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Introduction

International trade is not a new phenomenon. The massive opening of world markets, the rapid growth of capital export and the intensification of commercial trade between 1870 and 1914 lie behind the systematic comparison with the current process of globalization; in the meantime, the neoclassical economic theories set up the theoretical frame to defend a world-wide free trade. One could mention for instance that the proportion of direct investments in the GDP is barely higher today than it was then; it is also during the prewar era that large international groups started forming.

Nevertheless, globalization as it is currently happening (especially since the end of the world’s political bipolarity), characterized by financial globalization, large private firms taking over the global process of production, and the interdependency of economies, induces a substantial change : whereas international economy in the early 20th century rested upon the development of the relations between national economies, today’s globalization consists more in the decomposition of the instances of national regulation, in the perspective of an organic, integrated development. The nation-state is losing its sovereignty and its power - which means that a vital importance is conferred upon international institutions in charge of global regulation, among which the WTO.

Above all, the FIDH considers that the current rhetoric of an "inevitable" globalization, which would force the States to comply with the demands of an unforgiving competition and the tyranny of a supposed " trade war ", at any social cost, is illegitimate and needs to be refuted. The " current discourse concerning globalization and economic war justifying the elimination of the Welfare state and the idea of a collective good, in the name of a law of the markets, of individualism and the necessary privatization of pension, insurance, education and health systems " (1) should not be accepted at a time where the expansion of world markets and the increasing importance given to efficiency, create an environment in which the primacy of human rights risks being jeopardized, and the notion of public good, amputated in favor of a private regulation of social problems.

Globalization, as a process of interaction and negotiation involving multiple powers, should not lead to the primacy of the so-called " law of the market " over and above the common values of mankind, first and foremost human rights for all.

This holds for developed countries as much as for developing countries. During the UN Conference on Human Rights, held in Vienna in 1993, it was clearly stated that no argument, not even that of development, could justify a restriction of rights and freedoms. The so-called imperatives of growth can under no circumstances legitimate the failure of States to comply with their international obligations in the field of human rights. Incidentally, all indicators tend to show that economic mechanisms are more efficient when human rights (be it civil and political rights, or economic, social and cultural rights) are respected and protected.

In a process characterized by the multiplicity of decisional centers and instances of regulation, it is paramount to remind all implicated agents of their responsibility - be it States, transnational corporations, or international institutions, among which the WTO, in order to prevent free trade from becoming an end in itself instead of aiming at sustainable development, general prosperity and the realization of human rights as defined by the Universal Declaration of 1948 and subsequent international instruments. The UNGA has acknowledged this principle in its 1986 Declaration on the Right to Development, which stated that " the human being is at the center of development ".

In the UNDP’s words " markets are not the touchstone of human development (...). Globalization should serve individuals and not just profits " (2).

Inequalities and situations of chronic under-development, new forms of massive violations of human rights, provoked or aggravated by the rapid opening up of markets, require that the process of liberalization be controlled and subordinated to a rule of law.

One can briefly mention these inequalities. Today, 1,3 billions individuals live with a daily income of less than 1 US$ a day. According to the World Bank, the average annual individual income world-wide are spread on a scale from 1 to 400, with Ethiopia, Mozambique and Rwanda at the bottom, and Switzerland on top : which means that the average daily income of a Swiss equals the average annual income of an Ethiopian. According to the UNDP, the trend is towards an aggravation of these inequalities: the share of the world's poorest 20% went from 2,4% of the world's total income in 1960 to 1,1% in 1994 ; conversely, the share of the wealthiest 20% went from 69% to 86% over the same period. In the 1990s, more than 80% of foreign direct investment in developing countries benefited a mere 20 countries, essentially China. Moreover, the net flows are negative for 9 countries. UNCTAD estimates that the least-developed countries will lose between 163 and 265 millions US$ in export income as a consequence of the implementation of the Uruguay Round Agreements, whilst they will have to shoulder an extra bill of 145 to 292 millions US$ in order to finance their alimentary imports. One could also add that free trade has led to a progressive dismantlement of the Welfare State, which in turn has entailed the increase of inequalities within developed countries.

Globalization can hence be said to be an unbalanced process; if some countries have benefited from the growth in world trade, some others have become increasingly marginalized. Trade may undoubtedly open up many a new economic possibilities, create new jobs and lead to new incomes - but it can also eliminate them. The relationship between the liberalization of trade and development is in no way direct and unilateral, as the examples of Mali and Russia illustrate. Not only is it clear that one cannot expect free trade to solve the problems of development in and of itself, but it is clear that sustainable development hinges on a multitude of parameters. In this respect, the importance of sound public economic policies should not be under-estimated.

The manner in which trade is regulated, wealth is distributed and goods are produced is therefore of the utmost significance. What is currently at stake is the whole orientation of globalization: towards sustainable development and human rights for all, or the financial enrichment of a few ? The WTO thus has a major role to play, insofar as the theory of the "invisible hand" (according to which private economic activities automatically and spontaneously foster general prosperity, without the intervention of public authorities) has shown its impotence: a supranational, multilateral, public body is required to regulate commercial trade according to a rule of law, on the basis of mutual and fair agreements.

The FIDH thus considers that a public international institution is indispensable in order to regulate international trade flows on a fair basis, with a view to the general improvement of human rights and sustainable development.

One cannot leave liberalization in the sole hands of corporate entities - a fortiori when one considers that the 10 largest transnational companies hold assets worth three times the total GDP of the poorest 38 countries (China and India excluded).

The legitimacy of the WTO hinges on its fully integrating the goal of human rights and sustainable development for all. Indeed, in spite of a reference to "sustainable development" in the preamble to the founding pact of the WTO, one cannot but notice that, up until this day, the WTO has concentrated on an extremely narrow mandate of liberalizing trade, with no attention given to the broader social, economic and political context, and without fully weighing the potential negative impact its policies could have on human rights.

In its present form, the international system of regulation tends to hold growth, with trade as its kernel, as sole criterion for economic development. It is true that trade can help improve the situation of populations in some countries - nevertheless, there is a major risk of seeing human rights neglected and leveled down.

It is therefore crucial that the WTO helps create the fair conditions without which international trade is bound to lose all legitimacy, and integrates the frame defined by the UN Charter, aiming at the full realization of indivisible and interdependent human rights for all.

When one considers the statutes, the mandate, the mechanisms and the policies of the WTO, one cannot but acknowledge that the organization still lags very far behind this objective. The WTO needs to be renovated, reformed, broadened, made more transparent and more democratic.

 

 

CHAPTER I
THE PRIMACY OF INTERNATIONAL HUMAN RIGHTS LAW

 

Nowhere in their institutional or substantial aspects do the set of Marrakech Agreements make any reference either to the concept of human rights or to international human rights covenants.

Apart from a more than cryptic reference to the notion of sustainable development in the preamble to the founding pact of the World Trade Organisation (3), nothing can be found in the details of the Agreements that calls to mind the primacy of international human rights law.

The hidden agenda of those governments subscribing to the agreements is therefore quite clear: it comes down to freeing trade flows through contractual arrangements. The WTO member states’ undisguised intention is to abide by nothing but trade agreements, in the name of this most sacrosanct of principles – contractual freedom (i.e., one can be held only to what one has agreed to) - a stance that blatantly negates the primacy of international human rights law over trade agreements. The implementation and construction of the agreements actually confirms this statement. And yet, a world-wide consensus undoubtedly exists on the primacy of international human rights law over international trade arrangements, most notably with regard to the legal status of those instruments that set them out.

Moreover, it takes only a closer look at the Agreements to realize that some member states, through a variety of ways, have built in a moral or ethical dimension whereby, if only informally, they recognize the superior status of certain universal moral principles over any clauses purporting to ease international trade flows. Therefore, whenever a case calling for interpretation of any such clause is referred to the WTO’s Dispute Settlement Body (DSB), it will be up to this body to widen the material scope of these clauses in order to reintroduce, if only through the back door, the notion of the primacy of fundamental human rights and of the necessary consistency of trade agreements with these.

1. THE PRINCIPLE OF THE PRIMACY OF INTERNATIONAL HUMAN RIGHTS LAW

The Universal Declaration of Human Rights (UDHR) is the starting point of our line of reasoning. We shall focus on its legal status first (A) before we turn to the link between the UDHR and the UN Charter - since human rights obligations under the UN Charter are detailed in the UDHR.

A. The Universal Declaration of Human Rights: A superior standard

1. The legal standing of the UDHR

The standing of the UDHR in the international legal framework is a special one - its is, at the very least, a principle of international customary law if not a peremptory norm (jus cogens) of international law.

Constant references to the high status of the UDHR in multilateral discussions within the UN or other fora, the fact that a number of international treaties mention it as a fundamental source and that it features in the legislative and judicial proceedings of a good many countries, all go to show that the UDHR has become part and parcel of international customary law. As one of the most prominent authors of the bill once wrote : ‘’Today the bill is binding on all countries, including those which did not approve it in the first place in 1948.’’ (4)

Moreover, norms that are part and parcel of international customary law are deemed as binding ‘’erga omnes’’, which means that all states have a vested legal interest in the protection of such rights.

Some authors go further and consider the UDHR as a binding principle of jus cogens within the meaning of Article 53 of the Vienna Convention on the law of treaties.

2. The scope of the UDHR

In its last paragraph of its preamble, the UDHR refers to itself as "a common standard of achievement for all peoples and all nations, to the end that every individual and every organ of society (...) shall strive to secure their universal and effective recognition and observance.’’

The above paragraph clearly means that human rights promotion is not confined to governments only. A comprehensive view would indeed end up with a requirement that any individual or institutional action that failed to condone or uphold basic liberties must be opposed. This commitment similarly applies to multilateral institutions as well as to transnational corporations (5).

B. The UN Charter, human rights abidance and the UDHR

1. Universal human rights abidance as a founding principle of the UN Charter

In its very first article, the UN Charter establishes human rights protection as a basic principle as well as a prominent way of furthering the fundamental goals of the United Nations.

Article 55 (c) of the Charter provides that the United Nations will further ‘’universal respect for, and observance of, human rights and fundamental freedoms for all without distinction as to race, sex, language, or religion.’’

Furthermore, under Article 56, "all Members pledge themselves to take joint and separate action in co-operation with the Organization for the achievement of the purposes set forth in Article 55.’’

2. The primacy of commitments under the Charter over any other international agreement

Clearly, therefore, United Nations member states must uphold human rights. Article 103 of the Charter upholds the pre-eminent status of this commitment. It provides that "in 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.’’

3. The link between the Charter and the UDHR

Since the pledge to observe human rights prevails over any other obligation under any other international agreement, the nature of this ‘’pledge’’ must be specified. This is where the UDHR re-emerges. Indeed, the UDHR was drawn in order to specify the general obligations included in the Charter. This is because in an effort to steer clear from dilatory controversies, the authors of the Charter did not attempt to specify those rights but left it to the new organization to elaborate a declaration to this effect.

The FIDH therefore considers that, in view of its superior standing in the international legal framework, the UDHR prevails over any trade agreement and that it is for every WTO member state as well as to that institution as such, to observe the fundamental principles of human rights - and even promote their development. The FIDH considers it essential that the validity of commercial treaties be subordinated to the respect of human rights. In this respect, the norms set out in the UDHR must be seen as standards.

To this end, the FIDH calls for the inclusion of a ‘’human rights clause’’ in the preamble of each of the (institutional and substantial) Marrakech Agreements that would lay down the principle of unconditional observance of the international human rights standards included in the UDHR.

2. THE PRINCIPLE AS APPLIED BY THE WTO

So far, the WTO and its membership are hardly concerned by these principles. Human rights are perceived as a hindrance to trade liberalization. At the most, they emerge in a roundabout way whenever they represent ‘’unfair advantage’’ or ‘’technical barriers to trade.’’ Human rights are therefore only considered in an indirect connection with the facilitation or hindrance of trade liberalization. This means that the scale of values has been completely overturned. At this day, with the WTO, trade is not required to conform to fundamental human rights; rather, the reverse is true.

And yet, some provisions in the Agreements implicitly recognize the superior standing of certain universal values (A). These provisions are the gaps which the Dispute settlement body should enlarge if it is to further observance of these values (B).

A. Existing provisions

1. In the Preamble

The first paragraph of the Preamble to the Agreement provides that ‘’relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand’’.

As for Article 55a of the UN Charter, it provides that ‘’the United Nations shall promote higher standards of living, full employment, and conditions of economic and social progress and development’’.

Therefore the authors of the Agreement establishing the WTO were keen, in the preamble, to make a clear reference to Article 55 as mentioned above, which means that in fact, they recognized that WTO rules were subordinated to the principles of the UN Charter.

The reference to sustainable development is worth dwelling upon :

Relations in the field of trade and economic endeavor must allow for ‘’the optimal use of the world’s resources in accordance with the objective of sustainable development.’’

This is another instance where the WTO preamble refers to a concept developed by the United Nations and, more particularly, the UN Development Program (UNDP).

2. General exceptions

1. Article XX, GATT 1994

Every country is entitled to take any measures required for the protection of its public order. In this perspective, the provisions in article XX allow a WTO member state to implement measures which are in breach of GATT 1994. Any such measure taken must however be necessary, non-discriminatory, and must not be a disguised restriction on international trade (heading of Article XX).

Article XX allows specific exceptions in the following cases:

• protection of public morals (sub-paragraph a)
• protection of human, animal or plant life or health (sub-paragraph b)
• exceptions concerning products made in prisons (sub-paragraph e)

Therefore it would seem that all these areas combined define the notion of public order. Maintaining public order is a key function of any state, and it is therefore accepted as such by international law.

b) Article XIV of GATS

The bulk of article XX is included in Article XIV of the General agreement on trade in services (GATS). Protection of public morals, of public order and of human and vegetal life are mentioned again. Public order may be invoked whenever ‘’a genuine and sufficiently serious menace weighs on one of society’s essential interests.’’

GATS also allows for further exceptions such as those based on the privacy of individuals and confidentiality of individual records and accounts.

c) AGP (Agreement on government procurement)

Here again, Article XXIII provides for a number of exceptions based on protection of 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 labor.

3. Exceptions based on security reasons

Furthermore, both GATT (Article XXI) and GATS (Article XIV bis) include a general exception which provides that:

"Nothing in this Agreement will be construed (…) to prevent any Member from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.’’

 

B. The driving role of the Dispute settlement body (DSB)

As decisions have been increasingly difficult to make because of the rule of consensus, case law has taken on a growing role ; it has truly become a source of law. The FIDH hence considers that a positive evolution in the field of human rights could occur within the DSB, in particular thanks to the notion of "evolutionary definition", which would allow to interpret the principles included in the preamble in a direction more favorable to human rights.

1. A potential way forward

The mechanism for dispute settlement has as its objective to ‘‘preserve the rights and obligations accruing for Member states from the covered agreements.’’

Beyond this claim, a number of provisions and exceptions could and should make it possible to reverse the trend, in order to subordinate trade agreements to universal principles. In this way, the mechanism for dispute settlement could make it possible to reach beyond the principles and rules set out in the WTO agreements. Indeed, as two French academic experts, Dominique Carreau and Patrick Julliard, wrote:

‘’The recommendations and suggestions from the Panels and the Appellate body are bound to set guidelines for Member states’ practice and, therefore, to shape the consuetudo (code of rules) that is a prerequisite for the emergence of widespread custom in the area of international trade. The opinio juris will accrue by default if, when abiding by such practice, members feel they are observing the principles and conventional rules that provide its foundations. Therefore, there are very strong reasons to expect that if we must go beyond the Marrakech Agreements, international custom will provide the best, if roundabout, way.’’ (6).

A couple of cases have helped set a precedent as they broke into the otherwise bunker-like Marrakech Agreements.

1. The ‘‘Standards for gasoline’’ case (7)

In this ruling, the Appellate Body referred to Article 31 of the Vienna Convention on the law of treaties. The Body stated that "this general rule of construction has become a rule of customary or general law. As such, it belongs to a set of rules of international public law which the appellate body is under instructions to enforce (…) To some extent, such instructions come down to a recognition that the General Agreement must not be read in clinical isolation from public international law.’’

The Appellate Body thus implicitly recognizes its power to assess the validity of certain measures in terms of public international law. In so doing, it shifts away from the narrow boundaries of the treaty, and broadens the body of rules it may resort to in order to assess any particular situation.

On this basis, the Appellate Body might, like any other panel, call upon the principles set out in the UDHR or in any other relevant international instrument (e.g., the 1966 Covenants) in order to motivate a decision to censure a commercial behavior found to be in breach of certain fundamental principles.

2. The Thai tobacco case

This case took place in 1990, a time when GATT still was the institution in charge of managing the agreements, but it set a major precedent.

This was the first time indeed that a panel consulted the World Health Organization (WHO) over a trade issue linked to public health. Whilst GATT censured Thailand’s efforts to prohibit cigarette imports, it did on the other hand recognize that, detrimental as it was to importers’ interests, the prohibition of advertising in favor of cigarette sales was warranted on grounds of public health.

The circumstances of this case go to show how the appellate body and the panels might work together and in a more systematic way with UN specialized agencies. Better awareness of any potential detrimental effects on fundamental rights might encourage such bodies to broaden the scope of the general exceptions set out in Articles XX of GATT and XIV of GATS. (8)

A more restrictive case law would indeed void of any meaning the notion of public order, the very definition and protection of which are crucially incumbent on the state, thereby depriving the latter of an essential instrument for its own national policy and management purposes.

3. The turtle/shrimps case

In this particular case, the members of the Appellate body used the concept of an " evolutionary definition " to consider turtles as a " non renewable natural resource " under article XX of GATT.

The piece of case law clearly shows that " judges " allow themselves wide-ranging powers of interpretation. It is therefore up to civil society to persuade them to orient any interpretation in a direction more favorable to human rights.

2. A limited evolution

There is no doubting the efficiency of the dispute settlement mechanism. However, the dispute settlement body will intervene only when a member state considers that any of the benefits deriving from the covered agreements is being jeopardized.

This exposes the limitations of the system, which must not serve as an alternative mechanism to censure disregard of economic and social rights for which no adequate international forum exists. The risk would indeed be that international relations would end up being too markedly tainted by trade-related considerations.

To conclude, the FIDH considers that in order to subordinate the WTO to the principles set out in the United Nations Charter, the Universal Declaration of Human Rights and any other relevant instrument, the WTO must be brought into the United Nations system as a specialized agency.

Moreover, and since its ambit reaches beyond the strict boundaries of trade issues, the WTO must develop cooperation with other international institutions with a view to harmonizing international rules and regulations (8).

 

CHAPTER II

THE WTO AS AN INSTITUTION: UNFAIR, OPAQUE AND UNDEMOCRATIC

 

As things stand, there is every good reason for concern in view of the WTO’s inadequacies, of which there are several sorts, both structural and substantial. On the one hand, the very institution of the WTO raises serious questions in terms of its responsibility, fairness, accountability and of its democratic supervision. On the other hand, the sector-specific agreements lay serious threats over a number of fundamental rights. .

1. Mock democracy and lack of fairness in international relations

The WTO today has 135 member states. Whereas in other major international economic institutions, votes are weighted pro rata against individual countries’ shares in the capital (known as the ‘’one dollar, one vote’’ rule), the WTO provides that ‘’each member of the WTO shall have one vote’’ (Article IX-1 of the Agreement establishing the WTO) – this is known as the ‘’one country, one vote’’ rule.

Moreover, decision-making is by consensus (Article IX-1), meaning that an agreement is adopted from the moment ‘’no single member, among those represented at a meeting where a decision is made, formally opposes the proposed decision’’; otherwise, decisions are made by a majority of the votes cast. Equality of status among member states is a fundamental principle of the WTO.

Thus, the WTO can formally be called a democratic institution where developing countries, which outnumber developed countries by a multiple of four, ought to be in a strong enough position to secure fair arrangements that take into account the special issues linked to development. But in fact, whether one considers the dispute settlement procedures, the mechanisms for implementing agreements or the areas selected for negotiations, one comes to realize that the WTO structure is heavily tilted in favor of developed countries, such that developing countries are, de facto, kept away from decision-making mechanisms and from policy-making; similarly, their own specific problems are not sufficiently taken into account.

As it stands, the WTO tends to become an instrument in the hands of a few large industrial countries, contrary to both its mandate and its explicit objective to contribute to sustainable development. Not only can identical treatment of unequal countries generate unfairness; but equal treatment and non-discrimination are not even guaranteed, insofar as developed countries enjoy a degree of ‘’extra weight’’ within WTO decision-making bodies.

The FIDH considers that for the sake of justice and human rights observance worldwide, the specific circumstances of the least-favored countries must be taken into account.

The formal democracy that prevails at the WTO cannot adequately secure anything like genuine democracy, i.e., one that is based on fairness such as poor countries are effectively provided differential treatment.

One cannot overlook the hypocrisy displayed by a number of developed countries (including the EU). These formally advocate fair trade policies within the WTO in order to secure special treatment for developing countries, while at the same time displaying a large amount of indifference to those same countries in other areas. Consistency would, for instance, require much more generous financial commitments from developed countries, including through public development aid, as well as a genuine commitment to debt cancellation.

Moreover, a consistent stance in favor of free trade should naturally beg the question of free flows of individuals, and not just of goods. One cannot but be dismayed by the contradictory behavior of developed countries, which push for ever-wider opening of markets, while conducting increasingly restrictive immigration policies.

Nevertheless, the double-mindedness of developed countries should not serve as a justification for anything developing countries might undertake. In particular, developing countries will, time and again, claim that economic growth and trade liberalization require the restriction of fundamental rights, if only temporarily. This is not acceptable. Labor standards are a case in point: for the sake of their own ‘’comparative advantage’’, developing countries reject any WTO mechanism that might guarantee effective implementation of labor standards. It is unacceptable to see Bangladesh, in a recent media campaign, advertise its union-free, strike-free free trade zones in order to attract international investment; this type of campaign is inconsistent with the country’s international commitments in terms of economic, social and cultural rights.

More generally, we must keep in mind that (I) development is not to be measured against growth only, but that rather, full observance of all human rights is an integral part of it; (II) trade liberalization and economic growth can in no way serve to justify human rights violations; (III) economic studies show that foreign direct investment (FDI) is less attracted by restraints on economic and labor rights of potential workers, than by the economic, political and social stability of a country and the extent to which it is governed by the rule of law. Lack of regard for human rights, and for that matter, labor standards, can in no way guarantee investment or growth for developing countries – quite the contrary: in the short, medium and long terms, such disregard can only bring about chronic under-development and widespread impoverishment.

A. Waivers are flawed

Part IV of the GATT General Agreement, under the heading ‘’Trade and development’’ (Articles XXXVI, XXXVII and XXXVIII), provides waivers for developing countries. In particular, the well-known ‘’habilitation’’ or ‘’empowerment’’ clause validates the preferential customs treatment of developing by developed countries. However, these articles are flawed in a number of respects:

1. They do not represent specific legal commitments, which makes them closer to non-binding commitments (‘’soft law’’).
2. They are always considered as exceptions to general rules and regulations, and therefore based on a negative approach.
3. Waivers have hardly ever been implemented, or defectively so, thereby decreasing any benefits they might have carried for developing countries.

True, Articles XXXV and XXXVI do recognize the principle of non-reciprocity, whereby developing countries may be granted most-favored nation status without any reciprocity (9). But in fact, it appears that the elimination of reciprocity has all but relegated developing countries to an even more minor role in negotiations. Since they have nothing to offer, they cannot make themselves heard and are unable to win the concessions they seek.

When reading through the various specific agreements, the phrase ‘’special and differential treatment’’ is indeed recurrent. However, this vague and ill-defined principle has been left without any specific substance, except with regard to adjustment deadlines (10). Similarly, those waivers specific to the least developed countries (LDCs), including the ‘’measures in favor of LDCs’’ adopted in 1994 when the Marrakech Agreement was signed, lay down a number of laudable principles (such as, the benefits of the tariff and non-tariff concessions negotiated during the Uruguay Round will immediately accrue to LDCs, ‘’WTO law’’ will be applied to them in ‘’a favorable and flexible way’’, and LDCs ‘’will only be required to undertake commitments and concessions to the extent consistent with their individual development’’, etc.); but the precise purport of such waivers has never been clarified.

Therefore, the FIDH calls for effective observance of the waivers destined for developing countries, and for a procedure whereby the effectiveness of differential treatment could be assessed at all levels of the WTO structure.

 

B. The bias in decision-making mechanisms

Proposals for agreements are typically put forward in the WTO specialized councils (Council on goods trade, Council on trade-related aspects of intellectual property rights, Council on trade in services), or in special Committees and Working groups. The proposals then go through a process of consultations that is restricted to a few crucial delegations at the WTO’s Geneva headquarters. This initial consultation process plays an essential part; but from this early point onwards, developing countries are already under-represented and they have only a limited access to the negotiations.

The fact is that those involved in such consultations are the ‘’Quad’’ countries (USA, EU, Canada and Japan), Switzerland as the host-country and usually at least one of the Cairns Group countries. This means that all but a few developed countries are represented, while of all the developing countries, of which there are over 100 in the WTO, hardly 10 will typically be involved (11). There is no underplaying the role of these consultative groups: at the Ministerial meeting in Singapore, in 1996, a majority of developing countries were firmly opposed to the introduction of ‘’new topics’’, such as investment and competition, but these were put forward regardless of this opposition, thanks to an ‘’informal group’’ put together during the conference.

Therefore, the bias in favor of developing countries is at work from the very early stages in the talks, all the more so as these informal consultations give rise to many pressures on part of industrial countries. These pressures are easily applied on indebted countries as well as on those that are massively dependent on bilateral aid or on IMF and World Bank funding. The political cost of any formal opposition from one of the smaller countries at General Council or Ministerial meetings simply becomes exorbitant.

Since developing countries are thus denied the opportunity to take part in negotiations, the WTO agenda is geared to developed countries’ interests. At the same time, those areas of interest that are crucial to developing economies are either neglected (market access) or subordinated to dominant interests (agriculture, multi-fibre agreement). Moreover, this situation generates more bias and unfairness in any of the sector-specific agreements that may be adopted (see below, chap. III). For instance, tariff barriers in developed countries end up being relatively high for those products typically exported by developing countries, such as textiles, agricultural produce, etc.

Nevertheless, the creation of a mediating body within the WTO would be particularly welcome, in view of reviewing and redressing any distortions and inequities in the decision-making mechanisms.

 

C. Developing countries’ lack of financial, human and technical resources

Add to this the developing countries’ limited financial, technical and human resources. This shows particularly clearly in the dispute settlement body (see below), although the problem pervades all levels of the WTO. Developing countries typically have no permanent representation at the WTO in Geneva. Thus, during the Uruguay Round, only 12 of the 29 least-developed countries could afford a mission in Geneva. Most had only a small team to deal with the full range of UN activities there. Very few developing countries can durably maintain delegations while negotiations are being held. The problem was recognized in 1996 in Singapore, where ministers agreed that the bias in procedures must be redressed.

With over 50 meetings held every week, developing countries cannot afford the legal and technical resources that would secure genuine bargaining power. In this respect, the FIDH considers that a step has been made in the right direction with a proposal for the WTO to fund a $7.5 million technical assistance program for developing countries.

 

D. Excessive recourse to anti-dumping procedures

Dumping refers to two distinct types of behavior. A country may charge a lower price on export markets than it does at home – dumping therefore comes down to price discrimination (with the firm charging more on its home market, where it has a captive client base). The other, predatory type of dumping, involves selling a product below its average cost, which entails losses in the short term but effectively drives competitors out of the market, with a view to securing a monopoly-type of situation at some point in the future. The dumping developing countries are accused of typically refers to the first category. Dumping in its various guises is censured under Article VI of GATT allowing a country to take anti-dumping measures, provided certain conditions are met. An anti-dumping agreement was signed in 1994 to complement Article VI. The procedure it sets out includes three stages; it is conducted by the country at the receiving end of dumped goods and seeks to verify that dumping effectively took place and to assess the damage. Now, any subsequent investigation by the WTO dispute settlement body will focus only on points of procedure, rather than substance. The body will be content to make sure that national procedures conform to established criteria and that the country filing the complaint has abided by all the formal stages of the procedure. This means the WTO does not pass decisions on the substantial reality of dumping, proof of which must be brought by the country filing the complaint.

A fair number of people have come to consider that anti-dumping measures have been led away from their objective and turned, first and foremost, into a disguised form of protectionism at the hands of developed countries, with a view to denying developing countries their ‘’comparative advantage.’’ Practically, anti-dumping procedures have been turned into non-tariff barriers. This is in contrast to Article 15 of the anti-dumping agreement, which provides that ‘’avenues for constructive solutions’’ will be explored, both before anti-dumping duties are imposed on developing member countries and whenever such duties might, by their very nature, injure those countries’ ‘’essential interests.’’ Now, the exact purport of these rather vague provisions has never been clarified - which means they have never been implemented, either. Furthermore, it is well documented that in the USA, about 50 per cent of all anti-dumping procedures (i.e., 348 out of 774) launched between 1980 and 1988 ultimately resulted in voluntary export restrictions (VER) rather than anti-dumping duties (12). Moreover, the firms that originally triggered the anti-dumping actions are typically large multinationals operating in those industries most exposed to foreign competition.

It would seem, therefore, that the anti-dumping procedure has become an instrument for developed countries to eschew the negative by-effects of precisely the thing they advocate, i.e., trade liberalization. Industrial countries owe it to themselves to show more consistency vis-à-vis the very principles they advocate, instead of devising ever newer ways of protecting their own markets while demanding that those of developing countries become more open.

2. AN OPAQUE ORGANIZATION

The WTO's operational opacity seriously dents its legitimacy. In this respect, the mobilization of international civil society ahead of the Ministerial conference in Seattle testifies to the degree of awareness of the unsupervised power the WTO enjoys, while its agreements have an impact on an increasing number of people across the world. This is all the more the case as the influence, on the WTO, of powerful and well-organized multinational firms has grown out of all proportion, both within government delegations and in decision-making. This means that trade agreements tend systematically to favor those firms’ own private interests, to the detriment of the common interest. As things stand, one would be hard put to view the WTO as a body concerned with development, if only because of the significant influence of private-sector groups which care for little else but their particular commercial interests.

A. The undue influence of multinational corporations

The WTO as an institution claims to be supranational and multilateral, i.e., intergovernmental. Yet it is impossible to overlook the preponderant role large, notably American and European, firms play there, as they effectively detract intergovernmental negotiations and subordinate them to their own interests (13). Thus, negotiations are tacitly privatized as they subordinate the fair and public nature of any agreement to private interests and profit-seeking. This has little to do with an international trade system oriented to sustainable development and human rights observance - indeed it can only, if anything, tend to keep those two endeavors rather subdued.

Transnational corporations enjoy an extremely strong degree of influence over all echelons of the WTO (14) :

(i) They are very well represented within national delegations themselves. For instance, the US delegation to the Uruguay Round talks included a majority of executives from the country’s larger commercial firms.

(ii) They control politically and financially powerful lobbies, with channels of influence both formal and informal over respective governments, in order to make sure that their interests are well taken care of at every stage of negotiations. Thus, in the USA, the avowed objective of the Department of Commerce’s International Trade Administration is ‘’to help American firms to be competitive on the world market.’’ The President’s Advisory Committee for Trade Policy and Negotiations issues recommendations about US trade policy; the group includes, among others, representatives from some of the country’s largest corporations such as AT & T, Monsanto, Kodak and IBM. In Japan, links between the private sector and the government are maintained through the Keidanren, the country’s Federation of business organizations, and has set up itself vis-à-vis both parliament and government as a source of proposals regarding trade policy. In Europe, corporate networks such as those brought together in the ‘’Investment Network’’ (IN) – which includes Fiat, ICI, Daimler-Benz, Carlsberg, BP, Rhône-Poulenc – took part in the elaboration of the EU’s official policy stance ahead of the Seattle Conference, including with regard to the investment agreement. The Transatlantic Business Dialogue (TABD) brings together American and European companies and its influence over US and EU trade policies is growing.

(iii) The fact that talks take place behind closed doors works in favor of multinational firms; representatives from those firms will take part in ‘’experts' meetings’’, which have an important role to play in WTO negotiations. This is how they managed to secure the establishment of a working party on TRIPS (Trade-related aspects of intellectual property rights) at the time of the Uruguay Round, thanks to efficient lobbying from firms like IBM and Du Pont, but against the will of a majority of WTO member states. Insofar as an estimated 90 per cent of world patents are held by transnational corporations, it is easy to understand why they want to secure their protection while seeking guarantees against counterfeiting from developing countries. Similarly, the Uruguay Round owed the opening of negotiations on services to lobbying efforts by the transnational firms concerned, which had regrouped in a Coalition of services industries, which included Federal Express, Citicorp/Citibank and American Express and attracted a few European multinationals. Here again, this decision was made against the will of most developing countries.

(iv) Within the WTO, several informal bodies close to the Secretariat play a significant role in the policy-making process. In particular, the International Chamber of Commerce (ICC) was very influential in the drawing up of the MIA (Multilateral investment agreement). Ahead of the Seattle meeting, the ICC advocated negotiations over public procurement and investment, while opposing the introduction of binding labor and environmental standards.

(v) Dispute settlement procedures work in favor of large groups, as they have the political and financial muscle to prod their government into triggering a legal procedure against another country. Their financial resources also give the groups access to incomparable legal means, and all the more so in connection with disputes with developing countries. A good many examples go to prove the power of multinationals when they resort to the WTO procedures, the most famous of all being the US-EU conflict over trade in bananas. Though the USA does not produce bananas, it filed a complaint under pressure from Chiquita Brands International. This American multinational owns vast banana plantations in Central and Southern America and financially supported the complaint. Similarly, the European Commission complained with the dispute settlement body over a ‘’selective purchasing’’ legislation enacted by the state of Massachusetts. This piece of legislation imposes a 10% penalty on all bids from companies with operations in Burma and prevented any such companies from purchasing or hiring state property. The European Commission claimed the law was inconsistent with the WTO Agreement on government procurement. Quite clearly, European multinationals, including Total, Siemens and Unilever, threw their full weight behind the Commission’s decision, which one cannot help contrast with a September 1998 resolution in which the European Parliament censured investment in Burma. Will Europe at last display some consistency, and put human rights before commercial interests?

(vi) The very substance of the agreements also works in favor of multinational corporations. For instance, the agreement on international investments bars developing countries from imposing on multinational corporations certain criteria for market access, such as the use of local materials in the production process, the promotion of local partnerships, etc. By the same token, restrictions on profit repatriation shall be dismantled under the General Agreement on Trade in Services (GATS). TRIPs also works in favor of multinationals, because either it strengthens their grip on technology resources by raising obstacles to their transfer to developing countries, or it increases the cost of such transfers. It appears as though it is legitimate to support multinationals’ private interests to the detriment of the sustainable development objectives of the developing countries where those firms operate.

To the FIDH, restricting the increasing and underhand influence of private-sector firms is a matter of urgency, since they misappropriate the common interest for the benefit of their own business interests; moreover, as they do so, they are not in any way, under WTO arrangements, supervised or accountable to any body. In this regard, the trend towards privatization of law is harmful to the human community as a whole. To the FIDH, it is essential that the WTO becomes more transparent. The Federation also advocates the introduction of a supervisory mechanism for transnational corporations, which would make it possible to assess the impact of their actions on the human rights situation in the countries where they operate.

If globalization confers an unprecedented amount of power on multinationals, then international rules and regulations should be changed, in order to increase their sense of responsibility and make them fully accountable for their actions. In this respect, ‘’codes of conduct’’ clearly remain wide of the mark, insofar as, most of the time, they will be only sub-standards compared to relevant international standards. Moreover, such codes are also self-proclaimed, self-regulated and self-supervised, and devoid of any independent and binding control mechanism.

It remains, though, that it is illegitimate and unwarranted to construe Article 2.2 of the Agreement on Technical Barriers to Trade in a way that would suggest that whenever governments impose or promote codes of conduct, these represent barriers to trade rather ‘’legitimate objectives’’.

Any initiative that aims at promoting human rights observance, in particular as implemented by private-sector companies, must be considered by the WTO as a ‘‘legitimate objective,’’ rather than as ‘‘a technical barrier to trade’’.

B. Mechanisms are kept secret

Obviously, the WTO cannot claim to be the big international institution it would like to be so long as it sticks to its current practice of confidentiality. As its power rises among other international institutions, so should its sense of responsibility, and therefore the need to become more transparent and democratic in the way it operates. As it stands, the WTO remains a private club, devoid of any serious democratic checks and balances.

In this respect, let us consider the various negotiations, the ‘’experts groups’’, the discussions within the ‘’panels’’ of the dispute settlement body or the diversity of Councils and Committees, and even the negotiations prior to admission of a new member state. Whatever the level or the body where any of them take place within the WTO, these talks are shrouded in secrecy, or at the very least are not the object of a public debate.

More specifically, the FIDH considers that making ongoing discussions within the WTO public, together with a genuine public information policy, is essential if all the parties involved (first and foremost the WTO itself) are to behave in a more responsible way, and if a fair degree of democratic control must be imposed on an institution that is bound to play an ever greater role in the years to come.

C. Sorely missing: civil society

The fact that civil society is never consulted, at any level, in this process further goes to show how opaque it is. At a time when NGOs have proved their expertise, ability and technical capacity in all areas; at a time when international institutions move into partnership and/or cooperation arrangements with NGOs, thereby acknowledging their essential contribution to the full and unrestricted furthering of human rights, it is difficult to imagine that the WTO does not leave any room for civil society, if only on a consultative basis.

According to the UNDP, ‘’an alliance among the government, NGOs, local firms and multinational corporations can go far to foster cooperation towards common goals. (…) NGOs have emerged as major actors, both in size and in impact. (…) NGOs are a strong force – both as advocates and as providers of services’’ (15). By cutting itself off from NGOs, the WTO also isolates itself from the more dynamic elements of those societies upon which it seeks to impose its agreements, which means it is losing even more in terms of legitimacy.

In particular, the lack of proportion between the respective powers of influence among multinational corporations and NGOs goes a long way towards turning the WTO into an institution focused on the profits to be made by a few large groups, regardless of peoples’ legitimate interests, specially the poor. The often-heard claim whereby NGOs cannot be any more democratic than multinational firms, since they are not elected, is inadmissible. The reason is that through their non profit-seeking status, their attachment to the common as opposed to the private interest and their lack of will to power, NGOs command a degree of legitimacy that is out of the reach of multinational firms.

Consequently, the FIDH recommends that whenever discussions are being held at the WTO, an official consultation process be established with organizations which purport to represent civil society; this process must be established at all echelons, including the DSB.

3. DEFICIENCIES IN THE WTO DISPUTE SETTLEMENT BODY

The Memorandum of agreement on rules and procedures governing the settlement of disputes is often referred to as the greatest innovation in the Marrakech Agreements.

However, the scope of the system seems rather restricted in terms of those involved in the mechanism (A). Moreover, some significant structural flaws (B) call for substantial reforms. Finally, issues such as recourse to experts (C) and the burden of proof must also be raised.

A. Flaws linked to those involved in procedures: the judge and the parties to a conflict

1. The judge, or the endless to-and-fro between politics and law

The system is bent on an ever-greater role for judicial bodies - which entails absolute impartiality of the judges.

1. The system hinges on the goodwill of a political body

The Dispute settlement body (DSB) is placed under the control of the WTO General Council, which endorses reports from panels or from the appellate body. Such reports have no validity in law until endorsed by the DSB, that is, by the General Council acting in that capacity. The Council may dismiss a report by negative consensus. This means that any such decision loses its judicial nature from the moment it becomes dependent on the goodwill of a political body which must validate it before it becomes binding.

1. ‘‘A la carte’’ sanctions

The typical recommendation from the DSB is that the illegal national measure must be aligned on ‘’WTO law.’’ But this is not a compulsory sanction, and the ‘’victim’’ country will be free to seek mutually acceptable ways of reparation from the "defendant" country. In case this does not succeed, the victim country can even resort to counter-measures and suspend some equivalent trade concessions, possibly even involving industries that have little to do with those involved in the initial dispute. In a roundabout way, this alternative dispenses the offending country from conforming the disputed measure to WTO law.

This situation is inconsistent with adequate implementation of the rule of law.

Moreover, the measures taken are of a general nature and hardly detailed at all. This enables the offending government to hide behind a semblance of action, thereby eschewing the need to put the offending measure in line with the DSB’s decision (a phenomenon known as ‘’implementation avoidance’’).

If there must be anything like a fundamental right to effective recourse, plaintiffs should be allowed to request specific measures such that an ‘’illegal’’ situation can be brought to an end.

Moreover, there are no provisions for a mechanism whereby the way a decision is implemented can be challenged. Therefore, the FIDH calls for the introduction of such a procedure.

2. The parties involved : an intergovernmental mechanism, which shuts out developing countries

a) An intergovernmental mechanism

Since the Marrakech agreements were concluded between governments, the dispute settlement procedure quite naturally involves only those states which ratified the relevant Memorandum of agreement.

And here is the rub : the major powers-that-be in the international economy are not governments, but private businesses.

As specified, again, by Dominique Carreau and Patrick Julliard, ‘’when the rules of the international trade system are breached, the culprits are private-sector entities at least as much as governments, and those breaches are less detrimental to governments than to those entities. But if there is to be any redress for the breach in the international regulatory framework, then private-sector entities will have to shelter behind governments.’’

This leaves it to member states to decide, in a discretionary way, whether to file a complaint - a system which can only amplify the multinationals’ power of lobby, as the defense of its business interests is left crucially dependent on a government’s benevolence.

Moreover, any sanctions or counter-measures taken will have a real impact on the fundamental rights of the citizens of the countries involved in the dispute. But in the absence of any binding mechanism for the protection of economic, social and cultural rights, the principal victims are unable to seek redress for any damage endured.

As stressed by William Bourdon, IFHRL-FIDH Secretary General :

‘‘this situation goes against the grain of the forces driving today’s international law, the cardinal principle of which, regarding individual rights, is individual criminal responsibility, including for corporate entities.’’

For this reason, the FIDH is calling for the establishment of an international economic tribunal which would be independent from the WTO and its Settlement body, have effective jurisdiction over economic, social and cultural rights and be actionable by private individuals, too (such as, for instance, workers, or independent and representative NGOs). Such a tribunal would effectively exercise control not just over governments but also (pursuant to the principle of corporate liability) over the operations of multinational corporations - which for the time being operate in almost complete impunity.

1. the mechanism shuts out developing countries

For a dispute settlement procedure to be efficient, all states must enjoy equal rights of access to it. Now, it appears that developing countries are at a significant disadvantage with regard to their access to the procedure and the way it is conducted. In 1998, these countries were involved in 16 per cent of consultations and were found at fault in 25 per cent of the cases that came under review.

This situation was taken into account when the Memorandum of understanding was drawn up, with its Article 27 providing that developing countries are to be granted additional judicial aid. ‘’To this end, the Secretariat shall provide every developing state that may require it a qualified legal expert from the WTO’s technical cooperation services.’’

However, such aid is only available once a member state has decided to file a complaint with the DSB. But what really requires expertise and money is the step prior to that one, when a state assesses whether filing a complaint or not.

Therefore, though a mechanism does exist, it is ill-adapted.

This is why the FIDH is calling for the establishment, within the WTO Secretariat, of a permanent judicial aid center for developing countries, in order to provide these with the technical and legal assistance they need, both during the preliminary stage when states decide whether to take action, and at any point in the subsequent course of a procedure.

 

B. Structural flaws

The twin notions of transparency and independence, on the one hand, and of efficiency and capacity, on the other, call for some comment.

1. Flaws in the panels

There should be more transparency in the way panel members are appointed and their independence should be strengthened, specially vis-à-vis the Secretariat.

Under article 27, indeed, it falls on the Secretariat to ‘’help the panels, including with regard to legal issues, historic background and procedure…’’, which practically means that the Secretariat ends up in a quasi-legal role.

For this reason, the FIDH welcomes the European Union’s proposal to establish a cadre of panelists, split in a number of distinct chambers. This would secure genuine independence for panel members and an even degree of competence.

This reform would also go a long way towards making WTO case-law more predictable.

Moreover, parties to a dispute should be allowed to attend any relevant meetings (which at the moment, under Annex 3 to the Memorandum, is not the case), and documents should not be confidential.

2. Flaws in the appellate body

The way the members of the Appellate body are appointed is singularly lacking in transparency. The haggling between member states that resulted in the early, 1995 appointments is hardly compatible with the independence which every arbitration or judicial body is typically pledged to.

The FIDH is also calling for a reform whereby, in the name of efficient procedures, appellate judges would be granted resident status.

3. Opening up the DSB to civil society

The FIDH is calling for the DSB to be opened up to civil society. NGOs should be allowed to attend sessions as observers, to have access to any documents and be granted the opportunity to file contributions and memorandums with the parties.

C. Vague conditions of recourse to experts

Annex 4 enables any panel to resort to an expert ‘’whose ability and professional experience are recognized in the relevant area.’’ The expert always operates in a personal capacity, which would suggest that NGOs are to be left out.

So far, little use has been made of this opportunity. Only five panels did call upon an expert, all of them in cases involving environmental matters. Following this example, the FIDH calls for panel members systematically to resort to an expert specialized in human rights law, with a view to assessing the impact of the offending measure on fundamental, and especially economic and social, rights.

D. The burden of proof and the precaution principle

The burden of proof took a particularly central part in the beef (hormones) case. Indeed, the European Union argued that the benefit of the doubt should weigh in favor of consumers, rather than the reverse, which meant that it was for the United States to prove the innocuity of its products. The FIDH considers that whenever fundamental rights are at stake, such as the right to health, the burden of proof should not rest with the party found ‘’restricting free trade’’ ; this would preserve government’s prerogative to determine what it regards as the minimum required degree of consumer protection.

 

CHAPTER III

RIGHTS IN DANGER – THREATS FROM A FEW SPECIFIC AGREEMENTS

 

Though there are no grounds for portraying the WTO as jack-in-the-box, one cannot help noticing that beyond the WTO’s own institutional deficiencies, some of the agreements that were adopted under its aegis undermine (or may undermine) human rights. The rights under threat include the right to sustainable development, the right to health, the right to education, the right to information, the right to culture, labor rights and the right to make use of natural resources.

1. The General Agreement on Trade in Services (GATS)

The share of services in international trade keeps growing. Services exports are estimated at about 900 billion dollars per year, with 80% of providers based in Western Europe and in the United States. The US first proposed to include services in trade talks at the start of the Uruguay Round, and the EU soon followed suit. Notwithstanding opposition from a group of 10 countries led by Brazil and India, the negotiations in this area resulted in the signing of the GATS. This particular agreement condones the fundamental principles governing goods trade (most favored nation clause, national treatment, transparent trade policies…). But it does not cover the whole range of services (for instance, audio-visual services were left out, talks over maritime transport were adjourned, those over financial services resulted in an agreement which the USA did not sign…).

There are legitimate causes for worry about the GATS. Regarding financial services (banking, insurance), liberalization would mean that foreign insurance companies and banks could set up operations in developing countries, where this type of business comes under stringent regulations in connection with the conduct of government policies. Therefore, GATS has the potential to jeopardize government-determined economic policies, notably those oriented towards sustainable development. Moreover, the bulk of services exports originate in developed countries, while developing countries enjoy no special advantage in this area. Therefore, it seems legitimate for developing countries to fear that liberalized flows are going to be unilateral, since they will hardly be able to reciprocate with services exports of their own. Liberalization would entail a net loss for developing countries.

There are further reasons to worry about GATS, insofar as it opens up the public service sector (health, education…) to competition and, for that matter, to the risk of privatizing public goods which, by essence, are not of a commercial nature.

To the FIDH, privatizing public goods entails a number of serious dangers, as private-sector entities are oriented to their own particular interests, which means they cannot endorse the common interest public services are meant to pursue, and are therefore unable to guarantee the fundamental rights attached to them (such as rights to health and education).

In this regard, the provisions in Article 1.3b of GATS do not seem adequate. According to these, the Agreement applies to any service in any sector, except services ‘’supplied in the exercise of governmental authority.’’ But Article 1.3c adds that a service supplied in the exercise of governmental authority refers to ‘’any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers’’ (italics ours). Thus, a state where public and private health and education systems coexist might be forced into complete liberalization of its market. Therefore, Article 1.3 of GATS requires a degree of clarification if such occurrences are to be prevented.

Privatizing services that are considered as pertaining to the public domain has caused many specific problems in developing countries (16) : infrastructure projects typically entail a number of risks, and private-sector investors will frequently seek government guarantees. Such guarantees may undermine the benefits of privatization : as a government takes on the risk attached to a project, private-sector investors tend to engage in excessive risk. In developing countries, therefore, privatizing public services has the potential to substantially weaken governments, so that opening up their national markets ultimately hurts them in every sort of way.

Furthermore, the 4th mode of services supply (human flows) remains largely out of bounds, owing to opposition from developed countries. One can only deplore the hypocrisy and inconsistency of these countries, which apply the principles of free trade according to their own limited interests, but fail to push the logic of liberalization one step further and extend it to free movement of individuals.

Therefore, the FIDH is calling for talks to open over the 4^th mode, in order to include persons in the scope of the free movement granted to goods and services. The consistency of the WTO is at stake here.

2. The Agreement over Trade-related aspects of international property rights (TRIPS)

Intellectual property rights were first raised as an issue in 1986. The idea was to restrain trade in counterfeit products and for trade liberalization to go hand in hand with reinforced controls over technology. It did not take long before this objective was broadened, and today it extends to a variety of areas, including computer software, computer chips development, pharmaceutical products and genetically modified organisms. The TRIPs agreement came into force in 1995 and sets minimum standards on patents, royalties, trade names and trade secrets. Since all these originate in developed countries, the standards are geared to those countries’ protection requirements, which are much more stringent than those of developing countries (where agriculture or pharmaceutical products are often left out).

As a result, TRIPs rules and regulations pose more dangers to developing countries than to any other, insofar as industrial countries hold 97% of the world’s patents, and multinational corporations, just under 90% of the total (increasing privatization of research is bound further to entrench the trend). This means that large groups will enjoy complete domination in areas involving fundamental rights. Now, the pursuit of short-term profitability poses serious threats to biodiversity, biological safety, health rights and individual fulfillment of vital needs. The danger with TRIPs, therefore, is that it may marginalize developing countries and make them even more vulnerable through massive rises in the costs of, or barriers to, the transfer of technologies on which their development depends. More specifically, TRIPs entails one particular, direct threat on health rights : as its provisions allow for the patenting not just of manufacturing methods, but also of the products themselves, developing countries may be denied the new technologies which they might have accessed through adjustments and changes in production methods – while this is precisely how they had, so far, managed to develop generic drugs at markedly lower costs than original brands.

One of the highlights in Seattle will be a review of Article 27.3b of TRIPS which regulates patentability of life. Such patentability could, in practice, prevent farmers in developing countries to grow and develop their own seeds, and therefore hurt the rights of local and native communities, such as provided for in the UN Convention on Biodiversity. Thus, in July 1999, African countries agreed on a common policy stance in favor of reviewing TRIPs to the effect that live organisms and natural methods of obtaining vegetal, animal and other live organisms could not be patented. India, Brazil, Costa Rica, Honduras, Indonesia, Pakistan and the Philippines also rallied in support of this proposal.

Consequently, the FIDH fully supports the UNDP’s recommendation whereby ‘’intellectual property rights under the TRIPs agreement need comprehensive review to redress their perverse effects undermining food security, indigenous knowledge, biosafety and access to health care.’’ (17).

 

3. The Agreement on Agriculture

Up until the Uruguay Round, agriculture was considered as an exception to the liberalized trade regime. This meant that neither export subsidies nor import restrictions were prohibited; the idea being to help maintain farmers’ incomes. Since then, agriculture has been brought into the liberalization process, with the Cairns Group making a massive push in favor of extending GATT principles, while other major countries (mainly the EU and the USA) resorted to a variety of devices in order to preserve a sector they considered as privileged. And yet it would seem that if anyone is going to be hurt more seriously than any others by agricultural liberalization, it must be farmers in developing countries. The reason is that these countries’ economies are crucially dependent on agricultural output, as well as on world prices which, at the very best, can be characterized as volatile (18).

For instance, the fall in world grain prices caused by trade disputes between the United States and the EU in the 1980s resulted in a 40% dip in Argentina’s cereal exports between 1980 and 1987. Similarly, imports of heavily subsidized American wheat and corn destroyed the means of subsistence of local farmers in the Andes. Further liberalization cannot but take into account the serious risk of marginalising smaller farmers in developing countries.

For these countries, liberalizing agriculture must necessarily go hand in hand with the issue of food security and, therefore, with the issue of some countries’ increased dependence on unstable world markets dominated by a few large groups.

4. The Agreement on Trade-Related Investment Measures (TRIMs)

Following the failure of the Multilateral Investment Agreement (MIA), developed countries have been trying to re-introduce the idea via the WTO. Multinational firms have a very direct interest in this agreement. There is reason to fear that an agreement over investments will benefit their sole interests, to the detriment of national rules and regulations of a social and environmental nature. This is because under Paragraph 1 of the Annex to the TRI agreement, the principle of national treatment is inconsistent with any obligation on a firm to purchase or use local products (known as the ‘’local content’’ rule). This provision is meant to eliminate non-tariff barriers, but it may be used to counter any specific development policies conducted by Southern countries.

In the absence of national government regulation or of adjustments to local needs, it is doubtful whether any particular, exclusively profit-driven investment can make the most efficient contribution to sustainable development. Moreover, the potential for destabilization of the weaker sectors of developing economies must not be overlooked.

5. The Agreement on Government Procurement (AGP)

The Agreement on government procurement aims at the widest possible opening of government procurement to international competition. But the great risk here is that such a wide opening leads to restrictions on, and, ultimately, the prohibition of, any policies that seek to subordinate firms’ procurement contracts to ethical standards. This type of conditionality was successfully implemented in the context of apartheid in South Africa. Today, it is often used as a disincentive to firms from investing in Burma (Myanmar). Clearly, the AGP could be invoked by anyone opposed to such measures, although these tend to encourage ‘’good behavior’’ by firms.

6. The Agreement on Technical Barriers to Trade (TBT)

This agreement came into force in 1995 and entails serious dangers for human rights, notably because it may force public authorities to ratchet rights protection down to the lowest existing level. TBT Article 2.2 prevents governments from raising unnecessary barriers to trade. To this end, governments must make sure that technical regulations ‘’are not more trade-restrictive than necessary to fulfil a legitimate objective.’’ The risk lies in a restrictive construction of such ‘’legitimate objectives’’ which, for instance, would exclude imposing or promoting ‘’eco-labelling’’ on or with private-sector firms. For the time being, DSB case-law and comments on Trade and Environment by the WTO Committee do not augur well for anything but a narrow interpretation of this principle, with the Committee noting that eco-labelling devices ‘’have raised significant concerns over their potential impact on trade.’’

The FIDH considers that any initiative aimed at the protection or the promotion of universally recognized human rights can only be deemed to be a ‘’legitimate objective’’, rather than a technical barrier to trade. Therefore, the Federation is calling on the WTO, its various committees and its dispute settlement body to allow for a broad interpretation of TBT Article 2.2, in order to further genuine observance and implementation of human rights in member countries.

7. The special case of labor standards

A. The need for a specific approach to labor rights

The issue of labor standards is prominent on the Seattle agenda. The Singapore Ministerial declaration had already called for ‘’reinforced cooperation between WTO and the International Labour Organisation (ILO) and their respective secretariats, according to their own particular enabling rules, through more regular contacts and reports to WTO members on the outcomes of such cooperation.’’ The phrase ‘’social clause’’ is a generic and rather fuzzy term. Indeed, as stressed by Sylvie Paquerot :(19)

‘’The very substance and meaning of what might be called a social clause vary considerably among those concerned. In general, as current debates and ILO literature go, the phrase essentially refers to the social aspect of trade liberalization, and the topics covered are restricted to just a few of the standards already recognized by ILO conventions, which do not even extend to all the labor rights included in the UDHR.’’

The United States and the European Union have taken a stance in favor of introducing a social clause in the WTO Agreements. The bulk of Southern countries opposed this initiative, where they saw a disguised form of protectionism which only sought to deny their comparative advantage.

However, this controversial issue is not confined to a North-South clash, since, as stressed by James Howard of the International Confederation of Free Trade Unions (ICFTU-CISL) : ‘’The fact that some governments suppress workers’ rights in order to gain competitive advantage ends up undermining efforts made by other developing countries that are keen to improve labor and living conditions " (20).

The FIDH is well aware that workers stand to be the first hit by Trade agreements. Therefore, labor rights need to be addressed through a specific approach.

This is why the FIDH is calling for the creation, within the WTO, of a permanent body that would report to the General Council and maintain a close working relationship with the ILO. As for the mandate of this new body, the FIDH wants its main focus to be the totality of the labor rights recognized in the UDHR, instead of just the eight fundamental principles set out in the ILO Declaration on fundamental labor principles and rights.

Moreover, this new body must conduct research about the type of action that may be taken whenever WTO member states violate labor rights.

Finally, the FIDH is calling for the ILO to be granted observer status with the WTO.

2. The need for an integral approach to fundamental rights

However, and by its very nature, the social clause as a concept can give protection to only a portion of the workforce, namely, all those employed in exporting sectors. Moreover, labor rights are only one aspect of economic, social and cultural rights, which themselves are interdependent and inseparable from civil and political rights. It is, therefore, essential that all these fundamental rights are approached in an integrated manner, and that their superior status vis-a-vis trade agreements is affirmed.

Workers’ rights remain crucial, yet it must not be overlooked that WTO agreements pose threats to other types of rights and involve whole populations, not just workers.

This is why the FIDH calls for the introduction of a human rights clause, whereby the universal standards would become a major point of reference for existing and future agreements.

 

RECOMMENDATIONS

Regarding the primacy of universal human rights standards

Recommendation 1

The FIDH considers that, in view of its superior standing in the international legal framework, the Universal Declaration of Human Rights (UDHR) prevails over any trade agreement and that it is incumbent on every WTO member state, as well as to that institution as such, to observe the fundamental principles of human rights. In this respect, the norms set out in the UDHR must be seen as standards.

To this end, the FIDH calls for the introduction of a ‘’human rights clause’’ in the preamble of each of the (institutional and substantial) Marrakech Agreements, that would lay down the principle of unconditional observance of the international human rights standards included in the UDHR.

Recommendation 2

The FIDH considers that in order to subordinate the WTO to the principles set out in the United Nations Charter, the Universal Declaration of Human Rights and any other relevant instrument, the WTO must be brought into the United Nations system as a specialized agency.

Recommendation 3

Since its ambit extends beyond the strict boundaries of trade issues, the WTO must develop cooperation with other international institutions, with a view to harmonizing international rules and regulations.




Regarding the lack of fairness in international relations

Recommendation 4 (regarding the flaws in the waiver system)

The FIDH calls for effective observance of the waivers destined for developing countries, and for a procedure whereby the effectiveness of differential treatment could be assessed at all levels of the WTO structure

Recommendation 5 (regarding excessive recourse to anti-dumping procedures)

The FIDH recommends that a mediation body be set up within the WTO to review and redress any distortions and inequities in the decision-making mechanisms.

 

Regarding the WTO as an opaque organisation

Recommendation 6 (regarding the undue influence of multinational corporations)

To the FIDH, restricting the increasing and underhand influence of private-sector firms is a matter of urgency, since they misappropriate the common interest for the benefit of their own business interests. Moreover, as they do so, they are not in any way, under WTO arrangements, supervised or accountable to any body. In this regard, the trend towards privatization of law is harmful to the human community as a whole. To the FIDH, it is essential that the WTO becomes more transparent. The Federation also advocates the introduction of a supervisory mechanism for transnational corporations, which would make it possible to assess the impact of their actions on the human rights situation in the countries where they operate.

Recommendation 7

Any initiative that aims at promoting human rights observance and as implemented by private companies, must be considered by the WTO as a ‘‘legitimate objective,’’ rather than as ‘‘a technical barrier to trade’’.

Recommendation 8

More specifically, the FIDH considers that making ongoing discussions within the WTO public, together with a genuine public information policy, is essential if all the parties involved (first and foremost the WTO itself) are to behave in a more responsible way, and if a fair degree of democratic control must be imposed on an institution that is bound to play an ever greater role in the years to come.

Recommendation 9

The FIDH recommends that whenever discussions are being held at the WTO, an official consultation process be established with organizations which purport to represent civil society; this process must be established at all echelons, including with regard to dispute settlement procedures.

 

Regarding the deficiencies in the WTO Dispute settlement body

Recommendation 10

The FIDH is calling for the establishment of an international economic tribunal that would be independent from the WTO and its Settlement body, and which would have effective jurisdiction over economic, social and cultural rights and would be actionable by private individuals, too (such as, for instance, workers, and independent and representative NGOs). Such a tribunal would effectively exercise control not just over governments but also (pursuant to the principle of corporate liability) over the operations of multinational corporations - which for the time being operate in almost complete impunity.

Recommendation 11

The FIDH is calling for the establishment, within the WTO Secretariat, of a permanent judicial aid center for developing countries, in order to provide these with the technical and legal assistance they need, both during the preliminary stage when states decide whether to take action, and at any point in the subsequent course of a procedure.

Recommendation 12

The FIDH welcomes the European Union’s proposal to establish a cadre of panelists, split in a number of distinct chambers. This would secure genuine independence for panel members and an even degree of competence.

Recommendation 13

The FIDH calls for a reform whereby, in the name of efficient procedures, appellate judges would be granted resident status.

Recommendation 14

The FIDH is calling for the Dispute settlement body to be opened up to civil society. NGOs should be allowed to attend sessions as observers, to have access to any documents and be granted the opportunity to file contributions and memorandums with the parties.

Recommendation 15

The FIDH calls for panel members systematically to resort to an expert specializing in human rights law, with a view to assessing the impact of the offending measure on fundamental, and especially economic and social, rights.

 

Regarding certain specific agreements

Recommendation 16 (regarding the General Agreement in Trade In Services, mode 4, supply of services)

The FIDH calls for talks to open over the 4^th mode, in order to include persons in the scope of the free movement granted to goods and services.

Recommendation 17 (regarding the Agreements on intellectual property rights)

The FIDH supports the UNDP view that ‘‘intellectual property rights under the TRIPS agreement need comprehensive review to redress their perverse effects undermining food security, indigenous knowledge, biosafety and access to health care.’’

Recommendation 18 (regarding technical barriers to trade)

The FIDH considers that any initiative aimed at the protection or the promotion of universally recognized human rights can only be deemed to be a ‘‘legitimate objective’’, rather than a technical barrier to trade. Therefore, the Federation is calling on the WTO, its various committees and its dispute settlement body to allow for a broad interpretation of TBT Article 2.2, in order to further genuine observance and implementation of human rights in member countries.

Recommendation 19 (regarding labor standards)

The FIDH is calling for the creation, within the WTO, of a permanent body that would report to the General Council and maintain a close working relationship with the ILO.

As for the mandate of this new body, the FIDH wants its main focus to be the totality of the labor rights recognized in the UDHR, instead of just the eight fundamental principles of the ILO Declaration on fundamental labor rights.

Moreover, this new body must conduct research about the type of action that may be taken whenever WTO member states violate labor rights.

Finally, the FIDH is calling for the ILO to be granted observer status with the WTO.

 

 

NOTES

1) Philippe Hugon, " l’évolution de la pensée économique de la mondialisation ", in la Mondialisation, paris, Karthala, 1999, p.42

2) Human development report 1999, p.2

3) Preamble of the Agreement establishing the World trade Organization " Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment (...) in accordance with the objective of sustainable development "

4) John Humphrey, " No distant millenium : the international law of human rights " (Paris, Unesco, 1989)

5) E/CN/Sub.2/1999/11

6) Droit international économique, 4ème édition, LGDJ, p.83

7) WT/DS/AB/R, p.19

8) As Béatrice Marre stresses, ‘‘the inconsistencies between World Bank and IMF requirements and international trade rules and regulations place the countries involved in intenable situations. For instance, debtor countries are required to increase foreign currency receipts, i.e., to raise customs duties, which is inconsistent with the Marrakesh Agreement.’’

9) Let us recall here that the five fundamental principles behind GATT and the WTO are as follows: 1. The most-favoured nation treatment, whereby all beneficiary countries are granted the same treatment (when two countries agree between themselves to reduce customs tariffs, the benefit of the reduction must be extended to other member countries). 2. Binding customs duty tariffs, a principle under which every member country must specify the maximum rate it will charge on every category of product. 3. National treatment, whereby once duty has been paid, imported goods are treated the same way as national goods. 4. Transparent trade policies, meaning that any trade barrier other than customs duties must be eliminated. 5. Reciprocity of trade concessions, whereby any country at the receiving end of a tariff concession must offer a concession of its own in return.

10) See, for instance, Article 15 of the Agreement on Agriculture; Article 10 of the Agreement implementing sanitary and phytosanitary measures; Articles 11 and 12 of the Agreement on Technical barriers to trade; Article 41 on measures concerning trade-related investments (TRIs); Article 65 of TRIPs…

11) See B.Lal Das, ‘’Why rhe WTO decision-making system of consensus works against the South’’, TWN, 1999.

12) Voluntary export restrictions (VERs), a de facto equivalent of quotas, were prohibited as a result of the Uruguay Round under Article XXII of the Agreement on safeguards, which imposes their gradual elimination over four years, i.e. by December 1999.

13) It must be kept in mind that today, 2/3 of world trade is carried out by multinational firms, which therefore are greatly interested in trade talks.

14) In this respect, see M. Vander Stichele, Towards a world transnationals’ organisation? WTO Booklet Series Vol. 3, Transnational Institute, April 1999, and Olivier Hoedeman, Le bogue de l’OMC pour le nouveau millénaire: le contrôle de la politique de marché globale par les multinationales, 1999.

15) Human development report 1999, p. 95.

16) See M. Thobani, ‘’Le cas des pays en développement,’’ Problèmes Economiques, No. 2640, Services publics et dérèglementation, November 1999, p. 31, Paris: Documentation française.

17) Human development report 1999, p.10. Regarding intellectual property rights and new technologies, see the same report, Ch. 2, New technologies and the global race for knowledge.

18) On this topic, see K. Watkins, The Oxfam poverty report, 1996, p. 139 sq.

19) Sylvie Paquerot, a member of Quebec’s Ligue des droits et libertés, an IFHRL-FIDH affiliate, in Lettre de la FIDH No. 28, 25 November 1999.

20) James Howard, Head of employment and labour standards, in Lettre de la FIDH No. 28.