One of the strongest indictments of the WTO, the IMF and World Bank for their roles in furthering economic globalization with negative impacts on human rights, was recently provided by two Special Rapporteurs in a preliminary report to a UN Sub-Commission on human rights. Apart from criticising the rules of the WTO as being "grossly unfair and even prejudiced" and that the WTO has now become a "veritable nightmare" for developing countries, the report calls for, among others, a "radical review" of the whole system of trade liberalization.

by Chakravarthi Raghavan

Geneva, 10 Aug 2000 -- The rules of the World Trade Organisation (WTO) are “grossly unfair and even prejudiced”, and the WTO, with an agenda to promote dominant corporatist interests, has now become a “veritable nightmare” for the developing countries of the South, says a report by two Human Rights Special Rapporteurs.

In one of the strongest indictments of the WTO, the IMF and the World Bank, and their roles in furthering economic globalization with negative impacts on human rights of all people, the two Special Rapporteurs called for a “radical review” of the whole system of trade liberalization, and “reconceptualization of policies and instruments of international trade, investment and finance.”

The negative assessment of the WTO, and of the IMF and the World Bank, by two expert members and Special Rapporteurs, Mr. Joseph Oloka-Onyango (from Nigeria) and Deepika Udagama (of Sri Lanka), was in a preliminary report for the UN Sub-Commission on Promotion and Protection of Human Rights.

During the discussion of the report at the Sub-Commission this week,  Members of the Sub-Commission and representatives of non-governmental organizations, made some sharp criticisms of the WTO, the Fund and the Bank, for their roles in promoting policies of globalization, that was resulting in benefits for fewer and fewer people around the world, and with negative impacts on human rights.

The Sub-Commission members, elected by the UN Human Rights Commission, are experts serving in their individual capacities, and the UN body was discussing the impact of globalization on human rights in terms of the realization of economic, social and cultural rights of peoples. Before the Sub-Commission were two special reports, one on globalization and human rights and the other on activities of Transnational Corporations and their effects on human rights.

Joseph Oloka-Onyango and Deepika Udagama have presented a preliminary report on “Globalization and its impact on full enjoyment of human rights”.

In their report, the two experts said the globalization phenomenon, and the processes and institutional frameworks through which they are propagated, have numerous implications for promotion and protection of all human rights.

In a critical appraisal of the WTO, its rules and processes, as also those of the World Bank and the IMF, the two experts said “there is a need for critical reconceptualization of policies and instruments of international trade, investment and finance”. In such a reconceptualization, the two experts said, human rights issues should cease to be treated as peripheral, but brought directly into the debate and policy considerations of those formulating the policies and operating these institutions—the WTO, World Bank and the IMF.

The WTO, the two experts have said, is superficially a democratic institution - functioning on basis of one-member-one-vote and consensus decision-making - but such superficial equality “nevertheless masks a serious inequality, in both the appearance and reality of power in the institution... in the deliberations and negotiations over further goals of trade liberalization, the WTO has demonstrated particular opacity in the face of the demand for transparency.”

The preliminary report and assessment of the Special Rapporteurs has faulted several parts of the WTO agreements, including its dispute settlement procedures, the TRIPS agreement and its patenting issues, particularly of life forms and plant varieties that represent “outright piracy and appropriation of nature’s bounty”.

The two experts have called for greater and deeper involvement of the UN organizations—with those like the WIPO and WHO that have not been so far deeply involved—to address the issues in a more critical and far-reaching manner. And in the same way, the Sub-Commission has embarked on a process of formulating a draft code of conduct for TNCs, where guidelines should be formulated, elaborating on basic human rights obligations of the main actors and applicable to the various regimes of international trade, investment and finance and their institutional arrangements.

Globalization, Oloka-Onyango and Udagama say in their report, is no passing or ephemeral cloud. While capable of any number of conflicting and even contradictory interpretations, particularly qualitative or of a value-laden nature, as reflected in the existence of some bewilderment and growing alarm over its ramifications, there is little doubt that globalization has numerous implications for the regime of international law and practice, and the regime of international human rights.

The recent protests—at Seattle in December 1999 (against the WTO), and this April in Washington against the IMF and World Bank -- have brought to the fore the multifaceted nature of the globalization phenomenon and its potential impact on a whole range of contemporary social, political, cultural and economic relationships, and that in the foreseeable future globalization would remain an issue of considerable importance to intellectual debate and overall conduct of international relations and sustainable human development.

Referring to the contribution of information and communication technology (ICT) and attendant forces of the global economy to the emergence of globalization in its economic dimension, and the new orthodoxy of exalting the economic dimensions of globalization above all other human values or phenomenon, and even human rights themselves, the Special Rapporteurs say that “the unfortunate consequence of this has been to denigrate and mask the social, cultural and political roots and ramifications of this phenomenon.” As Brazilian President Enrique Cordoso has argued, it would be a mistake to think of globalization as being the result of market forces alone, since the boundaries within which the market operates is defined politically in direct negotiations between governments in multilateral fora like the WTO “where the power is always present in such negotiations.”

Among the prominent questions that emerge, in terms of the institutional context of international trade, investment and finance, are whether the institutions fostering trade and investment liberalization are paying heed to the negative effects of their operations on human rights.

Citing the views of the former chief economist of the World Bank, Joseph Stiglitz about the way the developing countries are asked to open their economies even as their exports run against anti-dumping duties or protected and restricted markets in developed countries, Oloka-Onyango and Udagama say that “the assumptions on which the rules of the WTO are based are grossly unfair and even prejudiced.”

“They reflect an agenda that serves only to promote dominant corporatist interests that already monopolize the arena of international trade. The rules assume an equality of bargaining power between all countries engaging in trade, and are designed on the basis of a premise that ignores the fact that the greater percentage of world trade is controlled by multinational enterprises. Within such a context, the notion of free trade on which the rules are constructed is a fallacy.”

The Special Rapporteurs underline that while trade and commerce are the principal focus of the WTO, the organization has extended its purview to encompass additional areas beyond what could be described as within its mandate. “Even its purely trade and commerce activities have serious human rights implications, compounded by the fact of scant (indeed only oblique) references to the principles of human rights.”

The net result, the two experts point out, is that “for certain sectors of humanity, particularly the developing countries of the South, the WTO is a veritable nightmare”. Women are largely excluded from its decision-making structures, the WTO rules are gender-insensitive, and women as a group stand to gain little from this organization.

The WTO was also affected by processual and substantive problems.  While superficially, it can be described as a democratic institution - with one-member-one-vote and decisions ostensibly based on consensus, and together allowing for more equitable outcomes - “the superficial equality nevertheless masks a serious inequality in both appearance and reality of power in the institution.”

In its deliberations and negotiations over the further goals of trade liberalization, the WTO has “demonstrated a particular opacity in the face of the demand for transparency.” At Seattle, despite warnings from developing-country representatives, the Northern countries persisted in developing a position in the process that excluded the majority of delegates. Unsurprisingly, the talks ended in deadlock.

“The pattern continues, compounded by the fact that because of a lack of resources and personnel with the requisite expertise, developing countries are forever condemned to a marginal negotiating position within the WTO framework.”

Among the several issues causing concern to developing countries, the Special Rapporteurs stress, is the attempt to forge a link between issues concerning trade, human rights, labour standards and the environment, particularly when they are couched in the language of conditionality.

And the tying of trade to human rights in the fashion in which it has so far been done is problematic for a number of reasons.

Firstly, it too easily succumbs to the charge by developing countries of neo-colonialism. Secondly, the commitment of Northern countries to a genuinely democratic and human rights-sensitive international regime is rendered suspect both by an extremely superficial rendering of the meaning of human rights, and by the numerous double standards observed daily in the relations between the countries of the North and those of the South.

“Thus, ‘human rights’ conditionality when applied in contexts such as trade depends on a range of largely subjective elements extrapolated from the much broader human rights regime... human rights are merely used as an opportunist fulcrum to achieve the objective of liberalized markets. For example, why is there almost always never any linkage between the demands being made and the observance and respect for economic, social and cultural rights?  The short answer is because many of the measures being pursued actually undermine the progressive realization of this category of rights. However, even when the linkage is made to civil and political rights, it is fraught with inconsistencies and national subjective interests predominate.”

Referring to the WTO TRIPS regime, and in particular the issues of patenting, especially of plant varieties and life forms, the Special Rapporteurs say: “The implications are serious for the issue of food security, and its consequent relationship to the right to food. Further, it represents outright piracy and appropriation of nature’s bounty which has been designated for the whole of humanity and not for a privileged and technologically advanced few.”

“At a minimum,” the two Special Rapporteurs add, “the WTO needs to reform its processual mechanisms of deliberation so as to be more inclusive, and to allow for discordant, especially civil society, voices to be heard. More fundamentally, however, it needs to review its approach to the substantive issue that it is supposed to tackle, the question of free trade.”

The Rapporteurs cite Stiglitz’s view on the need for trade liberalization to be balanced in its agenda, process and outcomes, and reflect the concerns of developing countries and take in not only sectors where the developed countries have comparative advantage like financial services, but also those where developing countries have a special interest like agriculture and construction services; include not only intellectual property protection of interest to developed countries, but address issues of concern for the developing world such as property rights for knowledge embedded in traditional medicine or prices of pharmaceuticals in developing-country markets.

“It is the above that the WTO failed to do at Seattle, and has since failed to do in its aftermath,” the Special Rapporteurs add.

Following the Seattle Ministerial Conference, the impression created by the WTO leadership, as well as by the countries of the North which had been the prime movers of the basic elements in the new WTO trade regime, was that there would be attempts at reform.

“However, deliberations and pronouncements by the organization since Seattle do not appear to indicate much change of heart. Thus, the problems of the WTO are much larger than simply its approach to the substantive elements of its mandate. As in the case of the OECD and (the efforts to negotiate) the MAI (multilateral agreement on investment), the WTO must radically review its mechanisms of operation, the role and place of both developing-country participation and of non-State actors such as NGOs, and its relationship to the United Nations system as a whole."

“In other words, what is required is nothing less than a radical review of the whole system of trade liberalization and a critical consideration of the extent to which it is genuinely equitable and geared towards shared benefits for rich and poor countries alike.  The WTO must take on board the many suggestions that have been made with respect to improving access and transparency at the organization, not only for the purposes of improving internal democracy, but also for constructing a more equitable and genuinely beneficial international trading system.”

On the international financial institutions (IFIs) and globalization, the two Special Rapporteurs said that the April demonstrations in Washington DC represented a deep-seated resentment against the IMF and the World Bank, that have played a much longer and critically more dominant role in shaping the essential characteristics of the global economy than the WTO. For many developing countries, the Fund and the Bank, have not only more deeply penetrated their very existence and operation, but have also had much more significant ramifications on basic human rights questions - ranging from right to self-determination and observance of civil and political rights, to the ability of developing countries to progressively realize economic, social and cultural rights, especially in the areas of health, education and basic welfare.

While of the two, the World Bank has made more progress in attempting to address criticisms, the fact that the reforms did not go far enough is illustrated by the fact that both with respect to Poverty Alleviation and the Heavily Indebted Poor Country (HIPC) initiatives, “the frameworks of approach remain the same i.e.  conditionality and free market reforms.”

By contrast, the IMF has confined its steps towards reforms to the release of information, but has been “more recalcitrant” about being drawn into the debates about human rights implications of its operations. The Fund has formulated a broad and rather nebulous document on ‘Good Governance’, whose purview was “extremely narrow”. It was confined to issues such as institutional reforms of the treasury, budget preparations and approval procedures, tax administration, accounting and audit mechanisms, central bank operations, and official statistics. Similarly, reforms of market mechanisms focus primarily on exchange, trade and price systems and aspects of the financial system. In the regulatory and legal areas, IMF advice would focus on taxation, banking sector laws and regulations and establishment of a free and fair market entry.

There is a heavy emphasis on corruption and need for transparent system of operation within countries that the Fund deals with.  Though couched as ‘advice’, for many developing countries, IMF prescriptions are edits giving them little choice and almost no room for manoeuvre.

But in both organizations, a “democratic deficit” is apparent. The governance practices of both institutions are ‘problematic’, and in fact ‘arcane and immoral’. The leadership of both institutions is confined to a ‘royal family’ of select individuals who must meet the criterion of regional, and indeed, ethnic origin.

Referring to the controversies surrounding the selection of a successor to Michel Camdessus at the IMF, and the US' initial backing of Mr.Stanley Fischer and the attempts to coax developing, especially African, countries to root for Fischer on the ground that “although a naturalized American, he was born in Zambia”, the Special Rapporteurs comment:

“Such practices demonstrated the duplicitous character of institutions that insist that the countries that borrow from them must be exemplars of ‘good governance’.”

The IMF continues to practice intense secrecy, centralization of power and denial of responsibility when crises can be traced to policies forced by it on countries under Fund conditionality.  Citing the examples of the recent East Asian crisis, with first blaming the crisis on the governments and their ‘poorly supervised’, ‘poorly functioning’, ‘badly regulated’, ‘corrupt’ and ‘government-directed’ policies—marking a significant volte face from what the IMF had said about the same countries just a few years earlier—and later admitting some connection between the crises and policy prescriptions, the Special Rapporteurs add:

“..there is no indication that the organization is willing to take the next most important step, accountability”. Both in conception and policies, the Fund remains virtually the same as before and “it is still a case of counselling the swallowing of a bitter pill for the present with a promise of recovery and robust health in the future.”

The critical question of these IFIs remains that of transparency and accountability.

Also, the institutional mechanisms of globalization have yet to seriously address the issue of human rights in a fundamental and democratic fashion. Referring to the dramatic resignation of the World Bank’s chief economist Joseph Stiglitz for his open criticisms of the policies of the Bank and the Fund, the Special Rapporteurs add: “No other incident demonstrates so well that despite all pretensions at reform, the IFIs still apply the old adage, ‘do as I say, not as I do’.”

In their conclusions and recommendations, the Special Rapporteurs say that the phenomenon of globalization, the processes and institutional framework through which it is propagated, and its multifaceted nature have serious implications for the promotion and protection of all human rights.

“This implies a need for critical reconceptualization of the policies and instruments of international trade, investment and finance. Such reconceptualization must cease treating human rights issues as peripheral to their formulation and operation. There is a dire need for human rights - with particular emphasis on questions relating to equality and non-discrimination - to be brought directly into the debate and policy considerations of those who formulate policies and operate these institutions that are at the forefront of the drive for increased globalization and contemporary society.”

Referring to the “growing clamour” from the main beneficiaries of globalization for rules to govern the international economy - with specific focus on questions such as copyright violations, trade sanctions and protection for increased foreign investment, Oloka-Onyango and Udagama note that not unsurprisingly most such demands come from those already benefiting from the current inequities in the global economy. What is needed is a balanced approach, ensuring that human rights principles are integrated into the rule-making processes from the start. In meeting these objectives, a critical challenge must be made to the dominant neo-liberal economic framework of analysis, and the measures of austerity and punitive conditionality that have been made the modus operandi of the existing system. Further reviews of debt relief and poverty eradication measures must be undertaken from a human rights perspective.

“Quite clearly, the rules of international trade, investment and finance require urgent reform. At the same time.... the institutions that currently make the rules governing the processes of globalization also require reform. Such reform must deal with issues concerning participation and involvement, transparency in decision-making, negotiations, dispute settlement and trade and investment policy reviews. Issues of leadership, recruitment and inclusiveness must also be addressed.”

And just as the Sub-Commission has embarked on a process of formulating a draft code of conduct for TNCs, “it is time an attempt is made to formulate guidelines that elaborate the basic human rights obligations of the main actors within the context of globalization.”

The guidelines must apply not only to various regimes of international trade, investment and finance, but also to institutional arrangements within which the regimes are housed - including the Bretton Woods institutions, WTO, and regional organizations such as the OECD, Asian and African Development Banks and a host of other agencies created to deal with promotion and regulation of international and regional trade, investment and finance.

And despite the fairly active engagement of a number of UN bodies and specialized agencies with the issue of globalization, much more can still be done, say the Special Rapporteurs.

Those organizations now not so deeply involved in the issue - such as the WIPO and WHO - should begin to address the issue in a more critical and far-reaching manner. There should also be more cross-country dialogue, both within the UN system and across institutional boundaries with the multilateral financial institutions and the WTO. The basic principle must be elaboration of fundamental human rights principles to underpin their activities in the areas of international trade, investment and finance.

In the debate at the Sub-Commission, a number of NGOs said that more must be done to counter the negative effects of economic globalization on poor people and poor countries. The IFIs and TNCs must be held responsible for respecting human rights. The behaviour of TNCs, and of institutions such as the World Bank, IMF and the WTO should be “subject to review for compliance with human rights norms,” the NGOs said.

Dinorah La Luz of the American Association of Jurists, speaking on behalf of 17 other NGOs, said they had submitted a document to the UN  on promotion of the right to development which expressed alarm that the main authorities of the UN were implementing a policy of opening the doors wide to TNCs. More and more power of decision was being given to financial and business conglomerates at the expense of UN members. The UN Secretary-General’s initiative for partnership with the business community was “worrisome” they said and called for an in-depth study of the activities of TNCs. The draft code of conduct proposed by a Sub-Commission expert, David Weisbrodt, was not sufficient as it was voluntary and had various shortcomings, the NGOs said.

Speaking for Habitat International, as also for the Lutheran World Federation and International Commission of Jurists, Miloon Kothari said that in the present context, any discussion of human rights that failed to take account of economic globalization was academic. The policies of the WTO were grossly unfair and even prejudiced, reflecting the agendas of dominant corporate interests. The implementation of TRIPS had restricted access of developing countries to patented medicines, while the pirating of indigenous traditional knowledge for commercial exploitation by others was a violation of established jurisprudence in human rights law. The larger ethical questions surrounding human genome mapping and patenting, should also be addressed. -SUNS4727

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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