Protecting Human Rights in a Global Economy: Challenges for the World Trade Organization

• Download PDF

Since the late 1980s, the ascendency of market economics coupled with a revolution in information technology has accelerated the process of globalization while institutions of international governance have been unable or unwilling to catch up. Privatization and the related phenomena of deregulation, structural adjustment and a myriad of new bilateral, regional and multilateral trade and investment agreements have proceeded without credible efforts to conceptually and practically address their impacts on legally protected human rights. This paper addresses the tensions and potential synergies between the two legal regimes governing trade and investment and human rights. Trade and investment agreements, as well as the practices of international business, must be held accountable to existing human rights law. The spirit of human rights law must frame the development of trade law if either is to achieve its goals.

The ability of capital to move across borders with increasing ease in the era of globalization has implications for human rights. While human rights violations existed long before this period of rapid economic integration, the growing number of sectors covered by multilateral trade and investment agreements has set the stage for a new variety of human rights abuses which have not yet been suitably addressed. Consider the example of Nigeria where in the last decade foreign oil companies and military governments have laid waste to vast tracts of land in the oil-producing areas and responded with chilling brutality when the Ogoni people sought to protect their fundamental rights. In several Asian countries and other emerging markets, businesses and governments have supported practices which violate the rights of workers with impunity through sweatshops and child, slave, unfree, and bonded labour. At the same time, globalization has served to focus heightened attention on such practices in general, including abuses that existed before globalization but were often ignored.

Global "free" trade and universal human rights regimes are both post-war phenomena. However, they have developed on parallel, separate, and sometimes inconsistent tracks. ¹ The contemporary international economic order, which is based on the push for a single global market, has its basis in the Bretton Woods System. ² The origins of the global trading system were laid with the International Trade Organization (ITO), which was to be an integral part of the blueprint for global peace and security after WWII. ³ A fair international trading regime was thought to be essential to global peace. Beggar-thy-neighbour economic competition among the western countries--with escalating retaliatory tariffs and quotas--was seen as a cause of instability in Europe. Such policies were blamed for the rise of fascism, and ultimately, the outbreak of WWII. Significantly, the Bretton Woods architects were worried about more than beggar-thy-neighbour competition from overt trade barriers. The ITO was designed to address restrictive business practices and fair labour practices.

Several factors, however, changed this vision and resulted in a different multilateral trading order. First, the ITO proposal failed. In its place, a minimal set of rules, concerned mostly with border measures and explicit domestic discriminatory policies against imports, was adopted. The General Agreement on Tarriffs and Trade (GATT) had virtually no institutional framework, and nothing, for example, about concerns such as fair labour practices. Secondly, with the bifurcation of the world by the Cold War, the GATT essentially became an entity for the liberalization of trade among western countries. Without a doubt, it achieved considerable success in the reduction or elimination of a range of trade barriers among these countries. Freer trade became an engine of growth for the project for economic, social and political reconstruction in Europe and Japan. The alliance of governments and private initiative were instrumental in the recovery efforts.

Once developing countries began to join the GATT in significant numbers, they soon felt their needs were not addressed adequately by the post-war regime. Many were caught up in the East-West conflict. However, some minimal amendments to the original GATT agreements allowed developing countries certain exemptions or reduced obligations to liberalize trade. Ironically, developing countries were able to erect very high barriers to many of the most important exports of other developing countries, even as tariffs on products traded among the developed countries fell. The GATT, which was concerned exclusively with the negotiation and monitoring of rules for freer trade, operated in splendid isolation from the other international institutions of the post-war order. Many in GATT expressed pride and satisfaction that the multilateral trading order had made progress towards rules-based free trade while other international institutions remained paralyzed or anemic because of geopolitics.

By the 1970s, the GATT had become successful as a forum for tariff reductions. As a result, increased attention came to be paid to a wide range of domestic policies. While not obviously discriminatory, some of those policies could amount to cheating on or undermining of negotiated concessions. Thus, issues such as subsidies, dumping, and "technical barriers" to trade became increasing preoccupations of the GATT system. With the creation in 1994 of the World Trade Organization (WTO), many of the areas of normative controversy such as technical barriers, services, intellectual property and subsidies were addressed by explicit new rules. ⁴

Unlike the skeletal legal framework of the original GATT text, the new WTO agreements set rules which are not merely general "standards" that an expert bureaucracy can use in crafting dispute-specific solutions. They often have the character of detailed legal code, embodying trade-offs between regulatory autonomy and trade liberalization explicitly negotiated ex ante. Moreover, the failure to abide by these new rules--and indeed the old rules as well--as interpreted in dispute settlement triggers a right to retaliation against the offending party, with the level of retaliation subject to determination by arbitration. Under the old GATT, rulings of dispute panels required adoption by the membership of the organization, whereas under the WTO system, the rulings are subject to appeal to a standing Appellate Body, but are effective, as upheld or modified on appeal, unless a consensus of the membership is opposed to adoption.

The WTO, the United Nations and the international financial and economic institutions, have created an institutional base for development of a "global consensus" for lawful and universally agreed-upon behaviour in the political, economic, trade, social and human rights arenas. Celebrating an existing "global consensus", however, is premature as the relationship between these bodies remains undefined. For example, what is to be done when there is a clear conflict between, say, a particular human right and a principle or provision in international trade law? Should human rights "trump" trade law or vice-versa? Will international law develop a body of rules that advances "free" trade while at the same time promoting and protecting human rights? The UN Committee on Economic, Social and Cultural Rights has written that trade liberalization, "must be understood as a means, not an end. The end which trade liberalization should serve is the objective of human well-being to which the international human rights instruments give legal expression". ⁵

The challenge before the world today is how to influence the process of globalization in such a way that human suffering, poverty, exploitation, exclusion, and discrimination are eliminated. Since trade is the driving engine of globalization, it is imperative that, at the very least, rules governing it do not violate human rights but rather promote and protect them. The effort to fashion such rules would benefit from a process which is inclusive, transparent, democratic and participatory across all barriers. In such a process, international financial and trade institutions, and the WTO in particular, would engage civil society as well as governments, inter-governmental organizations and businesses in this reformulation. In recent years, the World Bank itself has placed some emphasis on the role of civil society and popular participation as a part of its governance program. ⁶

This paper discusses the difficult nexus between trade and human rights and identifies areas of tension and possible reconciliation. It argues that trade and human rights regimes need not be in conflict, so long as the trade regime is applied and evolved in a manner that respects the hierarchy of norms in international law. Human rights, to the extent they are obligations erga omnes, or have the status of custom, or of general principles, will normally prevail over specific, conflicting provisions of treaties such as trade agreements. The WTO laws and processes must be interpreted in a way that advances human rights, transparency, accountability and representivity. It concludes that human rights and trade are fundamentally linked and must be seen as complementary, not oppositional.

Your Email :
To Email :