Human Rights and FTAs; when crossroads collide

The inclusion of human rights (HR) policies in Free Trade Agreements (FTAs) has always been a controversial point of disagreement between developing and developed countries. The opponents to any link between the two argue that if international trade becomes conditional to HR, then it could possibly cause detrimental consequences. This claim is based on the fact that HR provisions in FTAs limit the main advantage of the developing countries, namely their access to cheap labour. [1] They also claim that they harm the economies of developing countries because HR-related terms are seen as obstacles for such countries’ exports (their primary way to improve their economy). [2]


On the other hand, those who see a direct link between these two factors argue that omitting the inclusion of HR from FTAs may negatively affect the working conditions in countries with higher labour standards. [3] They also mention that the opponents’ argument is limited to HR-related work conditions, while when

it comes to FTAs, many other types of HR are involved.


The connection between HR and trade started from the Havana Charter, where countries were willing to put related provisions under the section devoted to fair labour standards. [4] This charter was not successful; therefore, the GATT 1947, and later the WTO, in 1995, just refer to a single example in this regard (prison labour). [5] Now, there is a growing perception that HR and international trade are highly related.


As international trade is a globalised issue, there had been a consideration of recognising its direct association with HR. However, this never happened and HR experienced a slow development towards this prospect. Therefore, many countries have considered it necessary to mention some HR in FTAs to achieve their goals, to ensure protection. [6] This is because, FTAs have more to do with the parties’ foreign policies, than pure non-economic issues, including HR. As a result, countries felt a dire need of including these matters in FTAs. [7]


It is worth noting that HR evolved in three main steps which are known as the ‘Three Generations of Human Rights’. This classification is purely based on a historical point of view and shows that HR have become more sophisticated as they have expanded from the concept of ‘civil and political rights’ to that of ‘economic, social, cultural rights’ [8] and then to ‘solidarity rights’. [9]


Based on standard FTAs concluded in recent years, HR are mentioned under three main sectors; (i) labour standards, (ii) social clauses and, (iii) environmental standards. This is the exact classification system that the EU uses in its FTAs: mainly, because global goals such as SDG are among their foreign policy. There are other rights that can be found in other parts of FTAs. For example, copyright and the patent right - under the Intellectual Property (IP) section - can encompass issues related to the right to health, the right to freedom of expression and the right to privacy.


Accepting the link between HR and trade in the first place and recognising those rights that should be included in FTAs does not make it any less difficult when referring to the inclusion of HR in such agreements. There is no uniform interpretation of HR among countries. Therefore, the way such rights are included in these agreements varies depending on different schemes. [10] The main problem arises where priority is given to trade over HR. [11] But HR may still be included in FTAs either as soft standards or as hard- standards. While the former provides voluntary cooperation, the latter becomes mandatory for the parties. In many agreements, soft standards have been chosen and have brought many problems based on their non-legally binding character.


By including HR in FTAs, there is always the question about the impact that such an inclusion might have internationally. [12] FTAs emerged as an exception to the Most Favoured Nation (MFN) provision of WTO. The parties of an FTA are either WTO members or are in the process of being a member soon. The latter situation rarely happens. [13] On the other hand, there is a link between human rights abuse, corruption and WTO membership as human rights are mostly violated in corrupted countries that are not WTO members. [14] As a result, FTAs do not affect HR in countries where such rights are breached. Based on case studies, some believe that WTO accession could address corruption and, subsequently, lead to better conditions in HR. [15]


It should be noted that the inclusion of HR in FTAs has more to do with politics than pure concerns over the protection of those rights per se. [16] Therefore, countries always push for provisions that suit their policies better. [17] Such foreign policies contain economic concerns and welfare rather than globalised goals such as SDG. Most countries, especially the developed ones, rarely conclude FTAs with less developed countries than them. [18] In FTAs between developed and developing countries, the developing states do not have any noticeable bargaining power, hence, if HR are not among those topics which the developed country is interested in, then there is not much for the other party to do. [19]


These factors have led some commentators to argue that to make a positive impact, WTO has two main advantages: (i) accession to the organisation and, (ii) the Trade Policy Review Mechanism (TPRM). A perfect example, to better explain this, is Vietnam after acceding to WTO. [20] Meeting the necessary standards on the one hand, and WTO's power to impose sanctions against non-conforming members on the other, have been WTO’s superiorities when addressing HR.


While there has been an extended argument over whether HR should be mentioned in FTAs, it is now accepted that doing so constitutes a necessity. HR have developed through time and have become more complicated. The inclusion of such rights in FTAs follows the same path. According to FTAs, HR are mainly discussed under three sections Labour standards, Social clauses and, environmental standards. There are also other HR which are outspread in different sectors. If countries achieve a sustainable agreement on this basis, then they can move to ensure the establishment and protection of more complicated rights. For instance, in TTIP, since the parties could reach a reasonable position regarding fundamental HR during the negotiations, they put their focus on other rights (right to food and health).


Addressing HR in FTAs occurs through either: (i) ‘the carrot and stick’ approach followed by the US or (ii) the ‘conditionality’ approach which is used by the EU. When comparing the two methods, the US approach is seen as the least effective one. Τhe US-Vietnam FTA is a fantastic example to illustrate that a free-market or a re-democratisation do not necessarily lead to better conditions for HR. [21] The positive impact of WTO accession on the HR condition in Vietnam shows that the US sanction approach is inefficient as well.


On the other edge of the spectrum, the EU uses the ‘conditionality’ method. There is no doubt that this mechanism works better and is in favour of HR. However, conditionality is not always a definite answer. Regarding FTAs, HR are enforced as long as they align with the relevant economic and trade foreign policies. If there is a conflict between trade policies and HR, the latter would be knocked out. Both EU-Singapore and CETA can perfectly shed light on this statement.


Neither the US nor the EU provide a practical approach in addressing HR in their FTAs. Based on the WTO mechanism, it can be argued that a combination of these two attitudes may be practical. However, some factors make the WTO mechanism less attractive, such as the accession process, which is considerably lengthy, and due to the lack of comprehensive emphasis on the different aspects of HR in its rules. All in all, while HR and trade are closely related, their background is inherently different. And as the saying goes 'Oil and water do not mix'.


Consequently, FTAs cannot be the best medium to reinforce HR as they are more focused on the economic aspects of the trade. Although using an external mechanism might be practical, WTO - as the system highly mentioned in this regard - cannot be the best option when considering its drawbacks. Therefore, an alternative mechanism is needed to support HR within trade. This desire has become even more prevalent because of the ongoing pandemic that countries are still wrestling with.





Endnotes


[1] Salman Bal, 'International Free Trade Agreements and Human Rights: Reinterpreting Article XX of the GATT' (2001) 10 Minn J Global Trade 62, 64

[2] ibid

[3] ibid

[4] Ibid 66

[5] General Agreement on Tariffs and Trade [GATT] (14 April 1994) entered into force 1 January 1995, Article XX (e)

[6] Salman Bal (n 1) 63

[7] Angelika Rettberg and others, ‘Rights, Free Trade, and Politics: The Strategic Use of a Rights Discourse in the Negotiation of Free Trade Agreements (FTAs)’ (2014) Colombia International 129, 131

[8] Adrian Vasile Cornescu, ‘The Generations of Human Rights’ (2009) 1 Masaryk University, 4

[9] Adrian Vasile Cornescu (n 9) 5

[10] Marcilio Toscano Franca-Filho and Lucas Lixinski and Belen Olmos Giupponi, 'Protection of Fundamental Rights in Latin American FTAs and MERCOSUR: An Exploratory Agenda' (2014) 20 Eur LJ 811,818.

[11] Ibid 818

[12] Meredith Kolsky Lewis, 'Human Rights Provisions in Free Trade Agreements: Do the Ends Justify the Means' (2014) 12 Loy U Chi Int'l L Rev 1, 6

[13] Ibid 12

[14] Ibid 15

[15] Ibid 15

[16] Ibid 6

[17] Ibid 7

[18] Ibid 12

[19] Ibid 17

[20] Ibid 16

[21] Loretta Sanchez, 'When It Comes to Free Trade Policy, Human Rights Should Be a Game Changer' (2015) 52 Harv J on Legis 343, 353.

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