Should Human Right be Taken into Consideration When Granting Preferential Trading Rights?

When it comes to international trade, there are two types of trade agreements that can have a direct influence on human rights; preferential trade agreements and trade sanctions. Whereas trade sanctions stop or severely limit the amount of trade between two countries, preferential trade agreements grant certain trade privileges to a particular country, such as very low import taxes. Although the potential effects of trade sanctions on human rights in the sanctioned country are somewhat obvious, the effects of preferential trade agreements can have many of the same negative effects as sanctions, but in a more obscure manner.

Take, for example, a situation involving three countries; A, B, and C. Country A is a wealthy developed country that has decided to give Country B, a developing country with high human rights standards, preferential trade rights in the form of no import taxes. Country C, another developing country with many known human rights violations, may also trade with Country A, but must pay the usual amount of import taxes. Both Country B and Country C export sugar to Country A.

Under these conditions, which country will assume the dominant position in Country A's sugar market? Clearly it will be Country B, since the people of Country A will be able to purchase sugar from Country B at lower prices than from Country C. How will this effect the people of Country's B and C? Those in Country B (who already have higher human rights standards than Country C) will prosper due to their sugar trade with Country A, while the people of Country C (who are already suffering from human rights violations) will suffer even more since their sugar trade with Country A will decrease as a result of Country A's preferential trade agreement with Country B.

As this scenario illustrates, when a developed countries grant preferential trading rights to developing countries who have high human rights standards over those developing countries who do not, the result is that those already suffering from domestic human rights violations suffer even more. Even though the developed country may view the preferential trade agreement as a "reward" to those developing countries who maintain high human rights standards, they may be compounding the negative situation in those low-human-rights developing countries. Essentially, these preferential trading agreements may act as partial (or complete depending on the case) sanctions against competing countries who are not granted the same preferential rights.

The World Trade Organization's policies are not very clear on this matter. "What about trade preferences made conditional upon human rights protection?...General national programs offering lower tariffs for development purposes are allowed, and what’s more, the granting state may require the beneficiary to adhere to certain standards for eligibility. Just how much a WTO Member can decide for itself whether or not to grant preferences is somewhat open – clear discrimination among similar potential recipients would probably be seen as a violation of trade obligations – but it is clear that the use of conditions in the first place is permissible" (Schefer, 2007, 8-9).

Clearly the developed international community should encourage and try to protect human rights in developing countries around the world, and that supporting human rights violating countries via open trade seems to go against this goal. In reality, however, sanctioning trade with these countries, or granting preferential trading rights to their competitors, only hurts those they are trying to help.

Therefore human rights should be taken into consideration when deciding which countries should or should not be granted preferential trading rights, but perhaps the result of such considerations will not be as expected.

Source:

Schefer, Krista Nadakavukaren. (January 2007). Economic Sanctions and Human Rights/Preferential Trade and Human Rights. NCCR Trade Regulation - Swiss National Center of Competence in Research. Reference URL: http://www.nccr-trade.org/images/stories/publications/IP4/ip4%20benefri%20t&hr.pdf

(ps - I really thought this paper was great if anyone else is interested in this topic!)

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