Human rights and economic co-operation

Economic circumstances influence the level of enjoyment of many human rights, such as those relating to education, due process, social security and an adequate standard of living. There is, however, no simple formula to indicate this relationship, and prosperity is neither a precondition nor a guarantee for respect for human rights. The premise that poor countries cannot be expected to respect social and economic rights until they have reached a certain level of economic development must be rejected, as this implies that people in poorer countries have fewer rights than people in richer countries. Moreover, history has shown that, in the long term, successful economic and social development is not sustainable in a repressive society. At the same time, poverty affects dignity and extreme poverty can be seen as an abuse of human rights.

International relations cannot be based solely on consideration of national economic interests; all human rights play a role. In the past, there was a clear reluctance from the side of governments to interfere in economic relations between private individuals and bodies in market-economies. As states are responsible for the framework in which international relations are developed they are required to intervene in situations were human rights are at stake. Some caution is called for, however, as this may entail interference in relations in which the government is not traditionally the sole actor. At the same time, the responsibility for implementing human rights is universal and concerns all state and non-state actors whose activities may affect people’s lives. The primary responsibility in the field of domestic human rights enjoyment remains with the state. But institutions within the state as well as international institutions have to share some responsibility.

In the field of economic co-operation, a distinction should be made between positive and reactive measures. Positive measures are defined here as all those that contribute to the improvement of economic relations. Promotion of economic relations based on private initiatives can be especially conducive in stimulating economic diversity.

Reactive measures, which may include economic sanctions, can be defined in the context of this section as any restrictions imposed on economic relations with a particular country. Such measures may be used as an instrument of human rights policy, to exert political pressure to stop human rights violations, as a means of punishment or as a way to avoid involvement in such violations.

One important element of economic co-operation is the maintenance, at the national and sub-national level, of internationally accepted human rights standards such as labour standards. As an institution establishing a framework for international economic relations, the ILO has set guidelines which, from a human rights point of view, are important positive measures in the international social and economic field. The ILO has directly addressed companies involved in international relations, for instance, through its ‘Declaration on Fundamental Principles and Rights at Work’ (1998) that addresses the basic principles and rights at work that concern all. Labour standards must be respected in all international co-operation but should, however, not be used for protectionist trade purposes. The standards to be maintained by multinational companies in their international investments will be discussed in VI§3.

Human rights elements are increasingly being incorporated into international trade agreements. The EU agreements with third countries, including trade and co-operation agreements, contain a clause stipulating that respect for human rights is an ‘essential element’ of the accord. The Cotonou Agreement with 77 African, Caribbean and Pacific countries, which entered into force on 1 April 2003, contains such a clause. The Agreement was amended in 2005 to include, inter alia, a reference to the promotion of the fight against poverty-related diseases and protection of sexual and reproductive health and rights of women. An analysis of the clause can be found in the ‘Resolution on Human Rights and Democracy Clause in European Union agreements’ from 2006. The European Parliament recommended that the clause should be extended to all types of agreements, including technical aid, financial aid and sectoral agreements. Furthermore it should apply to agreements with all countries and not be limited to ACP nations. Currently agreements with developed countries do not include any such clause. In 1997 Australia and New Zealand refused to sign a co-operation agreement with the EU, as the agreement was conditional on the inclusion of a human rights and democracy clause. In the context of economic co-operation, the EU Generalised System of Preferences (GSP) should also be mentioned. This system has existed since 1971 and offers developing countries the possibility of concessions as regards export tariffs. With respect to trade, the granting of additional preferences or withdrawal of preferences in relation to human rights issues is factored into the System. The basis for temporary withdrawal of general preferences was extended to cover the serious infringement of all ILO core Conventions in 2001. Within the system additional preferences can be granted to countries that have adequately observed ILO 87 concerning Freedom of Association and Protection of the Right to Organise, ILO 98 concerning the Right to Organise and Collective Bargaining, and ILO 138 concerning Minimum Age. Furthermore, within this system it is possible to investigate violations of the relevant ILO Conventions and, eventually, to impose sanctions on the basis of the investigation.

The United States Generalised System of Preferences (USGSP) was established through the Trade Act of 1974. This links the granting of preferences to the development of internationally recognised labour rights in developing nations. The ‘labour clause’ maintains that countries should not be allowed to exploit lax labour laws to render their goods artificially competitive. The US Trade Representative designates which countries qualify for GSP benefits, which include the waiving of custom duties. To maintain GSP benefits a country must be seen to be taking steps to improve the labour rights of its citizens. The necessary areas of improvement are listed in section 2462 of the 1974 Act. However the standards required of designated GSP nations is not clear as the United States has ratified only two of the fundamental ILO conventions; ILO Convention 105 on the Abolition of Forced Labour and ILO Convention 182 on the Prohibition and Elimination of the Worst forms of Child Labour. This has led to criticism that the standards upheld by the scheme are too vague, and that the withdrawal of preferences has sometimes been motivated more by other foreign policy objectives than by the concern for the plight of workers. Mention must also be made of the long-standing embargo against Cuba, ostensibly designed to promote human rights.

International Institutions such as the International Monetary Fund (IMF), the World Bank (WB) and the World Trade Organisation (WTO) play a crucial role in stimulating economic co-operation and international stability and increasingly their functions can have an impact with regard to human rights. Through their complementary roles in maintaining international financial stability and efforts to improve living standards in the world’s poorest countries, the IMF and the World Bank can contribute directly and indirectly towards people’s realisation of many of their human rights. The WTO supervises world trade. It aims to lower trade barriers and encourage multilateral trade. It monitors members’ adherence to international trade agreements and negotiates and implements new agreements.

Macro-economic stability is an essential pre-condition to economic success for every country, rich or poor. It is, however, increasingly recognised that macro-economic and financial aspects cannot be considered separate from the structural, social and human aspects of development. Therefore, human rights experts have called for human rights considerations to be integrated in all aspects of the IMFs operations.

The World Bank has since the 1990s made considerable efforts to integrate strategies for poverty alleviation in its policies. In recent years, it has strengthened its emphasis on working with governments and other partners to aid developing countries by providing a range of services that include analysis, advice and resources to fund development activities promoting poverty alleviation. In this context mention should be made of the 2004 poverty report and booklet entitled ‘Partnerships in Development: Progress in the Fight against Poverty’. The report provides a comprehensive and externally focused assessment of how the World Bank works to help countries move towards the vision of poverty reduction embodied in the Millennium Development Goals (see V§1) and the Monterrey Consensus (which was an outcome of the International Conference on Financing for Development, Doc. A/CONF. 198 MI). The report highlights the broad range of the Bank’s activities to promote growth and reduce poverty in its multiple dimensions. It should be noted that Article IV Section 10 of the Bank’s Articles of Agreement bar it from interfering in the domestic political affairs of nations, and thus the funding which it provides cannot be conditional upon human rights targets.

At the First Ministerial Conference of the WTO in Singapore, it was decided that the ILO would be responsible for the observance of internationally recognised labour standards accepted by the members of the WTO (the issue of the ‘social clause’). The connection between respect for these labour standards and the free market, however, is not without problems, as can be deduced from the following quotation from the Singapore Ministerial Declaration adopted on 13 December 1996:

We renew our commitment to the observance of internationally recognised labour standards. The International Labour Organisation (ILO) is the competent body to set and deal with these standards, and we affirm our support for its work in promoting them. We believe that economic growth and development fostered by increased trade and further trade liberalisation contribute to the promotion of these standards. We reject the use of labour standards for protectionism purposes, and agree that the comparative advantage of countries, particularly low-wage developing countries, must in no way be put into question.

Icelandic Human Rights Centre

Túngata 14 | 101 Reykjavík | Sími 552 2720 | info[at]

The office is open from 9-12 and 13-16