TWN Info Service on WTO and Trade Issues (Feb12/11)
27 February 2012
Third World Network

Human rights impact of trade and investment pacts
Published in SUNS #7312 dated 20 February 2012

Geneva, 17 Feb (Kanaga Raja) -- The United Nations Special Rapporteur on the right to food has unveiled a set of seven guiding principles on human rights impact assessments of trade and investment agreements.

These principles have been put forward by Special Rapporteur Olivier De Schutter in a report to the nineteenth regular session of the UN Human Rights Council due to take place later this month.

According to the Special Rapporteur, these guiding principles are intended to provide States with guidance on how best to ensure that the trade and investment agreements they conclude are consistent with their obligations under international human rights instruments.

The rights expert said that human rights impact assessments can be an important tool for States in negotiating trade and investment agreements, particularly to ensure that they will not make demands or concessions that will make it more difficult for them, or for the other party or parties, to comply with their human rights obligations.

"Yet, States have been provided with little guidance as to how such human rights impact assessments should be prepared, what is specific to a human rights impact assessment (as distinct, for instance, from sustainability impact assessments or social impact assessments), and how the conduct of human rights assessments relates to the undertakings of States under human rights treaties."

The guiding principles are intended to provide such advice, said De Schutter, adding that they are also intended as an operational tool that may be useful for human rights treaty bodies and the special procedures of the Human Rights Council, to the extent that their mandate includes assessing the consistency of trade and investment agreements with the human rights undertakings of States.

"Since the preparation of human rights impact assessments is a way for the State to discharge its human rights obligations, by ensuring that it does not conclude agreements that make it more difficult or impossible for the State to comply with such obligations, it is recommended that the process of preparing human rights impact assessments be stipulated in legislation, rather than left to the ad hoc choices of the Executive."

Guiding principle No. 1 states: "All States should prepare human rights impact assessments prior to the conclusion of trade and investment agreements."

The Special Rapporteur commented that by preparing human rights impact assessments prior to the conclusion of trade and investment agreements, States are addressing their obligations under the human rights treaties.

First, said De Schutter, since States are bound by these pre-existing treaty obligations, they are prohibited from concluding any agreements that would impose on them inconsistent obligations. Therefore, there is a duty to identify any potential inconsistency between pre-existing human rights treaties and subsequent trade or investment agreements, and to refrain from entering into such agreements where such inconsistencies are found to exist.

Second, the right of every citizen to take part in the conduct of public affairs, recognized under the International Covenant on Civil and Political Rights (art. 25a), implies that no trade or investment agreement should be concluded in the absence of a public debate, which in principle should be conducted by freely elected parliamentary assemblies for approval to ensure that the free expression of the will of the electors shall be fully respected (art. 25b of the Covenant). Human rights impact assessments serve to inform such public debate.

Third, since compliance with the obligations imposed under trade and investment agreements typically is ensured by the threat of economic sanctions or reparations authorized or awarded by an agreement-specific dispute settlement mechanism or international arbitral tribunals, it is important that any inconsistency with pre-existing human rights obligations imposed on the State are identified beforehand, to the fullest extent possible.

"Where an inconsistency between the human rights obligations of a State and its obligations under a trade or investment agreement becomes apparent only after the entry into force of the said agreement, the pre-existing human rights obligations must prevail," said the Special Rapporteur.

Guiding Principle No. 2 states: "States must ensure that the conclusion of any trade or investment agreement does not impose obligations inconsistent with their pre-existing international treaty obligations, including those to respect, protect and fulfil human rights."

The Special Rapporteur said that States cannot ignore their human rights obligations in the conclusion of trade or investment agreements, whether at the multilateral or bilateral level.

The specific purpose of human rights impact assessments, which distinguishes them from other impact assessments (such as social, environmental or sustainability impact assessments), is to ensure that States will not be facing inconsistent obligations, imposed respectively under human rights treaties and under trade or investment agreements, and that they will not face obstacles in the realization of human rights they have committed to guarantee as a result of having entered into such agreements.

In other words, the human rights impact assessment should measure the potential impact of the trade or investment agreement on human rights outcomes and on the capacity of States (and non-State actors, where relevant) to meet their human rights obligations, as well as on the capacity of individuals to enjoy their rights.

Human rights impose on States three levels of obligations, said the rights expert.

First, States must respect human rights. They are thus precluded from entering into trade or investment agreements that would require them to adopt certain measures, such as lowering a tariff or strengthening intellectual property rights, that would result in an infringement of human rights they have agreed to uphold.

Second, States should protect human rights. They must therefore ensure that they will not be precluded from the possibility of controlling private actors whose conduct may lead to violating the human rights of others, for example, as a result of an excessively high level of protection of foreign investors established on their territory or because of a broad understanding of the prohibition of imposing performance requirements on such investors.

Third, States should fulfil human rights. This requires that States refrain from concluding trade and investment agreements that will render impossible the adoption of policies that move towards the full realization of human rights, insofar as it relates to rights that are subject to progressive realization by States to the maximum of their available resources.

Guiding Principle No. 3 states: "Human rights impact assessments of trade and investment agreements should be prepared prior to the conclusion of the agreements and in time to influence the outcomes of the negotiations and, if necessary, should be completed by ex-post impact assessments. Based on the results of the human rights impact assessment, a range of responses exist where an incompatibility is found, including but not limited to the following: (a) Termination of the agreement; (b) Amendment of the agreement; (c) Insertion of safeguards in the agreement; (d) Provision of compensation by third-State parties;
(e) Adoption of mitigation measures."

The Special Rapporteur noted that even by initiating the human rights impact assessment before negotiations are well advanced, the final results of the assessment may only become available when negotiations have advanced to a point such that anything more than cosmetic changes may become extremely difficult. As such, States are encouraged to finalize a feasibility study that incorporates a human rights impact assessment prior to entering into the final phase of formal negotiations.

Where the impact assessment indicates the possibility of potential human rights violations resulting from the draft agreement, the draft may have to be revised to remove any incompatibility that has been found with pre-existing human rights obligations of the State concerned. Removing the incompatibility can be achieved either by the adoption of measures at the domestic level that ensure that the agreement will be consistent with the human rights obligations of the State, or by introducing within the agreement itself clauses, such as flexibilities or exceptions, that will allow the State to comply with its human rights obligations.

Guiding Principle No. 4 states: "Each State should define how to prepare human rights impact assessments of trade and investment agreements it intends to conclude or has entered into. The procedure, however, should be guided by a human rights-based approach, and its credibility and effectiveness depend on the fulfilment of the following minimum conditions: (a) Independence; (b) Transparency; (c) Inclusive participation; (d) Expertise and funding; and (e) Status."

The Special Rapporteur said that while the primary purpose of a human rights impact assessment of a trade and investment agreement is to ensure that the provisions of such agreement shall not be incompatible with the normative content of relevant human rights, it also should include an assessment of whether the process of negotiating the impact of the trade or investment agreement has affected human rights. Thus, it should be assessed whether the process of negotiation was participatory, inclusive and transparent, and whether it was conducted with appropriate parliamentary oversight.

The rights expert cautioned that human rights impact assessments can constitute a complex endeavour, and challenges may be encountered in developing a robust methodology. A number of factors contribute to this, including: (a) the difficulties of establishing causality between human rights outcomes and specific trade/investment reforms or initiatives; (b) the paucity of data, especially in least-developed countries; and (c) the limitations of quantitative and qualitative methods in capturing dynamic effects of trade/investment reforms.

"For this reason, it is for each State to define the calendar according to which the assessment shall be made; which body shall be in charge of the assessment; and on the basis of which data the assessment shall be prepared."

Guiding Principle No. 5 states: "While each State may decide on the methodology by which human rights impact assessments of trade and investment agreements will be prepared, a number of elements should be considered: (a) Making explicit reference to the normative content of human rights obligations; (b) Incorporating human rights indicators into the assessment; and (c) Ensuring that decisions on trade-offs are subject to adequate consultation (through a participatory, inclusive and transparent process), comport with the principles of equality and non-discrimination, and do not result in retrogression."

According to the Special Rapporteur, human rights impact assessments should rely on indicators that measure the following: (a) Whether the trade or investment agreement will make it more difficult for the State concerned to ratify particular human rights instruments, to adapt its regulatory framework to the requirements of human rights, or to set up the institutional mechanisms, that ensure compliance with its human rights obligations (structural indicators); (b) Whether it creates obstacles to the implementation of the State's policy measures and programmes, or to the functioning of institutional mechanisms, that ensure effective fulfilment of State's human rights obligations, particularly insofar as such obligations require budgetary commitments (process indicators); and (c) Whether the trade or investment agreement may make it more difficult for a State to make progress in the realization of the human rights it has undertaken to comply with, measured from the perspective of full enjoyment of all human rights by all (outcome indicators).

Guiding Principle No. 6 states: "States should use human rights impact assessments, which aid in identifying both the positive and negative impacts on human rights of the trade or investment agreement, to ensure that the agreement contributes to the overall protection of human rights."

The rights expert said that delicate choices will have to be made about the priorities that the State seeks to pursue, for instance, where trade and investment agreements contribute to economic growth and thus may facilitate the ability of the State to realize certain rights by mobilizing budgetary resources to finance certain public goods and services in various areas, including education, food, health and housing, while at the same time negatively affecting the State's capacity to protect the rights of certain groups, such as workers in the least efficient sectors of the economy.

"States should prioritize those economic and social benefits that will be sustainable in the long term in terms of their contribution to the realization of all human rights, including the right to development, over short-term economic and/or political gains expected from any trade and investment agreement."

Guiding Principle No. 7 states: "To ensure that the process of preparing a human rights impact assessment of a trade or investment agreement is manageable, the task should be broken down into a number of key steps that ensure both that the full range of human rights impacts will be considered, and that the assessment will be detailed enough on the impacts that seem to matter the most: (a) Screening; (b) Scoping; (c) Evidence gathering; (d) Analysis; (e) Conclusions and recommendations; and (f) Evaluation mechanism."

According to the Special Rapporteur, first, the human rights impact assessment should include a preliminary analysis of which human rights are most likely to be affected, with respect to which population groups, as a result of the trade or investment agreement (screening): this should allow the determination of which elements of the trade or investment agreement shall be subject to a full assessment, and with regard to their impacts on which human rights.

Second, those in charge of the human rights impact assessment should determine the set of questions that will have to be addressed and the methodology to be applied, including the use of indicators, for the full assessment in the areas identified at the screening stage (scoping).

Third, evidence gathering shall include the use of both quantitative (including economic modelling and regression analysis) and qualitative research (including consultations with rights holders or their representatives, and where feasible using participatory research methodologies), in order to determine the impacts as precisely as possible.

Fourth, the impacts of the trade or investment agreement on the ability of the State to respect, protect and fulfil human rights should be assessed, taking into account what has been said about trade-offs (analysis). The outcome of the human rights impact assessment, in any case, should be made public, since it should feed into the public debate about the preparation or implementation of the trade or investment agreement considered.

Fifth, the impact assessment should lead to the presentation of conclusions and recommendations, on the basis of which the bodies in charge of negotiating and concluding the impact assessment shall be held accountable.

Sixth, appropriate follow-up should be given to the conclusions and recommendations adopted at the final stage of the impact assessment, by organizing a monitoring and evaluation mechanism assessing the extent to which these conclusions and recommendations were in fact taken into account, said the Special Rapporteur. +