United Nations: Mainstream human rights into all activities, WTO told

The World Trade Organisation (WTO) should mainstream human rights into all of its activities and issue directives to the dispute settlement panels so that human rights treaty violations are not adversely affected.

This is one of the main recommendations highlighted by the UN Independent Expert on the promotion of a democratic and equitable international order, Mr Alfred de Zayas (United States), in his report to the Human Rights Council, which is currently holding its regular thirty-third session in Geneva.

"It is high time to mainstream human rights into all trade agreements and World Trade Organisation (WTO) rules and regulations, so that trade representatives and dispute-settlers know that trade is neither a ‘stand-alone' regime nor an end in itself," the rights expert said in presenting his report to the Council on Tuesday (13 September).

In his report, Mr De Zayas said WTO dispute panels should interpret the exceptions in the General Agreement on Tariffs and Trade 1994 to support initiatives on food security, health and the environment and facilitate solutions to climate change.

"WTO should harmonize policies with the Food and Agriculture Organization of the United Nations (FAO) and OHCHR [Office of the High Commissioner for Human Rights]," he added.

"The tenth WTO Ministerial Conference, held in Nairobi in December 2015, could have delivered good results had it been true to the commitments made under the Doha Development Agenda, but it was seriously marred by the intransigence of some States that attempted to bury the Agenda and prevented progress on food security and environmental protection," Mr De Zayas underlined.

He called on States to implement the Doha Development Agenda as envisaged in Sustainable Development Goal 17.10.

[Goal 17.10 states: "Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organization, including through the conclusion of negotiations under its Doha Development Agenda."]

The Trade Facilitation Agreement must not become operative until the Doha Development Agenda commitments have been met, the rights expert stressed.

He also called on States to refrain from entering into new bilateral investment treaties and free trade agreements, including the Trans-Pacific Partnership Agreement, the Transatlantic Trade and Investment Partnership, the Comprehensive Economic and Trade Agreement and the Trade in Services Agreement, unless human rights, health and environmental impact assessments have been conducted, and there is full disclosure, consultation with stakeholders and public participation.

Where possible, referendums should be conducted, Mr De Zayas said.

"States should test the legality of provisions of bilateral investment treaties and free trade agreements, investor- State dispute settlement and investment court system mechanisms, as well as WTO rules and practice, for compatibility with their own Constitutions and with their human rights treaty obligations."

WTO rules and practice

In his report, the rights expert, amongst others, addressed the human rights impacts of the General Agreement on Tariffs and Trade (GATT) and World Trade Organization (WTO) law and practice, in particular the dispute settlement mechanism.

Mr De Zayas noted that since the third Ministerial Conference, held in Seattle in 1999, and the civil society outcry against the adverse human rights impacts of commerce, the WTO has become increasingly aware of the human rights dimensions of trade.

Since 2001, the WTO has conducted a yearly Public Forum, in which as many as 1,500 representatives from civil society, academia, business, media, Governments, parliamentarians and inter-governmental organizations share their knowledge and make recommendations on how to tap the potential for multilateral cooperation and growth and how best to implement the commitments of the Doha Development Agenda.

According to the Independent Expert, while the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) may allow some policy space to member States, allowing them to exclude from patentability those inventions that, if commercially exploited, might adversely impact human, animal, plant life or the environment, and could potentially be invoked to exclude genetically modified crops, the State's policy space is far from being ensured, and the regulatory chill may still prevent States from adopting precautionary measures.

"The priority of human rights, health and environmental protection must be spelled out," said Mr De Zayas.

He pointed out that a majority of States at the WTO's tenth Ministerial Conference from 15 to 19 December 2015 in Nairobi favoured reaffirmation of the Doha framework, yet the opposition of some developed countries blocked consensus.

"Pressure on developing countries aimed at the introduction of new issues that would undermine the promotion of the right to development were reported."

Mr De Zayas cited Saudi Arabia as indicating in a response to a questionnaire sent by him: "The WTO top priority should be concluding the DDA issues. The majority of WTO members are developing countries. A successful conclusion of the Doha Round would address developing country needs and contribute significantly to their economic growth and their integration into the global economy. Furthermore, concluding the Doha Development Round would address the trade distortions and imbalances in the WTO's various agreements, and preserve the Special [and] Differential Treatment flexibilities granted to the developing countries ... The preamble of [the] Marrakesh agreement establishing the WTO explicitly sets the objective to ‘raise standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand'."

"While promoting trade, WTO should place people before profits, and development before the expansion of monopolies," the rights expert underscored.

He cited Deborah James of the Washington-based Center for Economic and Policy Research as observing in 2015: "Despite the global consensus, the rules in the WTO remain unchanged from decades past. WTO rules do not allow developing countries that were not subsidizing in 1994 to subsidize beyond the de minimis ... amount allowed to all WTO members. Meanwhile, the United States and Europe are allowed tens of billions a year in overtly trade-distorting subsidies for exported products, and have yet to implement the abolition of those subsidies to which they agreed nearly 10 years ago."

"Implementation of those commitments would be facilitated if WTO were incorporated into the United Nations system and subordinated to the purposes and principles of the United Nations. Incorporation pursuant to articles 57 and 63 of the Charter would ensure that WTO not only actively contributes to the work of the Economic and Social Council, as it can proudly claim, but also gives proper weight to human rights as part of its own constitutional law," said Mr De Zayas.

He noted that the Nairobi Ministerial Conference reached some agreements on agricultural export subsidies, food aid and other issues.

However, the Information Technology Agreement, covering products like Global Positioning System (GPS) navigation systems and medical products such as magnetic resonance imaging machines, was primarily drafted by high income countries.

"None of the countries from the Group of Least Developed Countries was represented and only one of the lower- middle-income countries was represented," he pointed out.

"It would have been desirable and in keeping with commitments to reduce poverty to adopt a clear statement on the legitimacy of public stockholding for food security that would allow countries to hold food stocks and enable them to deal with food shortages and fluctuations in global market prices."

While some developing countries were successful in securing concessions on cotton, an important issue for West African States, the rich countries won the deal on agricultural export subsidies, which did not abolish general subsidy schemes like the European Union's Common Agricultural Policy.

Observers noted that "the uneven WTO playing field, whereby rich countries' subsidy schemes are categorized as being ‘allowable' while poorer countries are prevented from subsidizing their farmers, will continue".

Barely three months after agreement on the Sustainable Development Goals, the Nairobi Ministerial Conference failed to implement target 17.10, pursuant to which States would "promote a universal, rules-based, open, non- discriminatory and equitable multilateral trading system under the World Trade Organization, including through the conclusion of negotiations under its Doha Development Agenda".

According to the rights expert, that paradox highlights the need to rethink the global trading system and the skewed ideological approach taken by some negotiators.

One problem with the WTO, beyond Doha and Nairobi, is the prevalent vision that equates "progress" with the growth of trade volumes and exports or with a higher gross domestic product.

"The Charter of the United Nations advocates another vision of progress as development, solidarity and human rights in a progressively more democratic and equitable international order," said Mr De Zayas.

Notwithstanding press comments in the United States and the European Union declaring the Doha Development Agenda "dead", paragraphs 30, 31 and 34 of the Nairobi Declaration give reason for hope, he added.

While acknowledging the stalemate, they indicate that the Doha Work Programme is a single undertaking, meaning that Western countries cannot cherry-pick which parts to prioritize.

"It appears relevant for the developing countries to continue the struggle on the negotiating agenda of the single undertaking of that Programme. Under no conditions can any conditional plurilateral agreements, as envisaged by the United States and the European Union, be incorporated into the WTO treaty framework, except when there is a consensus on them at a ministerial conference."

Yet, at the Bali Ministerial Conference, held in 2013, the developing countries surrendered their most powerful leverage when they conceded the Trade Facilitation Agreement as a separate accord.

Mr De Zayas said that bearing in mind that that Agreement has not entered into force, one may suggest that the developing countries withhold deposit of their instruments of ratification until they secure their own demands, including Nairobi decisions on "deliverables", in a single protocol incorporating the results of the Doha Work Programme.

The Independent Expert also drew attention to a dispute settlement case at the WTO involving India's renewable energy programmes.

He noted that on 24 February 2016, a WTO dispute panel adopted a decision against the efforts of India to create renewable energy through the extended use of solar panels.

"One would think that, after the Conference of the Parties to the United Nations Framework Convention on Climate Change, everyone would support such initiatives, but WTO dispute panels seem to be caught in their own mantras and incapable of showing flexibility in accommodating the new priorities imposed by climate change," Mr De Zayas underlined.

Despite some interesting initiatives in that field, such as the WTO Committee on Trade and Environment, there is still unwillingness to interpret broadly the general exceptions provided under the General Agreement on Tariffs and Trade 1994.

According to the rights expert, the National Solar Mission of India, which aims at increasing the country's renewable energy in line with Sustainable Development Goal 7 on ensuring access to affordable, reliable, sustainable and modern energy for all, is a reasonable plan.

It would create local jobs and bring clean energy to millions by generating 100 gigawatts of solar power annually, consistent with the goals of the Framework Convention on Climate Change.

"The WTO case was brought by the United States, which challenged the domestic content clause of India, which would require part of the solar cells to be produced nationally. India unsuccessfully tried to reach a settlement with the United States and now may have to adjust its solar programme to avoid WTO sanctions," he said.

[India has appealed the decision, and in a related development, initiated a dispute against the United States on 9 September over domestic content requirements and subsidies provided by the US states of Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware and Minnesota to renewable energy companies. See SUNS #8311 dated 14 September 2016.]

Mr De Zayas cited Friends of the Earth as commenting on the case: "The WTO ruling against India's National Solar Mission shows how arcane trade rules can be used to undermine governments that support clean energy and local jobs. The ink is barely dry on the Paris Climate agreement, but clearly trade still trumps real action on climate change."

"That is paradigmatic of what is wrong with the pro-business approach to the regulatory space of States and with the so-called ‘Washington consensus' that consistently opposes industrial policy-making by States. A United Nations campaign is needed to mainstream human rights into the work of WTO and to establish clear guidelines for dispute settlement panels giving due weight to human rights, health and environmental concerns," said the rights expert.

The United Nations is the pre-eminent international organization and States should ensure it has the power to coordinate the work of all other international organizations, or at least to prevent them from frustrating the purposes and principles of its Charter.

"It is an anomaly that other organizations like WTO, the World Bank and the International Monetary Fund (IMF), as well as non-State actors, including transnational corporations, are competing with the United Nations in setting the world agenda and have a negative impact on the enjoyment of human rights by billions of women, men, children and elderly persons," the rights expert observed.

"Instead of such institutional competition, greater coordination is necessary. The twenty-first century cannot afford multiple world organizations taking the international order in different and often opposite directions."

Human rights are too important to be subordinated to mercantilism. In case of conflict, only the highest public courts can decide in the light of the totality of international law.

Until amended by States Members, the Charter of the United Nations remains the principal treaty that determines the structure and functioning of the international order.

Article 103 of the Charter of the United Nations stipulates that all treaties must be compatible with the Charter.

"To the extent that aspects of trade agreements and WTO directives hinder the achievement of the purposes and principles of the Charter, including human rights and development, they must be revised. That requires the recognition that human rights are not a barrier to trade, but that trade can be a significant obstacle to the realization of human rights," said Mr De Zayas.

"Saying ‘no' to the Trans-Pacific Partnership Agreement, the Transatlantic Trade and Investment Partnership, the Comprehensive Economic and Trade Agreement and the Trade in Services Agreement will not have apocalyptic consequences, bring world trade to a grinding halt or make FDI stop flowing."

Henceforth trade must be made to benefit all in society, not only transnational corporations.

Objectively there is no need for more free trade agreements, which hitherto have engendered advantages for few and disadvantages for many.

A corporate takeover of State functions subverts States' constitutional order and renders the fulfilment of human rights treaty obligations impossible.

"The world economy before free trade agreements and investor-State dispute settlement was certainly not business-unfriendly and it prospered through a healthy level of trade," he said.

"Binding obligations on investors and corporations must be incorporated into trade and investment agreements, and public courts must have jurisdiction to examine violations and impose sanctions on violators."

Investor-State dispute settlement

The Independent Expert's report also addresses the aggravation of the "regulatory chill" generated by investor- State dispute settlements (ISDS), and highlights that the newly proposed investment court system (proposed by EU Trade Commissioner Cecilia Malmstrom in September 2015 to replace the ISDS system) suffers from the same fundamental flaws as investor-State dispute settlement.

Essentially, said Mr De Zayas, the investment court system lacks the fundamental safeguards to ensure an independent legal system in line with the requirements of due process.

Despite some improvements, including the introduction of an appeal mechanism and the appointment of judges, the investment court system fails to address the fundamental investor-State dispute settlement problems and aggravates the situation by multiplying the number of potential claims by a factor of 10, thus increasing the regulatory chill.

"Under the investment court system, States would remain vulnerable to the same kind of frivolous and vexatious claims that have characterized the hugely expensive, slow and unpredictable investor-State dispute settlement litigation.
Important issues of constitutionality and the rule of law arise when non-State actors exercise ‘prerogative powers' beyond public control and judicial scrutiny."

Globally, 696 investor-State dispute settlement cases concerning 107 countries had been counted as at January 2016.

Owing to the opacity of the system and the non-publication of many settlements, the actual figure could be higher, said the rights expert.

Some 72 per cent of known cases were filed against developing and transition economies.

The number of cases against developed countries is growing as foreign investors, arbitrators and new treaties bring investor-State dispute settlement into new domains. The number of such cases is rising. From a total of 3 known cases in 1995, 70 new cases were registered during 2015.

According to the United Nations Conference on Trade and Development (UNCTAD), investors triumphed in 60 per cent of admissible cases.

In principle, States never "win"; all they can hope for is to be "acquitted", and even then, they recover only a portion, if any, of their legal costs, which commonly reach millions of dollars.

In Yukos Universal Limited (Isle of Man) v. the Russian Federation, the lawyers billed $74 million and the tribunal's three arbitrators took home $7.4 million. The award amounted to $50 billion.

The regulatory chill caused by the mere existence of investor-State dispute settlements has effectively dissuaded many States from adopting much-needed health and environmental protection measures.

Several mega-regional treaties involving close to 90 States are currently under negotiation, mostly in secret. They include the Trans-Pacific Partnership Agreement, the Transatlantic Trade and Investment Partnership, the Comprehensive Economic and Trade Agreement, negotiated between the European Union and Canada, and the Trade in Services Agreement.

"If they enter into force with their investment chapters, the arbitration bonanza will massively expand," Mr De Zayas warned.

States should impose a moratorium on the execution of investor-State dispute settlement awards until the entire system is tested by the International Court of Justice.

A new multilateral treaty should be elaborated stipulating that courts may not execute such awards without verifying their compatibility with human rights treaty obligations and ordre public.

"UNCTAD should convene a world conference to revise existing bilateral investment treaties and free trade agreements, abolish investor-State dispute settlement and declare the investment court system incompatible with United Nations constitutional law," the rights expert said.

By Kanaga Raja.

Source: SUNS #8312 Thursday 15 September 2016.