Restrictive Trade Measures Based on Extraterritorial Human Rights Violations: An Analysis Under Allocation of Regulatory Jurisdiction and Transaction Costs
Are states entitled to take unilateral or collective trade measures in cases of extraterritorial human rights violations? Are states obligated to do so? The debate is often blurred by a multitude of legal, political, economic, and moral arguments that have, so far, produced many misunderstandings. On one hand, the human rights community alleges that the superiority of human rights resolves any conflict. On the other hand, the trade community fears the intrusion of human rights language and power within the trade regime, including multilateral regimes like the World Trade Organization.
While exploring the above issue, this dissertation unfolds in three parts. First, using traditional legal analysis, I demonstrate that, in reality, states have not embraced any robust doctrine (in the general, trade and human rights branches) permitting states to apply restrictive trade measures as countermeasures against human rights violations abroad.
Second, I use the framework of allocation of regulatory jurisdiction (ARJ) and transaction costs (TCs) to explain why the rules across those doctrinal branches reach the same end point. This framework is based on law and economics literature on property rights, which is transposed and expanded to problems of international law. The two primary suggested categories of TCs involved in ARJ are sovereignty and cognitive costs. Sovereignty costs increase because of extraterritorial allocations, and cognitive costs increase because of the two different domains or communities (trade and human rights) involved in the issue. I then apply this framework to three case studies: Chapter VII of the UN Charter, the World Trade Organization Diamond Waiver, and the trade and labor rights “linkages.” These case studies indicate that international law has not embraced any robust doctrine concerning the extraterritorial links between trade and human rights because of the above TCs.
Third, I argue that, because of the heightened sovereignty and cognitive costs of public international law, human rights advocacy in connection with international trade is actually gaining traction in other ways. This phenomenon has been generally described as transnational new governance (TNG) and involves initiatives such as voluntary codes of conduct, social certification, and labeling. These initiatives directly target the behavior of companies and, at the same time, use international conventions as their normative basis. TNG initiatives do not incur the same TCs (though they bear different types of costs). In addition, these initiatives may have the potential to change the calculation of state’s interests in the long run