Trade sanctions are among the many tactics resorted to by the international community in order to compel a state to comply with its human rights obligation.
While several treaties of the United Nations provide for human rights obligations, there is no treaty of the World Trade Organisation (WTO) that expressly provides for human rights protection. As such, it is questionable whether trade sanctions premised on the enforcement of human rights are valid grounds for restricting or banning trade with a country under WTO laws.
It is against this background that this essay examines the conformity of those trade sanctions to WTO law. I recommend that there should be a WTO treaty which expressly states that human rights violation is a justifiable grounds for trade restriction or prohibition.
Trade Restriction and Prohibition Under WTO Laws
The laws of the WTO regarding the illegality of trade restriction and prohibition are clear. Article 11 of the General Agreement on Tariffs and Trade (GATT) states that no member state of the WTO shall maintain any prohibition or restriction – other than duties, taxes or other charges – on importation/exportation from/to a contracting state.
In Turkey – Textiles, the WTO Panel of the Dispute Settlement Body noted that this provision reflects the preference of the WTO for tariffs over border closures. Article 13 of the GATT further provides that there shall be no import or export ban, or restriction placed on the goods of a contracting state except when the ban or restriction is imposed on all third states.
These provisions demonstrate the commitment of the WTO to trade liberalisation and non-discrimination in international trade, especially amongst members of the WTO. This essay opines that these provisions are commendable, as they ensure that there is stability in the supply of goods globally.
In US – Shrimp, the panel held that it was a breach of Article 11:1 of the GATT to ban shrimps harvested by vessels of countries not certified by the United States to be using methods to ensure the safety of sea turtles.
Despite the nobility of the trade policy, the panel ruled that the regulation was trade-restrictive, and breaches WTO law. This clearly demonstrates that trade policies must always conform to WTO treaties, and regardless of the morality of such policies.
This essay supports this approach, as adopting the opposite approach would create a chaotic environment. States would try to justify their trade practices through moral and ethical arguments.
Furthermore, in India – Quantitative Restrictions, the panel noted that Article 11:1 has a wide scope and is applied to discretionary import licences imposed by states. These cases demonstrate that trade restrictions in any form, which include certifications and licences, are incompatible with WTO laws.
Specific Trade Sanctions Premised on Human Rights: Compatibility with WTO Laws
Different factors necessitate the imposition of trade sanctions by different entities. For instance, the United Nations has imposed trade sanctions on various states and bodies for different purposes, which include the protection of human rights.
The sanctions come in different forms and they mainly involve comprehensive trade and economic sanctions. States and regional organisations such as the United States, the United Kingdom and the European Union also impose sanctions for similar reasons. Particularly, sanctions have been imposed on Russia after the invasion of Ukraine.
In addition to the ban on energy imports from Russia, some states have banned the export of dual-use goods – products that can be used for both civilian and military purposes – to Russia.
This essay argues that these trade restrictions are compatible with WTO laws. Article 21:1 of the GATT provides that a state can restrict trade for the purpose of ensuring international peace and security under the United Nations Charter. It is on this basis that this article submits that the imposition of trade sanctions in response to the Russia-Ukraine war is compatible with WTO laws.
Source: British Institute of International and Comparative Law
Similarly, the United States now requires that products imported from the Xinjiang region of China, or products incorporating input from that region, would be subject to a Withhold Release Order (WRO).
The aim of the policy is to ensure that products of forced labour are not imported from that region. In order to secure the release of a detained shipment, the importer must prove that the goods were not produced with forced labour in the Xinjiang Uyghur Autonomous Region.
Arguably, on the authority of US – Shrimp and the authority of India – Quantitative Restrictions, this trade policy is a violation of WTO laws, as it restricts trade and requires an import licence from a particular state. However, this essay opines that this trade policy is justifiable under Article 20:1(e) of the GATT and Article 23:2 of the Agreement on Government Procurement, which provides that states are not prevented from adopting measures relating to prison labour.
However, it is debatable whether forced labour in the Xinjiang Uyghur Autonomous Region amounts to prison labour. More so, the treaty only provides that states can adopt policies on prison labour, and does not permit the ban of goods which are products of prison labour. Hence, it can be argued that the WRO violates WTO law.
It is on this basis that this essay recommends that the international community enact treaties that clearly provide for the prohibition of forced labour in supply chains. While some states have enacted legislation which mandates human rights due diligence in supply chains, it is my opinion that these actions are not sufficient, and there is a need for a WTO treaty which mandates all member states to adopt a similar trade policy.
Source: NYU Stern Center for Business and Human Rights
This article recognises the importance of trade sanctions and encourages their further use. Trade sanctions have the ability to facilitate respect for human rights globally.
However, it is questionable whether the sanctions discussed in this article conform to WTO laws. The examples show that treaties and case laws of the WTO outlaw trade restrictions and the requirement of import licences. As such, the WRO imposed by the United States is potentially in violation of WTO laws.
Conclusion and Recommendations
This essay has argued that trade policies that hinder trade are illegal under WTO law. Additionally, the essay notes that moral and ethical arguments are not justifiable grounds under WTO law.
Indeed, there are treaties of the United Nations and the International Labour Organisation that promote human rights law and good labour standards. However, the applicability of those treaties before the WTO Dispute Settlement Body is debatable.
Moreover, it is problematic if a country restricts trade on the basis of a UN treaty that has not been ratified by a member of the WTO who is challenging the particular trade policy. The fact that many non-WTO treaties provide for human rights protection is not sufficient grounds to restrict trade on the basis of human rights law.
In order to address this problem, this essay recommends that the WTO adopts a treaty which states that human rights protection is a justifiable ground for trade restriction. It is further recommended that the treaty should reflect the provisions of the UN General Principles on Business and Human Rights.
Passing a treaty of this nature would remove the problem of uncertainty, as to the applicability of human rights treaties, in disputes before WTO. By doing so, states would be further compelled to protect human rights law in business and remove forced labour from their supply chains.
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