33/40 Report of the Independent Expert on the promotion of a democratic and equitable international order
Document Type: Final Report
Date: 2016 Jul
Session: 33rd Regular Session (2016 Sep)
Agenda Item: Item3: Promotion and protection of all human rights, civil, political, economic, social and cultural rights, including the right to development
GE.16-11938 (E) 270716
Human Rights Council Thirty-third session
Agenda item 3
Promotion and protection of all human rights, civil,
political, economic, social and cultural rights,
including the right to development
Report of the Independent Expert on the promotion of a democratic and equitable international order*
Note by the Secretariat
The Secretariat has the honour to transmit to the Human Rights Council the thematic
report of the Independent Expert on the promotion of a democratic and equitable
international order, Alfred de Zayas, pursuant to Council resolution 30/29.
* The annexes to the present report are reproduced as received.
United Nations A/HRC/33/40
2 GE.16-11938
I. Introduction
1. In its resolution 30/29, the Human Rights Council invited the Independent Expert on
the promotion of a democratic and equitable international order to continue to develop
studies on the adverse human rights impact of international investment agreements,
bilateral investment treaties and multilateral free trade agreements on the international
order.
2. The present report complements the analysis contained in the Independent Expert’s
2015 report to the Council (A/HRC/30/44 and Corr.1) and his 2015 report to the General
Assembly (A/70/285 and Corr.1), addresses the aggravation of the “regulatory chill”
generated by investor-State dispute settlements,1 and demonstrates that the newly proposed
investment court system suffers from the same fundamental flaws as investor-State dispute
settlement. Essentially, the investment court system lacks the fundamental safeguards to
ensure an independent legal system in line with the requirements of due process. That
analysis was shared by the associations of German and Spanish judges in opinions from 4
February 20162 and 23 May 2016,3 respectively. Under the investment court system, States
would remain vulnerable to the same kind of frivolous and vexatious claims that have
characterized the hugely expensive, slow and unpredictable investor-State dispute
settlement litigation. Important issues of constitutionality and the rule of law arise when
non-State actors exercise “prerogative powers” beyond public control and judicial scrutiny.
3. The human rights impacts of the General Agreement on Tariffs and Trade and
World Trade Organization (WTO) law and practice, in particular the dispute settlement
mechanism, are also addressed, recognizing that WTO multilateralism is more transparent
than practices under bilateral investment treaties and free trade agreements. The
Independent Expert is confident that WTO, through civil society inputs at its public forums,
will yet discover its vocation to use trade to promote human rights and development.
However, fundamental problems raised by bilateral investment treaties and free trade
agreements are reflected in WTO practices, notably concerning the agricultural and
intellectual property sectors. Closer monitoring by national parliaments and by the Inter-
Parliamentary Union (IPU) is necessary to recast trade in a human rights-friendly
framework. The tenth WTO Ministerial Conference, held in Nairobi in December 2015,
could have delivered good results had it been true to the commitments made under the
Doha Development Agenda, but it was seriously marred by the intransigence of some
States that attempted to bury the Agenda and prevented progress on food security and
environmental protection.
4. The issues are so complex and the consequences so serious that the present report
can be read only as a work in progress, since it will be necessary to continue monitoring the
adverse impacts of old bilateral investment treaties and free trade agreements and to see
whether initiatives to reform the system and eliminate contra bonos mores provisions in
those treaties result in a more democratic and equitable economic regime, or whether
egregious abuses continue with impunity. The role of parliaments is crucial in ensuring
1 World Investment Report 2015 (United Nations publication, Sales No. E.15.II.D.5);
http://investmentpolicyhub.unctad.org/ISDS; “Investor-state dispute settlement: the arbitration game”,
The Economist, 11 October 2014; European Economic and Social Committee, “Opinion of the
European Economic and Social Committee on Investor protection and investor to state dispute
settlement in EU trade and investment agreements with third countries”, Brussels, 27 May 2015.
2 ttip2016.eu/files/content/docs/Full%20documents/english_version_deutsche_richterbund
_opinion_ics_feb2016.pdf.
3 http://juecesparalademocracia.blogspot.ch/; http://ciarglobal.com/es/jpd-rechaza-arbitraje-ttip/.
GE.16-11938 3
human rights protection while promoting trade. The Parliamentary Conference of WTO in
June 2016 demonstrated awareness of the problems. The world expects more than rhetoric.
II. Facts about investment protection
5. World trade is expanding continuously. According to figures from the World Bank,
world trade reached US$ 19.11 trillion in merchandise exports in 2014.4 According to
WTO, the volume of trade in services in 2014 exceeded $4.87 trillion.5 Tariffs are already
low and do not constitute a significant hindrance to trade. There is no need to adopt more
“free trade agreements”, which are asymmetrical agreements providing privileges to
investors but no enforceable obligations.
6. Over the past decades, the number of bilateral investment treaties and free trade
agreements has grown beyond 3,200, following the hard sell and often over-optimistic
projections made by trade representatives. The siren call of foreign direct investment (FDI)
remains strong. Proponents claim that investment protection treaties are necessary to attract
FDI. Lobby groups including the International Chamber of Commerce routinely declare
that “strong investment protection standards should be a policy priority for all governments
in order to promote new waves of prosperity-enhancing FDI”.6 Yet no compelling empirical
evidence backs that up. Of course, some econometric studies contend that the treaties attract
investment, but other studies find that they have no effect or a negative impact.7 In 2015,
the European Union Commissioner for Trade, Cecilia Malmström, stated that “the
Commission is aware that most studies do not establish a direct and exclusive causal link
between the treaties and investment.”8 Brazil gets the lion’s share of FDI in Latin America,
yet has not ratified any bilateral investment treaties. South Africa has cancelled a number of
bilateral investment treaties (BITs) because, as a government official explained: “South
Africa does not receive significant inflows of FDI from many partners with whom we have
BITs, and at the same time, continues to receive investments from jurisdictions with which
we have no BITs.”9
7. Globally, 696 investor-State dispute settlement cases concerning 107 countries had
been counted as at January 2016.10 Owing to the opacity of the system and the non-
publication of many settlements, the actual figure could be higher. A quarter of the
registered cases end in settlement, frequently involving payments or changes in laws and
regulations to accommodate investors. However, the ontology of business is risk-taking.
Investors who think risk is too high should buy risk insurance or refrain from investing. The
State must not guarantee profit to investors. Protection is available through domestic courts.
8. Some 72 per cent of known cases were filed against developing and transition
economies. The number of cases against developed countries is growing as foreign
4 http://data.worldbank.org/topic/trade.
5 www.wto.org/english/res_e/statis_e/its2015_e/its2015_e.pdf, p. 11.
6 International Chamber of Commerce Austria, “Bilateral investment treaties and investor-State dispute
resolution”, 2014.
7 Lauge Poulsen, “The importance of BITs for foreign direct investment and political risk insurance”,
in Yearbook on International Investment Law and Policy 2009/2010, Karl P. Sauvant, ed. (New York:
Oxford University Press, 2010); Jason Yackee, “Do bilateral investment treaties promote foreign
direct investment? Some hints from alternative evidence”, University of Wisconsin Legal Studies
Research Paper No. 1114 (22 March 2010).
8 www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2015-008187&language=EN.
9 Xavier Carim, “International investment agreements and Africa’s structural transformation: a
perspective from South Africa”, South Centre Investment Policy Brief No. 4, August 2015, p. 4.
10 http://investmentpolicyhub.unctad.org/News/Hub/Home/504.
4 GE.16-11938
investors, arbitrators and new treaties bring investor-State dispute settlement into new
domains. Such settlement leads to socializing losses and privatizing gains,11 which is a
recipe for social unrest.
9. The number of such cases is rising. From a total of 3 known cases in 1995, 70 new
cases were registered during 2015. According to the United Nations Conference on Trade
and Development (UNCTAD),12 investors triumphed in 60 per cent of admissible cases. In
principle, States never “win”; all they can hope for is to be “acquitted”, and even then, they
recover only a portion, if any, of their legal costs, which commonly reach millions of
dollars. In Yukos Universal Limited (Isle of Man) v. the Russian Federation, the lawyers
billed $74 million and the tribunal’s three arbitrators took home $7.4 million. The award
amounted to $50 billion.13
10. The main financial beneficiaries of investor-State dispute settlement awards are not
small investors or middle-sized enterprises, whose investment would be most needed for
job creation and long-term development, but monopolies with at least $1 billion in annual
revenue and individuals with a net worth of over $100 million.14
11. The regulatory chill caused by the mere existence of investor-State dispute
settlements has effectively dissuaded many States from adopting much-needed health and
environmental protection measures. Peter Kirby of the law firm Fasken Martineau wryly
described investor-State dispute settlement as “a lobbying tool in the sense that you can go
in and say, ‘Okay, if you do this, we will be suing you for compensation’. It does change
behaviour in certain cases.”15 The law firm Steptoe and Johnson has referred to investor
protections as “a basis for preventing wrongful state conduct … As such, they may be a
highly important tool for foreign investors and industry associations in advocating against
legislative changes.”16 Although some treaties pro forma acknowledge State sovereignty,
the reality is different. Professor David Boyd has noted that “while there is language in
trade deals that purports to protect governments’ right to regulate, many arbitration panels
have ignored or narrowly interpreted these provisions, making them practically useless.”17
Professor David Schneiderman frankly described the system as “an emerging form of
supraconstitution … designed to insulate economic policy from majoritarian politics.”18
12. Several mega-regional treaties involving close to 90 States are currently under
negotiation, mostly in secret. They include the Trans-Pacific Partnership Agreement,19 the
Transatlantic Trade and Investment Partnership, the Comprehensive Economic and Trade
Agreement, negotiated between the European Union and Canada, and the Trade in Services
Agreement. If they enter into force with their investment chapters, the arbitration bonanza
will massively expand. As Nobel laureate Joseph Stiglitz aptly put it, “corporations are
attempting to achieve by stealth — through secretly negotiated trade agreements — what
11 Transnational Institute, “Socialising losses, privatizing gains” (Amsterdam, 2015).
12 World Investment Report 2015, p. 116.
13 www.iisd.org/itn/wp-content/uploads/2014/09/iisd_itn_yukos_sept_2014_1.pdf;
http://globalarbitrationreview.com/news/article/35248/us50-billion-yukos-awards-set-aside-hague/.
14 Pia Eberhardt, “The zombie ISDS: rebranded as ICS, rights for corporations to sue states refuse to
die” (Brussels, Corporate Europe Observatory, 2016), p. 14.
15 Pia Eberhardt, “The zombie ISDS”, p. 13.
16 www.steptoe.com/publications-9867.html.
17 www.thestar.com/opinion/commentary/2016/01/11/dont-let-trade-deals-hamper-climate-
progress.html.
18 David Schneiderman, Constitutionalizing Economic Globalization: Investment Rules and
Democracy’s Promise, (New York, Cambridge University Press, 2008), p. 3.
19 www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=17006.
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they could not attain in an open political process”,20 and “if there ever was a one-sided
dispute resolution mechanism that violates basic principles, this is it.”21
III. From the responsibility to protect to the responsibility to act
13. The notion of the responsibility to protect 22 was formulated at the 2005 World
Summit. Theoretically it has the potential, depending how it is interpreted and applied, to
reaffirm the duty of each State to protect the population under its jurisdiction from internal
and external dangers by the adoption of preventive and curative policies to counteract
structural violence caused by State and non-State actors. On the other hand, a narrow
interpretation of the responsibility to protect as a pretext to allow foreign intervention in the
internal affairs of States poses dangers signalled at the General Assembly debate in July
2009, which revealed the potential geopolitical misuse of the responsibility to protect as a
means to circumvent the jus cogens prohibition of the use of force stipulated in Article 2 (4)
of the Charter of the United Nations. While the responsibility to protect could advance
human rights, its slogan-like mediatization and the dangers of arbitrary and selective
application would erode the Charter.23
14. The Independent Expert proposes a reformulation of the doctrine to lift it out of the
narrow focus on protecting populations from war crimes and genocide to a broader duty to
protect populations from war, military interventions and structural violence. The
international community has an interest in reaffirming a duty to protect and actively
advance civil, cultural, economic, political and social rights. Governments, parliaments and
courts have a responsibility to act in the public interest for economic stability, social
development, environmental sustainability, food security, improvement of health and
labour standards, through taxation, precautionary and preventive measures against the
dangers of genetically modified organisms,24 fracking,25 open-pit mining, pesticides, air and
water pollution, corruption, monopolies and asymmetrical trade. Those generic obligations
of governance are the raison d’être of organized society. Rights holders of the responsibility
to act are individuals and peoples, including indigenous peoples. Duty bearers are
Governments, parliaments and courts.
15. Never must the courts become instruments of injustice. Never should they lend
themselves to the execution of manifestly unjust investor-State dispute settlement awards.
Courts should exercise their constitutional and implied powers to deny implementation in
cases of abuse of rights, unjust enrichment or manifestly ill-founded awards, such as when
arbitrators invent outrageously extensive interpretations.
16. The human rights and fundamental freedoms enshrined in the International
Covenant on Civil and Political Rights, the International Covenant on Economic, Social
and Cultural Rights, numerous regional human rights treaties like the Convention for the
Protection of Human Rights and Fundamental Freedoms (European Convention on Human
Rights), the European Social Charter, the American Convention on Human Rights and the
20 Joseph Stiglitz, “Developing countries are right to resist restrictive trade agreements”, The Guardian,
8 November 2013.
21 Joseph Stiglitz, “The secret corporate takeover of trade agreements”, The Guardian, 13 May 2015.
22 www.un.org/en/preventgenocide/adviser/responsibility.shtml; A/63/677.
23 www.un.org/press/en/2009/ga10850.doc.htm.
24 www.globalresearch.ca/the-seeds-of-suicide-how-monsanto-destroys-farming/5329947.
25 www.alternet.org/environment/8-dangerous-side-effects-fracking-industry-doesnt-want-you-hear-
about.
6 GE.16-11938
African Charter on Human and Peoples’ Rights, are binding treaty obligations, not mere
pledges.
17. It appears that investors and transnational corporations understand human rights
narrowly as the right to trade, the right to property and the right to profits. That perspective
is supported by invoking the “laws of the market”,26 a kind of ideological fundamentalism
or groupthink reflected in a speech by the former WTO Director Pascal Lamy, who argued
at a United Nations Institute for Training and Research conference on 26 September 2010
that “trade ensures concrete realization of human rights”.27 The “right to competition” is
also a favourite neo-liberal “right”. But trade, property and competition are not ends in
themselves and must be seen in the context of other rights and subject to reasonable
regulation. Competition presupposes a level playing field, which often necessitates
affirmative action to correct imbalances. Competition without solidarity is predator
behaviour, especially when competition is rigged in favour of mega-corporations and
monopolies.28
IV. Primacy of the international human rights treaty regime
18. All potential States parties to the Trans-Pacific Partnership Agreement, the
Transatlantic Trade and Investment Partnership, the Comprehensive Economic and Trade
Agreement and the Trade in Services Agreement are bound by the international human
rights treaty regime and most are parties to universal and regional human rights treaties,
including the International Covenant on Civil and Political Rights, the International
Covenant on Economic, Social and Cultural Rights, the European Convention on Human
Rights and the European Social Charter. Pacta sunt servanda requires States to fulfil their
human rights treaty obligations in good faith and prohibits them from entering into
agreements that would delay, circumvent, undermine or make impossible the fulfilment of
their human rights treaty obligations. However, discussing the human rights impacts of
trade with government officials, trade representatives and corporate lobbyists, the
Independent Expert realized that they did not immediately perceive the human rights
dimensions. Hence the following summary of human rights treaty provisions that have been
or can be adversely affected.
A. International Covenant on Civil and Political Rights
19. Article 1 provides that all peoples have the right of self-determination, to freely
determine their political status and freely pursue their economic, social and cultural
development. They have the right to freely dispose of their natural wealth and resources and
may not be deprived of their means of subsistence. States parties have an obligation to
promote the realization of the right of self-determination and cannot thwart it by entering
into commercial agreements that effectively deprive peoples of their natural resources or
26 Words conceal more than they elucidate. “The market” is not a law of natural science, but a bundle of
power relations. When a dogmatist invokes as a magic phrase “the laws of the market”, he means
what the mega-corporations want. “Investment” may or may not be beneficial. While the funding of
long-term investment in socially useful activities must be promoted, the management of existing
assets to milk them for rents, dividends and capital gains hurts society. Wealth extraction is different
from wealth creation. Market fundamentalism and free-trade-populism constitute a utopian,
millenarian faith in the “invisible hand” of the market, and in a non-existent “trickle down” effect.
27 www.wto.org/english/news_e/sppl_e/sppl172_e.htm.
28 Ha-Joon Chang, “Kicking away the ladder”, Foreign Policy In Focus (Silver City, NM:
Interhemispheric Resource Center, December 2003).
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entail land-grabbing or population displacement. Pursuant to the United Nations
Declaration on the Rights of Indigenous Peoples, any use of indigenous lands requires their
free, prior and informed consent. The Indigenous and Tribal Peoples Convention, 1989
(No. 169) of the International Labour Organization (ILO) stipulates bottom-up consultation
and participation.29
20. Article 2 provides that all individuals have a right to an effective remedy, such as to
compensation for environmental damage caused by transnational corporations. But even a
decision of the highest State court against a transnational corporation can be left without
implementation when the corporation invokes investor-State dispute settlement against the
State and refuses to pay compensation to the victims (see, for example, Chevron
Corporation and Texaco Petroleum Corporation v. the Republic of Ecuador, as discussed
in the Independent Expert’s other reports). Another problem is that individual victims have
no standing before investor-State dispute settlement or investment court system tribunals.
21. Article 6 concerns the right to life. Many activities of transnational corporations
threaten the right to life and the right to health,30 such as when large areas are polluted
through open-pit mining, oil sludge, toxic waste and radioactivity. The State has an
obligation to adopt precautionary measures to avert such dangers, and that cannot result in
corporate claims for “lost profits”. Transnational corporations have been guilty of handing
over the names of unionists to the police and to paramilitary groups, leading to the
disappearance and death of human rights defenders.31 In order to accommodate the interests
of transnational corporations, national police and sometimes armies have been used against
demonstrators, at times resulting in deaths. The so-called “evergreening” of patents in the
pharmaceutical industry may also lead to deaths because of lack of access to generic
medicines and medical equipment at affordable prices.
22. Article 12 concerns the right to freedom of movement. Some mega-projects have led
to the involuntary transfer of populations and the loss of homelands, churches and
cemeteries. 32 The oil, gas and mining industries have left landscapes devastated and
destroyed ecosystems, causing populations to move. In cases where the environment has
been seriously polluted, populations cannot return to their homes.
23. Article 14 concerns the right to due process. All suits at law must be adjudicated by
independent tribunals under the principles of transparency and accountability. Investor-
State dispute settlement tribunals have repeatedly been shown to lack independence,
transparency, predictability and accountability. That retrogression undermines the rule of
law based on public courts. Some arbitral awards violate the principle of separation of
powers, such as when the arbitrators in the Chevron case ordered the Government of
Ecuador to interfere with the independent Ecuadorian judiciary by overruling the judgment
of the Ecuadorian courts.
24. Article 19 concerns the right to have access to information, including on free trade
and investment agreements. Multiple stakeholders, including consumer groups,
environmental protection experts, labour unions and health professionals, need precise
29 A/70/301.
30 WHO Director-General, Margaret Chen, at the opening of the sixty-ninth session of the World Health
Assembly in May 2016, warned about “man-made disasters created by policies that place economic
interests above concerns about the well-being of human lives and the planet that sustains them”,
www.who.int/dg/speeches/2016/wha-69/en/.
31 Horacio Verbitsky and Juan Pablo Bohoslavsky, Cuentas Pendientes (Buenos Aires, Siglo XXI
Editores, 2013); www.theguardian.com/world/2016/jun/21/berta-caceres-name-honduran-military-
hitlist-former-soldier.
32 A/HRC/32/40.
8 GE.16-11938
information to evaluate the impact of trade agreements on society. They should not have to
rely on whistle-blowers. Secrecy has a corrosive effect on democracy and the rule of law.
25. Article 21 concerns the right of peaceful assembly. Demonstrators against mega-
projects have been harassed, detained and some of them killed.33
26. Article 24 concerns children’s rights. Compensation paid to transnational
corporations pursuant to investor-State dispute settlement awards reduces public funds to
advance the rights of the child, reduce infant mortality and provide better education.
27. Article 25 concerns the right to participate in the conduct of public affairs, which has
been systematically violated when elaborating and negotiating bilateral investment treaties
and free trade agreements in secret, and when adopting them without parliamentary
oversight. In view of the dangers posed by investor-State dispute settlement and the
investment court system to the rule of law and human rights, such agreements must be
subject to referendums. Parliaments must not fast-track ratification of treaties that have
been negotiated without multi-stakeholder participation or have met massive public
opposition when provisions of the treaties have become public. More than 3.3 million
Europeans signed a petition against the Transatlantic Trade and Investment Partnership and
a public consultation by the European Commission resulted in rejection by 97 per cent of
respondents.34
28. Article 26 concerns equality before the law. The right to equality before the law and
the prohibition of discrimination are violated when special rights are granted to foreign
investors, excluding domestic investors and corporations.
29. Article 27 concerns minority rights. While indigenous peoples are protected under
article 1 of the Covenant, minorities also demand protection of their culture and livelihood,
which are frequently violated by transnationals through destruction of their environment,
hunting, fishing and their access to clean water.
B. International Covenant on Economic, Social and Cultural Rights
30. Investor-State dispute settlement and the investment court system adversely affect
the enjoyment of most provisions of the Covenant, as elucidated in the Committee’s general
comments.
31. Article 6 concerns the right to work. Mega-agreements like the North American Free
Trade Agreement have led to the loss of millions of jobs and a race to the bottom in labour
rights, such as when manufacturing jobs were relocated from the United States of America
to Mexican maquiladoras, notorious for subhuman working conditions and unconscionably
low wages.
32. Article 7 concerns the right to just and favourable conditions of work. In its general
comment No. 23 (2016) on that right, the Committee on Economic, Social and Cultural
Rights stressed that it must be protected in trade agreements.
33. Article 8 concerns the right to form trade unions and to strike. Trade unionists have
been targets of transnational corporations, dismissed from their jobs, and sometimes victims
of violence perpetrated by private security companies and paramilitary groups.
33 A/HRC/29/25.
34 Pia Eberhardt, “The zombie ISDS”, p. 5. Yet the European Commission failed to see the elephant in
the room; why include investor-State arbitration at all?
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34. Article 9 concerns the right to social security. The relocation of jobs to countries that
have poor or no social security legislation counters the commitment to progressively
achieve that right. The Committee’s general comment No. 19 (2007) on the right to social
security states that agreements concerning trade liberalization should not restrict a State
party’s capacity to ensure the full realization of the right to social security.
35. Article 10 concerns the protection of the family and requires States parties to accord
the family, as the natural and fundamental group unit of society, the widest possible
protection and assistance. Moreover States parties should provide mothers with paid leave
before and after childbirth, and protect children from economic and social exploitation.
36. Article 11 concerns the right to an adequate standard of living, including adequate
food, clothing and housing. In developing countries, food security is of crucial importance.
Threats of investor-State dispute settlement litigation from developed countries’ subsidized
agro-industry have prevented developing countries from adopting agricultural policies to
ensure food security.35 Investor-State dispute settlement awards and potential investment
court system judgments deprive Governments of funds essential to meet their health,
housing and education obligations.
37. Article 12 concerns the right to the highest attainable standard of physical and
mental health. The so-called “evergreening” of patents by the pharmaceutical industry
reduces access to generic medicines.36 The deliberate withholding of life-saving medicines
entails a violation of the right to life.
38. Article 13 concerns the right to education. Privatizing education aggravates the
already unbalanced playing field, making it more difficult for poor families to help their
children overcome poverty.
39. Article 15 concerns the right to one’s own culture. That includes one’s own
language and its use in film, television and music. A population will lose its identity when
flooded by cheap foreign films and television. Governments have an obligation to preserve
their populations’ cultures as world heritage in accordance with the aim of the United
Nations Educational, Scientific and Cultural Organization to promote diversity and oppose
cultural imperialism.
40. Article 25 is crucial for indigenous and non-self-governing peoples, in addition to
article 1 on self-determination. Article 25 reaffirms that nothing in the Covenant should be
interpreted as impairing the inherent right of all peoples to enjoy and utilize fully and freely
their natural wealth and resources. The logging, oil, gas and mining industries loot
indigenous resources.
41. The regional human rights protection systems, the Convention for the Protection of
Human Rights and Fundamental Freedoms (arts. 5, 6, 8 to 11, 13 and 14), the European
Social Charter, the American Convention on Human Rights and the African Charter on
Human and Peoples’ Rights establish binding obligations that require proactive measures of
implementation and affirmative action to counteract engrained inequalities and the sequels
of colonialism and discrimination.
42. Although the human rights dimension of trade is obvious, investors and corporations
think that they can continue working in a human-rights-free zone. Facts fall into the
category of “facts without consequences” because the neo-liberal bulldozer rolls on,
ignoring the interests of billions of human beings who are subjected to exploitation and
habitat-devastation.
35 Guiding principles on human rights impact assessments of trade and investment agreements.
36 A/69/299.
10 GE.16-11938
V. Investor-State dispute settlement, the investment court system and State sovereignty
43. Further research into the relationship between trade and human rights has led the
Independent Expert to reverse his conditional endorsement of an international investment
court (see A/HRC/30/44 and Corr.1, paras. 62 (i) and 66 (a); and A/70/285 and Corr.1,
para. 55 (a)). Having re-evaluated the dangers, he considers the investment court system to
be essentially a rebranding exercise.
44. In September 2015, European Union Commissioner for Trade, Cecilia Malmström,
proposed replacing investor-State dispute settlement with an investor court system. Despite
some improvements, including the introduction of an appeal mechanism and the
appointment of judges, the investment court system fails to address the fundamental
investor-State dispute settlement problems and aggravates the situation by multiplying the
number of potential claims by a factor of 10,37 thus increasing the regulatory chill. The
investment court system must be rejected for the following reasons:
(a) The system is a one-way jurisdiction where investors can sue States, but not
vice-versa. It is based on the arbitration model and is a pseudo-court lacking the
fundamental safeguards to ensure an independent legal system, as found by the associations
of German and Spanish judges;
(b) The system does not impose obligations on investors, such as the “do no
harm” principle, or compliance with environmental, social, labour, health or safety
standards;
(c) Foreign investors, unlike domestic investors and corporations, are privileged
and allowed to circumvent domestic courts. There is no requirement to exhaust domestic
remedies;
(d) Expansive interpretations of the terms “investment”, “indirect expropriation”,
“fair and equitable treatment” and “legitimate expectations” allow investors to sue States,
even when the impugned legislation is in the public interest;
(e) The burden of proof has been reversed, so that a State has to prove that its
social legislation is “legitimate” and not “excessive”, thus inviting investors to litigate
against precautionary measures and health and environmental legislation;
(f) The chilling effect or regulatory freeze is intensified, so that States may not
dare adopt social legislation for fear of being sued for millions of dollars;
(g) The system does not grant standing to victims of investor action.
45. Under the proposed investment court system, the following pending investor-State
dispute settlement cases could be filed, generating similar legal costs and billion dollar
awards:
(a) Philip Morris Brands Sàrl and others v. Uruguay, which was filed in 2010
and is still pending, in which the tobacco giant is suing Uruguay for implementing its
obligations under the World Health Organization Framework Convention on Tobacco
Control;
37 Natacha Cingotti and others, “Investment court system put to the test” (Canadian Centre for Policy
Alternatives, Corporate Europe Observatory, Friends of the Earth Europe, Forum Umwelt und
Entwicklung and the Transnational Institute, Amsterdam/Brussels/Berlin/Ottawa, 2016); Maude
Barlow and Raoul Marc Jennar, “Le fléau de l’arbitrage international”, Le Monde diplomatique,
February 2016.
GE.16-11938 11
(b) Lone Pine Resources Inc. v. Canada, concerning a precautionary fracking
moratorium enacted in Quebec;
(c) Vattenfall AB and others v. Germany (2009), concerning the imposition in
Hamburg of environmental standards for water use at a coal-fired power plant;
(d) Vattenfall AB and others v. Germany (2012), concerning the decision of
Germany to phase out nuclear energy;
(e) TransCanada Corporation and TransCanada PipeLines Limited v. The
United States of America, in connection with President Obama’s decision to oppose
building the controversial Keystone XL pipeline as part of the commitment of the United
States to tackle climate change;
(f) Cosigo Resources, Ltd. and others v. Colombia, concerning denial of a
permit to mine in the Amazonian rainforest. Colombia is being sued for $16.5 billion in
“lost profits.”
46. Moreover, the same type of cases already decided by investor-State dispute
settlement arbitrators in favour of corporations could be filed under the proposed
investment court system, including:
(a) William Ralph Clayton and others v. Canada, concerning an environmental
impact assessment that prevented the construction of a large quarry and marine terminal in
an ecologically sensitive locality;
(b) Metalclad Corporation v. Mexico, concerning the denial of a permit for a
toxic waste deposit.
47. Those cases raise both human rights and constitutional questions. Can a State
constitutionally allow such interference with its policy space? Can a State repudiate its duty
to take precautionary measures, demand human rights, health and environmental impact
assessments,38 regulate taxation or raise the minimum wage? The State has a constitutional
obligation to protect the population not only from an invading enemy army but also from
private actors, including monopolies, cartels and corporate predators. The State has the
obligation to prohibit certain business activities in order to protect the lives and welfare of
the population. No State can turn its back on independent, transparent and accountable
public courts.
48. Another question concerns the legal effect of the consent purportedly given. Have
States that ratify bilateral investment treaties and free trade agreements effectively given
consent to the run-away jurisdiction of investor-State dispute settlement or the investment
court system? Is consent perfected or only inchoate? There is a peremptory norm of
customary international law that jurisdiction is based on consent. That norm is based on the
practice of sovereign States.
49. To illustrate that point, it is instructive to recall that the jurisdiction of the
International Court of Justice is not universal or automatic, but conditioned on a declaration
given by the State pursuant to Article 36 of the Statute of the International Court of Justice.
That declaration of consent can also be withdrawn. Two or more States can consent to the
jurisdiction of the International Court of Justice by ad hoc compromis. Yet another
possibility of establishing jurisdiction is through treaty clauses, by virtue of which a State
undertakes to accept the jurisdiction of the Court. Over 300 treaties contain such clauses,
38 Guiding principles on human rights impact assessments of trade and investment agreements; James
Harrison and Alessa Goller, “Trade and human rights: what does ‘impact assessment’ have to offer?”,
Human Rights Law Review, vol. 8, No. 4 (2008), pp. 587-615.
12 GE.16-11938
such as article IX of the Convention on the Prevention and Punishment of the Crime of
Genocide. Other treaties have optional protocols that provide for automatic referral, such as
the Optional Protocols to the Vienna Convention on Diplomatic Relations. As with article
36 of the Statute of the International Court of Justice, such consent can be withdrawn.
50. Without the consent of the relevant State or States, tribunals lack jurisdiction.
Investor-State dispute settlement and the investment court system, their “umbrella” and
“survival clauses”, violate the norm of jurisdiction by consent. As States can refuse the
jurisdiction of the International Court of Justice, a fortiori they can decline the jurisdiction
of ad hoc arbitral tribunals of three private arbitrators, especially when they encroach on the
fundamental functions of the State.
51. Article 62 of the Vienna Convention on the Law of Treaties states that when the
situation has significantly changed from the time when an agreement was signed (rebus sic
stantibus), the agreement can be revised or terminated. Other provisions of that Convention
allow revision or termination in cases of error (art. 48), fraud (art. 49), corruption (art. 50)
or coercion (arts. 51-52).
52. As is clear from diplomats’ statements and academic research, when most States,
particularly developing States, entered into bilateral investment treaties and free trade
agreements, hardly anyone imagined that investor-State dispute settlement arbitrators
would challenge the ontological functions of the State in the fields of taxation, health,
labour and environmental standards, overriding national law and the judgments of domestic
tribunals. Such a surrender of sovereignty would have required absolute clarity in the texts
of the treaties and agreements, not vague terminology subject to capricious interpretation.
The presumption in customary international law is that a State cannot surrender sovereignty
by chance or inadvertence, because international ordre public cannot accept that a State
waive its responsibility to act functions. If a State does, the agreement can be considered as
contra bonos mores.
53. In conversations with lobbyists and trade representatives, the Independent Expert
was confronted with the question of why States signed bilateral investment treaties and free
trade agreements in the first place. Perhaps the best answer was given by the Danish
political scientist Lauge Poulsen, who conducted worldwide research and asked many
government officials that question. He notes that “both qualitative and econometric
evidence strongly indicates that a bounded rationality framework is best suited to explain
the popularity of BITs in the developing world … By overestimating the benefits of BITs
and ignoring the risks, developing country governments often saw the treaties as merely
‘tokens of goodwill’”.39 Poulsen shows that developing countries expected that the treaties
would bring more foreign investment,40 although that belief was never backed by empirical
evidence and remained mostly unfulfilled, relying to the detriment of their populations on
the positive “publicity” for those treaties and on UNCTAD advice. He observes that
Governments were largely unaware of the political and economic risks, treaty negotiations
lasted only a few hours, and sometimes not even lawyers or the experts from the justice
ministries were involved. Poulsen concludes that “the majority of developing countries …
signed up to one of the most potent international legal regimes underwriting economic
globalization without even realizing it at the time”.41 That assessment raises issues of good
faith on the part of those selling the treaties, manifests unconscionable lack of due
39 www.cbs.dk/files/cbs.dk/abstract.pdf.
40 Lauge Poulsen, Bounded Rationality and Economic Diplomacy: The Politics of Investment
Treaties in Developing Countries (Cambridge, Cambridge University Press, 2015);
www.oecd.org/trade/benefitlib/.
41 Lauge Poulsen, Bounded Rationality and Economic Diplomacy, p. xvi.
GE.16-11938 13
diligence, and might lead to the suspicion of bribery and corruption. Treaty-making cannot
be a game of trying to trick the other party into a toxic deal and then holding it hostage
through “survival clauses”. In sum, an investment protection mechanism cannot result in
the transfer of important components of sovereignty from the State to private parties.
Contracts that are unconscionable in their aims or in their consequences42 are invalid and
must be declared null and void under article 53 of the Vienna Convention on the Law of
Treaties.
54. Considering that jurisdiction is based on consent, it would be instructive to consult
the travaux préparatoires of bilateral investment treaties and free trade agreements and see
whether investors and transnational corporations exercised due diligence and full disclosure
and whether States understood the stakes and expressed valid consent. Treaties are made
with rational expectations on both sides. No State will consent to a treaty when negative
consequences are likely to outweigh potential benefits. If those dangers and negative
consequences are not spelled out, consent cannot be presumed.
VI. World Trade Organization rules and practice
55. The Independent Expert wishes to thank the staff of the Secretariat of WTO for
devoting much time to addressing his questionnaire (see annexes III and IV) and explaining
in bilateral meetings many aspects of their important work.
56. He also thanks the former Special Rapporteur on the right to food, Olivier de
Schutter, for sharing his insights in relation to the impacts of WTO rules and practice on the
right to food and on human rights more generally.
57. The Independent Expert recognizes manifold human rights problems arising from
commercial activity, but places trust in the existence of multilateral organizations like
WTO. They have the opportunity and mechanisms to make trade work for human rights and
development, as exemplified, for instance, by the adoption of the Doha Declaration, which
is at the origin of an extended transition period for least developed countries exempting
them from the obligation to enforce patents for pharmaceutical products.43 The good will of
States parties and a change of mindset toward more international solidarity offers a starting
point.
58. Since the third Ministerial Conference, held in Seattle in 1999, and the civil society
outcry against the adverse human rights impacts of commerce, WTO has become
increasingly aware of the human rights dimensions of trade. In the wake of the global food
crisis in 2008, the United Nations Secretary-General established the High-level Task Force
on the Global Food Security Crisis, involving more than 20 international organizations,
including WTO and the Office of the United Nations High Commissioner for Human
Rights (OHCHR), towards a coordinated response to the crisis. A trilateral initiative with
the World Health Organization (WHO) and the World Intellectual Property Organization
(WIPO) also allows for policy dialogue and experience sharing. Since 2001, WTO has
conducted a yearly Public Forum,44 in which as many as 1,500 representatives from civil
42 The contract between Shylock and the Merchant of Venice, Antonio, was contra bonos mores,
because failure to reimburse a debt cannot have death as its consequence. By analogy, when a State
cannot repay an investor, the consequence cannot be interventionism as practised in the nineteenth
and twentieth centuries, when overt imperialism ruled, or more recently by IMF and central banks
when imposing “austerity measures” and “privatizations”; A/65/260 and A/69/273.
43 Annex IV.
44 Formerly known as “public symposium”,
www.wto.org/english/forums_e/public_forum_e/public_forum_e.htm.
14 GE.16-11938
society, academia, business, media, Governments, parliamentarians and inter-governmental
organizations share their knowledge and make recommendations on how to tap the
potential for multilateral cooperation and growth and how best to implement the
commitments of the Doha Development Agenda.
59. While the Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS Agreement) may allow some policy space to member States, allowing them to
exclude from patentability those inventions that, if commercially exploited, might adversely
impact human, animal, plant life or the environment, and could potentially be invoked to
exclude genetically modified crops,45 the State’s policy space is far from being ensured, and
the regulatory chill may still prevent States from adopting precautionary measures. The
priority of human rights, health and environmental protection must be spelled out.
60. WTO held its tenth Ministerial Conference from 15 to 19 December 2015 in
Nairobi. In a joint press release issued before it, the Special Rapporteurs on the right to
food and on the right of everyone to the enjoyment of the highest attainable standard of
physical and mental health joined the Independent Expert in urging Governments to deliver
on the Doha Development Agenda (DDA) and not to betray commitments to address the
needs of developing economies. “If trade is to work for human rights and development, it
should contribute to the realization of the rights to adequate food, to the highest attainable
standard of physical and mental health, and to live in a clean environment.” There is no
justification for defaulting on the Agenda: “Human rights obligations must be reaffirmed in
the context of global trade rules to ensure that WTO negotiations and rules support
development efforts to eliminate the root causes of hunger, ill-health and poverty,
strengthen human rights protection and promotion and ultimately ensure that the newly
adopted Sustainable Development Goals are achieved.”46
61. A majority of States meeting in Nairobi favoured reaffirmation of the Doha
framework, yet the opposition of some developed countries blocked consensus. Pressure on
developing countries aimed at the introduction of new issues that would undermine the
promotion of the right to development were reported. In response to the questionnaire sent
by the Independent Expert, Saudi Arabia indicated that: “The WTO top priority should be
concluding the DDA issues. The majority of WTO members are developing countries. A
successful conclusion of the Doha Round would address developing country needs and
contribute significantly to their economic growth and their integration into the global
economy. Furthermore, concluding the Doha Development Round would address the trade
distortions and imbalances in the WTO various agreements, and preserve the Special [and]
Differential Treatment flexibilities granted to the developing countries … The preamble of
[the] Marrakesh agreement47 establishing the WTO explicitly sets the objective to ‘raise
standards of living, ensuring full employment and a large and steadily growing volume of
real income and effective demand’.”
62. While promoting trade, WTO should place people before profits, and development
before the expansion of monopolies. As the Director at the Washington Centre for
Economic and Policy Research, Deborah James, observed in 2015: “Despite the global
consensus, the rules in the WTO remain unchanged from decades past. WTO rules do not
allow developing countries that were not subsidizing in 1994 to subsidize beyond the de
minimis … amount allowed to all WTO members. Meanwhile, the United States and
Europe are allowed tens of billions a year in overtly trade-distorting subsidies for exported
45 Annex IV.
46 www.ohchr.org/en/NewsEvents/Pages/DisplayNews.aspx?NewsID=16870&LangID=E.
47 www.wto.org/english/docs_e/legal_e/04-wto_e.htm.
GE.16-11938 15
products, and have yet to implement the abolition of those subsidies to which they agreed
nearly 10 years ago.”
63. Implementation of those commitments would be facilitated if WTO were
incorporated into the United Nations system and subordinated to the purposes and
principles of the United Nations. Incorporation pursuant to articles 57 and 63 of the Charter
would ensure that WTO not only actively contributes to the work of the Economic and
Social Council, as it can proudly claim, but also gives proper weight to human rights as part
of its own constitutional law.
64. The Nairobi Ministerial Conference reached some agreements on agricultural export
subsidies, food aid and other issues. However, the Information Technology Agreement,
covering products like Global Positioning System navigation systems and medical products
such as magnetic resonance imaging machines, was primarily drafted by high income
countries. None of the countries from the Group of Least Developed Countries was
represented and only one of the lower-middle-income countries was represented.
65. It would have been desirable and in keeping with commitments to reduce poverty to
adopt a clear statement on the legitimacy of public stockholding for food security that
would allow countries to hold food stocks and enable them to deal with food shortages and
fluctuations in global market prices.
66. While some developing countries were successful in securing concessions on cotton,
an important issue for West African States, the rich countries won the deal on agricultural
export subsidies, which did not abolish general subsidy schemes like the European Union
Common Agricultural Policy. Observers noted that “the uneven WTO playing field,
whereby rich countries’ subsidy schemes are categorized as being ‘allowable’ while poorer
countries are prevented from subsidizing their farmers, will continue”.48
67. Barely three months after agreement on the Sustainable Development Goals, the
Nairobi Ministerial Conference failed to implement target 17.10, pursuant to which States
would “promote a universal, rules-based, open, non-discriminatory and equitable
multilateral trading system under the World Trade Organization, including through the
conclusion of negotiations under its Doha Development Agenda”. That paradox highlights
the need to rethink the global trading system and the skewed ideological approach taken by
some negotiators. One problem with WTO, beyond Doha and Nairobi, is the prevalent
vision that equates “progress” with the growth of trade volumes and exports or with a
higher gross domestic product. The Charter of the United Nations advocates another vision
of progress as development, solidarity and human rights in a progressively more democratic
and equitable international order.
68. Notwithstanding press comments in the United States and the European Union
declaring the Doha Development Agenda “dead”, paragraphs 30, 31 and 34 of the Nairobi
Declaration give reason for hope.49 While acknowledging the stalemate, they indicate that
the Doha Work Programme is a single undertaking, meaning that Western countries cannot
cherry-pick which parts to prioritize. It appears relevant for the developing countries to
continue the struggle on the negotiating agenda of the single undertaking of that
Programme. Under no conditions can any conditional plurilateral agreements, as envisaged
by the United States and the European Union, be incorporated into the WTO treaty
48 www.globaljustice.org.uk/blog/2015/dec/23/what-really-happened-wto-summit.
49 www.wto.org/english/thewto_e/minist_e/mc10_e/mindecision_e.htm.
16 GE.16-11938
framework, except when there is a consensus on them at a ministerial conference.50 Yet, at
the Bali Ministerial Conference, held in 2013, the developing countries surrendered their
most powerful leverage when they conceded the Trade Facilitation Agreement as a separate
accord. Bearing in mind that that Agreement has not entered into force, one may suggest
the developing countries withhold deposit of their instruments of ratification until they
secure their own demands, including Nairobi decisions on “deliverables”, in a single
protocol incorporating the results of the Doha Work Programme.
69. The outcome document of the eleventh session of the Parliamentary Conference on
WTO, held on 13 and 14 June 2016, states: “We appreciate the decision on public
stockholding for food security purposes and call for the conclusion of negotiations on
finding a permanent solution to the issue … We believe that the issue of food security is
vital for developing countries and that WTO rules must support efforts to combat hunger. In
line with the same decision, we also want to stress the importance of a speedy adoption of a
proposal for a special safeguard mechanism … Flexibility, openness, inclusiveness and
political engagement will be key to advancing on all the remaining issues of the Doha
Development Agenda.”
VII. World Trade Organization dispute settlement
70. On 24 February 2016, a WTO dispute panel adopted a decision against the efforts of
India to create renewable energy through the extended use of solar panels.51 One would
think that, after the Conference of the Parties to the United Nations Framework Convention
on Climate Change, everyone would support such initiatives, but WTO dispute panels seem
to be caught in their own mantras and incapable of showing flexibility in accommodating
the new priorities imposed by climate change. Despite some interesting initiatives in that
field, such as the WTO Committee on Trade and Environment, there is still unwillingness
to interpret broadly the general exceptions provided under the General Agreement on
Tariffs and Trade 1994.52
71. The National Solar Mission of India, which aims at increasing the country’s
renewable energy in line with Sustainable Development Goal 7 on ensuring access to
affordable, reliable, sustainable and modern energy for all, is a reasonable plan. It would
create local jobs and bring clean energy to millions by generating 100 gigawatts of solar
power annually, consistent with the goals of the Framework Convention on Climate
Change. The WTO case was brought by the United States, which challenged the domestic
content clause of India, which would require part of the solar cells to be produced
nationally. India unsuccessfully tried to reach a settlement with the United States and now
may have to adjust its solar programme to avoid WTO sanctions. The panel concluded that
the measures of India were inconsistent with article 2.1 of the Agreement on Trade-Related
Investment Measures and article III:4 of the General Agreement on Tariffs and Trade 1994,
and were not covered by the derogation in article III:8 (a) of that General Agreement, or
justified under the general exceptions in articles XX (j) and XX (d) of that General
Agreement. The panel concluded that benefits accruing to the United States had been
50 http://thewire.in/17950/news-of-dohas-death-may-be-premature-but-india-china-must-fight-to-save-
the-day/; Chakravarthi Raghavan, The Third World in the Third Millennium CE (Penang, Third World
Network, 2014).
51 www.wto.org/english/news_e/news13_e/ds456rfc_06feb13_e.htm;
www.ictsd.org/bridges-news/biores/news/us-launches-new-wto-challenge-against-india-solar-
incentives; and www.wto.org/english/tratop_e/dispu_e/cases_e/ds456_e.htm.
52 www.wto.org/english/docs_e/legal_e/06-gatt_e.htm.
GE.16-11938 17
impaired. India appealed the decision on 30 April 2016,53 and on 13 May announced that it
would bring as many as 16 claims against the United States.54
72. Friends of the Earth has commented: “The WTO ruling against India’s National
Solar Mission shows how arcane trade rules can be used to undermine governments that
support clean energy and local jobs. The ink is barely dry on the Paris Climate agreement,
but clearly trade still trumps real action on climate change.”55 That is paradigmatic of what
is wrong with the pro-business approach to the regulatory space of States and with the so-
called “Washington consensus” that consistently opposes industrial policy-making by
States.56 A United Nations campaign is needed to mainstream human rights into the work of
WTO and to establish clear guidelines for dispute settlement panels giving due weight to
human rights, health and environmental concerns.
VIII. Trade and human rights facilitation
73. The United Nations is the preeminent international organization and States should
ensure it has the power to coordinate the work of all other international organizations, or at
least to prevent them from frustrating the purposes and principles of its Charter. It is an
anomaly that other organizations like WTO, the World Bank and the International
Monetary Fund (IMF), as well as non-State actors, including transnational corporations, are
competing with the United Nations in setting the world agenda and have a negative impact
on the enjoyment of human rights by billions of women, men, children and elderly persons.
Instead of such institutional competition, greater coordination is necessary. The twenty-first
century cannot afford multiple world organizations taking the international order in
different and often opposite directions. The international investment regime is not a “stand-
alone” legal regime; it must be made to conform with the Charter of the United Nations and
international human rights treaties. The so-called “fragmentation of international law” does
not mean that conflicting legal regimes can function simultaneously and that conflict should
be settled by three private arbitrators. Human rights are too important to be subordinated to
mercantilism.57 In case of conflict, only the highest public courts can decide in the light of
the totality of international law. Until amended by States Members, the Charter of the
United Nations remains the principal treaty that determines the structure and functioning of
the international order.
74. Article 103 of the Charter of the United Nations stipulates that all treaties must be
compatible with the Charter. To the extent that aspects of trade agreements and WTO
directives hinder the achievement of the purposes and principles of the Charter, including
human rights and development, they must be revised. That requires the recognition that
human rights are not a barrier to trade, but that trade can be a significant obstacle to the
realization of human rights.
75. Saying “no” to the Trans-Pacific Partnership Agreement, the Transatlantic Trade and
Investment Partnership, the Comprehensive Economic and Trade Agreement and the Trade
53 www.wto.org/english/news_e/news16_e/ds456apl_20apr16_e.htm.
54 www.pv-magazine.com/news/details/beitrag/india-confirms-it-will-file-16-solar-cases-against-us-
under-wto-dispute_100024597/#axzz49OIWaEFn.
55 www.bbc.com/news/world-asia-india-35668342.
56 Robert Wade, “The role of industrial policy in developing countries”, in UNCTAD, Rethinking
Development Strategies after the Global Financial Crisis, vol. I, pp. 67-80; José Salazar-Xirinachs,
Irmgard Nübler and Richard Kozul-Wright (eds.), Transforming Economies: Making industrial policy
work for growth, jobs and development (Geneva, ILO, 2014).
57 Juan Hernández Zubizarreta and Pedro Ramiro, Contra la lex mercatoria (Barcelona, Icaria editorial,
2015).
18 GE.16-11938
in Services Agreement will not have apocalyptic consequences, bring world trade to a
grinding halt or make FDI stop flowing. Henceforth trade must be made to benefit all in
society, not only transnational corporations. Objectively there is no need for more free trade
agreements, which hitherto have engendered advantages for few and disadvantages for
many. A corporate takeover of State functions subverts States’ constitutional order and
renders the fulfilment of human rights treaty obligations impossible. The world economy
before free trade agreements and investor-State dispute settlement was certainly not
business-unfriendly and it prospered through a healthy level of trade.
76. Thus, the debate is not whether there should be “free trade” or not. The benefits of
responsible free trade are not questioned. Jacking up tariffs or returning to self-supporting
communities with no commercial exchanges are not imaginable. The choice is not between
“anything-goes” and totalitarianism. Trade with a conscience and democratic controls
promotes development while respecting transparency and accountability. Governments,
parliaments and courts are reminded of their responsibility to act to achieve a just
international economic order in the sense of General Assembly resolution S-6/3201 of 1
May 1974.
IX. A treaty making the Guiding Principles on Business and Human Rights binding
77. A democratic and equitable international order, as prescribed in the Charter of the
United Nations, cannot be achieved through deregulation of trade, markets and financial
services. While enterprises deserve protection from corrupt Governments and arbitrary
expropriations, Governments also need protection from bribery and corruption by investors,
speculators and transnational corporations. Individuals and peoples deserve protection and
remedies against corporate abuse, land-grabbing and exploitation.
78. Observers have long decried the anomaly that while businesses have secured
privileged protection of their investments and have created privatized arbitral tribunals to
enforce their view of the “law”, there is no tribunal to protect Governments from business
abuse and no protection of individual victims from the negative consequences of business
activities. That normative asymmetry must be corrected.
79. Fifty years after the adoption of the International Covenant on Civil and Political
Rights and the International Covenant on Economic, Social and Cultural Rights, there is
still no enforcement mechanism. That reduces the credibility of United Nations institutions
that continue adopting “Views”, declarations and resolutions, which many States and non-
State actors ignore. While there are enforcement mechanisms for trade and other
agreements in WTO and investor-State dispute settlement, it is imperative to create them
globally for human rights treaties. The promise of the United Nations Global Compact and
the Guiding Principles on Business and Human Rights has not been realized, simply
because self-regulation never works.
80. Binding obligations on investors and corporations must be incorporated into trade
and investment agreements, and public courts must have jurisdiction to examine violations
and impose sanctions on violators. Although the Guiding Principles are based on hard law,
they are violated with impunity, as illustrated by bilateral investment treaties and free trade
agreements that encroach into the regulatory space of States. The treaty should provide for
its own monitoring and enforcement body or be incorporated into the International
Covenant on Civil and Political Rights and the International Covenant on Economic, Social
and Cultural Rights as optional protocols, stipulating that decisions are legally binding, as
are those of the Inter-American Court of Human Rights and the European Court of Human
Rights. States must enact civil and penal legislation concerning the human rights impacts of
GE.16-11938 19
business activity; the doctrine of State responsibility should be invoked to make abuses
justiciable where the enterprises operate or are registered.
81. In June 2014, the Human Rights Council adopted resolution 26/9 creating an inter-
governmental working group with the mandate to draft such an instrument.58 In July 2015,
the first session of the working group was held in Geneva;59 its second session is scheduled
to be held in October 2016 and deserves the support of all States and civil society. The
Forum on Business and Human Rights60 contributes to that process.
82. Beyond the treaty, there is an urgent need to strengthen national and international
penal law, including anti-trust legislation, to address cases of corruption, fraud, bribery,61
money-laundering, conspiracy, collusion, tax evasion, insider-trading, looting of pension
funds, and reckless endangerment of life and the environment. In that context, the United
Nations Convention against Corruption and the United Nations Office at Vienna could
advance the process. Also pertinent is the United Nations Convention against Transnational
Organized Crime, as certain activities of mining enterprises, including gold, diamond and
coltan mining,62 as well as the ivory trade,63 entail criminal acts and gross human rights
violations.
83. A treaty on corporate legal responsibility should not stop at defining the civil
liability of transnational corporations. There must also be penal responsibility when
corporate actions cause death or grievous harm, and when they destroy landscapes and the
common heritage of mankind. Indeed, some activities of petroleum, gas and mining
enterprises constitute a major attack on the environment, accompanied by reckless
endangerment of millions of peoples’ lives. Such attacks, perpetrated not only by legal
persons, but by individuals sitting in corporate boardrooms, may well be justiciable as
crimes against humanity pursuant to article 7 (1) (k) of the Rome Statute of the
International Criminal Court. In cases where business activity causes the involuntary
displacement of populations, article 7 (1) (d) applies. The Nuremberg Trials showed the
way in prosecuting and convicting business executives of the I.G. Farben, Flick and Krupp
companies because of their complicity in Nazi crimes. In 1946 Bruno Tesch, a business
executive responsible for the production of Zyklon B, was tried and convicted. Today the
penal responsibility of enterprises producing indiscriminate weapons such as landmines,
cluster bombs, depleted uranium ammunition and white phosphor can and must come
before the International Criminal Court. There is no justification for business executives
enjoying impunity. Universal jurisdiction should be tested in appropriate cases.
84. Hitherto, victims of corporate abuses were left without adequate recourse or remedy.
That poses a serious challenge to the Human Rights Council and calls not only for
diagnoses but for concrete recommendations and implementable solutions. The
strengthening of the human rights enforcement system is necessary to counter the prevalent
architecture of corporate impunity.
58 http://business-humanrights.org/en/binding-treaty/un-human-rights-council-sessions.
59 Kinda Mohamadieh and Daniel Uribe, “Business and Human Rights”, South Bulletin, vols. 87-88, 23
November 2015. On 25 September 2015, Pope Francis said before the General Assembly: “We must
avoid every temptation to fall into a declarationist nominalism which would assuage our consciences.
We need to ensure that our institutions are truly effective in the struggle against all these scourges”,
http://w2.vatican.va/content/francesco/en/speeches/2015/september/documents/papa-
francesco_20150925_onu-visita.html.
60 www.ohchr.org/EN/Issues/Business/Forum/Pages/ForumonBusinessandHumanRights.aspx.
61 www.theage.com.au/interactive/2016/the-bribe-factory/day-1/the-company-that-bribed-the-
world.html.
62 www.congoweek.org/en/coltan-facts.html.
63 http://iworry.org/crisis/?gclid=COnuwKXxks0CFVIaGwod6hMH2g.
20 GE.16-11938
X. Preventive and corrective action
85. While endorsing the analyses of economists, sociologists and jurists, including
Jeronim Capaldo,64 Noam Chomsky,65 Michael Hudson,66 Deborah James,67 George
Kahale,68 Richard Kozul-Wright,69 Isabel Ortiz,70 Max Otte,71 Lauge Poulsen,72 Jeffrey
Sachs,73 Joseph Stiglitz,74 Gus van Harten75 and Robert Wade,76 and relying on the
studies of other rapporteurs and working groups, the Independent Expert deems it
urgent to demand that the Human Rights Council take action so that their good
proposals are not rendered irrelevant by the corporate “so what?” Transnational
corporations have become a kind of Leviathan that must be tamed. Indeed, every
exercise of power, political or economic, that affects people’s lives must be subject to
democratic controls and compatible with the purposes and principles of the Charter
of the United Nations. It is that spirit that has prompted the following
recommendations.
To States
86. States should impose a moratorium on the execution of investor-State dispute
settlement awards until the entire system is tested by the International Court of
Justice. A new multilateral treaty should be elaborated stipulating that courts may not
execute such awards without verifying their compatibility with human rights treaty
obligations and ordre public.
87. States should refrain from entering into new bilateral investment treaties and
free trade agreements, including the Trans-Pacific Partnership Agreement, the
64 https://stopttipitalia.files.wordpress.com/2014/02/capaldottip_rejoinder.pdf.
65 Noam Chomsky, Who Rules the World? (London, Penguin, 2016);
www.youtube.com/watch?v=P2lsEVlqts0.
66 www.counterpunch.org/2016/05/11/the-dangers-of-free-trade-agreements-ttips-threat-to-europes-
elderly; Michael Hudson, Killing the Host (Petrolia, Counterpunch Books, 2015).
67 www.globalexchange.org/events/speaker/deborah-james.
68 Douglas Thomson, “Kahale calls for overhaul of BIT system”, Global Arbitration Review, Vol. 9, No.
3 (11 April 2014); www.chambersandpartners.com/global/person/50001/george-kahale-iii.
69 www.euractiv.com/section/trade-society/news/un-blasts-eu-for-backing-global-deal-for-isds-but-not-
for-country-bailouts/.
70 www.ilo.org/newyork/events-and-meetings/WCMS_237980/lang--en/index.htm;
www.ilo.org/global/docs/WCMS_214366/lang--en/index.htm.
71 www.youtube.com/watch?v=P_FBjYZBWH0. Max Otte calls investor-State dispute settlement “a
complete disempowerment of politics”.
72 www.gov.uk/government/uploads/system/uploads/attachment_data/file/260380/bis-13-1284-costs-
and-benefits-of-an-eu-usa-investment-protection-treaty.pdf;
www.rowmaninternational.com/books/rule-makers-or-rule-takers.
73 www.theguardian.com/global-development-professionals-network/2015/mar/24/could-the-ttip-trade-
deal-undo-development-gains;
www.huffingtonpost.com/roger-hickey/economist-jeffrey-sachs-s_b_5823918.html.
74 Joseph Stiglitz, Rewriting the Rules of the American Economy (New York, W.W. Norton, 2015); The
Great Divide: Unequal Societies and what we can do about them (New York, W.W. Norton, 2015).
75 http://thetyee.ca/Opinion/2016/01/18/TPP-Foreign-Investors/;
http://thetyee.ca/Opinion/2013/11/12/Harper-Gives-Up-Sovereignty/.
76 Robert Wade “Growth, inequality, and poverty: arguments, evidence, and economists”, in Global
political economy, John Ravenhill, ed. (Oxford, Oxford University Press, 2014); “Current thinking
about global trade policy”, Economic and Political Weekly, vol. 49, No. 6. (8 Feb. 2014); “‘Market
versus State’ or ‘market with State’: how to impart directional thrust”, Development and Change, vol.
45, No. 4 (July 2014).
GE.16-11938 21
Transatlantic Trade and Investment Partnership, the Comprehensive Economic and
Trade Agreement and the Trade in Services Agreement, unless human rights, health
and environmental impact assessments have been conducted, and unless there is full
disclosure, consultation with stakeholders and public participation. Where possible,
referendums should be conducted.
88. States should test the legality of provisions of bilateral investment treaties and
free trade agreements, investor-State dispute settlement and investment court system
mechanisms, as well as WTO rules and practice, for compatibility with their own
Constitutions and with their human rights treaty obligations.
89. States may consider invoking the inter-State procedures of the Human Rights
Committee (International Covenant on Civil and Political Rights, art. 41) and of
regional human rights courts. European States should test the compatibility of the
Comprehensive Economic and Trade Agreement and the Transatlantic Trade and
Investment Partnership with their human rights obligations before the European
Court of Human Rights. American States should test the compatibility of trade
agreements with the American Convention on Human Rights. African States should
test compatibility with the African Charter on Human and Peoples’ Rights. States
members of the European Union should test the constitutionality of trade agreements
before the European Court of Justice.77
90. States should conduct ex post human rights, health and environmental impact
assessments in connection with existing trade agreements and modify them where
necessary.
91. States should cooperate with the inter-governmental working group on the
drafting of a binding treaty on corporate social responsibility and adopt it
expeditiously. The treaty should put teeth on the Guiding Principles on Business and
Human Rights and provide for monitoring and enforcement mechanisms. The treaty
should give recourse and remedy to victims of abusive activities by transnational
corporations.
92. States should implement the Doha Development Agenda as envisaged in
Sustainable Development Goal 17.10. The Trade Facilitation Agreement must not
become operative until the Doha Development Agenda commitments have been met.
To parliaments
93. No parliament should approve trade agreements without exercising oversight
functions and examining the compatibility of the agreements with human rights treaty
obligations in the light of impact assessments.
94. Parliaments should make it illegal for treaty negotiators to agree to anti-
democratic lock-in periods in investment treaties.78 The adding of riders to existing
bills without democratic debate is inacceptable.
77 On 4 May 2016, the European Court of Justice upheld the 2014 Tobacco Products Directive against
challenges from British-American Tobacco (BAT) and Philip Morris,
http://curia.europa.eu/jcms/upload/docs/application/pdf/2016-
05/cp160048en.pdf?version=meter+at+null&module=meter-
Links&pgtype=article&contentId=&mediaId=&referrer=https%3A%2F%2Fwww.google.ch%2F&pri
ority=true&action=click&contentCollection=meter-links-click.
78 Typically they range from 10 to 30 years in investment treaties, when one accounts for the minimum
terms plus survival clauses. The Independent Expert is not aware of other treaties that have such long
22 GE.16-11938
95. Parliaments should invoke the pertinent revision and termination procedures
laid out in the Vienna Convention on the Law of Treaties to modify commercial
treaties and abolish investor-State dispute settlement.
96. Parliaments and IPU should intensify their cooperation with WTO in the field
of human rights, health and the environment.
To domestic courts
97. National courts and tribunals should execute foreign arbitral awards only after
examining their legitimacy in the light of human rights treaty obligations. Arbitral
awards that encroach on the regulatory space of States should be rejected as contrary
to domestic and international ordre public. The public policy exception contained in
article 5 of the New York Convention on the Recognition and Enforcement of Foreign
Arbitral Awards should be used systematically to prevent interference in fundamental
State functions.
To the International Court of Justice
98. The International Court of Justice should pronounce in appropriate
contentious cases or in an advisory opinion on the erga omnes obligations of States to
comply with the human rights treaty regime. No trade agreement, investor-State
dispute settlement or investment court system may obstruct the fulfilment of human
rights treaty obligations. The supremacy clause of the Charter of the United Nations
(Article 103) and general principles of law, including good faith, the prohibition of
treaties that are contra bonos mores and the prohibition of abuse of rights, override
conflicting trade agreements and arbitral awards.
To the World Trade Organization
99. WTO should mainstream human rights into all of its activities and issue
directives to the dispute settlement panels so that human rights treaty violations are
not adversely affected.
100. WTO dispute panels should interpret the exceptions in the General Agreement
on Tariffs and Trade 1994 to support initiatives on food security, health and the
environment and facilitate solutions to climate change. WTO should harmonize
policies with the Food and Agriculture Organization of the United Nations (FAO) and
OHCHR.
To the United Nations Conference on Trade and Development
101. UNCTAD should convene a world conference to revise existing bilateral
investment treaties and free trade agreements, abolish investor-State dispute
settlement and declare the investment court system incompatible with United Nations
constitutional law.
To national human rights institutions and civil society organizations
102. National human rights institutions and civil society organizations should assist
in conducting human rights, health and environmental impact assessments. They
should disseminate information on commercial treaties and their human rights
impacts and demand that referendums be held.
lock-in periods that hinder future elected Governments from revisiting treaties. Democratic
Governments must never be bound by such treaties generation after generation.
GE.16-11938 23
To the Human Rights Council
103. The Human Rights Council should become the international arena where
Governments compete to show how to implement human rights most effectively, how
to strengthen the rule of law and how to achieve social justice. Competition in human
rights performance is the best kind of competition. The Human Rights Council should
become the preeminent forum where Governments elucidate best practices in good-
faith implementation of pledges, expansive interpretation of human rights treaties and
inclusion of all stakeholders. The Human Rights Council must not be a politicized
arena where States instrumentalize human rights as weapons to defeat their political
adversaries, where human rights are undermined through “side shows”, the “flavour
of the month”, or where international law is applied à la carte.
XI. Postscript
104. The Independent Expert endorses Lawrence Summers’ recent comments in the
Financial Times: “The promotion of global integration can become a bottom-up
rather than a top-down project … This would mean a shift from international trade
agreements to international harmonization agreements, where issues such as labour
rights and environmental protection would take precedence over issues related to
empowering foreign producers.”79
105. The credibility of the special procedures depends in part on the implementation
of the recommendations of special rapporteurs and working groups, whose reports
are only briefly discussed, filed away and forgotten. When the special procedures were
established, it was surely not the intention of States to convene an assembly of
Cassandras, whose findings and warnings would be systematically ignored. Our moral
vertigo over gross violations of human rights should not result in paralysis, but
generate robust action. A properly funded follow-up mechanism should be established
to monitor and benchmark the extent to which special rapporteurs’ recommendations
are considered. The mandate of a special rapporteur on follow-up should be
established. The universal periodic review procedure and OHCHR advisory services
could further assist in implementation.
106. By way of conclusion, the Independent Expert reiterates his expression of
appreciation to the committed, hard-working and competent OHCHR staff, and
requests the Human Rights Council and the General Assembly to ensure that
considerably greater resources are allocated to OHCHR.
79 www.ft.com/cms/s/2/5e9f4a5e-ff09-11e5-99cb-83242733f755.html#axzz4C6q6RIgt.
24 GE.16-11938
Annex I
Activities of the Independent Expert since the last report
• Participation at side-events during the 30th, 31st and 32nd sessions of the HR
Council and side-events during UPR sessions.
• 20 July: Lecture on transnational organizations and human rights, University of
Jaén.
• 25 September: Lecture on the rights of children in UN monitoring bodies, University
of Leiden.
• 30 September: WTO Public Forum, Geneva.
• 13 October: Expert Consultation on Trade and Investment and Human Rights,
Geneva.
• 15 October: Lecture at the European Parliament and Bi-laterals with European
Commission representatives to discuss the proposed Investment Court System,
Brussels.
• 5 November: Lecture on “The UN’s contribution to democracy” at the Leuven
Centre for Global Governance Studies.
• 27-28 January: Lecture at the conference “Strategy meeting on catalysing reform of
trade negotiation processes”, organized by the Electronic Frontier Foundation/Open
Society Foundations, Brussels.
• February-March: Bilateral consultations with South Centre, Geneva.
• 19 April: Keynote speaker at the Parliamentary Assembly of the Council of Europe,
Strasbourg.
• 28 April: Conference on CETA and TTIP organized by Food Watch, Paris.
• 12 May: Bilateral consultations with WTO secretariat, Geneva.
• 23 May: Bilateral consultations with Lelio Basso Foundation, Geneva.
• 26 May: Bilateral consultations with IPU trade expert, Geneva.
• 2-3 June: CETIM conference on transnational corporations, Barcelona.
• 6-10 June: Annual meeting of Special Procedures, Geneva.
• 10 June: Working lunch on UN Reporting of Violence against Women in Politics
organized by the National Democratic Institute, Geneva.
• 13-14 June: Annual Session of the Parliamentary Conference on the WTO organized
jointly by the Inter-Parliamentary Union and the European Parliament, Geneva.
• 22 June: Keynote speaker at a meeting on trade and human rights organized by the
NGO Committee on Development, Geneva.
• 3-4 July: Seminar on International Criminal Law, organized by the Lelio and Lisli
Basso ISSOCO Foundation, Rome.
GE.16-11938 25
Annex II
Excerpt of the Conclusions and Recommendations of the G- 77 High- Level Panel of Eminent Personalities of the South. The Future Architecture of South-South Cooperation: Challenges and Opportunities held in Bangkok, Thailand, 9- 10 March 2016
In this context, Investor-State-dispute settlement (ISDS) arbitration agreements
should be rejected and those currently in existence should be abolished, because ISDS is
incompatible with international ordre public and its mere existence has led to a dangerous
“regulatory chill” and consequent violations of the international human rights treaty regime.
The ontological function of States is to legislate and regulate in the public interest and the
International Covenant on Civil and Political Rights (ICCPR) reaffirms that all suits at law
(including investment disputes) must be adjudicated by independent tribunals that respect
the principles of transparency and accountability. Creation of a privatized system of dispute
settlement is incompatible with the obligations under the ICCPR and the International
Covenant on Economic, Social and Cultural Rights (ICESCR). Private arbitrators cannot
replace the system of public justice, which is an achievement of the rule of law.
26 GE.16-11938
Annex III
Questionnaire of the Independent Expert on the promotion of a democratic and equitable international order on the impact of WTO agreements, rules and practice on human rights, particularly food security
Brief responses are welcome (e.g. in bullet points) and are not required for all
questions.
This questionnaire is addressed to member and observer States of the World Trade
Organization (WTO), inter-governmental organizations and civil society organizations. The
identity of civil society organizations, should they so wish, will remain confidential (only
the country where they operate may be disclosed).
Priorities of the WTO
1. Some countries, particularly developed countries, are proposing to introduce “new
issues” into the WTO agenda, including investment, competition policy, government
procurement and e-commerce, along the lines that have been shaped in the Trans-Pacific
Partnership (TPP) or which are shaping up in the Transatlantic Trade and Investment
Partnership (TTIP). There is, however, a pending agenda to be addressed — including
issues of agriculture reform (e.g. removal of developed country subsidies e.g. cotton), the
strengthening of Special and Differential Treatment flexibilities for developing countries to
have more policy space for industrialization etc. What should be the WTO’s priorities and
why?
2. What measures, if any, are envisaged or have been adopted to mainstream human
rights into all WTO activities, including guidelines for WTO dispute settlement panels?
How can WTO ensure that the human rights treaty obligations of WTO member States are
not compromised by WTO rules and that the human rights treaty regime is always taken
into account when elaborating, negotiating, adopting or implementing WTO policy,
agreements and rules.
Impact Assessments and other measures
3. Please provide examples of how measures, such as opinion polling, consultation of
all stakeholders, human rights, health and environmental impact assessments have been
used prior to the adoption of past WTO rules and recommendations, and how these
mechanisms may be effectively employed in current negotiations.
4. The Special Rapporteur on the right to food, Olivier de Schutter, proposed that the
WTO Secretariat should, “Maintain and deepen the existing constructive dialogue with the
Office of the United Nations High Commissioner for Human Rights. Encourage WTO
members to conduct human rights impact assessments prior to the conclusion of trade
agreements or to accepting new schedules of commitments”. To what extent have his
recommendations been implemented?a
a http://ap.ohchr.org/documents/dpage_e.aspx?si=A/HRC/10/5/Add.2.
GE.16-11938 27
Negotiation, ratification and implementation process
5. How and to what extent can all stakeholders participate in the negotiation,
ratification and implementation of WTO agreements, for example the TRIPs Agreement, to
ensure that ecosystems are preserved and human rights are respected, protected and fulfilled
in this regard, and that food security and access to generic drugs are promoted and not
delayed or undermined. Please include best practices and recommendations for meaningful
consultation and participation in these processes.
6. Numerous States and non-governmental organizations have criticized a lack of
transparency and inclusiveness during the WTO Nairobi Ministerial Conference. What
procedures should be put in place so that Ministerial Conferences do not end up presenting
what is effectively an ultimatum text at the final hour with no opportunity for the majority
of delegations to negotiate but merely an option to give an up or down vote? How can the
negotiating texts be responsive to the concerns of the majority of WTO Members and not
just the powerful?
7. The WTO Doha Round remains on-going as there was no consensus to close it in
Nairobi. Heads of States at the 2015 Sustainable Development Summit agreed to “promote
a universal, rules-based, open, non-discriminatory and equitable multilateral trading system
under the World Trade Organization, including through the conclusion of negotiations
under its Doha Development Agenda” (target 17.10).b Is your government supporting the
implementation of the Doha Development Agenda? If not, why not?
Conflict of laws
8. Bearing in mind that the UN Charter is akin to a world constitution, and that Article
103 of the Charter is effectively a supremacy clause, any conflict with other treaties must
give precedence to the UN Charter. However, WTO law operates outside the UN system.
There is therefore an incoherence that needs to be addressed so that WTO rules are fully
compatible with UN constitutional law. Would your government support the primacy of
human rights law over trade agreements? How can WTO ensure that State measures taken
for poverty alleviation, employment, food security, enjoyment of economic, cultural and
social rights, health and environmental protection are not delayed or undermined by trade
“imperatives”. Should this issue of priorities be raised by the international community, e.g.
in the UN General Assembly or before the International Court of Justice by advisory
opinion?
9. Please explain what are the pros and cons of incorporating WTO into the UN family
and making it work in tandem with the Purposes and Principles of the UN (Articles 57 and
63, UN Charter)?
Dispute Resolution
10. A WTO Panel recently ruled that local content requirements maintained by India for
solar cells and modules violate India’s national treatment obligations under the General
Agreement on Tariffs and Trade (GATT) 1994 and the WTO Agreement on Trade-Related
Investment Measures (TRIMs). This decision marks the first time that a WTO Member has
sought to justify a departure from WTO practice by reference to its international obligations
on climate change. The argument was rejected by the WTO panel, although India invoked
b https://sustainabledevelopment.un.org/topics/sustainabledevelopmentgoals.
28 GE.16-11938
its treaty obligations under the United Nations Framework Convention on Climate Change,
and the exception provided for in GATT Article XX (d). This raises an issue of
“fragmentation of international law”. Does your country have local content policies? If yes,
please give an example. The WTO’s Agreement on Trade-Related Investment Measures
(TRIMS) prohibits the use of local content policies in goods. Has this been an impediment
to your industrialization strategies or to the promotion of local employment?
11. What are the pros and cons of creating a dispute settlement mechanism within WTO
competence to examine human rights violations resulting from the application of WTO
agreements, rules and regulations?
12. What other recourse and remedies would be available to States, corporations, groups
and individuals, including indigenous peoples, in a situation where human rights are
violated as a consequence of the application of WTO agreements concerning agriculture
and the environment. Would a petitions mechanism assist in reaching friendly settlement?
GE.16-11938 29
Annex IV
WTO Secretariat replies to the questionnaire of the Independent Expert on the promotion of a democratic and international order
Priorities of the WTO
Question 1
• When WTO Members adopted the Nairobi Ministerial declarationa by consensus on
19 December 2015, they set the priorities for the WTO. The Ministerial Declaration
recognizes that differences do exist on the way forward and recognizes that “Many
Members want to carry out the work on the basis of the Doha structure, while some
want to explore new architectures” (parag. 32 of the Ministerial Declaration).
• The Declaration highlights an important element in its paragraph 34, when it says
that “any decision to launch negotiations multilaterally on such issues would need to
be agreed by all Members.
• In Paragraph 34 also, our Members have tasked officials to work towards finding
ways to advance negotiations and requested the Director-General to report regularly
to the General Council on these efforts.
Question 2
• WTO Members have never discussed nor adopted any specific measures to
mainstream human rights into WTO activities, including in relation to dispute
settlement.
• However, WTO rules do not prevent governments from implementing human rights
obligations.
• The WTO recognizes the benefits of sustainable development as one of its goals.
WTO agreements include sufficient policy space to allow governments to pursue
legitimate objectives other than trade, including human rights.
Impact Assessments and other measures
Question 3
• All WTO bodies serve as a forum for Members to discuss specific issues and share
experiences on trade and trade-related matters.
• WTO Members within the framework of these committees often request WTO
Secretariat to produce analysis and factual reports on specific issues pertinent to the
work of these committees.
• Given the member-driven nature of the organization, stakeholder consultations are
the primary responsibility of each individual member of the WTO; For information
a https://www.wto.org/english/thewto_e/minist_e/mc10_e/mindecision_e.htm.
30 GE.16-11938
purposes, the WTO Secretariat reaches out to all stakeholders through the WTO
Public Forum or activities in several regions in developing countries.
Question 4
• The WTO Secretariat engages actively with other international organisations and
also participates in numerous joint initiatives.
• In the wake of the global food crisis in 2008, the UN Secretary General established
the High Level Task Force on Global Food Security Crisis (HLTF) involving more
than 20 international organizationsb towards a coordinated and synergic response to
the crisis. The WTO Secretariat has participated in the HLTF deliberations since its
inception and contributed very actively to the formulation of the joint policy
framework (called Comprehensive Framework of Action) to assist the various stake
holders in dealing with the global food security challenge.
• Specifically on the issue of Right to Food, the Framework advises the national
governments and other stakeholders to be guided by the “Voluntary guidelines to
support the progressive realization of the right to adequate food in the context of
food security”c adopted by governments at the FAO Council in 2004.
• The WTO Secretariat also contributes to and participates in other international
efforts to support global food security including in the deliberations of the G20 and
the Committee on World Food Security (CFS).
• In the WTO Committee on Agriculture, a number of observer international
organizations are regularly invited to participate in the CoA meetings. The CoA
undertakes annually a dedicated discussion on food security-related aspects relevant
to LDCs and net food-importing developing countries and a number of organizations
active in the domain of food security (like the FAO, WFP) are specifically invited to
contribute to that debate.
• The long-term objective of the WTO Agreement on Agriculture is to establish a fair
and market-oriented trading system through a programme of fundamental reform.
The agricultural reform programme is furthered through the negotiations. The
negotiations on agriculture take place in the context of the Special Sessions of the
Committee on Agriculture and are based on WTO Members’ contributions and
proposals.
Negotiation, ratification and implementation process
Question 5
• The WTO TRIPS Agreement was consciously crafted and carefully negotiated to
safeguard policy space, particularly in the vital area of public health. For the first
time in a multilateral treaty, it expressly articulated the role of the IP system as a
policy tool intended to advance broader public policy objectives: it stated that the IP
system should promote both technological innovation and the transfer and
b Both the WTO and UN Office of the High Commissioner for Human Rights are represented on the
Task Force.
c The guidelines recognize the primary responsibility of States for the realization of the right to food
and advises them on a repertory of actions consistent with their international obligations. The
agricultural reform programme launched under the Uruguay Round Agreement on Agriculture is
specifically acknowledged in the Guidelines as a contributory factor to strengthening an enabling
environment for the progressive realization of the right to food.
GE.16-11938 31
dissemination of technology, and that this should work for the mutual advantage of
producers and users of technological knowledge as well as promoting social and
economic welfare and a balance of rights and obligations.
• The practical experience of WTO Members implementing the Agreement has since
borne out the breadth of the scope for public health policies that the TRIPS
Agreement supports, both for diverse forms of innovation and for measures to
leverage access to the fruits of innovation such as new medicines, as well as
safeguards against abuse of IP rights.
• A major step towards policy coherence for public health for the WTO was the
subsequent adoption of the Doha Declaration on the TRIPS Agreement and Public
Health of December 2001 (‘the Doha Declaration’). The Doha Declaration situated a
multilateral trade agreement squarely within a public health context, stating that the
TRIPS Agreement had to be part of wider national and international action to
address public health problems. The Declaration has helped catalyse cooperation
across the multilateral system to promote a more coherent and inclusive approach to
innovation and access to medicines, as reflected most recently in the Sustainable
Development Goals (target 3.b).
• The Doha Declaration led, on the initiative of the African Group, to a consensus
among WTO Members in 2005 to establish a formal amendment the TRIPS
Agreement that would remove a potential legal obstacle for countries most
dependent on imports to meet their needs for affordable medicines. This was the first
agreement to amend the entire package of WTO multilateral trade agreements, and it
was entirely geared to ensure access to medicines for the most vulnerable.
• The Doha Declaration is also at the origin of an extended transition period for least
developed country WTO Members that exempts them from the obligation to protect
and enforce patents for pharmaceutical products, as well as undisclosed test data that
are submitted for the purpose of obtaining marketing approval. In 2015, the LDC
Group took the leadership in negotiations with all other WTO Members that
ultimately led to a consensus decision to further extend the transition period until
January 2033. This second extension of the transition period is an example of the all-
inclusiveness of the negotiating process at the WTO. It aims at facilitating access to
affordable medicines and represents a significant contribution to an early
implementation of the SDG goals.
• The effect of the Doha Declaration as a catalyst for coherence at the international
level was seen in its role of making public health issues a central focus of work
carried out by the WTO on IP and international trade, in its inclusion in a series of
World Health Assembly (WHA) resolutions on ensuring accessibility to essential
medicines and public health, innovation and IP, in its use as a point of reference in
the negotiations on the WHO Global Strategy and Plan of Action on Public Health,
Innovation and Intellectual Property (GSPA-PHI), and in identifying health-related
flexibilities that have been dealt with under the WIPO Development Agenda, as well
as in a number of important declarations and resolutions adopted by other UN bodies
(e.g. UN ECOSOC High-Level Segment Ministerial Declaration, Implementing the
internationally agreed goals and commitments in regard to global public health,
2009; UN Political Declaration on HIV and AIDS: Intensifying our efforts to
eliminate HIV and AIDS, 2011).
• Exemplifying this coherent and inclusive approach, an active program of
coordinated technical assistance and policy dialogue, led at Director General level
and centred on public health imperatives, has unfolded in the form of a trilateral
initiative undertaken by the WHO, WIPO and WTO. Reaching well beyond the
32 GE.16-11938
three specialised agencies, this program has drawn widely on diverse policy
perspectives and practical experiences, to build a solid foundation of policy insights
and empirical data so as to illuminate the pathway to more coherent outcomes and to
build capacity in developing countries to take informed policy choices according to
national needs and circumstances. This policy dialogue and technical assistance has
long been consciously planned and implemented to include a wide spectrum of
voices from civil society, the not for profit and philanthropic sector, diverse industry
players, competition authorities, and experts from the United Nations system
including UNCTAD, UNAIDS and UNDP.
• With respect to food security, there seem to be numerous concerns about the right to
food and intellectual property. The fear is that farmers will get increasingly
dependent on new plant varieties that are protected by IPRs and that in time this
would lead to a reduction in agro-biodiversity. To the extent they concern IP
protection, the TRIPS Agreement already accommodates them in significant
respects through the policy space it leaves to countries. Under Article 27.3 (b)
countries are not required to provide patent protection for inventions of (i) plants and
animals and (ii) essentially biological processes for their production. Where
Members do not provide patent protection for new plant varieties, they are required
to protect plant varieties through an effective sui generis system (i.e. a system
created especially for this purpose). Members also have the option of using a
combination of both systems of protection, namely TRIPS provisions on patents and
a sui generis system. There is no further explicit guidance in the TRIPS Agreement
as to what is to be considered an effective sui generis system. These provisions have
been discussed in the TRIPS Council. For, example, when the delegation of the US
put forward what it considered to be an ‘effective’ system, this was countered by the
Indian delegation. There was also a vigorous debate on whether or not TRIPS
requires Members to comply with UPOV 1991, with no conclusion drawn. (See
Summary prepared by the WTO Secretariat in WTO document IP/C/W/369/Rev.1, 9
March 2006, 16-20 and 20-24.) Further, Article 27.2 allows WTO Members to
exclude from patentability inventions whose commercial exploitation they find
necessary to prevent to protect human, animal or plant life or health or to avoid
serious prejudice to the environment. This provision could be used, for example, to
exclude GM crops, provided the member also prevents the commercial exploitation
of such products in its territory.
Question 6
• The Nairobi Ministerial Declaration was adopted by consensus and incorporates a
number of decisions such as on Agriculture (Export Competition, Special Safeguard
Mechanism for Developing Country Members; Public Stockholding for Food
Security Purposes), Cotton and LDC issues (Preferential Rules of Origin for Least
developed countries; Implementation of Preferential Treatment in Favour of
Services and Service Suppliers of Least Developed Countries and Increasing LDC
Participation in Services Trade).
• It reiterates the importance of LDCs, Small and Vulnerable Economies (SVEs) and
Art. 12 Members … and pledges to work towards keeping Development at the heart
of the negotiations.
• Part III of the Declaration clearly reflects the different views that WTO Members
have on the way forward for the organization.
GE.16-11938 33
• That being said, the Director-General and some members have stressed that “the
preparatory process for Ministerial Conferences can be improved in order to
maintain transparency and inclusivity throughout the process”.d
Question 7
• This question seems to be addressed to governments and not to the WTO Secretariat.
International law
Question 8
• The WTO regularly associates itself with the objectives and activities of the UN
such as the MDGs and now the SDGs; it contributes actively to work of ECOSOC
work as well as on Financing for Development. The WTO is an active participant in
the UNCEB and its subsidiary bodies, and works closely with numerous UN
Specialized Agencies such as UNCTAD, ILO, FAO, WIPO and WHO. The WTO
also has a coherence mandate with the World Bank and the IMF.
• However, the decision for the WTO to be an independent intergovernmental
organization was taken unanimously by its founding members in 1995. Only WTO
members are in a position to respond to questions in relation to that decision, and
subsequently, its effect and resulting functioning.
Dispute Resolution
Question 9
• The WTO dispute settlement mechanism applies to disputes between WTO
Members regarding Members’ rights and obligations under the WTO agreements. It
does not provide panels or the Appellate Body with jurisdiction to decide on
violations of non-WTO agreements.
• So far, no WTO Member has ever made an allegation that the application of WTO
rules has led to a violation of a Member’s human rights obligations.
• WTO rules leave sufficient policy space for governments to be able to respect and
implement at the same time both their WTO obligations and their human rights
commitments.
Question 10
• Corporations and individuals may pursue their claims before domestic courts.
• Disputes between two States involving an alleged violation of a human rights treaty
may be brought before the International Court of Justice or other specific
adjudicatory bodies designated by the parties.
• It has been made clear in several trade disputes adjudicated under the WTO dispute
settlement mechanism that governments are entitled to prioritize national
environmental policies over their trade obligations.
• The GATT permits WTO Members to impose export restrictions to prevent or
relieve critical shortages of foodstuffs.
d https://www.wto.org/english/news_e/news16_e/hod_10feb16_e.htm.
34 GE.16-11938
• We are not aware of a single allegation to the effect that human rights are violated as
a result of the application of WTO agreements.
• The Committee on Trade and Environment (CTE) provides a forum where WTO
Members share their experiences, concerns and best practices on trade and
environmental policies.
• It has contributed to identifying and understanding the relationship between trade
and the environment in order to promote sustainable development (“triple win
opportunities” for trade, development and the environment).
• Members of the CTE are also regularly briefed by specialized environmental
institutions on topical subjects in the intersection between trade and environment.
• In recent years, several important issues have been discussed in the CTE including:
efforts to combat illegal logging; sustainability labelling schemes; carbon foot-print
methodologies; renewable energy initiatives.
GE.16-11938 35
Annex V
2016 Annual Session of the Parliamentary Conference on the WTO — Outcome Document, June 2016
We appreciate the decision on public stockholding for food security purposes and
call for the conclusion of negotiations on finding a permanent solution to the issue, in
keeping with the decision. We believe that the issue of food security is vital for developing
countries and that WTO rules must support efforts to combat hunger. In line with the same
decision, we also want to stress the importance of a speedy adoption of a proposal for a
Special Safeguard Mechanism, in conformity with the Nairobi Ministerial Decision on the
issue.
We urge WTO Members to capitalize on the momentum created by recent progress,
bearing in mind the strategic objective of strengthening the multilateral trading system and
the need to consolidate the WTO as the centre of trade negotiations, while at the same time
recognizing that new approaches will be necessary. Flexibility, openness, inclusiveness and
political engagement will be key to advancing on all the remaining issues of the Doha
Development Agenda (DDA). Since the Doha Round was launched in 2001, the world has
changed dramatically in economic, political and technological terms. New challenges such
as e-commerce, digital trade and international investment can also be discussed without
prejudice to outstanding issues of the DDA.
36 GE.16-11938
Annex VI
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