Are “Transparency” Procedures and Local Community “Consultations” Enough? A Human Rights “Feedback Loop” to International Economic Law Reforms of 2018

It is nearly the end of 2018, and so many “reform” efforts are underway throughout all realms of international economic law that one is inclined to think all our good intentions must lead somewhere, eventually.  There is an UNCITRAL Working Group for Reforming Investor-State Dispute Settlement (ISDS) that involves Member States, and to a different degree, academic inputs through the Academic Forum (see the blog’s series of posts on these authored by Anthea Roberts, found here, here, here, here, and here).  New trade agreements have been announced, such as the NAFTA renamed 2.0 version United States-Mexico-Canada Agreement (USMCA, recently discussed here by the Max Planck Institute’s Pedro Villareal and Franz Ebert), a renegotiated Korea-US trade agreement (details here), or the forthcoming entry into force of the US-less 11-nation bloc of the Comprehensive and Progressive Trans Pacific Partnership (CPTPP) on 30 December 2018 (see details here).  With the United States having changed its defense and leadership of the WTO and the multilateral trading system towards a policy of not shirking from initiating open bilateral trade wars to force renegotiations – such as the temporary trade truce with China (contents here) and tariffs slapped on the EU, Canada, and other allies (see Joseph Weiler’s ever prescient portents about the precarious US position here, and further discussions here, here, and here), it is not at all surprising that other States this year have been strategically realigning their economic partnerships, whether it be through deepening EU-Africa trade partnerships; Japan recently concluding a new trade pact with the EU; or more countries moving out of the Western orbit of economic influence towards China’s own expansive march with debt-financed investment projects in the Belt and Road Initiative; or China and/or India leading the state of negotiations at the pending 16-member mega-regional agreement, the Regional Comprehensive Economic Partnership (RCEP), allegedly set to be finalized by early 2019.  All these, apart from the uncertainties of securing any prospective UK-EU treaty, which, as of this writing is still up in the air after British PM Theresa May pulled back from forcing a catastrophic vote at the House of Commons (noting, of course, that the European Court of Justice issued a landmark ruling on 10 December 2018 declaring that the UK can voluntarily revoke Brexit).

Political expediencies and treaty negotiation pragmatisms aside, we have to wonder whether the “efficiency” of these developments will indeed result in “efficacy” or “effectiveness”, and for which constituencies of the international economic system.  Despite the multitude of public policy-driven reform efforts (such as expanding amicus participation, transparency guarantees, as well as public consultations in ISDS, setting out more detailed environmental and labor chapters in trade agreements, or announcing more infrastructure financing avenues for developing countries in new institutions and initiatives), what I have not seen in a year of attempted reforms is any deliberate shift towards broadening global economic governance beyond the usual voices at the negotiating table.  The same political, economic, intellectual, or social elites are crafting the new rules and institutions in the international economic system, with the contours of any local community consultations actually left to be operationalized according to the political auspices and national mechanisms of individual States.  To a great extent, this is understandable, since a relentless cacophony of voices might be anathema to achieving any final treaty text or clear institutional decision (e.g. the Aristotelian version of the tyranny of an extreme democracy).  But to a large extent, this “business as usual” approach remains just as discomfiting as the many paeans regularly being made these days (see here, here, here, for example), towards building in some kind of consultations process for local communities that are somehow intended to depict a “more inclusive” international economic system.  Is it enough that local communities are “being heard” by their respective States, or should the new rules and reforming institutions of the international economic system also start making sure that States are indeed listening?  

Once communities have been “consulted”, one way or another, where is the (hopefully objective and largely depoliticized) “feedback loop” that enables local communities to actually see what the State’s ultimate decision-making process has been with respect to reforming international economic treaties, decisions, and institutions?  That process remains shrouded in mystery – owing to the usual fictions of States claiming to need opacity during hard treaty bargaining.  I make the (rather obvious, but surprisingly still ignored) argument, in this post, that States’ human rights obligations to their populations make it imperative to build in a genuine “feedback loop” for any consultations or transparency procedure that may be contemplated in the continuing reform of international economic law.  A feedback loop is a necessary control mechanism in the communication process that enables communicants to verify whether their respective inputs or views have been used, recycled, revised, or discarded by the decision-maker.  To the best of my knowledge, this still doesn’t exist in the architecture of international economic law and its limited spaces for public participation.  There is “consultation” but no meaningful opportunities for communities’ real-time verification of what their States have promised, traded, conceded, or otherwise bargained at the negotiating table.

It is not enough that local communities just be “heard”, but we should all be properly informed of how community views translate (or not) into the State’s international economic decision, so as to ensure that communities can strategically and effectively participate as fellow constituents of the international economic system.  This is all the more urgent as States persist in these reforms through to the new year, when communities are, in the first place, at the frontlines of the international economic system’s felt impacts on environment, health, economic, social, cultural, civil, and political rights.  If there is any constituency that deserves the information on how States have been making all of these reform decisions, it is our communities who have to live through the consequences of these decisions, years after all the politicians and negotiators have come and gone.  With better information as to States’ actual international economic decisions coming from an actual “feedback loop”, communities are better empowered to choose (or reject) leaders who make these lasting decisions.  The “feedback loop” is thus central to a genuine right to self-determination, in its economic and political dimensions.

It is telling that the Committee on Economic Social and Cultural Rights (CESCR) has repeatedly emphasized the importance of publicly available information and the procedural obligations of governments towards their populations, to properly comply with the right to self-determination under Common Article 1 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) and the International Covenant on Civil and Political Rights (ICCPR).  The CESCR emphasizes that “the ability of people to defend their own economic, social and cultural rights, depends significantly on the availability of public information” (CESCR Concluding Observations: Azerbaijan, E/C.12/1/Add.20, 22 December 1997, at para. 24), as well as “the right of those affected by key decisions to participate in the relevant decision-making processes” (CESCR, Poverty and the ICESCR, Statement of 4 May 2001, at para. 12).  The CESCR has repeatedly admonished States to undertake proper consultations on the impacts of trade and investment agreements, as well as natural resource contracts, government procurement contracts, and privatization programs. [See General Comment No. 24 (2017), as well as, among others, 2016 Concluding Observations on the Sixth Periodic Report of Canada, para. 16; 2016 Concluding Observations on the Fourth Periodic Report of France, paras. 9-11; see full list of CESCR Concluding Observations with these provisions with respect to Switzerland, the Dominican Republic, Mexico, Egypt, Morocco, Colombia, Zambia, India, Germany, Norway, in Diane A. Desierto, Public Policy in International Economic Law: The ICESCR in Trade, Finance, and Investment, OUP 2015, at pp. 128-130.]. While States may make their reports on the nature of these consultations during their periodic review before the CESCR, there is no mechanism within the treaty negotiation or international economic decision-making process that requires States to advise their populations as to which interests prevailed in the final text of treaties or the actual international economic decision.  With complex economic partnership agreements (often numbering in thousands of pages) largely turning out to be technical or inaccessible to general laypeople in any public, it is harder for communities to actually see the extent to which their inputs were taken into account (or not) when States conclude these agreements.

This is particularly troublesome in the case of international investment agreements, contracts, or treaties.  Local communities are never parties to these agreements, contracts, or treaties, and as such, end up being rule-takers to whichever rule is set by their respective governments with foreign investors.  The legal regime that clothes foreign investors with protection is well-entrenched in the law of contract, administrative and public law, and the law of treaties.  By contrast, local communities depend on their governments’ implementation of human rights obligations to keep them informed as to the nature of these legal arrangements for foreign investors.  If the regulatory fabric faced by foreign investors does not purposely incorporate these human rights obligations (as it often does not), foreign investors are not put on reliable notice that governments have continuing and subsisting obligations to ensure the economic, social, cultural, civil, and political rights of their populations.  While there have been some efforts at instantiating “Community Development Agreements” (CDAs) as part of the foreign investment contracting process, this practice remains quite recent and States’ practices to this end are likewise uneven.  If there is no “feedback loop” after taking in local community views and opinions in a public consultation process on foreign investment reforms, it would be harder for communities to determine if their governments are internalizing those views when they design foreign investment laws, contracts, and treaties.  For all that the CESCR has repeatedly admonished States to particularly consider the unique circumstances of indigenous peoples and cultural communities often displaced by foreign investment in natural resources/land/agricultural sectors, we have yet to see a concrete example this 2018 of a State that effectively redesigned its investment treaty, law, and contract arrangements in a manner that provides for a mandatory “feedback loop” to local communities that have allegedly been “consulted”.  The 2018 Netherlands Model BIT contains provisions on sustainable development (Article 6) and corporate social responsibility (Article 7), as well as consultations between the Contracting Parties that could result in joint interpretative declarations (Article 24), but this treaty is still premised on inter-State regulation and conferral of benefits only to foreign investors.  It does not open up independent participation, oversight, monitoring, and/or information rights for local communities facing human rights impacts from foreign investment.  Communities would thus still have to depend on their respective national governments to vindicate those rights, even if the investment treaty does expressly acknowledge that Contracting Parties affirm their human rights, environmental, and labor obligations.  [2018 Netherlands Model BIT, Article 6(5)].

One can hardly talk about “reforming” the investor-State dispute settlement system (ISDS) without noticing the glaring lacunae as to effective community representation and meaningful access to information in that process – especially when political leaders tend to find it easier to abandon their human rights commitments for the popular publicity of touting jobs, employment, and growth, from foreign investment commitments to voters. The same information deficits exist in the world trade law and international finance regimes.  World trade law is, by its very nature, Member-driven at the WTO and leaves little space – nor meaningful access – for affected local communities to verify exactly what human rights tradeoffs their governments made in the process of making trade concessions. A State’s Trade Policy Review is conducted with a view to examining a Member’s national legislation and its consistency with multilateral trading commitments – it does not purposely check if a Member’s specific trade policies are causing development and human rights impacts.  International finance contracts are concluded in relative secrecy by the finance ministries of States with private or institutional lenders, often with no opportunity for communities to investigate contract terms and what increased debt may mean for them far into the future.  (One can recall, for example, the strict warnings issued by the International Monetary Fund as to the ballooning debt risks facing developing countries that avail of sovereign financing through China’s Belt and Road Initiative.). Since populations do not ordinarily extend a priori approvals for increased debts taken by their governments, they have no meaningful opportunity to be consulted as to the increasing debts, much less have their views taken in the actual wording and content of sovereign debt instruments.  

A “feedback loop” counterpart to any public consultations process, if deliberately designed by States when they make these international economic decisions, would better enable local communities (if not whole populations) to prepare for the impacts of those decisions.  Risk mitigation strategies shouldn’t be monopolized by national governments, especially when resource capacities are scarce and some communities will, inevitably, be harder hit than others.  In those circumstances (such as the massively failed sub-prime mortgage crisis in the United States), the truth would be more preferable than laying whole communities open to the looming risks of debt defaults.  In the case of world trade law, that means having foresight to anticipate loss of jobs from trade uncompetitiveness, in order to adapt well in advance with worker retraining and retooling or shifting production objectives.  In the case of foreign investment law, that means acknowledging the risks of displacement and forced migrations, environmental or health disasters, loss of access to natural resources that face the host State’s local communities exposed to foreign investor operations – who are often are relatively well-insulated from domestic accountability mechanisms as a result of their foreign investment contracts, agreements, or treaties between the home State of the foreign investor and the host State of the foreign investment.

Even if the majority of voters were to allegedly favor the human rights tradeoff for the promised gains from foreign investment, world trade law, or international finance contracts, it would not make governments any less accountable to the local communities adversely affected by the human rights tradeoffs from the new rules, institutions, and decisions taken in this era of international economic reform.  A “feedback loop” will, at the very least, enable human rights victims to pursue their remedies – whether through advocacy, the ballot box, ICESCR and ICCPR Optional Protocol procedures, domestic litigation, or other means of legal enforcement of their rights against political leaders that unlawfully traded their fundamental human rights entitlements away for foreign investment, market access, or increased debt prospects.  Any State that gives serious thought to the “economic self-determination” of their populations guaranteed under Common Article 1 of the ICESCR and ICCPR, as well as the basic human right to an effective remedy, will at least afford local communities or the population as a whole the fair opportunity to resist, oppose, modify, or even support such policies taken by politicians and treaty negotiators.  Failing to do so deprives us all of the essential virtues and values of public debate over State decision-making when it extends to the international economic system.  If States are serious about proving the “effectiveness” or “efficacy” of these decisions taken in the international economic space for their own populations, they have nothing to fear from something as administratively mundane as a “feedback loop” to their public consultations and transparency procedures.  

One can hope all our good intentions in reforming in international economic law in 2018 could lead to some traceable effectiveness and discernible efficacy for populations around the world in 2019.