Women, Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment, Convention on the Rights of the Child, Convention on the Prevention and Punishment of the Crime of Genocide, International Convention on the Suppression and Punishment of the Crime of Apartheid. 99 These are the same Conventions as under the previous special incentives namely: Minimum Age for Admission to Employment (N° 138), Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour (N° 182), Abolition of Forced Labour Convention (N° 105), Forced Compulsory Labour Convention (N° 29), Equal Remuneration of Men and Women Workers for Work of Equal Value Convention (N° 100), Discrimination in Respect of Employment and Occupation Convention (N° 111), Freedom of Association and Protection of the Right to Organise Convention (N° 87), Application of the Principles of the Right to Organise and to Bargain Collectively Convention (N°98). 100 Arts 10.2 and 16.1 (a) and 17. Council Regulation No. 980/2005, above n 94. 101 EC Commission Decision of 21 Dec 2005 on the list of the beneficiary countries which qualify for the special incentive arrangement for sustainable development and good governance, provided for by Art 26(e) of Council Regulation (EC) No 980/2005 applying a scheme of generalised tariff preferences (2005/924/EC)—L 337/50 Official Journal of the European Union. 98

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A Role for the WTO regarding Unilateral Measures? 119 cess of this model will depend on the extent to which the new scheme is actually able in practice to effectively and objectively make use of the multiple conventions and supervisory bodies that apply under the GSP Plus to reach meaningful decisions about who should qualify for the special incentives. There is a need for ongoing comparative analysis of these countries’ human rights performance in order to ascertain whether the incentives have had any positive effects on the promotion and protection of human rights. But in the design of its new scheme, the EC appears to be attempting to meet the requirement of objective standards by relating its assessment of eligibility to that of a number of international conventions, and utilising the expertise of relevant international organisations and agencies. The 1995–2005 special incentive arrangements for the protection of labour rights also utilised international standards, but based compliance on the ‘core labour standards’ of the ILO, as set out in the 1998 ILO Declaration on Fundamental Rights and Principles. States did not need to actually sign and ratify the ILO Conventions from which the standards are drawn. In much of its subsequent work the Commission appears to have very much focused on the more general principles of the core labour standards rather than the conventions themselves.102 By proposing this new procedure, the Commission appears to be advocating an approach which more firmly anchors the EU GSP system to international standards. For supporters of a coherent and harmonised international legal system this should be considered an important step, which must be at least partly a response to the decision and reasoning of the Appellate Body in EC—Tariff Preferences.

VI. A ROLE FOR THE WTO IN OVERSEEING UNILATERAL CONDITIONALITY-BASED MEASURES?

What can be seen from the presentation of the above RTA and GSP schemes is that, even though there is no official human rights and trade linkage under the world trading system, new measures are constantly being adopted to link human rights and labour rights issues to trade rules under trade agreements that are largely exempt from evaluation by WTO bodies. This raises concerns of fragmentation and erosion in global standards, and worries that there is no mechanism by which to distinguish and validate beneficial forms of conditionality from those that have more negative effects. It is therefore clear that, when the WTO does not have a role in supervising unilateral trade measures, this does not mean that these issues are then only dealt with through the appropriate international agency—the UN or the ILO— even though in the case of the labour rights, the Singapore Declaration specifically mandates such a scenario. Rather, it means that the various regional and bilateral trade agreements and GSP schemes which contain conditionality-based 102

P Alston, above n 59, at 492.

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120 Unilateral Conditionality-Based Measures trade measures are open to very little supervisory control at all at the global level. This potentially leads to various forms of conditionality being utilised on various human rights and labour rights issues, with no independent mechanism for judging the validity and impact of such measures. There is a danger that more powerful trading powers will impose standards unilaterally under instruments such as GSPs and RTAs. They may not therefore be required to have recourse to internationally recognised standards, or to ensure that the measures they undertake are effective in terms of raising human rights standards, and are free from protectionist biases. Such systems may then end up being replicated later in global schemes. This situation is particularly serious when the overall value of such conditionality is widely challenged. No detailed attempt will be made to evaluate the overall effectiveness of conditionality instruments, other than to note that a number of commentators have recently expressed doubt as to the amount of long-term advantage such systems represent for developing countries.103 These contributions suggest that GSP systems are not necessarily good for promoting long term development, and developing countries may become hooked upon them, thereby reducing enthusiasm for multilateral reduction in tariff barriers, as well as encouraging production of goods in developing countries that are only sustainable because of the preferences granted. Such problems are exacerbated when GSP systems are unpredictable, for example with preferences removed on products that suddenly become ‘sensitive’ as a result of lobbying from domestic producers. Moreover, the World Bank’s conditionality based approach to lending, which focuses on good governance, is an example of the problems that can occur where developing countries are only complying with conditionality requirements in order to obtain financial advantages, rather than because they are convinced of the importance of undertaking such measures.104 Current thinking about conditionality stresses the need to create ownership of the good governance agenda within developing countries. A prerequisite for such ownership (although there are many others) is to convince affected States that they will benefit from taking up the policies, thus leading to a greater chance of them being carried on in the longer term.105 Against this background, the new EU GSP model does seem like a step forward. The proposed new EU GSP model utilises internationally recognised 103 See B Hoekman, ‘Operationalizing the Concept of Policy Space in the WTO: Beyond Special and Differential Treatment’ in Petersmann (ed.) Reforming the World Trading System: Legitimacy, Efficiency and Democratic Governance, (Oxford, Oxford University Press, 2005) 223–45. Also Report by the Consultative Board to the Director-General Supachai Panitchpakdi, The Future of the WTO: Addressing Institutional Challenges in the New Millenium, (Geneva, WTO, 2004) at para 94. 104 See S G Koeberle, ‘Should Policy-Based Lending Still Involve Conditionality?’ (2003) 18 World Bank Research Observer 249–73. 105 For a taste of all the complications of this issue see papers presented at the The World Bank Group ‘Conditionality Revisited: Development Policy Forum’ available at http://web.worldbank. org/WBSITE/EXTERNAL/PROJECTS/0,,contentMDK:20292755~pagePK:41367~piPK:51533~th eSitePK:40941,00.html, accessed on 12 Nov 2006.

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Conclusions 121 human rights standards and the expertise of organisations such as the ILO and UN agencies as part of its conditionality model (although it remains to be seen the extent to which these mechanisms are utilised in practice). This new scheme appears, at least partially, to be responding to WTO ‘supervision’ in a way that is promoting compliance with international human rights and labour rights standards and their monitoring systems. Given the lack of other supervisory mechanisms for monitoring the effectiveness of RTAs and GSPs, is a cautious welcome therefore appropriate to this case law that suggests the WTO could undertake more of a supervisory role over the use of at least some such measures? From a human rights perspective, the WTO is not the ideal international organisation to be making decisions about the legitimacy or otherwise of measures that are utilised to protect and promote human rights. There are dangers inherent in a trade court with little if any expertise in human rights and a probable inherent bias towards liberalised trade ruling on the legality of trade restrictions aimed at the promotion and protection of human rights. Where it is advocating an approach which is based on utilising the standards and expertise of more expert international agencies, then at least some of these concerns are diminished. The alternative seems to be that the EU, the US and other bigger trading nations are left to decide for themselves the unilateral conditionalitybased trade measures they deem to be appropriate. To an extent, perspectives on the benefits of a more interventionalist WTO will depend on the degree to which there is perceived to be a need for independent monitoring of the actions of these heavyweight trading nations in their use of such conditionality measures.

VII. CONCLUSIONS

This chapter has argued that the use of conditionality-based trade restrictions to promote and protect human rights is currently impaired by two almost contradictory aspects of the international trading system. On the one hand fear of WTO scrutiny may lead to States not undertaking unilateral measures to tackle some of the most extreme forms of human rights abuses in other States, because of the dangers that this will contravene WTO rules and lead to trade retaliation, particularly from powerful trading partners. On the other hand lack of any kind of scrutiny at the international level is leading to increasing use of human rights conditionality in RTAs and GSPs with weaker trading partners, where any oversight has up until recently been negligible, and therefore, there is a danger of fragmentation of standards. The common problem in both of these phenomena from a human rights perspective is that decisions about the appropriateness or otherwise of unilateral conditionality-based trade measures as a tool for the protection and promotion of human rights are being made largely without recourse to international human rights standards, and instead on the basis of what is permissible (or perceived to be permissible) under WTO and other trade

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122 Unilateral Conditionality-Based Measures law rules. It is on this basis that the decision in EC—Tariff Preferences may be an interesting development in terms of a model for future supervision of conditionality utilising the expertise of appropriate international agencies. Some further conclusions will be drawn about the role of the WTO more generally with regard to conditionality-based measures in chapter ten, after consideration of the WTO impact on compliance-based and cooperation-based trade-related measures aimed at the protection and promotion of human rights in the next two chapters.

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8 A Legal Framework for Assessing Compliance and Cooperation-Based Measures I. INTRODUCTION

T

HE PREVIOUS THREE chapters have dealt with the issue of human rights linkage to international trade rules in the form of conditionalitybased measures. This chapter and the next one will deal with compliance and cooperation-based trade measures aimed at the protection and promotion of human rights. It will set out a framework for the discussion of such measures, focusing on the UN OHCHR reports that analyse this issue and highlighting positives and limitations of the OHCHR approach. It will start by arguing that the issues that arise in this context are somewhat different from those that arise in the context of conditionality-based measures and so some important distinctions will be drawn between the methodologies for addressing the two subject matters. This will be followed by a discussion on the nature of the human rights obligations that arise in the context of a State’s human rights obligations towards its own population and its obligations with regard to international cooperation. It will then go on to consider the particular differences in methodological approach of international trade law and international human rights law with regard to compliance and cooperation-based trade measures, and how these different approaches lead to potential conflicts between the two systems, followed by a discussion of the potential measures for reconciliation. The conclusions that are reached will then be tested in the next chapter against one particular issue—the human rights impact of the TRIPS Agreement, focusing on the right to health and access to medicines, where there has been an attempt to find mechanisms within the WTO to balance a State’s right to make measures to protect the health of its own population and co-operate to protect the right to health in other WTO Member States against the rights of intellectual property holders over their patented drugs. Some conclusions will be drawn from this analysis with wider application for the ability of States to effectively use compliance and cooperation-based measures in the WTO context.

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124 Assessing Compliance & Cooperation-Based Measures

II. PARTICULAR ISSUES RELATING TO COMPLIANCE AND COOPERATION-BASED HUMAN RIGHTS MEASURES

There are a wider range of human rights issues that arise in the context of a State’s obligation to protect and promote the human rights of its own population than when measures are taken by a State aimed at human rights violations in other States. Conditionality-based measures are basically limited to a narrow range of restrictions and incentives that are tied to the import and export of goods (as well as potentially services). Compliance-based measures, however, need to address a far wider range of trade-related issues. This may include restrictions on the import of goods, or other measures, in order to protect the human rights of domestic workers—perhaps because of a fear that, through increased competition and lower priced goods, workers may lose jobs and would be left in a situation that endangers their basic rights, including to food and shelter. But it also includes a range of other issues, particularly as a result of the increasing number of internal regulatory requirements imposed on States as a result of various WTO Agreements. So a WTO Member State needs for instance, to ensure that implementation of TRIPS Agreement obligations does not conflict with its obligations to take measures to ensure that its own population can obtain access to affordable medicines in accordance with the right to health. It also includes consideration of issues such as whether a WTO Member State’s liberalisation and non-discrimination commitments under the GATS conflict with measures aimed at the provision of essential services such as water, health or education to its own population. There are many other examples of such potential conflicts which will be discussed below. The human rights obligation to undertake cooperation-based measures will also be considered in this chapter. As can be seen from the examples set out briefly above, many of the rights engaged in the context of compliance-based measures are economic, social and cultural rights, as codified in the ICESCR. ICESCR also contains an obligation under Article 2 of the Covenant: [T]o take steps, individually and through international assistance and cooperation, especially economic and technical, to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognised in the present Covenant by all appropriate means.

It is not, therefore simply the responsibility of each WTO Member State individually to take measures to ensure that it meets its human rights obligations in the WTO context, there is also a responsibility on all State Parties to ICESCR to assist other WTO Members to achieve those goals. For instance, measures might include; facilitating the manufacturing and export of cheap medicines to States with widespread heath crises and little local manufacturing capacity; facilitating technology transfer to developing countries to promote innovation leading to enhanced protection of a range of human rights; and providing

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Particular Issues for Compliance and Cooperation-based Measures 125 ‘adjustment assistance’ to States whose people are suffering from human rights violations as a result of fulfilling their liberalisation commitments. There are a number of differences in dealing with the nature of human rights obligations in the context of compliance and cooperation-based measures than there are in the context of conditionality-based measures. These differences will shape the nature of the analysis which follows. First and most importantly, both compliance and cooperation based measures are based on human rights obligations contained in international human rights instruments. All States who are parties to relevant international human rights instruments have obligations to protect and promote the human rights of their own populations, as well as international cooperation and assistance obligations, particularly in respect of ICESCR. This is very different from the situation with regard to conditionalitybased measures, which do not originate from obligations within international human rights instruments, but are either authorised by other international legal frameworks, or are undertaken unilaterally, authorised by domestic policymaking mechanisms and governed by general international law rules on countermeasures. In the case of compliance and cooperation-based measures there is no need to analyse how measures are authorised through other multilateral frameworks, as there is for conditionality-based measures. So there is no need in this context for a detailed discussion of how the legal frameworks of organisations such as the ILO or the UNSC interact with the WTO system.1 Secondly consideration was needed of the potential negative human rights side-effects of conditionality-based measures. There are not such concerns in this respect with regard to compliance and cooperation-based measures. This is primarily because, as was argued in chapter five, trade restrictions imposed on other countries are a rather blunt tool for dealing with human rights violations. So, even where such measures are genuinely aimed at the protection and promotion of human rights in other countries there are considerable systemic concerns, particularly with regard to general restrictions, that they might have negative human rights consequences for the general population of the targeted country. A government taking measures to deal with (potential) human rights violations within its own territory, or co-operating with other States to do so, should have a much broader range of policy options that it can utilise to tackle violations that occur or need to be avoided, so the same concerns do not arise.2 1 States are internationally responsible for the human rights of their own population to the UN Treaty Monitoring Bodies of UN human rights instruments which they have ratified. They must periodically report to these bodies on how they have fulfilled their treaty obligations. Committees then make concluding observations regarding state parties’ performance of their obligations. But it is not clear how these concluding observations could give rise to human rights obligations that could be utilised in a trade law setting. 2 The argument made here is that compliance-based trade measures can take a number of different forms (as will be shown in the following discussions) and can be better directed by governments than conditionality-based measures. This should not be taken as implying that governments are limited in their responses to human rights abuses in other countries to only employing trade restrictions. As has been argued above, there are a number of other diplomatic, financial and measures that can be taken in response to such violations.

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126 Assessing Compliance & Cooperation-Based Measures At the same time this does not obviate the need to ensure that measures taken are not in fact a form of disguised protectionism. But there is a need for an in depth discussion on the types of human rights obligations that are raised in this context. This is because of the nature of the existing academic literature on this topic, where discussion of the use of trade restrictions for the protection and promotion of human rights far outweighs any other consideration of human rights in a trade law context. Particularly in the US literature, many prominent commentators on human rights and trade linkage write as if human rights enforcement through trade restrictions was the only possible linkage between trade and human rights.3 It should be noted that there are a number of recent academic contributions which do recognise that there are human rights implications for a State’s ability to protect the human rights of its own population in a number of WTO Agreements.4 Most prominently, questions are raised about the extent to which the TRIPS Agreement allows for the human rights of health and food to be adequately balanced against the right to property.5 A recent academic contribution was one of the first to consider the human rights impact of the GATS—concentrating on its potential impact on the water industry.6 Also considered by a number of commentators is the degree to which social safety nets that protect the right to food and shelter are affected by the rules of the world trading system, particularly liberalisation commitments.7 However, there is little work that attempts to systematically apply a human rights methodology to the impact of the international trade agreements in question. So there is a far greater need than with regard to conditionality-based measures to explain and expand upon the nature of the obligations that are involved in such an analysis. An important resource in this exercise are the reports of OHCHR. As is recognised by several commentators, these reports have considered in particular compliance-based human rights measures in a far more systemic fashion than most of the academic literature.8 The OHCHR reports have provided a sustained and systematic analysis of the human rights impact of the world trading system from the perspective of a State’s obligation to protect and promote the human rights of its own population, as well as the 3 Eg S H Cleveland, ‘Human Rights Sanctions and International Trade: A Theory of Compatibility’ (2002) 5 Journal of International Economic Law 133–89 at 144–5. 4 Eg T Cottier, ‘Trade and Human Rights, A Relationship to Discover’ (2002) 5 Journal of International Economic Law 111–32 at 111; E-U Petersmann, ‘The Human Rights Approach Advocated by the UN High Commissioner for Human Rights and by the International Labour Organisation: Is it Relevant for Law and Policy’ (2004) 7 Journal of International Economic Law 605–27. 5 Eg T Cottier, ibid, at 111 recognises that the introduction of IP protection, particularly with regard to pharmaceuticals gives rise to the argument the TRIPS is hostile to human rights and at page 126 debates the extent to which open trade effects economic, social and cultural rights in more general terms. See also P Cullet, ‘Patents and Medicines: The relationship between TRIPS and the human rights to health’ (2003) 79 International Affairs 139–60. 6 A Lang, ‘The GATS and Regulatory Autonomy: A Case Study of Social Regulation of the Water Industry’ (2004) 7 Journal of International Economic Law 801–838. 7 Eg T Cottier, above n 4, at 128. 8 Eg E-U Petersmann, above n 4; A Lang, above, n 6.

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The General Methodology of the OHCHR Reports 127 obligations upon the international community to co-operate to achieve those ends. The analysis undertaken will therefore explore, critique and further develop the methodological approach of the OHCHR. III. THE GENERAL METHODOLOGY OF THE OHCHR REPORTS

The OHCHR reports adopt the same starting point as the argument made in this book in defining the human rights scope of their analysis. All the OHCHR reports clearly base their definition of human rights on the legally adopted human rights codified in international human rights instruments, as well as human rights principles that have become part of customary international law. They each explain the legitimacy of invoking human rights obligations within the context of trade law by stating that all WTO members have undertaken obligations under international human rights law.9 All WTO members have ratified at least one human rights instrument and 112 members have ratified the ICESCR (which is the most relevant international human rights instrument in terms of compliance and cooperation-based measures). The OHCHR reports see State actors as the primary agents in negotiating trade law and setting trade policy and requires States to combine this role with that of the primary duty bearer for the implementation of human rights at both the national level and through international cooperation.10 This leads to the conclusion that: [W]hatever the human rights treaty obligations undertaken by particular States, WTO members have concurrent human rights obligations under international law and should therefore promote and protect human rights during the negotiation and implementation of international rules on trade liberalisation.11

A human rights approach to trade ‘sets the promotion and protection of human rights among the objectives of trade liberalisation’. It examines the effect of trade liberalisation particularly on the rights of vulnerable individuals and seeks consistency between the progressive realisation of liberalisation of trade and the protection and promotion of human rights. In stating that human rights are among the objectives of trade liberalisation, the OHCHR approach avoids hierarchical claims about the status of human rights when applied in a trade law context.12 This reflects the nature of the substantive human rights claims made 9 See discussion in ch 3 and also OHCHR, Liberalisation of Trade and Services and Human Rights—Report of the High Commissioner, (25 Jun 2002) E/CN.4/Sub.2/2002/9 (Report on GATS) para 5, OHCHR; Globalisation and its Impact on the Full Enjoyment of Human Rights—Report of the High Commissioner (15 Jan 2002) E/CN.4/2002/54 (Report on AoA) at para 10; and OHCHR, The Impact of the Agreement on Trade-Related Aspects of Intellectual Property Rights on Human Rights—Report of the High Commissioner (27 Jun 2001) E/CN.4/Sub.2/2001/13 (Report on TRIPS) at para 28 & para 60. 10 The Report on GATS, ibid at executive summary p 2 (a) and (d). 11 The Report on GATS, above n 9, at para 5. 12 Interestingly, there are no indications in the report of whether this reflects a view that the two systems in fact hold parity, or whether hierarchical issues are omitted simply in order to avoid contentious conclusions.

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128 Assessing Compliance & Cooperation-Based Measures in the reports, which all call for the interpretation of trade law to be in accordance with human rights law. Although it is made clear that human rights obligations should not be subordinated to trade rules, nowhere is it asserted that trade law norms are trumped by human rights norms.13 By advocating an interpretative approach that focuses on individual States’ obligations to prevent serious human rights abuses in their own countries and also through international cooperation to achieve those ends, the reports can address the substantive issues of inter-linkage between the two systems, and address situations where conflicts could potentially arise in individual WTO Agreements rather than become entangled in problematic hierarchical assertions. It has already been argued that assertions of inherent hierarchical superiority for human rights are likely to be extremely contested, and so it is submitted that this is the appropriate approach to take. The recent reports of the OHCHR that are discussed here represent a radical departure from the approach of a report previously produced in 1999 by independent experts for the Sub-Commission on the Promotion and Protection of Human Rights, which provided an almost entirely negative assessment of the effect of the WTO on human rights.14 This led to WTO criticism of the report, both for its lack of consultation with the WTO during the drafting process, and for its negative conclusions concerning the WTO’s impact on human rights.15 The recent reports analysed here represent a more balanced and constructive approach to the WTO and trade liberalisation. All the reports included consultation processes with the WTO as well as other agencies. They all recognise the potential benefits of trade liberalisation for human rights, as was discussed in chapter three. However, they highlight a number of issues where international trade rules in general, and the policies pursued within the WTO in particular, create potential conflicts with the protection and promotion of human rights and proposals are made for how these conflicts can be avoided. The reports also highlight some of the fundamental differences in approach between trade law and human rights that need to be assessed and monitored to ensure that the two legal systems can work compatibly.

IV. ANALYSIS OF THE OHCHR APPROACH TO ASSESSING THE HUMAN RIGHTS IMPACT OF WTO AGREEMENTS

The first three OHCHR reports on the impact of the WTO on human rights are those that are particularly relevant to this discussion since these examine three specific WTO Agreements. There is a fourth OHCHR report in this series— 13

The Report on GATS, above n 9 at para 58. J Oloka-Onyango and U Deepika, Globalization and its Impact on the Full Enjoyment of Human Rights, E/CN.4/Sub.2/2000/13 (25 Apr 2000). 15 See ‘UN Human Rights Commissioner responds to WTO’ at www.twnside.org.sg/title/ responds.htm, Accessed on 14 Nov 2006. 14

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The OHCHR Approach to the Human Rights and the WTO 129 Human Rights Trade and Investment16—which is of less relevance here as it does not focus on current WTO law as such, but rather considers how a variety of international legal instruments concerning investment and privatisation have impacted upon, and will impact upon human rights.17 There are also a number of other related reports that have been commissioned by the OHCHR which have further developed the analysis of the human rights impact of the international trading system, and these will also be referred to wherever relevant. Of particular interest here is an analytical study which focused on the principle of nondiscrimination, and its different conceptions under human rights and international trade law.18 A further study has looked at the relationship between the right to development and the WTO,19 and a report produced by this author considers how WTO exception clauses might be utilised in order to raise human rights issues in WTO dispute settlement proceedings.20 Finally, a report has been produced for the OHCHR by the Special Rapporteur on the Right to Health, concerning the impact of the international trading system on the right to health.21 While referring to the above reports where appropriate the main discussion in this chapter will be undertaken within the framework of the three OHCHR reports that analyse specific WTO Agreements. The first report examines the TRIPS Agreement. The TRIPS Agreement sets out detailed minimum standards for the protection and enforcement of IP systems in terms of requirements for the grant of rights, the time limitations on protection, permitted exceptions to the use of rights and modes of enforcement to be implemented by each WTO member. The OHCHR Report—The Report on TRIPS—examines the TRIPS Agreement in light of the obligations of States under the ICESCR, focusing on how the TRIPS Agreement impacts upon the right of access to basic health care and essential medicines, particularly with regard to AIDS/HIV.22 It examines 16 OHCHR, Human rights, trade and Investment—Report of the High Commissioner, (Jul 2003), E/CN.4/Sub.2/2003/9 (Report on Investment). 17 The ambit of this report is significantly wider than the previous ones, including bilateral, regional and international investment agreements, as well as the human rights implications of privatisation. Thus the focus of the report is less concerned with the specifics of how individual WTO Agreements impact upon human rights observance. The report does however include analysis of a number of existing WTO Agreements, which deal with aspects of investment, in particular the Agreement on Trade-Related Investment Measures (TRIMS Agreement) and the GATS Agreement, and it also considers the human rights implications of a more comprehensive future WTO agreement on investment. See The Report on Investment ibid at para 22–3. 18 OHCHR, Analytical study of the High Commissioner for Human Rights on the Fundamental Principle of Non-Discrimination in the Context of Globalization, Report of the High Commissioner, (15 Jan 2004) E/CN.4/2004/40 (Report on Non-Discrimination). 19 OHCHR, Sub-Commission on the Promotion and Protection of Human Rights, Mainstreaming the Right to Development into International Trade Law and Policy at the World Trade Organization, Note by the Secretariat, E/CN.4/Sub.2/2004/17, (9 Jun 2004). 20 OHCHR, Human Rights and World Trade Agreements: Using General Exception Clauses to Protect Human Rights (New York and Geneva, OHCHR, 2005). 21 Paul Hunt, The Right of Everyone to the Enjoyment of the Highest Attainable Standard of Physical and Mental Health, Report of the Special Rapporteur, Addendum, Mission to the World Trade Organisation, E/CN.4/2004/49/Add.1 (1 Mar 2004). 22 Above n 9.

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130 Assessing Compliance & Cooperation-Based Measures the extent to which the obligations created by the TRIPS Agreement are consistent with human rights obligations under ICESCR to ensure protection of the right to health (Article 12) as well as the rights of authors and inventors who are protected under article 15(c). The second OHCHR report—The Report on AoA—examines liberalisation of goods and focuses upon the AoA, since agricultural production has a particular impact on development and food security23. The AoA contains commitments to reduce support for and protection of the agricultural sector in three areas—market access, export subsidies and domestic support. The OHCHR report examines the ways in which the ongoing reform process of the AoA concerning agricultural trade could be directed in such a way that it protects the right to food, particularly of people in developing countries, who are more likely to be deprived of essential foodstuffs as a result of agricultural policies, and who are often living in a situation where there are few safety nets if liberalisation should lead to destruction of their livelihoods. The Report on AoA analyses the extent to which the AoA impacts upon the right to food, as contained in Article 11 of ICESCR which ‘recognises the fundamental right of everyone to be free from hunger’, and contains the internationally focused obligation: ‘Taking into account the problems of both food-importing and food exporting countries, to ensure an equitable distribution of world food supplies in relation to need.’24 The third report examines the GATS. The GATS sets out a framework for the liberalisation of trade in services. It covers all internationally-traded services with two exceptions.25 The GATS has two parts: the framework agreement containing the general rules and disciplines; and the national ‘schedules’ which list individual countries’ specific commitments on access to their domestic markets by foreign suppliers. The OHCHR report—The Report on GATS— focuses in particular on health and education services, and how GATS commitments in these areas might effect the enjoyment of human rights, in particular the right to health (Article 12 of ICESCR) and education (Article 13).26 Throughout all the reports there is also extensive mention of the right to development, since many of the key issues raised by international trade law involve the treatment of developing countries. The reports cite the Declaration on the Right to Development which makes the human person the central subject of development and places all States under duty to formulate appropriate national development policies, as well as to formulate policies individually and

23

Above n 9. ICESCR Art 11(2)(b). 25 Art I(3) of the GATS excludes ‘services supplied in the exercise of governmental authority’. These are services that are supplied neither on a commercial basis nor in competition with other suppliers. Cases in point are social security schemes and any other public services, such as health or education, in situations where they are provided at non-market conditions. Also, the Annex on Air Transport Services exempts from coverage measures affecting air traffic rights and services directly related to the exercise of such rights. 26 Above n 9. 24

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Obligations that Arise from ICESCR Provisions 131 collectively at the international level aimed at the full realisation of the right to development. The OHCHR reports therefore concentrate on the human rights implications of three WTO Agreements—the AoA, the TRIPS Agreements and the GATS Agreement. It is for this reason that the focus of the discussion which follows is on these three agreements. Discussion of the human rights issues arising from these Agreements will also be relevant for a range of other WTO Agreements which raise potential human rights concerns. So, many of the issues raised by discussion of the AoA will be relevant for regulations covering trade in a range of other goods. Discussions relating to the TRIPS Agreement will also be particularly relevant to human rights issues arising under other agreements which impose extensive regulatory burdens on WTO Member States such as the SPS Agreement and the TBT Agreement, although there will obviously be additional subject-specific human rights issues which arise with regard to each WTO agreement which is considered.

V. INTERPRETATION OF THE OBLIGATIONS THAT ARISE FROM ICESCR PROVISIONS

As can be seen from the above discussion, the OHCHR reports largely rely on ICESCR to specify the human rights obligations that are relevant in the trade law context. But the human rights that are set out in ICESCR are not in themselves greatly detailed. It is therefore difficult for many commentators (particularly those from a trade law background) to see how these create specific obligations that are relevant in the context of international trade law. As one trade expert has pondered: What is the ‘right to health’? What is the ‘right to food’, and what does such a right entail in terms of the rights and obligations of States? And why and how are they relevant to WTO obligations?27

The OHCHR reports largely rely upon the outputs of the Committee which monitors ICESCR—CESCR to specify in greater detail the nature of the obligations set out in ICESCR. Unlike a number of the other UN human rights treaty monitoring bodies, CESCR has no power to consider individual complaints, so there is no (quasi-)jurisprudence to rely on.28 But, like all the other treaty monitoring bodies, CESCR has written a series of ‘General Comments’ that provide a detailed explanation of the content of ICESCR rights. These General Comments are much utilised in the OHCHR reports to provide more detailed 27 G Marceau, ‘WTO Dispute Settlement and Human Rights’ (2002) 13 European Journal of International Economic Law 753–814 at 786ff. See also for a criticism of the vagueness of the right to health D P Fidler, International Law and Infectious Diseases (Oxford, Oxford University Press, 1999). 28 See http://www.ohchr.org/english/bodies/cescr/index.htm, accessed on 14 Nov 2006.

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132 Assessing Compliance & Cooperation-Based Measures guidance about the specific obligations that the human rights in ICESCR give rise to. Each General Comment sets out the content of the right, in terms of the obligations on States to respect, protect and fulfil the right, the core elements of the right,29 the level of international cooperation relevant to the implementation of the right, as well as acts constituting violations of the right. The OHCHR reports focus upon the General Comments on health, food and education and health.30 Of particular relevance with regard to the TRIPS Agreement, the General Comment on the right to health contains requirements to promote research, especially into diseases such as HIV/AIDS, provide access to affordable treatments, in particular essential drugs, and take steps to control diseases. Of particular relevance in the context of the GATS, CESCR’s General Comments on the rights to health and education state that the provision of these basic services must be according to certain criteria, the most important of which for this discussion are availability and accessibility. Availability means that the State must make available sufficient schools and essential health-care facilities. Accessibility means that there must not be discrimination in provision—education should be affordable to all, not provided on the basis of who can pay for it. In terms of health, there must be appropriate resource allocation, in particular, not disproportionately expensive ‘curative health services’ only available to the rich, ‘rather than primitive and preventative health care benefiting a far larger part of the population.’ Of particular importance with regard to the AoA, CESCR has elaborated on the right to food and stated it is realised ‘when everyone has physical and economic access at all times to adequate food or means of procurement’. So, food must be available in sufficient quantity and quality, either produced directly from the land or from a well-functioning system of distribution. Second, food must not be so expensive that it threatens an individual’s ability to purchase it as well as having money for other basic needs. Thirdly there is the physical aspect—adequate amounts of food must be available to everyone and all groups. There has been no attempt here to set out the full detail of the General Comments or extensively analyse their legal content.31 But even from this brief overview of their relevance to the subject matter under discussion here, it can be seen the extent to which the General Comments are important in providing a more detailed content for the rights contained within ICESCR. Further evidence of this is provided in chapter nine from the case study of TRIPS and ‘access to essential medicines’, which is specified in the General Comment on the Right to 29 These core elements are generally stated in terms of the availability, accessibility, affordability, quality and other key ingredients of essential goods and services. 30 There is also the General Comment on the right to water, relevant to this discussion, but produced subsequently to the OHCHR reports discussed here. 31 There has been no comprehensive academic analysis of the legal implications of the General Comments undertaken to date as far as this author is aware.

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Obligations that Arise from ICESCR Provisions 133 Health.32 It is the inclusion within the General Comment on the Right to Health of a requirement on the provision of essential medicines that is (part of) the focus of the debate, from a human rights perspective, on patents and pharmaceutical drugs.33 The OHCHR reports utilise the General Comments to explain in greater detail the content of the rights as set out in ICESCR. The OHCHR reports do not, however, address the status of the General Comments within international law, and therefore what their effect would be in a trade law context. They are presented as simply expanding the content of the rights which appear in ICESCR. But this is an important question. How should we gauge the status to be accorded to the General Comments, and therefore the extent to which they can be utilised to assert human rights obligations that must be taken into account in formulating and applying international trade law rules? As with the General Comments of all the other UN human rights treaty monitoring bodies, there is no pronouncement on the status to be accorded to the General Comments within ICESCR itself. Although the General Comments do not have a formal legal status, CESCR has developed this procedure into a quasi-legislative mechanism. The Committee introduced the practice of adopting General Comments on different aspects of the Covenant and the Committee’s practices in 1989.34 The aim of this procedure was stated to be to make ‘the experience gained so far through the examination of [State] reports available for the benefit of all State Parties in order to assist and promote their further implementation of the Covenant.’35 Although, therefore the Committee does not explicitly claim that the General Comments are expounding upon and expanding the legal content of the rights in ICESCR, they have, in reality, set out a number of more detailed and specific criteria that States need to adhere to in order to meet their human rights obligations as set out in ICESCR. This quasilegal status is to an extent supported by the tacit acceptance by States Parties to ICESCR, both of the ongoing formation of General Comments, and their utilisation as a mechanism by which to assess State reports under the Covenant.36 32 CESCR, The right to the highest attainable standard of health, General Comment No 14 (2000) (E/C.12/2000/4.CESCR) at paras 17 and 43(d). 33 This is not to say that without the reference in the General Comment there would be no obligation under the right to health to provide essential medicines. Rather that the General Comments represent a semi-formal mechanism for codifying such requirements at the international level. 34 K Arambulo, Strengthening the Supervision of the International Covenant on Economic, Social and Cultural Rights, Theoretical and Procedural Aspects (1999, Antwerp, Intersentia-Hart) at 40. 35 Report of the fifth session of the CESCR (E/C.12/1990/8) at para 44. 36 In the Concluding Observations of CESCR on the State Reports, consistent use has been made of the General Comments over a number of years, to identify a number of the obligations that states need to meet in order to comply with their obligations under ICESCR. Among Concluding Observations for 2004, General Comments are utilised in order to specify the obligations of States Parties in concluding obligations on Malta (para 26), Denmark (para 34), Italy (paras 29, 47, 49 and 50), Azerbaijan (paras 36, 54 and 56), Chile (paras 28, 30, 51 and 56) Ecuador (paras 53 and 59), Lithuania (paras 47 and 51), Greece (32, 42 and 48), Kuwait (paras 27 and 45) and Spain (paras 38 and 39).

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134 Assessing Compliance & Cooperation-Based Measures The legitimacy of the General Comments is further enhanced by the methodology adopted in their formation. In the case of each General Comment, the treaty monitoring bodies undertake wide consultation including among other relevant international organisations in order to attempt to ensure that the final draft reflects the consensus of expert international opinion on the issue in question. The status of the General Comments can also be ascertained to a certain extent by the attitudes of national courts, tribunals and legislators, and their views on the status of the work of the UN human rights treaty monitoring bodies in general, and the General Comments of CESCR in particular. The Committee on International Human Rights Law and Practice of the International Law Association has produced two recent reports that have analysed this question.37 Having surveyed a wide range of State practice the second report concludes that: [T]he material surveyed in the two reports shows that treaty body output has become a relevant interpretive source for many national courts in the interpretation of constitutional and statutory guarantees of human rights, as well as in interpreting provisions which form part of domestic law, as well as for international tribunals. While national courts have generally not been prepared to accept that they are formally bound by committee interpretations of treaty provisions, most courts have recognised that, as expert bodies entrusted by the States’ parties with functions under the treaties, the treaty bodies’ interpretations deserve to be given considerable weight in determining the meaning of a relevant right and the existence of a violation.38

This finding is supported by the case law of national courts with regard specifically to the General Comments of CESCR. A number of courts have placed considerable weight on the General Comments of CESCR in coming to determinations of the content of relevant economic, social and cultural rights.39 37 Committee on International Human Rights Law and Practice, International Law Association, Interim Report on the Impact of the Work of the United Nations human rights treaty bodies on national courts and tribunals, (Delhi, 11 May 2002); Committee on International Human Rights Law and Practice, International Law Association, Final Report on the Impact of the Findings of the United Nations Treaty Bodies, (Berlin, 2004). 38 Committee on International Human Rights Law and Practice, ibid at para 175. 39 With regard to the General Comments of CESCR, in one South African case, the High Court stated that General Comments have authoritative status under international law and continued by quoting General Comment No 12 of the CESCR in explaining the duty to respect ‘rights of access’ (Residents of Bon Vista Mansions v Southern Metropolitan Local Council (2002) 6 BCLR 625 at 629 paras 17–18, High Court Witwatersrand, Local Division). In another case in the South African Constitutional Court concerning rights of access to housing, the Court made extensive use of the work of CESCR including in particular the Committee’s General Comment No 3 (Government of the Republic of South Africa and Others v Grootboom and Others (2000) (11) BCLR 1169). The Swiss Federal Supreme Court has stated that CESCR’s General Comments are ‘of importance for the interpretation and jurisprudential development [of the Covenant] though they are not directly binding’ (A and B v Regierungsrat des Kantons Zürich, Judgment of 22 Sept 2000, § 2(g), Swiss Federal Supreme Court (Bundesgerichtf)). Positive citations of the General Comments of CESCR are also found in cases from Mauritius (Tengur v The Minister of Education and the State of Mauritius Record No 77387) and Latvia (Case No 2000–08–0109, judgment of Mar 2001) where the courts utilise the General Comments to support their own reasoning.

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Obligations that Arise from ICESCR Provisions 135 Academic commentators have also noted the importance of the General Comments in setting out the content of the rights set out in ICESCR in the international trade law context. The expertise of the Committees, their capacity to make pronouncements on a States’ human rights performance and the fact that they have been entrusted to such a role by State Parties themselves, means that the General Comments can be viewed as ‘expert doctrine for the interpretation of human rights law’, and contribute to a ‘general understanding of what human rights standards imply, and to the development of customary law and general international law in the field.’40 From the above discussion it can be seen that the General Comments of CESCR have gradually developed into an important interpretative tool for expanding upon the rights under ICESCR. But what is their relevance in the WTO context? At this stage of their development it would be extremely contentious for one State to argue that it was entitled to condition its trade with another State based on that State’s adherence to the obligations contained in the General Comments—particularly if it was imposing trade restrictions on that State as a result of non-compliance with provisions of the General Comments. In that scenario, States would be using General Comments as the relevant human rights norms and standards on the basis of which to take countermeasures according to rules of general international law. However, in the context of the discussion here States would be utilising the General Comments as interpretative tools in order to state their own ICESCR obligations in situations where they were in apparent conflict with WTO rules and principles. In the latter case, it is submitted that a much lesser degree of consensus is required about whether the General Comments are appropriate legal standards upon which to base trade-related measures aimed at the protection and promotion of human rights.41 The General Comments are therefore potentially important interpretative tools in the context of a WTO Member State’s obligations to its own population (as well as when States are taking measures to co-operate with other States in order help them fulfil their human rights obligations), in a way that is far more difficult to sustain when considering conditionality-based human rights measures. The above argument is not intended to suggest that, as a result of the General Comments, the content of all relevant human rights is now precisely defined in a way that makes them immediately applicable in the context of international trade law. There will still be interpretations needed in defining the precise nature of the obligations that human rights give rise to. Recommendations are made in chapter 12 with regard to the need for further enunciation of the specific human rights law obligations that arise in the trade law context. But the 40 C Dommen, ‘Claiming Environmental Rights: Some Possibilities Offered by the United Nations Human Rights Mechanisms’ (1998) 11 Georgia International Environmental Law Review 21; Sigrun Skolgy, Human Rights Obligations of the World Bank and the International Monetary Fund (London, Cavendish Publishing, 2001) at 144; G Marceau, above n 27. 41 This argument will be expanded upon in the context of the jurisdictional discussions in ch 11.

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136 Assessing Compliance & Cooperation-Based Measures General Comments certainly help in defining more concrete obligations from the more generalised rights set out in ICESCR and are also potentially of legal importance when States are asserting their need to take measures to protect and promote the human rights of their own population.

VI. DIFFERENT METHODOLOGICAL APPROACHES OF INTERNATIONAL TRADE LAW AND INTERNATIONAL HUMAN RIGHTS LAW

Nowhere do the OHCHR reports claim that a common methodological approach is required when dealing with all the human rights issues that arise with respect to all three agreements that are analysed. This is unsurprising since the OHCHR provide us with reports that cover three of the key areas of the world trading system—trade in goods (specifically agricultural goods), trade in services and intellectual property protection. This breadth inevitably means that in a number of aspects they represent very different types of trade agreements. The purpose of the GATT is the reduction of tariffs in order to achieve nondiscrimination in international trade, and the AoA is a specific legal instrument operating within the GATT framework concerned with liberalisation of the agricultural sector. So the Report on AoA concentrates on how liberalization commitments may have negative human rights impacts. The TRIPS Agreement on the other hand is no longer based on the original GATT philosophy which was limited to promoting non-discrimination and trade openness. Rather it places positive obligations on Member States to create minimum regulatory and enforcement mechanisms for intellectual property protection.42 So, the Report on TRIPS concentrates on how the regulatory and enforcement mechanisms mandated by the TRIPS Agreement may have negative human rights impacts. The GATS Agreement is more similar to the GATT in that its primary motivation is liberalisation, this time of services. But the nature of service delivery is such that there is much greater need for internal regulation of service provision within WTO Member States than there is for trade in goods. There are therefore greater regulatory burdens on States as a result of GATS obligations, which can potentially conflict with human rights objectives, particularly with regard to provision of essential services. The Report on GATS assesses all the very different ways in which regulation of service delivery can impact upon the protection and promotion of human rights. As a result of their differing objectives and regulatory burdens, there are bound to be different human rights issues that arise in relation to each of the three agreements. But, there are also a number of human rights concerns that arise in respect of all three OHCHR reports and therefore can be seen as

42 V Heiskanen, ‘The Regulatory Philosophy of International Trade’ (2004) 38 Journal of World Trade 1–36 at 11ff.

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Different Approaches of Trade Law and Human Rights Law 137 common to an assessment of the human rights impact of all of the agreements under consideration. This suggests that there are systemic issues that arise with regard to WTO rules and regulations in general, and these issues will be the focus of the current study. On the basis of an analysis of the OHCHR reports, some of these systemic issues are analysed below in order to show that, in a number of respects, a common approach to potential conflicts between trade law and human measures is justified, even if the different regulatory structures and aims of specific agreements will lead to some human rights issues arising uniquely in particular contexts. With regard to all WTO Agreements, it should first of all be noted that it is not assumed that international trade law rules will automatically and inherently conflict with a WTO Member State’s human rights obligations towards its own population. International human rights law does not take a position that is for or against any particular trade rule or policy. If a trade rule enhances the enjoyment of human rights for a country’s population, including for those living in poverty and other vulnerable and disadvantaged groups, then adopting that trade rule will be in conformity with human rights standards.43 As was discussed in chapter three, the OHCHR reports point out that there are a number of ways in which international trade rules in fact enhance, or have the potential to enhance human rights.44 The OHCHR reports make clear however that, although it is important to highlight potential positive aspects of each WTO Agreement for the promotion and protection of human rights, the primary focus of a State’s human rights approach to trade liberalisation must be to concentrate on the ‘losers’ within its jurisdiction and ensure that their fundamental human rights are not infringed. The OHCHR reports stress the fact that a human rights approach to trade liberalisation entails States having to consider the welfare of their entire populations and whether the autonomy they lose in ratifying WTO agreements will affect their ability to fulfil their human rights obligations.45 The contrast between the aims and objectives of an economic law and human rights law approach are implied, if never fully expanded upon, in all of the OHCHR reports. The Reports on GATS and AoA use almost identical wording to state that: [W]hile WTO Agreements provide a legal framework for the economic aspects of the liberalisation of trade, they focus on commercial objectives. The norms and standards

43 P Hunt, above n 21, at para 11. The Special Rapporteur also provides for a second procedural requirement; ‘the process by which the rule or policy is formulated, implemented and monitored must be consistent with all human rights and democratic principles.’ 44 See for instance, The Report on TRIPS, above n 9 at para 37ff and para 50, The Report on AoA, above n 9 at paras 27 and 33, The Report on GATS, above n 9 at paras 15, 39 and 41–48, The Report on Investment, above, n 16, at para 6. 45 The Report on GATS, above n 9, para 9, The Report on TRIPS, above n 9, at para 24, The Report on AoA, above n 9, at para 40.

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138 Assessing Compliance & Cooperation-Based Measures of human rights provide the means of providing a legal framework for the social dimensions of trade liberalisation.46

The Report on TRIPS echoes this in stating that the overall thrust of the TRIPS Agreement is the promotion of innovation through the provision of commercial incentives.47 While the commercial objectives of WTO Agreements may also enhance the protection and promotion of human rights this will not always be the case. There are numerous examples in the OHCHR reports highlighting the potential dangers of a purely commercial approach to international trade rules from the human rights perspective. So for instance, as was noted above, the provision of essential medicines has been specified by CECSR as an essential part of the human right to health. But in the Report on TRIPS, the WHO is quoted as noting that: [T]he commercial motivation of IPRs means that research is directed, first and foremost, towards ‘profitable’ disease. Diseases that predominantly affect people in poorer countries—in particular tuberculosis and malaria—still remain relatively under-researched.48

Questions therefore remain concerning whether the system of patent protection promoted by the TRIPS Agreement will encourage investment in medicines for the majority of the world’s poor. While the positive impact of TRIPS may therefore be limited, the potential for a negative impact of an overly commercial approach is also apparent; a significant concentration of control over the dissemination of drugs in the hands of certain corporations whose primary aim is to maximise profit from the drugs they have produced.49 As has been well documented in recent years, poorer individuals and countries may not be able to afford the prices charged as a result of patent protection.50 The particular issues arising with regard to the TRIPS Agreement will be discussed further in the next chapter, but a similar problem of potential overemphasis on commercial concerns arises within the context of the AoA; while trade liberalisation may lead to increased competitiveness with foreign producers, and therefore better value for consumers, those involved in agricultural production may be adversely effected with potential human rights implications. The report cites studies undertaken by the Food and Agricultural Organisation 46 The Report on GATS, above n 9, at para 10. The Report on AoA, above n 9, at para 4 states: ‘Moreover, a human rights approach provides balance to the liberalisation of trade. While the WTO agreements provide a legal framework for the economic aspects of the liberalisation of trade, the norms and standards of human rights balance this by offering a legal framework for the social dimensions of trade liberalisation.’ 47 The Report on TRIPS, above n 9, at para 22. 48 The Report on TRIPS, above n 9, at para 38. 49 The Report on TRIPS, above n 9, at para 39. 50 Eg see N A Bass, ‘Implications of the TRIPS Agreement for Developing Countries: Pharmaceutical Patent Laws in Brazil and South Africa in the 21st Century’ (2002) 34 George Washington International Law Review 191.

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Different Approaches of Trade Law and Human Rights Law 139 (FAO) on the impact of the AoA on 14 developing countries which found that trade liberalisation has led to a number of trends, including: [T]he consolidation of farms as competitive pressures build up following trade liberalisation. However, while this has contributed to an increase in productivity and competitiveness, it has also led to the displacement and marginalisation of farm labourers. This has created hardship for small farmers and food-insecure populations, in situations where there are few safety nets.51

States’ commitments to trade liberalization in agriculture (as well as industrial sectors) in developing countries could therefore have implications for the enjoyment of the right to food and the right to development—particularly for rural populations, poor farmers and farm workers. With regard to the GATS, less concrete examples are provided in the Report on GATS of clashes between GATS provisions themselves and human rights obligations. This is understandable, since very few countries have actually made any commitments as yet in essential services such as health and education that are considered in the report. There is great disagreement as to the human rights implications that such commitments will entail. Proponents of the GATS emphasise that no governments are forced to liberalise any such essential services. This is a sovereign decision, and any essential service which is entirely run by the government is exempt from GATS rules.52 Even where a country has some privately run health or education services, countries are only obliged to ensure MFN treatment to all foreign service suppliers under the GATS general framework.53 It is only when countries make commitments for specific sectors, such as health or education that they then undertake additional commitments on national treatment54 and limitations on their ability to impose restrictions on market access. Critics argue that the GATS will lock countries into progressive liberalisation commitments, which will contribute to an approach to the provision of services that focuses on those that are commercially profitable.55 Further, the broad scope of the GATS Agreement has led to confusion and uncertainty as to what exactly will be covered by its remit.56 51 See FAO, Agriculture, Trade and Food Security Issues and Options in the WTO Negotiations from the Perspective of Developing Countries, Vol II, Country Case Studies, (Rome, FAO, 1999) for descriptions of specific food security issues that farm workers in developing countries face in the context of liberalisation. 52 GATS Art 1.3. (b). 53 Meaning equal treatment of all foreign business. 54 Meaning treatment for foreign businesses no less favourable than the treatment of like domestic businesses. 55 See A J VanDuzer, ‘Navigating between the Poles: Unpacking the Debate on the Implications for Development of GATS Obligations Relating to Health and Education Services’ in E-U Petersmann (ed.) Reforming the World Trading System: Legitimacy, Efficiency and Democratic Governance (Oxford, Oxford University Press, 2005) 167–205 for a summary of both sides of this argument. 56 See A J VanDuzer, ibid, at 193ff who notes, for instance, that WTO Members do not seem to be precisely sure when public and private sector education and health providers will in fact be in competition with each other and therefore subject to non-discrimination provisions.

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140 Assessing Compliance & Cooperation-Based Measures One possible implication of an overly commercial interpretation of the GATS is the danger that the vast differences in wealth between individuals and countries will lead to a system which is focused on providing for those that have the economic power to pay for it. So, the Report on GATS warns against a twotiered ‘service-supply with a corporate segment focused on the healthy and wealthy and an under-financed public sector focusing on the poor and the sick.’57 This can also lead to a so-called ‘brain drain’ where better practitioners are naturally drawn to the better pay and conditions of the private sector. The same issue can occur with regard to the movement of national persons under GATS; there are perhaps increased risks of the permanent or semi-permanent movement of skilled persons from poorer to richer countries, a problem recognised by leading economic theorists as a problem for developing countries.58 While liberalisation has the potential to introduce increased FDI, thereby enhancing the infrastructures for the provision of essential services,59 it also has the potential to threaten the universal provision of such services, as noted by the World Bank.60 A recent example of the problems of liberalisation can be seen in Cochabamba, Bolivia. The Report on GATS states that: [T]he city’s water system was liberalised to the subsidiary of a foreign service provider, leading to price increases of more than 35 per cent. This resulted in mass demonstrations and strike action that led the Government to reverse the decision to liberalise the sector and restore public ownership.61

The action of the government appears consistent with its human rights obligation to take measures to ensure access to an adequate and affordable supply of safe drinking water according to CESCR (General Comments on the right to health and the right to water). But the potential of a threat to universal provision of essential services is clear, and future liberalisation of essential services such as water, health or education services must ensure that universal provision is not threatened.

VII. DIFFERING PRINCIPLES OF NON-DISCRIMINATION

The examples presented above highlight some of the potential negative impacts of an overly commercial approach to international trade rules on the protection and promotion of human rights. They are indicative of the different underlying 57 The Report on GATS, above n 9, at executive summary page 3 (a). See also Paul Hunt, above n 21, at 13–14. 58 Eg W Easterly, The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics (Cambridge, MIT Press, 2002). This phenomenon can currently be witnessed for instance in the continuing exodus of nurses from South Africa to the United Kingdom, see ‘Our Country Needs You’, The Economist, (17 May 2003). 59 The Report on GATS, above n 9, at para 43. 60 World Bank, Global Economic Prospects, Trade in Services: Using Openness to Grow, (Washington, World Bank October 2001), at 8. 61 The Report on GATS, above n 9, at para 49.

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Differing Principles of Non-discrimination 141 philosophies of human rights and international trade law as set out in chapter three. They are also suggestive of the fact that international trade law is based on the commercial need for predictable rules that allow effective competition between equally treated market participants. Protection and promotion of human rights, on the other hand, requires the flexibility to take measures to stop abuses occurring, particularly with regard to the vulnerable or disadvantaged. This difference of approach is perhaps best perceived in the differing interpretations of the principle of non-discrimination under the two legal systems. The principle of non-discrimination is absolutely fundamental to both systems of law.62 The importance of this issue is highlighted by the fact that there is one OHCHR report devoted entirely to the issue of non-discrimination in trade law and international human rights law.63 It is probably the most problematic methodological difference between the two systems. The principle of non-discrimination in trade law is not to discriminate between nationals and non-nationals and to treat both equally in terms of market access in order to remove unnecessary barriers to trade. The principle of non-discrimination in human rights law is designed to achieve ‘justice and equality between all individuals, whatever their status.’ It does not require equal treatment in all cases, but on the contrary necessitates affirmative action where appropriate in order to protect and promote the rights of the most vulnerable groups in society.64 While the equal treatment of nationals and non-nationals may have overall welfare-increasing tendencies (eg by reducing the cost of many goods and services to the average consumer), there are worries that it may not allow room for the application of the principle of non-discrimination in human rights law, and in particular the use of affirmative action where necessary in order to take action to promote equality. So, for instance, the National Water Act of South Africa grants certain favourable treatment to racial minorities in South Africa, because of past discrimination in the grant of water licences.65 But could such affirmative action to achieve non-discrimination under human rights law standards potentially lead to a violation of the principle of non-discrimination under international trade law; potentially violating the national treatment provision of the GATS which prohibits measures that give better treatment to a ‘like’ national service provider over a foreign service provider.66 More generally, non-discrimination in human rights law terms would mean that certain basic and goods services must be supplied to the whole population such as food, primary education, water or basic healthcare services. But there may be circumstances where this requires affirmative action in order to promote 62 For its importance to trade law see discussion in ch 1. With regard to human rights law, The Report on Non-Discrimination, above n 18, states at para 7 ‘The principle of non-discrimination is perhaps the dominant and most powerful principle of international human rights law.’ 63 The Report on Non-Discrimination, above n 18. 64 The Report on GATS, above n 9, at para 8 and 59, The Report on AoA, above n 9, at 43. 65 The Report on Investment, above n 16, at para 31(b). 66 Much will depend here on the interpretation of ‘like’, for which see discussion below.

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142 Assessing Compliance & Cooperation-Based Measures universal provision. An important issue highlighted by the OHCHR in the context of the GATS is that of ‘cross-subsidisation’, whereby governments use the money they have gained by for example, providing health and educational services to the rich to subsidise those paid to the poor.67 The Report on GATS questions whether the GATS might require that governments, according to the principle of non-discrimination, provide similar subsidies to all service suppliers in that sector, leading to escalating costs and the probable withdrawal of all subsidies with negative human rights consequences.68 A number of examples of policies (based on real life situations) that might infringe GATS nondiscrimination provisions are provided by Andrew Lang in his article on the effects of GATS on the water industry. He cites the example of two water companies working in different areas under the terms of two separate concession contracts. One operates in a poor region, and is thus granted preferential tax treatment and heavy subsidies. This action is taken by the government in order to keep the cost of water to consumers as low as possible. The other operator is granted no subsidies, and is subject to a number of burdensome regulatory rules (eg over wasted water) which are expensive to adhere to.69 Such differential treatment could amount to discrimination under the GATS, despite the fact that this action would most likely be justified from a human rights perspective on the grounds of taking affirmative action to promote access to essential services. As CESCR, in its General Comment on the Right to Water has stated: To ensure that water is affordable, States parties must adopt the necessary measures that may include, inter alia: . . . (b) appropriate pricing policies such as free or low-cost water; . . . Any payment for water services has to be based on the principle of equity, ensuring that these services, whether privately or publicly provided, are affordable for all, including socially disadvantaged groups. Equity demands that poorer households should not be disproportionately burdened with water expenses as compared to richer households.70

Similar situations can be envisaged in the provision of other essential services, such as health or education. Uncertainties such as those presented above over what forms of regulation and government intervention will be permitted under the GATS regime are holding up current WTO negotiations over GATS commitments since Member States are looking for more certainty over the degree of regulatory autonomy they will retain when making commitments in specific service industries.71 It is submitted that specifying that States can take measures based on human rights obligations, such as those set out in the CESCR General

67

The Report on GATS, above n 9, at para 60. It recognises (para 61) that such a scenario is dependent on many variables, including, as is mentioned below, the issue of how ‘like’ service-providers is defined. 69 A Lang, above n 6, at 811. 70 E/C.12/2002/11 (20 Jan 2003) at para 27. 71 See ‘Services ‘Cluster’ Focuses on Domestic Regulation, LDC Treatment’ in Bridges Weekly Trade News Digest (28 Jun 2006). 68

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Overcoming Human Rights Violations 143 Comment above, would be the basis for allowing genuine measures to be differentiated from those which are primarily a form of disguised protectionism. There are similar potential issues with regard to the provision of essential medicines and the TRIPS Agreement. Under international human rights law, affirmative action may be required to ensure that the poorest and most vulnerable persons have access to medicines, but does the TRIPS Agreement ensure that this will occur? There will be a detailed discussion of this issue in the next chapter. With regard to the AoA, all States have obligations to establish strategies to promote and protect the right to food in order to guarantee food to vulnerable peoples.72 The Report on AoA mentions a study of Sri Lanka where 300,000 farm labourers involved in the production of potatoes were negatively affected by tariff reductions. There is a human rights obligation to protect such farm workers, who have few safety nets, from the negative effects of the process of liberalisation. In such cases affirmative action may well be appropriate in a human rights context to protect the right to food and development of individuals affected. This raises issues as to whether obligations to liberalise should be subject to requirements that such people are provided with basic human rights requirements if they lose their jobs as a result, both at the national level and through cooperation-based measures of the international community. One further key issue to be resolved in order to apply a human rights approach to non-discrimination within a trade context is the ability to distinguish between different types of producers and service providers. Can effective distinctions be made under international trade law rules between producers or service providers who, from a human rights perspective, are very different in character; for instance between subsistence farmers, and multinational food companies, or not for profit educational charities for disadvantaged communities and commercial education providers? Governments may wish to ‘discriminate’ between the former and latter categories in order to take affirmative action and thereby promote substantive non-discrimination in human rights law terms. It is crucial for a human-rights compatible interpretation of WTO Agreements that such discrimination is permitted under WTO law.

VIII. MECHANISMS IN THE TRADE AGREEMENTS FOR OVERCOMING POTENTIAL HUMAN RIGHTS VIOLATIONS

As was noted earlier in this chapter, the OHCHR reports all concentrate on how WTO Agreements can be interpreted in a way that protects and promotes human rights. The OHCHR reports all recognise that there are mechanisms within WTO Agreements which do provide the potential opportunity for both compliance-based and cooperation-based measures to be taken in accordance with trade law rules, and for the differing principles of trade law and human 72

The Report on AoA, above n 9 at para 13ff.

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144 Assessing Compliance & Cooperation-Based Measures rights law explained above to be reconciled.73 For the sake of the current discussion, these mechanisms have been divided into three categories. First there are special and differential treatment provisions for developing countries. Because developing countries are those where human rights violations are most likely to occur, these clauses have the potential to allow measures to protect and promote human rights in a way that is analogous to taking affirmative action under international human rights law. The AoA for instance, gives developing countries longer implementation periods and lower reduction rates in implementing commitments to reduce tariff barriers. There is also the Marrakech Decision, which provides for various international responses to the problems of the least developed countries such as the provision of food aid where an adequate food supply is threatened. The TRIPS Agreement also has provisions for special and differential treatment for developing countries. For instance it allows for longer implementation periods for TRIPS commitments for both developing and least developed countries.74 Second, there are also so-called ‘general exception clauses’ in the majority of WTO agreements including those for the protection of public morals and human, animal and plant life.75 Many commentators have argued that these clauses are capable of being, and ought to be, interpreted to allow countries to take measures to protect and promote human rights. The United Nations Secretary-General has himself stated: Looking at the WTO Agreements themselves, the guiding principles can be said to mirror, to some extent, the principles of human rights law and, as such, to provide an opening for a human rights approach to the international trade regime. . . . The exceptions referred to call to mind the protection of the right to life, the clean environment, the right to food and to health, the right to self-determination over the use of natural resources and the right to development and freedom from slavery to mention a few.76

There are also more specific exception clauses that allow measures to be taken, derogating from obligations under WTO agreements in specific circumstances. For example, the TRIPS Agreement allows for various mechanisms such as compulsory license agreements that allow States in certain circumstances to exempt themselves from their IP obligations in order to promote the public interest or in cases of national emergency.77 A third mechanism for potentially ensuring the human rights compatibility of WTO Agreements is to interpret key terms within the main provisions of the Agreements so that they take into account key human rights law norms and 73 The Report on TRIPS, above n 9, at para 20, The Report on AoA, above n 9 at para 25, The Report on GATS, above n 9 at para 63. 74 TRIPS Agreement, Arts 65 and 66. 75 GATS Agreement Art XIV, GATT Art XX. 76 United Nations, Globalisation and its Impact on the Full Enjoyment of all Human Rights— Preliminary Report of the Secretary-General of the United Nations 31 August 2001 (A/55/342) at 4. 77 Compulsory licence agreements allow governments to authorise a third party to produce a product irrespective of the wishes of the patent holder.

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Limitations of the Mechanisms 145 principles. For instance, the Report on GATS highlights the fact that nondiscrimination in trade law prohibits a State from discriminating between ‘like’ service providers. But it is pointed out that much depends on the interpretation of ‘like’; ‘Would for example, a not-for-profit education service supplier be ‘like’ a for-profit education supplier?’78 If governments could distinguish between ‘like’ service providers, then there would be the potential to utilise mechanisms such as, for instance, ‘cross-subsidisation’79, whereby governments use the money they have gained by for example, providing health and educational services to the rich to subsidise those paid to the poor. Similarly governments need to be able to distinguish between subsistence farmers and large commercial agricultural businesses in providing help and support.

IX. LIMITATIONS OF THESE MECHANISMS

While the OHCHR reports recognise that these provisions highlighted above potentially offer mechanisms for taking measures to protect and promote human rights while complying with WTO obligations, they also note that these provisions are all broad in scope. Therefore a range of different interpretations are possible. Interpretations of WTO agreements that allow governments to observe their ongoing obligations to promote and protect human rights are of vital importance.80 But, from a human rights perspective, the OHCHR reports point out there is little guidance for the interpretation of clauses in the agreements which could serve human rights functions. All of the provisions that potentially provide an opportunity for the balancing of human rights against principles of free trade are either not central provisions of the Agreements, or lack sufficient clarity or enforceability.81 For instance, it is pointed out that the fact that the general exception clauses are not placed at the centre of the Agreements, but as exceptions to the general rules leads to concerns that they are not given the degree of significance that human rights concerns should be given if raised in those circumstances.82 They are set out with insufficient detail to understand the mechanism by which these are to be balanced with the main clauses in the agreements.83 This is perhaps a reason why such mechanisms have never been utilised to directly raise human rights issues in the WTO. Similar problems arise where attempts are made to interpret main provisions of WTO Agreements in a way that promotes and protects human rights. There 78

The Report on GATS, above n 9 at para 24. The Report on GATS above n 9 at para 60. 80 Eg The Report on TRIPS, above n 9, at para 28, The Report on AoA, above n 9, at para 38, The Report on GATS, above n 9, at para 54. 81 The Report on GATS, above n 9, at para 63 and fn 67, The Report on AoA, above n 9, at paras 26 and 43, The Report on TRIPS, above n 9, at para 22ff. 82 The Report on GATS, above n 9, at para 63. 83 The Report on TRIPS, above n 9, at para 23. 79

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146 Assessing Compliance & Cooperation-Based Measures is little guidance on how to interpret key terms where numerous different interpretations are possible, some of which would protect and promote human rights, while other interpretations might prevent a human rights compatible approach. For instance, a number of commentators have argued for an interpretation of ‘like’ products under the GATT Agreement which is capable of distinguishing between products on human rights grounds, but such interpretations are based on analyses of existing GATT jurisprudence which do not directly deal with human rights issues, and it is difficult to predict how future human-rights based claims might be evaluated. There is no guarantee that future dispute settlement panels would follow such approaches.84 Similar concerns are now being raised about interpretation of ‘like services’ under the GATS Agreement.85 Andrew Lang, for instance, has argued that there are a number of strategies that can be adopted on the basis of the GATS text in order to argue for regulatory diversity and therefore the possibility of social regulation, but the lack of certainty in terms of how provisions will be interpreted means that it is unclear which measures will be seen as legitimate and lawful under WTO rules.86 Further, many of the special and differential treatment provisions are ‘best endeavour’ commitments that are not sufficiently targeted or enforceable.87 So for instance, the Marrakesh Decision has been criticised by United Nations Conference on Trade and Development (UNCTAD) (as well as by a variety of civil society groups) because it does not have an operational mechanism for carrying out the support measures it proposes.88 Similarly the Report on AoA cites the preamble to the AoA as including the objective of improving market access to developing countries, but not specifying the means by which this should be achieved.89 A failure to liberalise farm trade now threatens the entire Doha round of trade talks90 and liberalisation is primarily prevented by the tariff barriers and subsidies that developed countries provide for the benefit of their farmers.91 It can 84 Possible approaches to the interpretation of ‘like products’ and ‘like services’ will be discussed in ch 11. 85 See A Lang, above n 6, at 822f who undertakes a long analysis of the complications inherent in deciding whether two water companies are ‘like’, for which there is no guidance in the GATS Agreement. 86 A Lang, above n 6 at 836–7. These are: 1. A broad interpretation of the governmental authority exception. 2. A narrow understanding of the concept of ‘competitive relationship’. 3. A broader margin of appreciation under general exceptions. 87 The Report on TRIPS, above n 9, at para 22, also see H Lim, ‘Trade and Human Rights, What’s at Issue?’( 2001) 35 Journal of World Trade 275–300, at 295. 88 See UNCTAD, The Impact of the Reform Process in Agriculture on LDCs and Net-Importing Developing Countries and Ways to Address Their Concerns in Multinational Trade Negotiations, Background note by the UNCTAD secretariat, TD/B/COM.1/EM.11/2 and Corr.1, (23 Jul 2000) at para 30. 89 The Report on AoA, above n 9, at para 52. 90 ‘The Doha Squabble—A failure to liberalise farm trade threatens the entire round of Doha Trade Talks’ The Economist, (29 Mar 2003), at 61. 91 On Europe’s protectionism see Scandalous—Europe’s Common Agricultural Policy Should be Scrapped not Defended, The Economist, (5 Oct 2002), at 15.

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Conclusions 147 therefore be seen how general objectives such as ‘improving market access to developing countries’ may have the appearance of performing human rights functions, but without any kind of enforcement mechanisms, in fact lack any real significance. Similar criticisms are made in the Report on TRIPS, which argues that the TRIPS Agreement sets out in considerable detail the content of intellectual property rights. It is argued that a balanced human rights approach would also set out in similar detail the minimum standards required for protection against anti-competitive practices or the abuse of rights, as well as the special and differential treatment and the promotion of technology transfer for developing countries, which could potentially perform human rights functions.92 Without more detail as to the content of these provisions, it is very difficult to ascertain the extent to which they have been complied with.

X. CONCLUSIONS

This analysis of the OHCHR reports has demonstrated that human rights law and international trade law have in many ways fundamentally different underlying rationales and principles, and that this might lead to international trade law rules undermining the ability of WTO Member States to protect and promote the human rights of their own populations. But, they also demonstrate that there are mechanisms potentially available within WTO agreements which can be utilised to ensure that compliance and cooperation-based trade measures aimed at the protection and promotion of human rights do not require Member States to breach their WTO obligations. The question that remains, however, is whether WTO Member States can rely upon these mechanisms being interpreted in a way that allows them to protect and promote the human rights of their populations. It has been noted that in the case of all the mechanisms outlined above, while there are potential entry points for a human rights approach, much then depends on the specifics of how particular phrases and clauses are interpreted. The following chapter will be spent considering one of the issues considered by the OHCHR reports in greater depth—the issue of TRIPS and access to medicines. This issue is particularly interesting for analysis because a number of further developments have occurred since the OHCHR report was written which have tested the inherent flexibilities of the TRIPS Agreement, and its ability to adequately deal with the right to health concerns raised by the issue of access to essential medicines. Consideration of this issue will then allow us to draw some more generalised conclusions about the degree to which compliance and cooperation-based measures to protect and promote human rights can be utilised by WTO Member States without breaching their WTO obligations. 92

The Report on TRIPS, above n 9, at para 23.

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9 A Case Study of Compliance and Cooperation-Based Measures: The Trips Agreement and Access to Essential Medicines I. INTRODUCTION

T

HIS CHAPTER WILL consider the particular issue of how WTO Member States’ human rights obligation to provide access to essential medicines to their own populations, as well as to co-operate in providing assistance to other Member States, has been affected by WTO rules governing IP protection under the TRIPS Agreement. It will start by providing some more detailed background information on the effects of IP protection on access to medicines, particularly with regard to developing countries. It will go on to present how such issues would be resolved under international human rights law, before examining how they have been dealt with under the TRIPS Agreement. Some conclusions will be drawn about the human rights compatibility of the latter approach, and what lessons can be learned more generally for ensuring that WTO obligations allow WTO Members effectively to protect and promote the human rights of their own populations.

II. THE EFFECT OF INTELLECTUAL PROPERTY PROTECTION ON ACCESS TO ESSENTIAL MEDICINES

Pharmaceutical drugs are an essential component in the treatment of many of the world’s most serious health care problems. But at the heart of the recent debate over pharmaceutical drugs have been their prices. The price of many drugs is greatly increased by the intellectual property protection that is granted to their inventors, allowing pharmaceutical companies a number of years in which they have exclusive rights to market and sell their products. This raises some absolutely fundamental questions about the legal and moral balances of our society. To what extent should inventors be allowed to profit from their inventions, and to what extent should society limit the rewards they can obtain in order to take care of other important societal concerns such as public health?

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150 TRIPS and Access to Essential Medicines In terms of international trade law this argument has become particularly acute with regard to developing countries. While most developed countries have already instituted relatively strong systems of IP protection as a result of domestic policy choices, many developing countries are only now establishing systems of intellectual property protection as a result of their obligations under the TRIPS Agreement. There are very contentious arguments concerning the overall value of a strong system of intellectual property protection for developing countries. On the one hand it is argued that IP protection stimulates invention and creates economic growth.1 On the other hand it is argued that such systems can have a negative impact on domestic production and therefore development.2 It is beyond the scope of the current research to consider in any depth the relative merits of these two arguments. However, there does not appear to be any strong empirical evidence that a strong system of intellectual property protection is necessary for development, and many countries have had long periods of growth without strong IP protection. Many developed countries chose only to institute patent protection very late in their stages of development.3 There is also substantial evidence that the timing of the implementation of such a system is very important.4 Certainly, with regard to the TRIPS Agreement, the overall effects appear to have been to benefit developed countries more than developing countries. There is evidence of increased payments for patents from developing countries to developed countries as a result of TRIPS. Analysis by the World Bank shows that the net increase in patent rents for six developed countries if TRIPS obligations were fully implemented would be $40–60 billion a year.5 In respect of access to essential medicines, there is also a degree to which the advantages and disadvantages of intellectual property protection are contested. 1 Presenting these arguments see Commission on Intellectual Property Rights, Integrating Intellectual Property Rights and Development Policy (2002) at 1: With regard to the general benefits of IP protection, it is argued that they are an important mechanism for stimulating economic growth, which in turn contributes to poverty reduction. By encouraging invention and new technologies, this will lead to a subsequent increase ‘. . . in agricultural or industrial production, promote domestic and foreign investment, facilitate technology transfer and improve the availability of medicines necessary to combat disease.’ 2 Presenting these arguments see Commission on Intellectual Property Rights, ibid at 1: With regard to the negative effects of IP protection it is argued that: ‘IP rights do little to stimulate invention in developing countries, because the necessary human and technical capacity may be absent. They are ineffective at stimulating research to benefit poor people because they will not be able to afford the products, even if developed. They limit the option of technological learning through imitation. They allow foreign firms to drive out domestic competition by obtaining patent protection and to service the market through imports, rather than domestic manufacture. Moreover, they increase the costs of essential medicines and agricultural inputs, affecting poor people and farmers particularly badly.’ 3 F M Abbott, ‘Towards a New Era of Objective Assessment in the Field of TRIPS and Variable Geometry for the Preservation of Multilateralism’ (2005) 8 Journal of International Economic Law 77–100 at 81ff. 4 F M Abbot (1), ibid. 5 F M Abbot (1), above n 3, at 80. Also see H Sun, ‘The Road to Doha and Beyond: Some Reflections on the TRIPS Agreement and Public Health’ (2004) 15 European Journal of International Law 123–50 at 141.

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The Effect of IP Protection on Access to Essential Medicines 151 There are those who argue that strong global IP protection is essential for enhanced access to medicines to all, including those in developing countries; the ability to charge a fee to all those who use the medicines in question allows pharmaceutical companies to fund their research capacity and produce further innovative drugs in the future. Also it is argued that lack of protection for patents in developing countries means that there is little incentive for drugs companies to carry out research into diseases that affect those countries. Furthermore, it is argued that there are more important and significant reasons for lack of essential drugs in developing countries, for instance, national regulatory requirements for medicines, and inadequate distribution programmes, and a variety of poverty-related issues.6 It is also argued that there are other more significant actions than waiving patent protection that could be taken by the international community to ensure access to essential medicines in developing countries such as adequate provision of global funds to fight tropical diseases, and more public money for research and development (R&D) into medicines for diseases that primarily affect developing countries.7 But those arguments are rejected on a number of grounds. There is significant evidence that IP protection does have a substantial effect on access to medicines of developing countries; without IP protection in developing countries, more patients would be able to afford essential pharmaceutical drugs as they could be offered at substantially reduced prices in the form of so-called ‘generic drugs’.8 For instance, a 2001 study found that only 4 per cent of HIV/AIDS sufferers in developing countries were receiving the antiretroviral drugs they needed.9 According to a joint UN programme on HIV/AIDS ‘the high prices of HIV/AIDS treatments are due, in part, to patent protection which allows control over their manufacture and sale.’10 Although fewer than 5 per cent of medicines which appear on the WHO Model List of Essential Medicines are patented, many of the most important newer drugs, particularly those that are designed to deal with the most severe health crises facing developing countries such as HIV/AIDS, are subject to 6 See, eg: A Attaran and L Gillespie-White, ‘Do Patents for Antiretroviral Drugs Constrain Access to AIDS Treatment in Africa?’ (2001) 286 Journal of the American Medical Association 1886–92. 7 D Matthews, ‘WTO Decision on Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement on Public Health: A Solution to the Access to Medicines Problem?’ (2004) 7 Journal of International Economic Law 73–107 at 103. Also see ‘Rolling out the Rollback: The War on Malaria is Heating Up’ The Economist, 28 Apr 2005, arguing that lack of institutional cooperation among IGOs has hampered progress and ‘Third-world Medicine: Hale and Healthy’ The Economist, 14 Apr 2005 for a description of how not-for-profit pharmaceutical companies are helping in the fight against 3rd world diseases. 8 Commission on Intellectual Property Rights, above n 1 at 37. F M Abbott, ‘The Doha Declaration on the TRIPS Agreement and Public Health: Lighting a Dark Corner of the WTO’ (2002) 5 Journal of International Economic Law 469–505 at 472. 9 H Sun, ‘Reshaping the TRIPS Agreement Concerning Public Health: Two Critical Issues’ (2003) 37 Journal of World Trade 163–97 at 165. 10 UNAIDS, Report on Global HIV/AIDS Epidemic 2002, Annex 1.

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152 TRIPS and Access to Essential Medicines patent control.11 Further, WHO research shows that cardiovascular disease, cancer, diabetes and respiratory disease are also major causes of death and disease in developing countries, and newer more effective treatments are patented, as will be future drugs.12 Surveys of the future public health impacts of drug patenting in a range of different developing countries by various organisations show the huge increase in costs of essential drugs through lack of access to generic drugs, and the negative public health consequences with regard to a range of the most serious diseases.13 There is, in addition, little evidence that, without revenues from developing countries, pharmaceutical companies would be unable to carry out needed research and development into diseases that have worldwide application.14 And there is little evidence, even after the implementation of the TRIPS Agreement, that drugs companies have seen big financial opportunities in researching medicines for diseases such as malaria and tuberculosis that primarily affect developing countries. One analysis states: Less than 5 per cent of the estimated $44 billion spent on research and development is directed towards developing country diseases, while only 13 of the 1,393 new drugs approved between 1975 and 1999 are concerned with tropical disease. (citations omitted)15

Furthermore there is evidence, based on the recent expenditure breakdowns of pharmaceutical companies, to suggest that any increased income from drugs sold in developing countries is more likely to be spent on advertising and promotion than research and development.16 So, despite the disputes about the effects of global IP protection for access to essential medicines to developing countries, the balance of the evidence appears to support the view that IP protection can indeed have negative effects on the prices of essential drugs, while there is little evidence to support the claim that lack of IP protection in developing countries will have negative effects on the future research of pharmaceutical companies. The following discussions will therefore be premised on the finding that, although there are other important mechanisms that can be utilised to provide essential medicines to developing countries, access to patented drugs at prices that are affordable to those countries is a vital component of their effective national health care policies. This should be recognised in the balancing processes by which international legal obligations are generated and subsequently enforced. 11

D Matthews, above, n 7, at 73–4. F M Abbott, ‘The WTO Medicines Decision: The Political Economy of World Pharmaceutical Trade and the Protection of Public Health’ 99 American Journal of International Law (2005) 317–58 at 323. 13 Oxfam, Patents Versus Patients; Five Years after the Doha Declaration, (2006) Oxfam Briefing Paper 95 (Patents vs Patients) at 15ff. 14 F M Abbott (1), above n 3, at 91–2. 15 Commission on Intellectual Property Rights, above n 1, at 37. 16 F M Abbott (3), above n 12, at 325. 12

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A Human Rights Approach to Essential Medicines 153

III. A HUMAN RIGHTS APPROACH TO ESSENTIAL MEDICINES

International human rights law and international trade law offer two different methodologies for balancing the interests of inventors versus the general public interests. In the context of access to essential medicines, this balancing act must take into account the importance of being able to provide affordable essential medicines to as many people as possible versus the need to adequately remunerate production of essential medicines particularly given the importance of creating incentives for future research. But how should the correct balance be struck between these two concerns? We need to examine human rights law and international trade law methodologies more closely to see how the balancing act operates under the two systems. From a human rights perspective, it is necessary to balance the rights of the inventor against the rights of those facing public health problems if they cannot afford the essential medicines in question. Article 15 of ICESCR deals with the issue of the right balance to be struck in terms of inventions. Article 15(1) recognises the right of everyone ‘to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he or she is the author.’ Article 15.2 of the Covenant requires that States Parties undertake steps necessary for the conservation, development and diffusion of science and culture. So, the right balance has to be struck between protecting the interests of inventors and promoting public access to new knowledge. Article 12 of ICESCR recognises ‘the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.’ Among the steps that need to be taken to achieve the full realisation of this right are those necessary for ‘the prevention, treatment and control of epidemic, endemic, occupational and other diseases.’ Further, it has already been explained in chapter 8 that the right to health has been interpreted by CESCR General Comment No 14 to include a core obligation to provide essential drugs.17 On the other hand, ‘the promotion of medical research’ is also an obligation of State Parties, and so the right to health also includes an obligation on States to create systems that will further this aim.18 It is therefore necessary to take into account the extent to which IP protection is a mechanism that promotes medical research. It should also be noted that the obligation to provide international cooperation and assistance under ICESCR19 applies particularly in the case of economic and technical assistance, which enables developing countries to meet their core obligations including the provision of essential medicines.20 17 CESCR, The right to the highest attainable standard of health, General Comment No 14 (2000) (E/C.12/2000/4.CESCR) at paras 17 and 43(d). 18 CESCR, above n 17, at para 36. 19 Art 2.1. 20 CESCR, above n 17, at para 45 read in conjunction with para 43(d).

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154 TRIPS and Access to Essential Medicines Developed countries should therefore provide assistance in ensuring the ‘economic accessibility’ of essential drugs. CESCR has produced a General Comment on the ‘right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he or she is the author (Article 15, paragraph 1 (c), of the Covenant)’ which gives some general guidance as to the way in which the balancing of these different human rights obligations should be accomplished.21 The General Comment emphasises that intellectual property rights are not human rights as such, but merely an instrumental mechanism through which States provide protection to individual authors and creators.22 Thus the protection afforded to inventors under Article 15(1) does not necessarily coincide with that under national and international IP systems. Rather, there is a need to ensure that such IP systems contribute to the progressive realisation of all the Covenant rights, including the right to health. In particular States have a duty to take action with regard to any IP regime that makes the costs of essential medicines ‘unreasonably high’.23 How does this mean that the balancing process should be accomplished under ICESCR? The human rights methodology described above must of course be utilised with reference to the specific facts of any given situation. But where essential medicines are effective in preventing, controlling and treating serious diseases that have a substantial immediate health impact on developing countries, the promotion of access to such drugs is almost certain to outweigh the property rights of inventors if those property rights represent a significant impediment to access. High prices caused by IP protection can affect the ‘economic accessibility’ of such essential drugs,24 and therefore make it more difficult for States to comply with their right to health obligations. If such difficulties lead to a negative impact on the right to health of the State’s population, then that system of IP protection would be in breach of human rights obligations under ICESCR. Any violations of the property rights of the inventors of the drugs, given that, in practice, these would belong to large pharmaceutical companies would, in human rights terms, be highly unlikely to be sufficient to counterbalance the violations of the right to health caused by lack of access to essential medicines, particularly for the poor, vulnerable and otherwise disadvantaged within society. As has already been noted, the primary focus of a human rights approach to trade liberalisation must be to concentrate on the ‘losers’ in the process and ensure that their fundamental human rights are not infringed.25 21 CESCR, General Comment No 17 (12/01/2006). E/C.12/GC/17. For a critique of this General Comment see 3D, Intellectual Property and Human Rights, Is the Distinction Clear Now? Policy Brief No 3 (Oct 2006) http://www.3dthree.org/pdf_3D/3D_GC17_IPHR.pdf, accessed on 8 Dec 2006. 22 CESCR, ibid, at paras 2–3. 23 CESCR, above n 21, at para 35. 24 ‘Economic Accessibility’ is a sub-category of accessibility, which is one of the essential elements of the right to health as set out in CESCR’s General Comment No 14 at para 12. 25 See discussion in ch 3.

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A Trade Law Approach to Essential Medicines 155 All States are also under a human rights obligation to promote medical research. It might be argued that, in human rights terms, a failure by developing countries to uphold international IP standards was breaching this obligation. However, first it has already been pointed out that there is little evidence that IP protection in developing countries does in fact lead to greater research being focused on drugs that actually positively affect the right to health of those in developing countries. Second, this is perhaps an obvious scenario where developed countries should be taking cooperation-based measures to meet their human rights obligations regarding international assistance and cooperation and thereby meet any shortfall in research capacity. So, international human rights law norms and standards appear to incline heavily in favour of ensuring access to essential medicines. International trade law rules contain different mechanisms for balancing the competing sets of concerns outlined above. They are contained in the TRIPS Agreement, and subsequent legal instruments clarifying TRIPS obligations. The following sections provide an analysis of relevant TRIPS provisions and how they have been utilised by States on the one hand to protect inventions and on the other to respond to public health issues. The question that is asked is whether international trade law is able to balance these two sets of issues in a way that takes into account the human rights methodology outlined above.

IV. A TRADE LAW APPROACH TO ESSENTIAL MEDICINES

The TRIPS Agreement was negotiated as part of the Uruguay Round of multilateral trade negotiations, and is binding upon all WTO Members.26 Its aim, as stated in the preamble to that agreement is: [T]o reduce distortions and impediments to international trade, and taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade.27

The Agreement therefore justifies the need for intellectual property rights within the WTO system by arguing that effective multilateral protection of such rights will reduce impediments and distortions to trade, thereby enhancing trade liberalisation. The Agreement covers all aspects of intellectual property and sets out detailed minimum standards for its protection and enforcement, in terms of requirements for the grant of rights, time limitations on protection, permitted exceptions to the use of rights and modes of enforcement to be implemented by each WTO member. Of particular relevance here, it requires Member States to 26 See the WTO website at http://www.wto.org/english/docs_e/legal_e/legal_e.htm, accessed on 12 Nov 2006, for an overview of the structure of the WTO Agreements and all the WTO legal texts including the TRIPS Agreement. 27 The TRIPS Agreement, Preamble.

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156 TRIPS and Access to Essential Medicines create minimum 20-year periods of protection for patents in all fields of technology, implicitly including pharmaceuticals.28 It is not greatly disputed that negotiations were started on the TRIPS Agreement during the Uruguay Round because developed country governments were lobbied hard by northern-based multinational enterprises that were seeking greater and more widespread protection for their intellectual property.29 It was US-led efforts that forced through the Agreement, and the pharmaceutical sector that was one of the biggest lobbying groups.30 There was very limited participation, on the other hand, from experts on any of the other public welfare issues raised by the creation of an international intellectual property right (IPR) system—including on public health issues.31 This in itself might be considered to be a violation of the right to health, given the participatory obligation, which that right entails.32 It is unsurprising therefore that the TRIPS Agreement has become symptomatic of concerns that the WTO does not take into account concerns of developing countries or the impact of trade law on ‘non-trade’ issues.33 Critics of the TRIPS Agreement have argued that it has had a negative impact on the ability of WTO Member States to operate effective domestic public health policies by adversely affecting their access to medicines. But there are a number of exceptions contained within the TRIPS Agreement, which potentially allow members to take measures to protect, amongst other concerns, public health. The most important of these provisions are articles 6, 7, 8 and 31. Articles 7 and 8 explain that the TRIPS Agreement should be interpreted with due regard for a range of important policy goals. Article 7 sets out broad objectives for the protection of IPRs; that they should contribute to technical innovation and the transfer and dissemination of technology ‘in a manner conducive to social and economic welfare, and to a balance of rights and obligations.’ Article 8(1) provides further safeguards in that members may ‘adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.’ There are also several more concrete mechanisms for countries to obtain access to essential medicines at affordable prices. Article 6 provides that nothing in the TRIPS Agreement shall affect the ‘exhaustion of intellectual property rights’. This has the effect of allowing so-called ‘parallel importation’ of pharmaceutical drugs and other products, whereby a patented drug that is 28

The TRIPS Agreement, Art 33. F M Abbott (1), above n 3, at 80. 30 F M Abbott (2), above n 8, at 470. 31 H Sun (2) above n 9 at 166–7. F M Abbott, (1), above n 3 at 85. 32 See P Hunt, The Right of everyone to the Enjoyment of the Highest Attainable Standard of Physical and Mental Health, Report of the Special Rapporteur, Addendum, Mission to the World Trade Organisation, (E/CN.4/2004/49/Add.1) 1 Mar 2004, at paras 11 and 27. 33 Making this argument and giving a number of examples, see H Sun (1), above n 5, at 123–4. 29

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Use of TRIPS to Enforce IP Rights 157 sold at a cheaper price in one country, can be imported to another country where such drugs are being sold at a higher price. This is because under existing international IP law, once a patent holder has placed drugs on the market, their rights to control the import and export of drugs are ‘exhausted’.34 Article 31 potentially provides an even more important mechanism for ensuring that public policy concerns can override the obligations owed to individual rights holders, summed up by one expert as follows: Article 31 allows for ‘use without authorization’, in effect a compulsory license granted by the competent national authority to allow that national authority or a third party to manufacture a patented product without the authorization of the rights holder.35

This allows production of so-called ‘generic’ pharmaceutical drugs, that is to say, drugs that are substantially reduced in price because there is no need to pay the patent holder any fee for production. There are, however, various criteria to be met to obtain a ‘compulsory licence’ in order to comply with the rules of the TRIPS Agreement. Of particular relevance to this discussion, a licence can only be obtained after unsuccessful ‘efforts to obtain authorization from the right holder on reasonable commercial terms and conditions’, unless the country concerned is in a situation ‘of national emergency or other circumstances of extreme urgency’.36 Also, compulsory licences must be ‘predominantly for the supply of the domestic market’, not to supply other countries.37 The Agreement also includes special treatment for developing and least-developed countries, including longer periods to implement their obligations under the Agreement. The question that arises is therefore whether these provisions within the TRIPS Agreement do allow developing countries effectively to protect the right to health of their own population. The scope of the protection available was brought very much to international attention by a case brought by a coalition of international pharmaceutical enterprises against South Africa, but it is not the only case where there have been clashes over intellectual property rights, public health concerns, and obligations under the TRIPS Agreement.

V. USE OF TRIPS TO ENFORCE INTELLECTUAL PROPERTY RIGHTS

In November 1997, at the height of the HIV/AIDS epidemic that was (and still is) ravaging the country, the South African government enacted legislation in order to increase the availability of affordable drugs treatment.38 This legislation 34 OHCHR, The Impact of the Agreement on Trade-Related Aspects of Intellectual Property Rights on Human Rights, Report of the Commissioner (27 Jun 2001) E/CN.4/Sub.2/2001/13 (Report on TRIPS), at para 48. 35 D Matthews, above n 7 at 76–7. 36 The TRIPS Agreement, Art 31(b). 37 The TRIPS Agreement, Art 31(f). 38 The Medicines and Related Substances Control Amendment Act 1997.

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158 TRIPS and Access to Essential Medicines authorised measures aimed at the provision of more affordable drugs for the treatment of AIDS/HIV including parallel importation of patented drugs and the production of generic medicines under compulsory licences, as apparently authorised under the TRIPS Agreement. There was a swift response from the US government and international pharmaceutical producers. In early 1998, approximately 40 drug companies banded together and submitted a formal complaint to the Pretoria High Court in South Africa, challenging the constitutionality of the legislation and arguing its incompatibility with the TRIPS Agreement. Further, the US Trade Representative (USTR), at the request of the US pharmaceutical industry, placed South Africa on its ‘Section 301 Watch List’ and the US administration withheld preferential treatment from several South African exports.39 Largely as a result of campaigning and publicity-raising by numerous NGOs, this legal action was brought to global attention. There was immense public outrage in South Africa and around the world that the South African government’s efforts to fight the HIV/AIDS epidemic could be blocked by rent-seeking pharmaceutical companies attempting to assert their intellectual property rights, and that this action should be supported by the US government. It was only, however, when such a reaction threatened even to disrupt Vice President Al Gore’s presidential campaign that the US government was prompted to change its policies and issue an executive order on the promotion of access to AIDS/HIV medicines.40 The legal action brought by the pharmaceutical companies was finally dropped in April 2001, after a belated realisation that they had orchestrated a public relations disaster.41 The majority of expert opinion on the merits of the case brought by the drugs companies against South Africa was that it would have failed in any case; the South African government had not breached the TRIPS Agreement whose provisions are sufficiently flexible to allow countries such as South Africa to take measures such as compulsory licensing to promote access to essential drugs when faced with epidemics such as HIV/AIDS.42

39 For details of the allegations made by the pharmaceutical companies see Notice of Motion, In the High Court of South Africa (Transvaal Provincial Division) Case number: 4183/98. With respect to the TRIPS Agreement it argues at s 2.4 that ‘it is discriminatory in respect of the enjoyment of patent rights in the pharmaceutical field which discrimination is in conflict with the provisions of Art 27 of the TRIPS Agreement, an international agreement binding the Republic and to which Parliament has given effect by the promulgation of the Intellectual Property Laws Amendment Act, No 38 of 1997, and consequently such provision is in conflict with Section 44(4) of the Constitution read with Sections 231(2) and 231(3) of the Constitution;’ For a more detailed account of this episode see H Sun, (1), above n 5 at 131. 40 Executive Order No 13155, 3 CFR 268–70 (2000). Note that the Order only prohibits the US Government from taking retaliatory trade measures against countries promoting HIV/AIDS if they provide ‘adequate and effective intellectual property protection in accordance with the TRIPS Agreement’. 41 See T Kongolo, ‘Public Interest versus Pharmaceutical Industry’s Monopoly in South Africa’ (2001) 4 Journal of World Intellectual Property 609–27. 42 H Sun (1) above n 5 at 132; F M Abbott, (1), above n 3 at 86–7.

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The Doha Declaration Negotiations 159 In February 2001, the US government also initiated action against Brazil in the WTO.43 The US government argued that compulsory licences were being authorised under Brazilian law as a protectionist measure to create jobs for Brazilian nationals.44 The Brazilian government viewed its provisions on compulsory licences as a vital part of its programme to provide access to affordable HIV/AIDS drugs, and also viewed the measure as entirely consistent with the TRIPS Agreement.45 Certainly there is evidence that Brazilian authorization of compulsory licences significantly reduced the price of AIDS/HIV drugs,46 leading to significant health results for the Brazilian population: The results of the Brazilian strategy have been significant. In terms of the enjoyment of the Brazilians’ right to health, there has been a reduction in deaths due to AIDS by 50 per cent over the last four years. Further, there has been a reduction of 80 per cent in cases of hospitalization due to opportunistic diseases.47

Once again the case against Brazil was subsequently withdrawn, and the two parties negotiated a settlement, but only when the US government and pharmaceutical companies realised that they were on the brink of opening up another hugely damaging and highly public exposure of their policies.48 In both cases, dubious legal claims on the basis of the TRIPS Agreement were defeated, and the right of governments to protect the health of their own population through provision of essential medicines prevailed. But the cases also show the potential for the TRIPS Agreement, despite its apparent flexibilities, being utilised as a mechanism for enforcing IPRs at the expense of public health. In high profile cases such as these, public pressure more than legal argument won the day. But the effect of the TRIPS Agreement has also been noted by leading expert, Frederick Abbott, with regard to other less high profile cases: [T]he highly visible cases were only the tip of the iceberg with a much broader impact. . . . Countries that were subject to intensive and well-documented USTR pressure include Argentina, the Dominican Republic, Kenya and Thailand.49

VI. THE DOHA DECLARATION NEGOTIATIONS

What was becoming clear from the situations described above was that, even though TRIPS rules potentially had mechanisms to allow for the provision of more affordable essential medicines, there was a great deal of ambiguity about when they could be utilised. Such ambiguities could lead to legal action and 43 Brazil—Measures Affecting Patent Production, Request for the Establishment of a Panel by the United States, WT/DS199/3, 9 January 2001. 44 See Office of the United States Trade Representative, ‘Special 301’ Report (2001) at 10. 45 H Sun (1), above n 5, at 133. 46 See The Report on TRIPS, para 51ff. 47 See The Report on TRIPS, at para 57. 48 F M Abbott (2), above n 8, at 471. 49 F M Abbott (2) above n 8, at 472.

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160 TRIPS and Access to Essential Medicines political pressure against developing countries that attempted to utilise relevant provisions. Thus, it was at the instigation of the African Group that in June 2001 discussions commenced in the TRIPS Council with a view to clarifying the flexibilities in the TRIPS Agreement, and particularly how they could be utilised to enhance access to essential medicines. This process eventually led on, 14 November 2001, to the Doha Declaration on the TRIPS Agreement and Public Health (‘Doha Declaration).50 It is beyond the scope of the current research to provide a detailed account of the negotiations that led up to the Doha Declaration.51 However, it is worth noting that the negotiations were heavily contested, and to summarise some of the key negotiating positions. A draft declaration put forward by developing countries most importantly stated that: ‘nothing in the TRIPS Agreement shall prevent Members from taking measures to protect public health’52 and in essence proposed that it should be left entirely at the discretion of the countries concerned when to utilise the various flexibility mechanisms in the TRIPS Agreement so as to protect public health, without threat of trade retaliation from developed countries. The draft declaration specifically invoked international human rights law as relevant context for the Declaration. According to the preamble of this draft therefore, Member States would, in endorsing the Declaration, be: discharging the obligation to protect and promote the fundamental human rights to life and the enjoyment of the highest attainable standard of physical and mental health, including the prevention, treatment and control of epidemic, endemic, occupational and other diseases and the creation of conditions which would assure to all medical service and medical attention in the event of sickness, as affirmed in the International Covenant on Economic, Social and Cultural Rights. (emphasis added)

The US-led coalition of developed countries responded to this draft with a number of proposals that attempted to emphasise the importance of a strong patent system for research and development, create restrictive interpretations of the TRIPS text and its potential flexibilities and limit discussions of solutions to HIV/AIDS. It was also hostile to attempts to interpret TRIPS in favour of a sovereign right to protect health, and rejected specific reference to international human rights law standards.53 As a result of developing country strength and unity on this issue, a strong public feeling in favour of developing country positions, and the effects of the 50 Declaration on the TRIPS Agreement and Public Health, Ministerial Declaration, WT/MIN(01)/DEC/2, adopted on 14 Nov 2001. 51 For a full account see F M Abbott (2), above n 8, and H Sun (1) above n 5 at 134ff. 52 Proposal by the African Group (Bangladesh, Barbados, Bolivia, Brazil, Cuba, Dominican Republic, Ecuador, Haiti, Honduras, India, Indonesia, Jamaica, Pakistan, Paraguay, Philippines, Peru, Sri Lanka, Thailand and Venezuela) IP/C/W/312, WT/GC/W/450, 4 Oct 2001. 53 See Contribution from Australia, Canada, Japan, Switzerland and the United States IP/C/W/313 4, Oct 2001.

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The Doha Declaration Negotiations 161 aftermath of the September 11th attacks,54 the Doha Declaration is one of the few occasions where the final text is much closer to that proposed by developing than developed countries.55 Although pharmaceutical companies claimed that the final Doha Declaration confirmed the importance of IP protection and the TRIPS Agreement as a vital part of this,56 it is generally recognised that the Doha Declaration confirms that all of the key flexibilities of the TRIPS Agreement could be utilised by developing countries. So, ‘[e]ach member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted’ (paragraph 5(b)) and each member has the right to determine what constitutes ‘a national emergency or other circumstances of extreme urgency’ (paragraph 5(b)) for the purposes of the Agreement. The one outstanding issue that was not resolved at Doha was an issue where the existing TRIPS rules did need to be amended in order to promote access to essential medicines in many developing countries; it was recognised that WTO Member States with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement and therefore the TRIPS General Council was instructed to find a solution to this problem by the end of 2002. This was indeed a major issue. Most developing countries do not have the domestic capacity to manufacture many pharmaceutical drugs, and therefore compulsory licences are only useful if they can allow import of medicines from countries with manufacturing capacity. But the TRIPS Agreement states that compulsory licensing shall be ‘predominantly for the supply of the domestic market’, hence blocking exports from States with manufacturing capacity to those who do not.57 Particularly with existing generic drug producing countries such as Argentina, Brazil and India required to provide intellectual property protection for their pharmaceutical products from 1 January 2005, developing countries were aware that they would have diminishing sources of supply from overseas producers.58 It was therefore necessary to circumvent this provision if many developing countries were to be able to obtain affordable essential medicines. However, it took two years of further negotiations to find a solution to this issue in the form of the Decision on Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health (‘the Decision’). 54 More generally September 11th led developed countries to view progress at the Doha Conference as vital for maintaining confidence in the global trading system. More specifically, the anthrax attacks that followed September 11th led to a US (and Canadian) government decision to stockpile ‘Cipro’ the antibiotic used against it. They threatened to utilise compulsory licensing of the drug in order to obtain price reductions from the patent holder, Bayer. This response to a perceived ‘public health crisis’ underlined the hypocrisy of the US-led position in the TRIPS negotiations. Making this point, see F M Abbott (2), above n 8, at 486ff. 55 F M Abbott (2), above n 8, at 469. 56 Pharmaceutical Research and Manufacturers of America (PhMRA), WTO Declaration Reaffirms Value of Intellectual Property Protection, (14 Nov 2001). 57 The TRIPS Agreement, para 31(f). 58 H Sun (2), above n 9, at 165; D Matthews, above n 7, at 78.

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162 TRIPS and Access to Essential Medicines The Decision amounts to a waiver of TRIPS obligations, but will be converted into a permanent amendment of the TRIPS Agreement when two thirds of the WTO Membership vote in favour, expected by December 2007.59 The major stumbling block to agreement on the original Decision was again US led pressure to limit the applicability of the Decision, most importantly in terms of the scope of diseases to HIV/AIDS, tuberculosis and malaria. It was argued that broadening the exemption to cover any ‘other epidemics’, in keeping with the wording of the Doha Declaration, ‘would risk the inclusion of ‘lifestyle’ illnesses such as obesity, or the common cold.’60 Developing countries wanted a broader interpretation as they thought had been resolved at Doha, and wanted it to cover all major public health issues including heart disease, cancer and diabetes.61 At the centre of this disagreement was, on the one hand the desire of pharmaceutical companies to strictly limit the use of generic medicines in order to protect their IPRs on as many drugs as possible. On the other hand, developing countries wanted to be able to utilise this provision to obtain access to essential medicines no matter what the public health issue. The Decision finally referred to the ‘public health problems as recognised in paragraph 1 of the Declaration’, (paragraph 1(a)) and this has been generally perceived as supporting the developing countries’ interpretation.62 There were also lengthy negotiations over a number of other technical provisions in the Decision,63 with developed country attempts to limit the scope of countries able to import and export generic drugs also largely defeated.64 Thus it seems that the Doha Declaration and subsequent Decision are positive developments in terms of human rights protection within the WTO. Despite the contested nature of the discussions, mechanisms within the TRIPS Agreement that can be utilised to provide access to essential medicines have been clarified and enhanced so that they have become more workable for developing countries. Some caveats to this conclusion will be addressed below. Before this, however, consideration is given to the extent to which an explicit human rights discourse affected the debate outlined above.

59 Members OK Amendment to Make Health Flexibility Permanent, WTO Press Release/4266 December 2005 at http://www.wto.org/english/news_e/pres05_e/pr426_e.htm, accessed on 15 Nov 2006. 60 D Matthews, above n 7, at 86. 61 F M Abbott (3), above n 12, at 327ff. 62 F M Abbott (3), above n 12, at 332. 63 In particular over whether Art 30 or Art 31 should be the basis of the solution to this issue. In the end, developing countries agreed to developed country demands that a waiver from Art 31 obligations be used. This has been viewed by commentators as a more restrictive solution from the perspective of developing countries. See H Sun (2), above n 9, at 172ff and D Matthews, above n 7, at 88ff. 64 D Matthews, above n 7, at 87–8 and 95–6.

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The Impact of a Human Rights Discourse 163

VII. THE IMPACT OF A HUMAN RIGHTS DISCOURSE ON THE TRIPS AND ACCESS TO MEDICINES DEBATE

It should be noted that a human rights discourse can be seen playing some role throughout the above debate. First, the fact that the South African Constitution explicitly recognises the right to health could be seen as a significant factor in the decision of the pharmaceutical companies to drop their legal action against the South African government.65 It meant that any court case would have led to judges explicitly balancing right to health concerns against the intellectual property rights of the pharmaceutical companies. It is impossible to know precisely how important this aspect was in the decision to discontinue the case.66 But the South African Constitutional Court already had a history of ruling in favour of upholding economic, social and cultural rights in other decisions, and so there were precedents for adopting the same approach in this dispute.67 The companies may have realised that they would face arguments that the government was complying with its constitutional obligations to protect the right to health of its citizens by circumventing patent laws in order to protect and promote the right to health of its citizens. Given the extreme nature of the South African HIV/AIDS epidemic, arguments made under the right to health such as those outlined at the beginning of this chapter, would have been extremely persuasive in the South African Constitutional Court. Second, it is clear that the right to health was a factor in shaping the negotiations over the Doha Declaration. Most obviously this can be seen by the draft declaration proposed by developing countries (cited above), which explicitly utilises a human rights discourse to state WTO Members’ obligations under the TRIPS Agreement. It envisages the Doha Declaration as a mechanism by which governments can discharge their human rights obligations under ICESCR. The draft declaration argues that this obligation entails measures to prevent, treat and control diseases, and the creation of conditions where medical treatment is available to all in the event of sickness. These requirements utilise the same language as human rights instruments such as CESCR’s General Comment on the Right to Health. The final Doha Declaration does not utilise the explicit human rights approach of the developing countries’ draft. It does however include allusions to the ‘right to health’ in stating that: 65 See C Scott, and R Wai, ‘Transnational Governance of Corporate Conduct through the Migration of Human Rights Norms: The Potential Contribution of Transnational ‘Private’ Litigation’ in C Joerges, I-J Sand, and G Teubner (eds) Transnational Governance and Constitutionalism (Oxford, Hart Publishing, 2004) at 315–6, arguing for the importance of the right to health in the South African Constitution, although recognising that it is impossible to disaggregate the different factors that led to the decision by the drugs companies to withdraw the case. 66 As opposed to, for instance, the bad publicity that the case was generating for the companies concerned. 67 See http://www.escr-net.org./, accessed on 15 Nov 2006, for summaries of most of the important cases.

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164 TRIPS and Access to Essential Medicines [W]hile reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all.68

The obligation to provide ‘access to medicines for all’ is derived from the right of ‘WTO Members’ to protect public health in a way that is once again reminiscent of CESCR’s General Comment. It does seem clear that a human rights methodology has inspired the framing of this commitment. As Robert Howse has argued: Understanding the right to health as a basic human right undoubtedly played some role in addressing the question of access to essential medicines under TRIPS in the Doha Declaration on that subject and the subsequent implementing instrument.69

But does this statement represent a recognition of the ‘right to health’ within WTO law? The Declaration itself gives rise only to a right of governments to protect the public health of their own citizens. It is a right of each WTO Member State, and therefore not an individual human right to health as recognised by international human rights law. This is a differentiation not picked up by some leading experts.70 On the other hand, it does represent a rights-based approach to health issues, and such an approach could be utilised by WTO Members in interpreting their other TRIPS obligations, thereby strengthening claims that right to health issues are paramount. Explicit reference to the right to health in the South African Constitution, developing country invocation of the right to health in their draft Doha Declaration and the final Declaration’s wording, are clear examples of a human rights approach having an influence on international trade law obligations. This ‘right to health’ type language should also prove important in supporting the right of developing countries to utilise the flexibilities of the TRIPS Agreement, as further clarified in the Doha Declaration. However, both the Declaration and the Decision fall some way short of explicitly recognising that the right to health is an obligatory consideration for every country in negotiating, adopting, implementing and interpreting trade law rules. Thus we need to assess whether, despite these limitations to the explicit human rights discourse on the right to health within the WTO, the Doha Declaration and the Decision are mechanisms by which the right to health can be adequately protected and promoted according to human rights standards. 68

Declaration on the TRIPS Agreement and Public Health, above n 50. R Howse, Mainstreaming the right to development into international economic law and policy at the World Trade Organisation, paper prepared for the OHCHR secretariat (E/CN.4/Sub.2/2004/17) 9 Jun 2004 at para 36. 70 Eg F M Abbott, ‘Integrating Human Rights and Competition Principles in TRIPS’ in T Cottier, J Pawelyn and E Burgi (eds) Human Rights and International Trade (Oxford, Oxford University Press, 2005) where he fails to draw a distinction between an individual right to health and a right granted only to States. 69

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Effective Protection of the Right to Health 165

VIII. CAN THE DOHA DECLARATION AND DECISION ON PARAGRAPH 6 EFFECTIVELY PROTECT DEVELOPING COUNTRIES’ RIGHT TO PROTECT THE PUBLIC HEALTH OF THEIR POPULATIONS?

A number of commentators have argued that in fact the Doha Declaration is simply a restatement and reaffirmation of the existing WTO rules and merely gives greater clarification to the right of WTO Members to use them.71 The perceived importance of the Doha Declaration as a breakthrough is more because of US-led efforts to abuse the TRIPS Agreement, in particular in South Africa, than because the Doha Declaration itself extended protection for developing countries’ rights to essential medicines.72 But, even if it will only be utilised to prevent abuses of TRIPS, the importance of such a measure should not be underestimated if it allows WTO Member States to utilise such important measures as compulsory licensing for essential medicines without fear of tradebased retaliation. It is too early to give a definitive answer as to whether the Doha Declaration will adequately protect WTO Members’ ability to protect the right to health of their populations. To an extent we will have to wait and see how it is used by WTO dispute settlement panels and the Appellate Body. But it is not simply through its usage in the case law of the WTO that the success of the Declaration should be judged. The Declaration should also act as support to countries seeking to protect the health of their populations, who feel pressured into a restrictive reading of the TRIPS Agreement by powerful trading partners. In addition it should be a source of assistance to all government agencies taking decisions on pharmaceutical drugs who might otherwise feel inhibited from pursuing genuine policy options because of vaguely worded TRIPS provisions and national legislative instruments which implement those international obligations.73 Conclusions on the degree to which the Decision provides a mechanism for developing countries to protect the right to health are mixed. At one end of the spectrum, the Director-General of the WTO, Supachai Panitchpakdi, described the Decision as a ‘historic agreement for the WTO . . . proving once and for all that the organization can handle humanitarian as well as trade concerns.’74 The EC Commissioner for Trade, Pascal Lamy, described it as a deal that showed the WTO could ‘put people before markets’.75 At the other end of the spectrum the Decision has been criticised as too complex to be workable in practice by a number of NGOs and generic drug manufacturers.76 Concerns have also been 71

D Matthews, above n 7, at 81ff; F M Abbott (1), above n 3, at 87. F M Abbott (1), above n 3, at 87. 73 F M Abbott (3), above n 12, at 343. 74 Intellectual Property Decision Removes Final Patent Obstacle to Cheap Drug Imports, WTO Press Release, Press/350, 30 August 2003 (03–4558). 75 Statement by Mr Pascal Lamy, Commissioner for Trade, European Communities Commission, WTO Ministerial Conference (Cancun), Fifth Session, 10 Sept. 2003, WT/MIN(03)/ST/5. 76 See F M Abbott (3), above n 12, at 317. 72

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166 TRIPS and Access to Essential Medicines raised that a number of administrative requirements and procedural arrangements of the Decision will act as a disincentive to both generic manufacturers exporting the drugs, and developing countries importing them.77 The South African Trade Ambassador, taking the more practical middle ground, stated that he believed ‘the mechanism will work, can work and we intend to use it.’78 Thus far, only a limited number of States have modified their domestic legislation in order to be able to make use of the additional flexibilities of the Decision, and there have as yet been no notifications of a grant of compulsory licences for export.79 It is perhaps as yet too early to say how effective the system will be.80 It is also argued that the effectiveness of the Decision is not only demonstrated by the frequency of its usage, but also by its effect on prices and availability of products produced under voluntary licences.81 On the other hand, reports by NGOs such as Oxfam and Medecin Sans Frontieres, five years on from the original Doha Declaration, suggest that the inherent complications of the Declaration and the mechanisms for its implementation at the national level severely restrict its usefulness, and that these mechanisms are in need of urgent review.82 There are also a number of concerns that have been raised about whether this mechanism will ensure that all developing countries have access to affordable essential drugs. Commentators who believe that the Decision itself is workable have rather questioned whether developing countries will be pressured into not utilising this mechanism. First, there are concerns that developing WTO accession countries are taking on TRIPS commitments that are above and beyond those of other developing countries and might limit their policy space to protect the right to health of their populations.83 Because of their keenness to join the WTO, and the lack of strength of their bargaining positions, they are likely to acquiesce to pressure that they take on such obligations in order to join the organisation. Secondly, there are concerns about pressure being applied to developing countries outside the WTO framework. Shortly after the Doha Declaration, US 77 D Matthews, above n 7, at 96–7: There are the additional costs of having to use differential packaging, pill size and colour for generic drugs; the notification requirements of Decision will be a disincentive, and will cause delays among importing developing countries; the burdensome administrative arrangements in terms of need to assess own capacity, seek voluntary licensing, then compulsory licensing, and then ask an exporting country who must also seek voluntary and then compulsory licensing. 78 H Sun (1), above n 5, at 147. 79 R D Anderson and H Wager, ‘Human Rights, Development, and the WTO: The Cases of Intellectual Property and Competition Policy’ 9 Journal of International Economic Law (2006) 707–47 at 729. 80 F M Abbott (1) above n 3 at 87. 81 R D Anderson and H Wager, above n 79, at 729. 82 See Patents Versus Patients, above n 13 and Medecin Sans Frontieres, The WTO August Decision is Unworkable (10 Aug 2006). 83 P Hunt, above n 32, at para 66ff; WHO, ‘Globalization, TRIPS and Access to Pharmaceuticals’, WHO Policy Perspectives on Medicines, WHO Medicine Strategy 2000–03, (WHO/EDM/2001.2) (3 Mar 2001).

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Effective Protection of the Right to Health 167 Pharmaceutical companies were once again attempting to have four countries monitored for potential sanctions under Section 301 of the US Trade Act (1974), for their ‘failure to protect patented pharmaceutical products.’84 Another example of such recent pressure comes in the form of the increasing number of bilateral trade deals being signed between the US and third countries that include intellectual property provisions limiting the policy space available under TRIPS to promote access to essential medicines. The US has signed, or is in the process of negotiation of a wide range of such agreements, including with Chile, Singapore, Peru, Columbia and Thailand.85 These FTAs contain the highest standards of protection yet seen in patent law, known as ‘TRIPS-plus’ which add periods of marketing exclusivity, extend the scope and term of patent protection, facilitate ever-greening, block parallel imports and limit the ability to utilise compulsory licensing. Thus, Frederick Abbott concludes, ‘[a]ll other things being equal, the FTAs will increase the price of medicines in developing countries.’86 Oxfam’s report on this issue also catalogues some of the predicted consequences of these TRIPS plus provisions indicating that there will be profound consequences for the ability of countries to pay for many essential medicines.87 Developing countries sign up to these IP provisions because of the prospective gains that they perceive in other areas of the FTAs, for instance, in terms of access for agricultural and textile products to valuable US markets. But such increased access is likely to benefit only a limited number of domestic stakeholders—eg farm owners and perhaps certain farm workers. Will additional revenue which is accrued in these sectors be transferred to the public health sector to pay for increases in the prices of essential drugs? It seems highly unlikely. Thus there is a danger that as a result of this negotiating process, there will be reduced access to essential medicines in a number of States. This trend and its potential adverse impact on the right to health has already been noted by several UN human rights treaty monitoring bodies. CESCR has expressed its concern to Ecuador about the potential negative impact of international trade-related intellectual property agreements on the access to affordable medicines, as has the UN Committee on the Rights of the Child with regard to El Salvador.88 In both cases this was with reference to the recently negotiated Central American Free Trade Agreement, which contains strict IP provisions limiting the ability of those countries to obtain generic medicines, similar to those mentioned above. 84

H Sun (1), above n 5, at 145. See Patents Versus Patients, above n 13; H Sun (1), above n 5, at 146. For a more in depth discussion of the provisions of the US–Chile free trade agreement (FTA) see Pedro Roffe, Bilateral Agreements and a TRIPS-plus World at http://www.qiap.ca/pages/documents/Chile_US_final.pdf Accessed on 15 Nov 2006. 86 F M Abbott (1), above n 3, at 93. 87 See Patents Versus Patients, above n 13 at 15ff, also noting how s 301 provisions are utilised to enforce interpretations of these provisions favourable to strict IP protection. 88 CESCR, Concluding observations of the Committee on Ecuador. (E/C.12/1/Add.100) 7 Jun 2004 paras 30 and 55; UN Committee on the Rights of the Child, Thirty-sixth session, Concluding observations: El Salvador (CRC/C/15/Add.232) 30 Jun 2004. 85

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168 TRIPS and Access to Essential Medicines This trade-off that such developing countries appear willing to undertake (increased market access for stronger IP protection) is an example of the failings of trade negotiations from a human rights perspective. From the perspective of developing countries, such agreements are only rationalised at best by recourse to aggregate welfare increases in line with utilitarian welfare economics approaches,89 rather than a (deontological) human rights approach that would argue that adequate provision for the basic healthcare needs of the population cannot be traded away against increased prosperity elsewhere. The achievements of the Doha Declaration therefore need to be balanced against these ongoing attempts to limit the extent to which many developing countries can utilise the mechanisms provided in order to address their public health needs. Inside the WTO system there are concerns, particularly with regard to WTO accession countries. But to an even greater extent outside of the WTO system, there is the potential for erosion of the protections of the right to health that were secured by the Doha Declaration. In particular, the tendency towards stronger provisions in bilateral and regional trade agreements limiting the policy space available under TRIPS to promote access to essential medicines is a worrying phenomenon in terms of protection of the right to health. These latest developments demonstrate that the right to health should not now be considered to be integral to the way in which IP rules are negotiated and implemented at the international level, particularly outside, but also within the WTO framework. As such, it remains a constant battle to ensure that human rights obligations are not violated by new patent laws, and that existing rules intended to assist countries with regard to access to affordable medicines are in fact workable and are utilised.

IX. CONCLUSIONS: LESSONS TO BE LEARNED FOR OTHER WTO AGREEMENTS

To what extent can the lessons learned from the debate on TRIPS and access to essential medicines be seen as having wider implications for the ability of WTO Member States to take measures to protect and promote the human rights of their populations and co-operate to protect rights in other WTO Member States, while complying with their WTO obligations? In the previous chapter, it was noted that there are mechanisms in all the WTO agreements for raising human rights concerns, but there are potential limitations to the usefulness of these mechanisms because of their vagueness, the possibility for multiple interpretations of key terms, lack of enforceability, or their status as exceptions to the main provisions of the Agreement. The TRIPS and access to medicines episode is evidence of how difficult it is for developing countries to rely on ‘exception’ or flexibility provisions under 89 At worst they simply represent agreements based upon the interests of the strongest lobbying groups.

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Conclusions: Lessons for Other WTO Agreements 169 WTO Agreements when they lack clarity and specificity. The cases brought against South Africa and Brazil and the pressure brought to bear on other developing countries are evidence of this; even in the case of such a clear threat to public health as the HIV/AIDS virus, developing countries could not depend on broadly worded exceptions to prevent action from developed countries to protect the IPRs of pharmaceutical companies. There was a need for a further Declaration to provide the necessary specificity in terms of setting out clearly the measures which WTO Members could take in order to protect the health of their populations. The effectiveness of this further instrument is still debated. Thus, the TRIPS and access to medicines debate should lead to great wariness in concluding that such general provisions in other WTO Agreements can also provide protection of human rights standards without further clarification of the way in which such provisions can be utilised. Where relevant provisions are broad and insufficiently defined, pressure may be applied on governments not to utilise those provisions in a way that is detrimental to important commercial interests, or government officials may simply avoid potential conflicts with their international trade obligations by not acting to protect and promote human rights.90 Where rights and obligations are better defined, there is an ongoing need to make sure that proposed solutions are workable in practice. In the case of the TRIPS and access to medicines episode, particularly as a result of the case in South Africa, there was an almost universal public and governmental consensus behind the principle that serious public health issues take precedence over IPRs and governments have the right to protect the health of their own population by providing essential drugs at affordable prices. But there was still a great deal of contentious debate about the precise mechanisms that could be used to achieve those agreed ends and the scope of the health issues they needed to cover. Throughout the negotiations, attempts were made by those countries with substantial pharmaceutical interests to limit the scope of the agreement in various ways, such as through the diseases and the countries to which the Declaration applied, and the mechanisms that could be utilised to address the diseases that were covered. Even after the apparently successful negotiations, there is still a need to monitor arrangements to ensure that they are in fact workable in practice. There is a similarly broad consensus that governments should take measures to promote the universal access to essential services such as education, water and health services. But, perhaps even more than in the TRIPS and public medicines debate, there is little consensus over what are the means that should be taken to pursue those ends.91 While mechanisms such as cross-subsidisation of services and differential pricing may be considered important mechanisms for promoting universal access to essential services from a human rights perspective, it is not 90 Making this point about the potential of the GATS see A Lang, ‘The GATS and Regulatory Autonomy: A Case Study of Social Regulation of the Water Industry’ (2004) 7 Journal of International Economic Law 801–38 at 836–37. 91 A Lang, ibid, at 836 argues this point with regard to regulation of the water industry.

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170 TRIPS and Access to Essential Medicines clear whether they would necessarily be considered legitimate measures from the standpoint of international trade law obligations.92 On the question of access to essential services such as water, the WTO Secretariat and the OECD both argue that it would be illogical for governments to give up regulatory autonomy.93 But, as with access to essential medicines, there will be commercial concerns within the countries concerned who will be pushing for an ‘un-human rights’ approach to regulation of essential services because of their vested commercial interests. The TRIPS debate shows how important such commercial interests can be in shaping (and abusing) interpretation of WTO obligations. We should therefore be wary of relying only on governmental authority, rather than precise definition of WTO obligations and their ongoing monitoring, review and refinement, to ensure that fundamental rights such as access to essential services are protected. Similar issues arise under the AoA. Under the AoA, it is assumed that, in theory, it is unacceptable if liberalisation commitments lead to human rights violations of poor farmers and farm workers, but there is less consensus on what mechanisms should be utilised to address such violations. Should governments be able to renege without penalty on their liberalisation commitments? Will poorer and less developed States be able to provide structural adjustment assistance to individuals who suffer human rights violations as a result of liberalisation? What should the duties be to provide international cooperation assistance to ensure that such human rights violations do not occur? There is insufficient focus on finding agreed mechanisms in order to prevent violations occurring, and react appropriately when they do occur. There are also dangers under agreements such as the AoA and the GATS that developing countries, in order to obtain trade benefits, may be pressured into accepting obligations that have a potentially negative impact on their human rights commitments. There are concerns, as with TRIPS, that accession countries are being pressured into accepting more GATS or AoA commitments as the price of entry into the WTO. All but one of the developing countries that have joined the WTO since 1995 have accepted some commitments in health services reflecting the greater negotiating pressure to make commitments experienced by such countries in relation to all services sectors.94 This negotiating process is viewed only in the round—it has an aggregate economic benefit to the country concerned—rather than considering how obligations may also have particular 92 See ch 11 for further consideration of this issue, in particular arguing that a trade restrictive measure may be justifiable on human rights grounds but, if it is taken in preference to a number of other alternative measures to protect human rights on the grounds of political expediency such as appeasing powerful vested interest groups, it may not pass a ‘least trade restrictiveness’ test. Should such measures be deemed ‘illegitimate’ under international trade law rules? 93 A Lang, above n 90, at 809. 94 A J VanDuzer, ‘Navigating between the Poles: Unpacking the debate on the implications for development of GATS obligations relating to health and education services’ in E-U Petersmann (ed) Reforming the World Trading System: Legitimacy, Efficiency and Democratic Governance (Oxford, Oxford University Press, 2005) 167–204 at 184. Mongolia is the only exception.

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Conclusions: Lessons for Other WTO Agreements 171 negative impacts, that, according to a human rights conception, might lead to violations of rights such as the right to health and the right to food of certain persons within those countries.95 There is a need therefore from a human rights perspective to ensure that human rights issues are systematically taken into account in all subject areas including, inter alia, in goods, services and intellectual property protection, and at all stages of the WTO process including accession, negotiation, implementation, clarification and ongoing review of obligations to ensure that WTO members are able to meet all their human rights obligations.

95

P Hunt, Above n 32, at 19.

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10 Reappraising the Protection and Promotion of Human Rights in the WTO I. INTRODUCTION

T

HE PREVIOUS SIX chapters of this book have considered the legal impact of WTO rules and standards on the protection and promotion of human rights. This analysis has been conducted according to a methodology that has distinguished between conditionality-based measures aimed at the protection and promotion of human rights on the one hand, and compliance and cooperation-based measures on the other. What has this analysis demonstrated? It will be argued below that it has demonstrated three fundamental points about the human rights impact of international trade rules on the protection and promotion of human rights. First, that different types of human rights measures need to be treated differently under international trade law rules; second, that many of the same systemic issues arise, however, when analysing the way in which human rights issues are currently dealt with in relation to all types of measures; third, that attempts to circumvent the WTO in coming to solutions about the relationship between international trade law and international human rights law are extremely problematic. On the basis of these conclusions, some suggestions are made for future strategies for dealing with the human rights impact of international trade law rules, which will be further expanded upon in the following two chapters.

II. DIFFERENT APPROACHES FOR DIFFERENT TYPES OF HUMAN RIGHTS MEASURES

The analysis in the preceding chapters has demonstrated that conditionalitybased trade measures aimed at protecting and promoting human rights in the trade law context differ significantly from compliance-based and cooperationbased measures. Conditionality-based measures are measures taken by one WTO Member State in order to promote or protect the human rights of persons in another WTO Member State by making some aspect of its trade with that

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176 Reappraising Human Rights in the WTO State conditional on that State’s human rights performance, either through trade restrictions or trade incentives. The analysis has shown that such measures are generally utilised to respond to abuses of labour rights in the production of goods for export or else human rights abuses that are unconnected with the production of goods, but where the governments of foreign countries can be held responsible for their commission.1 The measures tend to target violations of ‘liberty’ rights, generally, but not always in the form of civil and political rights. For instance they have been utilised to response to forced labour in Myanmar, violations of freedom of the press in Panama and systematic racial discrimination in South Africa. Compliance-based measures are measures taken by a WTO Member State in order to protect and promote the human rights of persons in its own country, in order to comply with its own international human rights obligations. Analysis has demonstrated that such measures generally involve the protection of ‘distributive’ rights, usually in the form of economic, social and cultural rights. This is because the issues that are faced concern the government’s responsibility to ensure that trade rules do not negatively impact upon its obligations with regard to basic distributive justice for the population in terms of provision of essential goods (eg medicines, food, shelter) or services (eg water, healthcare, education). Cooperation-based measures, where a State or a number of States are cooperating in order to protect and promote the human rights of individuals in another State, also tend to be aimed at the protection of ‘distributive rights’, for instance facilitating the export of affordable essential medicines to promote the right to health. It has been noted that the dominant human rights and trade discourse, certainly among academic commentators, has concerned conditionality-based trade measures, and in particular trade restrictions. There are some contributions that do consider compliance-based measures, but there is little academic work that deals with this latter category in any kind of systematic way, and certainly nothing that attempts a comprehensive comparative analysis of the two approaches, as has been conducted here. Perhaps this reflects the fact that when a human rights discourse is utilised in political debates in developed countries (particularly in the US), it is almost entirely concerned with trade restrictions, largely with regard to developing countries and their failure to adhere to human rights standards in the production of goods for export. But it perhaps also reflects the bias in human rights thinking in many western countries that was discussed in chapter two whereby there is far more openness to utilising a rights-based approach for ‘liberty’ rights than there is for ‘distributive’ rights such as the provision of food, medicines, education, water and other essential goods and services. A holistic human rights approach, such as that expressed in international human rights law needs to give full and equal consideration to measures taken to protect and promote economic, social and cultural rights and ensure that such measures are compatible with international trade law. 1

Or in the case of the KPCS, rebel groups.

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A Different Approach for Different Types of Human Rights 177 The effect of this neglect of economic, social and cultural rights is that traditional human rights and trade linkage focuses largely on how WTO member states may impose restrictions (or other punitive measures) on other countries for their failure to adhere to human rights standards. But the debate rarely extends to discussing a State’s obligations to protect and promote the human rights of its own population, or the need for international cooperation to achieve those ends, which is where economic, social and cultural rights are particularly relevant. From an academic legal perspective, this is surprising for a number of reasons. Both compliance and cooperation-based measures have been shown to be based on clear and definite obligations set out in international human rights law, whereas the legality and legitimacy of many unilateral conditionality-based measures is far more open to debate from a human rights perspective. The international human rights system is still largely based on inducing voluntary compliance with human rights standards among members of the international community, and so an approach that is primarily concerned with enabling WTO Members to comply with their human rights obligations, rather than penalising them for non-compliance appears a more natural starting point for both effective human rights advocacy and academic analysis.2 The distinction is very important in practical terms. It is perhaps because of the neglect of compliance-based measures and of economic, social and cultural rights that developing countries have generally been perceived as against human rights and trade linkages in the literature on this subject. But as can be seen from the preceding debate, when we are discussing compliance and cooperation based-measures such as access to medicines, it is in fact developing countries that raise human rights arguments (eg in the draft of the Doha Declaration proposed by developing countries). This is because human rights arguments in this context are generally raised by developing countries in order to argue for exemptions from their own trade commitments and in order to obtain human rights assistance from developed countries, as opposed to conditionality-based measures, which are utilised by developed countries in order to justify trade restrictions, generally against developing countries. If developing countries are to make use of human rights arguments to protect and promote the human rights of their own populations, then a clear distinction must be made between the two types of usage, so that States who do raise such issues, for instance in dispute settlement proceedings, are not concerned that they might be opening the floodgate to conditionality-based usage. It has been shown that there are also many more complexities to the use of conditionality-based measures as opposed to compliance or cooperation-based ones; while there is little argument that taking action aimed at promoting greater access to essential goods and services is positive from a human rights perspective, imposing trade restrictions on other countries for failing to adhere 2 See M Nowak, Introduction to the International Human Rights Regime (Leiden, Brill, 2003) at 33ff.

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178 Reappraising Human Rights in the WTO to human rights standards is an altogether more complex question. In the WTO context it is therefore argued that when one State takes genuine measures to protect and promote the human rights of its own population (compliance-based measure), or in cooperation with another WTO Member State takes measures to promote or protect the human rights of persons in that other WTO Member State (cooperation-based measures), then the international trading system should take all possible action to facilitate this. Such action must include providing sufficient clarity in trade law rules. But when one State attempts to induce change in the human rights practices and policies of another country through conditionality-based measures, we need to examine much more carefully the legitimacy of this action. This is not to question the fundamental legitimacy of States acting to protect and promote human rights in foro externo (cooperation-based measures are an example of just such a practice). The issue here is about conditionality-based trade restrictions as a mechanism for promoting and protecting human rights and in what situations such a mechanism is legitimate. It has been demonstrated that such measures are ‘blunt tools’ for protecting and promoting human rights and potentially, depending on the measure in question, can have a number of (often unintended) consequences. These include negative human rights impacts on the fundamental human rights of the targeted population; the dangers that measures will be a smokescreen for protectionism; encouraging unsustainable production of goods in developing countries; increasing the fragmentation of international human rights standards. For all of the above reasons, it therefore seems appropriate to demand greater justifications from those States who are utilising conditionality-based measures. Such justification, in the WTO context, would certainly occur as a result of authorisation through other more specialist international organisations such as through the UNSC, the ILO or relevant UN agencies. It should also occur as a result of widespread multilateral support for a particular trade-based measure such as the KPCS which targets extreme human rights violations without itself causing widespread deprivation. In the case of unilateral measures, greater scrutiny should be required of the proportionality of the measures taken and whether they do in fact protect and promote human rights. Unfortunately, it has been demonstrated that, in many cases, this is precisely where there is the least supervision of the actions of WTO Members, either in the WTO or, as would be more appropriate, in international agencies with greater expertise in the issues; unilateral trade measures are generally not taken on the basis of internationally agreed standards or under the auspices of any supervising agency. It has been suggested that the WTO’s approach in the EC—GSP Preferences case (as discussed in chapter 7) may give some grounds for cautious optimism regarding future treatment of such measures. In chapter eleven, we will therefore explore how the WTO system might develop its case law in order to more systematically and appropriately deal with

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Similarities in all Trade-Related Human Rights 179 the human rights measures which have been described above, including distinguishing between different types of measures where this is appropriate.

III. SIMILARITIES IN THE TREATMENT OF ALL TRADE-RELATED HUMAN RIGHTS MEASURES

Despite the differences in approach that are needed in order to deal with different types of measures, the analysis in the preceding chapters has also demonstrated that, in a number of ways, many of the same systemic issues arise when analysing the way in which human rights issues are currently dealt with in relation to all types of trade-related measures aimed at the protection and promotion of human rights in the WTO context. Many examples have been presented where attempts have been made within the WTO system to find mechanisms for balancing trade rules with broader social concerns that impact on the protection and promotion of human rights. The Kimberley Waiver is an example of such a mechanism in terms of conditionality-based measures. The Doha Declaration is a notable example from the perspective of compliance and cooperation-based measures. These mechanisms demonstrate the sensitivity of the WTO to particular non-trade ‘social justice’ issues. Where a particular issue is identified, there is the potential for action within the WTO framework in a way that can be instrumental in protecting and promoting human rights. But in both cases, these types of mechanisms for dealing with human rights issues are largely based on ad hoc and reactive responses to particularly high profile incidents where trade law rules clearly have the potential to negatively impact upon the protection and promotion of human rights, rather than being based upon an analysis of the systemic issues that lead to trade law rules actually impacting upon human rights observance in a generic situation. No inherent conflicts between the two systems have been uncovered. It has been demonstrated that it should generally be possible to interpret trade law rules in a way that protects and promotes human rights. Therefore the importance of clarifying the hierarchical uncertainties about the relationship between the two legal systems and their norms and standards as set out in chapter four is perhaps overemphasised. It has rather been demonstrated that, in a number of situations, generally worded provisions of trade agreements which potentially allow for human rights issues to be balanced against trade concerns may not be sufficient to ensure that WTO Agreements are in fact compatible with the protection and promotion of human rights. Of particular importance, it means that, where a waiver has not been granted or a declaration agreed, there remains uncertainty over the extent to which trade law rules permit measures that are taken on human rights grounds. Examples of this situation are the conditionality-based measures taken by Massachusetts against Myanmar and proposed by Maryland against Nigeria, and with respect to compliance-based measures, the

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180 Reappraising Human Rights in the WTO cases taken against South Africa and Brazil under the TRIPS Agreement. What these cases demonstrate is that while there is in general the potential flexibility within WTO rules for human rights issues to be taken into account in determining trade law obligations, there is a lack of clarity about the legality of such measures in any given situation. This can lead to pressure being applied by powerful trading partners in order to protect their own commercial interests or to States avoiding potential conflicts with WTO rules in any case by not taking action to protect human rights, a form of ‘regulatory chill’. Even where extensive action is taken to clarify WTO obligations and take into account broader social issues, such as in the case of the Doha Declaration, there is an ongoing need to ensure that such mechanisms are workable in practice and utilised by relevant actors.

IV. WTO TRADE RULES VERSUS RULES NEGOTIATED OUTSIDE THE WTO FRAMEWORK

Should we see the shortcomings outlined above as simply inherent in the WTO as an institution? Is it the WTO that is undermining the protection and promotion of human rights? The evidence that has been presented here tends to show that this is not the case. Where trade agreements that involve issues with a human rights impact have instead been negotiated in a bilateral or regional setting outside the WTO institutional framework, the results have arguably been worse from the perspective of advocates of a coherent international system for the protection and promotion of human rights. IPR protection in bilateral and regional trade agreements has been stronger and less respectful of right to health issues than the solutions negotiated within the WTO. EU and US labour and human rights conditionality in GSP schemes and Preferential Trade Agreements (PTAs), which operate largely outside the WTO framework have been shown to be, to varying degrees, open to political and other biases and failing to adhere to international standards. It should be noted in this context that, although there are almost 300 bilateral and regional trade agreements which contain some kind of explicit human rights clause, this does not mean that the clauses within those agreements ensure a holistic human rights approach to the agreements in question, based on accepted international norms and standards. There is a big difference between a trade agreement that contains a human rights clause, and agreements that systematically ensures the protection and promotion of human rights in all aspects of the obligations created by those agreements. There are institutional reasons why bilateral and regional negotiations are more likely than the multilateral forum of the WTO to lead to the adoption of measures that run contrary to human rights norms and principles; smaller countries have less power to block unwanted trade provisions when they are negotiating singly or in small groups than when they are forming a large unified front in global trade talks; conversely, powerful States are much freer to negotiate the

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WTO Trade Rules v Rules Negotiated Outside the WTO 181 terms they wish for, to the disadvantage of smaller and weaker states, and their people; bilateral negotiations are more likely to be influenced by interest groups (eg farming or industrial lobbyists) than multilateral talks as they are conducted in state capitols; such negotiations also tend to be more secretive and there is less press attention, so it is difficult to raise public awareness of provisions that are not in the general public interest.3 There is also considerable evidence to show that a set of global rules or laws with a functioning dispute settlement system that regulates the way in which nation states trade has advantages over approaches to trade that do not follow a rules-based approach (or ‘ruleorientated diplomacy’ as opposed to resolution on the basis of power differentials).4 A world trading system helps to ensure that trading rules are not decided by power politics or ‘aggressive unilateralism’.5 Rules help to bind all governments, including the most powerful, to act according to established and agreed principles and regulations. Adherence to such a rule-based system is generally beneficial from a human rights perspective, as it benefits smaller and more vulnerable States (whose populations’ human rights are more likely to be violated) as opposed to power-based diplomacy where more powerful States dominate. This does not mean that a rules-based system will embody ‘fairness’ as between all the participants—stronger parties will still have more power to force through their agendas, and can threaten unilateralism upon weaker participants.6 Outcomes that are simply ‘negotiated’ without recourse to any deontological frameworks are likely to involve a number of elements that are incompatible with forms of justice such as human rights, particularly when they involve negotiating parties who are in weak negotiating positions or who are subject to strong vested interests demanding certain outcomes. Certainly, in order to be considered ‘legitimate’, multilateral rules should be required to be more than consensual among participants, and this is why it is important to ensure that international trade law rules are promoting and protecting human rights. But a strong argument can be made that multilateralism as a structure for negotiation and settlement of disputes is preferable, from the justice perspective, to unilateralism, or to bilateral treaties involving parties with great power differentials. Therefore the

3 Making a similar point in relation to ‘TRIPS-plus’ provisions in regional and bilateral negotiations, see F M Abbott, ‘The WTO Medicines Decision: The Political Economy of World Pharmaceutical Trade and the Protection of Public Health’, (2005) 99 American Journal of International Law 317–58 at 354. 4 See J M Alvarez, ‘Constitutional Interpretation in International Organisations’ in J-M Coicaud and V Heiskanen (eds) The Legitimacy of International Organisations (Tokyo, United Nations University Press, 2001). Also see G Marceau, ‘WTO Dispute Settlement and Human Rights’ (2002) 13 European Journal of International Law 753–814 at 759ff, on the importance of the WTO dispute settlement system as a mechanism for regulating countermeasures by powerful states. 5 A term often used by Jagdish Bhagwati, and which is the title of one of his publications discussing the issue in depth—J Bhagwati and H T Patrick, Aggressive Unilateralism, America’s 301 Trade Policy and the World Trading System (Michigan, Michigan University Press, 1990). 6 R Howse, ‘The Legitimacy of the World Trade Organisation’, in J-M Coicard and V Heiskanen, above n 4.

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182 Reappraising Human Rights in the WTO current problems faced by the WTO and its Members in completing the Doha Round of trade negotiations should also be viewed with concern by human rights advocates. Failure to agree new trade deals at the global level is likely to lead to increased numbers of bilateral and regional trade agreements, with far more problematic provisions from a human rights perspective.

V. STRATEGIES FOR A MORE SYSTEMATIC HUMAN RIGHTS APPROACH TO INTERNATIONAL TRADE LAW RULES

The question is therefore how the multilateral trading system can more effectively and systematically respond to situations where trade law rules potentially threaten the ability of member states to protect and promote human rights. As has been concluded already, from a human rights perspective, there are strong arguments that it would be better if the WTO was not involved at all with issues that raise human rights concerns. Instead such issues should be dealt with by the international organisation with expertise in such matters (eg the ILO or relevant UN agencies). But it has also been noted that there are currently no mechanisms within these organisations that can deal with many of the issues that arise in the trade law context. Many commentators have concluded that the proper approach to effective global protection of human rights and labour rights is to increase the powers and capabilities of the ILO and UN agencies rather than encountering all the problems involved in dealing with such issues in a trade court setting.7 Suggestions for alternative approaches through the ILO and UN tend to focus upon conditionality-based measures, since these are the measures that are generally considered in the literature. They also tend to focus on voluntary mechanisms for increasing human rights observance. It is suggested, for instance, that the ILO should, as the WTO does in its Trade Policy Review mechanism, bring out annual reports on members conformity with the ILO conventions. UNICEF should do the same with children’s rights, and other appropriate international organisations on their relevant specialised issues.8 Further ideas for strengthening the ILO include promoting more market-orientated tools such as product labels and corporate codes of conduct, a ranking system for labour policies in order to shame countries into compliance, and the creation of more conventions with individual rights so that individuals can bring actions into their own domestic courts.9 Voluntary labelling systems have been cited by a number of authors as a mechanism for solving trade and human rights linkage, whereby it is then up to 7 See Statement of Third World Intellectuals and NGOs’ Statement Against Linkages, at 4 http://www.cuts-international.org/linkages-twinsal.htm, accessed on 18 Nov 2006. 8 See Statement of Third World Intellectuals and NGOs’ Statement Against Linkages, ibid at 4. 9 S Charnovitz, ‘The International Labor Organization in its Second Century’, Ch 11 in S Charnovitz (ed), Trade Law and Global Governance (London, Cameron May, 2002) at 287ff.

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A More Systematic Human Rights Approach to Trade Law 183 consumers to decide individually about the human rights standards they want to adopt in their purchasing decisions thus avoiding the problems of enforcement, while acting as an ever bigger incentive to increase standards as the market grows.10 But the overall effect of such labelling schemes on human rights conditionality through trade is likely to be limited, at least for the moment. Voluntary labelling schemes have achieved impressive results given their humble origins. It is estimated that the European Fair Trade Sector imports products from 800,000 producer families in 45 different developing countries and improves the living conditions of five million people.11 But this is a tiny fraction of world trade in the goods concerned, and unlikely to make a great deal of impact on the vast majority of the world’s workers in the foreseeable future. Given that consumers generally must pay a premium for products that adhere to such standards, the size of the overall market is likely to be limited. Further the ability of such schemes to reach the most marginalised producers is hampered by logistical and quality concerns.12 As the market does expand, it is very likely to lead to complaints from countries largely excluded by the schemes that they are contrary to WTO rules. A Belgian social labelling scheme has already been the subject of strong criticism by the Association of South East Asian Nations (ASEAN) countries in the WTO context.13 Official regulation of the schemes could be difficult. Post-Singapore, the Director General of the ILO suggested it could regulate a global social label, but this was rejected by Member States.14 In any case labelling systems are certainly not an alternative to effective reform of international trade law rules.15 For similar reasons, the increasing prevalence of voluntary codes of conduct undertaken by multinational companies is likely to only have a limited effect on human rights standards. It is only large multinational companies who have brands that they need to protect and are under consumer pressure to conform to such standards that are likely to be willing to comply.16 10 Eg R M Stern, and K Terrell, Labour Standards in the World Trade Organisation, Discussion Paper No 499, University of Michigan (Aug 2003) at 10; J M Diller, and D A Levy, ‘Child Labor, Trade and Investment: Towards the Harmonisation of International Law’ (1997) 91 American Journal of International Law 663–96 at 686; S Tay, ‘Trade and Labor: Text, Institutions, and Context’; B Hoekman, A Mattoo, and P English (eds), Development, Trade, and the WTO: A Handbook, (US, The World Bank, 2002) at 463–71. 11 See Fair Trade Resolution of the Austrian Parliament (24 Nov 2000). 12 See Economie Sociale—Note Stratégique Trans-Sectorielle 14 Nov 2002, Royaume de Belgique, Service Public Fédéral, Affaire Etrangères, Commerce Extérieur et Coopération au Développement at 7. 13 See discussion by C Breining-Kaufmann, ‘The Legal Matrix of Human Rights and Trade Law’ in J Pawelyn, T Cottier and E Burgi (eds) Human Rights and International Trade (Oxford, Oxford University Press, 2005) 95–136 at 111. 14 See R O’Brien et al, Contesting Global Governance: Multilateral Economic Institutions and Global Social Movements (Cambridge, Cambridge University Press, 2000) at 99 and 104. 15 See ‘Voting with your Trolley: Can you Really Change the World Just by Buying Certain Foods?’ The Economist (7 Dec 2006). 16 For more on the limitations of voluntary standards see R N Block, K Roberts and M J Roomkin, ‘Models of International Labor Standards’ (2001) 40 Industrial Relations 258–92 at 279.

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184 Reappraising Human Rights in the WTO While such soft law initiatives and adoption of domestic schemes are important measures that should in any case be utilised in order to respond to trade-related human rights issues, they are not sufficient to deal with the entrenched legal issues that have been explored in this research. Neither the ILO, nor the UN agencies appear to currently have the supervisory mechanisms with which to effectively deal with these issues. The recent history of the ILO demonstrates that it is moving towards systems of voluntary compliance rather than stronger enforcement procedures.17 UN agencies do not have the dispute settlement mechanisms to deal with the trade and human rights linkage issues outlined above. In chapter seven it was noted that several of the UN Treaty Bodies had expressed their concern about the potential negative impact of international trade-related intellectual property agreements on the access to affordable medicines. But they appear unable to do anything more to prevent provisions that are potentially damaging to human rights observance from being included in trade agreements. This should not be viewed as a hierarchical issue, which therefore signifies the prevalence of one set of values (trade) over another (human rights). It is rather the essential nature of international trade itself that allows States to design an institution such as the WTO with its binding dispute settlement system without the impingement on sovereignty that would occur in the field of human rights. Trade rulings can be enforced through withdrawal of concessions by the wounded party, human rights violations require a form of reparation that is far more intrusive into national jurisdiction.18 Hence, the difficulties in finding solutions to the problems outlined above through the ILO or the UN system. A number of authors have made radical proposals for how the WTO might be institutionally altered in order to make it a more expert and legitimate organisation for dealing with human rights issues. So it is suggested by one author (whose human rights and trade linkage concerns are limited to conditionalitybased issues) that a new arm of the WTO be set up with the power to assess facts and decide if restrictions are warranted before they are imposed by one State on another State.19 Several other authors argue that, with regard to labour rights, a combination of WTO enforcement with ILO expertise is the solution to this problem.20 The current contribution recognises the potential value of such approaches. But it also recognises the unlikelihood of such formal institutional 17 This observation was made by two renowned academics on human rights/labour rights issues—Brian Langville and Philip Alston—at a lecture at the European University Institute in Florence, although they differed considerably in their views about whether such a development was positive. 18 On a related point see J Pawelyn, Non-Traditional Patterns of Global Regulation: Is the WTO ‘Missing the Boat’? Paper Delivered at Conference in Florence on Legal Patterns of Transnational Social Regulations and International Trade, Florence, 24–5 Sept 2004. On file with author. 19 C M Vazquez, ‘Trade Sanctions and Human Rights—Past, Present and Future’ (2003) 6 Journal of International Economic Law 797–839 at 830. 20 For differing institutional models see R N Block et al, above n 16, at 284ff; K A Elliot, Can Labor Standards Improve under Globalization? (Washington, Institute for International Economics, 2003) at 85; Sandra Polaski, Trade and Labour Standards, A Strategy for Developing Countries, (Washington Carnegie Endowment for International Peace 2003) at 90ff.

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A More Systematic Human Rights Approach to Trade Law 185 link-up, given the current resistance to such proposals both within the institutions concerned, and among Member States. At various points in the following chapters, proposals are made for softer forms of institutional cooperation in terms of norm and rule creation and adjudication.21 These proposals are made in the context of recognising that human rights-related issues will inevitably arise in the WTO context and need to be dealt with utilising its current institutional architecture, in the absence of more profound change. It has been argued that, where possible, trade-related human rights measures should be legitimised under other international legal frameworks and that this validation should then be respected within the WTO system. It was argued that, with respect to measures authorised by the UNSC and the ILO, this would in fact be the case. But, with regard to many other measures for the protection and promotion of human rights, including all compliance-based measures, there is no such legitimising authority that would then bind the WTO and its Members. How do we then adjudicate on claims that measures are being taken to protect and promote human rights? It does appear that, if the majority of the human rights issues that have been addressed here are not raised within the WTO system, international trade rules will simply be applied without taking into account human rights concerns. It is for this reason that the remaining two chapters ask whether the types of human rights issues addressed in this book could be more appropriately and systematically identified and dealt with within the current WTO framework. The proposals that are made are limited to those which work within the existing international legal structures of the WTO, for pragmatic rather than idealistic reasons; there are unlikely to be any great institutional changes relevant to these issues in the near future for the reasons set out above. This analysis will begin by examining in the next chapter the extent to which it is possible to attain a more human rights-sensitive approach within the confines of the dispute settlement system of the WTO. It will give consideration to whether there are appropriate safeguards that could help to ensure that human rights concerns are appropriately weighed and balanced in a trade court setting. This will be followed by an examination of some broader concerns that require action by a range of actors outside the confines of dispute settlement if international human rights law commitments are to be successfully reconciled with WTO obligations.

21 In particular see the discussion in the following chapter concerning the need for expert human rights bodies to have a role in WTO dispute settlement, and the discussion in ch 12 of the need to involve human rights organisations in impact assessments. See also V Mosoti, ‘Institutional Co-operation and Norm Creation’ in T Cottier, J Pawelyn, and E Burgi (eds) Human Rights and International Trade (Oxford, Oxford University Press, 2005) for a more detailed discussion of this issue and in particular at 167 citing a number of other authors calling for greater co-ordination between the WTO and other relevant international agencies.

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11 Raising Explicit Human Rights Arguments in WTO Dispute Settlement Proceedings I. INTRODUCTION

T

HERE IS CONSIDERABLE disagreement about the mechanisms by which to find consistency between trade law and human rights law rules, norms and standards, particularly when the forum under consideration is WTO dispute settlement proceedings. A critique has been provided of the current WTO handling of human rights issues, arguing that it is largely based on ad hoc responses to issues where there is particular political pressure for action, when what is needed is a methodological approach which allows human rights issues to be systematically considered and taken into account in the creation, implementation and interpretation of trade law rules. This chapter addresses the question of the extent to which the dispute settlement system of the WTO can deal with these concerns. It is through dispute settlement that the precise nature of WTO obligations is formulated. So, if WTO Members were to raise human rights issues in dispute settlement proceedings, how could (and should) dispute settlement panels and the Appellate Body deal with them? In previous chapters we have considered how DSBs have dealt with certain human rights-related measures (eg trade incentives under GSP schemes). We have also considered how DSBs would deal with other human rights measures where there was a fair degree of certainty that they would accept the human rights measures in question: we have examined scenarios where they would show on deference to other international organisations (eg they would defer to measure taken according to Resolutions of the UNSC, and in all likelihood to measures authorised by the ILO). But consideration of human rights measures where the future approach of DSBs is uncertain has been left to this chapter. This is because it is necessary to clearly separate current practice and highly probable future approaches from an exploration of how future WTO DSBs might appropriately handle a much broader range of human rights issues. The latter exercise, undertaken in this chapter, is inevitably a great deal more

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188 Human Rights in WTO Dispute Settlement Proceedings speculative, and ‘best practice’ from a human rights perspective is by no means assured, as will be explained in the discussion which follows. A starting point for this type of analysis is to examine the jurisdictional competence of DSBs if such human rights issues were to arise. We then move on to consider various mechanisms for raising explicit human rights arguments in dispute settlement proceedings, focusing upon the use of exception clauses to raise human rights arguments, and explore the positive and negative aspects of this approach.

II. THE JURISDICTIONAL COMPETENCE OF WTO DISPUTE SETTLEMENT BODIES

There appears to be broad agreement about the limits of WTO competence in that the jurisdiction of WTO panels is limited to claims made under the WTO agreements.1 So no claims can be brought to WTO dispute settlement procedures alleging breaches of international law, including breaches of human rights, which are not based on provisions of WTO agreements.2 WTO dispute settlement proceedings are therefore restricted to ruling on claims that are based on WTO agreements. But WTO dispute settlement panels can make decisions on trade matters specified in the WTO agreements that also involve non-trade issues such as human rights issues, since this is part of their ‘implied’ or ‘incidental’ mandate required in order to settle disputes.3 In effect this means that while claimants cannot bring cases on the basis of a human rights claim, human rights arguments may be valid as part of defences to claims of breach of a WTO agreement. So, for instance, a claim could not be brought before a WTO panel by Country A alleging that Country B was utilising slave labour in the production of goods for export.4 Nor would a WTO panel have the jurisdiction to rule on a claim by Country A that Country B was failing to utilise compulsory licenses in order to provide access to affordable medicines. In neither of the above cases is the claim trade-based. Rather they are both claims by one country about the protection of human rights in another 1 DSU, Art 1.1: ‘The rules and procedures of this Understanding shall apply to disputes brought pursuant to the consultation and dispute settlement provisions of the agreements listed in Appendix 1 to this Understanding (referred to in this Understanding as the ‘covered agreements’) . . .’ Art 7.2: ‘Panels shall address the relevant provisions in any covered agreement or agreements cited by the parties to the dispute . . .’ See G Marceau, ‘WTO Dispute Settlement and Human Rights’ (2002) 13 European Journal of International Law 753–814 at 762 for further details on the relevant provisions of the DSU. 2 Eg See G Marceau, ibid, at 753–814 at 763. 3 See discussion of this point with regard to WTO law more generally in ch 4 and in J Pauwelyn, Conflict of Norms in Public International Law: How WTO Law Relates to Other Rules of International Law (Cambridge, Cambridge University Press, 2003) 447ff. 4 Although with regard to what could be considered labour rights issues, the Singapore Ministerial Declaration stated that ‘The International Labour Organisation (ILO) is the competent body to set and deal with these standards’. World Trade Organization, Singapore Ministerial Declaration, para 4 WT/MIN(96)/DEC/W, 13 Dec 1996. See discussion in ch 6 on this point.

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Methodologies for Raising Human Rights Arguments 189 country, albeit the claims do involve trade issues. The appropriate forum for raising such matters is the international human rights system.5 But, human rights measures may be raised as a defence within WTO dispute settlement proceedings. So, if Country A were to bring a case against Country B alleging that it was breaching non-discrimination provisions of the GATT in barring products made by slave labour, then WTO panels could potentially rule on a defence by Country A (if raised) that discrimination was justified on human rights grounds.6 Similarly, if Country A alleged a breach of the TRIPS Agreement by Country B in its use of compulsory licenses, then it would be within the jurisdiction of a WTO panel to rule on a defence raised by Country B that it was utilising compulsory licenses in order to protect the right to health of its population. So it appears to be within the jurisdiction of WTO dispute settlement panels to rule on human rights issues which are raised as defences by countries accused of breaching their WTO obligations. As was discussed in chapter four, if human rights issues were raised in this way in WTO dispute settlement proceedings, dispute settlement panels would then find themselves competent to decide on the case in question, as they have done on a range of other non-trade issues. To do otherwise would be to make a wide range of WTO obligations potentially unenforceable. As should have become obvious from the preceding chapters, the potential human rights issues raised in the trade context are so numerous, diverse and multifaceted that DSBs could not simply refuse to take cases with a human rights dimension. There is a distinct difference between raising a human rights argument, and whether or not the human rights claim is actually justified. If all cases where human rights issues were raised were to be excluded from dispute settlement, this could lead to use of unfounded human rights claims simply to avoid settlement of a case. At the very least, therefore some kind of adjudication of the validity of the claim is needed.

III. METHODOLOGIES FOR RAISING HUMAN RIGHTS ARGUMENTS IN WTO DISPUTE SETTLEMENT PROCEEDINGS

Human rights arguments cannot therefore be entirely excluded from dispute settlement proceedings. But there is a great deal of dispute about the mechanism by which human rights can and should be raised by parties, and the way they can and should be dealt with by WTO panels. The Appellate Body has confirmed that, in clarifying and interpreting the nature of WTO obligations, it must take into account the rights and obligations of the rest of the international legal system—WTO law cannot be read ‘in 5 A number of UN human rights treaties have interstate complaints procedures, but none have ever been utilised. 6 Although the position is somewhat complicated by the Singapore Declaration, as discussed in ch 6.

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190 Human Rights in WTO Dispute Settlement Proceedings clinical isolation from public international law’.7 But this obligation must be balanced with Article 3(2) of the DSU which provides that ‘[r]ecommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements.’ So, how can DSBs take into account norms and standards from international human rights law without adding to or diminishing WTO obligations? Some commentators, including most prominently, Gabrielle Marceau, argue that DSBs cannot find in favour of human rights norms and standards if they conflict with WTO obligations, as this would be adding to/diminishing rights and obligations under the covered agreements. Rather it is only possible to interpret WTO rules to be consistent with human rights obligations as far as this is possible within the WTO forum.8 She argues that the inherent flexibility of a number of WTO provisions means that such an approach will most often avoid conflicts between human rights law and international trade law.9 But in situations of conflict (which she envisages will be extremely rare) where WTO law mandates or prohibits a certain action, while human rights law does the opposite, with the exception of ius cogens, WTO DSBs would be required to find that human rights law does not have direct effect in WTO law. DSBs have no power to interpret or enforce other treaties, and therefore must limit themselves to applying relevant WTO law.10 Joost Pauwelyn is the most prominent proponent of an alternative approach. He argues that because WTO membership is broader than the membership of most human rights treaties, WTO rules cannot be interpreted in accordance with human rights norms and standards.11 Even where all parties to a case are bound by the human rights norm in question, the interpretation of WTO rules to take into account human rights would add to or diminish the rights and obligations of other WTO Members not bound by the human rights obligations in question. Instead, Pauwelyn argues that all WTO Members have human rights obligations as part of their obligations under general international law. Where both parties in a case have signed up to the human rights obligation in question, these obligations can be weighed and balanced directly against WTO obligations. Since WTO treaties are ‘reciprocal’ in nature (ie a series of bilateral treaty relations, that are each detachable from one another) and human rights treaties are ‘integral’ (ie their legal effect is collective), where the two sets of norms conflict, it is argued that it will be the human rights norms that will generally prevail.12 The approach advocated by Marceau more closely resembles that which has been utilised by WTO Members in WTO dispute settlement proceedings, and 7 United States—Standards for Reformulated and Conventional Gasoline, Report of the AB, WT/DS2/AB/R, adopted 22 Apr 1996 at 17 (US—Gasoline). 8 G Marceau, above, n 1 at 764. 9 G Marceau, above n 1 at 789ff. 10 G Marceau, above n 1 at 762ff. 11 J Pauwelyn, above n 3 at 263. 12 J Pauwelyn, above n 3 at 52ff and 491.

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Methodologies for Raising Human Rights Arguments 191 adjudicated upon by panels and the Appellate Body. There have been a number of disputes that have involved ‘non-trade’ issues, where WTO Members have argued for an interpretation of WTO obligations that takes into account other important social concerns such as public health13 and environmental issues.14 In each of these cases, the non-trade concern has been raised, and adjudicated upon through relevant WTO provisions, not as a freestanding legal argument. It would therefore seem to be both the most likely mechanism that States will use to raise human rights issues in WTO proceedings and the most readily acceptable mechanism by which WTO panels and the Appellate Body would be willing to hear such claims. This would mean that in cases of conflict, human rights law norms and standards may well be disapplied, with the exception of ius cogens. This clearly place limitations on the application of human rights law norms and standards in the trade law context. However, as has been demonstrated in the preceding chapters, most potential ‘conflicts’ which arise in the WTO context concern the possibility of non-human rights compliant interpretations of broadly-conceived provisions of WTO law. So an approach based on interpreting WTO provisions so that they do in fact protect and promote human rights, has the potential to deal with those substantive issues which have been raised in the previous chapters. The approach taken here will therefore be to concentrate on an analysis of the extent to which key provisions of WTO agreements can be interpreted to take into account the norms and standards of international human rights law. This requires in particular addressing two major issues. First, are there adequate provisions within WTO agreements to allow the full range of human rights arguments to be utilised by Member States wishing to raise human rights concerns? Second, where human rights arguments are able to be raised indirectly through WTO rules, justification for such an approach will be required utilising the legal tests and balancing mechanisms set out in the relevant WTO provisions.15 Questions arise from a human rights perspective about whether utilising WTO provisions to raise human rights issues allows them to be given the requisite weight in the balancing process. On this basis, conclusions will also be drawn about the extent to which interpretation of WTO law in order to effectively protect and promote human rights is possible. This approach will then be weighed and balanced against the alternative; raising human rights issues directly though provisions of international human rights law.

13 Eg Thailand—Restrictions on Importation of and Internal Taxes on Cigarettes, Panel Report, DS10/R–37S/200, adopted 7 Nov 1990 (Thailand—Cigarettes); EC—Measures Affecting Asbestos and Asbestos-containing Products, Report of the AB, WT/DS135/AB/R, adopted 12 Mar 2001 (EC—Asbestos). 14 Eg United States—Import Prohibition of Certain Shrimp and Shrimp Products, Report of the AB, WT/DS58/AB/R, adopted 12 Oct 1998. (Shrimp/Turtle). 15 In particular there will be a detailed evaluation of the ‘necessary’ criteria under GATT Art XX.

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192 Human Rights in WTO Dispute Settlement Proceedings

IV. MECHANISMS FOR RAISING HUMAN RIGHTS ISSUES THROUGH WTO AGREEMENTS

There are a number of ways in which provisions of WTO agreements can be interpreted in order to raise human rights issues. In this chapter we focus upon two mechanisms for raising explicit human rights arguments with potentially wide-ranging applicability across a range of human rights issues—the interpretation of non-discrimination provisions of WTO agreements according to human rights norms and standards, and use of exception clauses to raise human rights arguments. These two mechanisms will be described below, with a more detailed examination of exception clauses, because of their potentially wideranging applicability and status as ‘measures of last resort’. But it should be recognised that there are other mechanisms that can be utilised both to raise explicit human rights arguments in particular scenarios, or to deal with human rights issues without those issues being raised in explicit human rights terms. Beyond the scope of the current discussion, there are many mechanisms of narrow application within WTO agreements through which specific human rights issues can be raised. So, for instance, as was demonstrated in chapter nine, human rights arguments can be raised under various provisions of the TRIPS Agreement which allow for production of generic drugs. There are also other mechanisms which serve implicit human rights functions. For instance, there are special and differential treatment provisions for developing countries in relation to many obligations in WTO agreements. Because developing countries are the countries where human rights violations are most likely to occur, these clauses also have the potential to protect and promote human rights, and could even be interpreted with reference to international human rights norms and standards. So the discussion here focuses upon how WTO provisions with potentially broad application can be utilised to raise explicit human rights arguments. But it should be remembered that there are many other provisions of narrower application that could also be utilised to raise human rights issues explicitly or implicitly in a range of more specific scenarios.

V. NON-DISCRIMINATION PROVISIONS OF WTO AGREEMENTS

One key mechanism that could be utilised is to interpret non-discrimination provisions within WTO agreements so that they take into account key human rights law norms and standards. All the major WTO agreements have nondiscrimination provisions which forbid discrimination between ‘like’ products or, in the case of the GATS, like services. This applies to both discrimination between foreign and domestic products or services (national treatment) and between two foreign products or services (MFN treatment). Key to a human rights approach to these provisions is to argue for interpretations of non-

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Non-Discrimination Provisions 193 discrimination provisions of WTO agreements which allow for products and services to be distinguished on the basis of relevant human rights characteristics ie that human rights-compliant products or services are not ‘like’ non-compliant products and services, and that measures can therefore be taken which distinguish between the two categories. As has been demonstrated throughout this book, there are a number of different situations where human rights advocates may wish to differentiate between two different products or services in order that they receive different treatment from governments. States may wish to distinguish between products or services in order to utilise conditionality-based trade measures, for instance in the form of tailored, semi-tailored or general trade restrictions. So, for instance, do WTO nondiscrimination provisions allow differentiation between two tin cans as ‘unlike’ products because one tin can was produced with forced labour (tailored restrictions)? Do they allow differentiation between two diamonds because one diamond was mined by a rebel group which committed human rights atrocities (semi-tailored restrictions)? Do they allow differentiation between two automobiles because one automobile is being exported from a State which commits widespread torture of its citizens (general trade restrictions)? States also need to be able to treat products and services differently in order to utilise compliance-based trade measures. So, do WTO non-discrimination provisions allow differentiation between two apples because one apple is produced by a semi-subsistence farmer and the other by a multinational agrobusiness? Can we distinguish between two service providers because one service provider is a not-for-profit education establishment, running schools in disadvantaged remote rural communities, and another service provider is a profitdriven educational service provider running schools in affluent urban areas? As was discussed in chapter eight, determination of what constitutes ‘like’ service providers under the GATS is potentially very important in terms of the ability of governments to subsidise, or otherwise differentiate in favour of, organisations that are providing essential services to the poor and otherwise vulnerable.16 Therefore, in order to be able to successfully raise the full range of human rights arguments under non-discrimination provisions of WTO agreements, we need to be able to distinguish between products and services on the basis of a wide range of different characteristics. We also need to be able to differentiate on the basis of a wide range of characteristics of the producers or service providers (eg not-for-profit charity versus multinational company), and even on the basis of the human rights performance of States from which the products or services originate (is the government of that State committing widespread human rights abuses?). Will non-discrimination clauses in WTO agreements permit us to distinguish between products and services in the ways outlined 16 See A Lang, ‘The GATS and Regulatory Autonomy: A Case Study of Social Regulation of the Water Industry’ (2004) 7 Journal of International Economic Law 801–38 at 827ff.

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194 Human Rights in WTO Dispute Settlement Proceedings above, and thereby permit differential treatment of products and services where there are genuine and justified human rights grounds for doing so (as opposed to being utilised for disguised protectionism or where the measures taken do not meet a proportionality test)? There are two particular problems with providing answers to the questions raised above. First, the principle of non-discrimination has been held to be a very complex and context specific one which will depend on case-by-case interpretation.17 Second there is very little case law which is directly relevant to human rights-related interpretations of non-discrimination provisions. Therefore it is difficult to confidently predict how the wide range of human rights issues set out above might be treated if a particular dispute arose. No attempt will be made here to provide a comprehensive analysis of non-discrimination provisions in WTO law, but some comments can be made regarding potential future interpretation from a human rights perspective based on existing WTO jurisprudence.18 With regard to GATT, there has been a considerable amount of jurisprudence regarding the definition of ‘like products’, particularly under Article III. DSBs have utilised a set of four factors to be considered in making a determination of ‘likeness’: (i) the properties, nature and quality of the products; (ii) the end-uses of the products; (iii) consumers’ tastes and habits; and, (iv) the tariff classification of the products.19 In the case of EC—Asbestos, the AB utilised this test and its four factors in order to conclude that bricks containing asbestos fibres are unlike those which do not contain them, based on the potential health risks of the asbestos present in the former bricks.20 They did this partly on the basis of a finding that asbestos bricks have different physical properties than non-asbestos bricks. They also took into account consumers’ tastes and habits—that consumers would differentiate between bricks that represent a health risk and those that do not. Certainly, this case represents an approach adopted by the AB where it has balanced economic concerns against important social ones, in this case public health, and found in favour of a government’s right to protect the public health of its population. It has been argued that, following this approach, it might be possible to distinguish between products and services on human rights grounds. This argument primarily rests upon utilising ‘the tastes and habits of consumers criterion’—a consumers’ wish to purchase goods according to recognised human rights standards. However there is considerable disagreement between 17 See discussion in Japan—Taxes on Alcoholic Beverages, Panel Report, WT/DS8/R, (adopted 1 Nov 1996) at 21. 18 For more detailed recent analysis see J Ya Quinn ‘Defining Non-Discrimination Under the Law of the World Trade Organisation’ (2005) 23 Boston University International Law Journal 216–97; M Cosey, Determining Likeness Under the GATS: Squaring the Circle? WTO Staff Working Paper ERSD-2006-08 (Sept 2006). 19 These factors were originally set out in the Report of the Working Party on Border Tax Adjustments. See Working Party Report, Border Tax Adjustments, adopted 2 Dec 1970, BISD 18S/97. 20 EC—Asbestos, above n 13, at para 104ff.

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Non-Discrimination Provisions 195 commentators on this point.21 Certainly a stronger case could be made for distinguishing goods where clear and egregious human rights violations had occurred in the production process. In that scenario consumers might clearly recognise that human rights violations had occurred and identify that such violations were closely related to the product in question (eg goods produced with forced labour).22 But where the nexus between product and violation is less immediate (eg products emanating from States where widespread torture was occurring) or the key issue is the nature of the producer (eg an apple produced by semi-subsistence farmer), it is less obvious how the current test would distinguish between products and services on human rights grounds. The Appellate Body has indicated that the ‘four factors’ are not exhaustive, and other factors could be considered if appropriate to other products, so tests could potentially in future be formulated to take into account a wider range of human rights measures.23 But this is within the overall framework of an inquiry about the competitive relationship between products.24 From a human rights perspective, a broader ‘aims and effects’ test, as utilised by earlier dispute settlement panels, would certainly be preferable, which has been described as follows: [T]he legitimacy of internal taxes and regulations should be determined primarily on the basis of their purpose and market effects, i.e. whether they have a bona fide regulatory purpose and whether their effect on conditions of competition is to create a protective advantage in favor of domestic products.25

This test has subsequently been rejected by WTO dispute settlement bodies,26 and was not utilised in EC—Asbestos. But it would seem to be preferable from a human rights perspective. Potentially it would allows for a broader range of human rights measures to be accepted as non-discriminatory; if a bone fide 21 Eg S H Cleveland, ‘Human Rights Sanctions and International Trade: A Theory of Compatibility’ (2002) 5 Journal of International Economic Law 133–89 at 155ff arguing for such an interpretation. But C M Vazquez, ‘Trade Sanctions and Human Rights: Past, Present and Future’ (2004) 6 Journal of International Economic Law 797–839 at 811 argues that Art III is unlikely to support such arguments relating to process and production methods. 22 For references to a number of commentator on this issue see Carlos Manuel Vazquez, ibid at 811. Also see R Howse and E Tuerk, ‘The WTO Impact on International Regulations: A Case Study of the Canada—EC Asbestos Dispute’, in Grainne De Burca and Joanne Scott (eds) The EU and the WTO: Legal and Constitutional Issues (Oxford, Hart Publishing, 2001) at 297. 23 EC—Asbestos, above n 13 at para 102. 24 EC—Asbestos, above n 13 at para 98ff. The AB did go on to say that, even where products are found to be ‘like’ according to the test they outlined, the complainant would have to show that less favourable treatment was accorded to its products than the domestic equivalents. Such a requirement would presumably be met if the complainant could show that the costs of ensuring compliance were greater for its products than for domestic equivalents. But complainants from developing countries who are discriminated against on the basis, for instance, of non-compliance with labour standards would be able to make strong arguments that the costs of compliance are far greater than for developed countries who will, in all probability, be those imposing these type of restrictions. 25 R Hudec, ‘GATT/WTO Constraints on National Regulation: Requiem for an ‘Aim and Effects’ Test’, in Essays on the Nature of International Trade Law (London, Cameron and May, 1999) at 368. For references to case law where DSBs have rejected this approach see J Ya Quinn, above n 18, at 243ff. 26 See Japan—Alcoholic Beverages, Panel Report, endorsed in the AB Report above n 17.

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196 Human Rights in WTO Dispute Settlement Proceedings regulatory purpose, presumably including the protection and promotion of human rights, could be established with regard to the measure (eg preventing sales in conflict diamonds), it should then be judged as legitimate. Relying on factors such as consumer tastes to decide upon what represents a legitimate human rights measure risks only including the most uncomplicated measures whose aims and effects are clearly discernable by consumers. The key should instead be to assess the motivation of the regulator and the aims and effect of the regulation—how appropriate are the proposed measures in dealing with the human rights issue at stake, however complex the policy measure required to achieve that aim. With regard to the GATS, there is very little relevant jurisprudence at all thus far. What jurisprudence there is provides very little guidance on how future DSBs will interpret non-discrimination provisions, as panels have largely found ways to avoid the issue.27 Unlike the GATT, the GATS does potentially allow for determinations of likeness to be based on characteristics of the service provider, as well as the service itself. But it is currently unclear as to what would be the relevant characteristics of service suppliers. It is certainly not assured that the socio-economic status of consumers would be sufficient to enable States to treat service providers as not ‘like’, which would obviously be a key consideration from a human rights perspective.28 It appears therefore that non-discrimination provisions of WTO agreements do have some potential for permitting differential treatment of products and services based on human rights considerations. However, there is great uncertainty about how WTO DSBs will deal with these issues in individual cases. The current methodology adopted by DSBs suggests that measures taken which distinguish products and services where clear violations are occurring in the production process or service delivery have the greatest chance of being accepted as non-discriminatory under GATT rules.29 But where the nexus between the product or service and the human rights issue is not so strong, current WTO methodologies appear ill suited to dealing with these arguments. It is in this context that we turn to consider the general exception clauses in WTO agreements where there appear to be greater possibilities of raising a wider range of human rights issues.

27

See M Cossy, above n 18, at 5f for a summary of the case law. A Lang, above n 16, at 830. 29 Even in this scenario, there is still a need to wait and see how individual dispute settlement panels will rule in individual cases. It may be that future dispute settlement panels will also examine the validity of human rights measures under the TBT Agreement, if human rights norms and standards are deemed to be technical regulations. For an examination of the relationship between the TBT Agreement and the GATT see R Howse and E Tuerk, above n 22 at 308ff. 28

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General Exception Clauses 197

VI. GENERAL EXCEPTION CLAUSES30

There are various ‘general exception’ clauses in WTO agreements which allow countries to derogate from their obligations under the main provisions of the relevant treaties. These will be the subject of in depth analysis below in order to ascertain the extent to which they can be utilised to raise human rights issues in the WTO, and whether in so doing, human rights issues could be dealt with in a way that gives them sufficient weight and significance. This focus should not suggest that the general exception clauses are the primary mechanism for ensuring that bona fide human rights measures are able to be found compatible with WTO law. Every effort should be made to interpret and implement the main rules of WTO agreements in light of relevant human rights norms and standards, and to utilise special and differential treatment and specific WTO exceptions that have the potential to protect and promote human rights. But, the general exception clauses are particularly appropriate for detailed analysis here for two reasons. First, it is possible to utilise a wide range of different human rights arguments within their scope. In particular, there is the potential to justify conditionality, compliance and cooperation-based measures of all types under the general exceptions, and so it is possible to see how these different sets of human rights issues might be treated in dispute settlement proceedings, including how they might be differentiated. Second, the exception clauses can be seen as measures of last resort in situations where reconciliation between trade rules and human rights norms and standards has not been possible by utilising any of the other mechanisms outlined above. Thus, if the exception clauses are able to ‘catch’ any residual human rights issues that are unable to be dealt with by any of the other provisions, then ensuring that human rights can be effectively dealt with by this mechanism would go a long way towards supporting arguments that WTO agreements can be interpreted in a way that takes into account human rights norms and standards.

VII. KEY FEATURES OF THE GENERAL EXCEPTION CLAUSES

The general exception clauses provide a mechanism for raising human rights arguments within the WTO in any case where a Member State is found to have breached the main rules of the WTO agreement in question. These clauses provide a mechanism by which specific important state interests and obligations, which are not otherwise compatible with WTO trade agreements can find 30 The analysis of general exception clauses undertaken here is developed from a previous paper written by this author for the Office of the High Commissioner for Human Rights (OHCHR)— Human Rights and World Trade Agreements: Using General Exception Clauses to Protect Human Rights (New York and Geneva, OHCHR, 2005).

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198 Human Rights in WTO Dispute Settlement Proceedings expression.31 It will be argued below that human rights, as expressed in international instruments represent precisely these types of obligations and should fall within the ambit of specific exceptions, and therefore the general exception clauses are potentially an important avenue by which human rights issues can be raised by Member States at the WTO. The general exceptions should not be seen, however, as allowing governments the right to take any decision they wish domestically. Such an interpretation would render unenforceable the entire WTO system, since the exceptions could then be invoked to nullify any other WTO obligation at will.32 Nor does it seem that the general exceptions can be invoked to support any welfarerelated domestic decision, since the clauses are specific in the content of their permissible exceptions, and do not seem to include all possible welfare-related measures.33 Thus it is necessary to undertake an assessment of the nature of the general exception clauses, their potential human rights applicability, and finally an assessment of the pros and cons of utilising them to justify human rights measures. Three of the WTO agreements contain ‘general exception clauses’.34 Such exception clauses can be found in Article XX of the GATT, Article XIV of the GATS, and Article XXIII of the GPA. The TRIPS also contains, at Article 27.2, a general exception-type clause relating to the grant of patents.35 Other WTO agreements do not contain such general exception clauses.36 But for issues relating to agreements that are included within Annex 1A of the WTO Agreement (including agreements such as the AoA), the GATT is potentially applicable. It is also relevant at this point to indicate a different approach to the protection of human rights-related concerns that is found in the TBT Agreement which, instead of treating human rights-related concerns, such as the protection of human life and health, as general exceptions, incorporates these issues into the determination of whether a measure is consistent with trade rules.37 Thus, 31

See United States—Gasoline, above n 7 at 30–1. C McCrudden, ‘International Economic Law and the Pursuit of Human Rights: A framework for discussion of the legality of ‘selective purchasing’ laws under the WTO Government Procurement Agreement’ (1999) 2 Journal of International Economic Law 3–48 at 41. 33 For a discussion on this issue see C McCrudden, ibid, at 17and S Bal, ‘International Free Trade Agreements and Human Rights: Reinterpreting Art XX of the GATT’ (2001) 10 Minnesota Journal of Global Trade 62–108. 34 The exception clauses under the GPA and TRIPS are not actually officially called ‘general exceptions’ in the relevant Agreements, but the fact that they contain a number of similar provisions means that they will be dealt with here under the same heading. 35 Art 27.2 allows Members to exclude inventions from their patent systems where it is ‘necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by their law’. 36 The Agreement on Trade-Related Investment Measures (TRIMS Agreement) in Art 3 states: ‘All exceptions under GATT 1994 shall apply, as appropriate, to the provisions of this Agreement’, and so Article XX of the GATT should apply in the same way. 37 Under Art 2.2 of the TBT Agreement, WTO members undertake to ensure ‘that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to trade. For this purpose, technical regulations shall not be more trade-restrictive 32

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Key Features of the General Exception Clauses 199 human rights norms and standards could also potentially be utilised in that setting. The similarities in language and construction of relevant clauses in the TBT Agreement and the exception clauses considered here mean that many of the considerations presented here are applicable. There are three of the general exceptions that appear to have the potential to be used for a broader range of human rights concerns. The exception clause that will form the basis of the current analysis is the exception allowing States to take measures for the protection of public morals.38 There is also an exception allowing measures for the protection of ‘human, animal and plant life and health’, (human life and health being the relevant phrase for these purposes), and another exception which allows measures for the protection of public order/ordre public.39 The present discussion analyses only the term ‘public morals’ in order to demonstrate the systemic potential for a human rights approach to the exception clauses. But it also recognises that such an approach is also equally possible with regard to the ‘human life and health’ and ‘public order’ exceptions. The potential usage of these other exceptions for raising human rights issues is examined in a discussion paper produced by this author for OHCHR.40 There are also other exception clauses that can potentially be used to raise human rights arguments, but they are so closely linked to specific human rights that there is little reason to embark upon an extended discussion of their content. It is worth mentioning, however, that one of these clauses in the GATT concerns measures ‘relating to the products of prison labor’ as it has been argued that this could be utilised to defend measures relating to products made utilising forced labour more generally.41 The potential for human rights usage of the public morals exception (as with all the other exception clauses) will depend on two factors. First, we need to assess the extent to which the term ‘public morals’ is capable of being construed so as to include human rights arguments. Second we need to consider how such arguments are likely to be assessed by DSBs, and whether they will give sufficient weight to human rights concerns in their decision making processes. These two processes are described here as: 1. The human rights applicability of the public morals exception 2. The human rights interpretation of the public morals exception than necessary to fulfil a legitimate objective’. The Agreement provides a non-exhaustive list of ‘legitimate objectives’ such as the protection of human life and health. 38 The term used in Art 27 of the TRIPS Agreement is ‘morality’ rather than ‘public morals’, but the meaning is not significantly different. 39 This appears in the TRIPS, GPA and GATS Agreements but its omission from the GATT Agreement should not be considered significant as this was negotiated in 1947 and the concept of ordre public is a far more recent concept in international law. 40 OHCHR, Human Rights and World Trade Agreements: Using General Exception Clauses to Protect Human Rights (New York and Geneva, OHCHR, 2005). 41 GATT Art XX (e). Art XXIII of the GPA refers to measures relating to: the products or services of prison labour (relevant to the prohibition on forced and compulsory labour). See S H Cleveland, above n 21, at 147ff for a discussion of the potential of the clause in the GATT.

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200 Human Rights in WTO Dispute Settlement Proceedings

VIII. THE HUMAN RIGHTS APPLICABILITY OF THE PUBLIC MORALS EXCEPTION

In undertaking an assessment of the human rights applicability of the public morals exception, the Vienna Convention provides the authoritative interpretative methodology. Such an approach to interpretation is mandated under the WTO DSU Article 3(2), which states that WTO agreements need to be ‘interpreted in the light of customary rules of interpretation’. The Vienna Convention mandates in Article 31, section 1, that a Treaty ‘shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.’ As far as ‘context’ is concerned, Article 31 goes on to say that the context for the purpose of interpretation shall include the preamble and annexes. Furthermore, any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation as well as ‘any subsequent agreement between the parties’ shall be taken into account.42 Thus, the case law of the WTO will be an important interpretative tool, as well as Ministerial Declarations such as those on labour standards and public health. Of most direct relevance with regard to international human rights treaties, Article 31.3.(c) states that ‘any relevant rules of international law applicable in relations between the parties’ shall also be taken into account. Finally, Article 32 allows recourse to supplementary means of interpretation, including the preparatory work of the treaty, where the interpretative process under Article 31 leaves the meaning of the terms ambiguous or obscure, or leads to a result which is manifestly absurd or unreasonable. Thus in interpreting the general exception clauses that have been identified as potentially relevant to human rights, there are a number of stages where international human rights norms and standards could be taken into account. The analysis here starts with a consideration of Article 31.3 (c), as this appears to be the most directly applicable provision with regard to international human rights law. This is followed by an examination of the extent to which human rights norms and standards can be taken into account in determining the meaning of WTO provisions through consideration of the ordinary meaning of the terms, the degree to which WTO case law and other relevant instruments support this approach, and how supplementary means of interpretation might affect this methodology.

A. Determining the Scope of Article 31.3(c) Article 31.3(c) of the Vienna Convention provides us with potentially the most far-reaching mechanism for raising human rights arguments in dispute settle42

See Art 31.3(a) and (b).

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The Human Rights Applicability of the Public Morals Exception 201 ment proceedings. Article 31.3(c) mandates that ‘[t]here shall be taken into account together with the context . . . any relevant rules of international law applicable in the relations between the parties.’ If international human rights norms and standards can be found to be applicable law under Article 31.3(c), it means that they can be taken into account in determining the overall scope of WTO obligations, rather than being restricted to assisting in determining the ‘ordinary’ meaning of individual terms within provisions of WTO law. But, the nature of the obligation to take into account ‘applicable rules of international law between the parties’ has been perhaps the most controversial aspect of the relationship between WTO law and other international norms and standards in recent times. This controversy has centred around the precise meaning of the phrase ‘between the parties’. There are two potential meanings of this phrase. Does it mean that DSBs must take into account rules of international law that are valid between the parties to the case only, or rules which are applicable only to the whole WTO Membership, ie all parties to the WTO agreements? There has been very little jurisprudence which has directly referred to Article 31.3(c). The most recent pronouncement of the WTO on this issue was the panel decision in the case of EC—Biotech. In EC—Biotech, the panel, albeit obiter dicta, found that rules of international law are only applicable under Article 31.3(c) if they bind all WTO Member States.43 This interpretation has been criticised by Koskeniemmi in his report on fragmentation of international law for the ILC. He points out that such an interpretation would mean that the broader the membership of the treaty in question, the less likely it is that any other rules of international law are relevant to that treaty according to Article 31.3(c).44 No international treaty has identical membership and so the greater the number of members of two international instruments, the less chance there is of those treaties having identical membership. All international human rights treaties and WTO agreements tend to have large memberships. In addition, since the WTO admits non-sovereign members it cannot possibly have identical membership with any other international treaty.45 Thus, WTO law, as interpreted by the panel in EC—Biotech, is almost entirely isolated from taking into account other rules of international law according to Article 31.3(c). In particular, obligations created by international human rights treaties are virtually precluded from being considered ‘relevant international law, due to their wide membership. The EU has decided not to appeal the EC—Biotech ruling, so there will be no chance for the WTO’s Appellate Body to review the decision or reasoning of the 43 EC—Measures Affecting the Approval and Marketing of Biotech Products, (EC—Biotech), Report of the Panel, (7 Feb 2006) WT/DS291–293/R at para 7.68 and at para 7.72 stating that they did not actually need to rule on the issue. 44 International Law Commission, Fragmentation of International Law: Difficulties Arising from the Diversification and Expansion of International Law: Report of the Study Group of the International Law Commission, Finalised by M Koskenniemi, A/CN.4/L.682 (13 Apr 2006) at para 471. 45 G Marceau, above, n 1, s 3(A) (1) at 780ff.

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202 Human Rights in WTO Dispute Settlement Proceedings panel. We will therefore have and wait and see if the future case law of the WTO follows the approach of the panel in EC—Biotech. If this approach is followed, it will mean that Article 31.3(c) is virtually inoperable in the WTO context, thereby isolating WTO law from much of general international law (aside from that which has reached customary international law status) in a way that is contrary to the stated intention of the WTO DSU. But, even in a situation where the approach set out in EC—Biotech was not followed by future WTO panels, and the term ‘between the parties’ was taken to apply only to the parties to the case before the DSB, there would still be potential problems from the perspective of international human rights law. Even under this conception of Article 31.3(c), international human rights obligations are only ‘relevant’ in a dispute if both parties to a dispute have ratified the relevant agreement, or the human right in question has achieved customary international law status. It is arguable that this conception of the applicability of international human rights law obligations is appropriate when we are dealing with conditionality-based human rights measures since in that scenario human rights measures are being utilised to protect and promote human rights by one of the ‘parties’ within the jurisdiction of another ‘party’. But it is more problematic for compliance and cooperation-based human rights measures. When a WTO Member State (eg Zambia, which has ratified ICESCR) is utilising conditionality-based human rights measures, and in particular trade restrictions, in order to promote human rights in a second WTO Member State (eg the US, which has not ratified ICESCR), the US will be able to argue in the WTO setting that it is not bound to comply with ICESCR obligations which it has not agreed to, and are not part of customary international law. For instance, in a situation where Zambia imposes trade restrictions on the US because the US has failed to provide universal primary education, in possible breach of Article 13(2)(a) of ICESCR, then the US would have a strong argument that it was not bound by this obligation under international law rules.46 In the case of compliance-based human rights measures, Article 31.3(c) would still only apply if it was relevant law to all parties to the dispute in question. ICESCR, which is not ratified by the US, would therefore also be inapplicable law if raised as a defence by Zambia (a signatory of ICESCR) in a case against the US to argue, for example, that it was justified in utilising compulsory licenses in order to provide access to essential medicines, or to renege on commitments to liberalise trade in services such as education, health or water in order to protect fundamental provision of such services in line with the right to health, or education. On the other hand, if Zambia raised such a defence against China (which has ratified ICESCR) then the defence would be permitted. Such an approach presents difficulties because the nature of human rights law obligations are different from those of other international law instruments. For 46 It would be difficult to argue that the right to primary education is a rule of customary international law.

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The Human Rights Applicability of the Public Morals Exception 203 a State to be only able to raise human rights arguments where another State has ratified the same agreement is extremely problematic. Human rights obligations are not simply inter-state obligations. Human rights treaties grant rights to third parties (i.e. individuals), they make human beings rights holders under international law, and so States still have human rights obligations towards their own population even where another party to a dispute has not ratified the relevant treaty. In this respect human rights treaties are inherently different from other international treaties and must be treated as such when applied in the WTO setting.47 States cannot therefore derogate from their human rights obligations in undertaking WTO obligations if that is to the detriment of the beneficiaries of the human rights treaties (i.e. individuals within the State in question).48 This is a point well made by the Inter-American Court of Human Rights: The Court must emphasize, however, that modern human rights treaties . . . are not multilateral treaties of the traditional type concluded to accomplish the reciprocal exchange of rights for the mutual benefit of the contracting States. Their object and purpose is the protection of the basic rights of individual human beings irrespective of their nationality, both against the State of their nationality and all other contracting States. In concluding these human rights treaties, the States can be deemed to submit themselves to a legal order within which they, for the common good, assume various obligations, not in relation to other States, but towards all individuals within their jurisdiction. (emphasis added).49

A WTO Member State is not relieved of these human rights obligations in the context of the WTO, even in a case where another WTO Member State has not taken on the same obligations. That State therefore needs to be able to raise its obligations under international human rights norms and standards in WTO dispute settlement proceedings when taking measures to protect and promote the human rights of individuals within its jurisdiction, irrespective of whether or not other parties in the case have ratified the relevant human rights instrument. Therefore, even if future WTO DSBs were to find that the phrase ‘between the parties’ were to be construed so that only parties to a particular case had to be parties to the other international legal instrument, it still would not appear to be sufficient from a human rights perspective to allow all human rights measures, and in particular legitimate compliance-based measures to be raised and dealt with appropriately by DSBs. For instance through the public morals exception, as considered here. 47 See C Breining-Kaufmann, ‘The Legal Matrix of Human Rights and Trade Law’ in T Cottier, J Pauwelyn and E Burgi (eds) Human Rights and International Trade (Oxford, Oxford University Press, 2005) 95–136 at 98 for discussion of how international human rights law norms and standards are increasingly not subject to state-centred notions of international law in a number of different fields. 48 See M Koskenniemi, ‘The function and scope of the lex specialis rule and the question of ‘self-contained regimes’: International Law Commission, Study Group on Fragmentation (ILC(LVI)/SG/FIL/CRD.1 and Add 1) at 7. 49 The Effect of Reservations on the Entry Into Force of the American Convention on Human Rights (Arts 74 and 75), Advisory Opinion OC–2/82, 24 Sept 1982, Inter American Court of Human Rights (Ser A) No 2 (1982) at para 29. See also the ECHR, Austria v Italy, Application No 788/60 (1961) 4 European Yearbook of Human Rights 116 at 140 making a similar point.

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204 Human Rights in WTO Dispute Settlement Proceedings It has been suggested that instead, treaties with broad and potentially universal WTO membership should be considered applicable, wherever they are relevant to the WTO provisions to be interpreted.50 This would make far more international human rights law potentially applicable, but would still fail to take into account the special nature of human rights obligations and the relationship between the State and the individual. The only way that this might happen is if all human rights obligations are construed as applying erga omnes and therefore are ‘applicable rules of international law’ at all times, but as was discussed in chapter four, there is considerable contention over the nature of the norms and standards which have achieved erga omnes status, and so it seems unlikely that all human rights norms and standards will be found to be applicable law by WTO DSBs on that basis. We therefore need to consider whether there are other mechanisms for raising human rights arguments through provisions of WTO Agreements according to the principles of interpretation set out in the Vienna Convention. WTO dispute settlement bodies have previously examined other international treaties outside of the WTO covered agreements in order to determine the meaning of terms within WTO agreements. They have done this even in situations where not all parties of the WTO, or even parties to the particular case they are considering have signed and ratified the treaty in question. For instance, in the Shrimp/Turtle case the Appellate Body used the Convention on International Trade in Endangered Species (CITES) as well as other multilateral environmental agreements as a means of interpreting the term ‘exhaustible natural resources’.51 In US—FSC, the Appellate Body referred to a range of regional and bilateral trade agreements in order determine the meaning of the term ‘foreignsource income’.52 It is clear from these cases that it is not necessary for all parties to a case (let alone all WTO parties) to be parties to the treaty in question for a non-WTO treaty to be utilised to shed light on the ‘ordinary meaning’ of a term within a WTO Treaty, in accordance with Article 31.1 of the Vienna Convention. This approach has been confirmed in the decision of the panel in the recent case of EC—Biotech.53 50

G Marceau, above n 1, at 781f. Shrimp/Turtle, above n 14. See also J Pauwelyn, ‘Human Rights in WTO Dispute Settlement’ in T Cottier, J Pauwelyn and E Burgi (eds) Human Rights and International Trade (Oxford, Oxford University Press, 2005) at 209. 52 United States—Tax Treatment for ‘Foreign Sales Corporations (Art 21.5—EC) (14 Jan 2002) WT/DS108/AB/RW, paras 141–5. 53 EC—Biotech, above n 43, at para 7.94. Although it was held to be at the discretion of the panel as to whether it was necessary to utilise other treaties in this way (see para 7.93). In principle, therefore, if future dispute settlement panels were to follow this approach, it would be entirely at the discretion of individual panels to decide upon whether they thought human rights treaties were relevant to the interpretation of the meaning of WTO provisions in any given case. From a human rights perspective, in particular if Art 31.3(c) is not applicable and the term in question has a very broad range of meanings (as in the case of ‘public morals’ or ‘like’ products) consideration of human rights norms and standards should be mandatory. 51

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The Human Rights Applicability of the Public Morals Exception 205 But, there is a need to examine whether it is possible for a wide range of human rights obligations to be considered utilising this methodology within the scope of the public morals and other general exception clauses. This will involve an assessment of whether human rights norms and standards fit within the scope of the ordinary meaning of the relevant terms, the extent to which existing case law of the WTO would support such an interpretation and, in cases where the meaning of the term under consideration is still ambiguous, whether there are any supplementary means of interpretation that might support an interpretation which complies with human rights norms and standards. We will then consider whether human rights arguments can be given appropriate weight utilising this methodology.

B. An Assessment of the Ordinary Meaning to be Given to the Term ‘Public Morals’ The term ‘public morals’ was not found in any of the standard dictionaries consulted. The Universal Dictionary of the English Language defines moral as ‘relating to, concerned with, the difference between right and wrong in matters of conduct.’ Webster’s New International Dictionary defines ‘moral’ as ‘conforming to a standard of what is good and right.’ This leaves us with a very broad definition of the phrase in question. The generality of the phrase can be taken as evidence of the intention of the parties that the meaning of the phrase should be able to evolve over time so as to capture the important moral values of the time.54 On that basis, to argue for the exclusion of the norms and standards of international human rights on the basis of the ordinary meaning of the term would be very difficult to sustain. As Robert Howse has argued, ‘in the modern world, the very idea of public morality has become inseparable from the concern for human personhood, dignity, and capacity reflected in fundamental rights.’55 On that basis, a conception of the term ‘public morals’ which does not allow within its scope notions of fundamental rights would ‘simply be contrary to the ordinary contemporary meaning of the concept.’56

C. Relevant ‘Context’ including the Preamble to the Treaties and WTO Case Law on the Terms Given that the exception clauses are exceptions to the general provisions of the treaty, the preamble of the treaty itself is likely to be of limited use in their 54

ILC, above n 44, at para 478(b). R Howse, ‘Back to court after Shrimp/Turtle? Almost but not quite yet: India’s short lived challenge to labour and environmental exceptions in the European Union’s Generalized System of Preferences’ (2003), 18 American University International Law Review 1333 at 1368. 56 R Howse, ibid. 55

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206 Human Rights in WTO Dispute Settlement Proceedings interpretation. Insofar as such context is relevant to interpretation, the inclusion within the preamble of the Marrakesh Agreement Establishing the WTO of the need to promote ‘sustainable development’ could be argued to be important context. It gives rise to an expectation that provisions of WTO agreements, including the exception clauses, will be interpreted in a way that allows for measures that are taken to promote broadly-conceived conceptions of development, including the protection and promotion of human rights, rather than development judged only on the basis of economic criteria.57 With regard to case law, the primary problem for this type of analysis is that there is little case law that is directly relevant to the issue. References to human rights at all in any of the dispute settlement proceedings of the WTO are extremely rare58 and none of the references relates to the exception clauses themselves. There is, however, case law of the WTO system which assists us greatly by demonstrating the methodology that DSBs would utilise in interpreting key terms of the WTO agreements including the ‘public morals’ exception. This case law demonstrates various aspects of the methodology for interpreting the general exception clauses more generally, and includes one case that provides some guidance as to the interpretation of the term ‘public morals’ in particular. There are a number of cases that deal with various different exceptions under Article XX of GATT, and which shed some light on the likely approach of future panels.59 These cases provide evidence for the methodology which dispute settlement bodies would utilise to interpret the public morals exception, and assess its human rights applicability if such arguments were raised. The first important principle that the case law establishes is that just because these clauses are exceptions to the general rules of the WTO agreements, does not mean that they should be given a narrower or stricter interpretation. The EC—Hormones case states that: [M]erely characterizing a treaty provision as an ‘exception’ does not by itself justify a ‘stricter’ or ‘narrower’ interpretation of that provision than would be warranted by an examination of the ordinary meaning of the actual treaty words, viewed in context

57 Also appearing to adopt this approach in an international trade context see ‘Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee—Developing Countries, International Trade and Sustainable Development: The Function of the Community’s Generalised System of Preferences (GSP) for the Ten-year Period from 2006 to 2015’ COM (2004) 461 Final, Brussels 7.7.2004. 58 E-U Petersmann, ‘Constitutional Primacy and ‘Indivisibility’ of Human Rights in International Law? The Unfinished Human Rights Revolution and the Emerging Global Integration Law’ in Griller and Steffan (eds) International Economic Governance and Non-Economic Concerns: New Challenges for the International Legal Order (New York, Springer, 2003) at 254. 59 C T Feddersen, ‘Focusing on Substantive Law in International Economic Relations: The Public Morals of GATT’s Article XX (a) and ‘Conventional Rules of Interpretation’ (1998) 7 Minnesota Journal of Global Trade 75–122 at fn 48 provides list of WTO cases that have considered GATT Art XX.

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The Human Rights Applicability of the Public Morals Exception 207 and in light of the treaty’s object and purpose, or, in other words, by applying the normal rules of treaty interpretation.60

In the same case it was stated that, if the meaning of a treaty is ambiguous, the meaning that is to be preferred is the one ‘which is less onerous to the party assuming the obligation, or involves less general restrictions upon the parties.’61 Such an interpretative technique grants greater scope to the general exception clauses since they are exempting States from their treaty obligations.62 Second, evidence for a broad interpretation of the exception clause is found in Japan—Taxes on Alcoholic Beverages, which states: WTO rules are not so rigid or so inflexible as not to leave room for reasoned judgments in confronting the endless and ever-changing ebb and flow of real facts in real cases in the real world. They will serve the multilateral trading system best if they are interpreted with that in mind.63

Such an approach is particularly relevant to the exception clauses, since it is argued that they were ‘intentionally drafted in general terms to allow for the flexibility that is necessary for a single norm to be used in numerous and distinct factual circumstances.’64 Third, such a flexible interpretative approach is supported by a principle gleaned from the case law, which could be termed an ‘evolutionary approach’. Much of the most relevant case law concerns cases where general exceptions have been invoked for environmental purposes. Such cases are comparable in that they involve important social issues involving non-economic values that, within the WTO system, need to be set against trade concerns. One very important principle was set out by the Appellate Body in the Shrimp/Turtle case where the Appellate Body was asked to examine the meaning of the expression ‘exhaustible natural resources’ under GATT Article XX(g). It was held that the term included within its scope endangered species such as the turtle. This interpretation was reached by adopting an ‘evolutionary approach’ with regard to the interpretation of treaty terms—treaty terms are not ‘static’ but need to be interpreted in light of their modern day meaning.65 Thus, WTO members could take measures, otherwise in breach of their GATT obligations to protect endangered species such as the turtle under the exception provided by Article XX (g) of the GATT. In adopting this definition of the scope of Article XX (g) the Appellate Body referred to international environmental law, as it had developed since the negotiation of the original GATT Agreement, and held that the provisions of international environmental law were those by which to judge the meaning of ‘exhaustible natural resources’. 60 EC—Measures Concerning Meat and Meat Products, Report of the AB WT/DS26/AB/R; WT/DS48/AB/R, adopted 16 Jan 1998, (EC—Hormones) at para 104. 61 ‘EC—Hormones’, ibid at para 165. 62 S Charnovitz, ‘The Moral Exception in Trade Policy’, in S Charnovitz (ed), Trade Law and Global Governance, (London, Cameron May, 2002) 325–76 at 337. 63 Japan—Alcoholic Beverages, AB, above n 17. 64 G Marceau, above n 1 at 790. 65 Shrimp Turtle, above n 14, paras 129–130.

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208 Human Rights in WTO Dispute Settlement Proceedings The Appellate Body found that such an ‘evolutionary approach’ was, in general, the appropriate method for interpreting the meaning of terms in treaties, quoting a number of cases from the International Court of Justice. It therefore seems appropriate that the term ‘public morals’ should also be interpreted using an ‘evolutionary approach’ which would recognize modern respect for international human rights norms and standards as central to conceptions of public morality. There is no case law in WTO dispute settlement proceedings in relation to the exception for public morals in relation to Article XX (a) of GATT 1994.66 But there has been one case that has considered the term ‘public morals’ in relation to Article XIV(a) of GATS.67 In US—Gambling and Betting Services, the Panel was considering the legality under WTO law of a ban imposed by the US on internet gambling. The US raised the public morals exception to argue that, although its prohibition on internet gambling breached its specific market access commitments for gambling and betting services under the GATS, it was warranted because the measure was aimed at protecting public morals. The panel found against the US on the narrow grounds that it had not consulted or negotiated with Antigua over the ban,68 a decision that was later overturned by the Appellate Body.69 But the panel did find that the public morals exception could potentially be utilised to impose restrictions on trade in internet gambling services because of their impact on ‘money laundering, fraud, health and underage gambling’.70 This reasoning appears to have been accepted by the Appellate Body. In coming to this conclusion, the panel interpreted the term ‘public morals’ as denoting ‘standards of right and wrong conduct and maintained by or on behalf of a community or nation.’71 The panel understood that the meaning to be given to this term can vary in time and space depending on prevailing social, cultural, ethical and religious values, thereby appears to recognise the need to take an evolutionary approach to the term. Further, the panel stated that: [T]he Appellate Body has stated on several occasions that Members, in applying similar societal concepts, have the right to determine the level of protection that they consider appropriate.72 66 S Charnovitz, above n 62, at 374. C T Feddersen, above n 59 at 96; S Bal, above n 33, at 76; R Howse, above n 55 at 1367. 67 United States—Measures affecting the cross-border supply of gambling and betting services, Report of the Panel, WT/DS285/R, adopted 10 Nov 2004. (US—Gambling Panel Report). 68 US—Gambling Panel Report, ibid at para 6.564. 69 United States-Measures affecting the cross-border supply of gambling and betting services, Report of the Appellate Body, WT/DS285/AB/R, adopted 7 Apr 2005, at para 291f. (US—Gambling Appellate Body Report). 70 US—Gambling Panel Report, above n 67 at para 6.521. 71 US—Gambling Panel Report, above n 67 at para. 6.465. It also defined the term ‘public order’ as referring to ‘the preservation of the fundamental interests of a society, as reflected in public policy and law. These fundamental interests can relate, inter alia, to standards of law, security and morality’ (para 6.467) This definition also leaves great potential for human rights approaches. 72 US—Gambling Panel Report, above n 67 at para 6.461 referring to the AB Reports on Korea— Various Measures on Beef, AB, WT/DS161/AB/R, adopted 10 Jan 2001, (Korea—Beef ) at para 176 and EC—Asbestos, above n 13 para. 168.

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The Human Rights Applicability of the Public Morals Exception 209 The recent review of the decision by the AB appears to uphold the interpretations of the Panel on these terms.73 Therefore, this interpretation would appear to potentially support use of the public morals exception for a wide range of moral purposes. It seems inconceivable that human rights arguments would not therefore fit within the scope of this term.

D. Supplementary Means of Interpretation In cases where the meaning of a WTO term or terms is still obscure or ambiguous, or the current interpretation is ‘manifestly absurd or unreasonable’, then recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty. In terms of the preparatory work concerning the term public morals, it is clear that there was practically no debate about the meaning of XX (a) (the public morals exception) during the negotiations that took place in order to conclude the GATT.74 The most plausible explanation for such a lack of discussion on the content and meaning of the term is that the trade negotiators already had a common understanding of what the term meant. This was because it was based on similar clauses commonly inserted into prior commercial treaties. These treaties could be seen as ‘preparatory work’ for the interpretation of the term public morals, and therefore a valid interpretative tool. On the basis of analysis of these previous treaties and the way that the relevant terms were applied, it has been stated, in relation to the GATT, that: The range of policies covered by XX(a) would seemingly, at least, include slavery, weapons, narcotics, liquor, pornography, religion, compulsory labour and animal welfare.75

What this analysis seems to show is that the ‘moral exception’ in commercial treaties historically contained a series of diverse measures based on eclectic value premises concerning issues considered important to individual societies at the time when the treaties in question came about. Such an approach contains both moral exceptions concerning matters that we would now see as human rights issues (eg slavery, compulsory labour) but also to show a good deal of deference to society’s moral preferences, on issues where we would consider the discretion is very much left to individual societies to set their own moral thresholds within their own jurisdiction (such as treatment of alcohol).76 Against this background of usage, a definition of public morals that contained human rights provisions in international human rights treaties with broad membership, and reflecting fundamental values, should clearly come within the scope of the term. 73 74 75 76

US—Gambling, Appellate Body Report above n 69, at para 293ff. S Charnovitz, above n 61, at 338. S Charnovitz, above n 62, at 361. Once again, this broader scope relates to inwardly-directed measures.

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210 Human Rights in WTO Dispute Settlement Proceedings An additional source of assistance in determining the scope and meaning of the public morals exception is to consider how it has been applied in case law in other jurisdictions. The term is included in a number of regional trade agreements,77 but no interpretations of the term were found by this author, other than at the EU level. The Treaty of Rome, under Article 30, forbids quantitative restrictions on trade within the EU. But, a very similar means of construction as the general exception clauses in the WTO Treaties, Article 36 provides that restrictions may be placed on trade for certain specified and limited reasons, including public morality, public order, and the protection of the health and life of humans. There have been two important cases of the ECJ, both involving importation of pornography that help explain the application of this provision. In Henn and Darby 78 the defendants were convicted of fraudulently evading the prohibition on importation of pornography into the UK. The ECJ held that: [I]n principle, it is for each Member State to determine in accordance with its own scale of values and in the form selected by it the requirements of public morality in its territory.

But in Conegate,79 where foreign rubber dolls were banned, also on the grounds of prohibiting pornography, and there was only a partial restriction on sales domestically, there was a finding against the government, because the ban was seen as an unfair restriction on foreign imports, since there was no justification for the lack of a total ban on equivalent domestic pornography. This case law has been interpreted as allowing Member States to be free to determine ‘the sense of public morality within their own territory’ but not use this moral exception simply to impose restrictions on foreign importers above and beyond those imposed on domestic producers.80 The term ‘public morals’ also occurs in the ICCPR,81 and the ECHR. Under both the ICCPR and the ECHR, it is included in a number of the human rights that are listed, as a legitimate reason for governments to restrict the full enjoyment of the right in question. So, in the case of Handyside v UK (1976) 1 EHRR 737, a book publisher convicted of an obscenity violation in the UK brought a case under Article 10 of the ECHR (expression) to the ECtHR. The UK Government defended the case on the basis of the need to protect public morality. The Court held that there was no uniform conception of morals within contracting States 77 S Charnovitz, above n 62, at 366 where he notes that the Australia–New Zealand Closer Economic Relations Trade Agreement of 1983 contains an exception to protect public morals. The Agreement for ASEAN Free Trade Area of 1992 declares that nothing in the Agreement shall prevent a member from taking action that ‘it considers necessary’ for the protection of public morals’. Also NAFTA incorporates GATT XX(a) by reference to Art 2101. 78 Case 34/79 R v Henn and Darby [1979] ECR 3795, [1980] 1 CMLR. 79 Case 121/85, Conegate Ltd Commissioners of Customs and Excise [1986] ECR 1007, [1986] 1 CMLR 739. 80 P Craig and G de Burca, EU Law, Text, Cases and Materials, 2nd edn, (New York, Oxford University Press, 1998) at 597. 81 See Arts 12, 14, 18, 19, 21, and 22.

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The Human Rights Applicability of the Public Morals Exception 211 and that there was a ‘margin of appreciation’ given to States because they are in a better position to judge than an international adjudicator.82 If a similar approach were to be taken by WTO panels to that in the ECHR and ECJ, then a broad-ranging interpretation of public morals would be appropriate, where there was a genuine basis for its invocation, and WTO panels should be encouraged not ‘to second-guess the moral preferences of the government taking the measure.’83 However, it is clear that the basis for this ‘margin of appreciation’ granted to governments is that they have a degree of discretion with regard to moral values in their own territories. Consideration is therefore needed of the types of trade measures that will be utilised by governments and their jurisdictional context.

E. Conclusions on the Potential Applicability of the Public Morals Exception for Human Rights Arguments at the WTO An analysis of the relevant provisions of the Vienna Convention has shown that, while there are limitations in how the exception clauses can be used to justify human rights measures in WTO dispute settlement proceedings, there are still possibilities for utilising this mechanism. The limited conception of the scope of the ‘applicable rules of international law between the parties’ means that it is difficult to see how this provision can currently be utilised to raise human rights arguments. Even if future WTO panels interpreted ‘between the parties’ to allow greater scope for non-WTO legal instruments, it has been argued that there would be a range of compliancebased human rights measures that need to be taken into account in determining the nature of WTO obligations but could not be raised under this provision. We are therefore left to rely upon individual terms and phrases within WTO agreements and seek to interpret these terms in compliance with human rights obligations. An investigation of the potential for human rights arguments to be raised in this way, focusing on the ‘public morals’ exception present in many WTO agreements has found that there is considerable potential within the ambit of this term. Because the definition of ‘public morals’ is so broad, and because human rights arguments have never been raised so that their precise scope can be clarified, there is no direct and conclusive evidence regarding the human rights applicability of this term. But there are a number of strong arguments to be made in favour of the conclusion that modern conceptions of human rights fall within the compass of the public morals exception. First, under the ordinary meaning of the term, the full range of human rights norms and principles that are codified in international legal instruments are potentially applicable. 82 83

S Charnovitz, above n 62, at 357. S Charnovitz, above n 62, at 361.

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212 Human Rights in WTO Dispute Settlement Proceedings Second, the case law of the WTO promotes a broad and flexible approach to the definition of the general exception clauses, which, in turn, helps to justify the inclusion of human rights norms as appropriate exceptions to trade rules. Importantly, the ‘evolutionary approach’, adopted for the interpretation of environmental norms in the Shrimp/Turtle case should support arguments seeking the recognition of the modern day status of human rights norms and standards as issues that should be at the heart of public morality. Such an approach appears to be supported in the panel’s interpretation of ‘public morals’ in the US—Gambling Panel Report. The human rights applicability of the public morals exception is also supported by the European case law on the subject which grants discretion to governments to determine the appropriate measures to take, where there are genuine motives for invoking the provision in question. This is also the approach taken in WTO dispute settlement proceedings in relation to arguments concerning the protection of human life and health under Article XX (b)84 and a similar approach could also be taken with regard to human rights arguments under the public morals exception, as well as other exception clauses. This human rights approach to the interpretation of the term public morals would in fact give more specific definition to a phrase which is currently relatively vague.85 It would also validate action taken on the basis of internationally agreed norms, while preventing the kind of disguised protectionism that can occur without an agreed definition of the term being used, and what it stands for.86

F. Approaches to Different Types of Human Rights Measures and their Jurisdictional Context One of the central arguments of this book has been that it is appropriate for the WTO to be much more deferential in its attitudes to States taking measures to protect and promote the human rights of their own populations through compliance-based measures and States cooperating to achieve this (cooperationbased measures) than it should be with regard to States making trade conditional on human rights observance (conditionality-based measures). In particular with regard to dispute settlement, WTO Member States, and in particular developing countries, need to know that by taking compliance-based measures and justifying them explicitly through human rights arguments they 84

See EC—Asbestos, above n 13, at para 178, quoting EC—Hormones, above n 60, at para 194. S Charnovitz, above n 62, at 373. 86 Indeed, the widest possible interpretation of public morals, public order and human life and health would lead to the unacceptable situation where WTO Member States could derogate from international trade rules whenever they felt the inclination to do so. On this point see S Charnovitz, above n 62, at 373; C McCrudden, above n 32, at 41; and T G Ackermann, ‘Dis‘ordre’ly Loopholes: TRIPS Patent Protection, GATT and the ECJ’ (1997) 32 Texas International Law Journal 489–95 at 491. 85

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The Human Rights Applicability of the Public Morals Exception 213 will not be opening the floodgates to the widespread legitimisation of conditionality-based measures, which would mainly be taken by developed countries against developing countries. The latter measures should require a far greater level of justification than the former type of usage. The available evidence shows that panels show much more deference to the national policies of States when interpreting the term ‘public morals’ with regard to compliance-based measures, than in situations when the term is utilised for conditionality-based measures. The most obvious evidence of this differentiation is found in US—Gambling Panel Report, which is the only WTO case to directly address the public morals clause. The panel states that WTO Members ‘should be given some scope to define and apply for themselves [the public morals exception] in their respective territories according to their own systems and scales of values’.87 (emphasis added) This statement appears to concur with the approach that has been taken in the preceding chapters of this book: If WTO Members are taking measures to protect and promote the human rights of their own populations, then they will have greater scope to utilise human rights-based measures, and for this to be a justification to exempt them from their trade law obligations. Furthermore, once it has been found that a genuine policy objective is being pursued, WTO members have the right to determine the level of protection that they consider appropriate for persons within their jurisdiction.88 This also means that in this type of scenario, WTO Members may utilise higher (or different) regional or national human rights standards, if those standards represent a key aspect of their values (so EU States may utilise European standards of human rights protection etc). When they are utilising measures to condition trade with other States, much greater evidence will be required of the universality of the values that are being protected and that the measures taken will advance those values. This position is supported by the European jurisprudence, and its treatment of the pubic morals exception as cited above, which is all concerned with States’ use of public morals exception to protect the ‘morality’ of its own population. It is implicit in the decisions cited that the leeway to determine the scope of public morality is granted on the basis that it will be utilised to determine moral values within the State in question. On the other hand the case of Dassonville suggests a far more restrictive approach would be taken with regard to the imposition of outwardly-directed measures.89 While there is no case law in the WTO context which directly addresses the issue of use of the public morality clause to justify conditionality-based measures, it is clear that such measures could be justified under certain circumstances. First, Article XX of the GATT also contains an exception authorising 87

US—Gambling Panel Report, above n 67, at para. 6.461. See Korea –Beef, above n 72, para 176 and EC—Asbestos, above n 13, at para 168. 89 Case 8/74 Procureur du Roi v Dassonville [1974] ECR 837, [1974] 2 CMLR 436, which suggests a limit on the use of public morals in the European context to the morals within one’s own State. Case discussed further in S Charnovitz, above n 62, at 359. 88

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214 Human Rights in WTO Dispute Settlement Proceedings measures ‘relating to the products of prison labour’ which could only refer to conditionality-based measures, indicating that such measures are certainly within the ambit of Article XX as a whole, and should therefore be within the ambit of other exception clauses in other WTO agreements. In addition, the environmental case-law on GATT Article XX has included cases with findings on the extra-territorial application of the GATT. In the Shrimp/Turtle case, trade restrictions imposed by the US on the importation of turtles were considered justified, even though there was some doubt as to whether the turtles (who were the intended beneficiaries of the environmental protection) would ever in fact enter US territory.90 Thus, this decision has been seen as evidence in favour of the principle that restrictions can be legally imposed on other countries even when the supposed beneficiaries of that restriction have no connection to the country imposing the restriction (so for instance, a ban on products that were made in another State under working conditions that did not comply with basic labour rights).91 However, it seems clear from the analysis of the case law presented above that if general exception clauses, such as the public morals exception, are being used as the basis for imposing trade restrictions on another State, it will be far harder to justify than a situation where a State is invoking a general exception in order to protect the human rights of its own internal population. Certainly, where such measures are taken under the authority of a more expert international organisation (such as the UNSC or the ILO), then this should justify the measures in question. Measures which have broad international support and/or are tackling the worst kind of human rights violations, (such as in the case in the KPCS) should also be straightforwardly justifiable.92 Otherwise, more detailed scrutiny of the measures in question might be appropriate. It is suggested that, in such scenarios, the approach which the Appellate Body appeared to be adopting in EC—Tariff Preferences could be followed, in particular to address whether the measures in question effectively address a development need.

IX. HUMAN RIGHTS INTERPRETATION OF THE PUBLIC MORALS EXCEPTION

The above discussion has shown that the ‘public morals’ exception is capable of being construed so as to include human rights arguments, albeit not according to an ideal methodology from a human rights perspective. It is also capable of 90 Shrimp/Turtle, above n 14. Although the AB explicitly stated (para 133) that they were not ruling on the question of extraterritorial application of Art XX (g). 91 R Howse, above n 55, at 1367. S H Cleveland, ‘Human Rights Sanctions and the World Trade Organization’, in F Francioni (ed) Environment, Human Rights and International Trade (Oxford, Hart Publishing 2001) at 236. 92 For arguments in favour of interpretation of GATT Art XX to permit the KPCS see J Pauwelyn, ‘WTO Compassion or Superiority Complex: What to Make of the WTO Waiver for ‘Conflict Diamonds’ (2003) 24 Michigan Journal of International law 1177–207.

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Human Rights Interpretation of the Public Morals Exception 215 being utilised in a way that allows differentiation between different types of human rights measures, in accordance with the methodology proposed in this book. But we also need to consider how such arguments are likely to be assessed by DSBs, and whether they will deal appropriately with, and give sufficient weight to, human rights concerns in their decision making processes. Where human rights arguments are raised indirectly through provisions of WTO agreements, such as the general exception clauses, justification for such an approach will be required utilising the legal tests and balancing mechanisms set out in the relevant WTO provisions. Questions arise from a human rights perspective about whether utilising WTO provisions to raise human rights issues allows them to be given the requisite weight in the balancing process.

A. Problems of a Trade Law Methodology for Raising Human Rights Law Arguments Although in principle there seems therefore to be the potential to include human rights arguments within the ambit of the term ‘public morals’, in practice, there remain questions as to whether, in raising human rights issues in this way, they can be given their due weight in the process of WTO decision-making. It is therefore necessary to look at the method by which the public morals exception would need to be utilised by States wishing to invoke such a mechanism for human rights purposes, and the way it would be assessed by dispute settlement panels. There are elements of the way in which the construction of the general exception clauses are interpreted, as well as broader issues concerning use of human rights arguments in a trade forum, that give rise to a certain degree of concern over whether any human rights arguments raised will be given their proper weight and importance. A first issue that arises is the status of the exception clauses in the overall structure of the WTO agreements. The general exception clauses will only be invoked by a WTO Member State, when that State is found to have breached the main rules of the WTO agreement in question. In a situation where this occurs, a State may then invoke any of the general exceptions as a justification for adopting a measure that would otherwise be in breach of WTO rules. So the State invoking human rights will always be in a position where it needs to defend the position it has taken. Being an exception to the general rule has connotations of a presumption of guilt that might be considered inconsistent with the way in which human rights obligations should be viewed. Thus, human rights norms might too closely be associated with restrictions to trade. This could work against the wider objective of human rights approaches to trade and development which place the realisation of human rights among the objectives of trade rules. In a more concrete sense, it will mean that the burden of proof will be on the state invoking the general exception to show that the elements of the exception clause have

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216 Human Rights in WTO Dispute Settlement Proceedings been complied with.93 This is very different from the way in which human rights would be weighed and balanced in a specialist human rights court such as the ECtHR, or in national constitutional courts where, once a violation of a human right has been demonstrated, the burden of proof is generally on the ‘violator’ of the right in question to justify their actions, for instance by reference to a number of permitted exceptions pertaining to a number of rights in most jurisdictions. A second and more complex issue is the way in which the public morals exception itself is constructed, and therefore the way in which it will be assessed in dispute settlement proceedings. The case law of the WTO, particularly regarding GATT Article XX provides us with a methodology for how the exception clauses are interpreted. The interpretation of GATT Article XX involves a two stage test.94 First the challenged measure must meet the criteria for one of the Article XX exceptions. This means identifying a relevant policy pursued by the measure (such as public morals), and then looking at the subclause in question and ensuring that the criterion for that sub-clause is met. In the case of the public morals clause this means that the measure taken must be ‘necessary for the protection of public morals’. Second, the measure must pass the requirements of the introductory clause or ‘chapeau’ as it is known, which basically provides a means of assuring that the general exceptions set out in the sub-clauses are not being abused for protectionist purposes.95 There are several elements of this interpretation process that could be investigated. However, since the construction of the exception clauses is different in each of the agreements, it is therefore proposed to concentrate on one interpretative issue that applies equally to all of the agreements under consideration: that is, the use of the ‘necessary’ criterion. The concerns raised in relation to interpretation of that term also demonstrate some of the broader difficulties of appropriate interpretation from a human rights perspective in a trade court setting. Measures taken for the purposes of public morals under any of the agreements in which the term appears must be ‘necessary for the protection of public morals’. But other exceptions under the GATT and the GATS are constructed differently. In particular GATT Article XX (g) concerning exhaustible resources is phrased ‘relating to the conservation of exhaustible natural resources . . .’ Do these different textual constructions make a difference? The Appellate Body has stated that, given the different textual constructions of the various subparagraphs, it would seem unreasonable to suppose that the members intended to require the same kind or degree of connection or relationship

93

See C McCrudden, above n 32 at 44. C T Fedderson, above n 59, at 91ff. 95 Such a test is problematic for conditionality-based human rights measures, particularly general trade restrictions. For an argument in favour of the chapeau allowing general trade restrictions as a response to the worst human rights atrocities see S H Cleveland, above n 21, at 168ff. 94

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Human Rights Interpretation of the Public Morals Exception 217 between the measure under appraisal and the state interest or policy sought to be promoted or realised.96 The definitions of ‘relating to’ and ‘necessary’ have evolved during the case law of the WTO.97 In order to qualify as ‘relating to’ a particular policy, a trade measure has to show a ‘substantial relationship with’ that policy, and not merely be ‘incidentally or inadvertently aimed at’ it.98 Necessary, on the other hand was originally defined by means of a least trade restrictiveness test, but this test has recently been redefined and somewhat weakened so that a ‘necessary’ measure falls somewhere between ‘indispensable’ and ‘making a contribution to’, but significantly closer to the former than the latter.99 Thus, if a measure is the only available measure to fulfil the stated policy objective, it will certainly pass the ‘necessity’ test, as long as the measure is genuinely pursuing the policy in question. If there are other measures that are also available that could be used to pursue the same policy objective, the test becomes more complex and is a case of weighing and balancing a series of factors.100 In most cases, there will be two particularly relevant factors; one factor is the contribution of the measure to the realisation of the ends pursued by it and the second factor is the restrictive impact of the measure on international commerce. A panel should then compare the challenged measures and possible alternatives and consider the results of this comparison in light of the importance of the interests at stake. The more vital or important the values pursued are, the easier it would be for the AB to accept that the measures taken were ‘necessary’ to achieve the specified policy objective.101 What does this all mean for human rights arguments under the public morals exception? First, it is clear, (even by looking at the ordinary English of the terms in question), that the ‘relevant to’ test is less onerous than the ‘necessary’ test. Human rights arguments will have to be made using the necessity test, because the public morals exception (as well as all the other exception clauses with the potential to be generally applicable to human rights) contains a ‘necessity’ rather than a ‘relating to’ test. Therefore this might in theory lead to a more stringent analysis of human rights measures, and possible alternatives to them, than would occur for, say, environmental measures under GATT Article XX (g). This is why, it is argued, environmentalists have generally used GATT article XX (g) (‘relating to the conservation of exhaustible natural resources’) rather than XX (b) (‘necessary to protect human, animal or plant life or health’)

96

US—Gasoline, above n 7, at 18. For a more comprehensive discussion of this issue see John Morijn, ‘Adressing Human Rights Concerns within the World Trade Organisation: A Perspective of Human Rights ‘AND’ Trade and its Application to Article XX GATT’ (2002) unpublished, at 41ff. Copy on file with the author. 98 ‘US—Gasoline, above n 7 at 179. 99 Korea—Beef, above n 72, at para 141. 100 Korea—Beef, above n 72, at para 161. 101 Korea—Beef, above n 72, at para 162. 97

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218 Human Rights in WTO Dispute Settlement Proceedings because it is likely to be easier to meet the criteria for the former rather than the latter.102 A number of commentators have questioned whether the necessity test is too narrow and restrictive.103 These concerns do relate to the original least trade restrictiveness test, and the recent redefinition of the test (so that a ‘necessary’ measure is now somewhere between ‘indispensable’ and ‘making a contribution to’) may well allay some concerns from a human rights perspective. States making arguments based on human rights provisions of international treaties under the general exceptions would be justified in arguing that they were fundamental values of society being pursued, and so a dispute panel should be adopting a less onerous version of the necessity test (namely, closer to ‘making a contribution to’ the policy objective than the more onerous requirement of demonstrating that the measure is ‘indispensable’).104 However, the above decision making process is still a fundamentally different mechanism for balancing human rights arguments than would be used in a legal forum accustomed to dealing with human rights issues, where there might be an assessment, for instance, of whether the measure taken was proportionate to the issue faced. The underlying issue that can be seen from the above discussion is that, by bringing human rights arguments through provisions of WTO agreements, countries are then subjecting those arguments to the WTO legal system, and there are bound to be ways in which the WTO legal system will differ from adjudicatory systems under the human rights model. This leads to worries that human rights arguments will not be given appropriate weight under WTO law. There is some further concern that the WTO least restrictiveness test may not take into account the type of actual scenarios that occur in the real world. Will the test outlined above in fact eliminate the only realistic measures available to policy makers?105 For instance, will WTO panels be able to recognise that measures are often taken in the real world for mixed purposes. So, a trade restrictive measure may be justifiable on human rights grounds, but it is taken in preference to a number of other alternative measures on the grounds of political expediency such as appeasing powerful vested interest groups. For instance, Andrew Lang, writing about the effect of GATS on the water sector, has described different types of subsidies which might be utilised to promote access to water in accordance with protection and promotion of the right to health:

102

S H Cleveland, above n 91, at 240. S Bal, above n 33, at 97f; F J Garcia, ‘The Global Market and Human Rights: Trading Away the Human Rights Principle’ (1999) 25 Brooklyn Journal of International Law 51–97 at 83; R Howse and M Mutua, ‘Protecting Human Rights in a Global Economy: Challenges for the WTO, Policy Paper for the International Centre for Rights and Democracy, (2000) at 8. 104 R Howse, above n 55, at 1371. 105 R Howse, ‘The Legitimacy of the World Trade Organisation’ in J-M Coicard and V Heiskanen (eds) The Legitimacy of International Organisations (Tokyo, United Nations University Press, 2001) 365–7. 103

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Human Rights Interpretation of the Public Morals Exception 219 Take the example of cross-subsidies in the water sector. It is now commonly argued that direct consumer subsidies funded out of general consumer revenue are both more efficient and less discriminatory as between different service suppliers, and thus arguably a less trade restrictive alternative. At the same time, however, such a transformation makes subsidy programs subject to the processes of political negotiation which inevitably affect all budgetary allocations from general revenue. Although it is impossible to say in advance, it stands to reason that at least in some cases this will have the effect of gradually reducing the level of funding available for such a program. (citations omitted)106

This example demonstrates the potential dangers of a trade court dealing with human rights issues in real world scenarios. Questions remain about the extent to which trade adjudicators will give leeway to measures that have a genuinely beneficial human rights impact when these measures are not ‘least trade restrictive’. Will trade adjudicators be aware of the fact that ruling against such measures may well not lead to utilisation of a less trade restrictive policy alternative which has the same human rights impact. Instead it may give rise to political horse-trading leading to alternatives with less human rights impact, or the rejection of such alternatives altogether.

B. Mechanisms for Advancing a Human Rights Interpretation When raising human rights concerns within a specifically trade forum, concerns such as those raised above can never be entirely removed, but they can, to some extent, be lessened by taking measures to increase the prospects that human rights concerns are treated appropriately within the adjudicatory process. An important mechanism that will help to ensure human rights norms and standards are interpreted consistently would be for appropriate human rights expertise to be utilised by any dispute settlement panel taking a decision where human rights issues were raised under the general exception clauses.107 Evidence could be provided by acknowledged human rights experts on whether there was a genuine human rights issue faced by the State in question, and whether the measures taken did address this human rights issue. This would certainly solve some of the evidential problems of explaining the nature of the human rights issues faced. Such an approach would not be without precedent. For instance in the Thailand—Cigarettes case, the panel consulted the WHO in order to obtain expert opinion on the effects of smoking, and whether the measures adopted by Thailand in banning the import of foreign cigarettes, were

106

See A Lang, above n 16, at 807. For example, FIDH, Position Paper—The WTO and Human Rights, Nov 1999 at www.fidh.imaginet.fr/rapports/wto-fidh.htm p9, accessed on 18 Nov 2006; See also C McCrudden, above n 32, at 43; T Cottier, ‘Trade and Human Rights: A Relationship to Discover’ (2002) 5 Journal of International Economic Law 111–32 at 130; Cleveland, above n 91, at 258. 107

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220 Human Rights in WTO Dispute Settlement Proceedings appropriate to tackle the health issue faced.108 There are also a number of cases where the Appellate Body has asked the World Intellectual Property Organisation (WIPO) and the IMF for expert opinions.109 Similarly, where a human rights issue is raised, dispute panels could, as a matter of course, seek expert evidence from human rights treaty bodies, given that the panels themselves will not have the immediate expertise to recognize whether there is a genuine basis for the human rights argument raised.110 Of course, the introduction of human rights expertise and evidence will not, of itself, be sufficient to satisfy the differences in legal approach outlined above (human rights as ‘exceptions’, different legal principles etc.).111 Nor will it provide a failsafe for assessing the validity of ‘real world’ policy measures such as those described above. However, such expertise might assist a panel or the Appellate Body to determine whether a measure could be considered a genuine human rights measure as well as one that was ‘necessary’ to achieve the stated end, utilising the least onerous version of the necessity test. Of particular importance from a human rights perspective this should also help to reduce the tendency for WTO panels to provide their own interpretation of the nature of human rights obligations, and concentrate instead on how the obligations as specified by human rights experts should be applied to the particular circumstances of the case. If it was found, on the basis of this evidence, that the measure in question was pursuing a genuine human rights objective, it would then be necessary for the panel to give a large ‘margin of appreciation’, particularly for compliance-based measures, concerning the precise measure chosen by the state in order to fulfil the stated policy objective, taking into account the problems of ‘real world’ policy-making. This could be achieved with reference to previous decisions of the Appellate Body which have determined that, once it has been found that a genuine policy objective is being pursued, WTO members have the right to determine the level of protection that they consider appropriate.112 A greater degree of scrutiny of the measures taken (rather than the values those measures seek to protect and promote) is perhaps appropriate for conditionality-based measures, particularly those taken on a unilateral basis. 108 See Thailand—Cigarettes above n 13, at paras 72–81, where at a number of places it appears that it is the evidence of the WHO that leads the panel to conclude that Thailand’s measure falls outside the scope of Article XX (b). Although see Robert Howse, above n 105, at 392 for a critique of this decision. He argues that the WTO rejected WHO advice about open markets, and opened them up to foreign competition, even though this had shown that there were health risks in so doing. 109 See J Pauwelyn, above n 3, at 118–9 for cases where this has occurred. Also see S H Cleveland, above n 21, at 186ff arguing that the WTO can accept, and needs to accept expert advice. 110Authorisation for the submission of amicus briefs and various other transparency mechanisms would also help legitimise the decision making process. For a discussion of some relevant mechanisms see R Howse, above n 105, at 380. 111 The institutional tension between the two sets of legal norms cannot be made to disappear entirely by the provision of expert evidence by human rights experts. This is not simply a question of calling an expert, as one would call a renowned doctor to give evidence in a medical matter. The problem is complicated by the fact that the human rights at issue have their own legal system and norms that differ with those of the trade law judges, for instance, on the issue of non-discrimination. 112 See Korea—Beef, above n 72, para 176 and EC—Asbestos, above n 13, at para 168.

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Conclusions 221 However there is never any guarantee that the approach which has been set out here will be followed by DSBs in practice, and much will depend on the way that individual panels view the impact of human rights on the WTO system, together with the nature of the expert evidence presented in a specific case and how it is then evaluated. X. CONCLUSIONS

It is clearly possible for WTO Members to raise, and it is within the jurisdiction of WTO DSBs to deal with, human rights arguments as defences to complaints of breaches of WTO obligations by another WTO Member State. The question then is whether there are mechanisms whereby human rights arguments can be appropriately handled in the settlement of disputes. Detailed consideration has been given to provisions of WTO agreements which could be utilised to raise human rights arguments. It has been argued that, although it is difficult to predict how non-discrimination provisions of WTO agreements will be interpreted in future, these clauses have the potential to justify human rights measures and that products and services could be differentiated on human rights grounds through appropriate interpretation of these provisions. However, the applicability of such provisions is likely to be limited to human rights issues which are closely related to the product or service in question (eg it was made with forced labour). It has therefore been argued that the general exception clauses are the only provisions of general application which are potentially capable of being utilised to defend the full range of human rights measures which need to be raised in the WTO context. So a more detailed examination was undertaken of how human rights arguments raised under these provisions would be likely to be dealt with by DSBs. It has been argued that recent WTO jurisprudence seems to be indicating an approach whereby international human rights instruments would not be considered ‘relevant law’, and so human rights norms and standards would be restricted to being utilised in the interpretation of individual WTO provisions. While this appears restrictive and problematic from a human rights perspective, it has also been argued that Article 31.3(c) of the Vienna Convention would in any case, according to the way it is interpreted by most experts, be insufficient to allow all human rights arguments to be raised by all Member States who need to raise them. This is particularly relevant for scenarios where States are under an obligation to take measures to protect and promote the human rights of their own populations and the other party to the case has not ratified the relevant human rights instrument. Therefore consideration was given to how a wider range of human rights measures could be justified through interpreting individual words and phrases of WTO agreements in accordance with human rights norms and standards. Utilising the ‘public morals’ exception as an example, it was demonstrated that it is possible to utilise such exceptions to raise a wide range of human rights

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222 Human Rights in WTO Dispute Settlement Proceedings issues. It was also demonstrated that WTO DSBs could distinguish between conditionality and compliance-based measures in line with the approach which has been advocated in this book. However, the extent to which dispute settlement panels will give sufficient weight to human rights arguments in their decision making processes is more problematic. It has been shown that the legal methodology which is used to assess the legitimacy of measures taken under the exception clauses does present a number of problems from a human rights perspective. The status of the exception clauses as exceptions to the main rules of the relevant agreement, as well as the way the exceptions clauses are constructed, in particular with regard to the ‘necessary’ criterion, leads to concerns that measures which genuinely aim at the protection and promotion of human rights might be ruled illegitimate by WTO adjudicators. Some suggestions have been made that would make it more likely that DSBs would take an approach that is appropriate from a human rights perspective. But, in the final analysis, it will be impossible to ever satisfy all the requirements of a human rights approach within a trade court forum. Furthermore, without guidance from its Members (for more on this issue see the next chapter) it will be up to individual WTO panels to make decisions on how to address human rights arguments when they are raised, so there are no guarantees that they would necessarily utilise the mechanisms suggested above which make a ‘human rights-sensitive’ adjudication more likely. An alternative mechanism for raising human rights issues was suggested— directly raising human rights arguments through relevant human rights instruments. This would avert many of the above problems inherent in trying to interpret WTO provisions to take into account human rights norms and standards, as raised above. But, the legal complexities of weighing and balancing (often broadly worded) human rights obligations directly against WTO obligations, might be considered to present just as many potential pitfalls, from a human rights perspective, as the interpretative approach analysed above. Would DSBs have the requisite skills and experience to undertake such a complex process with no guidance on how such a balancing process should be undertaken? In any case, we would run into the same problems as raising human rights arguments utilising Article 31.3(c) of the Vienna Convention; namely that, direct application, as conceptualised by its leading proponent, could only be utilised when both parties to a dispute had ratified the human rights instrument in question.113 For the reasons set out earlier, this will not allow all human rights measures, and in particular all compliance-based measures, to be raised and adjudicated upon in the WTO context. This mention of the drawbacks of direct application is not an outright rejection of that approach, rather a recognition that there are likely to be as many problems in appropriately taking into account human rights norms and standards through this methodology as there are through attempting appropriate interpretations of relevant WTO provisions. 113

J Pauwelyn, above n 3, at 490.

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Conclusions 223 Recent case law presented in previous chapters suggests that it is only a matter of time before a WTO panel will, in any case, be confronted by arguments from a Member State that require substantive consideration of human rights issues and how they should be handled in the WTO setting. There have been a number of WTO cases potentially containing human rights issues, which have been resolved prior to adjudication by dispute settlement,114 or which give rise to expectations of human rights arguments being made in the future.115 Therefore, given the human rights obligations of every WTO Member, it is only a matter of time before WTO dispute settlement bodies are asked to respond to legal claims on a number of human rights issues.116 Until cases start to be raised utilising explicit human rights arguments, either directly, or through WTO provisions such as the general exception clauses, any conclusions about the extent to which DSBs will adopt a human rights-sensitive methodology would be premature. But at least if explicit human rights arguments were raised, and had to be dealt with by DSBs, then it would mean that issues crucial to the protection and promotion of human rights were being considered according to an explicit human rights methodology. It would therefore allow for some kind of systematic approach to what does and what does not represent a justified restriction on international trade based on human rights grounds. In the worst case scenario, if DSBs make inappropriate decisions relating to explicit human rights arguments that have been raised, at least then such decisions could become the focus for debate about the nature of the value judgements made within the WTO setting. The alternative scenario—trade law courts making decisions on cases that affect the protection and promotion of human rights utilising only trade law methodologies—does not seem preferable from the perspective of enhancing substantive human rights protection. Rather it means that trade law rules will be applied without reference to the deontological approach of assessing the fundamental rights of each person, as advanced by the human rights system. To look at it from the WTO perspective, if WTO dispute settlement proceedings were to accept that internationally recognised human rights norms and standards should come within the scope of the general exception clauses and to adopt appropriate interpretations thereof, they would be allowing States to comply with their other international legal responsibilities without creating a conflict between obligations originating from WTO and human rights treaties. This would be demonstrating due respect for national bodies (democratic institutions, courts etc) who are taking legitimate decisions in balancing their 114 See discussion in ch 7 of United States—The Cuban Liberty and Democratic Solidarity Act— WT/DS38 and United States—Measures Affecting Government Procurement WT/DS95. 115 See discussion in ch 7 of European Communities—Conditions for the Granting of Tariff Preferences to Developing Countries, AB Report, WT/DS246/AB/R, adopted 7 Apr 2004 . 116 E-U Petersmann, ‘The Human Rights Approach Advocated by the UN High Commissioner for Human Rights and by the International Labour Organisation: Is it Relevant for Law and Policy’ (2004) 7 Journal of International Economic Law 605–27 at 608–9.

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224 Human Rights in WTO Dispute Settlement Proceedings various international and national obligations.117 From a trade law perspective, such an approach might also serve to dispel some of the perceived negatives of trade liberalisation. It would demonstrate the extent to which WTO agreements have a mechanism for ensuring that they do not negatively impact on vulnerable, poor and disadvantaged people, and would ensure that critics cannot easily blame WTO rules for causing human rights infringements.

117

E-U Petersmann, above n 58, at 258.

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12 Broader Strategies for Ensuring Trade Law Rules do not Negatively Impact Upon Human Rights I. INTRODUCTION

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VEN THOUGH IT has been demonstrated that there are mechanisms in WTO agreements that can be utilised in order to promote an interpretation of international trade law that takes into account international human rights law norms and standards, it has been shown this does not mean that WTO law will always be interpreted in such a way, either at the international or national level. It is not sufficient that WTO Agreements are potentially legally compatible with human rights norms and standards. Rather there is a need to ensure that action is actually taken to protect and promote human rights in the trade law context. There are a number of prerequisites for concrete action rather than simply the possibility of compatible interpretation. Four particularly important issues of this type will be discussed in this chapter. First, it will be argued that it is vital that action is taken to ensure that (potential) violations of human rights which occur as a result of international trade law rules are identified in the first place. Second, greater specificity is required in terms of the implications of obligations created by international human rights norms and standards. Third, greater certainty and clarity is required concerning the relationship between WTO rules and human rights, so that action can be taken to protect and promote human rights without fear of breaching WTO obligations. Finally, the implications of a state-centred system of global trade governance for the protection and promotion of human rights is briefly touched upon, in order to put the discussions of substantive human rights issues in this book into a broader human rights context.

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II. MONITORING THE IMPACT OF TRADE AGREEMENTS ON THE PROTECTION AND PROMOTION OF HUMAN RIGHTS

Often the debate about trade and human rights inter-linkage is conducted at a high level of abstraction. Conclusions are therefore reached about the degree to which international trade rules and human rights obligations are inherently complementary or contradictory, without any attempt at evidential analysis of the two sets of norms and standards. There have not, thus far, been any conflicts between international trade rules and human rights within WTO dispute settlement proceedings. But that does not mean that, ‘on the ground’, trade agreements are not having negative effects on the protection and promotion of human rights. Similarly, just because international trade agreements are not based on the same value premises as international human rights norms and standards does not mean that violations will necessarily occur. Discovering whether conflicts between human rights and international trade rules have occurred or will occur in the future depends to a large extent on the degree to which the effects of WTO Agreements are monitored, and any negative effects on the protection and promotion of human rights are detected. Without impact assessments which analyse the (potential) effects of the Agreements, particularly on the poor, vulnerable and otherwise disadvantaged in individual countries, the actual effects will remain largely unknown, and it will be impossible to formulate policies targeted at those whose fundamental human rights have been violated. A number of UN Human Rights Treaty Monitoring Bodies have stated the need for States to undertake impact assessments of trade rules and policies.1 As the UN OHCHR report on GATS states: A human rights approach [to international trade law rules] requires a constant examination of trade law and policy as it affects the enjoyment of human rights. Assessing the potential and real impact of trade policy and law on the enjoyment of human rights is perhaps the principal means of avoiding the implementation of any retrogressive measure that reduces the enjoyment of human rights.2

A human rights approach to international trade law rules demands that assessment of the potential impact of human rights is undertaken at the stage when policies are formulated, in order to ensure that the policies that are chosen protect and promote human rights.3 When WTO Agreements have been ratified and implemented, there is a continuing obligation under international

1 Eg see recent conclusions observations of CESCR on Ecuador (para 55) and of CRC on El Salvador (para 48). 2 OHCHR, Human Rights, Trade and Investment (2 July 2003) E/CN.4/Sub.2/2003/9 (Report on Investment), at para 12. 3 P Hunt, The Right of Everyone to the Enjoyment of the Highest Attainable Standard of Physical and Mental Health Report of the Special Rapporteur, Addendum, Mission to the World Trade Organisation, (E/CN.4/2004/49/Add.1) 1 Mar 2004, at para 12.

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Monitoring the Impact of Trade Agreements 227 human rights law for regular impact assessments in order to ensure that trade law rules are not, in fact, negatively impacting upon human rights. In particular, there is a need to ensure that the effect on vulnerable groups and individuals is effectively monitored (including through participatory assessments).4 Where such a negative impact is detected, States are under a duty to revise the relevant policy in order to ensure that the negative impact is eliminated.5 Without undertaking impact assessments, and reacting to correct violations that have occurred, the mere intention to act in accordance with human rights norms and standards is valueless.6 It is important that impact assessments are conducted both at the international and national level. Individual countries need to undertake human rights assessments of trade liberalisation policies, and utilise these assessments in a variety of different ways, including; in WTO negotiations over future commitments;7 to revise their national policies so as to ensure they are in accordance with international human rights obligations; and as a defence to actions brought by other States in dispute settlement proceedings alleging breaches of WTO obligations. They should also present the information obtained before relevant Committees of the WTO.8 Individual national assessments need to be complemented by international assessments which can uncover trends at the regional or global level about how particular trade rules are impacting upon human rights in particular ways.9 This will lead to better identification of where national impact assessments should be focused. But, at present, assessment and monitoring of the human rights impact of trade agreements is extremely limited. Even taking into account assessments that make some attempts to gauge broader ‘social’ impacts, very few WTO Member States undertake any kind of systematic assessments of the agreements they sign up to, either before, during or after negotiation and implementation. From a specifically human rights standpoint, a recent comparative analysis was undertaken by the UN Secretary General on the effects of globalisation, WTO Agreements and trade liberalisation on the protection and promotion of human rights. This study received responses from only seven countries, and none of these provided any detailed analysis of the human rights impact of 4 Eg OHCHR, The Impact of the Agreement on Trade-Related Aspects of Intellectual Property Rights on Human Rights (27 Jun 2001) E/CN.4/Sub.2/2001/13 (Report on TRIPS), at para 61; Globalisation and its Impact on the Full Enjoyment of Human Rights (15 Jan 2002) E/CN.4/2002/54 (Report on AoA), at paras 46 and 49; Liberalisation of Trade and Services and Human Rights (25 Jun 2002) E/CN.4/Sub.2/2002/9 (Report on GATS) at paras 12, 67 and 72. These reports set out the reasons why monitoring is needed and the type of monitoring required—they highlight the need for it to be participatory and obtain a wide range of views. 5 P Hunt, above n 3, at para 11. 6 On a similar point with regard to the obligation of the IMF and World Bank to conduct impact assessments see S Skolgy, Human Rights Obligations of the World Bank and the International Monetary Fund (London, Cavendish Publications, 2001) at 160. 7 The Report on GATS, above n 4, at para 72. 8 The Report on AoA, above n 4, at para 47, The Report on GATS, above n 4, at para 67. 9 P Hunt, above n 3, at para 53.

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228 Broader Strategies WTO Agreements.10 This can perhaps be taken to suggest that no such analysis has been carried out by the majority of Member States. Certainly, this author was unable to find any detailed impact assessment of any trade agreement commissioned by a WTO Member State which adopted a human rights methodology for analysis. There is also little evidence of systematic assessment and monitoring of WTO issues and agreements that are likely to give rise to human rights concerns. For instance, there is no effective monitoring of the human rights implications of the Marrakech Decision.11 And unlike developed countries that undertook assessments of the losses suffered by their companies as a result of inadequate protection of IPRs, developing countries did not prepare impact assessment reports of the impact of TRIPS on their public health sectors.12 At the European level, one of the criticisms of the European Parliament in their review of the Commission’s proposals for a new GSP scheme was that there was no ‘prior thorough evaluation of the functioning and impact of the current GSP’.13 Certainly, this author was unable to find any systematic research that had been done that provides an in depth comparative analysis of the successes and failures of such schemes, in terms of either the effectiveness of different types of conditionality (eg positive versus negative) or the labour/human rights standards towards which it was targeted (eg child labour, freedom of association), and the standards of protection that are required in order to take advantage of the incentives on offer.14 Systematic environmental assessments of trade agreements are relatively common. Norway, the US and Canada all carry out reviews of the environmental impact of trade policies which include some international impact assessment, as do the United Nations Environment Programme and World Wildlife Fund.15 But only the EU systematically commissions broader ‘Sustainability Impact Assessments’ (SIAs) of WTO Agreements which were launched at the 1999 WTO Ministerial Meeting in Seattle. These identify social as well as economic and environmental impacts on all countries from the most to the least developed. Assessments are commissioned of bilateral, regional and WTO Agreements before and during a trade negotiation. Their purpose is to ‘integrate 10 Australia, Burkina Faso, Cuba, Finland and Thailand, whose responses are listed in the original report (A/56/254) and Costa Rica and Saudi Arabia in a subsequent addendum (A/56/254/Add 1). 11 The Report on AoA, above n 4, fn 15. 12 F M Abbott, ‘Towards a New Era of Objective Assessment in the Field of TRIPS and Variable Geometry for the Preservation of Multilateralism’ (2005) 8 Journal of International Economic Law 77–100 at 94. 13 European Parliament Resolution on the Communication from the Commission to the Council, the European Parliament and the European Economic Committee (COM (2004) 0461). 14 The most comprehensive recent analysis of US GSP is L Compa and J Vogt, ‘Labor Rights in the Generalized System of Preferences: A 20-Year Review’ (2001) 22 Comparative Labour Law & Policy Journal 199–238. This series of case studies shows how the effects of the US system is mixed and heavily affected by geopolitical concerns. 15 See European Commission ‘Sustainability Impact Assessment, Frequently Asked Questions’ on the Europa website at http://europa.eu.int/comm/trade/issues/global/sia/faqs.htm, accessed on 20 Nov 2006.

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Monitoring the Impact of Trade Agreements 229 sustainability into trade policy by informing negotiators of the possible social, environmental and economic consequences of a trade agreement’.16 SIAs utilise ‘indicators’ in order to determine the positive and negative impacts of trade agreements. SIAs of WTO Agreements utilise three ‘core’ social indicators and a series of secondary indicators in order to determine the social impacts of the agreements in question. Core indicators are poverty, health and education, and equity. The secondary indicators of poverty are ‘income and other social dimensions of poverty’. The secondary indicators of health and education are ‘life expectancy; mortality rates; nutritional levels literacy rates; primary, secondary and tertiary enrolment rates’. The secondary indicators of equity are ‘income distribution; gender; other disadvantaged age-related groups (young, old); indigenous peoples; and ethnic minorities’. Indicators are utilised in order to ‘identify the potential impact that trade liberalisation and changes in trade rules may have on sustainability’.17 Where negative impacts are identified, ‘mitigation and enhancement measures’ are suggested in order to, inter alia, ‘mitigate negative impacts to compensate losers’.18 The EU methodology also contains provisions requiring ‘ex post monitoring, evaluation and follow up of trade agreements’ so that ongoing impacts of trade agreements can be evaluated once the agreement in question is actually in force.19 In a number of respects, EU SIAs represent a laudable first step towards monitoring trade agreements in accordance with the methodology that would be utilised if an explicit human rights methodology were adopted—EU indicators correspond to a number of the key social, economic and cultural rights that are protected by international human rights instruments,20 and follow up procedures can be seen as, to a certain extent, fulfilling the human rights obligation to take action to respond to violations. But both the methodology utilised by the EU and its implementation in practice are, in a number of respects, problematic from a human rights perspective. Criticism needs to be tempered by the fact that EU SIAs are still in their early years, and have recently been subject to extensive review which may lead to some change.21 But some of the more obvious limitations from a human rights perspective are addressed below.22 The clearest problem with EU SIAs, from a human rights perspective, is that nowhere does the SIA methodology refer explicitly to human rights. This is 16 See European Commission ‘Sustainability Impact Assessment’ http://europa.eu.int/comm/ trade/issues/global/sia/index_en.htm, accessed on 27 Dec 2006. 17 European Commission, External Trade, Handbook for Trade Sustainability Impact Assessment (Mar 2006) at 9. 18 European Commission, ibid, at 22. 19 European Commission, above n 17, at 23. 20 Most obviously the right to education and right to health as well as the principle of nondiscrimination which it is at the core of the human rights methodology. 21 EU Trade Stocktaking Conference, 21–2 Mar 2006, during which a handbook on the methodology for trade SIAs was launched, above, n 17. 22 This author is currently undertaking a project, funded by the British Academy which will look at this issue in more depth. Also, for a broader range of criticisms of EU SIAs, see NGOs Statement on the Draft Handbook for Sustainability Impact Assessments (Apr 2005).

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230 Broader Strategies despite the obvious similarities in content and objectives of the indicators chosen to assess the social impact of trade agreements. The lack of any explicit linkage is particularly surprising given the widely-recognised links between sustainable development, which is explicitly acknowledged as being at the heart of the SIAs, and human rights. Such an approach is in stark contrast with the EU’s scheme for its GSP, which specifically recognises that ‘[m]ultiple international conventions and declarations have acknowledged the link between development and basic human and labour rights’. GSP plus trade incentives are specifically linked to ratification and effective implementation of relevant international human rights treaties.23 In the absence of an explicit human rights methodology in the SIAs, indicators that are chosen appear somewhat arbitrary, and certainly do not contain all of the elements necessary for the protection and promotion of ‘human dignity’, as mandated according to a holistic human rights approach. For instance, there is no indicator specifically relating to the enjoyment and fulfilment of the right to work, right to housing or the right to non-discrimination on the basis of race. Other indicators which do bear a resemblance to human rights obligations are very much partial in conception from a human rights perspective. For instance, the secondary indicators of health and education are stated to be ‘life expectancy; mortality rates; nutritional levels; literacy rates; and primary, secondary and tertiary enrolment rates’. These indicators reflect a very limited number of the aspects of the rights to health or education, as elaborated by international human rights experts.24 There are also concerns about the way that indicators are utilised in the implementation of assessments. An early critique of SIAs suggested that, from the social perspective: [T]here is little reference in the assessment to the selected indicators as being determinants for the significance or lack thereof, or potential impacts. . . . Rather, broad impacts are suggested from existing literature that bears little relation to the key indicators identified. It is therefore unclear how the chosen indicators are feeding into the assessment.25

A more recent SIA on the impact of agricultural negotiations displays similar problems to those identified above.26 It focuses on very generalised and overall assessments of the effects of liberalisation on countries as a whole, rather than assessing how the ‘losers’ under trade liberalisation will have their fundamental 23

See discussion in ch 7. See the General Comments on the Right to Health (General Comment No 14) and Education (General Comment No 13) by the CESCR for a far more comprehensive approach to identifying key elements of health and education from the rights-based perspective. 25 S Richardson, A ‘Critique’ of the EC’s WTO Sustainability Impact Assessment Study and Recommendations for Phase III, paper commissioned by Oxfam GB, WWF-European Policy Office, Save the Children, ActionAid (2000) at http://www.oxfam.org.uk/what_we_do/issues/trade/ downloads/wto_sustainability.rtf, accessed on 20 Nov 2006. 26 Overseas Development Institute, ‘Sustainability Impact Assessment of Proposed WTO Negotiations, Final Report for the Agriculture Sector Study’, (22 Apr 2005). 24

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Monitoring the Impact of Trade Agreements 231 rights (to life, health etc) infringed. There is often no attempt to evaluate the degree of ‘social impact’ which liberalisation will cause; for instance, in terms of the differential impact of liberalisation on subsistence farmers, as opposed to commercial agro-business. So, when discussing the social impact on highly protected developing countries the report states that: As the costs of adjustment fall predominantly on producers, they will fall predominantly on rural areas. As small (semi-) subsistence producers tend to be less competitive, they are likely to lose domestic market share to imports, whereas commercial producers are the most likely to be able to respond to increased competition. Some losses among domestic producers are likely, although there is no strong reason to believe that adverse effects will be more severe for small-holders (who often display remarkable resilience) than for larger, more commercial farms. (Emphasis added).27

The conclusions reached here on the effects of liberalisation do not appear to be consistent with a human rights methodology. When discussing effects of adjustment to liberalisation, the report is certainly not taking into account the severity of the potential impacts on the different actors under consideration. To look at it from a human rights perspective, it is not considering the likelihood that violations of the right to food, housing etc will occur in relation to different producers, where there will be a great differential impact between commercial producers and semi-subsistence farmers. There is also no consideration, for instance, of farm workers that are likely to be laid off as a result of this increased competition, and the impact on their human rights. A methodology consistent with the protection and promotion of human rights needs to highlight where human rights violations are likely to occur, and the extent of their severity. Once human rights issues have been identified, then action must be taken with regard to violations that have occurred, or are likely to occur in the future. In the EU methodology, this issue is dealt with through ‘mitigation and enhancement measures’ which will not lead to changes in the agreements themselves, but rather to measures that will mitigate against negative effects. Obviously targeted and directed measures will depend on previous identification of violations. Suggested measures to date include some important recommendations from a human rights perspective (eg provision of international financial assistance to States suffering negative consequences).28 But measures are often generalised, rather than tailored to specific circumstances, and depend on action from a variety of EU and other international actors, who must therefore ‘buy in’ to recommendations if they are to be implemented.29 There are, therefore, ongoing concerns about EU SIAs from a human rights perspective; in terms of the methodology utilised, the conclusions reached; and action taken as a result. The EU SIAs are still in their early years and need to be 27

Overseas Development Institute, ibid, at 33. See Institute for Development Policy and Management, University of Manchester, Sustainability Impact Assessment of Proposed WTO Negotiations, Final Global Overview Trade SIA of the Doha Development Agenda, Final Report (Jul 2006) at 119ff. 29 See NGO Statement, above n 22 at section 3. 28

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232 Broader Strategies given the opportunity to develop and deal with these, and a range of other issues, which are necessary for a human rights-consistent impact assessment methodology (in particular increased participatory rights to relevant actors30). The EU is the only WTO Member to consider systematically the social impact of trade agreements globally, and so a constructive critique of the EU methodology, which highlights positives and makes concrete suggestions for enhancement, is the best strategy to encourage wider participation in this process. There is a significant amount of good and promising practice from international NGOs,31 academic institutions32 and UN agencies33 as well as ad-hoc State assessments,34 which can be utilised in order to develop methodologies which are more appropriate from a human rights perspective. For instance, the FAO has previously undertaken studies on the impact of the AoA on 14 developing countries, and the methodology utilised can be compared and contrasted with that utilised in the EU assessment cited above.35 One example of good practice from the FAO studies is that they specifically address human rights issues such as the ‘food security’ of developing countries. The studies found that trade liberalisation has led to a number of important trends, including: [T]he consolidation of farms as competitive pressures build up following trade liberalisation. However, while this has contributed to an increase in productivity and competitiveness, it has also led to the displacement and marginalisation of farm labourers. This has created hardship for small farmers and food-insecure populations, in situations where there are few safety nets.36

The FAO reports make clear use of a human rights-type methodology in specifically addressing the impact of trade agreements on the most vulnerable within a given society. There is a need to highlight such good and promising practice from across the full range of impact assessments that have already been conducted, in order to make suggestions for how future impact assessments can deal more comprehensively with the impact of trade agreements from a human rights perspective. Even in the absence of an enhanced human rights-compliant methodology for impact assessments, some assessments have been undertaken which have flagged up key human rights concerns of future agreements. Assessments under30

For a number of recommendations in this area, see NGOs Statement, above n 22. In particular see reports and impact assessments of Oxfam at www.oxfam.org.uk/what_we_ do/issues/trade/papers.htm and 3D at http://www.3dthree.org/en/, accessed on 27 Dec 2006. 32 Eg see D J C Forsyth and N-K Plange, Social Impact Assessment of Membership of the Pacific Free Trade Area (University of the South Pacific, 2001) 33 See, eg: see discussion below of case studies produced by the Food and Agricultural Organisation (FAO). 34 In particular these are increasingly being carried out by South and Central American States, eg Ministerio de Salud Del Peru, Evaluacion de los Potenciales efectos acceso a medicamentos del tratado de libre comercio que se negocia con los Estados Unidos de America (Apr 2005). 35 FAO, Agriculture, Trade and Food Security Issues and Options in the WTO Negotiations from the Perspective of Developing Countries vol II, Country Case Studies (1999). 36 FAO, ibid, Pt 1 S IV. 31

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Monitoring the Impact of Trade Agreements 233 taken by the governments of Australia and Columbia, with respect to proposed FTAs with the US, addressed issues relating to stronger forms of intellectual property protection. Both revealed serious concerns about an adverse impact on access to medicines as a result of the respective agreements. In Australia, some change has occurred to the implementing legislation as a result of the assessment (although concerns remain). In the case of Columbia, the adverse impact was predicted to affect the poor disproportionately, which is particularly problematic from a human rights perspective. Negotiations on the FTA are ongoing, so we will have to wait and see what the effects of the impact assessment will be on the substance of the final agreement.37 These latter two cases once again show the dangers from a human rights perspective of bilateral trade agreements negotiated outside the WTO framework. But they are also examples which demonstrate that impact assessment of trade agreements of any type can uncover (potential) violations of human rights. Governments are thereby provided with information about the conflicts in their international legal obligations raised by the agreement in question. Particularly where government representatives are involved in complex trade negotiations involving multiple different obligations, such information is vital, as they may be otherwise unaware of the human rights implications of a particular agreement. Such a problem is particularly acute given the nature of trade negotiations, which rarely involve non-trade experts who are informed about the wider social impact of the trade agreements that are being negotiated. The fact that impact assessments have been undertaken does not mean, unfortunately, that governments will necessarily act to resolve any conflicts that are revealed in their international legal obligations. But, even where there is no governmental action, such impact assessments can make the general public aware of the negative human rights impact of signing up to particular trade obligations, and become the basis for opposition parties, and domestic and international civil society groups, campaigning for changes to agreements to make them compatible with international human rights obligations. If States were to conduct human rights-compliant impact assessments as a key component of the negotiating process of any new trade agreement, this would be an important step in ensuring that trade law rules protect and promote human rights. As has been shown, presently any assessments that are undertaken are very much piecemeal efforts, generally undertaken by individual countries on ad-hoc issues, UN agencies, or NGOs. There is no overall co-ordination of these efforts so that any kind of systematic methodology can be created for how to measure the human rights impact of trade agreements. One locus where such efforts could be co-ordinated would be the WTO itself. The Trade Policy Review Mechanism (TPRM) would be the obvious mechanism by which the WTO could assess the human rights impact of trade agreements. Under the TPRM, all WTO Members’ trade policies are periodically reviewed, with 37

F M Abbott, above n 12 at 94–6.

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234 Broader Strategies the objective of ensuring the smooth functioning of the multilateral trading system.38 A human rights impact assessment could become part of that process. However, criticisms would be likely of the extent to which the WTO would have the expertise and impartiality to conduct such assessments. A recent paper by Robert Howse was very critical of a recent TPRM report on Senegal, which failed to be sufficiently critical of neo-liberal economic theory, and to assess the impact of such theory on the protection and promotion of human rights.39 The alternative is that UN bodies such as OHCHR, FAO and WHO could become coordinating agencies, monitoring the effects of international trade within their relevant specialisms. Certainly, this is an area where expert academic institutions could also have an important role to play in developing and testing methodologies. Finally, it should be remembered that developing countries may not have the capacity or infrastructure to undertake assessments by themselves. This is an area where international assistance is required, particularly from developed countries, so that they fulfil their human rights obligations with regard to international cooperation.40

III. IMPROVING THE SPECIFICITY OF HUMAN RIGHTS IN THE TRADE LAW CONTEXT

A prerequisite for conducting effective impact assessments of trade agreements is optimal specificity in terms of human rights obligations created by international human rights norms and standards. It has been pointed out several times during the course of this book that many trade lawyers, trade negotiators and other non-human rights trade specialists tend to be sceptical over whether many human rights, particularly economic, social and cultural rights, have the required degree of specificity as to be relevant in a trade law context—what are the elements of the right to food, the right to health or the right to housing, which allow judgments to be made over whether there has been a negative impact in a given set of circumstances? It has already been argued that the General Comments of UN Treaty Bodies and in particular in this context, the CESCR provide greater specificity to many of the key rights. So, for instance, the General Comment on the Right to Health provides greater specificity regarding obligations, inter alia, to ensure access to essential medicines.

38

See Annex III of the Marrakech Agreement. R Howse, ‘Mainstreaming the right to development into international economic law and policy at the World Trade Organisation’, paper prepared for the OHCHR secretariat (E/CN.4/Sub.2/ 2004/17) 9 Jun 2004 at para 29. 40 Report on GATS, above n 4, para 50. Also see Report on AoA, above n 4, para 30 where it is argued that with respect to the implementation of the Marrakech decision, ‘the creation of a centralised monitoring and enforcement mechanism with the duty to report annually on assistance given and received’ is recommended. 39

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Clarifying the Impact of WTO Agreements 235 But, given the general lack of awareness, particularly among non-human rights specialists, over the situations in which human rights are actually engaged in the trade law context, and situations where violations might have occurred, any additional tools that could be utilised to aid understanding of the nature and extent of human rights obligations would be useful. One mechanism for bringing more specificity to human rights norms and standards would be to utilise the ‘human rights indicators’ which are currently being developed by leading international human rights experts.41 The purpose of a human rights indicator is to provide information concerning whether and how a State has fulfilled a specific human rights obligation. Indicators can be quantitative—measuring realisation on the basis of purely statistical data (eg how many persons with HIV/AIDS are utilising a specified medicine)—or qualitative—evaluative questions about a right, requiring a reasoned response, the provision of relevant policy documents etc. (eg is there a government policy of ensuring universal access to affordable medicine for HIV/AIDS sufferers?). A series of human rights indicators should be developed with specific relevance to trade agreements and their impacts. These indicators could then be utilised to monitor consequences of States’ international trade law commitments (by comparing indicators pre and post-obligation) and assessing whether States have taken on commitments which are likely to lead to violations. It should be noted that there are bound to be a number of government policies and practices, actions of non-state actors etc, which affect the realisation of a right in any give situation. Human rights indicators are therefore only ‘indicators’ that further investigations are necessary to determine the cause of violations, they are not conclusive determinants of violations and their causes. But they are useful starting points which could be utilised by States, UN human rights treaty monitoring bodies and other interested parties, in order to assist in the monitoring of trade agreements, to uncover evidence of (potential) violations and more generally create greater understanding of the interactions between the two legal frameworks.

IV. CLARIFYING THE (POTENTIAL) IMPACT OF WTO AGREEMENTS ON THE PROTECTION AND PROMOTION OF HUMAN RIGHTS

The need to improve understanding of the obligations created by legal frameworks is not a problem restricted to international human rights law. Human rights violations are as likely to occur because of lack of understanding of the nature of WTO obligations, as they are because of incompatibilities between the two legal frameworks. The example of the TRIPS and access to medicines debate, demonstrates the need for clarity in WTO rules (in that case through the Doha Declaration), so that countries can act to protect and promote human 41

See eg Report of Turku Expert Meeting on Human Rights Indicators, (10–13 Mar 2005).

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236 Broader Strategies rights in full knowledge that they will not be breaching their obligations under the Agreement. There are many other scenarios in which Member States may be worried about the implications of raising human rights issues, either domestically, or in WTO proceedings, because of the lack of clarity concerning the consequences of such actions. For instance, developing countries in particular may well be concerned that, by raising a human rights defence with regard to compliance-based trade measures, they may also be justifying the use of conditionality-based trade measures by other States, because the two sets of measures are not sufficiently differentiated. So, a developing country might not make an argument that it needed to contravene its obligations under TRIPS or GATS in order to protect the right to health of its population, for fear that this may become a justification for developed countries utilising human rights arguments in WTO proceedings to argue that trade restrictions on goods from developing countries are justified under the GATT if there is a failure to adhere to human rights standards. It is important, therefore, that the different levels of justification needed for these two different types of human rights measures are not simply implicit in the complex reasoning of existing judgements of the WTO, but are made explicit and unambiguous, so that governments can be sure that the two types of situation will be treated differently. A second problem that may occur as a result of lack of clarity is the problem of ‘regulatory chill’. It must be remembered that WTO obligations have potentially far wider ramifications than simply the issues that arise in dispute settlement proceedings. The way that WTO obligations are interpreted also has important consequences in many aspects of policy-making and implementation at the international and domestic level. There is a danger that other regulatory systems will be negatively affected by WTO provisions because the implications of WTO regulations are uncertain. Governments may, for instance, not regulate in ways that may have a positive effect on the protection and promotion of human rights, if there is a potential risk of contravening WTO law, even where it is highly likely that there would be no actual conflict if such action were to be taken. Several examples of this scenario have already been discussed. For example, with regard to conditionality-based measures, the US and Canada’s refusal to take part in the KPCS without a waiver from WTO obligations was based on uncertainty about whether the Scheme would conflict with non-discrimination provisions under the GATT.42 Thus, despite the fact that the EU argued that there was no reason to believe that there was in fact a conflict between WTO obligations and those of the Kimberley Scheme,43 a waiver was required to 42 See discussion in ch 6 and K Nadakavukaren-Schefer, ‘Stopping Trade in Conflict Diamonds: Exploring the Trade and Human Rights Interface with the WTO Waiver for the Kimberely Process’ in T Cottier et al (eds) Human Rights and Trade (Oxford, Oxford University Press, 2005). 43 J Pauwelyn, ‘WTO Compassion or Superiority Complex: What to Make of the WTO Waiver for “Conflict Diamonds” ’ (2003) 24 Michigan Journal of International Law 1177–207 at 1183.

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Clarifying the Impact of WTO Agreements 237 make the scheme operable, and allay the concerns of Canada and the US. As was noted in chapter six, the fact that a waiver was agreed in the case of the Kimberley Scheme was because of a rare set of circumstances, and it cannot be taken for granted that a waiver will be granted to other such multilateral schemes aimed at the protection and promotion of human rights. Lack of clarity about the nature of the underlying WTO obligations may therefore have the effect of preventing future initiatives from being implemented because States are worried about the extent to which they will conflict with WTO obligations, even in situations where a very good case could be made against there being an actual conflict. This propensity for so-called ‘regulatory chill’ can also be seen with regard to compliance-based measures to protect and promote human rights. Although WTO rules and regulations may have no direct legal effect on the ability of domestic regulators to introduce regulations that effectively protect the human rights of their populations, there is a danger that complex and often poorly understood supra-national regulations may, in fact, lead to regulatory chill whereby domestic legislators are fearful of breaching WTO rules, and so do not introduce, develop or strengthen domestic regulatory schemes that protect human rights values. The potential for such a situation is exacerbated when there is external pressure. For instance, with regard to TRIPS and access to medicines, it has been noted that pharmaceutical companies and supportive governments have attempted to pressure governments in a number of developing countries into agreeing that the inherent flexibilities of the TRIPS Agreement do not allow measures such as compulsory licensing for dealing with the AIDS/HIV epidemic, despite the fact that most commentators believe that such measures are permissible. Such pressure becomes an added incentive not to take action which could protect and promote human rights. But such issues are not simply restricted to the TRIPS Agreement. Commentators have noted the potential of the TBT and SPS Agreements to have such a chilling effect with regard to, for instance, health and safety regulations.44 The possibilities of ‘regulatory chill’ have also been noted with regard to the GATS and the water industry—whereby ‘regulators become cautious about imposing new or especially burdensome requirements in the absence of a high level of available evidence to objectively justify the measure.’45 Underlying all of the above issues is that, while it may be possible to interpret WTO law in a way that is compatible with the protection and promotion of human rights, policy makers may avoid any prospect of conflict by refusing to take measures that would, in all likelihood, be permissible under WTO law. In this scenario, we cannot simply wait for obligations to be clarified in dispute 44 R Howse and E Tuerk, ‘The WTO Impact on International Regulations: A Case Study of the Canada-EC Asbestos Dispute’, in Grainne De Burca and Joanne Scott, (eds) The EU and the WTO: Legal and Constitutional Issues (Oxford, Hart Publishing, 2001). 45 A Lang, ‘The GATS and Regulatory Autonomy: A Case Study of Social Regulation of the Water Industry’ (2004) 7 Journal of International Economic Law 801–38 at 812.

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238 Broader Strategies settlement proceedings because cases will never arise that clarify all the potential misconceptions about WTO obligations. These types of issues can be addressed through a number of different mechanisms, not all of which require an explicit human rights approach. To a certain extent, it may be a question of simply educating legislators and other relevant parties about what individual WTO obligations do and do not entail, and facilitating more widespread detailed technical training on the nature of WTO obligations. But, alongside this approach, an explicit human rights approach to international trade law rules may also help to highlight some of the permitted actions that can be taken in a more systematic fashion, and thereby provide a methodology for dealing with future issues that may arise. So, how can the relationship between the two sets of legal norms be clarified so that consequences such as those described above are less likely to occur in future?

V. THE VALUE OF EXPRESS REFERENCE TO HUMAN RIGHTS IN THE WTO CONTEXT

One form of governmental action that could be utilised to clarify the interrelationship between human rights and trade law norms and standards would be for WTO Members to state explicitly their commitment to the promotion and protection of human rights within the WTO context. Such an explicit statement could take one of several forms. It could be in the form of a free-standing Declaration (such as that concerning TRIPS and access to medicines) or could involve the insertion of a human rights clause into existing trade agreements. The question is whether such an approach would then mean that all governments could be more confident in taking measures to protect and promote human rights that they would not be breaching their WTO obligations. The insertion of an express reference to human rights into WTO agreements is a recommendation that is made in the first two OHCHR reports—The Report on TRIPS and The Report on the AoA). The reason given in the Report on TRIPS for the inclusion of an express reference was that: [It] would clearly link States’ obligations under international trade law and human rights law . . . This would assist the States to implement the ‘permitted exceptions’ in the TRIPS Agreement in line with their obligations under the ICESCR.46

Thus, it is envisaged that the express reference to human rights would, for instance, allow human rights arguments to be directly invoked when considering the conditions under which compulsory licensing can be utilised under the TRIPS Agreement. The Report on TRIPS suggests that, if the Agreement were to be renegotiated, then a human rights reference could be inserted within Article 7 of the 46

The Report on TRIPS, above n 4, para 68.

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Express Reference to Human Rights in the WTO Context 239 Agreement. This is the most obvious setting for such an express reference, as Article 7 states the need for the protection and enforcement of IPRs to benefit both ‘producers and users of technological knowledge . . . in a manner conducive to social and economic welfare, and to a balance of rights and obligations.’ Human rights provide a methodology, as was demonstrated in chapter 10, for undertaking such a balancing process, and so an explicit recognition of human rights in this article would then potentially allow a human rights approach to be taken into account in utilising all the other mechanisms in the agreement which have the potential to protect and promote human rights (eg compulsory licensing, parallel imports etc). The Report on the AoA also advocates an express reference to human rights in the AoA. It argues for the development of ‘a legal framework for the social dimensions of the liberalisation of the agricultural trade through express reference in the AoA to the promotion and protection of human rights.’47 Unlike the Report on TRIPS, this report does not specify where a human rights clause might be inserted in the AoA, perhaps reflecting the fact that, unlike for the TRIPS Agreement, there is no clause in the AoA that sums up the objectives of the AoA in a way that is conducive to the addition of an express reference to human rights. Perhaps a freestanding Article would be required. But it is clear that the intention here, as with the TRIPS Agreement, was to ensure that the rules and norms of international human rights law are directly taken into account when the obligations under WTO Agreements are interpreted and implemented, and create an access point through which States could directly utilise the norms of international human rights law within a trade law context. But, while the first two OHCHR reports recommended that an express reference to the promotion and protection of human rights should be added into the relevant Agreements48, none of the later OHCHR reports make such a recommendation.49 This is despite the fact that a recommendation of an express reference would be equally appropriate in discussing the latter issues. There was clearly a growing realisation of the complications of an express reference to human rights in WTO Agreements. Thus, it was decided that no such recommendation would be made in the latter reports.50 So what are the complications of an express reference to human rights in WTO Agreements? First, on a political level, it has been argued that there would not be sufficient political will to obtain agreement to an express human rights clause if it was part of the negotiations in a trade round.51 Once put forward as 47

The Report on AoA, above n 4, para 45. The Report on TRIPS, above n 4, para 68, The Report on AoA, above n 4, para 45. 49 This recommendation does not appear in the Report on GATS, the Report on Investment, or the Report on Non-Discrimination. 50 A point confirmed by this author in discussions with relevant OHCHR staff. 51 J E Alvarez, ‘How Not to Link: Institutional Conundrums on an Expanded Trade Regime’ (2001) 7 Widener Law Symposium Journal 1–19 at 14; F J Garcia, ‘The Global Market and Human Rights: Trading Away the Human Rights Principle’ (1999) 25 Brooklyn Journal of International Law 51–97 at 87. 48

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240 Broader Strategies part of the negotiations, a failure to agree such a clause could be seen as very damaging to human rights recognition, as it would represent an explicit rejection of human rights concerns in the WTO context. But there are also concerns about whether express human rights clauses within WTO Agreements, even if agreed, could in fact have negative effects for the protection and promotion of human rights. Inclusion of such clauses might lead to the WTO DSBs feeling that they then had a freer hand to themselves interpret the content of human rights norms and standards (potentially ignoring the mechanisms such as seeking expert advice on interpretation as suggested in Chapter 11). As has already been discussed, this power of interpretation would be worrying to many human rights advocates, given that the expertise of WTO panellists will be in trade law rather than in human rights law, and they may well also have a bias towards trade law values. Further, at the international level, many of the human rights norms under consideration (and in particular economic, social and cultural rights) have not been the subject of a great deal of judicial enforcement, and so the nature of the obligations they entail is still open to a broad range of interpretations.52 It is perhaps these concerns that led the OHCHR to drop proposals for an express human rights clause and to concentrate instead on finding ways to interpret existing WTO provisions so as to take into account the protection and promotion of human rights. An alternative mechanism for including express reference to human rights in the WTO trade regime is through a governmental declaration whereby WTO members could set out their human rights obligations in the WTO context. Such a declaration would need to be similar to the Doha Declaration on the TRIPS Agreement and Public Health in that it would need to set out how human rights would be dealt with in the trade law context. The advantage of this mechanism over proposals for a human rights clause in trade agreements would be that it would allow the methodology required by a human rights approach to be set out in broad terms. Given the analysis that has been presented in this book, the Declaration would need, at the least, to include agreement on the following key points: • That all WTO Member States in the negotiation, implementation and ongoing operation of WTO agreements are also under an obligation to promote and protect human rights as set out in relevant international, regional and national law instruments. • That the WTO as an institution and all of its Member States, both individually and through international cooperation, are under an obligation to ensure that international trade law obligations do not lead to violations of international human rights law obligations.

52 For related concerns see J E Alvarez, above n 51, at 14 Philip Alston, ‘Resisting the Merger and Acquisition of Human Rights by Trade Law: A Reply to Petersmann’ (2002) 13 European Journal of International Law 815–44 at 836.

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Express Reference to Human Rights in the WTO Context 241 • That WTO obligations should therefore be interpreted taking into account human rights norms and standards as set out in relevant international instruments. • That the human rights impact of WTO agreements should be monitored effectively at the national and international level and immediate action taken to rectify any human rights violations caused by international trade agreements. • That no Member State should be prevented from taking compliance or cooperation-based measures genuinely aimed at the protection and promotion of the human rights, and that a large margin of appreciation in favour of the State adopting such measures is appropriate when adjudicating on the measures in question. • That conditionality-based measures to protect and promote human rights raise more complex issues of disguised protectionism, as well as concerns about the human rights effects of the measures that are taken on the population of the targeted State. Such measures should therefore only be taken in extreme circumstances, should be based on multilaterally agreed principles, monitored by relevant international agencies, and should be of a type that minimises negative effects on those who may suffer adverse human rights consequences. • That if human rights arguments are raised in dispute settlement proceedings, then DSBs should utilise the expertise of relevant human rights bodies (ILO, UN agencies etc) in order to come to a determination of the nature of a given human rights obligation, and whether measures that have been taken are genuinely aimed at the human right in question. A Declaration containing provisions along the lines of those advocated above would substantially differ from the OHCHR proposal of express human rights clauses in trade agreements. Instead of merely signifying the importance of considering human rights in the trade law context, and leaving it up to WTO organs to make determinations on the extent of the human rights obligations that they gave rise to, such a declaration would provide a methodology for interpreting human rights obligations in the trade law context, broadly in line with what is appropriate from a human rights perspective. In advocating the adoption of such a declaration, the aim is for greater legal certainty in interpreting existing trade law rules compatibly with existing international human rights norms and standards, as codified in international legal instruments. It should be noted that other authors have come to much more far-reaching conclusions in discussing the linkages between international trade law and international human rights law rules. Most notably, Ernst-Ulrich Petersmann has discussed the linkages between human rights law and international trade law in the context of ‘constitutionalising international trade law’.53 53 See, among many other publications, E-U Petersmann, ‘From Negative to Positive Integration in the WTO: Time for Mainstreaming Human Rights into WTO Law?’ (2000) 37 Common Market Law Review 1363–82; E-U Petersmann, ‘Theories of Justice, Human Rights and the Constitution of International Markets’ (2003) 37 (2003) 37 Loyola Law Review 407–59.

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242 Broader Strategies The complex issues raised by these proposals go way beyond the scope of this work, and so no position is taken here regarding the pros and cons of such arguments. Certainly, the more modest proposals for human rights and trade linkage advocated here do not conflict with the approach advocated by Petersmann. Perhaps given the degree of contestation between international trade law and international human rights law experts concerning the inter-linkages between trade and human rights, these proposals for legal coherence between the two systems may be useful as a platform for future, more far-reaching discussions. In any case, even the weaker form of recognition of human rights advocated here would, in all likelihood, be too substantial to obtain the agreement of Member States of the WTO. Differing conceptions of the weight that should be given to different human rights by different countries,54 clashes between developed and developing countries over the way in which human rights should be utilised in the WTO context,55 and in particular US scepticism about the relevance of wider international law norms in the WTO context, would probably scupper any chances of agreement on the content of a Declaration. It is therefore likely that it will only be through dispute settlement that the status and applicability of human rights in the WTO context will become clarified. This should not however prevent human rights advocates from concentrating attention on the methodological issues that have been addressed here, and pressing for both the applicability and proper interpretation of human rights norms and standards in the trade law context. It is also important that relevant human rights organisations continue to identify (potential) clashes between trade law and human rights law obligations, as the UN Treaty Bodies did in the case of the problematic IP provisions in the trade agreements involving Ecuador and Chile. By presenting such examples of (potential) human rights violations, and making proposals for how they should be dealt with, a methodology such as that presented here might be built, as it were, from the bottom up rather than from the top down.

VI. PROCEDURAL HUMAN RIGHTS ISSUES IN THE WTO CONTEXT

As stated in the opening chapter, the scope of this book has been largely limited to a discussion of the substantive human rights issues that arise in the WTO context. It has therefore only touched upon discussions of any procedural imperfections in the institutional architecture of the WTO system from a human rights perspective—ie the human rights implications of the processes by which 54 Of the two biggest trading nations in the world for instance, China has ratified the ICESCR and not the ICCPR, while the US has ratified ICCPR but not ICESCR. 55 The examples that have been presented here appear to demonstrate, for reasons that have already been explained, that developed countries will generally be far more interested in validating conditionality-based human rights measures, while developing countries will be concerned with validating compliance-based human rights measures.

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Procedural Human Rights Issues in the WTO Context 243 the WTO and its Member States reach decisions on new agreements, the procedures according to which disputes are settled, and the degree to which those processes conform to international human rights standards. Such issues have been thoroughly discussed elsewhere and would require a second volume of this book if they were to be considered in the same level of detail as the substantive issues which have been considered here.56 However, some brief mention of the effect of WTO procedures on the protection and promotion of substantive human rights is necessary at this juncture in order to put the issues raised in this book in to a broader context. Effective monitoring of the human rights impact of trade agreements and clarity over the human rights applicability of WTO provisions will not in themselves ensure that human rights issues are necessarily raised and dealt with. The WTO is an intergovernmental organisation, and this means that it is only national governments that have the standing to negotiate trade agreements, bring cases against other WTO Member States, and make decisions about how to reconcile their international trade law commitments with their human rights law obligations. Power and wealth differentials between different Member States further exacerbate the inequalities between citizens of different countries. Despite the far greater degree of transparency and openness that the WTO has exhibited in recent years,57 the human rights obligations of all WTO Member States entail the need to provide far greater participatory involvement to individuals than currently takes place. Changes to this intergovernmental structure to allow open consultation, effective representation and greater individual access to negotiating and decision-making procedures are necessary. Many trade lawyers will argue that trade negotiations are already so complex and difficult, because of the increasingly polarised and organised positions of WTO Member State groupings. Therefore, any gains the WTO will make in legitimacy through genuine increases to the participatory nature of decision-making will require sacrifices in efficiency and effectiveness at a time when the latter are in very short supply. But at the very least, proposed WTO treaty texts should be available to prospective WTO Members in languages that enable them to be read by their citizens and to be debated in national parliaments, and judgements of WTO DSBs should be produced in a way that means as great a number of interested parties as possible have the opportunity to read and understand them.58 56 For discussions of the human rights and other ‘fairness’ issues raised by the procedural rules of the WTO see eg S Charnovitz, ‘The WTO and Cosmopolitics’ (2004) 7 Journal of International Economic Law 675–82; R Howse, above n 39. 57 For instance, see the WTO website containing all WTO case law and information about many other WTO-related developments (www.wto.org), and the variety of public forums that take place. 58 See E-U Petersmann, ‘The Human Rights Approach Advocated by the UN High Commissioner for Human Rights and by the International Labour Organisation: Is it Relevant for Law and Policy’ (2004) 7 Journal of International Economic Law 605–27 at 611–12 arguing that currently effective scrutiny by democratically elected bodies in WTO Member States is almost impossible given the massive texts produced by the WTO (eg 25,000 pages for the Uruguay Round)

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244 Broader Strategies It is beyond the scope of this research to examine the many proposals that have been made for tackling these issues.59 They are mentioned because it is important to at least recognise that these procedural failings in themselves potentially breach human rights standards. They also have an impact on the substantive issues that have been discussed in this book. As the situation currently stands, lack of individual engagement in, or understanding of, WTO issues means the vast majority of persons are disengaged from, and disenchanted with, the WTO as an institution. As a result, lobbying by powerful domestic interest groups is likely to continue to drive national governments’ choice of their key issues in negotiations and the cases they bring to the WTO, and therefore limit the extent to which substantive human rights issues are raised in the WTO context. But even without tackling such procedural defects, there are indirect mechanisms for confronting substantive human rights issues. At the WTO level, even though there is no standing for individuals to bring or defend cases, governments can still be encouraged and pressured by human rights advocates to use all available mechanisms to raise human rights issues as defences in WTO proceedings. Coalitions of human rights organisations can submit amicus curiae briefs to WTO proceedings in cases that raise issues of concern from a human rights perspective. At the domestic level, explaining that there are mechanisms within WTO agreements that do allow governments to take measures to protect and promote human rights, can help to prevent tendencies for governments not to act in the face of broadly constructed international trade law commitments, and even to blame their WTO obligations for human rights violations (and other unpopular domestic policy choices). If governments are forced to concede that there are, in fact, mechanisms within trade agreements that they could utilise to justify measures taken to protect and promote human rights, then they cannot blame their WTO obligations for their domestic human rights failings. This would be to the benefit of both the protection and promotion of human rights, as well as the standing of the WTO in the eyes of those who are so often driven to oppose it.

combined with limited opportunities for debating them in many countries. R Howse, above n 39, who argues that the meaningful participation of diverse social actors in the making of WTO laws and policies entails a variety of measures at both the domestic level and the international level. ‘The vastness of the undertaking is indicated by the fact that, in the last round of WTO negotiations, citizens in many parts of the world did not even have access to the proposed treaty texts in their native languages.’ He goes on to discuss a number of mechanisms by which such participatory involvement can be achieved. See the Report of the AB in EC—Measures Affecting the Approval and Marketing of Biotech Products (7 February 2006) WT/DS291–293/R which is over 1,000 pages long and thereby totally inaccessible to all but the most devoted specialists. 59 See, inter alia, R Howse, above n 39. Also see S Charnovitz, above n 56; E-U Petersmann, above n 58; E Mann, ‘A Parliamentary Dimension to the WTO: More than Just a Vision’ in Petersmann, (ed) Reforming the World Trading System: Legitimacy, Efficiency and Democratic Governance

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Conclusions 245

VII. CONCLUSIONS

It is clear that the human rights impact of the WTO goes way beyond the narrow confines of its dispute settlement system. Action must be taken in a variety of different fora if (potential) human rights violations are to be identified and acted upon. Existing methodologies for monitoring trade agreements must be developed and enhanced by relevant actors so that they can identify when human rights violations are likely to occur, or have already happened as a result of international trade law obligations. As part of this process, the precise scope of human rights obligations needs to be better identified in the context of international trade law obligations, particularly through the use of human rights indicators, specifically tailored to deal with issues raised by international trade agreements. Greater certainty and clarity are also required concerning the nature of WTO rules where there are potential human rights impacts, so that action can be taken to protect and promote human rights without fear of breaching WTO obligations and the dangers of ‘regulatory chill’ are minimised. An intergovernmental declaration of WTO Members was suggested as one mechanism for achieving greater clarity in this regard. But it is recognised that there is unlikely to be the requisite consensus among governments to achieve such a declaration, and so human rights advocates must utilise all mechanisms at their disposal to press for greater specificity in, and increased understanding of, individual WTO obligations wherever possible. Finally, it has been recognised that a number of changes are required within the institutional architecture, decision-making process and participatory mechanisms of the WTO itself, if its human rights obligations are to be fulfilled. But even without such changes, human rights advocates should continue to engage their own governments on the full range of human rights issues raised by international trade law rules in order to press for action at both the national and international levels.

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Bibliography 263 Medecin Sans Frontieres, The WTO August Decision is Unworkable (10 Aug 2006). Ministerio de Salud Del Peru, Evaluacion de los Potenciales efectos acceso a medicamentos del tratado de libre comercio que se negocia con los Estados Unidos de America (Apr 2005). Overseas Development Institute, ‘Sustainability Impact Assessment of Proposed WTO Negotiations, Final Report for the Agriculture Sector Study’ (22 Apr 2005). OECD, Report of the OECD Roundtable on Global Instruments for Corporate Responsibility (Paris, 19 Jun 2001). —— Open Services Markets Matter: Trade Directorate, Trade Committee, Working Party of the Trade Committee (TD/TC/WP(2001)24/FINAL) (Dec 2001). OHCHR, The Impact of the Agreement on Trade-Related Aspects of Intellectual Property Rights on Human Rights Report of the Commissioner (E/CN.4/Sub.2/2001/ 13) (27 June 2001). —— Globalisation and its impact on the full enjoyment of all human rights – Preliminary report of the Secretary-General of the United Nations (A/55/342) (31 Aug 2001). —— The Right to Food, Report by the Special Rapporteur on the Right to Food, by Mr Jean Zieggler (10 Jan 2002). —— Globalisation and its Impact on the Full Enjoyment of Human Rights Report of the High Commissioner (E/CN.4/2002/54) (15 Jan 2002). —— Liberalisation of Trade and Services and Human Rights—Report of the High Commissioner (E/CN.4/Sub.2/2002/9) (25 Jun 2002). —— Human Rights, Trade and Investment, Report of the High Commissioner (E/CN.4/Sub.2/2003/9) (2 Jul 2003). —— Analytical Study of the High Commissioner for Human Rights on the Fundamental Principle of Non-discrimination in the Context of Globalization, Report of the High Commissioner (E/CN.4/2004/40) (15 Jan 2004). —— Human Rights and World Trade Agreements: Using General Exception Clauses to Protect Human Rights (New York and Geneva, OHCHR, 2005). OHCHR, Sub-Commission on the Promotion and Protection of Human Rights, Mainstreaming the Right to Development into International Trade Law and Policy at the World Trade Organization, Note by the Secretariat (E/CN.4/Sub.2/2004/17) (9 Jun 2004). Overseas Development Institute, Sustainability Impact Assessment of Proposed WTO Negotiations, Final Report for the Agriculture Sector Study (22 Apr 2005). Oxfam, Patent Injustice: How World Trade Rules Threaten the Health of Poor People (2001). Oxfam, Trading Away our Rights: Women Working in Global Supply Chains (2004). Oxfam, Patents Versus Patients; Five Years after the Doha Declaration, Oxfam Briefing Paper 95 (2006). RHAGHAVAN, C, The World Trade Organisation and its dispute Settlement System: Tilting the Balance against the South, TWN Trade and Development Series No 9 (2000). RICHARDSON, S, A ‘Critique’ of the EC’s WTO Sustainability Impact Assessment Study and Recommendations for Phase III, a paper commissioned by Oxfam GB, WWF–European Policy Office, Save the Children, ActionAid (2000) at http://www. oxfam.org.uk/what_we_do/issues/trade/downloads/wto_sustainability.rtf, accessed on 26 Nov 2006.

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264 Bibliography UN, Millennium Report of the Secretary-General of the United Nations, (New York, United Nations Department of Public Information, 2000). —— Informal Working Group of the Security Council on General Issues of Sanctions Non-paper/Rev 10 (26 Sept 2002). —— Globalisation and its Impact on the Full Enjoyment of all Human Rights, Preliminary report of the Secretary-General of the UN (A/55/342) (31 Aug 2001). UN Sub-Commission on the Promotion and Protection of Human Rights, The Adverse Consequences of Economic Sanctions on the Enjoyment of Human Rights, A Working Paper prepared by Marc Bossuyt (E/C.4/Sub.2/2000/33) (21 Jun 2000). —— Globalisation and its impact on the full enjoyment of human rights—Report of the Secretary General (31 Jul 2001) (A156/254) at 6. (2 Aug 2001) —— Globalisation and its Impact on the Full enjoyment of Human Rights, Progress Report by J. Oloka-Onyango and Deepika Udagama (2 Aug 2001). UNAIDS, Report on Global HIV/AIDS Epidemic (2002). UNCTAD, Globalisation and Liberalisation: Effects of International Economic Relations on Poverty (UNCTAD/ECDC/PA/4/Rev.1) (1996). —— The Least developed countries Report (Geneva, 2001). WHO, The World Health Report 2000: Health Systems, Improving Performance, (Geneva, WHO, 2000). —— Globalisation, TRIPS and Access to Pharmaceuticals, WHO Policy Perspectives on Medicines: WHO Medicine Strategy 2000–03 (WHO/EDM/2001.2) (3 Mar 2001). World Bank, World Development Report (Washington DC, World Bank, 2000/2001). World Development Movement, Stop the GATSastrophe!: How basic rights are being traded away under the GATS (Jul 2001). —— Out of Service: The development dangers of the General Agreement On Trade in Services (Mar 2002). WTO, Report by the Consultative Board to the Director-General Supachai Panitchpakdi, The Future of the WTO: Addressing Institutional Challenges in the New Millennium (Geneva, World Trade Organisation, 2004). 3D, Intellectual Property and Human Rights, Is the Distinction Clear Now? Policy Brief No 3 (Oct 2006) http://www.3dthree.org/pdf_3D/3D_GC17_IPHR.pdf, accessed on 8 Dec 2006.

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Index Abbott, Frederick, 159, 167 Agreement on Agriculture (AoA) commercial emphasis, 138 developing countries, 144, 146, 147, 170 food security, 130, 143, 232 human rights impact 143, 170, 232 human rights clause, 238, 239 market access, 146, 147 negative consequences, 138, 139 purpose, 136 reform process, 130 right to food, 57, 130, 132, 139, 143 trade benefits, 170 trade liberalisation, 139, 170 and see Trade liberalisation Agreement on Technical Barriers to Trade human rights concerns, 198, 199 regulatory burdens, 131 rationale for, 44, 131, 248 Agreement on the Application of Sanitary and Phytosanitary Measures regulatory burdens, 131 rationale for, 44, 131, 248 Agreement on Trade Related Aspects of Intellectual Property (TRIPS) see Trade Related Aspects of Intellectual Property (TRIPS) AIDS/HIV affordable treatment, 157–59 Brazilian experience, 159 essential medicines, 129, 151, 158 price of treatment, 151 public health issues, 169 research, 132 South African experience, 157, 158, 163 Alston, Philip, 18, 77, 111 Bossuyt, Marc, 74 Civil and political rights conditionality-based measures, links to 176 Economic social and cultural rights, distinguished, 28, 29 and see Economic social and cultural rights positive obligations, 29 resource implications, 29, 30 Charnovitz, Steve, 209 Cleveland, Sarah, 100 Committee on Economic, Social and Cultural Rights (CESCR)

see also Economic social and cultural rights expertise, 135 General Comments Agreement on Agriculture (AoA), 132, 138, 139 GATS, 132, 139, 140, 142 legitimacy, 134 TRIPS Agreement, 132, 138 WTO context, 135 national courts, 134 status, 134 Compliance-based measures conditionality-based measures, distinguished, 64, 125, 126, 175–179, 212–214, 236 definition, 62, 63, 124, 176 disguised protectionism, 126 distributive rights, 176 dispute settlement, 202, 203, 212–214, 220 economic social and cultural rights, 124, 176 and see Economic social cultural and rights internal regulatory requirements, 124 international human rights instruments, 125 negative consequences, 125 non-discrimination provisions, 193 and see Non-discrimination OHCHR Reports, 126 and see OHCHR Reports other countries, affecting, 125 public morals exception, 202, 211–13, 222 and see Public morals exception regulatory chill, 237 and see Regulatory chill state obligations, 64, 124, 126 trade agreements, reconciling with 143–147 trade-related issues, 124 Conditionality-based measures abolition of slavery, 69 authorisation, 178 complexities, associated with, 177 compliance-based measures, distinguished, 64, 125, 126, 175–179, 212–214, 236 definition, 62, 69, 70–71, 175 effects, 71, 73 general trade restrictions, 73–76 Generalised System of Preferences (GSP), 116 and see Generalised System of Preferences (GSP) justification, 178

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266 Index Conditionality-based measures (cont.): labour rights, 176 legality, 177 legitimacy, 117, 177, 178 liberty rights, 176 multilateral frameworks International Labour Organisation (ILO), 84, 87–92 international law, involving, 83, 84 international organisations, 84 Kimberley Process Certification Scheme (KPCS), 84, 92–95 trade restrictions, 83, 84 United Nations (UN), 84–87 non-discrimination provisions, 193 and see Non-discrimination other states, affected by, 69–71, 73, 74, 83, 175, 176, 178 public morals exception, 202, 213, 214, 222 and see Public morals exception rationale for terminology, 64 Regional and Bilateral Trade Agreements (RTAs), 108–11 and see Regional and Bilateral Trade Agreements (RTAs) tailored trade restrictions, 76–81 trade incentives, 176 trade measures, 83, 84 trade restrictions, 69, 70, 71, 73–75, 83, 176 see also General trade restrictions; Tailored trade restrictions trade retaliation, 121 typologies additional tariff rates, 70 export/import bans, 70 licensing requirements, 70 quotas, 70 semi-tailored measures, 72 tailored/targeted measures, 71, 72 trade incentives, 70, 71, 73 trade restrictions, 70, 71, 73–75 trade sanctions, 70, 71 unilateral measures authorisation, 97 definition, 97 international law, 97 other countries, affecting, 97 WTO law, 97, 121, 122 see also Unilateral trade restrictions use, of, 69–72, 83 WTO rules, 64, 69, 70, 72, 73, 81, 83 Cooperation-based measures compliance, 64 definition, 64, 65, 176 disguised protectionism, 126 distributive rights, 176 ICESCR obligation, 124, international human rights instruments, 125

and see International instruments (human rights) negative consequences, 125 public morals exception, 202 and see Public morals exception OHCHR Reports, 126 and see OHCHR Reports other countries, affecting, 125, 176 state obligations, 124, 126 Developing countries Agreement on Agriculture (AoA), 144, 146, 147, 170 and see Agreement on Agriculture (AoA) essential medicines, 150, 151 and see Essential medicines Free Trade Agreements (FTAs), 167, 168 GATT provisions, 12 and see General Agreement on Tariffs and Trade Generalised System of Preferences, 111–119 and see Generalised System of Preferences (GSP) human rights and trade linkage, attitude to 177, 236 labour standards, 77, 79, 80, 81, 88 and see Labour standards patent protection, 150, 151, 160–62, 165, 166 preferential treatment, 12 trade restrictions, 107 TRIPS, 156, 157, 168 and see Trade-related Aspects of Intellectual Property Rights World Trade Organisation (WTO), and, 5, 106, 107, 236 Dispute settlement procedure (WTO) concepts of justice, 10–13 Dispute Settlement Bodies (DSBs) environmental concerns, 191 human rights norms/standards, 190, 191, 221 human rights-related measures, 187–89 interpretative role, 189–91 jurisdictional competence, 188–89 “like” products, determination of, 194, 195 social concerns, 191 Dispute Settlement Understanding (DSU), 10, 11, 190 human rights human rights arguments, 189–91, 222, 223 human rights dimension, 11, 13, 14, 187–89, 221, 222 international instruments, 221, 222 influence, of, 11 international trade law rules breach of obligation, 13 enforcement, 52, 54

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Index 267 interpretation, 13, 54 negative consensus procedure, 13 trade/human rights linkage, 226 and see International trade law rules societal values, 13 Doha Declaration administrative requirements, 166 Decision on Implementation, 161, 162 developing countries, 160–62, 165, 166 domestic legislation, amendment to, 166 health access to medicines, 166–68 public health issues, 160, 162, 164 right to health, 163–65, 167, 168 importance, of, 165, 166, 168 international human rights law, 160 see also International human rights law medicines access, to, 166–68 essential medicines, 161 pricing issues, 166 negotiating positions, 160 patent protection compulsory licences, 161, 165, 166 developing countries, 160–62, 165, 166 essential medicines, 161 importance, of, 160, 161 national emergencies, 161 research and development, 160 voluntary licences, 166 procedural arrangements, 166 trade retaliation, 160 TRIPS Agreement, amendment to, 162, 165 US pressure, 162, 165, 167 WTO rules reaffirmation, 165 restatement, 165 Doha Development Round difficulties, 5 Donnelly, Jack, 19 Economic social and cultural rights civil/political rights, distinguished, 28, 29 compliance-based measures, links to 176 Committee on Social, Economic and Cultural Rights (CESCR), 30, 31 and see Committee on Social, Economic and Cultural Rights (CESCR) equal importance, 26, 28, 31, 176 government obligations, 29, 30 human dignity, 28 international trade law rules, 32 justiciable/non-justiciable, 26, 28, 29, 30, 31 minimum requirements, 31 national constitutions, 31 progressive realisation, 29 resource expenditure, 29, 32 South African experience, 31

status, of, 31 WTO obligations, 32 see also World Trade Organisation (obligations) Englehart, Neil, 23 Erga omnes obligations examples, 59 human rights, 59 ius cogens obligations, and, 59 and see Ius cogens obligations meaning, 59 scope, 59 state obligations, 59 unilateral trade restrictions, 99, 100 and see Unilateral trade restrictions Essential medicines access bilateral trade agreements, 167 developing countries, 149–52 economic accessibility, 154 free trade agreements (FTAs), 167, 168 intellectual property protection, 149–51 international human rights law, 149 universal access, 164 WTO obligations, 149 affordable treatment, 156, 157–59, 161 AIDS/HIV, 151 and see AIDS/HIV developing countries, 151 domestic production, 150, 161 human rights approach/discourse conflicting interests, 153, 154 economic social and cultural rights, 163 economic/technical assistance, 153, 154 human rights norms/standards, 155 international trade law obligations, 164 medical research, 153, 155 public health considerations, 153 right to health, 153, 154, 156, 163, 164 intellectual property protection developed countries, 150 developing countries, 150, 151 economic growth, 150 effect, of, 149, 151, 152 innovation rights, 150 medical research, 153, 155 negative impact, 150, 152 product development, 150 manufacturing capacity, 161 price of drugs, 149, 151, 152, 154 public health concerns, 149, 153 TRIPS Agreement, 155, 156 Export processing zones (EPZs) unionisation, in, 80 working conditions, 80, 81 see also Labour standards

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268 Index Fair trade consumer choice, 183 soft law initiatives, 182–84 voluntary codes of conduct, 183 WTO rules, 183 Free trade agreements (FTAs) developing countries, 167, 168 effect, of, 167 essential medicines, 167, 168 and see Essential medicines proliferation, 167 right to health, 167, 168 General Agreement on Tariffs and Trade (GATT) developing countries, 12 establishment, of, 7 exceptions differential treatment, 12 general exception clauses, 94, 197–199 human life and health, 199 justified regulatory diversity, 13 public order, 199 public morals, 199–220 security exceptions, 12, 86 public policy, 12 interpretation, 146 key principles equal treatment, 12 most-favoured-nation (MFN) status, 11, 12 national treatment, 12 labour conditionality, 88 “like” products, determination of, 194–96 purpose of, 7, 136 quantitative restrictions discriminatory treatment, 12 export/import bans, 12 prohibitions, 12 quotas, 12 tariff reduction, 136 unilateral trade restrictions GATT breaches, 102 justification, 103 property rights, 102, 105 and see Unilateral trade restrictions General Agreement on Trade in Services (GATS) commercial interpretation, 140 cross-subsidisation, 142, 145 essential services, 139 establishment, of, 9 foreign direct investment (FDI), 140 general exception clauses – 198, 199 See also General exception clauses framework agreement, 130 human rights impact, 139, 140 interpretation, 146

liberalisation, 9, 139, 140 “likeness”, determination of, 196 market access, 139 most-favoured-nation (MFN) treatment, 139 and see Most-favoured-nation (MFN) national schedules, 130 national treatment, 139 non-discrimination provisions, 142, 145 see also Non-discrimination principle OHCHR Reports, 130 and see OHCHR Reports purpose, 136 regulatory issues autonomy, 142 burdens, 136 diversity, 146 scope, of, 9, 10 unilateral trade restrictions, 102 and see Unilateral trade restrictions General exception clauses human life/health, 199 human rights issues, 197–99 GATT, 198, 199 see also General Agreement on Tariffs and Trade importance, of, 197, 198 measures of last resort, 197 public morals 199–220 public order, 199 state interests, 197, 198 TRIPS, 198 see also Trade-related Aspects of Intellectual Property Protection use, of, 197 welfare-related measures, 198 General trade restrictions see also Tailored trade restrictions; Unilateral trade restrictions authoritarian regimes, 74 economic sanctions, 73 examples of, 98 financial restrictions, 73, 75 guidelines, 75 human rights abuses, 73–75 negative consequences, 73, 74 smart sanctions, 75 success, of, 74 targeting, 75 use, of, 73, 75 Generalised Systems of Preferences (GSPs) conditionality-based measures, 119, 120 and see Conditionality-based measures developing countries, 111, 112, 120 EU system challenges, to, 113, 114–17 developing countries, 113–18 development needs, 117 differential treatment, 115, 116

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Index 269 drug production, 113, 115 EC–Tariff Preferences, 113, 114–17, 119, 122, 178 environmental protection, 113, 115, 118 export industries, 114 GSP Plus, 118, 119 human rights conditionality, 116, 118, 180 human rights norms/standards, 120, 121 incentive arrangements, 113, 114, 115, 117, 118, 119 labour rights, 113, 115, 118, 119, 180 labour standards, 114, 119 least developed countries (LDCs), 113 legal provisions (1995–2005), 113, 119 legal provisions (2006–2015), 117–20 monitoring systems, 118 operation, 113 sustainable development, 118 tariff reductions, 113 trafficking, 113 validity, 114 human rights conditionality, 116 imposed standards, 120 long-term development, 120 purpose, 111 supervision, 119, 120, 121 tariff rates, 112 trade/human rights linkage, 107, 108 and see Trade/human rights linkage trade incentives, 112 unilateral trade restrictions, 111–19 and see Unilateral trade restrictions US system compliance, 112 human rights conditionality, 180 labour rights, 180 labour standards, 112, 113 workers’ rights conditionality, 112 validity, 120 World Trade Organisation authorisation, 111, 112 Enabling Clause, 112, 115, 116 role, of, 119–21 and see World Trade Organisation (WTO) Globalisation anti-globalisation protests shared opposition, 4 significance, 4 social concerns, 4, 5 Howse, Robert, 42, 164, 205, 234 Hudec, Robert, 195 Human rights see also International human rights law challenges applicability of values, 21, 22 cultural diversity, 24, 32

cultural relativism, 21, 22, 25 universality, 22–24, 32 civil and political rights see Civil and political rights codified human rights, 17, 18, 21 common principles, 19 constitutionalisation process, 25, 26 differing conceptions, 18, 19 distributive rights, 28 economic social and cultural rights see Economic social and cultural rights economic development, 32 fundamental rights, 18 human dignity, 19 holistic approach, 46–48, 176, 248 impact assessments, 226–234 importance, in trade law context, 41–48 intergovernmental organisations, 14 international instruments see International instruments (human rights) international law, 14 see also International human rights law international trade law rules, agricultural benefits, 39, 40 benefits, 38–41 compliance-based measures, 62, 63, 185 conditionality-based measures, 61, 62, 67, 182, 184 co-operation-based measures, 62–64 economic welfare, 38 explicit commitment, 238, 239 functional importance, 38 global justice, 38 global protection, 182 government declarations, 240, 241, 242, 245, 250 human rights clauses, 240, 241 international organisations, 182 liberalisation of services, 39 norm/rule adjudication, 185 norm/rule creation, 185 OHCHR Reports, 38–40 positive consequences, 38 poverty reduction, 40 relationship, 18, 24–26, 33–48 soft law initiatives, 182–84 technology transfer, 39 trade liberalisation, 39, 40 voluntary mechanisms, 182 welfare creation, 38 welfare enhancement, 39 WTO enforcement systems, 184, 185 and see International trade law rules international treaties, 14 legal positivist approach adoption, of, 17–19 codified human rights, 17, 18, 21

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270 Index Human rights (cont.): liberty rights, 26, 27, 28 market-weighted approach, 46 moral directives, 18 state responsibilities, 14 trade liberalisation, 41–47 and see Trade liberalisation unilateral trade restrictions, 97–100, 102–105 and see Unilateral trade restrictions universal applicability, 18 and see International trade law rules utilitarianism, distinguished, 20, 21 WTO agreements compliance-based measures, 236, 237 conditionality-based measures, 236 human rights defence, 236 lack of clarity, 235–238, 245 “regulatory chill”, 236, 237, 245 see World Trade Organisation (agreements) Impact Assessments co-ordinating agencies, 234 environmental assessments, 228, 229 human rights assessments, 227 importance, of, 226 international assessments, 227 national assessments, 227 negative effects, 226, 227, 229 policy formulation, 226 social impact, 227, 230 trade liberalisation policies, 227 WTO agreements, 228 Intellectual property rights (IPRs) see Trade Related Aspects of Intellectual Property Rights (TRIPS) International Covenant on Civil and Political Rights (ICCPR) effect, of, 22, 28, 29 International Covenant on Economic, Social and Cultural Rights (ICESCR) economic/technical assistance, 153, 154 educational choice, 30 effect, of, 22, 28–32 ratification, 127 rights education, 130 food, 130 health, 130, 153, 156 inventor’s rights, 153, 154 scientific research, 30 state obligations, 129 trade union membership, 29, 30 International human rights law see also Human rights basis, of, 52 distributive rights, 28 conflicting laws, 54, 60, 65

economic social and cultural rights, 26, 28, 29, 176, 177 and see Economic social and cultural rights essential medicines, 149 and see Essential medicines holistic approach, 176 human rights norms/standards international law, 54 priority, 57, 59, 67 protection, of, 56 status, of, 56, 57, 60 WTO jurisdiction, 54–56 international co-operation, 64 international law, 52, 53 international trade law rules, 14, 53–57, 61, 64, 176 and see International trade law rules interpretation, 52 jurisdiction, 52 lex speciales, 51, 52 liberty rights, 28 protection, under, 56 self-contained regimes, 51, 52, 67 specific regulations, 51 state obligations, 51, 64 voluntary compliance, 177 WTO jurisdiction, 14, 15, 54–56 International Labour Organisation (ILO) conflicting legal regimes, 89–91 conflicting norms, 91 erga omnes obligations, 91 and see Erga omnes obligations ius cogens obligations, 91 and see Ius cogens obligations labour conditionality, 88, 89 labour rights, 87–89 lex posterior maxim, 90, 91 lex specialis rule, 90, 91 primacy, of, 89, 90 purpose, 87 sanctions challenges, to, 88, 92, 95 defences, 89 economic, 87 enforcement procedure, 87 trade restrictions, 87, 88, 90, 95 WTO prohibitions, 90, 92 strengthening role, 182–184 voluntary compliance procedures, 184 International law EC – Biotech, 201–204 fragmentation/unity, 52, 119, 121, 201–202, 51 human rights law see International human rights law state obligations, 53 unilateral trade restrictions, 97–100

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Index 271 and see Unilateral trade restrictions WTO obligations, 53 see also World Trade Organisation (obligations) International Monetary Fund (IMF) creation, of, 7 International trade law see also International trade law rules; International trade law system basis, of, 52 differential treatment compliance-based measures, 175 conditionality-based measures, 175 co-operation-based measures, 175 WTO impact, 175 dispute settlement, 52, 54 see also Dispute settlement procedure (WTO) fair trade see Fair trade economic social and culturalrights, 32 and see Economic social and culturalrights functional legal system, 35 governmental rule-making, 34, 225 human rights categorisation, 61, 65 explicit discourse, 41, 43 human rights indicators, 229, 235, 245 holistic conception, 29, 46–48 humans rights methodology, 61, 64 international norms/standards, 53, 54 market functionality, 46, 47 market transparency, 46 monitoring bodies, 53 optimally performing markets, 46, 47, 48 rationale(s), 41–48 respect, for, 46 specificity, 225, 234–35, 245 state involvement, 61, 64 WTO impact, 175 and see Human rights human rights norms/standards conflicting laws, 54, 60, 65 erga omnes obligations, 57, 58–61 interaction, 54–56, 57, 61, 64 international law remedies, 54 ius cogens obligations, 57, 58–61 legal unity, 57 priority, 57, 59, 67 protection, of, 56, 225 status, of, 56, 57, 60 WTO jurisdiction, 54–56 impact, of, 54 international relations, 35 interpretation, 52 jurisdiction, 52 justice requirement, 5 lex speciales, 51, 52

nature, of, 34 non-discrimination, 141 see also Non-discrimination non-trade issues, 54, 55 origins, 7,8 political rationales, 8 producer interests, 8 protectionism, 7, 8 public international law, 34, 52, 53 self-contained regimes, 51, 52, 67 social/economic/political dimension, 4 social impact, 24 social justice, 5, 21, 24, 33 specific regulations, 51 state obligations, 51 trade agreements, 52, 226–28 see also Trade agreements Ius cogens obligations breaches, 59 civil /political rights, 58 and see Civil and political rights economic social and cultural rights, 58 and see Economic social and cultural rights erga omnes obligations, and, 59 and see Erga omnes obligations human rights, 58, 59 legal certainty, 58 legal effect, 58 meaning, 58 unilateral trade restrictions, 101 and see Unilateral trade restrictions Kimberley Process Certificate Scheme (KPCS) conflict diamonds, 92, 93, 95 human rights impact, 92–96 multilateral legal framework, 92 participants, 93, 94 purpose, 93 trade restrictions, 93, 94 WTO obligations conflict, with, 93–95 GATT exception clauses, 94 waiver, 94–96 and see World Trade Organisation (obligations) Jurisdiction Importance for human rights/trade linkage, 25, 177–178, 202–203, 212–214 States’ human rights responsibilities, 64, 137, 203 Self-contained regimes, 52 WTO, 55–56, 184, 188–189, 202–203, 212–214 Koskenniemi, Marti, 251 Labour standards developing countries, 77, 79, 80, 81

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272 Index Labour standards (cont.): enforceable standards, 77, 78 export processing zones (EPZs), 80 EU GSP, 113–114, 119 foreign direct investment (FDI), 78, 79 global competition, 79 globalisation, 79 informal economy, 80 International Labour Organisation (ILO), 87–89 and see International Labour Organisation (ILO) lowering, of, 78, 79 political pressures, 79 trade restrictions, 77–80 unfair competition, 79 unionisation, 80 US GSP, 111,112 US RTAs, 110–111 Lang, Andrew, 142,146, 218,219

Non-discrimination affirmative action, 141, 143 compliance-based measures, 193 and see Compliance-based measures conditionality-based measures, 193 and see Conditionality-based measures cross-subsidisation, 142, 145 differential treatment, 193, 194, 196 EC – Asbestos, 194–195 equal treatment, 141 fundamental importance, 141 goods and services, 193–195 human rights approach, 141–143, 192–193 interpretation, 192, 194–196 “like” products, 192–194 market access, 141 most-favoured-nation (MFN) treatment, 11, 12, 108, 192 national treatment, 11, 12, 192 OHCHR Reports, 141 and see OHCHR Reports trade law, 141, 193–196 trade restrictions, 193 universal provision, 142 vulnerable people, 141 Nowak, Manfred, 18

codified rights, 127 definition, 127 explicit commitment in trade agreements, 238, 239 human rights clauses, 240, 241 international instruments, 127 obligations, 127, 128, 131, 132, 133, 135, 136, 137, 143 norms/standards, 138 principles, 127 state obligations, 127, 128, 131 trade law context, 127 trade liberalisation, 128 welfare considerations, 137 ICESCR, 131 and see International Covenant on Economic, Social and Cultural Rights (ICESCR) international trading system, 129 non-discrimination principle, 141 and see Non-discrimination principle right to development, 130, 131, 139 trade law human rights approach, 127, 128 international trade law, 137 interpretation, 128 positive impact, 38–40 trade/human rights linkage, 128 trade liberalisation, 127, 128, 137, 138 value, of, 126 World Trade Organisation (WTO) Agreement on Agriculture (AoA), 130, 131, 136 commercial objectives, 138 consultation, 128 dispute settlement proceedings, 129 exception clauses, 129 GATS, 130, 131, 136 impact, 128, 129, 130, 131, 136 non-discrimination, 129 obligations, 131 right to development, 129 right to health, 129 TRIPS Agreement, 129–131, 136 WTO agreements, 128, 129, 137, 138, 142–147 and see World Trade Organisation (WTO) Open trade see Trade liberalisation

Office of the High Commissioner for Human Rights (OHCHR) see OHCHR Reports OHCHR Reports common methodological approach, 136, 137 development policies, 130, 131 human rights

Pauwelyn, Joost, 190 Petersmann, Ernst-Ulrich, 25, 241, 242 Policy-orientated approach dispute settlement procedure, 251, 252 see also Dispute settlement procedure (WTO) future strategies, 250

Marceau, Gabrielle, 11, 131, 190 Matthews, Duncan, 157

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Index 273 importance, of, 250–52 trade-related measures, 251 Public morals exception human rights applicability compliance-based measures, 202, 211–13, 222 conditionality-based measures, 202, 213, 214, 222 co-operation-based measures, 202 EC-Biotech, 201, 202, 204 erga omnes obligations, 204 human rights norms/standards, 200, 201 human rights obligations, 202–205, 211 international instruments, 201–204 international law rules, 200, 201, 211 interpretative methodology, 200, 204, 205 Shrimp-Turtle, 204, 207, 212, 214 third party rights, 202 trade restrictions, 214 US-Gambling, 208, 212, 213 interpretation burden of proof, 215, 216 case law, 206–209, 213, 216, 212, 216 compliance-based measures, 220 context, 205, 206 differentiation, 215 expert opinions, 219–21 interpretative methodology, 200, 204–206 interpretative process, 216, 217 margin of appreciation, 220 national policies, 213 necessity test, 217, 218, 222 presumption of guilt, 215 supplementary means, 209–11 status of clauses, 215 trade law methodology, 215–19 treaty terms, 206, 207, 209 Vienna Convention, 200, 201, 204, 211, 221, 222 WTO agreements, 211 public morals, meaning of, 205, 211 Regional and Bilateral Trade Agreements (RTAs) conditionality-based measures, 108–11, 119, 120 and see Conditionality-based measures imposed standards, 120 labour standards, 110, 111 and see Labour standards most-favoured-nation (MFN) status, 109 see also Most-favoured-nation (MFN) negative effects, 251 negotiation, of, 180, 181 North American Free Trade Agreement (NAFTA), 110

proliferation, 182 purpose, 108 rights human rights clauses, 109–11 intellectual property rights (IPRs), 180 labour rights clauses, 109–11 right to health, 180 special interest groups, 181 supervision, 119, 120, 121 third country agreements, 109 trade concessions, 108 trade/human rights linkage, 107, 108 and see Trade/human rights linkage unilateral trade restrictions, 108–11 and see Unilateral trade restrictions unwanted trade provisions, 180 US/EU trade, 109 validity, 120 Regulatory chill, 180, 236–237, 245 Rodrik, Dani, 42 Sanctions See Trade Restrictions Sen, Amartya, 27, 42 SPS Agreement see Agreement on the Application of Sanitary and Phytosanitary Measures Sustainability impact assessments (SIAs) human rights issues, 229, 230, 232 indicators concerns, as to, 229 secondary indicators, 229 social indicators, 229 use, of, 229 methodology, 229, 232 monitoring trade agreements, 229 WTO agreements, 229 social impact, 231 trade liberalisation, 230, 231 Tailored trade restrictions see also General trade restrictions; Unilateral trade restrictions effectiveness, 76, 77 human rights abuses, 77 labour standards, 77–80 and see Labour standards meaning, 76 Tariff barriers elimination, 8 negotiation, on, 7 reduction, 8, 136 Smoot-Hawley Tariff Act (US), 7 TBT Agreement see Agreement on Technical Barriers to Trade

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274 Index Trade barriers see also Agreement on Technical Barriers to Trade reduction, 15 Trade/human rights linkage broader perspective, 249–50 commercial interests, 249 complexities, involving, 247, 248 compliance-based measures, 62, 63, 66, 249 conditionality-based measures, 61, 62, 66, 67, 248, 249 co-operation-based measures, 62–64, 66, 249 consensus, affecting, 36 constitutionalisation process, 241, 242 consumer choice, 183 differences legal systems, 34, 36 philosophies, 141 dispute settlement procedure, 184, 226, 249, 250 see also Dispute settlement procedure (WTO) economic social and cultural rights, 177 and see Economic social and culturalrights Generalised System of Preferences (GSP), 107, 108 and see Generalised System of Preferences (GSP) government declarations, 240–42, 245, 250 hostility, towards, 33–36 human rights conditionality, 107, 108 inherent relationship, 37, 38 interaction, 4, 15 labour standards, 78 and see Labour standards legal norms, 35 liberalisation, 248 methodology common systematic questions, 65 inwardly focussed issues, 65, 66 outwardly focussed issues, 65 rationale, 61, 64 moral rationale, 66 multi-faceted strategies, 247, 249 non-discrimination principle, 141 and see Non-discrimination principle OHCHR Reports, 128 and see OHCHR Reports re-evaluation, 35–38 Regional and Bilateral Trade Agreements (RTAs), 107, 108 and see Regional and Bilateral Trade Agreements (RTAs) relevance, of, 36 separate institutional framework, 34 simultaneous obligations, 35 social justice, 36, 37, 40 state obligations, 177

voluntary mechanisms, 182, 183 World Trade Organisation (WTO) role, of, 119–21 attitude towards, 37 and see World Trade Organisation (WTO) Trade liberalisation benefits/losses, 46 disadvantaged communities/individuals, 45 economic growth, 41, 42, 43, 47 financial impact, 41 flexible policies, 43 global policy, 41 human dignity, 45 human rights methodology, 41–47 and see Human rights methodology importance of, 8 OHCHR Reports, 127, 128 and see OHCHR Reports poverty reduction, 42, 43 producer bias, 43, 44 related policies, 42 social justice, 42 welfare enhancement, 43, 45, 46 Trade Related Aspects of Intellectual Property Rights (TRIPS) affirmative action, 143 affordable treatments, 132 amendment, to, 162, 165 benefit, of, 150 binding nature, 155 commercial incentives, 138 commercial interests, 170 compulsory licence agreements, 144, 157–59, 165, 166 creation, of, 9, 155, 156 developing countries, 156, 157, 168 differential treatment, 144, 147 Doha Declaration see Doha Declaration effect, of, 126, 129, 138 health health care, 129, 138 protection, 157–59 public health, 156 right to health, 138 human rights approach, 147 intellectual property protection balancing rights/obligations, 156, 159 compulsory licences, 144, 157–59, 165, 166, 167 developing countries, 168 economic welfare, 156 enforcement modes, 129, 136, 155 enforcement of rights, 10, 129, 155, 156, 158–60, 162, 167, 169 exhaustion of rights, 156, 157 extent, of, 167

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Index 275 free trade agreements (FTAs), 167 global protection, 151, 152 grant of rights, 10, 129, 155 health considerations, 157–59 lack, of, 151 marketing exclusivity, 167 parallel imports, 167 patent protection, 138 public welfare considerations, 156, 159 research funding, 151 social welfare, 156 technical innovation, 156 TRIPS-Plus, 167 use of rights, 10, 129, 155 medicines essential medicines, 129, 132, 133, 143, 147, 150, 151, 160–62 generic pharmaceutical drugs, 157, 158 parallel imports, 156–58 pricing issues, 157 see also Essential medicines negative impact, 156 positive obligations, 136 public interest considerations, 144 public policy issues, 157 purpose, 155, 156 retaliatory action, 158–60, 167 scope, of, 10 technology transfer, 147, 156 US influence, 156 Trade restrictions see General trade restrictions; Tailored trade restrictions; Unilateral trade restrictions Unilateral trade restrictions authorisation, 100 cessation, 99 countermeasures, 99, 100, 102, 105 effectiveness, 98 erga omnes obligations, 99, 100 and see Erga omnes obligations Generalised System of Preferences (GSP), 111–19 and see Generalised System of Preferences (GSP) general trade restrictions, 98 and see General trade restrictions human rights norms/standards, 99, 102 international human rights law, 97, 99, 100 and see International human rights law international law, 97–100 ius cogens obligations, 101 and see Ius cogens obligations justification, 100, 101 Mexico – Soft Drinks, 104–105

other countries, affecting, 97, 98 proportionality, 99, 100, 178 Regional and Bilateral Trade Agreements (RTAs), 108–11 and see Regional and Bilateral Trade Agreements (RTAs) reparations, 99 repressive regimes, 98 semi-tailored restrictions, 98 sovereign power, 98 state practice, 97, 98 state responsibility, 99 supervision, 178 tailored restrictions, 98 and see Tailored trade restrictions trading partnerships, 106, 121 US activity, 97, 98 World Trade Organisation law, 102–19 supervisory role, 119–21 see also World Trade Organisation (WTO) United Nations (UN) authorisation, 84–87 human rights treaties, 22, 25 limitations of, 182, 184 sanctions challenges, to, 85–87, 95 dispute settlement procedure, 86, 87 economic, 84, 85 effective sanctions, 85 international law principles, 85 international security, 84, 85 justification, 86 legitimate alternatives, 85 national security, 86 negative effects, 85 trade restrictions, 84, 86, 87, 95 Uruguay Round dispute settlement, 10 global trading rules creation, of, 9 technical agreements, 9 technical standards, 9 trade agreements, 9, 10 trade restrictions, 9 impact, of, 10 Weiler, Joseph, 35 World Bank conditionality-based approach, 120 World Trade Organisation (law) administration, 9 best endeavour commitments, 146 commercial concerns, 170 complexity, of, 44, 248 conflicts, involving, 102 derogations, 144, 168, 169

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276 Index World Trade Organisation (law) (cont.): developing countries concerns, 236 interests, 236 differential treatment, 144, 146, 192 dispute settlement procedure see Dispute settlement procedure (WTO) essential services access, 169, 170 regulation, 170 exception clauses, 144, 145, 192, 197, 221, 222, 211 see also General exception clauses; Public morals exception human rights dimension compliance-based measures, 236, 237 conditionality-based measures, 236 explicit commitment, 238, 239 government declarations, 240, 241, 242, 245, 250 human rights clauses, 240, 241 human rights defence, 236 human rights norms/standards, 144, 145, 191, 192, 221, 224, 225 lack of clarity, 235–38, 245 legal certainty, 241, 245 “regulatory chill”, 236, 237, 245 human rights norms/standards conflicting laws, 54, 60 dispute settlement procedure, 190, 191, 221 erga omnes obligations, 57, 58–61 interaction, 54–57, 61 ius cogens obligations, 57, 58–61 legal unity, 57 priority, 57, 59, 67 status, of, 56, 57, 60interpretation, 145, 146, 192, 197, 221, 222 labour conditionality, 88 labour standards, 88–90 and see Labour standards monitoring, 226, 228 non-discrimination provisions, 192–96, 221 and see Non-discrimination provisions public health issues, 169 Regional and Bilateral Trade Agreements (RTAs), 180, 181 see also Regional and Bilateral Trade Agreements (RTAs) regulatory autonomy, 170 trade disputes, 9 trade restrictions permitting, 105–19 preventing, 102–105

trade negotiations, 9 unilateral trade restrictions developing countries, 106, 107 economic sanctions, 107 GATS, under, 102 GATT, under, 102, 103, 105 Helms-Burton Act, 102, 105 legitimacy, 102, 104, 105 negative effects, 105, 121 trading partners, 106, 121 WTO compatibility, 103, 121 WTO enforcement system, 106, 107 WTO influence, 104, 105 and see Unilateral trade restrictions WTO obligations, 168 World Trade Organisation (organisation) competence, 55 dispute settlement procedure see Dispute settlement procedure (WTO) global regulation, 44–46 impact, of, 6 imperfections balancing processes, 44 positive regulation, 44 producer bias, 43, 44 influence, of, 36 international law norms, 13, 14 standards, 13 jurisdiction environmental issues, 55 human rights issues, 54–56 multilateralism/unilateralism compared, 181 origins, 7, 9–10 power differentials, 180, 181 procedural aspects decision-making process, 243, 245 dispute settlement procedure see Dispute settlement procedure (WTO) effective representation, 243, 244 participation individual, 243–45 intergovernmental, 243 procedural failings, 243, 244 transparency, 243 role perceptions, 5 scrutiny, of, 4 supervisory, 119–21 trade disputes, 9 trade/human rights linkage, 119–21 trade negotiations, 9 strength, of, 36, 54