Making a Case for the
Imposition of Unilateral Trade Sanctions to Protect Labour and
Basic Human Rights
Aditya Swarup*
While
liberalization and free trade play an important role in trade law, related
concerns for labour and human rights cannot be ignored. These concerns have
given rise to the modern concept of the social clause, a provision in trade
agreements allowing sanctions to curb labour exploitation. The WTO, however,
via the Singapore Ministerial Declaration, has taken the stance that concerns
for labour rights fall outside the domain of its regulation and are not to be
used for protectionist purposes. In this manner, strict sanction has been given
under the WTO regime to principles of international trade law such as Most
Favored Nation status and National Treatment. Barring a few exceptional
circumstances, these principles bar nations from imposing unilateral trade
sanctions that target a particular nation.
This note makes a case for unilateral trade sanctions imposed with an aim
to protect labour and basic human rights. While agreements such as the North
American Agreement on Labor Cooperation under the NAFTA have failed to act as
an enforceable social clause, a strong case for practicable incorporation of
labour and human standards can be made under Article XX of GATT. Article XX of
GATT, if interpreted as a social clause allowing for countermeasures in defence
of erga omnes obligations, acts as a backdoor for the entry of human and
labour standards in the WTO trade regime. An appraisal of measures allowed
under Article XX suggests that if unilateral trade sanctions are absolutely
necessary to curb violations of labour rights, such sanctions can be justified
under the WTO regime.
Table of Contents
I. Introduction
II. A
Social Clause: Understanding the Link between Trade and Labour Rights
A. Trade and Labour Rights: Inherently
Linked
B. What
is a Social Clause?
III. NAFTA and the Labour Side Accords
A. Background
to the Agreement
B. The NAALC has Failed to act as an
Enforceable Social Clause
IV. The GATT as a Backdoor to Enforcement of Labour
Standards and Basic Human
Rights
A. Countermeasures, Jus Cogens
Norms and Erga Omnes Obligations
B. Understanding GATT Article XX
C. Public Morals and Health Standards:
Making a case for the incorporation of Labour rights in Article XX
D. Drawing a Parallel: GATT Article XX
and Measures Protecting the Environment
V. Conclusion: Applying the Law
I. Introduction
In an era of the World Trade Organization (WTO) and free trade
agreements (FTAs), we have been witnessing intensive trade liberalization
between states, prompting advocates of human rights to explore possible links
between human rights, labour standards and trade. While most states have called
for a separation of labour standards from trade treaties, many scholars have
argued for the linkage of labour rights to trade within the context of
international trade law.[1] The United Nations (UN) has
called for the WTO to shift to a human rights based approach in international
trade, the idea being that the primacy to human rights law over all other
regimes of international law is a basic and fundamental principle that should
not be departed from.[2]
We are at a stage when trade law is symbolized by practices of non-discrimination,
national and most-favoured-nation (MFN) treatment. Also, a peculiarity of
global trade today is that concerns for labour standards seem to be
non-existent in trade treaties. In fact, the WTO has itself stated that labour
standards must be kept separate from trade and should be specifically addressed
through the International Labour Organization (ILO).[3] With no specific provision in
trade treaties to promote labour standards, a question that arises is whether
existing treaties can be interpreted in a manner so as to incorporate and
promote these standards? This can occur only if a link between trade and labour
standards can be found in the corpus
of international law.
This note shall endeavour to
present and further explain this link between trade, labour and human rights.
It specifically focuses on the issue of the imposition of unilateral
trade-sanctions with an aim to protect trade, labour and basic human rights;
and the justifiability of such sanctions in the context of the North Atlantic
Free Trade Agreement (NAFTA)[4] and the General Agreement on
Tariffs and Trade (GATT).[5] In doing so, and in order for
the reader to better visualize the authors ideas, the note seeks to address
the following factual situation:
Suppose
the United States of America finds conclusive evidence to show that certain
clothes imported from Mexico are manufactured by children in Mexico so as to
lower the cost of production of the product, would it be justified for the US
government to impose duties and trade sanctions in an effort to force Mexico to
address the situation of child labour?
Contra
Assuming there is
conclusive evidence to show that the cotton used in the clothes imported from
Mexico is spun by children in Bangladesh so as to lower the cost of production
of the product, would it be justified for the US Government to impose duties
and sanction against Mexico so as to force it not to buy such cotton from
Bangladesh?
It is the
purpose of the following discourse to present a legal argument justifying such
an action by a government by examining the NAFTA, GATT and other principles of
international law. Against this backdrop, Part II presents an understanding of
the link between trade and labour standards in light of the concept of the
social clause, while Part III examines the NAFTA and Labour Side Accords to
see whether these agreements can assist in addressing the above factual
situation. Part IV suggests that the answer may lie in Article XX of GATT and
explores this idea further. In all, this work seeks to justify unilateral trade
measures imposed by a government to protect labour standards and basic human
rights linked to international trade.
II. A Social
Clause: Understanding the Link between Trade and Labour Rights
A. Trade and Labour Rights: Inherently
Linked
It is imperative to understand the link between
trade and labour standards in order to appreciate the arguments presented in
this work. There have been divergent views on the issue;[6]
the starting point of any discussion, however, is the Havana Charter.[7]
When the Havana Charter was drafted back in 1950, Article 7 of the Charter
contained a provision recognizing that all countries have a common interest in
the maintenance of fair labour standards related to productivity and that
unfair labour conditions would create difficulties in international trade. The
Havana Charter, framed at a time when the Universal Declaration of Human Rights
(UDHR)[8]
was gaining prominence, first expressed the relation between trade and labour
rights in an explicit manner.[9]
When the GATT 1947,[10] later came
into force, it did not contain an explicit clause (as was present in the Havana
Charter) reaffirming the commitment to labour rights whilst promoting and
regulating free trade. The same position continues with the formation of the
World Trade Organization.[11]
However, it seems fairly obvious that unfair
labour standards, including minimum wage violations, make it cheaper for the
manufacturer to produce his product and thereby reduce the overall cost of
production. Thus, a violation of labour laws and rights can aid in reducing the
cost of production, a phenomenon seen more often in developing countries. As a result, when these products are exported to
developed countries where these rights are respected, they create an unfair
atmosphere of competition and affect that particular industry of the developed
state.[12]
When this argument was presented at the Singapore Ministerial Conference[13]
of the WTO, the organization declared its commitment to internationally
recognized core labour standards, but at the same time rejected the use of
such labour standards for protectionist purposes.[14]
This was in conformity with the stand of the majority of developing countries,
who had expressed their concern that the United States and other developed
countries would make use of such provisions for protectionist purposes and
impose unfair sanctions on them. They felt that better working conditions and
improved labour rights arose through economic growth and the WTO need not link
the two. It was proposed that the ILO was a more competent body to deal with
such labour violations and trade law should be kept out of it.[15]
In time, the ILO adopted the
Declaration of Fundamental Principles and Rights at Work[16]
which recognized trade related human rights and labour standards and called for
the elimination of all forms of forced and compulsory labour, abolition of
child labour, the implementation of the freedom of association and collective
bargaining and the elimination of discrimination in matters related to
employment. However, while this link was acknowledged, another crucial point of
debate became whether the aegis of trade law could be used for the enforcement
of these labour standards and rights.
B. What is a Social Clause?
Simply put, a social clause is
a provision in a trade agreement aimed at removing extreme forms of labour
exploitation in exporting countries. This is done by allowing the importing
countries to take trade measures against exporting countries which fail to
observe a set of internationally agreed minimum labour standards.[17]
Adele Blackett explains lucidly that:
A social clause may be defined narrowly as one or more
provisions within the WTO agreement that would explicitly enable the parties to
the agreement to enforce violations of certain workers fundamental human
rights through the WTOs dispute settlement mechanisms. This term can also
encompass attempts to read a clause into existing trade agreements. [18]
Read in this sense, while principles such as non-discrimination,[19]
national treatment[20] and MFN clauses
incorporated in the GATT restrict the ability of a state to impose trade
sanctions and unilateral trade measures, a social clause may be used as a
justification for the imposition of such measures when the link between the
labour standard and the product is established.[21]
The social clause may be used in two broad
situations: First, where the members use trade measures in order to enforce
human rights and labour standards[22]
that are generally violated by another state that may or may not be necessary
or have a direct nexus to trade. The second is more specific in nature and
requires the establishment of a nexus and that the trade measure at issue was
necessary to protect such rights and standards.[23]
Closely linked to the latter issue is the notion of social dumping. Article
VI of the GATT defines dumping as a situation in which products of one
country are introduced in the economy of another at less than the normal value
of the products.[24] In most
developing countries, the conditions of production are responsible for the
lowering of the cost of production.[25]
The idea of social dumping is one where countries make use of unacceptable
labour practices in order to lower the price of production.[26]
If these practices go unchecked,
developed countries would be forced to cut labour costs and reduce the number
of employees to stay in competition. This phenomenon is described as a race to
the bottom.[27] The very
essential ideals of free and fair trade would be undermined in such a siuation.[28]
The aim of international labour standards should be to prevent and redress
these practices that include child labour, prison labour, forced labour, unsafe
and unhealthy conditions of work, unfair wages and discriminatory practices.[29]
Thus, in order to promote free and fair trade, it is essential that
international labour standards be enforced through trade agreements and trade
measures.[30]
III. NAFTA and the
Labour Side Accords
A. Background to the
Agreement
When the United States and Canada signed the
Canada – United States Free Trade Agreement[31]
(CUSFTA), scholars argued that amongst other negative effects, it would lead to
wage cuts, job losses, the erosion of labour standards and the harmonization of
labour laws to the lowest common denominator.[32]
In this sense, a race to the bottom was foreseen. These concerns spiraled
when Mexico was made a party and the NAFTA came into force.[33]
It was felt that increased trade liberalization would expose the Canadian
economy to competition from low wage workers in Mexico and southern United
States.[34]
The need of the hour was to have comprehensive measures to address such
concerns amongst the state parties.
The NAFTA text itself, save for the Preamble, does
not address labour concerns. Such exclusion is ironic because the United States
was one of the nations that vehemently argued for the inclusion of labour
standards in trade agreements fearing competition from developing countries.[35]
Nevertheless, via the Preamble the
NAFTA parties do resolve to protect, enhance and enforce basic workers rights.[36]
No illustration is offered, however, of any of these basic workers rights,
with the ILO Conventions seen as offering some help in this regard.
When the Clinton administration
came to power in the US, concerns for labour standards escalated, but it was
considered to be too late to address labour standards within the NAFTA itself.[37]
The result was a side-agreement on labour called the North Atlantic Agreement
on Labour Conditions (NAALC)[38]
wherein state parties purported to bind themselves to certain minimum standards
of labour. The NAALC required the state parties to protect and promote eleven
core principles recognized in the agreement.[39]
These include the freedom of association, right to organize, free collective
bargaining, prohibitions on child labour, and the right to safe and healthy
work environments.[40]
As a result of the NAALC, National Administrative
Offices (NAOs) were set up[41]
in each member country and any individual or aggrieved party could bring a
complaint for the violation of labour standards within NAFTA member countries.
If the complaint appeared to demonstrate that the country in question was not
enforcing its labour laws as per the commitments in the NAALC,[42]
then ministerial consultations could be recommended.[43]
The results of ministerial consultations had no binding force and arbitral
panels giving binding decisions could only be constituted when the complaint
related to occupational safety and health, child labour or minimum wage
standards.[44]
B. The NAALC has Failed to act as an
Enforceable Social Clause
In as much as the NAALC may be seen as an effort
to promote and enforce labour standards amongst the members of NAFTA, it has
failed to act as an enforceable social clause. This can be substantiated on two
separate grounds: one legal and the other supported by practical application of
the facts.
The idea of a social clause is one that explicitly
enables a party to undertake measures to make another party enforce and comply
with its labour laws and standards.[45]
This measure taken by the importing country then has a sort of
extra-territorial application with the result of achieving public and economic
good within its own and other jurisdictions. Unfortunately, with the NAALC, the
contracting parties explicitly ruled out such measures by the inclusion of
Article 43 and only providing for consultation in such matters. Article 43 of
the NAALC states that:[46]
Nothing in this Agreement shall be construed to empower a Partys authorities
to undertake labour enforcement activities in the territory of another Party.
Thus, a State may not impose a unilateral trade measure against another in
order to enforce any human rights or labour standards in the other States
territory. Moreover, a binding decision on the consultation and ensuing dispute
resolution can only be achieved if the matter concerns occupational safety and
health, child labour and minimum wage technical labour standards.[47]
This then creates a loophole in the enforcement of the other core labour
standards mentioned in the NAALC[48]
and gives freedom to the party in matters of implementation of these standards.
Even if the NAALC may seem like a strong
commitment towards labour rights, in its application it has failed to enforce
labour standards.[49] Even after
15 years of the NAFTA being in force, Parties still have to deal with various
labour rights violations and non-implementation of core labour and basic human
rights.[50]
As one author puts it, the fatal flaw in the labor accord is that there is
no legal bridge from the side agreement to the main agreement and recommends
that it be renegotiated so that trade sanctions can be applied to ensure that
core labor rights, are not violated.[51]
Even though the NAALC recognizes its commitment to the fundamental rights of
workers, important rights such as the right to collective bargaining and
freedom of association cannot be enforced and hence there is no effective
remedy for those workers whose rights are violated.[52]
A textbook instance of how the NAALC has failed to
enforce labour standards and protect the rights of workers is the wide spread
prevalence of child labour in Mexico. Though the NAALC explicitly vows not to
tolerate child labour and may even authorize the imposition of binding trade
sanction to control it,[53]
it has not been able to curb and check this widespread violation.[54]
According to the UN Childrens Fund (UNICEF), sixteen
percent of children between the ages of five and fourteen years in Mexico were
engaged in child labor between 1999 and 2005.[55]
Author Elizabeth Chilcoat says that the principles binding state parties to the
NAALC are easily erodible and criticizes it for low enforcement standards,
especially with regard to eradicating child labour.[56]
She argues that this is mainly because of the fact that NAALC protections are limited
almost exclusively to unionized workers and the children are for the most not
part of such unions.[57]
The above factors clearly indicate that the NAALC lacks
the teeth to effectively enforce labour rights and trade-related human rights.
With the provisions of the NAALC not being able to justify unilateral trade
sanctions to protect extra territorial rights, other international instruments
like the GATT must be examined to effectively address the factual situations
posed at the start of this work.
IV. The GATT as a Backdoor to Enforcement of
Labour Standards and Basic Human Rights
The fundamental issue, as previously discussed, is
whether an importing country can impose unilateral trade sanctions in an effort
to make the exporting country comply with labour standards and basic human
rights. It is clear that there exists an unequivocal link between trade and
human rights, and the emergence of the social clause concept facilitates the
justification of such measures. For various reasons, both legal and practical,
agreements such as the NAALC have failed to act as enforceable social clauses.
It becomes necessary then to look at the possibility of incorporating the
social clause concept into GATT and examine underlying principles of
international law which may be used in order to justify such unilateral
actions.
A. Countermeasures, Jus Cogens Norms and Erga Omnes Obligations
The justifications of unilateral trade measures
stem from the theory of a countermeasure in defence of obligations erga omnes. Very simply put, in the Barcelona Traction case,[58]
the International Court of Justice held that there are two types of
obligations: one that one state owes to another and a second type that a state
owes towards the international community as a whole.[59]
Obligations of the second type are referenced as erga omnes obligations and any interested state may take action and
seek a remedy without having express jurisdiction to do so. The ILO, in its
Constitution, does recognize the obligations of all state parties to commit and
enforce the rights elucidated in its Conventions.[60]
Further, under Article 26 of the ILO Convention[61]
any member, whether affected by the labour rights violation or not, may file a
complaint with the ILO office thus showing semblances of an erga omnes obligation.[62]
Most of these obligations emanate from customary international law and some
have even attained the status of peremptory norms of international law.
Since the passing of the
Philadelphia Declaration[63]
and the setting up of the ILO, important labour rights such as those against
child labour[64] and forced
labour[65]
have attained the status of jus cogens under
international law.[66] The
classification of such norms as erga
omnes obligations[67]
too, gives any State, whether affected by such violation or not, the right to
seek remedy of such violation.
Under the customary international law
doctrine of countermeasures, states may take otherwise unlawful action in
response to prior unlawful action and justify the
same as long as such action is necessary to remedy the situation.[68]
Thus, if there is an international law violation by one State, the other State
may take actions in the nature of counter measures against the former to remedy
the same. This principle was recognized by the International Court of Justice
in the Gabcikovo – Nagymaros[69]
case and has also been held valid in several arbitral decisions.[70]
What is interesting to note is that when it comes to trade sanctions in
justification of erga omnes
obligations to protect the environment, such sanctions have been upheld even
though they may be wrongful acts.[71]
B. Understanding GATT Article XX
An explanation of the doctrine of
countermeasures and erga omnes
obligations is vital in order to understand the notion that GATT Article XX may
be a codification of the doctrine. Article XX of the GATT,[72]
titled General Exceptions, authorizes governments to apply otherwise illegal
measures when such measures are necessary to deal with the listed social or
economic policy problems.[73]
The practice of the WTO Panels has been to interpret this provision narrowly so
as to put Article XX as a conditional and limited exception from obligations
under other provisions of the GATT, and not as a positive rule establishing
obligations itself.[74]
Article XX is meant to be a justification
and thus only comes into play when a measure taken by one State is in
contravention of the other provisions of the GATT.[75]
It places the burden of proving justifiable cause on the party invoking the
exception.[76]
Furthermore, the measures taken by the party must not be arbitrary or
constitute an unjustifiable discrimination[77]
in any manner and must be necessary in order to obtain the justified ends
mentioned in Article XX. Thus, in order to apply and use Article XX as a
justification, a three tier test must be satisfied, wherein the State must
show: first, that the policy meets the standards in the introductory phase,
which require non-arbitrary and non-discriminatory policies; second, that the
adopted measures fall within one of the policy areas recognized in the general
exceptions, and; third, that there is a connection between the policy and the
trade and that the policy is needed in order to reach the stated end.[78]
However, human rights and labour
standards are not explicitly mentioned in the text of Article XX, which prompts
the question of whether Article XX can be used to justify violations of labour
and basic human rights. This can only be answered by an interpretative
discourse on Article XX.
C. Public
Morals and Health Standards: Making a case for the incorporation of Labour
rights in Article XX
It is the authors opinion, supported
by views of others,[79] that
clauses (a), (b) and (d) of Article XX of the GATT can be used to enforce
labour standards between GATT members.[80]
The conception of public morals[81]
and protection of human, animal or plant life or health[82]
in the GATT are broadly worded and recent jurisprudence of the WTO shows that
basic human rights and labour standards may be incorporated under it.
The starting point for such reasoning
is to understand that there is an unequivocal link between trade and human
rights[83]
and that international trade law must be understood in this background of human
rights and labour standards. It must then be realized that clauses (a) and (b)
have never been used to justify human rights or labour standards violations.[84]
While public morals havent been
defined explicitly, in the Tuna-Dolphin
dispute,[85]
the Australian government argued, inter
alia, that Article XX(a) could justify inhumane treatment of animals, if
such measures applied equally to domestic and foreign products. Salman Bal
argues that this very definition and the fact that the Dispute Settlement Body
did not reject it, could probably imply that inhuman treatment could cover
labour standards.[86] He
substantiates this opinion with a case in the European Court of Human Rights
where inhuman treatment was held to involve atleast such treatment as
deliberately causes severe suffering, mental or physical, which in a particular
situation is justifiable.[87]
According to him, a violation of poor work conditions, might then satisfy the
definition of inhuman treatment.[88]
While such an argument is completely
plausible, it can be taken further. The idea is that the morality criterion in
public morals can be used to incorporate fair labour standards. Morality,
in this sense, would include actions that aim at civilizing, constraining, resisting or democratizing
labour markets in the name of justice and fairness.[89]
It is this component of justice that can be evoked to explain the usage and
incorporation of fair labour standards in Article XX(a). This would be
synonymous with the understanding of Article XX to be a public policy
exception[90]
wherein public policy is held to include fundamental principles of law,
justice,[91]
equity and fairness.[92]
However, a member seeking to justify a unilateral
trade-restrictive measure on the ground that it advances labour standards must
first demonstrate a nexus between the measure as such and its chosen policy
objective by proving a connection between the measure and the risk posed by it.[93]
This requirement restricts the usage of Article XX(a) to protect and promote
labour standards.
If Article XX(a) leaves any doubt as to usage of
labour standards to impose unilateral trade measures, it is cleared by Article
XX(b). The text of Article XX(b) talks of measures necessary to protect human,
animal or plant life or health. Read in context of international instruments[94]
concerning the right to life and health, it can be said that the right to life
also includes matters of public health, environmental measures, worker safety
laws, industrial accidents and matters involving basic human dignity.[95]
In the same light, health has been looked at as the prescription of minimum
conditions of occupational health and safety in the context of ILO Conventions.[96]
Moreover, the Preamble of the GATT states that contracting parties recognize
that their relations in the field of trade and economic endeavour should be
conducted with a view to raising the standards of living.[97]
In Thai – Cigarettes, the Panel
asserted that Article XX(b) clearly allowed contracting parties to give
priority to human health over trade liberalization and stated that trade
related human rights, such as working conditions, undoubtedly contributed
towards living standards.[98]
However, the rider to Article XX(a) requiring a nexus between the measure and
the concerned violation applies to this provision as well. A State is thus
restricted from invoking unilateral trade sections of a general nature that are
not necessary to promote labour
standards.
D. Drawing a Parallel: GATT Article XX
and Measures Protecting the Environment
In the United
States – Shrimp Turtle dispute,[99]
the United States imposed a prohibition on certain varieties of shrimp on the
basis that the usage of certain technology to harvest shrimps would harm the
life of sea turtles. In an action brought to the Dispute Settlement Body by
India, Malaysia, Pakistan and Thailand, the Appellate Body held that sovereign
nations and Members of the WTO can adopt measures to protect endangered species
and the environment under Article XX.[100]
In later disputes,[101] the WTO
Dispute Settlement Body has further clarified that unilateral trade measures
taken in a manner that is essential for the protection of the environment and
demonstrating the requirement of a causal linkage are justified under Article
XX.[102]
However, it must be noted that the adoption of such
measures to protect the environment must be non-discriminatory and necessary to
protect the environment.[103]
The usage of this approach by WTO Panels, even though the protection of the
environment has not been explicitly stated in Article XX, prompts creation of
a parallel wherein labour standards and basic human rights related to trade may
also be incorporated. Measures taken to achieve the above objective may then be
justified under Article XX if shown to be non-discriminatory and necessary to
promote and protect labour standards.
V. Conclusion: Applying the Law
While the NAFTA itself may not be helpful, Article
2101 of the Agreement states that GATT Article XX shall apply as a general
exception and be incorporated in the NAFTA.[104]
The principle of law emanating from Part IV of this note is clear: if there is
a nexus between the labour rights violation and trade and a specific trade
sanction is necessary to stop such
violation, it may be justified under the GATT regime.
In addressing the factual situations posed at the
beginning of this note,[105]
it is clear that no action can be undertaken under the NAFTA by virtue of
Article 43 of the NAALC, which prohibits state parties from taking measures to
enforce their actions in the territories of other state parties. Any sanction
must then be undertaken through the provisions of the GATT, specifically
Article XX. Thus, if in the first scenario the United States can demonstrate a
causal link between the employment of Mexican children and the cost of the
product itself, and such that sanctions were necessary to stop this unfair
practice, it may be justified.
However, in the second scenario it may not be
possible to establish a conclusive link between the employment of children in
Bangladesh and the manufacture of that product in Mexico. Unless this link is
established, no sanction under the GATT is possible.
In both these situations what is striking is the
power and competence of the WTO to enforce such sanctions and act as a
protector of human rights and labour standards, as well. While the ILO also has
concrete provisions regarding the same, enforcement through the WTO mechanisms
seems more effective in compelling States to prescribe to labour norms and
basic human rights standards.
There is, however, one concern in applying this law
on the issue of extra-territorial application. While Article 43 of the NAALC
stated explicitly that the instrument may not be used to enforce its actions in
the territory of another state, an argument was raised by Mexico in the Tuna – Dolphin[106]
dispute where it contended that nothing in Article XX entitled a state party to
impose measures that were not in its jurisdiction while being enforced. The
Panel unfortunately accepted this principle and stated that Article XX(b)
referred only to the protection of life and health within the territory of the
contracting party protecting such rights.[107]
While use of this decision may serve to complicate the solution, it is
fortunate that in later decisions[108]
concerning extra territorial application of actions, this question has not
arisen and the sanctions imposed have been upheld.
In as much as no case has come before an
international dispute settlement body on this issue,[109]
the author truly hopes that the reasoning laid out above is applied, or at
least discussed and debated upon, at the international level and labour standards
and basic human rights come to play a greater role in increasing trade
liberalization.
* B.A., LL.B.
(Honours) Candidate 2010, NALSAR University of Law, Hyderabad, INDIA. Address:
3-4-761, Barkatpura, Hyderabad, Andhra Pradesh, INDIA - 500078. Telephone:
+91-98497-84793. E-mail: adityaswarup[at]gmail.com.
The
author would like to thank Mr. Michael Robinson, QC (Professor, University of
Western Ontario) for his valuable comments. An initial draft of this note was
submitted in partial fulfillment of the course on NAFTA and Its Place in
Global Trade and Investment Law pursued at the University of Western Ontario
in 2008. The usual disclaimer applies.
[1] Padideh AlaI, A Human Rights Critique of the WTO: Some Preliminary Observations, 33 Geo. Wash. Intl L. Rev. 537 (2001); Tatjana
Eres, The Limits of GATT Article XX: A
Back Door for Human Rights, 35 Geo.
J. Intl L. 597 (2003-2004) (hereinafter Eres); Adele
Blackett, Whither Social Clause: Human
Rights, Trade Theory and Treaty Interpretation, 31 Colum. Hum. Rts. L. Rev. 1 (1999-2000) (hereinafter
Blackett).
[2] J. Oloka-Onyango & Deepika Udagama, The Realisation of Economic, Social and
Cultural Rights: Globalisation and its Impact on the Full Enjoyment of Human
Rights, U.N. ESCOR,
52d Sess., U.N. Doc. E/CN.4/Sub.2/2000/13 (2000). See also Eres, Id.
[3] World Trade Organization: Singapore Ministerial
Declaration, Dec. 13, 1996, 36 I.L.M. 218 (1997) (hereinafter Singapore
Ministerial Declaration).
[4] North
American Free Trade Agreement Between the Government of Canada, the Government
of the United Mexican States, and the Government of the United States of
America, December 17, 1992, 32 I.L.M. 289 (hereinafter NAFTA).
[5] General
Agreement on Tariffs and Trade 1994, Apr. 15, 1994, Marrakesh Agreement
Establishing the World Trade Organization, Annex 1A, Legal Instruments –
Results of the Uruguay round, 1867 U.N.T.S. 187, 33 I.L.M. 1153 (1994)
(hereinafter GATT).
[6] While many scholars argue for the linkage between
trade and labour rights, others contend that no direct link exists between the
two within the framework of the WTO. See
generally Eres, supra note 1.
[7] Final Act and Related Documents, Mar. 24, 1948,
United Nations Conference on Trade and Development, UN Doc. ICITO/1/4 and
E/Conf.2/78 (hereinafter Havana Charter). The Havana Charter never
entered into force due to the failure of the United States to ratify. See John
H. Jackson, The World Trading System: Law and Policy of International Economic
Relations 38 (2002)
[8] Universal Declaration on Human Rights, Dec. 10,
1948, GA Res. 217A (III), at 71, UN Doc. A/810 (Dec. 12, 1988) (hereinafter
UDHR).
[9] Salman Bal, International
Free Trade Agreements and Human Rights: Reinterpreting Article XX of the GATT,
10 Minn. J. Global Trade 62 (2001) (hereinafter
Bal).
[10] General Agreement on Tariffs and Trade, October
30, 1947, 61 Stat. A-11, 55 U.N.T.S. 194. See
generally Bal, Id.
[11] Marrakesh Agreement Establishing the World Trade
Organization, Apr. 15, 1994, 33 I.L.M 1144 (1995). (hereinafter WTO Agreement).
[12] Some authors characterize this as a
protectionist approach of developed countries with an aim to ensure the
security of their economy while at the same time reducing the comparative
advantages of developing economies. See
Erika De Wet, Labour Standards in a
Globalised Economy: The inclusion of a Social Clause in the General Agreement
on Tariff and Trade/ World Trade Organization, 17 Hum. Rts. Q. 443 (1995) (hereinafter Erika De Wet).
[13] Singapore Ministerial Declaration, supra note 3.
[14] See Lejo
Sibbel & Petra Borrmann, Linking
Trade with Labour Rights: The ILO Better Factories Cambodia Project, 24 Ariz. J. Int'l & Comp. L. 235 (2007) (hereinafter
Sibbel & Borrmann).
[15] See
Virginia Leary, The WTO and the Social
Clause: Post Singapore, 8(1) Euro.
J. Intl L. 118
(1997), available at: http://207.57.19.226/journal/Vol8/No1/art7.html (last
visited Jul. 22, 2009)
[16] International Labour Organization (ILO), Declaration on Fundamental Principles and
Rights at Work and Annex, Jun. 18, 1988, 37 I.L.M. 1233 (1998). See generally
Sibbel & Borrmann, supra note 14.
[17] Hoe Lim,
The Social Clause: Issues and Challenges 3.1 (2001), available at:
http://actrav.itcilo.org/actrav-english/telearn/global/ilo/guide/hoelim.htm
(last visited Jul. 22, 2009).
[18] See Blackett,
supra note 1.
[19] See
GATT supra note 5, at arts.I and II.
[20] Id. at
art. III.
[21] See
Eres, supra note 1. Eres argues that by the inclusion of
these Articles in the GATT the members contracted away the right to impose
unilateral trade-restrictive measures. This argument is further discussed in
Part IV.
[22] The terms human rights and labour standards
are used together because the ILO has drafted a series of Conventions and
classified important labour rights as basic human rights. These include:
Convention Concerning the Minimum Wage for Admission to Employment, Jun. 26,
1973, 1015 U.N.T.S. 297; Convention Concerning Discrimination in Respect
of Employment and Occupation, Jun. 25, 1958, 362 U.N.T.S. 31; Convention Concerning the Abolition of Forced
Labour, Jun. 25, 1957, 320 U.N.T.S. 291; Convention Concerning the Application of the
Principles of the Right to Organize and Bargain Collectively, Jul. 1, 1949, 96
U.N.T.S. 257. See
generally Bal, supra note 9.
[23] This is especially true of Article XX of the
GATT. See Eres, supra note 1.
[24] See
GATT, supra note 5, at art.VI.
[25] See Erika
De Wet, supra note 12.
[26] Id. See also Blackett, supra note 1.
[27] George Sogas, Labour
Standards in International Trade Agreements: An Assessment of the Arguments,
10 Int. J. of Hum. Resource Manag. 351
(1999) (hereinafter Sogas); Stephen S.
Golub, Are International Labour Standards
needed to Prevent Social Dumping?, Finance
& development 20 (1997) available
at: http://www.imf.org/external/pubs/ft/fandd/ 1997/12/pdf/golub.pdf
(hereinafter Golub).
[28] Steve Suranovic, International Labour and Environmental Standards Agreements: Is This
Fair Trade? 25 The World Economy
231 (2002).
[29] Supra
note 24. See also Thomas R. Donahue, Workers Rights in a Global Village:
Observations of an American Trade Unionist in International Labour
Standards and Economic Independence 198 (W.
Sengenberger & D. Campbell eds., 1994).
[30] See
Sogas, supra note 27.
[31] Free
Trade Agreement between the Government of Canada and the Government of the
United States of America, Jan. 2, 1988, 3 Can. T. S. (1989).
[32] Roy Adams and Jerry White, Labor and the Canada – US Free Trade Agreement, 17(1) ILR Report, 15(1989), at 15.
[33] See
Parbudyal Singh, NAFTA and Labour: A
Canadian Perspective, 23(3) J. Labor
Res. 433 (hereinafter Singh).
[34] Id. at
434.
[35] Terry Collingsworth, An Enforceable Social Clause, 3(28) Foreign
Policy in Focus 1 (Oct. 1998), available
at: www.fpif.org/pdf/vol3/28ifsoc.pdf (last visited Jul. 22, 2009).
[36] Preamble, NAFTA, supra note 4.
[37] Elizabeth B. Chilcoat, Pinkie Promises of Blood Oaths: Using Social Clauses in Free Trade
Agreements to Eradicate Child Labour, 7
Wash. U. Global Stud. L. Rev. 307 (2008) (hereinafter Chilcoat).
[38] North American Agreement on Labor Cooperation,
Sept. 13, 1993, 32 I.L.M. 1499 (1993) (hereinafter NAALC).
[39] Singh, supra
note 33, at 433. See also
Roy Adams and Parbudyal Singh, Early
Experience with NAFTAs Labour Side Agreement, 19 Comp. Labor L. and Poly J. 161, (1997).
[40] NAALC, supra
note 38, at art.11.
[41] Id. at
arts.15 & 16.
[42] Singh, supra
note 33, at 433. See also
A. L. C. de Mestral, The Significance of
the Labour Side Agreements on Environmental and Labour Cooperation, 15 Ariz. J. of Intl and COmp. L. 169 (1998).
[43] NAALC, supra
note 38, at art.22.
[44] Id. at
art.29(1).
[45] For more discussion on the issue, see supra notes 14 – 17.
[46] NAALC,
supra note 38, at art.43.
[47] NAALC, supra
note 38, at art.29. See also Singh, supra note 33, at 433.
[48] NAALC, supra
note 38, at art.11.
[49] See
Laura Okin Pomeroy, The Labor Side
Agreement Under the NAFTA: Analysis of Its Failure to Include Strong
Enforcement Provisions and Recommendations for Future Labor Agreements
Negotiated with Developing Countries, 29
Geo. Wash. J. Int'l L. & Eco. 769 (1996)
(hereinafter Pomeroy).
[50] Joel Solomon, Trading
Away Rights: the Unfulfilled Promise of NAFTAs Labor Side Agreement, 13(2)
HRW Report iv (Apr. 2001), available at:
www.hrw.org/legacy/reports/2001/nafta/ (last visited Jul. 22, 2009).
[51] Jerome
Levinson, NAFTA's Labor Side Agreement: Lessons from the First Three Years
11 (Institute for Policy Studies and the International Labor Rights Fund,
1996). See also Peter Zernite, NAFTA Flaw Leaves Workers Without Rights, Albion
Monitor (Dec. 3, 1996) available at:
www.albionmonitor.net/9612a/ss-naftafail.html (last visited Jul. 22, 2009)
[52] See Pomeroy,
supra note 49. See
also Morton Bahr, President, Communication Workers of America, comments
reproduced in Commission for Labor Cooperation, Review of the North American Agreement on Labor Cooperation, (March
1999), available at:
http://new.naalc.org/publications/press_release/nafta_labor_agreement.htm (last
visited Jul. 22, 2009).
[53] NAALC, supra
note 38, at art.29. See also Singh, supra note 33, at 433.
[54] Joshua Briones, Paying the Price for NAFTA: NAFTA's Effect on Women and Children
Laborers in Mexico, 9 U.C.L.A.
Women's L.J. 301 (1999) (hereinafter Briones).
[55] United Nations Childrens Fund (UNICEF), At a Glance: Mexico, available at: www.unicef.org/infobycountry/mexico_statistics.html#30
(last visited Jul. 22, 2009).
[56] See Chilcoat,
supra note 37.
[57] Id. See
also Briones supra note 54.
[58] Barcelona Traction,
Light and Power Company, Ltd.
(Belgium v. Spain), ICJ Rep. 4 (1970), (hereinafter Barcelona Traction).
[59] See Claudia
Annaker, The Legal Regime of Erga Omnes
Obligations in International Law, 46 Austrian
J. of Publ. Intl L. 131 (1994); Michale Byers, Conceptualising
the Relationship between Jus Cogens and Erga Omnes Rules, 66 Nordic J. of Intl L. 211 (1997) (hereinafter
Byers).
[60] Preamble, Constitution
of the International Labour Organization, Jun. 28, 1919, 15 U.N.T.S. 35
(1919).
[61] Id. at
art.28.
[62] Christian.
J. Tams, Enforcing Erga Omnes
Obligations in International Law 72 (1d. ed., 2005). See also
Portugal/Libya Complaint, 46 ILO
Bulletin, No. 2, Supp. II (1962).
[63] International Labour Organization [ILO], Declaration Concerning
Aims and Purposes of the International Labour Organization,
Philadelphia, May 10, 1944, 15 U.N.T.S. 40 (1944).
[64] ILO Convention 182, Concerning the Prohibition
and Immediate Elimination of the Worst Forms of Child Labour, Jun. 17, 1999, 38
I.L.M. 1207 (1999); UN Convention on the Rights of the Child, Nov. 20, 1989, 1577 U.N.T.S. 3 (1989).
[65] ILO Convention 105, Abolition of Forced Labour,
Jun. 25, 1957, 320 U.N.T.S. 291
(1957); ILO Convention 29, Forced Labour, Jun. 28, 1930, 39 U.N.T.S. 291 (1930).
[66] See, for example, the argument comparing
child labour, in its strict-sense, with slavery, and thus making the
prohibition not only a part of customary law, but a peremptory norm of jus cogens. Lenzerini, International Trade and Child Labour
Standards in Environment, Human
Rights and International Trade 285 (F. Francioni ed., 2001) at 308. See also Philip Alston, Core Labour Standards and the
Transformation of the International Labour Rights Regime in Social Issues, Globalisation and International
Institutions 49 (Virginia Leary & Daniel Warner eds., 2006).
[67] See
Byers, supra note 59.
[68] Draft
Articles on Responsibility of States for Internationally Wrongful Acts,
published in the Report of the International Law Commission, Fifty-Third
Session, U.N. GAOR, 56th Sess., Supp. No. 10, U.N. Doc. A/56/10 (adopted
November 6, 2001), at art.51.
[69] Case
Concerning the Gabckovo –
Nagymaros Project (Hungary v. Slovakia), ICJ Rep., 7 (1997).
[70] Case
Relating to the Responsibility of Germany for damage caused in the Portuguese
Colonies in the South of Africa (Naulilaa), 2 UNRIAA 1011 (1928); Case
Relating to the Responsibility of Germany for Acts Committed Subsequent to 31
July, 1914 and Before Portugal Entered into the War (Cysne), 2 UNRIAA 1035
(1930); Case Related to the Air Services Agreement of 27 March 1946 (United
States v. France), 18 UNRIAA 416 (1979).
[71] See
Mary Ellen O'Connell, Using Trade to Enforce International Environmental
Law: Implications for United States Law, 1 Ind.
J. Global L. Stud. 273 (1994) (hereinafter O'Connell); Thomas J. Schoenbaum, International Trade and Protection
of the Environment: The Continuing Search for Reconciliation, 91 Am. J. Int'l L. 268 (1997) (hereinafter
Schoenbaum).
[72] Article XX of the GATT, supra note 5, states:
Subject to the requirement
that such measures are not applied in a manner which would constitute a means
of arbitrary or unjustifiable discrimination between countries where the same
conditions prevail, or a disguised restriction on international trade, nothing
in this Agreement shall be construed to prevent the adoption or enforcement by
any contracting party of measures:
(a) necessary
to protect public morals;
(b) necessary
to protect human, animal or plant life or health;
(c) relating
to the importations or exportations of gold or silver;
(d) necessary
to secure compliance with laws or regulations which are not inconsistent with
the provisions of this Agreement, including those relating to customs
enforcement, the enforcement of monopolies operated under paragraph 4 of
Article II and Article XVII, the protection of patents, trade marks and
copyrights, and the prevention of deceptive practices;
(e) relating
to the products of prison labour;
(f) imposed
for the protection of national treasures of artistic, historic or
archaeological value;
(g) relating
to the conservation of exhaustible natural resources if such measures are made
effective in conjunction with restrictions on domestic production or
consumption;
(h) undertaken
in pursuance of obligations under any intergovernmental commodity agreement
which conforms to criteria submitted to the CONTRACTING PARTIES and not
disapproved by them or which is itself so submitted and not so disapproved;*
(i) involving
restrictions on exports of domestic materials necessary to ensure essential
quantities of such materials to a domestic processing industry during periods
when the domestic price of such materials is held below the world price as part
of a governmental stabilization plan; Provided that such restrictions
shall not operate to increase the exports of or the protection afforded to such
domestic industry, and shall not depart from the provisions of this Agreement
relating to non-discrimination;
(j) essential
to the acquisition or distribution of products in general or local short
supply; Provided that any such measures shall be consistent with the
principle that all contracting parties are entitled to an equitable share of
the international supply of such products, and that any such measures, which
are inconsistent with the other provisions of the Agreement shall be
discontinued as soon as the conditions giving rise to them have ceased to
exist. The CONTRACTING PARTIES shall review the need for this sub-paragraph not
later than 30 June 1960.
[73] See Bal,
supra note 9.
[74] GATT Panel Report, United States: Restriction on Imports of Tuna, B.I.S.D. (39th
Supp.) 155 (1993; adopted Aug. 6, 1991). (hereinafter Tuna
– Dolphin); See also Bal, supra note 9.
[75] See Bal
supra note 9; See generally M. T. Mitro, Outlawing
the Trade in Child Labour Products: Why the GATT Article XX Health Exception
authorizes Unilateral Sanctions, 51 Am.
Univ. L. Rev. 1223 (2001-2002) (hereinafter Mitro).
[76] Appellate Body Report, United States: Standards for Reformulated and Conventional Gasoline,
WT/DS2/AB/R at 22 (adopted May 20, 1996). See also Committee on Trade and
Environment, GATT/WTO Dispute Settlement
Practice Relating to Article XX paragraphs (b), (d) and (g) of GATT –
Note by the Secretariat, WT/CTE/W/53/Rev.1 (Oct.
26, 1998).
[77] GATT, art.XX, supra
note 72.
[78] See
Bal, supra note 9.
[79] See
Mitro, supra note 75; Blackett, supra note 1; Bal, supra note 9; Jan
Klabbers, Jurisprudence in International
Trade Law: Article XX of GATT, 26 J. World Trade 63 (1992).
[80] For
contrary views see Eres, supra note 1, where the author argues that labour standards were never
meant to be incorporated in Article XX and that the State parties expressly
contracted away those rights.
[81] GATT, supra
note 72, at art.XX(a).
[82] GATT, supra
note 72, at art.XX(b).
[83] For an extensive discussion, see Part II.
[84] See
Bal, supra note 9, at 79.
[85] Tuna
– Dolphin Panel Report, supra note 74, at 181.
[86] See
Bal, supra note 9, at 77.
[87] The Greek
Case (Denmark v. Greece; Sweden v. Greece; Netherlands v. Greece; Norway v.
Greece), Y. B. Eur. Conv. on H. R. 12
(1969). See Bal, id.
[88] See Bal, id.
[89] Brian Langille, What is International Labour Law For?, report prepared for the
International Institute for Labor Studies (2005), available at: www.ilo.org/public/english/bureau/inst/download/langille.pdf.
[90] See generally Bal, supra note 9.
[91] This interpretation of public policy is taken
from the interpretation of arbitral instruments like the UNCITRAL Model Law on
International Commercial Arbitration. See
Report of the Committee on the
Enforcement of International Arbitral Awards, 28th March 1955,
UN Doc. E/2704 and E/AC.42/4/Rev.1 (1955). See also J.
F. Poudret and Sebastien Besson, Comparative
Law of International Arbitration 856 (2d. ed., 2007).
[92] See
Attorney General for Canada v. SD Myers Inc., (2004) FC 38; Parsons and
Whitmore Inc. v. Societe Generale de Lindustrie du Papier RAKTA and Bank of
America, 508 F.2d 969, 2nd Circuit (1974).
[93] Panel Report, European
Communities – Measures Affecting Asbestos and Asbestos containing
Products, WT/DS135/R 8, at p. 169 (Sept 18, 2000) (hereinafter EC –
Asbestos). See also Eres, supra note 1.
[94] International Covenant of Civil and Political
Rights, 1966, 999 U.N.T.S 171 (1966); UDHR, supra note 8; International Covenant on
Economic, Social and Cultural Rights, 3 Jan., 1976, 993 U.N.T.S 3 (1976).
[95] F. Przetacznik, The Right to Life as a Basic Human Right, 9 HRJ 585 (1976). See also The
International Covenant on Civil and Political Rights and United Kingdom Law
174 (David Harris & Sarah Joseph eds., 1995,).
[96] Matthew
Craven, The International Covenant
on Economic, Social and Cultural Rights: A Perspective on its Development 240 (1995).
[97] Preamble, GATT, supra note 5. See also
Bal, supra note 9, at 83.
[98]
Panel Report, Thailand:
Restriction on Importation of and Internal Taxes on Cigarettes, 30 I.L.M
1122 (Nov. 7, 1990) (hereinafter Thai
– Cigarettes). See generally
Bal, supra note 9, at 84.
[99] Appellate Body Report, Import Prohibition of
Certain Shrimp and Shrimp Products, WT/DS58/AB/R, 12 October 1998
(hereinafter United States Shrimp Turtle)
[100] Id at
185. The Appellate Body, however, held that the measures adopted by the United
States were applied in an arbitrary manner and thus were illegal.
[101] Appellate Body Report, Korea- Measures
Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161/AB/R (2000;
adopted Jan. 10, 2001); Appellate Body Report, EC – Asbestos,
WT/DS135/AB/R ( Mar. 12, 2001).
[102] See
OConnell, supra note 71 and
Schoenbaum, supra note 71.
[103] See
Bal, supra note 9. See also R. W. Parker, The Use and Abuse of Trade Leverage to
Protect Global Commons: What We Can Learn from the Dolphin – Tuna
Conflict, 12 Geo. Intl Envtl L. Rev.
1 (1999).
[104] NAFTA, supra
note 4, at art.2101.
[105] See supra
Part I.
[106] See Bal,
supra note 9.
[107] See also
Lorand Bartels, Article XX of GATT and
the Problem of Extra-territorial Jurisdiction: The case of Trade Measures for
the Protection of Human Rights, 36
J.W.T. 353 (2002).
[108] United
States Shrimp Turtle, Appellate Body Report, supra note 99.
[109] See
Bal, supra note 9.
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