Is More Trade Always Better? The WTO & Human Rights in Conflict Zones

Journal ofWORLD TRADE

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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 nroH kirneH 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, USAChad P. Bown Senior Economist, Development Research Group,The World Bank

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Is More Trade Always Better? The WTO andHuman Rights in Conflict Zones

Susan Ariel AARONSON & M. Rodwan ABOUHARB*

JEL Codes: F51, F53, 019, Q34

Scholars and policymakers have long believed that the interdependenceencouraged by trade relations encourages trust and peaceful relations. In thisarticle, we examine the role of the GATT/WTO (and the trade it supposedlyencourages) in conflict zones.Although the WTO is built on the notion that tradestimulates peace, policymakers really do not know how more or less trade affectsthe human rights conditions of citizens living in zones of conflict. Policymakersoften try to reduce trade in such zones in the hopes that sanctioning trade willreduce conflict.Yet, at other times, policymakers try to encourage trade in conflictzones. We show that policymakers have used several avenues under the WTO todiscuss and address human rights in Member States experiencing conflict or inpost-conflict recovery. We then focus on how policymakers can achieve greatercoherence among trade and human rights policies in conflict zones.

1 IS MORE TRADE ALWAYS BETTER? THE WTO AND HUMANRIGHTS IN CONFLICT ZONES1

Sri Lanka and Myanmar/Burma are case-studies in the human rights dilemmaspolicymakers face in zones of conflict.2 Although the two nations are quite

* Susan Ariel Aaronson is Associate Research Professor at GWU and the Minerva Chair at theNational War College. M. Rodwan Abouharb is Senior Lecturer International Relations, DirectorMSc International Public Policy Program, School of Public Policy, University College London.Email [email protected]; [email protected].

1 We are grateful to K. Daniel Wang, a graduate student at GWU, for his extensive help with themanuscript.

2 During the civil war, the Tamils, some 9% of the population tried to set up a separate country inthe 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 HumanRights in Conflict Zones’. Journal of World Trade 47, no. 5 (2013): 1091–1128.


different, they also have much in common. Both states have experienced years ofethnic violence and civil war. The leaders of both countries long governed withimpunity while thousands of their citizens suffered and died. Interestingly both SriLanka (the former Ceylon) and Myanmar/Burma (hereafter Burma) are foundingmembers of both the United Nations and the international organizationgoverning trade, the GATT (now the WTO).3

During its long and brutal civil war (1983–2009),4 the rights of many SriLankan citizens were undermined.5 Nonetheless, trade continued apace. Othergovernments did not attempt to use trade policies to affect human rights in SriLanka until the conflict ended in 2009. Members of the WTO respondeddifferently to civil war, ethnic violence, and human rights abuse in Burma. TheUS, Canada, and the EU as well as other nations maintained years of tradesanctions on Burma in the hopes of altering the military regime’s policies towardsits citizens.6

When countries such as Sri Lanka or Burma initiate or undergo conflict,policymakers from other governments must wrestle with difficult questions. Dothey take steps to expand trade or do they use trade sanctions to punish orthreaten governments which may act in an abusive manner? On one hand, rebelgroups or oppressive regimes may use trade revenues to fund and perpetuateconflict. However, without the economic growth from trade, innocent civiliansmay be deprived of jobs, income, and opportunities (Deitelhoff and Dieter Wolf:2010; De Luca: 2003). Moreover, after violence ends, trade can help policymakersrestart the economy, expand opportunities, foster reconciliation, and promoterespect for human rights.

But the international agreement and organization that governs trade, theGATT/WTO, does not provide its members with clear guidance about the roletrade can and should play in zones of conflict. Under WTO rules, members of theGATT/WTO are not permitted to take trade actions to protect citizens of anotherMember State because such actions would violate WTO norms of equal treatmentamong nations. However, Member States may use trade sanctions against another

3 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.

4 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.

5 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.

6 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/burmamyanmar/time-ethnic-violence-kill-burmas-fragile-reforms/p28483.

JOURNAL OF WORLD TRADE1092

Member State if the UN Security Council authorizes such actions.7 In thesixty-five year history of the GATT and its successor organization the WTO, theUN 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 morepeople, including those living in conflict zones. Hence when countries imposedtargeted sanctions on Burma, they did not act with the direct assent of the UN orthe WTO. These nations argued that human rights abuses in Burma were sosignificant that they justified trade sanctions and an exception to GATT/WTOnorms.8

During Sri Lanka’s years of war, trade and tourism were significantlyreduced.9 Much of the nation’s infrastructure was destroyed and many of thecountry’s best and brightest left.10 To put it differently, Sri Lanka missed asignificant amount of trade (Anderson: 2000). But Burma ‘missed’ even more tradebecause of the sanctions. After 2000, many countries banned exports in keycommodities including gems, timber and other items that they believed were usedto finance conflict; the US blocked all exports to Burma.According to the UnitedNations, the country remained isolated and traded much less than it should have, asindicated by its resource base and potential.11

Herein we examine how the members of the WTO use trade to affect humanrights in Member States experiencing or recovering from conflict, focusing in

7 Article 39 of the Charter of the United Nations allows the Security Council to take measuressuch as sanctions only to ‘maintain or restore international peace and security’ following itsdetermination 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 iscapable of being a threat to international peace or security or that is in fact threateninginternational peace and security. While armed groups within a country may pose a threat tointernational 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, peaceand security must not be affected by sanctions imposed on the violating State.

8 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).

9 Sri Lanka is heavily dependent on tourism, commodity and garment trade. It has excellentharbours, high levels of literacy (91%) and life expectancy (75 years) and a low rate of infantmortality (14 per 1,000 live births), figures comparable to those of developed countries. Because ofthe importance of trade to the island nation, Sri Lanka joined the GATT in 1948 and was afounding member of its successor organization the WTO. Australia Department of Foreign Affairsand 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.

10 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 AsianEconomic Institute estimated the war’s costs at some USD 200 bn.

11 Witada Anukoonwattaka & Mia Mikic, Myanmar: Opening Up to its Trade and Foreign Direct InvestmentPotential, United Nations Economic and Social Commission for Asia and the Pacific, 31 Dec. 2012,http://www.unescap.org/tid/publication/swp112.pdf.

TRADE, CONFLICT ZONES AND THE ROLE OF THE WTO 1093

particular on intrastate or internal conflict.12 Surprisingly, despite the importantrole of the WTO in trade, as well as the continuing force of the idea that tradepromotes peace, neither trade, human rights, nor conflict scholars have focused onthis question.We note that the WTO Secretariat has no independent authority; itoperates at the behest of Member States. Under international law, Member Statesare obligated to protect, respect and remedy human rights. However, they may notbe meeting that responsibility with their trade policies (Aaronson andZimmerman: 2007).

As this is a complicated topic, we have kept our purview narrow.We do notattempt to identify the specific human rights that more or less trade might affect inconflict zones. Nor do we address whether WTO rules conflict with theinternational human rights system, or if the WTO is undermining its human rightsobligations as an international organization when it promotes trade (or whenMember States ban trade) in conflict zones. We note that other scholars havefocused on these questions.13

We begin with a brief review of the literature on trade and conflict.We thendiscuss how the WTO interacts with its members on the issue of human rights.Wenote that the WTO says little directly about human rights, but aims to enhancehuman welfare through expanded trade. Next, we examine the history and role ofthe WTO in dealing with both inter- and intra-state conflict.The general ethos ofthe WTO is that more trade is better – that trade will advance peace, and in sodoing, human welfare. We show that policymakers have relied on several built-inmechanisms to discuss trade in countries experiencing human rights crises andconflict. But members of the WTO don’t really know how, when, or why tradecan advance peaceful relations and human welfare. Finally, we develop conclusionsand make some suggestions as to how members of the WTO can use trade toenhance 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 soeffectually and certainly secure the peace of the nation as the regulating of our

12 We will also use quantitative research to examine if the WTO promotes peace in another study.13 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 ofWorldwide Organizations, Jean Monnet Working paper, 7/01.


trade’.14 Philosopher Immanuel Kant suggested that ‘republican constitutions’ andthe ‘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 becamea meme among scholars. But in recent years, some academics have begun to useempirical tools to tease out this relationship (Gartzke, Li and Boehmer: 2001;Mansfield and Pollins: 2001; O’Neal and Russett: 1997, 1999, 2001; Oneal, Russettand Berbaum: 2003; Oneal, Maoz and Russett: 1996).They have argued that tradeagreements facilitate trust by enhancing political relations and creatingexpectations of future gains (Fernandez and Portes, 1998; Mansfield andPevehouse, 2000). However, some scholars such as Green, Kim, and Yoon (2001)find no statistically significant relationship between international trade andconflict. In fact, Katherine Barbieri (1996, 2002), Barbieri and Schneider (1999),and Barbieri and Peters (2003) find that greater trade among states may enhancethe likelihood of militarized dispute. Li and Reuveny offer a theory (2008) toexplain how export and import flows in specific sectors influence decisions toinitiate bilateral military conflict.15

Keshk, Pollins, and Reuveny (2004) and Kim & Rousseau (2005) find thatconflict impedes trade, but trade does not deter conflict. Alternatively, Hegre,O’Neal and Russet (2009) control for size and distance between states, and findthat 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 whichcountries trade will occur. They note that trade theory asserts that nationspossessing disparate factor endowments should have strong trade relations becauseeach needs the goods and services that the other country produces.Yet economistshave found that the bulk of trade occurs not between industrialized anddeveloping countries or among developing countries, but between the advancedindustrial states. Trade among developing/industrialized countries and betweendeveloping countries is ‘missing’ (Trefler: 1995). Industrialized countries have notonly 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 globalnetwork 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 Douglas A. Irwin, Against the Tide: An Intellectual History of Free Trade 32, n. 14 (Princeton U. Press1996).

15 Quan Li & Rafael Reuveny, Trading for Peace? Disaggregated Bilateral Trade and Interstate Military ConflictInitiation, http://www.princeton.edu/~pcglobal/conferences/beijing08/papers/Li-Reuveny.pdf.

16 Havard Hegre, John R. O Neal & Bruce Russett, Trade Does Promote Peace: New SimultaneousEstimates of the Reciprocal Effects of Trade and Conflict, http://www.yale.edu/leitner/resources/docs/HORJune09.pdf.


also allow partners to share information about new opportunities, about thereliability of financiers and to match producers and distributors. A system of rulessuch as a trade agreement may also facilitate the development of such trust.Developing countries that participate in trade agreements should be able toincrease their trade.

Anderson (2000) argues that trade agreements provide a system of rules toensure contracts are enforced and countries don’t default on their agreements.Other scholars see participation in a trade agreement as a means of formalizingcommitments (Goldstein and Martin: 2000; and Sung and Chu: 2003) andspreading key norms of good governance and open markets (Sandholtz and Gray:2003; Simmons, Dobbin and Garrett: 2008). Membership in the WTO signalsgood governance as more traders believe the country and its citizens can betrusted (Büthe and Milner 2008; Dobbins, Simmons and Garrett: 2007; Elkins,Guzman and Simmons: 2006; Mansfield and Pevehouse: 2008, 273). UNCTADtheorized that policymakers may see their commitments as ‘investments….they arepayments today in the expectation that they will produce rewards in the future’(Basu: 2008, 5). Moreover, when countries join, they are signalling foreigninvestors that the country will provide foreign and domestic actors with theinformation 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 overtime 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 tradeto trade and conflict.They have examined Preferential Trade Agreements (PTAs -which can include bilateral or regional trade agreements) and found that theseagreements are more effective than trade alone at maintaining peace (Dembinski etal.: 2004; Mansfield, Pevehouse and Bearce: 1999). Hafner-Burton andMontgomery have nuanced this, arguing that the benefits of these PTAs areuneven and hence they can provide incentives for conflict as well as cooperation(2006, 2008, 2009, 2012). Other scholars have postulated that shared norms andtrust can lower business transaction costs, accelerate economic growth, enhancegovernment effectiveness, and reduce the likelihood of conflict among members ofa society (Putnam: 1993; Platteau: 1994; Zak and Knack: 2001). In this view, tradecan create a virtuous circle of good governance.

However, many of these scholars have examined trade, but not tradeagreements specifically. We note that policymakers will respond differently tochanges in trade versus changes and rules stemming from a specific tradeagreement. We could not find any scholarship examining how the WTO, the


largest and most influential international trade agreement and institution, mayaffect conflict (or affect human rights in conflict zones). In this paper, we beginthat analysis. Specifically, we examine the signals that WTO rules send topolicymakers about trade and conflict. Then we examine the avenues throughwhich 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 thattrade can encourage peace. Although that idea has become an entrenched ideaamong Member States, we really don’t know how, and under what conditions,trade encouraged by membership in the WTO can advance peace. Moreover, wedon’t know whether more or less trade is better to advance peace in particularcircumstances.

During World War II, government officials in both the US and Great Britainworked to build institutions that could promote political and economic stability.These post-war planners devised an international institution, the InternationalTrade Organization (ITO), to govern trade, employment, investment, and cartels,but it never came into existence. However, the General Agreement on Tariffs andTrade (GATT), the part of the ITO that governed commercial policy, tariffs, andquotas, went into force in 1948 (Aaronson: 1996; Irwin, Mavroidis and Sykes:2008). In 1993, GATT Member States created a new institution, the WTO, whichwent into effect in 1995.17

The GATT and WTO do not have a direct human rights mission; but thepostwar planners recognized that expanded trade could have benefits for humanwelfare. These officials thought that by reducing barriers to trade, theGATT/WTO would increase economic growth and employment.18 Neither the

17 In this article, we focus on GATT 1994, which delineates the basic norms and obligations of theworld trading system General Agreement on Tariffs and Trade 1994, http://www.wto.org/english/docs_e/legal_e/06-gatt.pdf.

18 The Preamble for the GATT states, ‘Recognizing that their relations in the field of trade andeconomic endeavor should be conducted with a view to raising standards of living, ensuring fullemployment 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 exchangeof 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 inthe field of trade and economic endeavor should be conducted with a view to raising standards ofliving, ensuring full employment and a large and steadily growing volume of real income and effectivedemand, and expanding the production of and trade in goods and services, while allowing for theoptimal 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.


GATT nor the WTO mentions human rights; and neither organization has anyhuman rights criteria for membership. Nor is there a democracy clause;authoritarian states have become members (Aaronson: 2007). But the WTOSecretariat is increasingly sensitive to human rights. In 2004, the ConsultativeBoard to the WTO (an advisory board trying to help the WTO respond to newchallenges) argued that the WTO does not threaten human rights. The Boardstressed, ‘the case for freeing trade is made…in terms of enhancing humanwelfare’.Trade is a means to achieving that end, ‘but not an end in itself ’.19 Morerecently, the Director General of the WTO has given speeches saying trade andhuman rights go ‘hand in hand’. But his arguments focused on the spill-overeffects of trade and not the direct effects of WTO rules. He noted that the ‘WTOsystem …contained protectionist pressures during the crisis helps shelter poorerpopulations. So, in a way, trade can be a transmission belt between human rightsprinciples and practice.’20

The GATT/WTO also never mentions conflict or how conflict can make itharder for states to enhance human welfare. In fact, the GATT/WTO does notgovern trade in arms.21

Nonetheless, the WTO does have direct and indirect effects on human rightsconditions.The GATT/WTO’s rules constrain the behaviour of governments thatwant to use trade policy to advance human rights in zones of conflict.The GATTand the WTO are built on three key principles. First, Member States mustautomatically extend the best trade conditions granted to goods and services ofany one member to the goods and services of every other nation that belongs tothe WTO (the most favoured nation principle). So unless the Member State iswilling to rely on an exception (or the members of the UN authorize tradesanctions),WTO member A can’t use a trade ban to punish WTO member B thatis abusing human rights during conflict. And should member A use such anexception, 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 treatlocal firms (the national treatment principle.). Finally, policymakers cannotdiscriminate between products originating in different countries, nor betweenimported goods and like domestically produced goods (like-product).22 Thus, the

19 WTO Consultative Board, to the Director General of the WTO, The Future of the WTO: AddressingInstitutional Challenges in the New Millennium, WTO, 2004, #11, 14, http://www.ipu.org/splz-e/wto-symp05/future_WTO.pdf.

20 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.

21 As of March 2013, the members of the UN are negotiating an Arms Trade Treaty, https://www.un.org/disarmament/convarms/ArmsTradeTreaty/.

22 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.


US or any other country can’t ban a product from Sri Lanka because it was madein poor human rights conditions or because its trade funded conflict. However, themembers 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 theWTO. But many of the world’s most volatile and conflict-ridden countriesincluding Syria, Afghanistan, and Iraq are not members.

2 HOW MIGHT THE GATT/WTO PROMOTE PEACE BOTHWITHIN AND AMONG NATIONS?

WTO officials frequently claim the WTO promotes peace both directly throughtrade and indirectly through improved governance. The arguments sound logical,but they are not rooted in evidence. Governments that cooperate to resolve tradeconflicts may or may not be able to resolve political or security conflicts, whetherinternal or external.

Figure 1 Mapping of WTO Secretariat Arguments Regarding howTrade and theWTO Promote Peace

For example, in 2003, the WTO argued that the first benefit of the world tradingsystem is to keep the peace.The Secretariat noted:

Sales people are usually reluctant to fight their customers. In other words, if trade flowssmoothly and both sides enjoy a healthy commercial relationship, political conflict is less


likely….What’s more, smoothly-flowing trade also helps people all over the world becomebetter off. People who are more prosperous and contented are also less likely to fight. Butthat is not all.The GATT/WTO system is an important confidence-builder.The trade warsin the 1930s are proof of how protectionism can easily plunge countries into a situationwhere no one wins and everyone loses.23

The WTO Secretariat also claims that peace is a spillover effect of membership inthe 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 tokeep the peace….Peace is partly an outcome of two of the most fundamental principles ofthe trading system: helping trade to flow smoothly, and providing countries with aconstructive and fair outlet for dealing with disputes over trade issues. It is also anoutcome of the international confidence and cooperation that the system creates andreinforces.24

In a 2012 brochure, the WTO Secretariat wrote, ‘When the world economy is inturmoil, the multilateral trading system can contribute to stability. Some wouldargue that this can even contribute to international peace.’25

The WTO Secretariat is essentially arguing that trust among nations createdby this system acts as the social capital that enables peace. ‘When governmentsbelieve that others will keep their trade barriers within agreed limits, they will dothe same. They will be in a much better frame of mind to cooperate with eachother.’26 In short, Member States policymakers must work together to findconsensus on addressing and reducing barriers to trade. In so doing, they learn totrust and to resolve differences peacefully.

Finally,WTO leaders claim that the WTO is directly helping Member Statesreduce conflict. In 2013, Pascal Lamy (the Director General) noted that:

trade promotes peace, by binding nations together in ties of mutual interest anddependence….Conflicts are about much more than economics, of course. Nevertheless, itis clear that India-Pakistan relations will be quite different when a vibrant tradingrelationship creates constituencies for peace on either side of the border. Indian andPakistani policymakers have recognized this, and have set targets for opening andexpanding trade. Their leadership deserves praise. A similar case could be made for the

23 WTO Secretariat, Ten Benefits of the WTO, http://www.wto.org/english/thewto_e/whatis_e/10ben_e/10b01_e.htm.

24 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.

25 WTO, Ten Things the WTO Can Do, 2012, http://www.wto.org/english/res_e/publications_e/wtocan_e.pdf.

26 WTO, Ten Things the WTO Can Do, 2012, http://www.wto.org/english/res_e/publications_e/wtocan_e.pdf.


Israelis and the Palestinians….To put it bluntly: it is important for people to have a stake insomething other than wanting to kill each other.27

Policymakers’ belief that trade can mitigate conflict has not been born out byWTO history. Members have gone to war against other Member States (asexample Argentina and Great Britain). Member states have also experiencedinternal conflict; Colombia, Sri Lanka, and Burma are prominent examples.Tradediplomats from Member States do not have clear evidence that trade or WTOstimulated trade reduces conflict or that such trade consistently enhances humanwelfare in conflict zones. Nonetheless, like WTO Secretariat officials, WTOMember States make the case that membership in the WTO can promote peacefulrelations among and within states. We see these arguments in the day-to-dayworkings of the WTO.

3 AVENUES WHERE MEMBER STATES DISCUSS TRADE ANDCONFLICT

Member states regularly discuss conflict and post-conflict recovery in theday-to-day workings of the WTO.28 Some trade diplomats use these discussions toremind other Member States of their difficulties recovering from conflict. Forexample, 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 tradealone cannot encourage peace if all countries in her region did not benefit.‘Increased trade has an equally important role to play in solidifying peace inpost-conflict situations….All the efforts at peace building in Liberia will meannothing, ladies and gentlemen, if it doesn’t take place within the regional contextof the Mano River Union Basin….We have the same people and instability inGuinea, or Côte d’Ivoire, flowing right into Liberia and Sierra Leone. We mayhave achieved the democratic process in Sierra Leone and Liberia but if we haveinstability 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 thetransformation 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 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.

28 A search of WTO and conflict finds 949 results, but conflict may also refer to conflict betweenWTO 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.

29 Statement by H.E. Ms. Olubanke-King-Akerele, Minister for Foreign Affairs, Liberia, at WTOPublic Forum, www.wto.org/english/forums_e/public_forum2007_e/plenary_session_kingakerele_e.pdf.


Moreover, post-conflict countries have tried to remind their counterparts that theywant the current trade negotiations-the Doha Round of trade talks-to truly focuson their needs. And what they need is greater market access. As Sierra Leone’strade minister stressed, ‘Whilst Sierra Leone has made tremendous political andmacroeconomic progress in less than two years following the end of the war, thecountry…faces peculiarly serious trade-related post-conflict constraints ofreconstructing the devastated infrastructure and building human and other supplycapacity.’ He then said while some countries are offering capacity building, whatthe country really needed is market access for its agricultural goods.30 But his pleaseemed to fall on deaf ears.Although some WTO Member States provide capacitybuilding funds and training to developing country members, many of the samecountries don’t acknowledge the relationship between full market access forcountries such as Sierra Leone and post-conflict recovery.31 Although richcountries say trade can promote peace, they are not really helping nations achievemarket access by reducing barriers to trade.

Meanwhile, although they are doing little to actually help countries in orrecovering from conflict,WTO officials frequently mention how the organizationand its rules promote peace and prevent conflict. In 2001, after Moldovasuccessfully concluded its negotiations to accede, then WTO Director GeneralMichael Moore noted, ‘28 countries are queuing up to join the WTO and there isa good reason for this’, said Mr Moore. ‘Membership of the WTO promotesgrowth and development, peace and prosperity.’32 The DG was essentiallycontinuing the argument that simply joining the WTO promotes peace.

Why would these officials blather on with these claims? They seemed to trulybelieve 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 inthe states that seek to join the WTO (Aaronson and Abouharb: 2013) Workingparties comprised of other WTO Member States closely monitor potentialmembers, and make sure these nations meet their commitments.

30 WTO Ministerial Conference, H.E. Dr. Kadi Sesay, Minister of Trade and Industry, Fifth Session,13 Sep. 2003, WT/MIN(03)ST/115.

31 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.

32 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.


Of the 23 states seeking to accede to the WTO as of March 2013, someseventeen countries are currently experiencing or recovering from conflict.33

These nations are required to show existing WTO members that they follow therule of law, are transparent, and have clear and fair processes for tradepolicymaking. Often these countries must make major changes to their laws andgovernance processes (Aaronson and Abouharb: 2011; Mansfield et al.: 2002).

Countries that are recovering from conflict use the accession process to askfellow Member States for their help.As example, Iraqi Trade Minister MohammedMustafa Al-Jibouri noted, ‘The new Iraq looks with great optimism at achievingpolitical stability, economic prosperity and social development…we believe thatour reintegration into the world trading system is an essential element to fulfilthose aims.’34 And trade diplomats from other Member States say they arereceptive to the needs of these states. During the deliberations over the steps thatAfghanistan must take to join the WTO, The Working Party Chair, AmbassadorBoudewijn J. Van Eenennaam (Netherlands) said that trade cooperation canenhance peace and security. He stated that Afghanistan faced particular challengesas a landlocked least-developed country rebuilding itself after decades of conflictand added that it was essential to take full account of these factors in thenegotiations.35 However, we could find no direct evidence that Member Statesgave additional concessions because a Member State was in conflict or wasrecovering from conflict.

3.2 NON-APPLICATION

GATT’s central principle is non-discrimination. Nonetheless, the members UnderArticle XXXV (Non-application of the Agreement), members are allowed aone-time exception with respect to their GATT obligations vis-à-vis a newmember. If a new member and an existing member have not entered into tariffnegotiations and if the existing member doesn’t want to give its consent, GATTobligations do not apply between those two members. Non-application could be apowerful tool; but we could find no evidence that any member of theGATT/WTO had invoked non-application in response to conflict. Morocco and

33 We evaluated all the acceding states, http://www.wto.org/english/thewto_e/acc_e/acc_e.htm basedon 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 globalsecurity.org’s evaluation of ongoing conflicts, including civil conflicts at http://www.globalsecurity.org/military/world/war/index.html.

34 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.

35 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.


Tunisia maintain non-application of the WTO to Israel, but this conflict doesn’t fittraditional intra-state conflict models, as both Israeli and Palestinians claim muchof the same land.36 The US invoked non-application at the behest of Congress toprotest the Communist coup in 1951. However, this suspension was not donethrough Article XXXV, non-application, but through a Declaration on ‘Suspensionof Obligations between Czechoslovakia and the United States Under theAgreement.’37

3.3 TRADE POLICY REVIEWS

Member states monitor each other’s performance during trade policy reviews. If aWTO member does not adhere to their accession commitments and WTOnorms, a Member State or states may use the trade policy review process tocriticize that behaviour and they may even challenge its practices in a tradedispute.38 These reviews covered a wide range of trade-related policies. Memberstates are closely monitored for their governance practices and the implications ofthose practices for trade (the trade spill-overs.) Some members (in particular theUS and the EU) also use the trade policy reviews to praise countries that havemade governance progress and to name and shame countries that continue to haveproblems. But trade policy reviews cannot force nations to live up to theiraccession or WTO agreement commitments. Hence while the trade policy reviewprocess 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 howconflict can affect both trade and governance. For example, during Angola’sreview, other WTO members acknowledged how hard it is for conflict-afflictedstates such as Angola to recover from conflict. But they also made clear that it didnot absolve that country’s leaders of their WTO obligations.39 Membersacknowledged the legacy of the conflict in Rwanda during Rwanda’s review; but

36 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.

37 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.

38 Some members of the WTO have brought human rights concerns into trade disputes. Forexample, in the Brazilian tire case, Brazil became one of the first countries to argue that a tradeban is ‘necessary’ to protect the life and health of its people. It also argued that it had noreasonable alternative measure to such a ban to protect the right to health. See first writtensubmission 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) isAntigua US Gambling. http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds285_e.htm.

39 Trade Policy Review, Angola, http://www.wto.org/english/tratop_e/tpr_e/tp259_e.htm.


the members offered no concessions or plan to help.40 Croatia was lauded for itsresilient recovery from war damage.41 However, during Nigeria’s trade policyreview, no other Member State mentioned that country’s internal conflicts.42

Sri Lanka provides an interesting example of how WTO members discusshuman rights in post-conflict zones. During Sri Lanka’s review, other MemberStates danced around continuing ethnic strife in Sri Lanka. They lauded thecountry for its attempts to post-conflict reconciliation.43 But the representative ofSri Lanka in fact protested that ‘the EU has withdrawn its GSP+ benefits’ fornon-trade (human rights) reasons. ‘It would appear that these schemes are beingutilized to achieve foreign policy objectives which are not consistent with WTOrequirements.’44 The EU responded by noting ‘The GSP+ scheme…aims atencouraging developing countries to comply with international standards relatingto human and labour rights…It thus serves as an incentive.’The EU representativethen noted that if a country did not effectively implement human rights law thebenefit would be withdrawn. The EU made its position clear. ‘Trade andinvestment can only reach their full potential in a conducive environment.This iswhere economic progress needs to be complemented by progress in areas such asthe rule of law, individual freedoms and security.’45 Sri Lanka was not makingprogress in these areas.

Trade diplomats were not as direct when they met to discuss the context fortrade in Zimbabwe, a country with significant political conflict and human rightsabuse.The WTO secretariat wrote:

Zimbabwe’s Constitution guarantees legal protection for all investors…It prohibitsexpropriation of private property without compensation. However, events in the lastdecade, whereby private commercial land has been seized without compensation wouldappear to indicate that the authorities have not always complied with the letter and spiritof the Constitution….A fractious socio-political environment, combined with acontroversial land reform and measures in favour of indigenization, has triggered thewithdrawal of support from the international community and cast a shadow over propertyrights.46

40 WTO, Trade Policy Review, Rwanda: Report by the Secretariat, 13 Apr. 2004, WT/TPR/129, viii,#8.

41 WTO, Trade Policy Review, Croatia, WT/TPR/S/227, vii, 1.42 WTO, Trade Policy Review, Nigeria, 6/28-6/30, 2011, WT/TPR/M/247.43 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.

44 WT/TPR/M/237. For complaint about human rights misuses of GSP, 6, # 18.45 WT/TPR/M/237, 23–24, #122–123, 127.46 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.


The Secretariat noted that Zimbabwe’s ‘problems were exacerbated in the run-upto the last elections in 2008, which were also characterized by violence, and anatmosphere of political intolerance’.The WTO mentions the land tenure system asa source of conflict three times.47 The Secretariat concluded that this internalconflict made economic growth ‘uncertain’.48 But the members did not discusshow trade might help Zimbabwe make respect for specific human rights a priority.Nor did they discuss their own human rights responsibilities in relation toZimbabwe, conflict and trade.

Thus, to some extent concerns about the relationship between trade, WTOmembership and human rights in conflict zones are being discussed during tradepolicy reviews. Nonetheless,WTO members appear to have put little thought intodeveloping strategies (such as capacity building) that might be helpful to facilitatetrade and advance human rights in conflict zones or rules to guide business.49 Norhave they devised strategies to use the trade policy review process as a means ofdiscussing the trade/conflict/recovery relationship.

3.4 WAIVERS

Waivers are temporary exceptions to WTO rules. WTO members may waive anobligation imposed on a member, provided that any such decision is approved bythree-quarters of the other members. These waivers were supposed to be limitedto exceptional circumstances and in fact such waivers are rare.

The members of the WTO have never used a waiver to assist a country thatcan’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 indiamonds that may stimulate conflict. The WTO acted at the UN’s behest.According to the UN, conflict diamonds ‘originate from areas controlled by forcesor factions opposed to legitimate and internationally recognized governments, andare used to fund military action in opposition to those governments or incontravention of the decisions of the Security Council.’50 WTO Member Statescalled 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 WT/TPR/S/252/ 66, #19; also see 64, #10, 11, and n. 2 and #15, 65.48 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.49 Zimbabwe is a good example, WT/TPR/S/252, 117–121.50 World Diamond Council, Diamond Facts.org 1, http://www.worlddiamondcouncil.org/download/

resources/documents/Fact%20Sheet%20%28Conflict%20Diamonds%20and%20the%20Kimberley%20Process%29.pdf.

51 For a good overview, see Joost Pauwelyn, WTO Compassion or Superiority Complex? What to Make oftheWTOWaiver for Conflict Diamonds, Mich. J. Intl. L. vol. 24, 1184–1191 (2003).


under the Kimberley Process Certification Scheme. Members applying for thewaiver had to commit to ensure that the measures taken were consistent withinternational trade rules.The Kimberley Process Certification Scheme is a way forconsumers and producers to ensure that they do not trade diamonds that indirectlyfund wars in Sierra Leone or the Democratic Republic of the Congo.52 Roughdiamonds must be shipped in sealed containers and exported with a KimberleyProcess Certificate that certifies that the diamonds are conflict free. Seventy-fivecountries are involved in the Kimberley Process; but not all trade diamonds.53 Thiswas the first time that the members of the WTO approved a waiver of tradeobligations based on a human rights rationale.Thus, the Kimberley waiver sets animportant precedent. Canadian Trade Minister Pierre Pettigrew stated, ‘Thisdecision clearly shows that the WTO can be flexible when it comes to humansecurity and development.’54 However, many NGOs such as Global Witness andOxfam among others are not happy with the Kimberley process.They argue thatattempts at industry self-regulation coupled with the trade waiver can’t guaranteeconsumers that the diamonds they purchase are free from the taint of conflict andhuman rights abuse.55 Representatives of these NGOs believe the KimberleyProcess and trade waiver should also address how diamonds enrich authoritarianregimes and fuel internal conflict.56 Nor has it addressed trade leaks andnoncompliance in countries such asVenezuela, Guinea, Lebanon and Zimbabwe.57

52 http://www.kimberleyprocess.com. Also, see WTO, Waiver Concerning Kimberley Process CertificationScheme for Rough Diamonds, Decision of 15 May 2003. 2003,WT/L/518, 27 May 2003.

53 WTO members are allowed to waive an obligation in exceptional circumstances under theapproval 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 ReviewEvaluating the Effectiveness of the Kimberley Process, Submitted to the Ad Hoc Working Group on theReview 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 in2006.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 andVenezuela) necessary to prohibit theexport of rough diamonds to non-participants in the scheme. http://www.wto.org/english/news_e/news06_e/ctg_20nov06_e.htm.

54 Foreign Affairs and International Trade Canada, Press Release, Pettigrew Welcomes WTO Waiver forKimberley Process Certification Scheme, 22 May 2003, http://w01.international.gc.ca/MinPub/Publication.asp?publication_id=380114&Language=E, last searched 10 Aug. 2006.

55 http://www.globalwitness.org/library/global-witness-founding-director%E2%80%99s-statement-ngo-coalition-walk-out-kimberley-process.

56 http://www.thezimbabwean.co.uk/human-rights/54318/diamond-csos-slam-zim-deal.html?utm_source=thezim&utm_medium=homepage&utm_campaign=listarticle&utm_content=readmorelink; andhttp://www.globalwitness.org/library/kimberley-process-lets-zimbabwe-hook-again.

57 Ian Smilie, 2001. ‘Assessment of the Kimberley Process in Enhancing Formalization andCertification 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-Opportunities-2011.pdf.


WTO members have also established a waiver for industrialized countries thatwanted to provide lower tariffs for developing country exports.58 The waiver iscalled the Generalized System of Preferences or GSP. After that waiver expired in1981, the contracting parties (members) of the GATT adopted a declarationpermanently extending the waiver.59 Many countries that provide GSP see it as atool to improve governance and some use that lever to advance specific humanrights. But GSP granting nations do not use this waiver to provide additional tradebenefits for conflict-afflicted or conflict recovering states per se.60

For example, the members of the UN did not call for trade sanctions duringthe civil war in Sri Lanka.61 However, since the end of the war, both the US andthe EU have used trade policies (specifically preferential programs, also known asGSP) to improve human rights in Sri Lankan exports.62 In 2009, the BushAdministration temporarily suspended Sri Lanka’s benefits under the GSP due toallegations about labour conditions. Eventually, the Sri Lankan government wasable to show that labour rights had improved.63 Meanwhile, in July 2010 the EUwithdrew Sri Lanka’s eligibility for GSP plus, (where all goods but arms receivepreferential access.) The country still receives some preferential benefits under theEU’s existing scheme. The EU said the Sri Lankan government failed to make awritten promise of progress on torture, children’s’ rights and civil and political

58 WTO High Level Symposium on Trade and Development Geneva, 17–18 Mar. 1999. Backgrounddocument Development Division World Trade Organization, Developing Counties and the MultilateralTrading System: Past and Present, Background Note by the Secretariat, http://www.wto.org, last searched 10Feb. 2006.

59 John L Jackson, The World Trading System: Law and Policy of International Relations 164, 323. (2d ed.,MIT Press 1998).

60 EU Generalized System of Preferences, http://ec.europa.eu/trade/wider-agenda/development/generalised-system-of-preferences/.

61 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 estimatesrun as high as 100,000 deaths.ABC News, Up to 100,000 Killed in Sri Lanka’s Civil War: UN, 21 May2009, http://www.abc.net.au/news/2009-05-20/up-to-100000-killed-in-sri-lankas-civil-war-un/1689524.

62 The United States is Sri Lanka’s second-biggest market for garments, taking almost 40% of totalgarment exports. The EU as a whole is Sri Lanka’s biggest export market and largest apparelbuyer. 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 ofBusiness, 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, nodate, http://www.ceylontoday.lk/22-21862-news-detail-us-sri-lanka-bilateral-relations-improving.html.

63 Feizal Samalth, Sri Lanka Brief, 18 Dec. 2011, http://www.srilankabrief.org/2011/12/us-gsp-probe-resumes-in-jan.html. The US accepted the petition after the government began seekingfinancial assistance from China and Iran. A. A. M. Nizam, United States Reinstates GSP facility to SriLankan Export Projects, Asian Tribune 19 Oct. 2011.


rights.64 As of March 2013, The EU has not reinstated Sri Lanka’s preferentialaccess.65

As these examples illuminate, trade waivers may not be the most effectivetools to use at the intersection of conflict, trade and human rights. Trade waiversare temporary measures and human rights problems generally cannot be solved ona short-term basis. Moreover, these waivers provide little guidance to tradepolicymakers on how to reconcile trade, human rights and conflict reductionobjectives (Pauwelyn: 2003; Schefer: 2007). Finally, these waivers do not fullyaddress the causes of conflict or human rights abuse. Perhaps the best evidence thatthis Kimberley Process waiver is not widely seen as a success is that neither statesnor 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 asnew 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 tradeobligations to achieve humanitarian objectives.As example, in the early nineteenthcentury 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 countryengaged in bombing attacks on civilians (Charnovitz: 1998, 12-13).The architectsof the GATT acknowledged this need in its exceptions. Member states rely onthese exceptions to justify their derogations of trade rules in the interest ofprotecting individuals at home and abroad from human rights abuse in zones ofconflict. To put it differently, policymakers use the exceptions to reduce or bantrade in the interest of promoting peace.

Under Article XX, nations can restrict trade when necessary to ‘protecthuman, 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 thatpolicymakers can use the public morals clause of Article XX to justify trade bansin the interest of promoting human rights (Charnovitz: 1998; Howse: 2002;WTO: 2001). Others say that because Article XX bans trade in prison labour,

64 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 (UnitedKingdom Pound (GBP) 1 bn; USD 1.55 bn.

65 http://ec.europa.eu/trade/wider-agenda/development/generalised-system-of-preferences/; and TheEU’s new Generalized Scheme of Preferences, http://trade.ec.europa.eu/doclib/docs/2013/february/tradoc_150582.pdf, 16.


policymakers could use it to ban trade in goods made with slave, trafficked, orabused workers (Stirling: 1996).

The national security exception, Article XXI, states that WTO rules shouldnot prevent nations from protecting their own security.66 Members are notpermitted to take trade action to protect another member’s security or to protectthe citizens of another member per se, unless the United Nations Security Councilauthorizes trade sanctions (as example in the case of South Africa).67 However,because the UN and the WTO have rarely collaborated in the interest ofpromoting human rights in conflict zones, at times the US, EU, and others haveadopted 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 theirsecurity is at stake when another nation violates human rights or is embroiled inconflict. A sanctioning Member need not give any prior notice of impending orimposed national security sanctions, justify the sanctions to the WTO or obtainthe prior approval of other members. However it is in that member’s interest tohave good trade relations with its fellow members and generally members will tryto 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 sanctionsto advance human rights in Belarus, Burma, Iran, North Korea, Somalia, SouthSudan, Syria and Zimbabwe (among other countries). Many of these states areexperiencing or recovering from conflict.68 However, with the exception ofBurma and Zimbabwe, these countries are not WTO members. Hence, theycannot use the WTO as a venue to challenge the trade sanctions. Burma andZimbabwe could have challenged trade sanctions as a member of the WTO, but

66 Nothing in this Agreement shall be construed (a) to require any contracting party to furnish anyinformation the disclosure of which it considers contrary to its essential security interests; or (b) toprevent any contracting party from taking any action which it considers necessary for the protectionof its essential security interests: (i) relating to fissionable materials or the materials from which theyare derived; (ii) relating to the traffic in arms, ammunition and implements of war and to such trafficin other goods and materials as is carried on directly or indirectly for the purpose of supplying amilitary establishment; (iii) taken in time of war or other emergency in international relations; or (c) toprevent any contracting party from taking any action in pursuance of its obligations under the UnitedNations 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.

67 See, supra n. 7.68 US Department of the Treasury, Sanctions Program and Country Information, http://www.treasu

ry.gov/resource-center/sanctions/Programs/Pages/Programs.aspx; European Commission, Restrictivemeasures (sanctions) in force Updated 2/21/2013, http://eeas.europa.eu/cfsp/sanctions/docs/measures_en.pdf.


neither has. After some eleven years of sanctions, Burma began to liberalize bothits economy and its political system in 2011. The US, EU, Australia, Canada andother nations decided to gradually reduce their sanctions on the country andencourage trade and investment.69

When nations such as the US employ trade sanctions, they don’t know if lessor more trade can prod policymakers to respect specific human rights in conflictzones, such as protecting individuals from genocide or rape or establishing freespeech rights (Stirling: 1996).When officials use sanctions or the incentive of moretrade, they are focusing on altering policymaker behaviour (the supply side ofhuman rights) and they presume that policymakers in repressive countries aresensitive to changes in supply of traded goods. But policymakers should also thinkabout 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 etal.: 1990; Petrescu: 2010; UNICEF: 2011), few of these studies have examined howtrade sanctions (a smaller supply of goods and services) affects particular humanrights conditions or specific human rights in conflict zones. Petrescu (2010) did across country survey of sanctions and found children’s health and mortality can beadversely affected as a result of inadequate sanitation, insufficient supply ofmedicines and vaccines, and poor nutrition. The UNDP reported that sanctionsnegatively impacted upon Burundi’s poor. Although humanitarian goods wereexempted from the sanctions, they were held up for weeks before being allowed toenter Burundi (UNICEF: 2011, 1). Michael Ewing-Chow examined how UStrade sanctions affected Burmese civilians. He found the military government wasable to replace lost trade with the US with expanded trade from India and China.Moreover, because the government controlled the trade, the benefits from thisincreased trade with India and China accrued to corrupt officials in the regimeand not to the people (Ewing-Chow 2007: 177–179).

Thus, the members of the WTO have become more sensitive to human rightsconditions in conflict zones.They frequently discuss these issues in the day-to-dayworkings of the WTO. However, the WTO provides little guidance topolicymakers 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 TradeBarriers 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_relations_bilaterales/canada-burma-birmanie.aspx?view=d.


they argue that more trade is better for human rights. But although Member Statesagree with the notion that more trade promotes peace, we found little evidencethat members are taking steps to expand trade or enhance capacity in conflictzones. However, some Member States are using sanctions to influence humanrights conditions in conflict-ridden states. With sanctions, policymakers areessentially saying less trade is better for human rights. However, there is littleevidence that sanctions actually improve specific human rights outcomes forcitizens 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 conflictzones has occurred outside the WTO. Policymakers have developed human rightsprinciples for business operating in conflict zones; and developed special initiativesto influence human rights conditions in conflict zones. However, these initiativeshave trade effects and should be coordinated with the WTO Secretariat.

At the behest of UN Secretary General Kofi Annan, John Ruggie, the UNspecial Representative on Business and Human Rights developed the GuidingPrinciples for Business on Human Rights. His work was endorsed by the UNHuman Rights Council in 2011.70 The Guiding Principles stress that states mustdo more to ensure that their firms (incorporated within their borders or those that theyhost) do not undermine human rights at home and abroad. States should take stepsto educate their firms regarding their human rights responsibilities and hold thesefirms accountable for these practices. In this regard, states should examine howtheir public policies affect the state duty to respect, protect and remedy humanrights violations. Hence, they should examine the effect of trade agreements uponhuman rights as well as the signals these agreements send to market actors.However, we could find no evidence that the members of the WTO haveacknowledged 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 DueDiligence Guidance for Responsible Supply Chains of Minerals fromConflict-Affected and High-Risk Areas.’71 This 2011 recommendation wasdeveloped to provide guidance to firms that rely on conflict minerals – minerals

70 Human Rights Council, Report of the special Representative of the Secretary General on the Issue of HumanRights 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.

71 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.


mined in situations of conflict and human rights abuse. The Recommendationdiscusses how to identify and reduce use of these conflict minerals to ensure thatmineral trade does not encourage human rights abuse or further conflict. But itwill 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 strategiesdesigned to maintain trade as well as to ensure that business activities do notfinance or encourage conflict, especially in resource rich areas. The Dodd/FrankWall Street Reform and Consumer Protection Act of 2010 may be a goodexample of this approach; it has sections related to trade in conflict minerals.72

Conflict minerals – tin, tantalum, tungsten, and gold from the Great Lakes Regionof 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 andinstability 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 requiresall firms publicly traded on US exchanges (hence US and foreign firms) to reportto their shareholders the steps they and their suppliers are taking to ensure thatrevenues from trade in conflict minerals (tantalum, tin, tungsten and gold) don’tfinance conflict in the Democratic Republic of the Congo (DRC)75 andneighbouring states.76 It does not mandate any behaviour except reporting. TheEU executive is currently mulling similar regulation with a broader scope,including not just conflict minerals but sectors such as forestry or consumergoods.77 In March 2013, the European Commission launched a publicconsultation on so-called conflict minerals. The aim of the consultation is to get

72 H.R.4173.ENR, http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.4173.ENR: Any company thatsells securities to the public in the US must disclose on a yearly basis whether the mineralsoriginate from the DRC or an adjoining country and if so, the company has to include a conflictminerals report in its annual report.

73 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 & DavidSullivan, Certification: The Path to Conflict–Free Minerals from the Congo, 5 May 2011, Enough,http://www.enoughproject.org/certification.

74 Dodd-Frank, S. 1502, 838–843, http://www.sec.gov/about/laws/wallstreetreform-cpa.pdf.75 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 copperreserves. US Geological Survey, Minerals Yearbook, Congo (Kinshasa) 1999, http://minerals.usgs.gov/minerals/pubs/mcs/2010/mcs2010.pdf

76 The US Conflict Minerals Law applies to materials originating (or claimed to originate) from theDRC as well as the 9 adjoining countries: Angola, Burundi, Central African Republic, CongoRepublic (a different nation than DRC), Rwanda, Sudan, Tanzania, Uganda and Zambia.

77 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,


interested parties’ views on a potential EU initiative for responsible sourcing ofminerals coming from conflict-affected and high-risk areas – for example, warzones, postwar zones, and areas vulnerable to political instability or civil unrest.Reflecting the trade impact of such an initiative, the EC Directorate General forTrade is managing the consultation and ultimate policy.78

Meanwhile, the Dodd-Frank provisions have already had a sizeable effect onboth 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 ruralregions to pick up the conflict minerals stopped delivering goods and merchandiseto the people.80

The UN’s Coordinator of the Group of Experts concerning the DRCreported 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’ becauseproduction of these minerals has shifted to largely non-conflict areas of theCongo, armed groups have less control over tin mines. However, this strategy hasnot enhanced human welfare. He also admitted that Dodd-Frank has led to‘increased economic hardship and more smuggling and general criminalization ofthe minerals trade. It has also had a severely negative impact on provincialgovernment revenues, weakening governance capacity’.81 Although the legislationwas not rooted in trade policies, by reducing trade, without direct intent,policymakers may have indirectly undermined human rights and the ability andfunds of the states in the Great Lakes region to advance human rights.

In recognition that the Dodd-Frank approach could have a negative impacton the people in the Great Lakes region, the US and the Netherlands havelaunched a tagging process to trace the source of metals.82 In so doing, they hope

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-conflict-minerals-regulation/.

78 European Commission, Public Consultation on a EU initiative on responsible sourcing of minerals originatingfrom conflict-affected and high-risk areas, http://ec.europa.eu/yourvoice/ipm/forms/dispatch?form=EuMin&lang=en.

79 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-08042011.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.

80 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

81 Letter Fred Robarts, Coordinator, Group of Experts on the DRC, to SEC/ RefS/AC.43/2011/GE/OC.86, at http://www.sec.gov/comments/s7-40-10/s74010-346.pdf.

82 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.


to encourage trade and reassure buyers that the minerals have been legitimatelyproduced without funding conflict.

In sum, policymakers are experimenting with new approaches to influencinghuman rights conditions in conflict zones. But these strategies have tradespill-overs and hence officials must examine the human rights and trade impact ofthese 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’treally know if the WTO has helped foster greater peace or if more trade amongMember States has limited conflict within and among Member States.We also lackknowledge about how more or less trade can affect human rights conditions.

Although members argue that trade promotes peace, at times they use WTOexceptions to ban or reduce trade in the interest of encouraging peace. In recentyears, policymakers have tried to target sanctions on specific leaders, commoditiesor areas (smart or targeted sanctions). However, former UN Secretary General KofiAnnan said, ‘It is not enough merely to make sanctions smarter.’83 We need tounderstand how less trade affects opportunities for the people in conflict zones.Weknow that sanctions whether broad or targeted, don’t improve governance – thesupply side of human rights; nor do they empower citizens – the demand side ofhuman rights.Whether or not trade encouraged by the WTO promotes peace maybe conditional on how Member States use the revenue from trade; do they use itto 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 firstfocus on obtaining a better understanding of how trade in conflict zones mayaffect human rights conditions. Under WTO procedures, a member(s) can requestthat the Secretariat do research on the history of trade sanctions and their recordin advancing specific human rights in zones of conflict. Second, a Member Stateshould request that the WTO develop procedures as to how Member States shouldbehave in conflict zones where trade might enhance and/or undermine specifichuman rights that the government is not respecting. The Secretariat should alsoexamine 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 andwhether more or less trade will be helpful in particular circumstances.

83 UN, Preventing Conflicts, http://cyberschoolbus.un.org/briefing/conflicts/prevention.pdf.


The members of the WTO should also re-examine how they act towardscountries in or recovering from conflict. First, because so many of the states thatseek to accede to the WTO are recovering from conflict, the WTO shouldexamine how it can help these states meet their governance obligations. Second,WTO Member States already use the Trade Policy Review process to examine thegovernance context of Member States (Aaronson and Abouharb: 2011); they coulduse the process to examine the trade/conflict recovery and human rightsrelationship. And they should use the opportunity to ask these countries whatcapacity building they need and make efforts to provide such help – whether it isgreater market access or training in computerized customs management.

As the UN Special Representative on Business and Human Rights JohnRuggie noted:

the most egregious….human rights abuses take place in conflict zones….Yet there remainsa lack of clarity among governments as to what innovative, proactive and, above all,practical policies and tools have the greatest potential for preventing ormitigating….abuses in situations of conflict.84

If the WTO aims to enhance human welfare, the GATT/WTO system must gobeyond talk. In some instances, more trade may not be better for some humanrights. Scholars and trade practitioners need to focus greater attention on andwork towards greater understanding of how membership in the WTO can advancepeace as well as human rights.

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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 nroH kirneH 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, USAChad P. Bown Senior Economist, Development Research Group,The World Bank

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ISSN 1011-6702 Mode of citation: 47:5 J.W.T.

Author Guide

[A] Aim of the Journal

The journal deals authoritatively with the most crucial issues affecting world trade today, with focus on multilateral,regional, and bilateral trade negotiations, on various anti-dumping and unfair trade practices issues, and on theendless succession of vital new issues that arise constantly in this turbulent field of activity. The approach isconsistently multidisciplinary, aimed at trade practitioners, government officials, negotiators and scholars whoseek to expose ground-breaking theses, to make important policy statements or to offer in-depth analysis anddiscussion of delicate trade issues.

[B] Contact Details

Manuscripts should be submitted to the Editor, Edwin Vermulst.E-mail address: [email protected]

[C] Submission Guidelines

[1] Manuscripts should be submitted electronically, in Word format, via e-mail. [2] Submitted manuscripts are understood to be final versions. They must not have been published or submitted for publication elsewhere.[3] Articles should not exceed 10,000 words. [4] Only articles in English will be considered for publication. Manuscripts should be written in standard English, while using ‘ize’ and ‘ization’ instead of ‘ise’ and ‘isation’. Preferred reference source is the Oxford English Dictionary. However, in case of quotations the original spelling should be maintained. In case the complete article is written by an American author, US spelling may also be used. [5] The article should contain an abstract, a short summary of about 200 words. This abstract will also be added to the free search zone of the Kluwer Online database.[6] A brief biographical note, including both the current affiliation as well as the e-mail address of the author(s), should be provided in the first footnote of the manuscript.[7] An article title should be concise, with a maximum of 70 characters.[8] Special attention should be paid to quotations, footnotes, and references. All citations and quotations must be verified before submission of the manuscript. The accuracy of the contribution is the responsibility of the author. The journal has adopted the Association of Legal Writing Directors (ALWD) legal citation style to ensure uniformity. Citations should not appear in the text but in the footnotes. Footnotes should be numbered consecutively, using the footnote function in Word so that if any footnotes are added or deleted the others are automatically renumbered. [9] Tables should be self-explanatory and their content should not be repeated in the text. Do not tabulate unnecessarily. Tables should be numbered and should include concise titles. [10] Heading levels should be clearly indicated.

For further information on style, see the House Style Guide on the website: www.kluwerlaw.com/ContactUs/

[D] Review Process

[1] Before submission to the publisher, manuscripts will be reviewed by the Editor or by an associate editor selected by the Editor and may be accepted, rejected or returned to the author for revision. [2] The journal’s policy is to provide an initial assessment of the submission within thirty days of receiving the posted submission. In cases where the article is externally referred for review, this period may be extended.[3] The Editor reserves the right to make alterations as to style, punctuation, grammar etc.[4] The author will also receive PDF proofs of the article, and any corrections should be returned within the scheduled dates.

[E] Copyright

[1] Publication in the journal is subject to authors signing a ‘Consent to Publish and Transfer of Copyright’ form. [2] The following rights remain reserved to the author: the right to make copies and distribute copies (including via e-mail) of the contribution for own personal use, including for own classroom teaching use and to research colleagues, for personal use by such colleagues, and the right to present the contribution at meetings or conferences and to distribute copies of the contribution to the delegates attending the meeting; the right to post the contribution on the author’s personal or institutional web site or server, provided acknowledgement is given to the original source of publication; for the author’s employer, if the contribution is a ‘work for hire’, made within the scope of the author’s employment, the right to use all or part of the contribution for other intra-company use (e.g. training), including by posting the contribution on secure, internal corporate intranets; and the right to use the contribution for his/her further career by including the contribution in other publications such as a dissertation and/or a collection of articles provided acknowledgement is given to the original source of publication.[3] The author shall receive for the rights granted a free copy of the issue of the journal in which the article is published, plus a PDF file of his/her article.