Name: Blame It On the WTO: A Human Rights Critique
Author: Sarah Joseph

Front matter

BLAME IT ON THE WTO?

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Foreword

When the World Trade Organisation (WTO) was established in 1995, few human rights lawyers at the time realized the significance of this event for their discipline. In part, this may have been because the creation of the WTO followed more than a decade of neoliberal policies characterized by deregulation and the removal of barriers to trade and investment in many regions. Although it strengthened the system originally established under the General Agreement on Tariffs and Trade in 1947, the WTO was not seen to represent a seismic shift: it was the final stage of a gradual evolution, rather than the beginning of something radically new.

The relative indifference of human rights lawyers also stemmed from a lack of understanding of the consequences of this ambitious overhaul of the global trade system. The WTO was deliberately placed outside the remit of the United Nations. With its establishment, the international trade system included for the first time a dispute settlement mechanism of a quasi-judicial nature, binding upon the WTO Members, and which could allow economic sanctions to be imposed on States that failed to comply with the disciplines imposed on them. Indeed, in retrospect, it is this aspect of the WTO Agreement that appears both the most novel and that has the most far-reaching consequences. Most notably, it created an imbalance between the commitments of States under the WTO framework and their other international obligations, including those under human rights treaties: should conflicts emerge between the two sets of obligations, States may be tempted systematically to prioritize their duties under the WTO, because of the sanctions attached to non-compliance, leaving aside the comparatively ‘softer commitments made under human rights treaties.

As this important book by Sarah Joseph shows, things are now changing. The problems arising from the fragmentation of international law are increasingly being acknowledged, and solutions are being explored to overcome them. Due to the ‘special nature’ of human rights treaties, which are irreducible to exchanges of undertakings between States,’ merely to state that these treaties are paramount, will not suffice. We need to work towards practical ways of avoiding conflicts whenever possible, and of solving conflicts when they emerge, in ways that do not lead to the sacrifice of human rights on the altar of increased trade, even for the sake of economic growth.

And progress is being made. Increasingly, human rights treaty bodies—in particular, the Committee on Economic, Social, and Cultural Rights—insist that States comply with their ‘extraterritorial obligations. That is, States must ensure that the measures they adopt unilaterally or the international agreements

1 Inter-American Court of Human Rights, Case of the Sawhoyamaxa Indigenous Community v Paraguay, Judgment of 29 March 2006, Series C No 146, para 140.

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At the same time, following the recommendations made by a number of human rights treaty bodies and the special procedures developed by the Human Rights Council,’ the practice of human rights impact assessments of trade agreements is underway. The European Commission is preparing sustainability impact assessments of the agreements concluded between the European Union and third countries on a systematic basis since 2002. It has now acknowledged that, in order to take into account the binding status of the EU Charter of Fundamental Rights

? Committee on Economic, Social, and Cultural Rights, General Comment No 12 (1999), The right to adequate food (art 11), E/C.12/1999/5, paras 19 and 36 (‘States parties should, in international agreements whenever relevant, ensure that the right to adequate food is given due attention’); Committee on Economic, Social, and Cultural Rights, General Comment No 14 (2000), The right to the highest attainable standard of health (article 12 of the International Covenant on Economic, Social and Cultural Rights), E/C.12/2000/4 (2000), para 39 (‘In relation to the conclusion of other international agreements, States parties should take steps to ensure that these instruments do not adversely impact upon the right to health’); Committee on Economic, Social, and Cultural Rights, General Comment No 15 (2002), The right to water (arts 11 and 12 of the International Covenant on Economic, Social and Cultural Rights), UN Doc E/C.12/2002/11 (26 November 2002), paras 31 and 35-6 (‘States parties should ensure that the right to water is given due attention in international agreements and, to that end, should consider the development of further legal instruments. With regard to the conclusion and implementation of other international and regional agreements, States parties should take steps to ensure that these instruments do not adversely impact upon the right to water. Agreements concerning trade liberalization should not curtail or inhibit a country’s capacity to ensure the full realization of the right to water’).

3 See, eg, Committee on Economic, Social, and Cultural Rights, Concluding Observations regarding Ecuador, 7 July 2004, E/C.12/1/Add.100, para 56; Committee on the Rights of the Child, Concluding Observations regarding El Salvador, 30 June 2004, CRC/C/15/Add.232, para 48; Committee on the Elimination of Discrimination against Women, Concluding Observations regarding Colombia, 2 February 2007, CEDAW/C/COL/CO/6, para 29; Committee on the Elimination of Discrimination Against Women, Concluding Observations regarding Philipines, 25 October 2006, CEDAW/C/PHI/CO/6, para 26; Committee on the Elimination of Discrimination Against Women, Concluding Observations regarding Guatemala, 2 June 2006, CEDAW/C/GUA/CO/6, para 32; Report of the Special Rapporteur on the right to food, Addendum: Mission to the World Trade Organization, 4 February 2009, A/HRC/10/5/Add.2, paras 37-8.

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Foreword vii within the EU legal order, the impact of trade agreements on fundamental rights should be systematically assessed in the future.‘ In order to provide guidance to States in preparing such human rights impact assessments, I have presented a draft set of guiding principles on human rights impact assessments of trade and investment agreements, in my official capacity as the UN Special Rapporteur on the right to food. The draft guiding principles—still under discussion at the time of writing this Foreword—define the preparation of human rights impact assessments as an obligation of States, which are bound by pre-existing human rights treaty obligations and are therefore prohibited from concluding any agreements that would impose inconsistent obligations on them. This measure, the guiding principles argue, imposes on States a duty to identify and resolve any potential inconsistency between pre-existing human rights treaties and subsequent trade or investment agreements. The draft guiding principles also refer to the right of every citizen to take part in the conduct of public affairs, recognized under the International Covenant on Civil and Political Rights; the implication is that no trade or investment agreement should be concluded in the absence of a public debate, which should be informed precisely by human rights impact assessments.

Yet, as attempts are being made to reconcile trade agreements—particularly commitments made by States within the WTO framework—with human rights, three major difficulties emerge.

The first difficulty stems from the fact that economic, social, and cultural rights, while they do impose certain immediate obligations, are also subject to progressive realization, depending on the resources available to each State. Therefore, in order for the conclusion of trade agreements to be compatible with a State’s human rights obligations, it is not sufficient simply to ensure that such agreements do not impose directly conflicting obligations on that State. The State must preserve a certain ‘policy space’ that will allow it to take measures whereby it discharges its obligation to ‘fulfil’ human rights: for instance, by enlarging access to certain public services, such as health or education, or by supporting access to basic necessities, such as food and housing. In order to ensure that a State is never prohibited from moving in this direction because of commitments—such as restrictions on subsidies liable to be trade distorting—made under previously agreed trade agreements, a general safeguard clause would be desirable. Such a clause would assert that the trade agreement is never to be interpreted as imposing a prohibition or creating an obstacle to the ability of a State to comply with its human rights obligations.

However, even that may not be enough. When a State moves towards the realization of human rights by choosing to implement certain policies that seek to improve the accessibility of goods or services conducive to the enjoyment of such rights, it is generally encouraged—but not, strictly speaking, obliged—to do so. In the area of human rights, States should be seen as having to score as high as they

4 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, ‘Smart Regulation in the European Union’, COM(2010) 543 final of 8 October 2010, 7.

> International Covenant on Civil and Political Rights, GA res 2200A (XXI), 21 UN GAOR Supp (No 16) at 52, U.N Doc A/6316 (1966), 999 UNTS 171, art 25 (a).

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But we encounter a second difficulty in the tension between the short- and long-term considerations that guide States in the commitments they make to remove barriers to trade. That is, that the deepening of the international division of labour, which may bring about certain immediate benefits, may however not work in favour of the long-term development of poor countries, and thus of their ability to promote the full realization of human rights. As already noted by the United Nations Economic Commission for Latin America under the leadership of Raúl Prebisch in the 1950s, countries that export raw commodities need to export increasing volumes in order to import the manufactured products, with a higher added technological value, that they are unable to produce themselves. Thus, in the long term, the removal of barriers to trade, which accelerates the specialization of each country in the kind of production in which it has a comparative advantage, will not benefit the least industrialized countries: while trade liberalization may bring them short-term advantages—they will increase their exports of agricultural products and pay less for their imports of manufactured goods than if they had to produce such goods themselves—the long-term consequences will be a widening of the gap between rich and poor countries, and an inability on the part of the latter to climb up the ladder of development.

That, in essence, is what has come be known as the Prebisch-Singer thesis of deteriorating terms of trade. It leads to the idea that international trade, replicating the patterns of colonialism, may in fact accentuate the dependency of developing countries on the former colonial powers, and make it impossible for these countries to overcome the obstacles to development. These views are currently being revived, with some variations, by economists such as Ha-Joon Chang or Erik Reinert, who note that rich countries have become rich thanks to the protection of

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Foreword ix their nascent industries, and that they now preach free trade to developing nations simply because, having climbed up the ladder of development, free trade is now in their interest.° Globalization, they remark, has benefited the countries—such as, for example, Brazil, China, South Korea, or India—which carefully sequenced trade liberalization, and which built an industry and a services sector behind trade barriers before opening up to trade. But for the developing countries that had not diversified their economies and whose industrial sector was still too weak at the time when the economies opened, it has meant the relegation to a permanent status of underclass nations.’

‘These views pose a clear challenge to the assessment of the impacts of trade liberalization on human rights: how to rank the immediate benefits against the long-term development impacts? How can the dimension of sustainability enter into the human rights equation? Should we say, to take the idea of sustainability at its word, that policies that seek to promote human rights today (as trade is sometimes alleged to do), should not be at the expense of the ability of States to promote human rights in the future? It is of course ironic that, in general, the tables are turned in exactly the opposite direction: in discussions about the relationships between human rights and trade, the free traders typically argue that the benefits of trade will be visible in the long term—that is, once the economic actors have adjusted to the new conditions it creates—even though there may be negative impacts in the short term—the so-called ‘transition (or adjustment) costs’. That the positions are thus so easily exchanged shows the considerable degree of confusion that is now clouding the debate.

Finally, and linked to the previous point, there is the problem of trade-offs. Trade agreements will typically benefit certain groups, making them better off, and hurt others, whose situation will be made more fragile as a result. In particular, trade agreements may contribute to economic growth and thus may facilitate the ability of the State to mobilize budgetary resources allowing it to finance certain public goods in the areas of health, education, or housing. At the same time, they may negatively affect the situation of certain groups, such as workers in the least efficient sectors of the economy or local producers affected by dumping of imported products on the local markets. In such cases, difficult choices will have to be made about the priorities that the State seeks to pursue. Human rights impact assessments seek to clarify the nature of such choices, and to ensure that they are made on the basis of the best information available.

The question of which trade-offs are acceptable is to be decided at the level of each country, through open and democratic processes, informed by human rights é See Ha-Joon Chang, Kicking Away the Ladder. Development Strategy in Historical Perspective (Anthem Press, London, 2002) ; Ha-Joon Chang, Bad Samaritan. The Guilty Secrets of Rich Nations e the Threat to Global Prosperity (Random House, London, 2007); Erik S Reinert, How Rich Countries Got Rich and Why Poor Countries Stay Poor (Constable, London, 2007).

7 See also Joseph E Stiglitz and Andrew Charlton, Fair Trade for All. How Trade Can Promote Development (Oxford University Press, Oxford, 2005, rev edn 2007) 17 (‘To date, not one successful developing country has pursued a purely free market approach to development. In this context it is inappropriate for the world trading system to be implementing rules which circumscribe the ability of developing countries to use both trade and industry policies to promote industrialization’).

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‘The issues above are only some of the difficult and highly contentious questions that are raised in the emerging dialogue between trade and human rights. Building on her unparalleled knowledge of human rights, Sarah Joseph makes an important contribution to this dialogue, at a particularly propitious time—a time when global capitalism is being reshaped in fundamental ways, and when human rights lawyers are developing tools to ensure that the choices that are made will move us in the right direction. I am grateful to her for not evading any difficult question, and for her continued commitment to this dialogue.

Olivier De Schutter

United Nations Special Rapporteur on the right to food Professor at the University of Louvain

Visiting Professor, Columbia University

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Preface

This book is the culmination of my work on an Australian Research Council grant on “Ihe WTO and Human Rights’. Most of it was written at the end of 2009 during a period of sabbatical at the Lauterpacht Centre for International Law, Cambridge University, and a lot of its ideas gleaned in two prior stints at the Lauterpacht in 2006 and 2007. I can thoroughly recommend the Lauterpacht as a lively and friendly place to write and share research. In that regard I must thanks its directors and staff at the time, James Crawford and Roger O’Keefe, Anne Skinner, Katie Hargreaves, Anita Rutherford, and Karen Fachechi, for their help and hospitality. And also all the other researchers and visiting scholars. ... I won't name you all because I'll undoubtedly, inadvertently, leave someone out.

Some writing was also done, because ‘I had to get this finished lest I go mad’, during a retreat at The Last Villa in Sandy Bay in Hobart in early 2010. Again, that place is recommended for anyone who has to ‘get away’ to punch out a chapter (or just to relax in fine surrounds). Thanks also to Elise Histed in Hobart (and of course Libscombe Larder).

As a human rights lawyer, it was very difficult to wrap my head around the intricacies of WTO law and free trade theory. So of course I had a lot of help, and, in that respect, I must thank Jiirgen Kurtz, Andrew Lang, Gig Moon, Amrita Narlikar, Jeff Waincymer, and also my brother Rob, especially for providing the missing link in my understanding of ‘comparative advantage’ (‘opportunity cost’, for the record). And also, for their invaluable feedback on my chapters: Olivier De Schutter (thanks too for his thought-provoking foreword), Chip Pitts, Frank Garcia, Scott Coleman, Adam McBeth, Melissa Castan, and Jenny Schultz (the latter being the person who first introduced me to the WTO over a decade ago). And there were many others who helped me with ideas and conversations, including Lorand Bartels, Iain Byrne, Rowena Cantley Smith, Thomas Cottier, Patrick Emerton, Joanna Gomula, Robert McCorquodale, James Harrison, David Kinley, Aileen Kwa, Justin Malbon, Gabrielle Marceau, Justine Nolan, Thomas Pogge, Margot Salomon, Sigrun Skogly, and Margaret Young. Of course, any errors in the text are my own.

Special thanks also to Susie Talbot, who was a meticulous and proactive researcher on this book. It was great knowing that I could email my chapters across the sea to have them returned on time exactly as I needed them. Thanks of course goes to Oxford University Press, who were patient with my lateness and then very diligent in getting this out for the Northern summer. So thanks to John Louth, Merel Alstein, and Ela Kotkowska. And also I must thank the Monash University Faculty of Law, especially its support with teaching-free periods of research, and its library and computer staff.

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And finally thanks to friends and family, apart from those already mentioned above, for their support, especially during my crankier moments!

Sarah Joseph

Castan Centre for Human Rights Law Monash University, Melbourne February 2011

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Preface to the Paperback Edition

In advance of the paperback edition, I make the following brief comments on developments since original publication in 2011. Little progress has been made with the Doha round negotiations, which continue to sputter.

The most positive development concerns TRIPS and the least developed countries. The deadline for their full compliance with TRIPS was extended from 2013 to 2021. Furthermore, the prohibition on the rolling back of existing intellectual property rules for LDCs was excluded in this new extension, which seems to give them much-needed flexibility. Beyond that initiative, none of the concerns raised in this book have been addressed.

Pascal Lamy will end his term as the WTO Director-General on 1 September 2013. His successor will be Brazil’s Roberto Carvalho de Azevédo.

New members have joined the WTO, namely Vietnam, Laos, Samoa, Montenegro, Tajikistan and, most importantly due to the size of its economy, Russia. Interestingly, the Ukraine, which only joined the WTO in 2008, is seeking to renegotiate the terms of its accession protocol, as it argues that its commitments were made in the expectation of a swift end to the Doha Round.

Concerns over spiraling global food prices, discussed in Chapter 6, have returned. There have also been interesting WTO cases. It has been confirmed that the Agreement on Technical Barriers to Trade (the TBT, discussed in Chapter 4) can apply to restrict mandatory labeling requirements. Challenges to Canadian subsidies on renewable energy, as well as a US ban on clove cigarettes, have succeeded, again confirming the real impact of WTO rules on “non-trade” areas such as health and the environment. Two ongoing cases will also shed light in this area: a challenge to the European Union’s ban on seal products and a challenge to Australia’s laws which mandate plain packages for tobacco products to reduce their consumer appeal.

I thank the wonderful staff at Oxford University Press for their marketing efforts with this book, and their demonstration of faith in it by proceeding to a paperback edition. And thanks too to all who have read it and sent feedback.

Sarah Joseph June 2013

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Blame It On the WTO: A Human Rights Critique

About this book

Front matter

Foreword

Preface

Preface to the Paperback Edition

Contents

The end

Blame It On the WTO: A Human Rights Critique

About this book

Front matter

Foreword

Preface

Preface to the Paperback Edition

Contents

The end

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