Journal of
WORLD TRADE
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Author Guide
[A] Aim of the Journal
Editor
Edwin Vermulst
VVGB Advocaten / Avocats Brussels, Belgium
Associate Editors Petros C. Mavroidis Edwin B. Parker Professor of Law at Columbia Law School,
New York, Professor of Law at the University of Neuchatel & CEPR
Thomas Cottier Professor of European and International Economic Law, Managing
Director World Trade Institute, University of Berne, Switzerland
Simon Evenett University of St.Gallen
Bernard Hoekman Development Research Group, The World Bank
Junji Nakagawa Professor, University of Tokyo, Tokyo, Japan
Yong-Shik Lee Director and Professorial Fellow, The Law and Development Institute
Faizel Ismail Head of the South African Delegation to the WTO, Geneva
Gary N. Horlick Law Offices of Gary N. Horlick
Henrik Horn Senior Research Fellow, Research Institute of Industrial Economics
(IFN), Stockholm
Pierre Sauvé World Trade Institute, University of Berne
Lorand Bartels Faculty of Law, University of Cambridge
Thomas J. Prusa Department of Economics, Rutgers University,
New Brunswick, NJ, USA
Chad P. Bown Senior Economist, Development Research Group,
The World Bank
The journal deals authoritatively with the most crucial issues affecting world trade today, with focus on multilateral,
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ISSN 1011-6702
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Is More Trade Always Better? The WTO and
Human Rights in Conflict Zones
Susan Ariel AARONSON & M. Rodwan ABOUHARB*
JEL Codes: F51, F53, 019, Q34
Scholars and policymakers have long believed that the interdependence
encouraged by trade relations encourages trust and peaceful relations. In this
article, we examine the role of the GATT/WTO (and the trade it supposedly
encourages) in conflict zones. Although the WTO is built on the notion that trade
stimulates peace, policymakers really do not know how more or less trade affects
the human rights conditions of citizens living in zones of conflict. Policymakers
often try to reduce trade in such zones in the hopes that sanctioning trade will
reduce conflict.Yet, at other times, policymakers try to encourage trade in conflict
zones. We show that policymakers have used several avenues under the WTO to
discuss and address human rights in Member States experiencing conflict or in
post-conflict recovery. We then focus on how policymakers can achieve greater
coherence among trade and human rights policies in conflict zones.
1
IS MORE TRADE ALWAYS BETTER? THE WTO AND HUMAN
RIGHTS IN CONFLICT ZONES1
Sri Lanka and Myanmar/Burma are case-studies in the human rights dilemmas
policymakers face in zones of conflict.2 Although the two nations are quite
*
1
2
Susan Ariel Aaronson is Associate Research Professor at GWU and the Minerva Chair at the
National War College. M. Rodwan Abouharb is Senior Lecturer International Relations, Director
MSc International Public Policy Program, School of Public Policy, University College London.
Email saaronso@gwu.edu; m.abouharb@ucl.ac.uk.
We are grateful to K. Daniel Wang, a graduate student at GWU, for his extensive help with the
manuscript.
During the civil war, the Tamils, some 9% of the population tried to set up a separate country in
the north of the island. Arundhati Roy, The Silence Surrounding Sri Lanka, Boston Globe, (31 Dec.
2009), http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2009/03/31/the_silence
_surrounding_sri_lanka/; Backgrounder, Council on Foreign Relations, The Sri Lankan Conflict,
(18 May 2009), http://www.cfr.org/terrorist-organizations/sri-lankan-conflict/p11407; N.Y. Times,
Sri Lanka, http://topics.nytimes.com/top/news/international/countriesandterritories/srilanka/index.
html.
Aaronson, Susan Ariel & Abouharb, M. Rodwan. ‘Is More Trade Always Better? The WTO and Human
Rights in Conflict Zones’. Journal of World Trade 47, no. 5 (2013): 1091–1128.
© 2013 Kluwer Law International BV, The Netherlands
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JOURNAL OF WORLD TRADE
different, they also have much in common. Both states have experienced years of
ethnic violence and civil war. The leaders of both countries long governed with
impunity while thousands of their citizens suffered and died. Interestingly both Sri
Lanka (the former Ceylon) and Myanmar/Burma (hereafter Burma) are founding
members of both the United Nations and the international organization
governing trade, the GATT (now the WTO).3
During its long and brutal civil war (1983–2009),4 the rights of many Sri
Lankan citizens were undermined.5 Nonetheless, trade continued apace. Other
governments did not attempt to use trade policies to affect human rights in Sri
Lanka until the conflict ended in 2009. Members of the WTO responded
differently to civil war, ethnic violence, and human rights abuse in Burma. The
US, Canada, and the EU as well as other nations maintained years of trade
sanctions on Burma in the hopes of altering the military regime’s policies towards
its citizens.6
When countries such as Sri Lanka or Burma initiate or undergo conflict,
policymakers from other governments must wrestle with difficult questions. Do
they take steps to expand trade or do they use trade sanctions to punish or
threaten governments which may act in an abusive manner? On one hand, rebel
groups or oppressive regimes may use trade revenues to fund and perpetuate
conflict. However, without the economic growth from trade, innocent civilians
may be deprived of jobs, income, and opportunities (Deitelhoff and Dieter Wolf:
2010; De Luca: 2003). Moreover, after violence ends, trade can help policymakers
restart the economy, expand opportunities, foster reconciliation, and promote
respect for human rights.
But the international agreement and organization that governs trade, the
GATT/WTO, does not provide its members with clear guidance about the role
trade can and should play in zones of conflict. Under WTO rules, members of the
GATT/WTO are not permitted to take trade actions to protect citizens of another
Member State because such actions would violate WTO norms of equal treatment
among nations. However, Member States may use trade sanctions against another
3
4
5
6
Both joined in 1948. http://www.un.int/wcm/content/site/myanmar; http://unic.un.org/imucms/
colombo/25/561/un-in-sri-lanka.aspx; and http://www.wto.org/english/thewto_e/minist_e/min96
_e/chrono.htm.
Norway brokered a cease-fire in February 2002. However, violence continued until May 2009,
when the government announced that it had finally defeated the remnants of the Tamil Tigers.
https://www.cia.gov/library/publications/the-world-factbook/geos/ce.html, and Manu Joseph,
Revisiting the Horror in Sri Lanka, N.Y. Times, (27 Feb. 2013), http://www.nytimes.com/2013/02/28/
world/asia/28iht-letter28.html?ref=srilanka.
The ethnic and civil conflict in Burma began in 1948 and continues to this day. Hannah Beech,
Will Ethnic Violence Kill Burma’s Fragile Reforms? Time (11 Jun. 2012), http://www.cfr.org/burmam
yanmar/time-ethnic-violence-kill-burmas-fragile-reforms/p28483.
TRADE, CONFLICT ZONES AND THE ROLE OF THE WTO
1093
Member State if the UN Security Council authorizes such actions.7 In the
sixty-five year history of the GATT and its successor organization the WTO, the
UN Security Council has rarely authorized such trade sanctions. Like its precursor,
the GATT, the WTO, is built on a presumption that more trade is better for more
people, including those living in conflict zones. Hence when countries imposed
targeted sanctions on Burma, they did not act with the direct assent of the UN or
the WTO. These nations argued that human rights abuses in Burma were so
significant that they justified trade sanctions and an exception to GATT/WTO
norms.8
During Sri Lanka’s years of war, trade and tourism were significantly
reduced.9 Much of the nation’s infrastructure was destroyed and many of the
country’s best and brightest left.10 To put it differently, Sri Lanka missed a
significant amount of trade (Anderson: 2000). But Burma ‘missed’ even more trade
because of the sanctions. After 2000, many countries banned exports in key
commodities including gems, timber and other items that they believed were used
to finance conflict; the US blocked all exports to Burma. According to the United
Nations, the country remained isolated and traded much less than it should have, as
indicated by its resource base and potential.11
Herein we examine how the members of the WTO use trade to affect human
rights in Member States experiencing or recovering from conflict, focusing in
7
8
9
10
11
Article 39 of the Charter of the United Nations allows the Security Council to take measures
such as sanctions only to ‘maintain or restore international peace and security’ following its
determination that there exists a threat to or breach of the peace, or an act of aggression. Thus,
sanctions may only be imposed upon a Government, ‘quasi-Government’ or other entity that is
capable of being a threat to international peace or security or that is in fact threatening
international peace and security. While armed groups within a country may pose a threat to
international peace and security, a generally unarmed civilian population is, in all likelihood,
unable to pose such a threat. Other States not presenting a threat to, or actually breaching, peace
and security must not be affected by sanctions imposed on the violating State.
http://www.treasury.gov/resource-center/sanctions/Documents/burma.txt; http://burma.usembassy.
gov/burma_sanctions.html; http://www.dfat.gov.au/geo/myanmar/; http://eeas.europa.eu/cfsp/
sanctions/docs/measures_en.pdf (2, 50).
Sri Lanka is heavily dependent on tourism, commodity and garment trade. It has excellent
harbours, high levels of literacy (91%) and life expectancy (75 years) and a low rate of infant
mortality (14 per 1,000 live births), figures comparable to those of developed countries. Because of
the importance of trade to the island nation, Sri Lanka joined the GATT in 1948 and was a
founding member of its successor organization the WTO. Australia Department of Foreign Affairs
and Trade, Sri Lanka Country Brief, 8/2012, http://www.dfat.gov.au/geo/sri_lanka/sri_lanka_
country_brief.html, K. Alan Kronstadt & Bruce Vaughn, CRS, Sri Lanka: Background and U.S.
Relations, 4 Jun. 2009, http://assets.opencrs.com/rpts/RL31707_20090604.pdf.
Asia Economic Institute, Economic Impacts of Sri Lanka’s Civil War, 2009, http://www.asiaecon.org/
special_articles/read_sp/12556http://www.asiaecon.org/special_articles/read_sp/12556. The Asian
Economic Institute estimated the war’s costs at some USD 200 bn.
Witada Anukoonwattaka & Mia Mikic, Myanmar: Opening Up to its Trade and Foreign Direct Investment
Potential, United Nations Economic and Social Commission for Asia and the Pacific, 31 Dec. 2012,
http://www.unescap.org/tid/publication/swp112.pdf.
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JOURNAL OF WORLD TRADE
particular on intrastate or internal conflict.12 Surprisingly, despite the important
role of the WTO in trade, as well as the continuing force of the idea that trade
promotes peace, neither trade, human rights, nor conflict scholars have focused on
this question. We note that the WTO Secretariat has no independent authority; it
operates at the behest of Member States. Under international law, Member States
are obligated to protect, respect and remedy human rights. However, they may not
be meeting that responsibility with their trade policies (Aaronson and
Zimmerman: 2007).
As this is a complicated topic, we have kept our purview narrow. We do not
attempt to identify the specific human rights that more or less trade might affect in
conflict zones. Nor do we address whether WTO rules conflict with the
international human rights system, or if the WTO is undermining its human rights
obligations as an international organization when it promotes trade (or when
Member States ban trade) in conflict zones. We note that other scholars have
focused on these questions.13
We begin with a brief review of the literature on trade and conflict. We then
discuss how the WTO interacts with its members on the issue of human rights.We
note that the WTO says little directly about human rights, but aims to enhance
human welfare through expanded trade. Next, we examine the history and role of
the WTO in dealing with both inter- and intra-state conflict.The general ethos of
the WTO is that more trade is better – that trade will advance peace, and in so
doing, human welfare. We show that policymakers have relied on several built-in
mechanisms to discuss trade in countries experiencing human rights crises and
conflict. But members of the WTO don’t really know how, when, or why trade
can advance peaceful relations and human welfare. Finally, we develop conclusions
and make some suggestions as to how members of the WTO can use trade to
enhance human welfare in zones of conflict.
1.1
LITERATURE REVIEW
Philosophers and theologians have long argued that trade can stimulate peace.
Economic historian Douglas Irwin cites Petyt, who wrote in 1680 ‘nothing can so
effectually and certainly secure the peace of the nation as the regulating of our
12
13
We will also use quantitative research to examine if the WTO promotes peace in another study.
Andrew Clapham, Human Rights Obligations of Non-State Actors (Oxford U. Press 2006); Hoe Lim,
Trade and Human Rights, What’s at Issue? 10 Apr. 2001 at http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=1682245; Ernst-Ulrich Petersmann, Time for Integrating Human Rights into the Law of
Worldwide Organizations, Jean Monnet Working paper, 7/01.
TRADE, CONFLICT ZONES AND THE ROLE OF THE WTO
1095
trade’.14 Philosopher Immanuel Kant suggested that ‘republican constitutions’ and
the ‘commercial spirit’ of trade would lead to peace (O’Neal and Russet 1999, 1).
Over time, the idea that trade facilitated peaceful relations among nations became
a meme among scholars. But in recent years, some academics have begun to use
empirical tools to tease out this relationship (Gartzke, Li and Boehmer: 2001;
Mansfield and Pollins: 2001; O’Neal and Russett: 1997, 1999, 2001; Oneal, Russett
and Berbaum: 2003; Oneal, Maoz and Russett: 1996).They have argued that trade
agreements facilitate trust by enhancing political relations and creating
expectations of future gains (Fernandez and Portes, 1998; Mansfield and
Pevehouse, 2000). However, some scholars such as Green, Kim, and Yoon (2001)
find no statistically significant relationship between international trade and
conflict. In fact, Katherine Barbieri (1996, 2002), Barbieri and Schneider (1999),
and Barbieri and Peters (2003) find that greater trade among states may enhance
the likelihood of militarized dispute. Li and Reuveny offer a theory (2008) to
explain how export and import flows in specific sectors influence decisions to
initiate bilateral military conflict.15
Keshk, Pollins, and Reuveny (2004) and Kim & Rousseau (2005) find that
conflict impedes trade, but trade does not deter conflict. Alternatively, Hegre,
O’Neal and Russet (2009) control for size and distance between states, and find
that trade does promote peace. They show that violence has high costs to trade,
political stability, and commercial relations.16
Scholars have also attempted to understand why, how, and with which
countries trade will occur. They note that trade theory asserts that nations
possessing disparate factor endowments should have strong trade relations because
each needs the goods and services that the other country produces.Yet economists
have found that the bulk of trade occurs not between industrialized and
developing countries or among developing countries, but between the advanced
industrial states. Trade among developing/industrialized countries and between
developing countries is ‘missing’ (Trefler: 1995). Industrialized countries have not
only developed a wide range of goods and services for trade, but developed
‘relationship based’ or ‘rule based’ institutions and trust that facilitates trade
(Bardhan: 2006). Scholars have also found that membership in a shared global
network may facilitate trust among citizens of distant nations (Conley and Udry:
2010). Shared trust networks can work to sanction bad actors and behaviour.They
14
15
16
Douglas A. Irwin, Against the Tide: An Intellectual History of Free Trade 32, n. 14 (Princeton U. Press
1996).
Quan Li & Rafael Reuveny, Trading for Peace? Disaggregated Bilateral Trade and Interstate Military Conflict
Initiation, http://www.princeton.edu/~pcglobal/conferences/beijing08/papers/Li-Reuveny.pdf.
Havard Hegre, John R. O Neal & Bruce Russett, Trade Does Promote Peace: New Simultaneous
Estimates of the Reciprocal Effects of Trade and Conflict, http://www.yale.edu/leitner/resources/do
cs/HORJune09.pdf.
1096
JOURNAL OF WORLD TRADE
also allow partners to share information about new opportunities, about the
reliability of financiers and to match producers and distributors. A system of rules
such as a trade agreement may also facilitate the development of such trust.
Developing countries that participate in trade agreements should be able to
increase their trade.
Anderson (2000) argues that trade agreements provide a system of rules to
ensure contracts are enforced and countries don’t default on their agreements.
Other scholars see participation in a trade agreement as a means of formalizing
commitments (Goldstein and Martin: 2000; and Sung and Chu: 2003) and
spreading key norms of good governance and open markets (Sandholtz and Gray:
2003; Simmons, Dobbin and Garrett: 2008). Membership in the WTO signals
good governance as more traders believe the country and its citizens can be
trusted (Büthe and Milner 2008; Dobbins, Simmons and Garrett: 2007; Elkins,
Guzman and Simmons: 2006; Mansfield and Pevehouse: 2008, 273). UNCTAD
theorized that policymakers may see their commitments as ‘investments….they are
payments today in the expectation that they will produce rewards in the future’
(Basu: 2008, 5). Moreover, when countries join, they are signalling foreign
investors that the country will provide foreign and domestic actors with the
information they need to assess market and political conditions (Barton et al.:
2006; Honda: 2006; Tang and Wei: 2006; World Bank: 2006).
Membership in the WTO may also improve governance as members over
time gradually learn how to enforce the rules (Aaronson and Abouharb: 2013).
With improved governance, governments may engender greater trust (Acemoglu,
Johnson and Robinson: 2005;Ades and Di Tella: 1999).
Some scholars have found ways to connect the literature on trust and trade
to trade and conflict. They have examined Preferential Trade Agreements (PTAs which can include bilateral or regional trade agreements) and found that these
agreements are more effective than trade alone at maintaining peace (Dembinski et
al.: 2004; Mansfield, Pevehouse and Bearce: 1999). Hafner-Burton and
Montgomery have nuanced this, arguing that the benefits of these PTAs are
uneven and hence they can provide incentives for conflict as well as cooperation
(2006, 2008, 2009, 2012). Other scholars have postulated that shared norms and
trust can lower business transaction costs, accelerate economic growth, enhance
government effectiveness, and reduce the likelihood of conflict among members of
a society (Putnam: 1993; Platteau: 1994; Zak and Knack: 2001). In this view, trade
can create a virtuous circle of good governance.
However, many of these scholars have examined trade, but not trade
agreements specifically. We note that policymakers will respond differently to
changes in trade versus changes and rules stemming from a specific trade
agreement. We could not find any scholarship examining how the WTO, the
TRADE, CONFLICT ZONES AND THE ROLE OF THE WTO
1097
largest and most influential international trade agreement and institution, may
affect conflict (or affect human rights in conflict zones). In this paper, we begin
that analysis. Specifically, we examine the signals that WTO rules send to
policymakers about trade and conflict. Then we examine the avenues through
which Member States discuss trade, conflict, and human welfare.
1.2
THE WTO, HUMAN RIGHTS, AND CONFLICT
The GATT and its predecessor organization, the WTO, were built on the idea that
trade can encourage peace. Although that idea has become an entrenched idea
among Member States, we really don’t know how, and under what conditions,
trade encouraged by membership in the WTO can advance peace. Moreover, we
don’t know whether more or less trade is better to advance peace in particular
circumstances.
During World War II, government officials in both the US and Great Britain
worked to build institutions that could promote political and economic stability.
These post-war planners devised an international institution, the International
Trade Organization (ITO), to govern trade, employment, investment, and cartels,
but it never came into existence. However, the General Agreement on Tariffs and
Trade (GATT), the part of the ITO that governed commercial policy, tariffs, and
quotas, went into force in 1948 (Aaronson: 1996; Irwin, Mavroidis and Sykes:
2008). In 1993, GATT Member States created a new institution, the WTO, which
went into effect in 1995.17
The GATT and WTO do not have a direct human rights mission; but the
postwar planners recognized that expanded trade could have benefits for human
welfare. These officials thought that by reducing barriers to trade, the
GATT/WTO would increase economic growth and employment.18 Neither the
17
18
In this article, we focus on GATT 1994, which delineates the basic norms and obligations of the
world trading system General Agreement on Tariffs and Trade 1994, http://www.wto.org/
english/docs_e/legal_e/06-gatt.pdf.
The Preamble for the GATT states, ‘Recognizing that their relations in the field of trade and
economic endeavor should be conducted with a view to raising standards of living, ensuring full
employment and a large and steadily growing volume of real income and effective demand,
developing the full use of the resources of the world and expanding the production and exchange
of goods,’ http://find.galegroup.com/gic/infomark.do?contentSet=EBKS&docType=EBKS.Article
&idigest=fb720fd31d9036c1ed2d1f3a0500fcc2&type=retrieve&tabID=T0011&prodId=GIC&docId=
CX3447600460&userGroupName=itsbtrial&version=1.0&searchType=BasicSearchForm&source=gale.
The Preamble for the WTO states, the ‘Parties to this Agreement…Recognizing that their relations in
the field of trade and economic endeavor should be conducted with a view to raising standards of
living, ensuring full employment and a large and steadily growing volume of real income and effective
demand, and expanding the production of and trade in goods and services, while allowing for the
optimal use of the world’s resources in accordance with the objective of sustainable development.’
http://www.wto.org/english/res_e/booksp_e/analytic_index_e/wto_agree_01_e.htm.
1098
JOURNAL OF WORLD TRADE
GATT nor the WTO mentions human rights; and neither organization has any
human rights criteria for membership. Nor is there a democracy clause;
authoritarian states have become members (Aaronson: 2007). But the WTO
Secretariat is increasingly sensitive to human rights. In 2004, the Consultative
Board to the WTO (an advisory board trying to help the WTO respond to new
challenges) argued that the WTO does not threaten human rights. The Board
stressed, ‘the case for freeing trade is made…in terms of enhancing human
welfare’. Trade is a means to achieving that end, ‘but not an end in itself ’.19 More
recently, the Director General of the WTO has given speeches saying trade and
human rights go ‘hand in hand’. But his arguments focused on the spill-over
effects of trade and not the direct effects of WTO rules. He noted that the ‘WTO
system …contained protectionist pressures during the crisis helps shelter poorer
populations. So, in a way, trade can be a transmission belt between human rights
principles and practice.’20
The GATT/WTO also never mentions conflict or how conflict can make it
harder for states to enhance human welfare. In fact, the GATT/WTO does not
govern trade in arms.21
Nonetheless, the WTO does have direct and indirect effects on human rights
conditions.The GATT/WTO’s rules constrain the behaviour of governments that
want to use trade policy to advance human rights in zones of conflict.The GATT
and the WTO are built on three key principles. First, Member States must
automatically extend the best trade conditions granted to goods and services of
any one member to the goods and services of every other nation that belongs to
the WTO (the most favoured nation principle). So unless the Member State is
willing to rely on an exception (or the members of the UN authorize trade
sanctions),WTO member A can’t use a trade ban to punish WTO member B that
is abusing human rights during conflict. And should member A use such an
exception, it might be challenged in a trade dispute by member B. Second,
Member States must treat products of foreign firms in the same way they treat
local firms (the national treatment principle.). Finally, policymakers cannot
discriminate between products originating in different countries, nor between
imported goods and like domestically produced goods (like-product).22 Thus, the
19
20
21
22
WTO Consultative Board, to the Director General of the WTO, The Future of the WTO: Addressing
Institutional Challenges in the New Millennium, WTO, 2004, #11, 14, http://www.ipu.org/splz-e/
wto-symp05/future_WTO.pdf.
Pascal Lamy, Trade and Human Rights Go Hand in Hand, (26 Sep. 2010), http://www.wto.org/
english/news_e/sppl_e/sppl172_e.htm.
As of March 2013, the members of the UN are negotiating an Arms Trade Treaty, https://www.
un.org/disarmament/convarms/ArmsTradeTreaty/.
WTO, Principles of the Trading System at http://www.wto.org/english/thewto_e/whatis_e/tif_
e/fact2_e.htm; and http://www.meti.go.jp/english/report/downloadfiles/gCT0002e.pdf.
TRADE, CONFLICT ZONES AND THE ROLE OF THE WTO
1099
US or any other country can’t ban a product from Sri Lanka because it was made
in poor human rights conditions or because its trade funded conflict. However, the
members of the WTO can implement trade sanctions against non-Member States.
The bulk of the world’s countries, some 159 nations, are now members of the
WTO. But many of the world’s most volatile and conflict-ridden countries
including Syria, Afghanistan, and Iraq are not members.
2
HOW MIGHT THE GATT/WTO PROMOTE PEACE BOTH
WITHIN AND AMONG NATIONS?
WTO officials frequently claim the WTO promotes peace both directly through
trade and indirectly through improved governance. The arguments sound logical,
but they are not rooted in evidence. Governments that cooperate to resolve trade
conflicts may or may not be able to resolve political or security conflicts, whether
internal or external.
Figure 1
Mapping of WTO Secretariat Arguments Regarding how Trade and the
WTO Promote Peace
For example, in 2003, the WTO argued that the first benefit of the world trading
system is to keep the peace.The Secretariat noted:
Sales people are usually reluctant to fight their customers. In other words, if trade flows
smoothly and both sides enjoy a healthy commercial relationship, political conflict is less
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JOURNAL OF WORLD TRADE
likely….What’s more, smoothly-flowing trade also helps people all over the world become
better off. People who are more prosperous and contented are also less likely to fight. But
that is not all. The GATT/WTO system is an important confidence-builder. The trade wars
in the 1930s are proof of how protectionism can easily plunge countries into a situation
where no one wins and everyone loses.23
The WTO Secretariat also claims that peace is a spillover effect of membership in
the WTO. For example, in a 2008 brochure explaining the benefits of the WTO,
the Secretariat argued that:
history is littered with examples of trade disputes turning into war….the system helps to
keep the peace….Peace is partly an outcome of two of the most fundamental principles of
the trading system: helping trade to flow smoothly, and providing countries with a
constructive and fair outlet for dealing with disputes over trade issues. It is also an
outcome of the international confidence and cooperation that the system creates and
reinforces.24
In a 2012 brochure, the WTO Secretariat wrote, ‘When the world economy is in
turmoil, the multilateral trading system can contribute to stability. Some would
argue that this can even contribute to international peace.’25
The WTO Secretariat is essentially arguing that trust among nations created
by this system acts as the social capital that enables peace. ‘When governments
believe that others will keep their trade barriers within agreed limits, they will do
the same. They will be in a much better frame of mind to cooperate with each
other.’26 In short, Member States policymakers must work together to find
consensus on addressing and reducing barriers to trade. In so doing, they learn to
trust and to resolve differences peacefully.
Finally, WTO leaders claim that the WTO is directly helping Member States
reduce conflict. In 2013, Pascal Lamy (the Director General) noted that:
trade promotes peace, by binding nations together in ties of mutual interest and
dependence….Conflicts are about much more than economics, of course. Nevertheless, it
is clear that India-Pakistan relations will be quite different when a vibrant trading
relationship creates constituencies for peace on either side of the border. Indian and
Pakistani policymakers have recognized this, and have set targets for opening and
expanding trade. Their leadership deserves praise. A similar case could be made for the
23
24
25
26
WTO Secretariat, Ten Benefits of the WTO, http://www.wto.org/english/thewto_e/whatis_e/10ben_
e/10b01_e.htm.
WTO, Ten Benefits of the WTO, 1. The System helps to keep the peace, http://www.wto.org/english/
thewto_e/whatis_e/10ben_e/10b00_e.htm.
WTO, Ten Things the WTO Can Do, 2012, http://www.wto.org/english/res_e/publications_
e/wtocan_e.pdf.
WTO, Ten Things the WTO Can Do, 2012, http://www.wto.org/english/res_e/publications_e/
wtocan_e.pdf.
TRADE, CONFLICT ZONES AND THE ROLE OF THE WTO
1101
Israelis and the Palestinians….To put it bluntly: it is important for people to have a stake in
something other than wanting to kill each other.27
Policymakers’ belief that trade can mitigate conflict has not been born out by
WTO history. Members have gone to war against other Member States (as
example Argentina and Great Britain). Member states have also experienced
internal conflict; Colombia, Sri Lanka, and Burma are prominent examples. Trade
diplomats from Member States do not have clear evidence that trade or WTO
stimulated trade reduces conflict or that such trade consistently enhances human
welfare in conflict zones. Nonetheless, like WTO Secretariat officials, WTO
Member States make the case that membership in the WTO can promote peaceful
relations among and within states. We see these arguments in the day-to-day
workings of the WTO.
3
AVENUES WHERE MEMBER STATES DISCUSS TRADE AND
CONFLICT
Member states regularly discuss conflict and post-conflict recovery in the
day-to-day workings of the WTO.28 Some trade diplomats use these discussions to
remind other Member States of their difficulties recovering from conflict. For
example, at the 2007 WTO public forum, the foreign minister of Liberia H.E. MS.
Olubanke King-Akerele wanted her fellow trade ministers to understand that trade
alone cannot encourage peace if all countries in her region did not benefit.
‘Increased trade has an equally important role to play in solidifying peace in
post-conflict situations….All the efforts at peace building in Liberia will mean
nothing, ladies and gentlemen, if it doesn’t take place within the regional context
of the Mano River Union Basin….We have the same people and instability in
Guinea, or Côte d’Ivoire, flowing right into Liberia and Sierra Leone. We may
have achieved the democratic process in Sierra Leone and Liberia but if we have
instability on the border region we are going nowhere.’ She concluded by saying:
to those of us from conflict countries like mine, trade and export promotion facilitates the
transformation of the lives of our people, and is critical to sustain our still fragile peace,
and this again, as I said, within a regional context.29
27
28
29
Director General Pascal Lamy, Putting Geopolitics Back at the Trade Table, 13 Jan. 2013, http://www.
wto.org/english/news_e/sppl_e/sppl264_e.htm.
A search of WTO and conflict finds 949 results, but conflict may also refer to conflict between
WTO norms or trade and other objectives. Last searched 5 Oct. 2011. http://search.wto.org/
search?q=trade++conflict&site=English_website&btnG=Search&entqr=0&output=xml_no_dtd&sort=
date%3AD%3AL%3Ad1&client=english_frontend&numgm=5&ud=1&oe=ISO-8859-1&ie=ISO-8859
-1&proxystylesheet=english_frontend&proxyreload=1.
Statement by H.E. Ms. Olubanke-King-Akerele, Minister for Foreign Affairs, Liberia, at WTO
Public Forum, www.wto.org/english/forums_e/public_forum2007_e/plenary_session_kingakerele_
e.pdf.
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Moreover, post-conflict countries have tried to remind their counterparts that they
want the current trade negotiations-the Doha Round of trade talks-to truly focus
on their needs. And what they need is greater market access. As Sierra Leone’s
trade minister stressed, ‘Whilst Sierra Leone has made tremendous political and
macroeconomic progress in less than two years following the end of the war, the
country…faces peculiarly serious trade-related post-conflict constraints of
reconstructing the devastated infrastructure and building human and other supply
capacity.’ He then said while some countries are offering capacity building, what
the country really needed is market access for its agricultural goods.30 But his plea
seemed to fall on deaf ears. Although some WTO Member States provide capacity
building funds and training to developing country members, many of the same
countries don’t acknowledge the relationship between full market access for
countries such as Sierra Leone and post-conflict recovery.31 Although rich
countries say trade can promote peace, they are not really helping nations achieve
market access by reducing barriers to trade.
Meanwhile, although they are doing little to actually help countries in or
recovering from conflict, WTO officials frequently mention how the organization
and its rules promote peace and prevent conflict. In 2001, after Moldova
successfully concluded its negotiations to accede, then WTO Director General
Michael Moore noted, ‘28 countries are queuing up to join the WTO and there is
a good reason for this’, said Mr Moore. ‘Membership of the WTO promotes
growth and development, peace and prosperity.’32 The DG was essentially
continuing the argument that simply joining the WTO promotes peace.
Why would these officials blather on with these claims? They seemed to truly
believe that trade promotes an economic stake in peaceful relations among nations.
3.1
ACCESSIONS
Current WTO Member States use the accession process to improve governance in
the states that seek to join the WTO (Aaronson and Abouharb: 2013) Working
parties comprised of other WTO Member States closely monitor potential
members, and make sure these nations meet their commitments.
30
31
32
WTO Ministerial Conference, H.E. Dr. Kadi Sesay, Minister of Trade and Industry, Fifth Session,
13 Sep. 2003, WT/MIN(03)ST/115.
http://www.wto.org/english/tratop_e/devel_e/build_tr_capa_e.htm; and www.wto.org/english/tratop_e/
devel_e/teccop_e/financing_trta_e.htm.
WTO NEWS, Moldova concludes negotiations for accession to the WTO, 19 Feb. 2001, http://www.
wto.org/english/news_e/pres01_e/pr209_e.htm.
TRADE, CONFLICT ZONES AND THE ROLE OF THE WTO
1103
Of the 23 states seeking to accede to the WTO as of March 2013, some
seventeen countries are currently experiencing or recovering from conflict.33
These nations are required to show existing WTO members that they follow the
rule of law, are transparent, and have clear and fair processes for trade
policymaking. Often these countries must make major changes to their laws and
governance processes (Aaronson and Abouharb: 2011; Mansfield et al.: 2002).
Countries that are recovering from conflict use the accession process to ask
fellow Member States for their help. As example, Iraqi Trade Minister Mohammed
Mustafa Al-Jibouri noted, ‘The new Iraq looks with great optimism at achieving
political stability, economic prosperity and social development…we believe that
our reintegration into the world trading system is an essential element to fulfil
those aims.’34 And trade diplomats from other Member States say they are
receptive to the needs of these states. During the deliberations over the steps that
Afghanistan must take to join the WTO, The Working Party Chair, Ambassador
Boudewijn J. Van Eenennaam (Netherlands) said that trade cooperation can
enhance peace and security. He stated that Afghanistan faced particular challenges
as a landlocked least-developed country rebuilding itself after decades of conflict
and added that it was essential to take full account of these factors in the
negotiations.35 However, we could find no direct evidence that Member States
gave additional concessions because a Member State was in conflict or was
recovering from conflict.
3.2
NON-APPLICATION
GATT’s central principle is non-discrimination. Nonetheless, the members Under
Article XXXV (Non-application of the Agreement), members are allowed a
one-time exception with respect to their GATT obligations vis-à-vis a new
member. If a new member and an existing member have not entered into tariff
negotiations and if the existing member doesn’t want to give its consent, GATT
obligations do not apply between those two members. Non-application could be a
powerful tool; but we could find no evidence that any member of the
GATT/WTO had invoked non-application in response to conflict. Morocco and
33
34
35
We evaluated all the acceding states, http://www.wto.org/english/thewto_e/acc_e/acc_e.htm based
on the World Bank’s definition of conflict and post-conflict states at http://web.worldbank.
org/WBSITE/EXTERNAL/PROJECTS/STRATEGIES/EXTLICUS/0,contentMDK:22230573~
pagePK:64171531~menuPK:4448982~piPK:64171507~theSitePK:511778,00.html as well as global
security.org’s evaluation of ongoing conflicts, including civil conflicts at http://www.global
security.org/military/world/war/index.html.
WTO General Council, Accession working parties established for Afghanistan, Iraq, 13 Dec. 2004, http://
www.wto.org/english/news_e/news04_e/gc_afghanistan_iraq_13dec04_e.htm.
WTO, WTO Shows Strong Support for Afghanistan’s Membership,1/31/2011, http://www.wto.org/
english/news_e/news11_e/acc_afg_31jan11_e.htm.
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JOURNAL OF WORLD TRADE
Tunisia maintain non-application of the WTO to Israel, but this conflict doesn’t fit
traditional intra-state conflict models, as both Israeli and Palestinians claim much
of the same land.36 The US invoked non-application at the behest of Congress to
protest the Communist coup in 1951. However, this suspension was not done
through Article XXXV, non-application, but through a Declaration on ‘Suspension
of Obligations between Czechoslovakia and the United States Under the
Agreement.’37
3.3
TRADE POLICY REVIEWS
Member states monitor each other’s performance during trade policy reviews. If a
WTO member does not adhere to their accession commitments and WTO
norms, a Member State or states may use the trade policy review process to
criticize that behaviour and they may even challenge its practices in a trade
dispute.38 These reviews covered a wide range of trade-related policies. Member
states are closely monitored for their governance practices and the implications of
those practices for trade (the trade spill-overs.) Some members (in particular the
US and the EU) also use the trade policy reviews to praise countries that have
made governance progress and to name and shame countries that continue to have
problems. But trade policy reviews cannot force nations to live up to their
accession or WTO agreement commitments. Hence while the trade policy review
process is useful as a means of ‘outing’ bad or inadequate adherence to WTO rules,
it cannot stop such behaviour (Aaronson and Abouharb: 2011).
Not surprisingly, WTO Member States use these reviews to discuss how
conflict can affect both trade and governance. For example, during Angola’s
review, other WTO members acknowledged how hard it is for conflict-afflicted
states such as Angola to recover from conflict. But they also made clear that it did
not absolve that country’s leaders of their WTO obligations.39 Members
acknowledged the legacy of the conflict in Rwanda during Rwanda’s review; but
36
37
38
39
WTO, Art. XXXV, ‘Non-Application of the Agreement between Particular Contracting Parties, 1034,
http://www.wto.org/english/res_e/booksp_e/gatt_ai_e/art35_e.pdf.
WTO, Art. XXXV, ‘Non-Application of the Agreement Between Particular Contracting Parties, 1037,
http://www.wto.org/english/res_e/booksp_e/gatt_ai_e/art35_e.pdf.
Some members of the WTO have brought human rights concerns into trade disputes. For
example, in the Brazilian tire case, Brazil became one of the first countries to argue that a trade
ban is ‘necessary’ to protect the life and health of its people. It also argued that it had no
reasonable alternative measure to such a ban to protect the right to health. See first written
submission of Brazil, 8 Jun. 2006, http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds332_
e.htm. Another case some see as protecting human rights (as well as the US gambling market) is
Antigua US Gambling. http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds285_e.htm.
Trade Policy Review, Angola, http://www.wto.org/english/tratop_e/tpr_e/tp259_e.htm.
TRADE, CONFLICT ZONES AND THE ROLE OF THE WTO
1105
the members offered no concessions or plan to help.40 Croatia was lauded for its
resilient recovery from war damage.41 However, during Nigeria’s trade policy
review, no other Member State mentioned that country’s internal conflicts.42
Sri Lanka provides an interesting example of how WTO members discuss
human rights in post-conflict zones. During Sri Lanka’s review, other Member
States danced around continuing ethnic strife in Sri Lanka. They lauded the
country for its attempts to post-conflict reconciliation.43 But the representative of
Sri Lanka in fact protested that ‘the EU has withdrawn its GSP+ benefits’ for
non-trade (human rights) reasons. ‘It would appear that these schemes are being
utilized to achieve foreign policy objectives which are not consistent with WTO
requirements.’44 The EU responded by noting ‘The GSP+ scheme…aims at
encouraging developing countries to comply with international standards relating
to human and labour rights…It thus serves as an incentive.’The EU representative
then noted that if a country did not effectively implement human rights law the
benefit would be withdrawn. The EU made its position clear. ‘Trade and
investment can only reach their full potential in a conducive environment. This is
where economic progress needs to be complemented by progress in areas such as
the rule of law, individual freedoms and security.’45 Sri Lanka was not making
progress in these areas.
Trade diplomats were not as direct when they met to discuss the context for
trade in Zimbabwe, a country with significant political conflict and human rights
abuse.The WTO secretariat wrote:
Zimbabwe’s Constitution guarantees legal protection for all investors…It prohibits
expropriation of private property without compensation. However, events in the last
decade, whereby private commercial land has been seized without compensation would
appear to indicate that the authorities have not always complied with the letter and spirit
of the Constitution….A fractious socio-political environment, combined with a
controversial land reform and measures in favour of indigenization, has triggered the
withdrawal of support from the international community and cast a shadow over property
rights.46
40
41
42
43
44
45
46
WTO, Trade Policy Review, Rwanda: Report by the Secretariat, 13 Apr. 2004, WT/TPR/129, viii,
#8.
WTO, Trade Policy Review, Croatia, WT/TPR/S/227, vii, 1.
WTO, Trade Policy Review, Nigeria, 6/28-6/30, 2011, WT/TPR/M/247.
WTO, Trade Policy Review, Sri Lanka, 2 Dec. 2019, WT/TPR/M/237. For mention of the end
of the conflict as an opportunity see Remarks by the Chairperson, 3, # 7, #9; and discussant, 8–9
#27, 31, Australia, 15, #64, and India, 13 #49.
WT/TPR/M/237. For complaint about human rights misuses of GSP, 6, # 18.
WT/TPR/M/237, 23–24, #122–123, 127.
WTO Trade Policy Review, Zimbabwe, 19–21 Oct. 2011, WT/TPR/S/252, quotes vii, 1,# 1,#
2,# 4, 20. #19, 18, #29. http://www.wto.org/english/tratop_e/tpr_e/tp352_e.htm.
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JOURNAL OF WORLD TRADE
The Secretariat noted that Zimbabwe’s ‘problems were exacerbated in the run-up
to the last elections in 2008, which were also characterized by violence, and an
atmosphere of political intolerance’.The WTO mentions the land tenure system as
a source of conflict three times.47 The Secretariat concluded that this internal
conflict made economic growth ‘uncertain’.48 But the members did not discuss
how trade might help Zimbabwe make respect for specific human rights a priority.
Nor did they discuss their own human rights responsibilities in relation to
Zimbabwe, conflict and trade.
Thus, to some extent concerns about the relationship between trade, WTO
membership and human rights in conflict zones are being discussed during trade
policy reviews. Nonetheless,WTO members appear to have put little thought into
developing strategies (such as capacity building) that might be helpful to facilitate
trade and advance human rights in conflict zones or rules to guide business.49 Nor
have they devised strategies to use the trade policy review process as a means of
discussing the trade/conflict/recovery relationship.
3.4
WAIVERS
Waivers are temporary exceptions to WTO rules. WTO members may waive an
obligation imposed on a member, provided that any such decision is approved by
three-quarters of the other members. These waivers were supposed to be limited
to exceptional circumstances and in fact such waivers are rare.
The members of the WTO have never used a waiver to assist a country that
can’t meet its WTO obligations due to conflict or post-conflict recovery.
However, WTO Members have used a waiver to address the problem of trade in
diamonds that may stimulate conflict. The WTO acted at the UN’s behest.
According to the UN, conflict diamonds ‘originate from areas controlled by forces
or factions opposed to legitimate and internationally recognized governments, and
are used to fund military action in opposition to those governments or in
contravention of the decisions of the Security Council.’50 WTO Member States
called for and eventually agreed upon a waiver under the WTO for such a ban.51
Under the waiver, nations are allowed to trade only those diamonds certified
47
48
49
50
51
WT/TPR/S/252/ 66, #19; also see 64, #10, 11, and n. 2 and #15, 65.
WTO Trade Policy Review, Zimbabwe, 19–21 Oct. 2011, WT/TPR/S/252, quotes vii, 1, #1, #2,
#4, 18, #29, 20, #19, http://www.wto.org/english/tratop_e/tpr_e/tp352_e.htm.
Zimbabwe is a good example, WT/TPR/S/252, 117–121.
World Diamond Council, Diamond Facts.org 1, http://www.worlddiamondcouncil.org/download/
resources/documents/Fact%20Sheet%20%28Conflict%20Diamonds%20and%20the%20Kimberley%20
Process%29.pdf.
For a good overview, see Joost Pauwelyn, WTO Compassion or Superiority Complex? What to Make of
the WTO Waiver for Conflict Diamonds, Mich. J. Intl. L. vol. 24, 1184–1191 (2003).
TRADE, CONFLICT ZONES AND THE ROLE OF THE WTO
1107
under the Kimberley Process Certification Scheme. Members applying for the
waiver had to commit to ensure that the measures taken were consistent with
international trade rules.The Kimberley Process Certification Scheme is a way for
consumers and producers to ensure that they do not trade diamonds that indirectly
fund wars in Sierra Leone or the Democratic Republic of the Congo.52 Rough
diamonds must be shipped in sealed containers and exported with a Kimberley
Process Certificate that certifies that the diamonds are conflict free. Seventy-five
countries are involved in the Kimberley Process; but not all trade diamonds.53 This
was the first time that the members of the WTO approved a waiver of trade
obligations based on a human rights rationale. Thus, the Kimberley waiver sets an
important precedent. Canadian Trade Minister Pierre Pettigrew stated, ‘This
decision clearly shows that the WTO can be flexible when it comes to human
security and development.’54 However, many NGOs such as Global Witness and
Oxfam among others are not happy with the Kimberley process. They argue that
attempts at industry self-regulation coupled with the trade waiver can’t guarantee
consumers that the diamonds they purchase are free from the taint of conflict and
human rights abuse.55 Representatives of these NGOs believe the Kimberley
Process and trade waiver should also address how diamonds enrich authoritarian
regimes and fuel internal conflict.56 Nor has it addressed trade leaks and
noncompliance in countries such as Venezuela, Guinea, Lebanon and Zimbabwe.57
52
53
54
55
56
57
http://www.kimberleyprocess.com. Also, see WTO, Waiver Concerning Kimberley Process Certification
Scheme for Rough Diamonds, Decision of 15 May 2003. 2003,WT/L/518, 27 May 2003.
WTO members are allowed to waive an obligation in exceptional circumstances under the
approval of three-fourths of the members. Procedures for waivers, http://www.wto.org/english/
docs_e/legal_e/11-25_e.htm. See update in Global Witness, An Independent Commissioned Review
Evaluating the Effectiveness of the Kimberley Process, Submitted to the Ad Hoc Working Group on the
Review of the Kimberley Process 2006, http://www.globalwitness.org/sites/default/files/import
/GW%20Commissioned%20Report%20on%20KP.pdf The waiver was reviewed and maintained in
2006. The following countries applied for the waiver as of 2006. Australia, Botswana, Brazil, Canada,
Croatia, India, Israel, Japan, Korea, Malaysia, Mauritius, Mexico, Norway, Philippines, Sierra Leone,
Chinese Taipei,Thailand, United Arab Emirates, United States and Venezuela) necessary to prohibit the
export of rough diamonds to non-participants in the scheme. http://www.wto.org/english/
news_e/news06_e/ctg_20nov06_e.htm.
Foreign Affairs and International Trade Canada, Press Release, Pettigrew Welcomes WTO Waiver for
Kimberley Process Certification Scheme, 22 May 2003, http://w01.international.gc.ca/MinPub/Publi
cation.asp?publication_id=380114&Language=E, last searched 10 Aug. 2006.
http://www.globalwitness.org/library/global-witness-founding-director%E2%80%99s-statement-ngocoalition-walk-out-kimberley-process.
http://www.thezimbabwean.co.uk/human-rights/54318/diamond-csos-slam-zim-deal.html?utm_so
urce=thezim&utm_medium=homepage&utm_campaign=listarticle&utm_content=readmorelink; and
http://www.globalwitness.org/library/kimberley-process-lets-zimbabwe-hook-again.
Ian Smilie, 2001. ‘Assessment of the Kimberley Process in Enhancing Formalization and
Certification in the Diamond Industry—Problems and Opportunities,’ Study for GIZ, 3/2011,
http://www.ddiglobal.org/login/Upload/Ian-Smillie-GIZ-Kimberley-Process-Problems-and-Oppor
tunities-2011.pdf.
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WTO members have also established a waiver for industrialized countries that
wanted to provide lower tariffs for developing country exports.58 The waiver is
called the Generalized System of Preferences or GSP. After that waiver expired in
1981, the contracting parties (members) of the GATT adopted a declaration
permanently extending the waiver.59 Many countries that provide GSP see it as a
tool to improve governance and some use that lever to advance specific human
rights. But GSP granting nations do not use this waiver to provide additional trade
benefits for conflict-afflicted or conflict recovering states per se.60
For example, the members of the UN did not call for trade sanctions during
the civil war in Sri Lanka.61 However, since the end of the war, both the US and
the EU have used trade policies (specifically preferential programs, also known as
GSP) to improve human rights in Sri Lankan exports.62 In 2009, the Bush
Administration temporarily suspended Sri Lanka’s benefits under the GSP due to
allegations about labour conditions. Eventually, the Sri Lankan government was
able to show that labour rights had improved.63 Meanwhile, in July 2010 the EU
withdrew Sri Lanka’s eligibility for GSP plus, (where all goods but arms receive
preferential access.) The country still receives some preferential benefits under the
EU’s existing scheme. The EU said the Sri Lankan government failed to make a
written promise of progress on torture, children’s’ rights and civil and political
58
59
60
61
62
63
WTO High Level Symposium on Trade and Development Geneva, 17–18 Mar. 1999. Background
document Development Division World Trade Organization, Developing Counties and the Multilateral
Trading System: Past and Present, Background Note by the Secretariat, http://www.wto.org, last searched 10
Feb. 2006.
John L Jackson, The World Trading System: Law and Policy of International Relations 164, 323. (2d ed.,
MIT Press 1998).
EU Generalized System of Preferences, http://ec.europa.eu/trade/wider-agenda/development/
generalised-system-of-preferences/.
Sudha Ramachandran, War is Over but Tensions Run High, The Diplomat, 13 Dec. 2012,
http://thediplomat.com/2012/12/13/sri-lanka-war-is-over-but-tensions-run-high/. Other estimates
run as high as 100,000 deaths. ABC News, Up to 100,000 Killed in Sri Lanka’s Civil War: UN, 21 May
2009, http://www.abc.net.au/news/2009-05-20/up-to-100000-killed-in-sri-lankas-civil-war-un/16
89524.
The United States is Sri Lanka’s second-biggest market for garments, taking almost 40% of total
garment exports. The EU as a whole is Sri Lanka’s biggest export market and largest apparel
buyer. United States exports to Sri Lanka were estimated to be around USD 178 m for 2010,
consisting primarily of machinery and mechanical appliances, medical and scientific equipment,
electrical apparatus, wheat, plastics, lentils, and paper. Michigan State University, Broad College of
Business, Global Insights, Sri Lanka: Economy, http://globaledge.msu.edu/countries/sri-lanka/
economy; and Sulochana Ramiah Mohan, US-Sri Lanka bilateral relations improving Ceylon Today, no
date, http://www.ceylontoday.lk/22-21862-news-detail-us-sri-lanka-bilateral-relations-improving.html.
Feizal Samalth, Sri Lanka Brief, 18 Dec. 2011, http://www.srilankabrief.org/2011/12/us-gspprobe-resumes-in-jan.html. The US accepted the petition after the government began seeking
financial assistance from China and Iran. A. A. M. Nizam, United States Reinstates GSP facility to Sri
Lankan Export Projects, Asian Tribune 19 Oct. 2011.
TRADE, CONFLICT ZONES AND THE ROLE OF THE WTO
1109
rights.64 As of March 2013, The EU has not reinstated Sri Lanka’s preferential
access.65
As these examples illuminate, trade waivers may not be the most effective
tools to use at the intersection of conflict, trade and human rights. Trade waivers
are temporary measures and human rights problems generally cannot be solved on
a short-term basis. Moreover, these waivers provide little guidance to trade
policymakers on how to reconcile trade, human rights and conflict reduction
objectives (Pauwelyn: 2003; Schefer: 2007). Finally, these waivers do not fully
address the causes of conflict or human rights abuse. Perhaps the best evidence that
this Kimberley Process waiver is not widely seen as a success is that neither states
nor civil society groups are calling for a similar waiver for conflict minerals. In fact,
a growing number of governments are relying on non-trade strategies (such as
new corporate governance rules) or the WTO’s exceptions.
3.5
THE EXCEPTIONS ARTICLES XX AND XXI
Policymakers have long recognized that at times they must breach their trade
obligations to achieve humanitarian objectives. As example, in the early nineteenth
century policymakers used trade bans to reduce the global trade in slaves. In 1940,
the US banned trade in airplanes and aviation gasoline destined for any country
engaged in bombing attacks on civilians (Charnovitz: 1998, 12-13). The architects
of the GATT acknowledged this need in its exceptions. Member states rely on
these exceptions to justify their derogations of trade rules in the interest of
protecting individuals at home and abroad from human rights abuse in zones of
conflict. To put it differently, policymakers use the exceptions to reduce or ban
trade in the interest of promoting peace.
Under Article XX, nations can restrict trade when necessary to ‘protect
human, animal, or plant life or health’ or to conserve exhaustible natural resources.
Governments may also restrict imports relating to the products of prison labour.
Although it does not refer explicitly to human rights, some scholars attest that
policymakers can use the public morals clause of Article XX to justify trade bans
in the interest of promoting human rights (Charnovitz: 1998; Howse: 2002;
WTO: 2001). Others say that because Article XX bans trade in prison labour,
64
65
BBC News, EU to Withdraw Sri Lanka Trade Concessions Deal, 5 Jul. 2010, http://www.bbc.
co.uk/news/10514634. In 2008, Sri Lankan exports to the EU totalled EUR1.24 bn (United
Kingdom Pound (GBP) 1 bn; USD 1.55 bn.
http://ec.europa.eu/trade/wider-agenda/development/generalised-system-of-preferences/; and The
EU’s new Generalized Scheme of Preferences, http://trade.ec.europa.eu/doclib/docs/2013/february/
tradoc_150582.pdf, 16.
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policymakers could use it to ban trade in goods made with slave, trafficked, or
abused workers (Stirling: 1996).
The national security exception, Article XXI, states that WTO rules should
not prevent nations from protecting their own security.66 Members are not
permitted to take trade action to protect another member’s security or to protect
the citizens of another member per se, unless the United Nations Security Council
authorizes trade sanctions (as example in the case of South Africa).67 However,
because the UN and the WTO have rarely collaborated in the interest of
promoting human rights in conflict zones, at times the US, EU, and others have
adopted trade sanctions, which are often limited and targeted at particular sectors,
individuals, or areas.
Under GATT/WTO rules, these countries are free to decide how their
security is at stake when another nation violates human rights or is embroiled in
conflict. A sanctioning Member need not give any prior notice of impending or
imposed national security sanctions, justify the sanctions to the WTO or obtain
the prior approval of other members. However it is in that member’s interest to
have good trade relations with its fellow members and generally members will try
to inform their colleagues if they are planning to adopt Article XXI sanctions
(Bhala: 1999).
As of November 2011, both the US and the EU have adopted trade sanctions
to advance human rights in Belarus, Burma, Iran, North Korea, Somalia, South
Sudan, Syria and Zimbabwe (among other countries). Many of these states are
experiencing or recovering from conflict.68 However, with the exception of
Burma and Zimbabwe, these countries are not WTO members. Hence, they
cannot use the WTO as a venue to challenge the trade sanctions. Burma and
Zimbabwe could have challenged trade sanctions as a member of the WTO, but
66
67
68
Nothing in this Agreement shall be construed (a) to require any contracting party to furnish any
information the disclosure of which it considers contrary to its essential security interests; or (b) to
prevent any contracting party from taking any action which it considers necessary for the protection
of its essential security interests: (i) relating to fissionable materials or the materials from which they
are derived; (ii) relating to the traffic in arms, ammunition and implements of war and to such traffic
in other goods and materials as is carried on directly or indirectly for the purpose of supplying a
military establishment; (iii) taken in time of war or other emergency in international relations; or (c) to
prevent any contracting party from taking any action in pursuance of its obligations under the United
Nations Charter for the maintenance of international peace and security. GATT Analytical Index, Art.
XXI, http://www.wto.org/english/res_e/booksp_e/analytic_index_e/gatt1994_07_e.htm#article20.
See, supra n. 7.
US Department of the Treasury, Sanctions Program and Country Information, http://www.treasu
ry.gov/resource-center/sanctions/Programs/Pages/Programs.aspx; European Commission, Restrictive
measures (sanctions) in force Updated 2/21/2013, http://eeas.europa.eu/cfsp/sanctions/docs/mea
sures_en.pdf.
TRADE, CONFLICT ZONES AND THE ROLE OF THE WTO
1111
neither has. After some eleven years of sanctions, Burma began to liberalize both
its economy and its political system in 2011. The US, EU, Australia, Canada and
other nations decided to gradually reduce their sanctions on the country and
encourage trade and investment.69
When nations such as the US employ trade sanctions, they don’t know if less
or more trade can prod policymakers to respect specific human rights in conflict
zones, such as protecting individuals from genocide or rape or establishing free
speech rights (Stirling: 1996).When officials use sanctions or the incentive of more
trade, they are focusing on altering policymaker behaviour (the supply side of
human rights) and they presume that policymakers in repressive countries are
sensitive to changes in supply of traded goods. But policymakers should also think
about how policy can bolster the local inherent demand for human rights
(Aaronson: 2011). Moreover, they must weigh the impact of sanctions (less trade)
on human rights conditions of the citizens in affected states.
While there are many studies showing sanctions are ineffective (Hufbauer et
al.: 1990; Petrescu: 2010; UNICEF: 2011), few of these studies have examined how
trade sanctions (a smaller supply of goods and services) affects particular human
rights conditions or specific human rights in conflict zones. Petrescu (2010) did a
cross country survey of sanctions and found children’s health and mortality can be
adversely affected as a result of inadequate sanitation, insufficient supply of
medicines and vaccines, and poor nutrition. The UNDP reported that sanctions
negatively impacted upon Burundi’s poor. Although humanitarian goods were
exempted from the sanctions, they were held up for weeks before being allowed to
enter Burundi (UNICEF: 2011, 1). Michael Ewing-Chow examined how US
trade sanctions affected Burmese civilians. He found the military government was
able to replace lost trade with the US with expanded trade from India and China.
Moreover, because the government controlled the trade, the benefits from this
increased trade with India and China accrued to corrupt officials in the regime
and not to the people (Ewing-Chow 2007: 177–179).
Thus, the members of the WTO have become more sensitive to human rights
conditions in conflict zones.They frequently discuss these issues in the day-to-day
workings of the WTO. However, the WTO provides little guidance to
policymakers and market actors regarding how to behave in conflict zones.
Conflict-afflicted states ask for more trade and more capacity building assistance;
69
http://www.dfat.gov.au/geo/myanmar/myanmar_brief.html; BBC news, EU Plans to Lift Trade
Barriers for Burma Exports, 18 Sep. 2012, http://www.bbc.co.uk/news/world-europe-19635067;
Canada-Burma Relations, http://www.canadainternational.gc.ca/thailand-thailande/bilateral_relati
ons_bilaterales/canada-burma-birmanie.aspx?view=d.
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they argue that more trade is better for human rights. But although Member States
agree with the notion that more trade promotes peace, we found little evidence
that members are taking steps to expand trade or enhance capacity in conflict
zones. However, some Member States are using sanctions to influence human
rights conditions in conflict-ridden states. With sanctions, policymakers are
essentially saying less trade is better for human rights. However, there is little
evidence that sanctions actually improve specific human rights outcomes for
citizens in conflict zones (UNICEF: 2011).
3.6
RECENT DEVELOPMENTS IN CONFLICT AND HUMAN RIGHTS
In recent years, much of the effort to use trade to advance human rights in conflict
zones has occurred outside the WTO. Policymakers have developed human rights
principles for business operating in conflict zones; and developed special initiatives
to influence human rights conditions in conflict zones. However, these initiatives
have trade effects and should be coordinated with the WTO Secretariat.
At the behest of UN Secretary General Kofi Annan, John Ruggie, the UN
special Representative on Business and Human Rights developed the Guiding
Principles for Business on Human Rights. His work was endorsed by the UN
Human Rights Council in 2011.70 The Guiding Principles stress that states must
do more to ensure that their firms (incorporated within their borders or those that they
host) do not undermine human rights at home and abroad. States should take steps
to educate their firms regarding their human rights responsibilities and hold these
firms accountable for these practices. In this regard, states should examine how
their public policies affect the state duty to respect, protect and remedy human
rights violations. Hence, they should examine the effect of trade agreements upon
human rights as well as the signals these agreements send to market actors.
However, we could find no evidence that the members of the WTO have
acknowledged Ruggie’s work on the Guiding Principles.
In 2011, the members of the OECD and Argentina, Brazil, Egypt, Latvia,
Lithuania, Morocco, Peru, and Romania approved a ‘Recommendation on Due
Diligence Guidance for Responsible Supply Chains of Minerals from
Conflict-Affected and High-Risk Areas.’71 This 2011 recommendation was
developed to provide guidance to firms that rely on conflict minerals – minerals
70
71
Human Rights Council, Report of the special Representative of the Secretary General on the Issue of Human
Rights and Transnational corporations and Other business Enterprises, John Ruggie, A/HRC/14/27, 7,
#26–32; 8 A/HRC/11/13, paras 13–16; and A/HRC/8/5, paras 18–19 and A/HRC/14/27.
OECD due diligence guidance for responsible supply chains of minerals from conflict-affected and high-risk areas,
OECD, http://www.oecd.org/document/36/0,3343,en_2649_34889_44307940_1_1_1_34529562,
00.html.
TRADE, CONFLICT ZONES AND THE ROLE OF THE WTO
1113
mined in situations of conflict and human rights abuse. The Recommendation
discusses how to identify and reduce use of these conflict minerals to ensure that
mineral trade does not encourage human rights abuse or further conflict. But it
will all be ‘pretty words’, unless the trade regime proves supportive of such efforts,
as it has with conflict diamonds (see below).
In recent years, policymakers have tried to develop alternative strategies
designed to maintain trade as well as to ensure that business activities do not
finance or encourage conflict, especially in resource rich areas. The Dodd/Frank
Wall Street Reform and Consumer Protection Act of 2010 may be a good
example of this approach; it has sections related to trade in conflict minerals.72
Conflict minerals – tin, tantalum, tungsten, and gold from the Great Lakes Region
of Africa have been traded by armed groups and military units in the Congo.
These armed market actors use the funds from such trade to fund violence and
instability in the region.73
With this legislation, Congress aimed to prod the US Government to develop
‘a strategy to address the linkages between human rights abuses, armed groups,
mining of conflict minerals and commercial products’.74 The legislation requires
all firms publicly traded on US exchanges (hence US and foreign firms) to report
to their shareholders the steps they and their suppliers are taking to ensure that
revenues from trade in conflict minerals (tantalum, tin, tungsten and gold) don’t
finance conflict in the Democratic Republic of the Congo (DRC)75 and
neighbouring states.76 It does not mandate any behaviour except reporting. The
EU executive is currently mulling similar regulation with a broader scope,
including not just conflict minerals but sectors such as forestry or consumer
goods.77 In March 2013, the European Commission launched a public
consultation on so-called conflict minerals. The aim of the consultation is to get
72
73
74
75
76
77
H.R.4173.ENR, http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.4173.ENR: Any company that
sells securities to the public in the US must disclose on a yearly basis whether the minerals
originate from the DRC or an adjoining country and if so, the company has to include a conflict
minerals report in its annual report.
US Department of State, Industry Representatives Discuss Conflict Minerals at the US Department of State,
14 May 2010, http://www.state.gov/r/pa/prs/ps/2010/05/141880.htm and Sasha Lezhnev & David
Sullivan, Certification: The Path to Conflict–Free Minerals from the Congo, 5 May 2011, Enough,
http://www.enoughproject.org/certification.
Dodd-Frank, S. 1502, 838–843, http://www.sec.gov/about/laws/wallstreetreform-cpa.pdf.
DRC is blessed with large deposits of precious stones and diamonds, 80% of the world’s
columbite-tantalite (coltan) reserves, 49% of its cobalt reserves, and 10% of the world’s copper
reserves. US Geological Survey, Minerals Yearbook, Congo (Kinshasa) 1999, http://minerals.usgs.
gov/minerals/pubs/mcs/2010/mcs2010.pdf
The US Conflict Minerals Law applies to materials originating (or claimed to originate) from the
DRC as well as the 9 adjoining countries: Angola, Burundi, Central African Republic, Congo
Republic (a different nation than DRC), Rwanda, Sudan, Tanzania, Uganda and Zambia.
EU to table oil, mining transparency bill, EurActiv, 4 Mar. 2011, http://www.euractiv.com/en/
specialreport-rawmaterials/eu-table-oil-mining-transparency-bill-news-502755 and Andrew Willis,
1114
JOURNAL OF WORLD TRADE
interested parties’ views on a potential EU initiative for responsible sourcing of
minerals coming from conflict-affected and high-risk areas – for example, war
zones, postwar zones, and areas vulnerable to political instability or civil unrest.
Reflecting the trade impact of such an initiative, the EC Directorate General for
Trade is managing the consultation and ultimate policy.78
Meanwhile, the Dodd-Frank provisions have already had a sizeable effect on
both trade and human rights conditions in the Great Lakes Region of Africa. First,
many high tech firms have begun to source these minerals outside of the Congo.79
With less trade, some observers note that the planes that once went to rural
regions to pick up the conflict minerals stopped delivering goods and merchandise
to the people.80
The UN’s Coordinator of the Group of Experts concerning the DRC
reported to the US Government on 21 October 2011 that the strategy is working.
He noted ‘a higher proportion of conflict minerals is not funding conflict’ because
production of these minerals has shifted to largely non-conflict areas of the
Congo, armed groups have less control over tin mines. However, this strategy has
not enhanced human welfare. He also admitted that Dodd-Frank has led to
‘increased economic hardship and more smuggling and general criminalization of
the minerals trade. It has also had a severely negative impact on provincial
government revenues, weakening governance capacity’.81 Although the legislation
was not rooted in trade policies, by reducing trade, without direct intent,
policymakers may have indirectly undermined human rights and the ability and
funds of the states in the Great Lakes region to advance human rights.
In recognition that the Dodd-Frank approach could have a negative impact
on the people in the Great Lakes region, the US and the Netherlands have
launched a tagging process to trace the source of metals.82 In so doing, they hope
78
79
80
81
82
EU prepares clampdown on conflict minerals, EU Observer, 11 Mar. 2011, http://euobserver.com/
19/31972; and http://blog.ipc.org/2012/11/30/european-union-considers-implementing-conflictminerals-regulation/.
European Commission, Public Consultation on a EU initiative on responsible sourcing of minerals originating
from conflict-affected and high-risk areas, http://ec.europa.eu/yourvoice/ipm/forms/dispatch?form
=EuMin&lang=en.
Mark Drajem et al., A Rule Aimed at Warlords Upends African Mines, Bloomberg Bus. Week, 4 Apr.
2011, http://www.businessweek.com/magazine/a-rule-aimed-at-warlords-upends-african-mines-08
042011.html; and Pole Institute, The Criminalization of the Mining Industry in the DRC, http://www.
pole-institute. org/documents/Blood_Minerals.pdf,August 2010, 24.
Congo Siasa, Interview with Eric Kajemba on Conflict Minerals, and ITRI Tin Supply Chain Initiative,
Technical Challenges Encountered and Solutions Developed in the ITSCI Pilot Project in South Kivu,
https://www.itri.co.uk/index.php?option=com_mtree&task=att_download&link_id=49722&cf_id=24
Letter Fred Robarts, Coordinator, Group of Experts on the DRC, to SEC/ Ref
S/AC.43/2011/GE/OC.86, at http://www.sec.gov/comments/s7-40-10/s74010-346.pdf.
Jonny Hogg, Conflict-free’ tags help revive Congo Minerals Trade, 08 Nov. 2012, http://www.reuters.
com/article/2012/11/08/us-congo-democratic-mining-idUSBRE8A70PG20121108.
TRADE, CONFLICT ZONES AND THE ROLE OF THE WTO
1115
to encourage trade and reassure buyers that the minerals have been legitimately
produced without funding conflict.
In sum, policymakers are experimenting with new approaches to influencing
human rights conditions in conflict zones. But these strategies have trade
spill-overs and hence officials must examine the human rights and trade impact of
these options.
4
CONCLUSION
The GATT/WTO was forged from the belief that trade can promote peace.
Although the GATT and the WTO have a sixty-five year track record, we don’t
really know if the WTO has helped foster greater peace or if more trade among
Member States has limited conflict within and among Member States.We also lack
knowledge about how more or less trade can affect human rights conditions.
Although members argue that trade promotes peace, at times they use WTO
exceptions to ban or reduce trade in the interest of encouraging peace. In recent
years, policymakers have tried to target sanctions on specific leaders, commodities
or areas (smart or targeted sanctions). However, former UN Secretary General Kofi
Annan said, ‘It is not enough merely to make sanctions smarter.’83 We need to
understand how less trade affects opportunities for the people in conflict zones.We
know that sanctions whether broad or targeted, don’t improve governance – the
supply side of human rights; nor do they empower citizens – the demand side of
human rights.Whether or not trade encouraged by the WTO promotes peace may
be conditional on how Member States use the revenue from trade; do they use it
to improve governance or do they use it to fund conflict?
The WTO should serve as a hotbed for research on best practice.
Policymakers that seek to promote human rights in conflict zones should first
focus on obtaining a better understanding of how trade in conflict zones may
affect human rights conditions. Under WTO procedures, a member(s) can request
that the Secretariat do research on the history of trade sanctions and their record
in advancing specific human rights in zones of conflict. Second, a Member State
should request that the WTO develop procedures as to how Member States should
behave in conflict zones where trade might enhance and/or undermine specific
human rights that the government is not respecting. The Secretariat should also
examine how trade strategies can empower citizens to demand their rights. Finally,
the WTO could set up a Working Group to examine trade in conflict zones and
whether more or less trade will be helpful in particular circumstances.
83
UN, Preventing Conflicts, http://cyberschoolbus.un.org/briefing/conflicts/prevention.pdf.
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JOURNAL OF WORLD TRADE
The members of the WTO should also re-examine how they act towards
countries in or recovering from conflict. First, because so many of the states that
seek to accede to the WTO are recovering from conflict, the WTO should
examine how it can help these states meet their governance obligations. Second,
WTO Member States already use the Trade Policy Review process to examine the
governance context of Member States (Aaronson and Abouharb: 2011); they could
use the process to examine the trade/conflict recovery and human rights
relationship. And they should use the opportunity to ask these countries what
capacity building they need and make efforts to provide such help – whether it is
greater market access or training in computerized customs management.
As the UN Special Representative on Business and Human Rights John
Ruggie noted:
the most egregious….human rights abuses take place in conflict zones….Yet there remains
a lack of clarity among governments as to what innovative, proactive and, above all,
practical policies and tools have the greatest potential for preventing or
mitigating….abuses in situations of conflict.84
If the WTO aims to enhance human welfare, the GATT/WTO system must go
beyond talk. In some instances, more trade may not be better for some human
rights. Scholars and trade practitioners need to focus greater attention on and
work towards greater understanding of how membership in the WTO can advance
peace as well as human rights.
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Author Guide
[A] Aim of the Journal
Editor
Edwin Vermulst
VVGB Advocaten / Avocats Brussels, Belgium
Associate Editors Petros C. Mavroidis Edwin B. Parker Professor of Law at Columbia Law School,
New York, Professor of Law at the University of Neuchatel & CEPR
Thomas Cottier Professor of European and International Economic Law, Managing
Director World Trade Institute, University of Berne, Switzerland
Simon Evenett University of St.Gallen
Bernard Hoekman Development Research Group, The World Bank
Junji Nakagawa Professor, University of Tokyo, Tokyo, Japan
Yong-Shik Lee Director and Professorial Fellow, The Law and Development Institute
Faizel Ismail Head of the South African Delegation to the WTO, Geneva
Gary N. Horlick Law Offices of Gary N. Horlick
Henrik Horn Senior Research Fellow, Research Institute of Industrial Economics
(IFN), Stockholm
Pierre Sauvé World Trade Institute, University of Berne
Lorand Bartels Faculty of Law, University of Cambridge
Thomas J. Prusa Department of Economics, Rutgers University,
New Brunswick, NJ, USA
Chad P. Bown Senior Economist, Development Research Group,
The World Bank
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