Trading in Human Rights:
The Need for Human Rights Sensitivity at the World Trade Organization

A Brief to the Standing Committee on Foreign Affairs and International Trade
By Warren Allmand
President, ICHRDD, Montreal, Canada, March 24, 1999

International human rights law has primacy over all other conventional international law, including that found in trade agreements. In the event of conflict between these legal regimes, human rights law prevails. For these reasons, the provisions of the WTO/GATT 1994 should be interpreted in a fashion receptive to human rights values. Further, any new trade agreements should explicitly respect human rights norms.

There are a number of areas in the present trade law regime where human rights action is being, or may be, challenged as an irritant to trade. In particular, concern has been expressed that government-promoted voluntary codes of conduct may run afoul of WTO rules. Further, human rights-sensitive government procurement is being challenged as a violation of WTO. When the legitimacy of these challenges is determined, the Canadian Government should urge a resolution recognising the primacy of human rights law and enabling countries to protect and promote international human rights to their fullest.

A similar emphasis on the importance of human rights law should underlie the Government of Canada's approach to the Millennium Round of negotiations and in particular, to the issues of labour rights and transparency at the WTO. Discussion of a social clause is both desirable and necessary for four reasons. First, an international system of regulation is desperately needed and cannot be replaced by a voluntary system of compliance. Second, the present multilateral system for protecting workers' human rights is too weak. Third, trade law now clearly deals with both products in trade and the processes by which they are manufactured. Fourth, a failure to devise such an agreement will not stop protectionism and in fact may acerbate it.

Increased transparency is required at the WTO to ensure the application of the human rights primacy principle. In particular, there must greater integration between the WTO and other multilateral bodies in trade policy development and greater access by civil society groups to WTO policy making. Further, there must be greater transparency in dispute settlement, including open dispute settlement hearings and a mechanism for interested third parties to make submissions.

As UN Secretary General Kofi Annan has suggested, failure to act on human rights and other considerations will undermine the credibility of the multilateral trading system. The continued viability and the credibility of the international trade regime depends, in part, on redressing concerns about the impact of trade on human rights.

RECOMMENDATION ONE: Where there are competing interpretations of provisions of the WTO/GATT, the Government of Canada should seek the adoption of the interpretation that recognizes the primacy of international human rights law and is most sensitive to human rights protection and promotion.

RECOMMENDATION TWO: The Canadian Government, in any future trade negotiations, should recognize the primacy of the Universal Declaration of Human Rights and promote and foster interpretations of the WTO/GATT consistent with international human rights norms.

RECOMMENDATION THREE: In order to ensure that voluntary corporate human rights codes encouraged by the Canadian Government are not subjected to WTO discipline, the Government should advocate the view that such codes are not technical barriers to trade.

RECOMMENDATION FOUR: If, because of government participation in their development and implementation, these codes are "standards" within the meaning of the Agreement on Technical Barriers to Trade, the Canadian Government should guarantee national treatment by requiring both domestic and international compliance with the code.

RECOMMENDATION FIVE: If, because of government participation in their development and implementation, these codes are "standards" within the meaning of the Agreement on Technical Barriers to Trade, the Canadian Government should take the view that, in keeping with the primacy of human rights law, promoting international human rights is a legitimate objective and not to be considered an unnecessary obstacle to international trade.

RECOMMENDATION SIX: The Canadian Government should support an interpretation of the Agreement on Government Procurement that recognizes the primacy of human rights law and permits procurement practices that encourage human rights sensitive behaviour by companies operating internationally.

RECOMMENDATION SEVEN: If the Government Procurement Agreement (GPA), as presently constituted, is interpreted a prohibiting ethical selective purchasing by governments, then the Canadian Government should insist on the re-negotiation of the Agreement to ensure the incorporation of human rights-sensitive exemptions.

RECOMMENDATION EIGHT: Until the precise scope of the GPA is established, the Canadian Government should cease negotiating for the inclusion of the provinces under the GPA.

RECOMMENDATION NINE: The Canadian government oppose comprehensive negotiations on investment being moved to the WTO until sufficient institutional safeguards are in place to ensure the primacy of international human rights law and the preservation of the ability of states to regulate investment according to their own democratically determined priorities.

RECOMMENDATION TEN: The Canadian Government should support the establishment of a Joint ILO/WTO Working Group on the relationship between Trade and "Trade-Related" International Human Rights Standards, similar to the WTO Working Groups on the Relationship between Trade and Investment and on the Interaction between Trade and Competition Policy. The new working group should examine how the WTO, in collaboration with the ILO, can contribute to improving the observance of trade-related human rights standards in particular core labour standards.

RECOMMENDATION ELEVEN: The Canadian Government should actively promote the development of a WTO social clause grappling with trade-related human rights concerns and guided by the principles outlined in this brief.

RECOMMENDATION TWELVE: At a bare minimum, the Canadian Government should ensure that the WTO grants observer status prior to the Seattle Meeting to the ILO and other specialized UN human rights agencies, in order that these agencies may attend the 3rd Ministerial and express their concerns and share their expertise.

RECOMMENDATION THIRTEEN: Civil society groups should be permitted the opportunity to present their views on a regular basis to WTO committees and the WTO should make provisions to ensure that NGOS have access to proceedings and official delegates during Ministerial and other high-level meetings.

RECOMMENDATION FOURTEEN: The Canadian Government should advocate transparency in the dispute settlement process, and should push both for open dispute settlement hearings and a mechanism allowing interested third parties to make submissions.

Thank you very much for inviting me to appear before your Committee this morning. I would like to congratulate the Standing Committee on holding these hearings, and in particular for including issues of civil society participation, human rights and labour rights as part of the terms of reference for your work. It was not so long ago, that these issues were considered completely separate from trade, to be discussed only by select representatives of the business community behind closed doors with technical experts. And while human rights have yet to become front and centre in trade discussions, they are undeniably recognized today a key part of the picture. This is true whether we are talking about the WTO, APEC, NAFTA, the FTAA, the MAI.

Let me begin by stating two fundamental premises, which are not contradictory to the approach of the Government of Canada.¹

1. We have not to choose between human rights and trade, rather we must encourage complementarities between the two.

2. Trade liberalization, increased investment flows and globalization will not in and of themselves have any automatic effect on human rights, either positive or negative. It will depend upon the conditions under which such trade flows take place.

It is therefore our responsibility, specifically yours as legislators, to ensure that the new rules that are put into place are compatible with existing international human rights standards. Globalization must not be seen as an end in itself. At best, it is a means to an end, which must be better lives for more people on this earth. There is a growing body of evidence that unfettered trade liberalization with no social standards does have a negative impact on human rights, although the precise impacts will vary from country to country. We do know, and there is now a broad consensus on this matter, that globalization has winners and losers. Despite a twelve-fold increase in trade since the end of World War Two, the poor continue to grow poorer and the rich continue to grow richer. Should the statistics require repetition, I repeat:

• The 225 wealthiest individuals on this planet have an income equivalent to 47% of the world's population
• According to the famous champagne glass develeoped by the UNDP, the 20% of the richest population consumes 82.7% of the world’s goods. The poorest 20% gets 1.4%. No surprise then that over a billion people world-wide live in absolute, abject poverty.
• Whereas in 1950, the gap between the richest and the poorest nations was 30:1, by 1980 it had grown to 60:1.

Unless we can reverse this trend, and begin to reduce the gap between the rich and the poor, both between and within countries, we will not have made progress. Any global economic regime that does not have reducing these growing inequities amongst its core objectives is missing the point. This is a human rights issue. It is obvious that we can produce more, consume more, trade more, invest more and have more money whizzing around the globe than ever before. But if that is not accompanied by reduced hunger, greater dignity for workers, and a fuller enjoyment of human rights by a greater number of people then we have mistaken the means for the end. In this presentation, I am particularly concerned with social and economic rights, more immediately related to trading rules than civil and political rights.

It has become a truism to say that our institutions of global governance are woefully inadequate. The United Nations is in important respects undemocratic. The World Bank and the International Monetary Fund are scrambling to catch up to events, redefine their mandates, deal effectively with new global crises. The International Labour Organization and UN system of human rights protection lack teeth to implement their standards and principles. Regional organizations face conflicting mandates and objectives, and sometimes inadequate or badly spent resources. All of these institutions are being forced to deal with issues of accountability, transparency and civil society participation and there are few if any ready-made models we can use. We have not yet learnt to apply democratic principles at the multilateral level.

It is not surprising in this context that the WTO is facing a plethora of new demands, and that many trade lawyers caution against it taking on new roles and responsibilities. The WTO is attractive to people interested in the social dimension of trade for one main reason: it has teeth. It is an institution equipped, however poorly, to impose sanctions on violators of its rules. And that is what is missing in the international system of human rights protection: appropriate remedies for victims of human rights abuses and sanctions for those who violate international law.

We are a long way from effective remedies for social and economic rights in general, for as you know, the International Covenant on Economic, Social and Cultural Rights still does not have an optional protocol and all to often these rights are accorded a lower priority than civil and political rights, despite the formal commitment to indivisibility of all human rights. The WTO alone cannot solve this problem. But, we must at the very least ensure that WTO rules do not constrain the ability of states or civil society groups to take action against human rights abuses (see discussion below on codes of conduct and Burma), and that human rights abuses are not effectively encouraged under WTO rules governing the liberalization of trade (what is commonly known as social dumping).

It is high time we reflected seriously on these issues in Canada. We are known and respected in many parts of the world for championing human rights. We are a trading nation. When our children and grandchildren think back to the values that we defended in the Millenium Round, will they only think of split run magazines, of export subsidies, or of our aggressive promotion of trade liberalization in areas where our economy is strong? Or will they think of Canada as a nation that defended international human rights values, that refused to put profits before principles and commerce before conscience, that began to think creatively and reconcile to objectives of global wealth creation with wealth distribution?

There is an extraordinatory opportunity in this new round to reverse the trend of the last decade where globalization became an end in itself and where its human cost was ignored. We have an opportunity to begin building the necessary international consensus to forge some form of global governance that will have mechanisms of democratic accountability at least as strong as those of the democratic nation state. We must ensure that we do not continue to erode the capacity of the nation state with no mechanisms to protect the values that citizens find important. In the brief that follows, we offer some initial thoughts on how this can be done.

We need to clarify exactly what constitutes human rights-responsible trade. In the submission that follows, we propose a series of recommendations which offer some initial steps to make trade law more human rights-sensitive. Our starting point, set out in Part I, is that human rights law has primacy over all other conventional international law, including that found in trade agreements. In the event of conflict between these legal regimes, human rights law prevails. For these reasons, the provisions of the WTO/GATT 1994 should be interpreted in a fashion receptive to human rights values. Further, any new trade agreements should explicitly respect human rights norms. Part II of this brief outlines areas in the present trade law regime where human rights action is being, or may be, challenged as an irritant to trade. It proposes that, when the legitimacy of these challenges is determined, the Canadian Government should urge a resolution recognising the primacy of human rights law. Part III applies similar considerations in proposing how the Government of Canada should approach the Millennium Round of negotiations and in particular, the issue of labour rights and transparency at the WTO. The brief concludes by urging that the continued viability and the credibility of the international trade regime depends, in part, on redressing concerns about the impact of trade on human rights.

International human rights norms rank among the most important principles of international law. Yet, increasingly, trade agreements have the effect of regulating and constraining steps taken by states to express disapproval of poor human rights performance by other nations. In many international fora, discussion of trade is accorded more importance than discussion of human rights. Liberalizing trade, in this context, is apparently higher in the hierarchy of values than admonishing human rights abuses.

The Universal Declaration of Human Rights is now commonly considered to be customary international law. As Canadian John Humphrey, one of the Declaration's key drafters, argued in 1989, the Declaration is now "binding on all states including the states that did not vote for it in 1948."² Humphrey noted in an earlier statement that, since its adoption, "the Declaration has been invoked so many times both within and without the United Nations that lawyers now are saying that, whatever the intention of its authors may have been, the Declaration is now part of the customary law of nations and therefore is binding on all states. The Declaration has become what some nations wished it to be in 1948: the universally accepted interpretation and definition of the human rights left undefined by the Charter of the United Nations.

For its part, the Government of Canada agrees that the Declaration is customary international law and an authoritative interpretation of the human rights obligations contained in the U.N. Charter. In this last regard, the principal human rights provisions of the UN Charter are found in Article 55. By this Article, the United Nations undertakes to promote "higher standards of living, full employment, and conditions of economic and social progress and development," as well as "universal respect for, and observance of, human rights and fundamental freedoms for all." Member states, under Article 56, "pledge themselves to take joint and separate action in co-operation" with the UN to reach this objective.

Some authorities have gone even further and concluded that the Declaration's principles have taken on what is known as jus cogens status in international law. According to the Vienna Convention on the Law of Treaties, these jus cogens principles are norms "accepted and recognized 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 general international law having the same character". Human rights that are customary international law are also said to be obligations erga omnes, in that all states have a legal interest in their protection. For the International Law Institute, for example, the very obligation of states to guarantee the protection of human rights is an obligation erga omnes. For the Institute, the "obligation further implies a duty of solidarity among all States to ensure as rapidly as possible the effective protection of human rights throughout the world."

On the basis of this discussion, ICHRDD takes the view that the entire Universal Declaration of Human Rights, or substantial portions of it, are customary international law. Some of these human rights norms are also jus cogens principles. At the very least, the Declaration reflects and defines the obligations state members of the United Nations have under the U.N. Charter. In addition, human rights principles reflect obligations erga omnes, meaning than some measure of horizontal enforcement between and by states, including trade remedies, is available.

To the extent that certain human rights principles are jus cogens norms, they preempt conventional and customary international law. They thus have primacy over regular treaty law. Further, there can be no doubt that the U.N. Charter takes precedence over other international agreements. Article 103 of the U.N. Charter specifies that "[i]n the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligations under the present Charter shall prevail". The emergence of the Universal Declaration as the authoritative elaboration of human rights obligations contained in the U.N. Charter means that any international agreement conflicting with the Declaration is to be subordinated to that document through the operations of Article 103. International agreement, in this context, would clearly include international trade and investment treaties, including the WTO. At present, Article XXI of the GATT indicates that nothing in the GATT prevents "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 103 of the U.N. Charter has the effect of broadening this exception to include any obligation under the U.N. Charter, including the promotion and protection of human rights.

For all these reasons, the Universal Declaration has primacy over the trade law regime. Accordingly, it is ICHRDD's view that the provisions in this regime are to accommodate the human rights norms contained in this Declaration and be interpreted in a fashion consistent with them. Recognition of this requires that the following modest recommendations be followed:

RECOMMENDATION ONE: Where there are competing interpretations of provisions of the WTO/GATT, the Government of Canada should seek the adoption of the interpretation that recognizes the primacy of international human rights law and is most sensitive to human rights protection and promotion.

RECOMMENDATION TWO: The Canadian Government, in any future trade negotiations, should recognize the primacy of the Universal Declaration of Human Rights and promote and foster interpretations of the WTO/GATT consistent with international human rights norms.

The scope and applicability of these recommendations are traced in greater detail in the sections that follow.

Under the present WTO/GATT 1994 arrangement, there are a number of issues and irritations that risk constraining the capacity of states to redress poor human rights behaviour by trading partners. First, some have speculated that voluntary codes of conduct encouraged or endorsed by governments may amount to disguised technical barriers to trade. Second, there is presently a challenge being made to human rights-sensitive "selective purchasing", or government procurement, by WTO members. In both instances, in keeping the discussion in Part I above, it is our view the relevant norms in the WTO/GATT 1994 should be interpreted so as to favour steps taken by countries to promote and protect human rights.

A. Taking Responsibility for Canadian Businesses

Globalization and economic integration have resulted in an increased involvement by Canadian companies with countries where human rights standards are regularly ignored. The question these businesses confront is to what extent should Canadian businesses operating overseas be expected to apply international human rights they abide by in their home jurisdiction in countries where they need not observe these standards? ICHRDD has long taken the view that Canadian businesses operating internationally should meet international human rights standards, including the "core labour rights".³

There has been much discussion in recent years on voluntary business codes of conduct as a means to accomplish this objective. The most detailed of these codes commit businesses to voluntarily adhere to key workers' human rights. Voluntary codes are becoming increasingly commonplace. In a recent survey of 150 US multinational corporations in sectors deemed likely to have supplier codes, San Francisco-based Business for Social Responsibility found that 25 firms had human rights codes.⁴ Another survey by Boston-based Franklin Research and Development found that roughly 10% of US multinationals had overseas human rights guidelines.⁵ A more comprehensive survey on the child labor practices of US retailers and textile manufacturers by the US Department of Labor in 1996 revealed that of 42 major textile retailers and manufacturers surveyed and willing to make public their responses, 36 had adopted some form of policy specifically prohibiting the use of child labor in overseas production facilities. Two of the respondents also had country human rights guidelines that they used to determine in which countries they would invest.⁶ Finally, a content analysis of a 1998 International Sourcing Report from the New York-based Council on Economic Priorities surveying prominent US corporations, suggests that 80 of the 145 responding businesses had codes of conduct containing labor rights standards.⁷

The proportion of corporations in Canada that have some sort of corporate code of conduct is also high, though the data are incomplete.⁸ However, a 1996 CLAIHR/ICHRDD survey of the 98 largest Canadian businesses operating internationally suggested that relatively few Canadian companies have codes of conduct dealing with the human rights impacts of their overseas operations. While 49% of the respondent companies reported possessing international codes of conduct, only 32% had codes containing some of the so-called core labor rights, while only 14% had codes containing all the core labor rights. Similarly, only 14% had any sort of provision touching on business relations with repressive regimes.⁹

Notably, many observers contend that the prevalence and effectiveness of most modern human rights codes are directly correlated to the scope of external pressures inducing corporations to abide by standards found in these codes. Discussing conditions conducive to successful code development, a March 1998 Industry Canada report noted that:

[w]hile codes are voluntary -- firms are not legislatively required to develop or adhere to them -- the term 'voluntary' is something of a misnomer. Voluntary codes are usually a response to the real or perceived threat of a new law, regulation or trade sanctions, competitive pressures or opportunities, or consumer and other market or public pressures...[O]nce the code is in place, the initial pressure that led to its creation may dissipate, which could cause compliance among adherents to taper off.¹⁰

In keeping with these observations, governments have also been active in promoting these "voluntary" codes. In the United States, the Clinton Administration has sought to defuse criticism of its failure to consider human rights concerns during its renewal of China's most favored nation trading status by promoting a model voluntary code of conduct for US businesses overseas and has played an active role in the development of the Apparel Industry Partnership, a code on overseas sweatshop labor. More recently, the European Parliament has adopted a resolution urging European enterprises operating in developing countries to develop a European Code of Conduct that would be fairly inclusive in content and robust in terms of implementation and monitoring. ¹¹

In Canada, the Department of Foreign Affairs and International Trade has hired a facilitator to try to bring stakeholders together to establish a similar process to deal with sweatshop labour in the garment and footwear sectors, and possibly others. Organizations involved -- which include companies, labour unions, industry associations and non-governmental organizations -- hope the process will result in a Task Force that will create an agreement to monitor and enforce human rights standards among Canadian companies operating abroad.

Meanwhile, in December 1998, the Standing Senate Committee on Foreign Affairs cited with approval a recommendation that the Canadian Government go even further than simply facilitating code development:

Laws should be promulgated (a) conditioning government procurement on adherence by firms to ... core labor rights in their overseas operations; (b) conditioning financial and investment support contributions by government agencies, including the Export Development Corporation and CIDA [Canadian International Development Agency], on adherence by firms to ... core labour rights in their overseas operations; and (c) requiring that adherence to these [standards] be assessed with reference to independently audited reports.¹²

Notably, the status of government sponsored codes of conduct vis-à-vis the WTO is unclear, and many advocating for these schemes, including the Sir Leon Brittain, Vice President of the European Commission, have expressed concerns.¹³ In Britain, a voluntary Ethical Trading Initiative has been endorsed and partly funded by the government. However, the government is not represented on the board for fear of the initiative being categorized as a governmental initiative by the WTO.¹⁴ Similar concerns have reportedly been expressed by Canadian governmental officials involved in the Task Force.

Operationally similar to these "ethical trading initiatives" are so-called "eco-labelling" schemes. The purpose of all these initiatives "is to create a basis for distinguishing products in the marketplace by the social and/or environmental characteristics of their production, i.e. some form of labelling or, more broadly, endorsement."¹⁵ The WTO's Committee on Trade and the Environment has commented briefly on eco-labelling mechanisms, suggesting that some labelling schemes have "raised significant concerns about their possible trade effects." While a "starting point" for addressing these concerns is by ensuring transparency and participation by interested parties from other countries, the Committee recommends further discussion of how the use of social and environmental criteria in labelling schemes should be treated under the WTO Agreement on Technical Barriers to Trade (the "Agreement").¹⁶

A "standard", in this Agreement, is a "document approved by a recognized body, that provides, for common and repeated use, rules, guidelines or characteristics for products or related processes and production methods, with which compliance is not mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a product, process or production method." This definition might conceivably extend to include an eco-labelling or a government-sponsored code of conduct initiative.

The Agreement specifies that members "shall ensure that their central government standardizing bodies accept and comply with the Code of Good Practice for the Preparation, Adoption and Application of Standards in Annex 3 to this Agreement." Further, members "shall take such reasonable measures as may be available to them to ensure that ... non-governmental standardizing bodies with their territories ... accept and comply with this Code of Good Practice."

The Code of Good Practice spells out a transparent process of standards development and urges that standard-setting be guided by international standards. Voluntary human rights codes usually do refer to existing international human rights norms and they are increasingly being developed in a transparent fashion. However, there are an additional two hurdles that a standard must meet. First, the standard must meet "national treatment" requirements. More specifically, "[i]n respect of standards, the standardizing body shall accord treatment to products originating in the territory of any other Member of the WTO no less favourable that that accorded to like products of national origin and to like products originating in any other country."

National treatment" poses a unique problem to a federally prompted ethical trading initiative in Canada, since national treatment would probably require that codes promoted by the government focus on the human rights abuses of companies operating in Canada as well as abroad. While this approach would be consistent, it might be perceived as interfering with provincial jurisdiction. Nevertheless, a precedent for such domestic human rights codes promoted by the federal government exists in the form of the Federal Contractors Program. Under this initiative, any employer with more than 100 employees bidding on a federal contract worth more than $200,000 must agree to implement employment equity in the workplace. The program applies to both Canadian and foreign contractors. The program is enforced through random compliance reviews by Human Resources Development Canada and HRDC is capable of making a finding of non-compliance. After two consecutive finding of non-compliance, and employer can be barred from bidding for federal contracts.¹⁷

The second hurdle in the Technical Barriers Agreement is that "standards are not [to be] prepared, adopted or applied with a view to, or with the effect of, creating unnecessary obstacles to international trade." The meaning of "unnecessary obstacles to international trade" is not spelled out in the Code. In the Articles of the Agreement dealing with mandatory regulations, a regulation, to meet the unnecessary obstacle requirement, "shall not be more trade-restrictive than necessary to fulfill a legitimate objective". These objectives, while not exhaustively defined, include "protection of human health or safety."

Given this discussion, ICHRDD makes the following recommendations:

RECOMMENDATION THREE: In order to ensure that voluntary corporate human rights codes encouraged by the Canadian Government are not subjected to WTO discipline, the Government should advocate the view that such codes are not technical barriers to trade.

RECOMMENDATION FOUR: If, because of government participation in their development and implementation, these codes are "standards" within the meaning of the Agreement on Technical Barriers to Trade, the Canadian Government should guarantee national treatment by requiring both domestic and international compliance with the code.

RECOMMENDATION FIVE: If, because of government participation in their development and implementation, these codes are "standards" within the meaning of the Agreement on Technical Barriers to Trade, the Canadian Government should take the view that, in keeping with the primacy of human rights law, promoting international human rights is a legitimate objective and not to be considered an unnecessary obstacle to international trade.

As noted above, included among the recommendations endorsed by the Standing Senate Committee on Foreign Affairs was a call for laws that would condition "government procurement on adherence by firms to ... core labor rights in their overseas operations". In ICHRDD's view, government conditionalities of this sort are necessary for the effective implementation of voluntary codes.

Ethical government procurement reflects a moral choice to reward ethical behaviour. This "selective purchasing" has a long history in North America. It was used as a lever on firms operating in apartheid-era South Africa and, more recently, has been used to encourage firms to divest from Burma. Investment in Burma is enormously problematic. In the words of former US ambassador to Burma, Burton Levin: "[f]oreign investment in most countries acts as a catalyst to promote change, but the Burmese regime is so single-minded that whatever [income] they might obtain from foreign sources they pour straight into the army while the rest of the country is collapsing."¹⁸

Selective purchasing laws are supported by Aung San Suu Kyi, winner of the Nobel Peace Prize, and leader of the Burmese National League for Democracy. The most notable selective purchasing law, that passed in Massachusetts, was written in response to urgings by Aung San Suu Kyi that investment in Burma be barred until the military regime - responsible for complicity in drug trafficking and directly implicated in widespread human rights violations - negotiates a peaceful transition to representative government.¹⁹ The European Union and Japan have, however, objected to US selective purchasing laws on Burma and have brought a trade challenge under the Agreement on Government Procurement (GPA) of the WTO. The focus of the challenge is the Massachusetts law that, among other things, places a 10% premium on bids to state agencies from companies that do business in Burma, and prohibits those companies from purchasing or leasing state-owned property.

While reports suggest that this challenge is suspended at present, the fact that the GPA might conceivably be used to undermine human rights-sensitive selective purchasing laws is of enormous concern to ICHRDD and many other human rights groups. It is our view that the EU complaint is merely one interpretation of the scope of the GPA. The GPA does not explicitly prohibit the consideration of political or human rights variables in procurement decisions. If it did, long-standing programs such as the Federal Contractors Program mentioned above would be impermissible. In addition, Article XXIII(2)of the GPA includes an express exemption:

Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent any Party from imposing or enforcing measures: necessary to protect public morals, order or safety, human, animal or plant life or health or intellectual property; or relating to the products or services of handicapped persons, of philanthropic institutions or of prison labour.

On the basis of this discussion, ICHRDD makes the following recommendations:

RECOMMENDATION SIX: The Canadian Government should support an interpretation of the Agreement on Government Procurement that recognizes the primacy of human rights law and permits procurement practices that encourage human rights sensitive behaviour by companies operating internationally.

RECOMMENDATION SEVEN: If the Government Procurement Agreement (GPA), as presently constituted, is interpreted a prohibiting ethical selective purchasing by governments, then the Canadian Government should insist on the re-negotiation of the Agreement to ensure the incorporation of human rights-sensitive exemptions.

RECOMMENDATION EIGHT: Until the precise scope of the GPA is established, the Canadian Government should cease negotiating for the inclusion of the provinces under the GPA.

For the so-called Millennium Round of broad-based trade negotiations, the Canadian government has identified several areas of interest to Canada. These include: reducing tariffs on industrial goods; addressing non-tariff barriers relating to standards, customs valuations and rules of origin; reducing antidumping, countervailing duties and safeguard actions; extending coverage of rules on services and agriculture; addressing developments in such areas as intellectual property; electronic commerce, transparency in government procurement; and investment and competition policy; ensuring that trade rules respect sound cultural, environmental and labour policies; and ensuring that governments retain the ability to regulate for reasons of public health, consumer safety, social policy or other legitimate public interests.²⁰

In keeping with our second recommendation, we are of the view that, in any future trade negotiations, the Canadian Government should recognize the primacy of the Universal Declaration. The human rights and democratic implications of a possible investment agreement are of particular concern to ICHRDD, given concerns expressed during the negotiation of the Multilateral Agreement on Investment and in light of data cited below regarding the attitudes of some nations on workers’ human rights and competitiveness. We recommend the following:

RECOMMENDATION NINE: The Canadian government oppose comprehensive negotiations on investment being moved to the WTO until sufficient institutional safeguards are in place to ensure the primacy of international human rights law and the preservation of the ability of states to regulate investment according to their own democratically determined priorities.

There are two other areas in which the relationship between human rights and the multilateral trade regime need to be recognized: in the context of a so-called "social clause"; and in rendering the WTO process more transparent and accountable.

Protecting Core Labour Standards

As noted in the Technical Annex to this Brief, some observers have concluded that the WTO/GATT 1994, as presently constituted, is capable of accommodating trade restraints imposed on human rights grounds. Many other commentators, mostly from developed countries, favour the inclusion of a specially tailored "social clause" in the WTO that would link adherence to labour standards with trade. A number of proposals exist regarding the actual mechanics of such a linkage. However, at present, the debate on a social clause remains focused on whether such a linkage should be forged.

High unemployment in the G7 nations is said by some to underlie calls to address the social dimension of trade. Critics of a social clause, many of whom are from the developing nations, argue that such an agreement would constitute disguised protectionism and reflect self-interest rather than a genuine concern with human rights. Supporters, on the other hand, urge that "workers, globally, should be allowed to share in the fruits of increased trade through free organization and bargaining rather than becoming victim to aggressive competition based upon arbitrary management and the state-sponsored suppression of labour rights."²¹ The international trade union movement, particularly the International Confederation of Free Trade Unions is the main proponent of the social clause.

While the debate continues as to whether debasement of workers' human rights is capable of improving competitiveness,²² there is evidence that some countries in the developing world continue to violate these rights,²³ at least in part because of competitiveness concerns. The Organization for Economic Co-operation and Development (OECD), in a 1996 study, found "evidence that some governments felt that restricting certain core labor standards would help attract inward FDI [foreign direct investment]."²⁴ In addition, the OECD has conceded that some firms may in fact respond to the cost advantages of repression. The OECD notes that "in a number of ... countries which are among the primary destination for OECD investment, the record of compliance with core labor standards is tarnished, particularly with respect to freedom-of-association rights, although to different degrees."²⁵According to the OECD, "there is no definitive evidence on the extent to which FDI responds to the level of core labor standards."²⁶ In fact, "low or non-existent labor standards may have a detrimental effect on FDI decisions. They indicate a risk of future social discontent and unrest, and include the risk of consumer boycotts."²⁷ However, "it is readily admitted that expectations of high profitability due to the economic environment provided in host countries may be able to outweigh some of the concerns foreign investors [have] about low levels of observance of core labor standard by host government[s]."²⁸ Further, while the OECD was not able to identify what impacts multinationals have on core labor rights, it did note that multinationals employ most of the workers in the world's export processing zones (EPZs). As such, "the radically lower degree of unionization in EPZs in comparison with the domestic economy as a whole could suggest that [multinational businesses] do not contribute to the improvement of the practical situation of unions"²⁹ and, one might infer from other practices in these zones, of labour rights generally.³⁰

As noted above, voluntary codes of conduct reflect one means of grappling with this problem. It is ICHRDD's view, however, that while codes of conduct represent an important development, they remain at best a partial solution to trade-related human rights issues. As was noted recently by a European Parliament Rapporteur on codes of conduct, "[v]oluntary regulation can do a great deal to promote better practice, but the worst offences will only ever be prevented through national and international laws and binding rules. Such systems can operate in parallel: binding rules to ensure minimum standards and voluntary initiatives to promote higher standards."³¹

If, as the research cited above suggests, codes are successful to the extent that the external pressures are strong, then the development and effective implementation of codes will continue to be dependent on the glare of publicity and will disproportionately affect companies with a image and reputation to protect, particularly those in the consumer goods sector. Maintaining and broadening the spotlight on the multitude of companies, and ensuring adherence to codes, will tax the limited resources of human rights and labor groups, effectively rendering many companies immune from scrutiny. Therefore, voluntary codes of conduct cannot and should not replace the development of binding international forms of regulation.

As a consequence, in ICHRDD's opinion, a discussion regarding the inclusion of a "social clause" or an "Agreement on Trade-Related Aspects of International Labour Standards" is both necessary and desirable. We offer the following reasons. First, the present multilateral system for protecting workers' human rights is too weak. The current reliance on ILO-led moral suasion and voluntary compliance results in the absence of meaningful consequences for systematic human rights abusers.

Second, the once commonplace argument that the world trade law regime deals solely with products in trade, and not the fashion by which they are produced, is no longer true. With the inclusion of the Agreement on Trade Related Intellectual Property (TRIPs), the WTO now grapples with products produced with pirated technology, but still is not able to deal with labour practices unlawful in international law.

Third, a failure to devise such an agreement will not stop the imposition of trade bans on human rights grounds. Human rights standards are valued, either per se, or as an excuse for self-interested action. The perception that countries compete via human rights abuses will continue to fuel trade-restrictive action in the developed world. In this context, the failure to grapple with the social dimensions of trade may well acerbate protectionism rather than reduce it. The United States, in particular, in recent amendments to the Tariff Act of 1930, has demonstrated an increased willingness to proscribe trade unilaterally on human rights grounds.³² Given our view on the primacy of human rights law discussed above, it is our opinion that such unilateral action may well be lawful, if it meets the public international law requirements set out in Part I. However, it may not be desirable. The inevitable unilateral trade sanctions outside the confines of the WTO will undermine the WTO's credibility and effectiveness and will remain a blunt instrument for effective human rights change. Multilateral rules, aiming to enforce international standards, are much more desirable.

As a consequence, we endorse the call for some attempt to grapple with the social dimensions of trade in the WTO framework. In particular, we make the following recommendation:

RECOMMENDATION TEN: The Canadian Government should support the establishment of a Joint ILO/WTO Working Group on the relationship between Trade and "Trade-Related" International Human Rights Standards, similar to the WTO Working Groups on the Relationship between Trade and Investment and on the Interaction between Trade and Competition Policy. The new working group should examine how the WTO, in collaboration with the ILO, can contribute to improving the observance of core labour standards.

It is our view that any social clause that emerges at the WTO should be governed by the following considerations. First, because of the nature of the WTO and its mandate, the social clause should grapple with a basic array of "trade-related" human rights; specifically, the five "core" labor standards found in ILO and UN conventions. These are: freedom of association; the right to collective bargaining; non-discrimination in the workplace; a ban on child labor,³³ and; a ban on forced labor. In May 1995, the Director-General of the International Labor Organization launched a campaign calling for universal ratification of the conventions containing these core standards. Labelled "fundamental principles" by the ILO, these four standards were invoked in the June 1998 ILO Declaration on Fundamental Principles and Rights at Work, a call by the 86th Session of the International Labor Conference for all ILO members to ratify the conventions containing these rights. In fact, the International Labor Organization and UN conventions in question are widely, though not universally, ratified by the states of the world.³⁴ It is these broadly affirmed rights that are increasingly being viewed as the minimum labour rights baseline.

Second, the social clause should recognize that some violations of core labour rights reflect the pervasiveness of poverty in the developing world. Child labour is a key case in point. Where violations of these rights reflect pervasive socio-economic problems, a social clause must include nuanced compliance mechanisms. The TRIPs Agreement includes, in Article 66, a ten year phase in period of least developed countries, while Article 67 provides for technical co-operation in the development of relevant laws and standards. A similar approach might be appropriate with regard to underage labour. However, it is ICHRDD's view that differential levels of development cannot excuse use of exploitative child labour (a term being defined at present at the ILO), forced labour, discrimination in the workplace or violations of freedom of association rights.

Third, in keeping with the poverty-related dimensions of human rights abuses, discussions of a social clause should be complemented by the strengthening of both multilateral and bilateral assistance to developing countries, enhancing their domestic workers' human rights monitoring and enforcement capacity.

Four, breaches of these core labour standards must bear some sanction, if requirements that these rights be met are to have any meaning. However, any remedies for the breach of these core labour standards should be narrowly focused to the industry, or even company, implicated and should be prefaced by a probationary period giving the target of any sanctions mechanism an opportunity to make improvements in core labour standard.

RECOMMENDATION ELEVEN: The Canadian Government should actively promote the development of a WTO social clause grappling with trade-related human rights concerns and guided by the principles outlined in this brief.

In the interim, some effort should be made to include consideration of trade-related human rights in the WTO Trade Policy Review Mechanism (TPRM). All members countries are subject to the TPRM. The objectives of the TPRM include facilitating the smooth functioning of the multilateral trading system by enhancing the transparency of Members' trade policies. As the International Confederation of Free Trade Unions has noted, the "TPRM is potentially a powerful tool to ensure that member states follow WTO rules and it is gradually developing its methods of exercising pressure on WTO members under review." ICFTU has submitted "44 reports on the observance of core labour standards to the WTO trade policy review mechanism. They are politely acknowledged by the WTO and on many occasions have been used by delegates, although others have argued that they are inadmissible in WTO meetings. The ICFTU reports thereby serve as a regular reminder of the need to address the relationship between core labour standards and trade."³⁵ We concur with the thrust of ICFTU recommendations that the TPRM be restructured to include trade-related human rights concerns as integral part of the reviews.

The Need for Transparency

As noted by former Canadian trade official Peter Clark, "Trade and investment issues are now as much discussed at the kitchen table as in boardrooms."³⁶ This phenomenon was amply demonstrated by grassroots opposition in Canada and elsewhere to the proposed Multilateral Agreement on Investment. It has become clear that those most affected by trade agreements will continue to demand a more open process for formulating these agreements, and increased transparency in trade proceedings.

ICHRDD is concerned that if the human right primacy principle set out here is to be observed, the WTO process must be more open to civil society and to other stakeholders, including the multilateral agencies such as the ILO. It is this civil society and these agencies, after all, that have been instrumental in raising the profile and significance of human rights and human rights law. To this end, there must be ample opportunity for citizen and stakeholder participation at the WTO. Transparency and accountability must be the rule rather than the exception. This must hold true for the entire process, including the negotiation of trade agreements, the establishment of benchmarks and technical standards, and the settlement of disputes. However, while the WTO has made some improvements in certain specific areas -- most notably the availability of documents relating to dispute settlement on its web site -- the body is still by and large secretive and closed to citizen participation.

Transparency in WTO Policy-making

The history of trade agreement negotiations is not a proud one with respect to citizen participation. The agenda behind the Uruguay Round was widely seen as being set by industrialized countries, and the process by which it was negotiated remained closed and secretive. The result has been that the trade negotiations process is tainted by a widespread perception that it is merely a vehicle for powerful and wealthy interests, a view reinforced by conflicts of interest among trade panelists and technical advisors.

This problem appears to stem from a deep-set culture of secrecy and exclusion. One WTO official recently quoted in the Financial Timeswent so far as to state that the WTO "is the place where governments collude in private against their domestic pressure groups. Allowing NGOs in could open the doors to ... all kinds of lobbyists opposed to free trade."³⁷ While this thinking may not be pervasive among delegations such as Canada's, the WTO will never gain respectability until there is meaningful participation in trade negotiations by civil society organizations. As one observer puts it, "... the notion that the international trade regime should be a buffer between the makers of trade policy and the public is an elitist view that should not find refuge in liberal governance."³⁸

It is worth noting that 50 years ago, when the original pillar of the trade system intended by the framers of the GATT -- the International Trade Organization -- was being formulated, the Interim Commission Secretariat -- the predecessor to the GATT Secretariat -- prepared a report for the first ITO Conference which identified procedures for NGO involvement in the ITO. Among other things, this proposal recommended that: "(1) appropriate NGOs be listed as consultative organizations; (2) these listed organizations be invited to ITO Conference sessions; (3) NGO representatives be able to make statements on items on which they had submitted reports, and on other items at the discretion of the chairperson; and (4) these organizations receive ITO documents as necessary for effective consultation."³⁹ It seems likely that member governments would have adopted these measures if the ITO had come into existence. For its part, the WTO, in Article V(2) of the Final Act, provides that "[t]he General Council may make appropriate arrangements for consultation and cooperation with non-governmental organizations concerned with matters related to those of the WTO." We agree with statements made by observers that "the straightforward nature of this provision, and its similarity to the original provision in the ITO, make it difficult for WTO members to argue convincingly that the WTO is different from other international organizations in its ability to institutionalize NGO participation."⁴⁰ As in other areas of international law, NGOs can facilitate trade negotiations and WTO policy-making in several ways: "by providing expert information, serving as a sounding board for possible compromises, injecting new ideas into a substantive debate, securing public support necessary for parliamentary approval, and serving as monitors to enforce governmental commitments."⁴¹

We are also concerned that the other multilateral agencies whose areas of competence are affected by trade agreements are not closely linked into the WTO process. Notably, Article XXIII(2) of the GATT provides that the WTO may consult with Members, as well as "with the Economic and Social Council of the United Nations and with any appropriate intergovernmental organization in cases where [it] considers such consultations necessary." It seems appropriate to broaden this provision to provide for the more formal participation of other multilateral agencies in WTO policy-making. We certainly would not want to see a repeat of the 1996 Ministerial meeting when the Director General of the ILO had his invitation to speak to Ministers revoked.

To reach these objectives, we make the following recommendations:

RECOMMENDATION TWELVE: At a bare minimum, the Canadian Government should ensure that the WTO grants observer status prior to the Seattle Meeting to the ILO and other specialized UN human rights agencies, in order that these agencies may attend the 3rd Ministerial and express their concerns and share their expertise.

RECOMMENDATION THIRTEEN: Civil society groups should be permitted the opportunity to present their views on a regular basis to WTO committees and the WTO should make provisions to ensure that NGOS have access to proceedings and official delegates during Ministerial and other high-level meetings.

Transparency in the Dispute Settlement Process

In recent years, trade panels have been deciding ever more sensitive issues of public welfare, including health, social, cultural and environmental issues. With the scope of issues rapidly expanding, there are pressures on the WTO to take on an even wider mandate, including broader investment issues, competition issues, and other regulatory matters. However, the process of trade dispute settlement has remained largely secretive, and those most affected by disputes are not formally represented at panel hearings. As noted by Peter Clark, "Determining the fate of stakeholders on important issues behind closed doors and denying them the right to their counsel of choice undermines the credibility of and support for the system."⁴² Consider that submissions made to dispute resolution panels are confidential, and are only released when state members chose to do so. Even if members release there submissions, the Dispute Settlement Understanding precludes "a party to a dispute from disclosing statements of its own positions to the public. Members shall treat as confidential information submitted by another Member to the panel ... which that Member has designated as confidential." The panel proceedings themselves are in camera. In addition, written versions of oral statements made before the dispute settlement panels are not entered into any WTO document series, are treated as confidential and are not made public. Any oral or written questions and answers made at the panel hearing are not entered in any WTO document series and are treated as confidential.⁴³

We agree with comments made by observers that "a closed dispute resolution process will undermine popular support. The general public of a country that loses a WTO dispute will be more apt to cooperate with the required legislative change if the WTO dispute resolution process seems fair."⁴⁴

The Government of Canada’s position on transparency is set out in its submissions to the High Level Symposium on Trade and Environment, March 1999:

To promote greater understanding among civil society of developments at the CTE and other WTO fora, Canada has made proposals calling for the unrestricted circulation of agendas prior to meetings, the speedier derestriction of WTO documents (including the minutes of meetings and the reports of dispute settlement Panels) and more outreach by the WTO Secretariat. Canada has a general policy of issuing its papers at the WTO as derestricted documents and hopes that WTO Members can achieve consensus as soon as possible on the adoption of more open document derestriction and circulation policies. With respect to dispute settlement, in addition to calling for WTO members to agree immediately to the faster derestriction of Panel reports, Canada is seeking to enhance transparency in the context of the ongoing review of the Dispute Settlement Understanding (DSU) by, for example, proposing that Members make WTO Panel and Appellate Body submissions publicly available on a timely basis, and to consider making an adjustment to the DSU that would require Members to release public versions of submissions. ⁴⁵

While these are positive proposals, they do not go as far as those changes recommended by the EU. The EU also recommends making all arguments put to trade panels available to the public. But transparency and accountability must include a right to participate by those most affected by the decisions being made in the dispute settlement process. In this regard, the EU advocates allowing either open hearings before panels or to allow "interested third parties to express their views to the panel." There is no compelling reason why this is an either-or proposition. It is a right essential to fundamental justice that important hearings must, as a general rule, be open to all. It ensures transparency, openness, and public confidence in the process. The right to participation by those with an interest in the outcome of a dispute is equally important, but addresses an additional concern: that non-governmental bodies may have expertise and perspectives that contribute to the quality of the decisions made. In some instances, these perspectives may not be reflected by governments.

Currently, trade panels only allow civil society third parties to make submissions as part of a country’s submissions, and these submissions are given weight only to the extent that they support that country's arguments.⁴⁶ As a result, there is little room in dispute settlement panels for the arguments of ordinary citizens or groups that may represent views other than those of the governments involved. The interests of a government may not always coincide with some or even most citizens. These citizens should not be denied a forum to have their points of view heard.

Given these observations, ICHRDD makes the following recommendation:

RECOMMENDATION FOURTEEN: The Canadian Government should advocate transparency in the dispute settlement process, and should push both for open dispute settlement hearings and a mechanism allowing interested third parties to make submissions.

In this brief, we have outlined only some of the major human rights challenges that the world trading system will face over the coming years. If building an international trading system is meant to improve the lives of people, then the world must recognize the primacy of international human rights law over trade regimes as we have outlined in this brief. For too long, a good half century, these two bodies of law have operated in isolation from each other. Canada can credibly defend the primacy of human rights at the next Ministerial meeting of the WTO and that is what we propose you recommend to the Minister and your Parliamentary colleagues.

There are a number of human rights issues we have not dealt with in this brief that are trade-related and would merit more attention. The Centre expects to refine its research on these topics over the coming year and will be pleased to share its conclusions with the Government of Canada and the members of the Standing Committee. Today I would simply like to signal them as important issues on which we have not yet fully developed our positions.

1. The trading system must better serve the needs of developing countries by improving market access, providing technical assistance and encouraging fair prices on commodities. It should not be assumed that liberalization will automatically lead to economic growth or a better distribution of wealth. Developing countries must be able to strategically develop whatever sector of their economy they choose in accordance with national and international social and environmental norms. The international trading system should assist rather than hinder this process.

2. We have not focused on the gender-specific dimension of the world trading system although clearly there are specific impacts on women as a growing body of research is demonstrating. Canada needs to assess the impacts its trade policies will have on gender equality, paying particular attention to women workers, migrant workers and rural women in developing countries.
3. The international trading regime also has specific impacts on indigenous populations in terms of their access to land, traditional rights and other matters. The ICHRDD is particularly concerned that the WTO has no means of protecting the intellectual property rights of indigenous knowledge and genetic heritage which are held collectively by indigenous communities through century-old traditions.
4. The inclusion of agriculture in the next round will clearly have important implications for development and food security and therefore have human rights implications. The primacy argument articulated in Part one of this brief applies naturally to this question. Clearly the right to food for all people around the world must be given precedence over the rights of a handful of large agribusinesses to expand their markets. This question is of concern to many of our partners in the developing world.

Thank you for this opportunity to appear before the Committee.

NOTES