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Business and Human Rights:

Recommendations to Advance Access to Remedy

Moxamuud Abdallah

Abdi Ahmed

Julia Donaldson

Krista Lance

Janice McInerney

Connor Molloy

Mariyam Naadha

Thea Reilkoff

Erik Sande

Maria del Carmen Guerra de Sims

PA 8081: Capstone Project

Adjunct Faculty: Kathleen Motzenbecker

May 20, 2013

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Table of Contents Executive Summary ................................................................................................................. 3

Background .............................................................................................................................. 6

Recommendation 1: National Contact Point (NCP) Liaisons ............................................. 9 NCP Liaison Strengthening the UNGP Third Pillar .................................................................... 11

For Further Consideration ............................................................................................................. 15

Recommendation 2: Partnership between the company and an NGO ............................ 18 Objectives of Partnership with an NGO ...................................................................................... 22

For Further Consideration ........................................................................................................ 24  

Recommendation 3: Trade Regimes ................................................................................... 26 Mechanisms for Inclusion of UNGPs in trade regimes ............................................................... 31

For Further Consideration ........................................................................................................ 36  

Conclusion .............................................................................................................................. 38

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Executive Summary

In June 2011, the United Nations Human Rights Council unanimously endorsed a set of

Guiding Principles for Business and Human Rights (UNGPs). Harvard Professor John

Ruggie, as Special Representative of the UN Secretary-General for Business and Human

Rights, based the UNGPs on his findings that among stakeholders there was agreement on

three main pillars: 1) the state’s duty to protect human rights through legislation, regulation,

and adjudication; 2) the corporate responsibility to respect human rights, including acting

with due diligence to avoid infringing on the rights of others; and 3) the need for more

effective access to remedy—both judicial and non-judicial—when human rights violations

occur. The UNGPs establish a set of standards for governments and corporations to

implement the UN “Protect, Respect, and Remedy” Framework.

While it is the state's duty to protect the rights of those living within its jurisdiction, many

governments, including that of the United States, recognize that their multinational

corporations contribute to human rights abuses, directly or indirectly, throughout the world.

With this recognition, they have begun to explore the extraterritorial implementation of the

UNGPs. This project was conducted to support the U.S. State Department’s Bureau of

Democracy, Human Rights, and Labor in its work to improve access to non-judicial

remedies, such as grievance mechanisms, for those harmed by U.S. business activity in

foreign states.

Grievance mechanisms serve as an important tool for remediation, providing direct access at

low cost. While they are often available at the operational, industry, national, regional, and/or

international levels, significant gaps exist between the mechanisms and effective remediation

of grievances. These gaps include the subjective nature of what constitutes a grievance

mechanism, a lack of trust and awareness on the part of the local population toward existing

venues to address concerns, and a lack of accountability for failures in remediation of

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grievances. This paper proposes three recommendations for how the State Department should

address these gaps:

1. Expand the reach and effectiveness of the U.S. National Contact Point (NCP)

through a network of contact point liaisons based in U.S. Embassies around the

world.

2. Establish a framework for public-private partnerships that allows the State

Department to build the capacity of local human rights NGOs abroad.

3. Leverage trade regimes to ensure that other states also effectively implement and

enforce the UNGPs.

Recommendation One: NCP Liaisons

The State Department should establish an international network of NCP liaisons to support

the work of the U.S. NCP based at the Bureau of Economics and Business Affairs. The

Organization for Economic Cooperation and Development Guidelines for Multinational

Enterprises, which were updated in 2011 to reflect the UNGPs, require that adhering

countries establish an NCP to promote awareness of the Guidelines and to address

grievances. The U.S. NCP is a single person whose work focuses on the latter purpose.

Implementing a network of NCP liaisons that reside in each U.S. Embassy would enable the

U.S. Government (USG) to strengthen awareness of the Guidelines, and by extension the

UNGPs. The U.S. NCP would provide oversight for the network and continue to be

responsible for facilitating grievances. NCP liaisons would act locally to engage business,

civil society, and especially National Human Rights Institutions to promote awareness of the

U.S. NCP dispute resolution process. An NCP liaison network would multiply the

effectiveness of the U.S. NCP with minimal investment.

Recommendation Two: Partnership between the company and an NGO

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In each target country, the State Department should identify and support a single NGO tasked

with ensuring access to remedy by working directly with the business sector to prevent and

facilitate grievances. Such an NGO would train and educate workers, labor organizations,

supply chain managers, and other relevant stakeholders on the UNGPs, grievance

mechanisms, and mechanisms for identifying and mitigating risk. It would act as an impartial

point of access to grievance processes. In the event that an operational-level grievance

mechanism proves ineffective, the NGO would support an aggrieved party’s access to state-

based judicial and non-judicial remedy. A public-private partnership supported by the State

Department would provide locally appropriate and more effective stakeholder representation.

Recommendation Three: Trade Regimes

The State Department should encourage the addition of language and enforcement

mechanisms that reflect the UNGPs to trade regimes such as Preferential Trade Agreements

(PTAs), the Generalized System of Preferences (GSP), and Bilateral Investment Treaties

(BITs). New PTAs, and those up for renewal, should include standards for transparency,

monitoring, and enforcement related to the UNGPs. The GSP facility extended to developing

countries, which is already contingent on the beneficiary country’s compliance with

international human rights norms, should be revised to require more careful observance of the

UNGPs. The model BIT, which was recently revised to provide labor protections, should be

further modified to make investor protections contingent upon compliance with fundamental

human rights obligations and provision of access to remedy. As legally binding documents,

trade regimes can help ensure that remedies are present and effective.

Comprehensive support for the UNGPs will require engagement across agencies, sectors, and

borders. These recommendations address some of the current system gaps, particularly

awareness, accessibility, and enforcement of available grievance mechanisms. Implemented

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in concert or as standalone initiatives, they would demonstrate a commitment on the part of

the USG to implementing the UNGPs.

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Background

After decades of UN efforts to develop a binding code of conduct for businesses,

Secretary-General Kofi Anan appealed to business leaders at the World Economic Forum in

1999, “Globalization is a fact of life. But I believe we have underestimated its fragility . . .

The spread of markets outpace the ability of societies and their political systems to adjust to

them, let alone guide the course they take.” Anan was announcing the UN Global Compact—

a voluntary strategic policy initiative for businesses committed to developing practices that

observe universally-accepted human rights.1 It would not provide the answer Anan sought,

but was an important step in recognizing the role businesses play in human rights violations.

Just over a decade later, the U.N. Human Rights Council took historic action in

unanimously endorsing the UN Guiding Principles on Business and Human Rights

(UNGPs)—a set of 31 principles developed over a six-year study by John Ruggie, Special

Representative of the UN Secretary-General.2 Where voluntary codes of conduct have fallen

short, the UNGPs offer a new framework for the protection and promotion of human rights

through all aspects of business operations. As a restatement of international human rights law

and legal standards, the UNGPs articulate existing obligations both states and businesses

have to protect human rights. The “Protect, Respect, and Remedy” framework recognizes 1)

the state’s duty to protect human rights through legislation, regulation, and adjudication; 2)

the corporate responsibility to respect human rights, including acting with due diligence to

avoid infringing on the rights of others; and 3) the need for more effective access to

remedy—both judicial and non-judicial—when human rights violations occur.

                                                                                                                         1 UN Doc. SG/SM/6881. Secretary-General Proposes Global Compact on Human Rights, Labour,

Environment, in Address to World Economic Forum in Davos. N.p., 2 Jan. 1999. Web. <http://www.un.org/ News/Press/docs/1999/19990201.sgsm6881.html>.

2  John Ruggie, The Special Representative of the Secretary- General. "Guiding Principles on Business and Human Rights: Implementing the United Nations 'Protect, Respect and Remedy' Framework." UN Human Rights Council. N.p., 16 June 2011. Web. <http://www.business-humanrights.org/media/documents/ruggie/ruggie-guiding-principles-21-mar-2011.pdf>.  

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At the request of the U.S. State Department, this paper proposes recommendations for

U.S. implementation of the UNGP’s access to remedy pillar with a focus on developing

effective and sustainable mechanisms for addressing human rights violations committed by

U.S. businesses operating abroad. The UNGPs do not require states to regulate the

extraterritorial activities of businesses domiciled in their territory, yet the commentary makes

clear that there are strong policy reasons for doing so.3

Ruggie took caution to focus on the measures states could adopt within the current

permissible scope of their jurisdiction and the proposed recommendations follow this

guidance.4 One area in which the U.S. may be able to contribute significant positive impact is

providing access to non-judicial remedies, such as grievance mechanisms. Such mechanisms

already exist at the company- through international-level and serve as an important tool for

redressing human rights violations. Yet, significant gaps exist, particularly when considering

a business’ responsibility through its supply chain. This paper proposes three

recommendations for addressing these gaps: 1) expand the reach and effectiveness of the U.S.

National Contact Point (NCP) through a network of contact point liaisons based in U.S.

Embassies around the world; 2) establish a framework for partnership between companies

and NGOs that allows the State Department to build the capacity of local human rights NGOs

abroad; and 3) leverage trade regimes to ensure that other states also effectively implement

and enforce the UNGPs. Each of these recommendations is presented as an opportunity for

the U.S. to contribute to the protection and promotion of human rights throughout the world.

Although they may each stand alone, they are complimentary and together represent a

                                                                                                                         3 See John Ruggie, The Special Representative of the Secretary- General. "Guiding Principles on Business and

Human Rights: Implementing the United Nations 'Protect, Respect and Remedy' Framework." UN Human Rights Council. N.p., 16 June 2011. Web. <http://www.business-humanrights.org/media/documents/ruggie/ruggie-guiding-principles-21-mar-2011.pdf>.

4 "THE U.N. GUIDING PRINCIPLES ON BUSINESS AND HUMAN RIGHTS ANALYSIS AND IMPLEMENTATION." Kenan Institute for Ethics, Duke University, 2012. Web. <http://kenan.ethics.duke.edu/wp-content/uploads/2012/07/UN-Guiding-Principles-on-Business-and-Human-Rights-Analysis-and-Implementation.pdf>.

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comprehensive approach to promoting development, awareness, accessibility, and

enforcement of non-judicial remedies.

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Recommendation One: National Contact Point (NCP) Liaisons

Many grievance mechanisms exist to address human rights issues. A common

shortcoming however, is that these remedies are not known to the populations for whom they

are intended to assist. A mandate of the Organization for Economic Cooperation and

Development (OECD) National Contact Points (NCPs) is to promote and raise awareness

about the OECD Guidelines for Multinational Enterprises (MNEs),5 which were updated in

2011 to reflect the UNGPs. A worldwide physical presence, established through a network of

NCP liaisons, would strengthen the State Department’s ability to meet the UNGP’s call for

access to remedy.

Background

In October 2012, the OECD and the International Coordinating Committee of

National Human Rights Institutions (ICC) signed a Memorandum of Understanding (MOU)

to formalize their cooperation related to implementing the OECD Guidelines for MNEs

(hereafter known as the Guidelines) and, by extension, the UNGPs.6 The MOU leverages the

respective mandates of National Human Rights Institutions (NHRIs) and NCPs to promote

and protect human rights. It calls for cross reference of mandates, cross-participation in each

other’s events, joint capacity building exercises to support internal knowledge of each other’s

procedures, contextual information sharing, and dialogue for continual review.7

National Human Rights Institutions have two primary responsibilities within their

national borders—to promote and protect human rights. They increase public awareness and

often provide training for NGOs, police, prison officials, armed forces, journalists, and the                                                                                                                          5 "The Contribution of National Contact Points in Furthering the Responsibility of Business to Respect Human Rights." U.S. Department of State. U.S. Department of State, 23 Mar. 2012. Web. 16 Apr. 2013. <http://www.state.gov/e/eb/rls/rm/2012/193511.htm> 6 "Guidelines for Multinational Enterprises - OECD." The Organisation for Economic Co-operation and Development (OECD). N.p., 11 July 2012. Web. 14 Apr. 2013. <http://www.oecd.org/corporate/mne/oecdandnationalhumanrightsinstitutionsjoinforces.htm>. 7 OECD and ICC. Memorandum of Understanding between the OECD and the Ass. International Coordinating Committee of National Human Rights Institutions (ICC). Comp. Marie-France Houde and Mousa Burayzat. OECD - ICC, 11 July 2012. Web. 26 Mar. 2013. <http://www.oecd.org/daf/inv/mne/OECD_ICC_MoU.pdf>.    

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judiciary.8 The ICC specifically committed to addressing human rights issues related to

business operations when it adopted the Edinburgh Declaration on Business and Human

Rights in 2010.9 Countries adhering to the Guidelines must establish an NCP whose main

functions are to promote awareness of the Guidelines and take action on grievances.10 The

work of the current U.S. NCP is most involved with the dispute resolution process, which is

based on the U.S. NCP Procedures for Specific Instances (hereafter known as U.S. NCP

Procedures).11

While NCPs serve a vital role in human rights protection, the system is vulnerable to

criticism. A common perception is that NCPs are biased toward corporate interests.

Aggrieved parties often lack accessibility, knowledge, and acumen for navigating the

process. The NCP system is weakened by a lack of transparency about processes and

outcomes as well as a lack of commitment on the part of governments. Since NCPs are only

required for countries adhering to the Guidelines, there is often no NCP presence where

abuses occur.12

The ever-widening scope of the Guidelines presents additional challenges for

implementation. Originally, governments and companies were held accountable to the

Guidelines only when operating in adhering countries.13 A review in 2000 called for the

Guidelines to apply to companies based in adhering countries, regardless of where the                                                                                                                          8  “National Human Rights Institutions: History, Principles, Roles, and Responsibilities.” Office of the United Nations High Commissioner for Human Rights. 2010. Web. < http://www.ohchr.org/Documents/Publications/PTS-4Rev1-NHRI_en.pdf>.  9  “The Edinburgh Declaration.” International Coordinating Committee of National Institutions for the Promotion and Protection of Human Rights. 2010. Web. <http://www.ohchr.org/Documents/AboutUs/NHRI/Edinburgh_Declaration_en.pdf>.  10 "U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises." U.S. Department of State. U.S. Department of State, n.d. Web. 20 Apr. 2013. <http://www.state.gov/e/eb/oecd/usncp/index.htm>. 11 "Interview with Alan Yu, U.S. NCP." Telephone interview. 16 Apr. 2013. 12 "Access to Remedies for Corporate Human Rights Impacts: Improving Non-Judicial Mechanisms - Consultation Report." Business & Human Rights : Links. Corporate Social Responsibility Initiative, Kennedy School of Govt., Harvard Univ., Dec. 2008. Web. 14 Apr. 2013. <http://www.business-humanrights.org/Links/Repository/991050>. 13 "The OECD Guidelines for Multinational Enterprises OECD Guidelines for Multinational Enterprises 2011 Edition." OECD Guidelines for Multinational Enterprises. OECD, 2011. Web. 14 Apr. 2013. <http://www.oecd.org/daf/inv/mne/48004323.pdf>.  

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companies operate or abuses occur. Most recently, the 2011 Guidelines update included

supply chain responsibilities. 9

Recommendation

The recent OECD/ICC MOU presents a formalized opportunity to strengthen the role

of the U.S. NCP through a proposed network of NCP liaisons based at U.S. Embassies. The

liaison network would strengthen the U.S. NCP’s presence and effectiveness at a low cost

relative to the return and with minimally increased workload across the system.

The Bureau of Economic and Business Affairs in Washington, DC, would provide

network oversight and would continue to be recognized as the primary U.S. NCP. This office

would continue to process specific instances, submit final reports, and serve as the NCP

representative to the OECD. Additional tasks required by the proposed network would

include collating reports from liaisons into the single annual report to the OECD Secretariat

and ensuring that liaisons meet their responsibilities.

These liaisons, with deeper local and cultural knowledge, would be better positioned

than colleagues in Washington, DC, to coordinate activities and foster relationships within

their respective countries. They would be tasked with developing relationships, promoting the

U.S. NCP Procedures, and preparing locally relevant materials to publicize the Guidelines

and UNGPs.

NCP Liaisons Strengthening the UNGPs Third Pillar

Locally based NCP liaisons would strengthen efforts to meet the UNGPs’

effectiveness criteria for non-judicial grievance mechanisms, which include: legitimate,

accessible, predictable, and transparent processes as well as a source of continuous learning.14

These criteria mirror some of the indicators used to measure NHRI performance.                                                                                                                          14 John Ruggie, The Special Representative of the Secretary- General. "Guiding Principles on Business and Human Rights: Implementing the United Nations 'Protect, Respect and Remedy' Framework." UN Human Rights Council. N.p., 16 June 2011. Web. <http://www.business-humanrights.org/media/documents/ruggie/ruggie-guiding-principles-21-mar-2011.pdf>.

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Strengthening the U.S. presence and relationships with NHRIs through an NCP liaison

network will improve the performance of both entities by helping to fulfill their respective

mandates. Recommendations for meeting selected UNGP effectiveness criteria follow.

Legitimate: Recommendations for establishing trust

NCP liaisons should leverage the legitimacy of established NHRIs. This is

particularly important in countries where public trust of government institutions has eroded.

The Paris Principles, the source for normative standards for NHRIs, call for adequate funding

to allow NHRIs to remain free from government control or influence.15 The OECD/ICC

MOU helps to establish greater trust of NCPs as recognized partners to institutions known for

such independence. Filtering information and resources through NHRIs could increase the

U.S. NCP’s perceived integrity. At the same time, the NCP liaison should maintain a

perception of balance by doing direct outreach to business and civil society as well.16

Accessible: Recommendations for making remedies known

The UNGPs call for making grievance mechanisms known “to all stakeholder groups

for whose use they are intended, and providing adequate assistance for those who may face

particular barriers to access.”17 NCP liaisons can use their physical presence as well as local

knowledge to more effectively educate stakeholders about the U.S. NCP Procedures. The

U.S. NCP hosts a webpage and has distributed printed fact sheets about the Guidelines and

role of the NCP, but both vehicles are limited to English.18 NCP liaisons should coordinate

translation of the printed fact sheets into predominate local languages to promote the

Guidelines to a more inclusive stakeholder audience. This will further bolster the credibility                                                                                                                          15 "Assessing the Effectiveness of National Human Rights Institutions." Office of the United Nations High Commissioner for Human Rights. International Council on Human Rights Policy. 2005. Web. <http://www.ichrp.org/files/reports/18/125_report.pdf>. 16 "Interview with Alan Yu, U.S. NCP." Telephone interview. 16 Apr. 2013. 17 John Ruggie, The Special Representative of the Secretary- General. "Guiding Principles on Business and Human Rights: Implementing the United Nations 'Protect, Respect and Remedy' Framework." UN Human Rights Council. N.p., 16 June 2011. Web. <http://www.business-humanrights.org/media/documents/ruggie/ruggie-guiding-principles-21-mar-2011.pdf>. 18  "Common Framework for Annual Reporting by National Contact Points for the Period 1 July 2011-30 June 2012." US Department of State, 2012. Web. <http://www.state.gov/documents/organization/202978.pdf>  

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of the local embassy-based NCPs and help them demonstrate a genuine concern for inclusion

of all local peoples.

NCP liaisons can also tap into the physical presence of NHRIs that have established

regional and local offices. An NCP liaison could use that network as a communications

channel for news and announcements related to the implementation of the UNGPs as well as

specific instances originating from the host country. This is something that the U.S. NCP

alone would not have the contacts or bandwidth to accomplish through each NHRI in the

world.

NCP liaisons should network and attend meetings of stakeholder groups and other

organizations with the purpose of educating about the U.S. NCP Procedures. In its 2012

annual summary to the OECD Secretariat, the U.S. NCP reported participation in nine

meetings to promote the Guidelines and their implementation procedures. Other participants

included business councils, NGOs, other NCPs, and law professors. All but one of these

meetings took place in the United States, and most of these were in Washington, DC.19 An

NCP liaison network could multiply U.S. participation by attending human rights meetings in

host countries. This additional outreach and education could help ensure that local aggrieved

parties are aware of remedy available through the U.S. NCP.

The broad scope of today’s Guidelines means that governments and companies are

responsible for abuses that occur far from their home operations and in locations where there

may not be a host country NCP. The proposed international network of U.S. NCP liaisons, in

cooperation with NHRIs, would be most beneficial for preventing and responding to abuses

in such locations. Because stakeholders would not have a host country NCP to contact for

remedy, the U.S. NCP would fill that needed role when a grievance involves a U.S.-based

MNE. NCP liaisons could educate NHRIs on the U.S. NCP Procedures and promote this                                                                                                                          19 "Common Framework for Annual Reporting by National Contact Points for the Period 1 July 2011-30 June 2012." US Department of State, 2012. Web. <http://www.state.gov/documents/organization/202978.pdf>.  

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remedy throughout their established networks.

Predictable: Recommendations for providing clear

and known procedures

The U.S. NCP Procedures are readily

available online. They provide an outline of step-

by-step decisions and actions along with a target

timeline for initiating a request, initial assessment,

mediation, and conclusion.20 While these

procedures should continue to be managed and

refined by the U.S. NCP, this is another document

that would better serve stakeholders if it were

available in multiple languages. The NCP liaison

should coordinate translations and ensure that

electronic or print or even audio resources are

appropriately distributed.

The NCP liaison should also be held

accountable for conducting annual in-person

training on the U.S. NCP Procedures for NHRI

representatives who could, in turn, train

stakeholders. Some NHRIs already train

businesses, employees, and communities on

human rights issues.21 The NCP liaison could ensure that the U.S. NCP Procedures are

                                                                                                                         20 "U.S. NCP Procedures for Specific Instances Under the OECD MNE Guidelines." U.S. Department of State. n.d. Web. 14 Apr. 2013. <http://www.state.gov/e/eb/oecd/usncp/links/rls/166661.htm>. 21 Collins, Ben, and Lesley Fleischman, “Human Rights and Social Conflict in the Oil, Gas, and Mining Industries: Policy Recommendations for National Human Rights Institutions,” Oxfam America Research Backgrounder series (2013): http://www.oxfamamerica.org/publications/national-HR-institutions-and-extractive- industries.

The  U.S.  NCP  and  Nigeria  In  April  2013,  the  U.S.  Supreme  Court  issued  a  unanimous  ruling  in  a  case  brought  by  Nigerian  plaintiffs  against  foreign  oil  companies  for  alleged  human  rights  abuses  perpetrated  by  a  subsidiary  in  Nigeria.  The  court’s  opinion—that  conduct  must  take  place  in  the  U.S.  in  order  to  allow  such  lawsuits—may  have  broad  implications.  Human  rights  groups  considered  the  decision  a  blow  to  victims  who,  as  a  result,  face  limited  access  to  remedy.1  The  U.S.  NCP  becomes  even  more  important  in  light  of  this  ruling.  An  NCP  liaison  based  in  Nigeria  would  strengthen  the  U.S.  NCP  by  engaging  local  stakeholders  and  facilitating  information.    

Nigeria’s  NHRI  recently  expanded  beyond  its  headquarters  and  zonal  presence,  and  it  has  plans  to  establish  offices  in  more  than  two-­‐thirds  of  the  country.2  An  NCP  liaison  could  utilize  that  network  as  a  communications  channel  for  news,  announcements,  and  training  related  to  the  implementation  of  the  UNGPs  as  well  as  specific  instances  originating  from  Nigeria.  This  is  something  that  the  U.S.  NCP  alone  would  not  have  the  contacts  or  bandwidth  to  accomplish  through  each  NHRI  in  the  world.  

The  Niger  Delta  has  been  identified  as  a  region  where  human  rights  are  most  at  risk,  in  part  due  to  exploitation  of  resources  by  transnational  oil  companies.3  Many  languages  are  spoken  there,  but  Nigerian  Pidgin  English  cuts  across  age,  social  class,  and  regional  origin.4  With  a  61%  literacy  rate  in  the  country,5  perhaps  the  best  way  to  reach  stakeholders  in  the  Niger  Delta  would  be  to  prepare  audio  files,  recorded  in  Pidgin  English,  regarding  U.S.  NCP  Procedures  and  relevant  specific  instances.  

By  working  through  the  NHRC,  networking  

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included when trainings are presented to NGOs, employees groups, and other stakeholders

pertaining to U.S.-based MNEs.

Transparent: Recommendations for keeping parties informed

NCP liaisons should help ensure that aggrieved parties are kept adequately informed

of cases that involve U.S.-based MNEs operating in their host countries. This could include

specific instances brought before the U.S. NCP as well as grievances managed by the NHRI.

As of June 2011, the U.S. NCP set a policy to release assessments or statements on

specific instances.22 NCP liaisons should publish and locally distribute documents related to

specific instances that originated in their host countries. When NHRIs report on human rights

issues related to U.S.-based MNEs, the NCP liaison could encourage them also to make the

grievance processes and outcomes known to relevant parties and available to the public.

A Source of Continuous Learning: Recommendations for continuous improvement

The physical presence of NCP liaisons provides the opportunity to build stronger

relationships with NHRIs and other local stakeholders. They should build local networks

from which they would gain valuable insights. This would engender continuous improvement

to systems and aid in the prevention of future grievances.

Just as NCP liaisons can educate NHRIs by attending local meetings on human rights

issues, they should also be there to learn and understand the context in which grievances are

occurring and remedies are sought. This information would be shared with the U.S. NCP

through an annual report, the contents of which would be easily transferrable to the annual

summary to the OECD Secretariat. Relevant questions from the summary report about

promotion and collaboration can be more thoroughly answered by NCP liaisons with first-

hand knowledge of in-country activities. This data would then be used selectively to augment

the U.S. NCP summary report and to support continuous improvement of the U.S. NCP                                                                                                                          22 "Specific Instance Process: Specific Instances Addressed by the U.S. NCP." U.S. Department of State. U.S. Department of State, n.d. Web. 23 Apr. 2013. <http://www.state.gov/e/eb/oecd/usncp/specificinstance/assessments/index.htm>.  

  17

Procedures.

For Further Consideration

An NCP liaison network is an elegant solution to addressing some of the general

weaknesses of NCPs, supporting the OECD/ICC MOU, and ensuring access to remedy.

However, it is not without faults or lingering questions. It is logical that a network of NCP

liaisons would enable greater attention to supply chain issues, related to business and human

rights. Having a designated NCP liaison in the field to convey and report information with

more depth would be a start, but structure and processes should be established to specifically

address the supply chain.

Further, some training of NCP liaisons will be required. There are concerns that,

while some Foreign Service Officers (FSO) would have a natural interest in the U.S. NCP

process, others would not. Similarly, FSOs would demonstrate varying degrees of ability in

filling the NCP liaison role. The turnover that is a part of Embassy life would also limit

sustained awareness and effectiveness.23 To combat this, training should exist in three stages.

First, NCP liaisons would need to understand how effective the U.S. NCP and the Procedures

can be. Relevant localized examples should be used whenever possible to drive home the

effectiveness of the process. Second, a one-page bulleted description of the NCP liaison

duties would be helpful so that there is a clearly articulated set of responsibilities that new

NCP liaisons can refer back to as they learn and grow into their new roles. This would also

aid in helping the NCPs to introduce themselves to the populations they serve by giving them

the basic talking points they need to be seen as competent and genuinely engaged in the

process. Finally, training through the Foreign Service Institute would help to develop

effective NCP liaisons.24

Among NHRIs, there will be more and less capable partners. NHRIs with “A” level

                                                                                                                         23 "Interview with Alan Yu, U.S. NCP." Telephone interview. 16 Apr. 2013. 24 "Interview with Unnamed County Desk Officer." Telephone interview. 19 Apr. 2013.

  18

accreditation from the ICC fully comply with the Paris Principles and should be engaged by

the NCP liaison. A policy should be established regarding NHRIs at “B” or “C” status, even

if the policy is to decide on a country-by-county basis from an assessment by the NCP

liaison.25

A program is only as good as its execution, so perhaps most important is the question

of how to raise the priority of the NCP liaison network. At a high level, this can be

encouraged through inclusion in the Quadrennial Diplomacy & Development Review, if this

is something that Secretary Kerry will continue. Because the issue of business and human

rights cuts across political, economic, and public diplomacy dimensions, a front-channel

cable would be most effective for practical purposes.26

Still, given proper support, the NCP liaison network would be feasible to implement

because it would build on existing infrastructure which has already been committed by the

U.S. Government. The program would require minimal meetings, translation of documents,

reports, and training on the part of each NCP liaison. The U.S. NCP would provide oversight

in the form of tracking which specific Embassies have an effective liaison, encouraging

additional Embassies to support this role, and incorporating liaison feedback into existing

reports. An exponentially increased number of stakeholders could be engaged through the

NCP liaison network via NHRIs. For a relatively small investment, the U.S. NCP structure

could serve as a model to others in proactively seeking solid methods of grievance redress.

                                                                                                                         25 "ICC Sub-Committee on Accreditation (SCA)." Nhri.ohchr.org. N.p., n.d. Web. 22 Apr. 2013. <http://nhri.ohchr.org/EN/AboutUs/ICCAccreditation/Pages/default.aspx>.  

26 "Interview with Unnamed County Desk Officer." Telephone interview. 19 Apr. 2013.

  19

Recommendation Two: Partnership between the company and an NGO

Non-state-based, non-judicial grievance mechanisms are an important instrument for

aggrieved parties to address human rights abuses. The UNGPs state that aggrieved parties

can take grievances to Non-State actors without State intervention, though it is the State’s

responsibility to protect human rights. The UNGPs laud this type of grievance mechanism

because it allows companies to make changes to abusive practices early and directly. While

the state has the responsibility to protect, the presence of this type of mechanism is part of the

companies’ own responsibility to respect human rights.

Background

As outlined by the UNGPs, a grievance mechanism must be equitable; that is

complainants must have “reasonable access to sources of information, advice, and expertise

to engage in the grievance process”. 27 In a pilot project carried out between 2009- 2010 to

test the practicality of a set of guiding principles on operational level grievance mechanisms,

the UN Special Representative of the Secretary-General on the issue of human rights and

transnational corporations and other businesses enterprises notes that it is imperative that the

grievance process is equitable and that complainants have reasonable access to information to

ensure that it is effective and sustainable.23 The report also highlighted that while the

assistance can be provided externally, through NGOs, academic and state level bodies,

companies may have to provide resources for such activities. The key point is, that provider

of such services must be trusted by both parties and have resources to ensure that they are

able to perform successfully.

                                                                                                                         27 John Ruggie, The Special Representative of the Secretary- General. "Guiding Principles on Business and Human Rights: Implementing the United Nations 'Protect, Respect and Remedy' Framework." UN Human Rights Council. N.p., 16 June 2011. Web. <http://www.business-humanrights.org/media/documents/ruggie/ruggie-guiding-principles-21-mar-2011.pdf>.

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Further, in order for an NGO to act as an independent point of contact, collaboration

and buy-in from the company is necessary. A company interested in utilizing this model can

support the NGO by providing necessary funding and resources. In 2005, the Reebok

Company compensated Phulki in Bangladesh for acting as an independent point of contact

and for facilitating dialogue between workers and the company. 28The company believes that

due to the honest and frank responses provided by them, the financial compensation did not

impact their independence and objectivity.24 This is a solid example of how beneficial an

independent NGO can be when resolving grievances between workers and multi-national

corporations at a localized level.

The State Department has also carried out several roundtable discussions with

stakeholders from the private sector and industries on the UNGPs. 29 This dialogue and

continued relationship building provides the State Department the leverage it needs to

encourage businesses to adopt the model proposed above. When a company is eager to adopt

an effective grievance mechanism in line with that of the UNGP’s, the State Department is in

a unique position to identify NGOs on the ground that have the capacity to carry out such a

partnership. Additionally, the State Department can play a key role in the dissemination of

existing training materials, as well as provide coordination support between NGOs, NCPs,

NHRIs, and other stakeholders.

In fact, the US Department of State (DOS) has already begun forming these links with

local NGOs. Pillars in Practices is a program that uses funds from the State Department to

implement a project geared towards training civil society organizations such as the Corporate

Social Responsibility Center in Bangladesh, Professionals for Social and Company Audits in

                                                                                                                         28  Reebok International Ltd. (2005). Our Commitment to Human Rights, Reebok Human Rights Report 2005. Canton, Massachusetts: Human Rights Program. 29 Human Rights.gov. Letter to the U.N. Working Group. http://www.humanrights.gov/2012/12/10/u-s-government-on-business-and-human-rights-letter-to-the-un-working-group/. ( 12 October 2012). Web. April 12. 2013.

  21

Nicaragua, and Zimbabwe Environmental Law Association on the details of the UNGPs.

30Additionally, the DOS has issued RFPs for building capacity of independent organizations

representing workers.31 Lastly, DOS is working with NGOs, governments, and companies in

dealing with land tenure issues.32

Recommendation

In light of this background, we propose collaboration between NGOs and companies.

Coordinating and supporting an in-country NGO that is close to both parties companies and

workers, can be an effective practice for the US Department of State to realize the Third

Pillar of the Guiding Principles by facilitating access to remedy for the aggrieved parties.

The companies themselves frequently carry out operational-level grievance

mechanisms. Most companies operating in countries with recurrent human rights abuses have

company-based grievance mechanisms clearly outlined in their literature, however,

sometimes these company-based grievance mechanisms are insufficient or do not translate

very well from the company website into actual practice. This lack of effectiveness was

perhaps foreseen by the UNGPs, which outlined specific criteria for all types of non-judicial

grievance mechanisms. They must be legitimate, accessible, predictable, equitable,

transparent, rights-compatible, and a source of continuing learning.

One way to tackle a deficiency in these criteria is through the involvement of an

independent third party, or as we recommend, an NGO that is familiar with both parties. An

NGO that is not motivated by profit like the companies involved in the grievance, and is well

versed in the UNGPs to guide aggrieved workers who may lack the in-depth knowledge of

the grievance processes available to them.

                                                                                                                         30  Danish Institute for Human Rights. “DIHR awarded U.S. State Dept. Grant for ‘Pillars in Practice’ Programme.” humanrights.dk/news/news?doc=21842. (19 Sept. 2012.): Web. 12 Apr. 2013. 31 U.S. Department of State. Bureau of Democracy, Human Rights and Labor (DRL) - Request for Proposals for International Labor Programs. http://www.state.gov/j/drl/p/198503.htm. ( 14 Jan 2013). Web. 12. Apr. 2013. 32 U.S. Department of State. Bureau of Democracy, Human Rights and Labor (DRL)- Request for Proposal for Business and Human Rights Programs. http://www.state.gov/j/drl/p/205017.htm (20 February 2013). Web. 12. Apr 2013.

  22

With consistent coordination and support from American embassies in the country,

the NGOs will be able to foster a culture of equity in a way that one-off trainings or

education disseminations are not able to.

The DOS will work with this local

NGO to accomplish three important

objectives in partnership with companies; it

will work to educate stakeholders, it will act

as an independent third party in these

companies’ grievance mechanisms, and if

those grievance mechanisms fail to

accomplish the Third Pillar of the UNGPs,

the NGO can assist with access to State-based

grievance mechanisms.

Criteria for Selection of NGOs:

The basic criteria for selecting an in-country

NGO to ensure access to remedy include:

1. A well-established NGO recognized

as a formal organization that is incorporated

under state law and possesses legal status.

The selected NGO must be capable to adapt

to widely diverse laws, cultures, and economic realities.

2. The NGO is driven by a legitimate and long-term commitment to improve human

rights, as opposed to operational NGOs, or an organization that provides temporary

relief. The in-country NGO’s activities should complement the governments human

rights priorities and aim to improve transparency and accountability.

Country  Zoom-­‐In:  Case  Study  Mexico  In  2005,  Hewlett-­‐  Packard  partnered  with  The  Centre  for  Reflection  and  Action  on  Labor  Issues  (CEREAL),  an  NGO,  as  a  first  point  of  contact  for  a  grievance  mechanism  if  and  when  other  representatives  failed  to  respond  their  complaints.  8  The  workers  can  raise  complaints  in  line  with  standards  including  HP’s  Social  and  Environmental  Responsibility  codes  as  outlined  by  the  Electronic  Industry  Code,  which  is  broadly  based  on  the  ILO  Core  Conventions.  Any  worker  or  group  of  workers  in  a  supply  factory  can  initiate  a  complaint  with  CEREAL  who  can  take  it  to  the  factory  level,  and  if  no  solution  is  achieved,  then  on  to  the  Mexican  Chamber  of  the  Electronic  Industry  (CANIETI).    

If  these  actions  do  not  provide  satisfactory  outcomes,  CEREAL  can  also  take  these  complaints  to  the  brand  companies  as  well  in  order  to  seek  a  solution.  The  NGO  provides  confidential  support  to  complainants  and  an  access  point  to  those  seeking  remedy  that  do  not  feel  comfortable  directing  their  concerns  to  factory  management.    

Moreover,  CEREAL  in  collaboration  with  El  Instituto  Technologico  y  de  Estudios  Superiores  de  Occidente  (ITESO)  provides  training  and  a  diploma  on  labor  rights  for  electronic  sector  workers.  Several  IT  companies  such  as  Seimans  and  IBM  are  currently  using  a  similar  model  for  access  to  grievance.  

  23

3. The NGO must possess a good reputation as a trusted access point to which workers

or other aggrieved parties can bring their grievances. This means that the in-country

NGO will provide confidential support to complainants, and serve as access point to

those seeking remedy that do not feel comfortable addressing their concerns with

company managers.

4. The NGO must be willing to serve as mediator between management and workers by

engaging them in dispute resolution, as well as provide the necessary financial

assistance and technical support.

5. The NGO must facilitate public awareness and understanding of company-based and

state-based grievance mechanisms, and how those mechanisms can be accessed. This

implies that the in-country NGO is well versed in the UNGPs, placing premium on

the communication, flexibility and tolerance for ambiguity.

6. The NGO must be self-governed; this means that the government or individual owner

must not control it. It must possess autonomy to set the organization’s own strategies,

design its own programs, pursue revenues through multiple means, and select those

who will benefit from their services.

7. The NGO must be willing to ensure access to remedy and human rights priorities and

make modifications as needed.

NGO Objective Part 1: Capacity Building of Stakeholders.

Aside from these seven critical criteria for the in-country NGOs, one of the objectives

of this partnership is to facilitate trainings to educate and transfer knowledge to a generation

of workers, labor organizations, supply chain managers, and other relevant stakeholders on

the UNGPs and effective grievance mechanisms. When workers and other constituents have

the necessary knowledge, training, and avenues for recourse, they are better equipped to

  24

effectively engage with the company at an early stage.33 Over time, it should help to embed

better practices into the companies’ practices and procedures. It also gives them an

understanding of the options as well as the constraints in addressing the human rights

violation and enables constructive exchange between the two sides. By supporting the

training and knowledge for workers and other relevant stakeholders, this partnership can

enable the grievance mechanism to meet the criteria of “fair and empowering” as outlined in

the UNGPs.

NGO Objective Part 2: Act as Point of Access to the Grievance Mechanism

One of the key factors of a human rights-based grievance mechanism is the need for

more than one point of access to the grievance mechanism. While most companies will have

representatives, we recommend that at least one of them should be independent of the

company to ensure that those who are intimidated or fear reprisal will have access to the

grievance mechanism. 29 By partnering with an NGO acting as the point of access, the

grievance mechanism meets the criteria of “publicized and accessible.” The NGO can ensure

that all complaints are registered and verified. They can also ensure that gender and power

imbalances are taken into consideration and support is provided for the more marginalized

groups, as well as illiterate stakeholders.

NGO Objective Part 3: Assist in State-based Grievance Mechanisms, both Judicial and

Non-judicial

If company-based grievances prove to be ultimately ineffective, the NGO would be

able to help the aggrieved workers access the mechanisms of the State. As outlined above,

operational-level grievance mechanisms are preferred for their speed in remediation and

proximity to the original grievance. However, if the essential criteria of a company-based

                                                                                                                         33  Corporate  Social  Responsibility  Initiative.  2008.  “Rights-­‐Compatible  Grievance  Mechanisms.  A  Guidance  Tool  for  Companies  and  Their  Stakeholders”  Corporate  Social  Responsibility  Initiative  Working  Paper  No.  41.  Cambridge,  MA:  John.  F.  Kennedy  School  of  Government,  Harvard  University.    

  25

mechanism (that it be legitimate, accessible, predictable, equitable, transparent, rights-

compatible, and a source of continuing learning) are not being met, then an aggrieved worker

would need to turn to State-based mechanisms, where the duty to protect fundamentally lies.

The NGO can work with the aggrieved workers in two different State-based avenues

and they are State-based judicial and State-based non-judicial.

State-based Judicial:

If an aggrieved worker is unable to succeed through a company-based grievance

mechanism, it is likely this worker will also face challenges when pursuing a grievance

resolution through the judicial system. The NGO can address these obstacles in four

important ways:

1. Financial Assistance. The NGO can draw on its own funds or those allocated for

human rights programs, to help with the costs involved in a court case and also to

assist in the event the aggrieved worker is terminated.

2. Legal Expertise. Because they are deeply involved with the law of the State, the

NGO will be readily available to assist aggrieved workers in how to handle claims,

file grievances, and acquire legal representation.

3. Coordinating Class Action. In the event workers are unable to coordinate claims,

and in the absence of a bargaining union, the NGO is uniquely seated to combine

similar claims in to a single class action lawsuit against the company.

4. Assist the Prosecution: States with limited resources may not be able to fully

investigate the grievances brought to their courts. The NGO can leverage their legal

knowledge and their on-the-ground positioning against the resources of the company.

For Further Consideration

Our recommendation that the State Department support a single, in-country NGO to

ensure access to remedy, through the NGO fulfillment of the objectives (capacity building of

  26

stakeholders, acting as a point of access to the grievance mechanism, and assisting in State-

based grievance mechanisms, both judicial and non-judicial), exemplifies the role of an NGO

to fulfill the gaps left by company-based and state-based grievance mechanism failures by

providing the services that those two sectors for whatever reasons, could not.

In one scenario, perhaps the existing company-based grievance mechanisms have

failed because of information asymmetry, meaning that individuals do not have complete

information or lack the ability to understand or judge the type of grievance mechanisms they

need to pursue for gaining full access to remedy. In this case, the well-versed in UNGPs in-

country NGO will facilitate public awareness and understanding of company-based grievance

mechanisms and how those mechanisms can be accessed. The aggrieved parties can turn to

the in-country NGO for a trusted resource to help them along the pathway to redress. The in-

country NGOs would emphasize communications, flexibility, and tolerance for ambiguity in

their facilitation process.

The company-focused examples included in this section illustrate both successes and

failures of company-based and state-based grievance processes in their attempts to realize the

third Pillar of the Guiding Principles. In the absence of identification of a local NGO already

operating in the field, this proposal includes the basic criteria for selecting and establishing a

qualified in-country NGO, to ensure access to remedy in the geographic locations where they

are needed.

  27

Recommendation Three: Trade Regimes

Background

As is true with so many elements of public policy and advocacy, two very important

aspects of success are: motivation and capability. As discussed above, there is a certain

capability that is lacking when it comes to grievance mechanisms and access to remedy for

individuals and communities. In some cases, the access to remedy is simply not present and

there are no grievance mechanisms available. However, through our research, we have seen

that in the majority of troublesome cases, there is a mechanism in place to resolve issues as

they arise, however, the complaints brought forth through those mechanisms are simply

ignored or improperly addressed.

The previous two concepts of a network of National Contact Points and increased

cooperation with NGOs in affected markets seek to enhance the capability of governments as

well as individuals to ensure that appropriate access to remedy is present. The addition and

expansion of trade agreements with governments in affected markets would seek to provide

additional motivation to governments to ensure compliance. Frequently, the reporting and

inspection processes that companies go through are voluntary. However, trade regimes, such

as Preferential Trade Agreements, the Generalized System of Preferences, and Free Trade

Agreements are all legally binding documents. Additionally, there are frequently already side

agreements covering labor and environmental issues. Truly, trade agreements can provide

both the motivation and enforcement, helping to push the above recommendations toward

success.

Trade agreements have been used on numerous occasions to motivate policy change.

Recent examples include the HOPE II Trade Act, the African Growth and Opportunity Act,

and the Andean Trade Preference and Drug Eradication Act (ATPDEA). Specifically, the

ATPDEA has worked to motivate countries like Ecuador to increase workers’ rights and to

  28

also ensure strong drug enforcement. The following sections will go into more detail on trade

and give some context and recommendations for the use of trade regimes in aiding access to

remedy.

Trade Agreements

Preferential trade agreements (PTAs) provide a unique mechanism for promoting

human rights, particularly labor rights, outside U.S. territory. The U.S. has free trade

agreements (FTAs) in effect with 19 countries34and extends a generalized system of

preferences (GSP) to 131 countries.

Today, free trade agreements include chapters on labor, transparency (access to

information), and public participation35 which can play a vital role in governing state

compliance with human rights. For example, the U.S. claim brought against Guatemala for

violation of the labor chapter of CAFTA-DR has resulted in new measures to ensure

compliance with international standards. Guatemala has agreed to a comprehensive labor

enforcement plan, which includes strengthening enforcement of labor laws, ensuring payment

to workers when factories suddenly close, improving the enforcement of court orders for

verifying employer compliance and monitoring as well as criminal prosecution for those who

fail to comply, ensuring export companies comply with labor laws, and improving

transparency and coordination.36

Many believe if human rights provisions are designed carefully, they can work to

promote good governance and to empower citizens to claim their rights. Additionally,

according to Aaronson, “market access can be an important instrument of leverage because it

can affect the economic and political health of targeted countries…Furthermore, in recent

                                                                                                                         34  United States of America. Executive Office of the President. Office of the United States Trade Representative. Office of the United States Trade Representative. N.p., n.d. Web. 13 Apr. 2013. 35 Aaronson, Susan A. "Human Rights." N.p.: n.p., n.d. N. 443-466. World Trade Organization. Web. 14 Apr. 2013. 36  Ibid.

 

  29

years policy makers have come to understand that failure to protect human rights (such as

labor rights) can affect market access conditions for their own producers.” (p. 445) Hence,

the United States has begun to use the economic incentive of enhanced market access to not

only promote and protect American business interests abroad, but also to encourage

compliance with human rights norms. It should be highlighted, however, that PTAs are not

the best type of human rights governance, and that they are not a substitute for domestic and

international human rights laws. That said, they are among the only existing international

institutions with some capacity to enforce compliance, and they may be one of the more

effective means of implementing very basic human rights norms, although incomplete and

insufficient.37

Trade Agreement Recommendations

Inclusion of UN Guiding Principle text when new trade agreements are formed

New trade agreements could be proposed working either bilaterally with specific

countries or with specific regions to advance the UNGPs. New agreements could include

transparency, monitoring and enforcement strategies in concert with the agreement, perhaps

incorporating the language into the transparency, labor and environmental chapters. For

example, new trade agreements could use North American Agreement on Labor

Cooperation (NAALC) as a design template. The main institution of NAALC, the

Commission for Labor Cooperation, is composed of a ministerial Council and an

International Coordinating Secretariat. At present, the Council’s role is to facilitate

cooperative activities in the areas of labor law and policy. Moreover, each state party must

also establish a National Administrative Office (NAO), which amongst other tasks, receives

communications from interested parties when another state party is not enforcing its labor

                                                                                                                         37 Hafner-Burton, Emilie M. "Trading Human Rights: How Preferential Trade Agreements Influence Government Repression."International Organization 59.Summer (2005): 593-629. Web. 13 Apr. 2013.

  30

laws. The complaint then proceeds through a dispute resolution procedure. 38 The mandate of

the Council and the NAOs could be expanded to include monitoring and enforcing the

UNGPs. In this respect, they would act like a state-based non-judicial grievance mechanism.

It should be noted that in agreements with state partners in underdeveloped

democracies, special emphasis should be placed on linking the agreement to capacity

building designed to build governance expertise and will around the UNGPs, as well as

incorporating regular trade policy reviews. In especially fragile democracies, the U.S. should

consider introducing a provision that one signatory can challenge human rights violations of

the trade agreement or suspend it. Perhaps the State Department can also encourage the use

of Human Rights Impact Assessments in especially fragile regimes to not only distinguish the

human rights implication of the prospective trade agreement, but also to raise awareness

about human rights standards with state partners and to encourage capacity building on how a

rights-based approach to trade can work in practice.

Inclusion of UN Guiding Principle text when trade agreements are renewed

As trade agreements are renewed, new text promoting the UNGPs could be included,

perhaps introducing the language into the transparency, labor and environmental chapters.

The State Department, in its role as a member of the FTA administrative oversight body,

could play a role in approving and amending new trade agreements. As these new agreements

are created, the Office of Bilateral Trade Affairs (BTA) would take the lead (in conjunction

with DRL) in the creation and maintenance of these agreements. Since DRL could potentially

handle the country audits or Human Rights Impact Assessments provided by NGOs and local

contact points, the State’s role would be to ensure the implementation and enforcement of the

UNGPs, while the BTA’s role would be to make sure that everything on the trade side is

being handled appropriately.

                                                                                                                         38  Cullen, Holly. “The Limits of International Trade Mechanism in Enforcing Human Rights: The Case of Child Labour.” 1-29. The International Journal of Children’s Rights. 7: 1-29, 1999.

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Greater enforcement of cooperative side agreements

The U.S. Government monitors compliance with and enforces U.S. trade agreements,

and it is within this realm of enforcement that incorporating the UNGPs access to remedy

lies. In the U.S., the Interagency Trade Enforcement Center (ITEC) is responsible for trade

enforcement.39 Once an FTA has entered into force, the USTR and the Department of State,

Commerce, Agriculture, and Treasury consistently review the FTA partner’s laws and other

measures to ensure it continues to meet its commitments. 40 During the monitoring and

reporting process, the State Department could ensure that the FTA administrative oversight

body also reviews information regarding the UNGPs. Report information could be gleaned

from the NGOs and in-country ‘contact points.’ Once the audits are completed, the State

Department would be able to review and report back to the FTA administrative oversight

body regarding human rights compliance.

Perhaps a better way to ensure enforcement would be through separate cooperative

agreements where the U.S. assists trading partners with strengthening democratic institutions,

processes and accountability, as well as implementation of the UNGPs. Since 2002, all U.S.

PTAs contain a chapter on transparency, and even though the verbiage in these chapters

differs from agreement to agreement, in general, the passages are structured in the language

of human rights. Policy makers have developed three models for public participation (i.e.

transparency) which were first integrated into the environmental chapter of PTAs and later

into the labor chapter.41 These three models may provide a template for how the U.S.

incorporates access to remedy into trade agreements. The first model was for developed

democracies, hence, contained minimal public participation provisions. The second model

                                                                                                                         39 The ITEC serves as the primary forum within the Federal Government for executive departments and agencies to coordinate enforcement of international and domestic trade rules. 40 "The President's 2013 Trade Policy Agenda." Office of the United States Trade Representative. Office of the United States Trade Representative, Mar. 2013. Web. 14 Apr. 2013. <http://www.ustr.gov/sites/default/files/AnnualReport%20Final2013.pdf>. 41  Aaronson, Susan A. "Human Rights." N.p.: n.p., n.d. N. 443-467. World Trade Organization. Web. 14 Apr. 2013. <http://siteresources.worldbank.org/INTRANETTRADE/Resources/C21.pdf>.

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was for relatively new democracies, and in this model, the bilateral trade partners set up an

advisory committee that would meet consistently and engage the public in discussion. U.S.

policy makers also agreed to provide capacity-building assistance to support this activity.

DRL could play a role in this capacity-building centered on implementing and monitoring the

UNGPs.

The third model, which targets developing states, called on the USTR to put the

“public participation provisions directly in the trade agreements, to develop benchmarks and

‘ways to measure progress over time,’ and to find ways to encourage objective monitoring

and scrutiny by the public.”42 The third model also established a mechanism and secretariat

allowing the general public (including entities that are not disputing parties) to submit

petitions regarding the operation of the agreement’s labor and environmental provisions, and

ensured promotion of public awareness of labor laws and access to tribunals for enforcement.

Moreover, the U.S. agreed to fund the first year of the secretariats work.43 Hence, the U.S.

(through the ITEC) could extend the mandate of the secretariat to include investigating

claims, under the UNGPs, of human rights abuses in partner states as well as issuing

nonbinding resolutions.

Generalized System of Preferences (GSP)

The Generalized System of Preferences (GSP) is a “duty-free treatment of certain

products that are imported from designated developing countries.”44 This trade preference

system allows the duty-free importation of over 3,500 goods from 127 different countries.45

The United States and other industrialized countries established this program initially in the

                                                                                                                         42  Aaronson, Susan A. "Human Rights." N.p.: n.p., n.d. N. 443-467. World Trade Organization. Web. 14 Apr. 2013. <http://siteresources.worldbank.org/INTRANETTRADE/Resources/C21.pdf>. 43 Aaronson, Susan A. "Human Rights." N.p.: n.p., n.d. N. 443-467. World Trade Organization. Web. 14 Apr. 2013. <http://siteresources.worldbank.org/INTRANETTRADE/Resources/C21.pdf>. 44 Cooper, William. Generalized System of Preferences. Rep. Washington, DC: Congressional Research Service, 2002. 45 Jones, Vivian. Generalized System of Preferences: Background and Renewal Debate. Rep. Washington, DC: Congressional Research Service, 2013.

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1970s to promote growth in developing countries. This growth is to be achieved through

stimulating their economies through exports. The GSP has been repeatedly reauthorized by

congress over the years and supporters feel that the GSP is an “effective, low-cost means of

providing economic help to developing countries.”46 Development via aid, these supporters

feel, is more effective and efficient than intergovernmental assistance.

There have been attempts to leverage the GSP for advancing worker’s rights. In fact,

according to the U.S. Trade Representative’s Guidebook, the requirements for eligibility have

been expanded to include internationally recognized human rights including: “collective

bargaining, freedom from compulsory labor, minimum age for employment of children, and

acceptable working conditions with respect to minimum wages, hours of work, occupational

safety and health”47 as well as a commitment to end child labor. However, one of the main

concerns with the GSP is that the observance of workers’ rights by receiving countries is not

being fully implemented. This is where NGOs like the International Labor Organization

(ILO) and others have stepped in to fill the gap. One example of where this has happened is

the 2010 memo to the US Trade Representative’s office by the International Labor Rights

Forum (ILRF).48 This memo urged the USTR’s GSP Director to pay closer attention to the

labor rights violations ongoing within Bangladesh’s Special Export Processing Zone. A

second separate example is the work being done, also by ILRF, to increase worker’s Freedom

of Association in the Philippines by urging the USTR to revoke some of the trade benefits

allowed to Philippine businesses until appropriate changes have been made.49 This

exemplifies that NGOs are familiar with the GSPs and are aware that they can be used as

effective tools in affecting policy.

                                                                                                                         46 Cooper 2002. 47 United States. Executive Office of the President. Office of the United States Trade Representative. U.S. Generalized System of Preferences Guidebook. Washington, DC: n.p., 2009. Print. 48 Athreya, Bama. "International Labor Rights Forum." ILRF GSP Comments on Bangladesh. N.p., 1 Sept. 2010. Web. 09 Apr. 2013. 49 Campbell, Brian. Testimony of BRIAN CAMPBELL, Attorney, on Behalf of the INTERNATIONAL LABOR RIGHTS FORUM. 24 Apr. 2009. Testimony given to the United States Trade Representative. Washington, DC.

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It is in this space that the GSP and trade policy in general could be used to enhance

the access to remedy needed by the UNGPs. Indeed, research by the Congressional Research

Service notes that, “observers maintain that the threat of losing benefits sometimes persuades

beneficiary countries to change objectionable policies or practices.”50 Furthermore, research

has noted that preferential trade agreements instill a more hard enforcement of agreed upon

values and more stringently than simple Human Rights Agreements that supply soft human

rights standards that are not tied to market benefits.51

The GSP is maintained and monitored by the Trade Policy Staff Committee, chaired

by the USTR, and there are annual meetings to review the GSP. As an example of how this

review process works, as recently as March 26, 2012, GSP benefits were suspended for

Argentina because they had not fulfilled all the requirements of the agreement. The Office for

the U.S. Trade Representative notes that this suspension would affect, based upon 2011

imports, nearly 11% of all imports from Argentina, or around $477 million.52 Studies have

shown that the benefits of GSP are important. One example from the USTR shows that

inclusion in the GSP led to an 18% increase in eligible exports annually.53 This indicates that

trade could be an effective tool in encouraging policy changes. The biggest hurdle for

expanded benefits, as the GSP is established currently, is that some products are listed as

exceeding the competitive need limit for that particular good.

                                                                                                                         50 Cooper 2002. 51 Hafner-Burton, Emilie M. "Trading Human Rights: How Preferential Trade Agreements Influence Government Repression." International Organization 59.03 (2005): 593-629. Print. 52 "United States Suspends Argentina's Preferential Trade Status for Failure to Pay ICSID Arbitral Awards." News & Insights. Sidley Austin LLP, 30 Mar. 2012. Web. 15 Apr. 2013. 53 Sandler, Marideth. "Expanding Kazakhstan's Exports to the United States." United States Trade Representative, n.d. Web.

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GSP Recommendations

Inclusion of UN Guiding Principle text when the GSP is renewed

Countries, NGOs and businesses pay attention to the GSP process and if the next

iteration of this trade agreement were to include language requiring more careful observance

of the UNGPs, it could have a large impact. Beyond simply working on greater enforcement

of the current GSP guidelines, and extending UNGP guidelines to the GSP, expansion of the

GSP listing of certain products could also help. The GSP is set to require renewal again on

July 31, 2013. Work could be started now to ensure that the GSP includes UNGP language

moving forward.

Greater oversight of current GSP requirements

As noted above, several NGOs have been involved in highlighting business

environments that fall short of the GSP requirements. However, the most recent case of a

large market being penalized and having their GSP benefits removed has to do with investor

arbitration. This lack of appropriate enforcement will do more damage than simply not even

including the labor rights requirements in the GSP in the first place. By setting up a false

requirement where the enforcement is lacking, it allows countries and businesses to fail to

uphold their end of the agreement. Moving forward with the renewal process, including

stronger UN Guiding Principle text and, perhaps even more importantly, fully enforcing the

labor rights already written into the GSP, would go a long way towards the State

Department’s goal of increasing human rights.

Bilateral Investment Treaties

The U.S. currently has over 40 bilateral investment treaties (BITs). Their primary

purpose is to protect U.S. investors in foreign states from unfavorable state action by

providing a number of guarantees to investors— fair and equitable treatment, protection from

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expropriation, full protection and security, free transfer of funds, and access to international

arbitration for disputes that arise.

Up until recently, the Model BIT contained some, but weak, obligations for a state to

enforce its labor laws. Under the Obama Administration, the Model BIT was revised in 2012

to include expanded obligations relating to labor and the environment, providing that each

party “shall ensure that it does not waive or otherwise derogate from . . . or fail to effectively

enforce its labor laws through a sustained or recurring course of action or inaction, as an

encouragement for” investment.54 The Model recognizes fundamental labor rights as non-

derogable, including freedom of association, the right to collective bargaining, the

elimination of forced labor, child labor, and discrimination, and acceptable conditions of

work with respect to minimum wages, hours, and occupational safety and health.55 This is

consistent with commitments made in U.S. FTAs. However, unlike FTAs, the U.S. Model

BIT’s labor provisions remain outside the scope of the dispute settlement mechanism,

allowing only for consultations between state parties.56

While BITs uniquely allow investors to directly initiate arbitration against state

parties for failure to comply with the agreement, the U.S. Model places no binding

obligations on foreign business entities. Such expansion of rights, absent of responsibility, is

of particular concern.

BIT Recommendations

Incorporate the UN Guiding Principles into the Model BIT to provide access to remedy

In addition to requiring state parties to uphold core labor laws, the Model could

incorporate the UN Guiding Principles pillar three, by including in the Model itself or via

negotiated BITs, a mechanism to provide access to remedy for victims of recognized human

                                                                                                                         54 2012 U.S. Model Bilateral Investment Treaty, art. 13(2) (emphasis added). 55 Id. at art. 13(3). 56 Id. at art. 13(4).

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rights violations.57 This may include a provision which would allow labor unions or other

affected parties to bring a claim for arbitration under the agreement. Under such provision,

state parties may be encouraged to work with investors as well as domestic enterprises to

ensure appropriate grievance mechanisms are in place to address infractions before they

become systemic violations and to encourage adoption of a voluntary code of conduct for

social responsibility.

Place reciprocal obligations on investors

It is of concern that BITs continue to provide significant rights to investors without

assigning reciprocal responsibility despite serious violations of national and international

law.58Although it remains the state’s obligation to enforce its labor laws and under the threat

of costly arbitration decisions favoring investors, states may be less inclined to get in the way

of investor operations. The Model BIT could create reciprocal obligations for investors, such

as maintaining due diligence procedures; providing transparency; conducting environmental

and social impact assessments; adopting a standard of corporate social responsibility, such as

the UN Global Compact, OECD Guidelines for MNEs, or the SA 8000; and providing

grievance mechanisms.59

Additionally, the Model could provide mechanisms for improving compliance: (1)

Investor protections could be conditioned upon compliance with fundamental human rights

obligations recognized in the agreements; (2) state parties could raise allegations of investor

violations of human rights in investor actions as a mechanism for offsetting damages the state

                                                                                                                         57 Todd Weiler, Balancing Human Rights and Investor Protection: A New Approach for a Different Legal Order, 27 B.C. INT’L COMP. L. REV. 429 (2004). 58 PETERSON, at 15 (“John Ruggie, lamented that the legal rights of transnational corporations have expanded greatly—including through bilateral investment treaties—while the legal framework regulating those same corporations has not expanded in a similar fashion”). 59 See Megan Wells Sheffer, Bilateral Investment Treaties: A Friend or Foe to Human Rights?, 39 DENV. J. INT’L L. & POL’Y 483, 518–19 (2011).

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party may be liable for; or, alternatively, (3) the state party could bring counterclaims in

investor actions for violations of human rights.60

The inclusion of reciprocal obligations is a significant departure from the fundamental

purpose of these agreements—to protect investors. However, given the widespread failure of

states to effectively enforce labor laws, it may be necessary to place some obligations directly

on the private parties responsible for committing violations. This concept is not new, but also

has not been adopted. A 2008 Norwegian draft model investment treaty encouraged investor

compliance with OECD Guidelines for Multinational Enterprises and the UN Global

Compact, but did not mandate investor obligations. 61 Under criticism that it did not

sufficiently protect investors, Norway’s draft model was shelved in 2009. However, it

represents an example of how other countries are evaluating investor responsibility in terms

of respecting human rights.

For Further Consideration

The above recommendations regarding the leveraging of trade regimes offer many

similar benefits. These benefits range from the legally binding nature of trade agreements, to

the inherent monitoring mechanisms, and finally, the potential motivational factors of trade.

There are, however, some issues that would need to be considered further. Inserting new

language into existing trade regimes could be difficult. As noted above, the last time that the

GSP was renewed and amended, it took a year to complete. This is due to issues of trade

being a relatively political process. As such, the process takes time and would require

planning. An additional issue to be considered is the current gaps in already existing trade

regimes. The examples of the Philippines and Bangladesh are particularly poignant with the

                                                                                                                         60 Patrick Dumberry & Gabrielle Dumas Aubin, How to Incorporate Human Rights Obligations in Bilateral Investment Treaties?, INT’L INST. FOR SUSTAINABLE DEV. (Mar. 22, 2013); see also LUKE ERIC PETERSON, HUMAN RIGHTS AND BUSINESS INVESTMENT TREATIES: MAPPING THE ROLE OF HUMAN RIGHTS LAW WITHIN

INVESTOR-STATE ARBITRATION 14–15, (2009). 61 Nikos Lavranos, Agora 5: Investment Protection, Bilateral Investment Treaties (BITs) and EU law, ESIL Conference 26 (2010), available at http://www.esil-en.law.cam.ac.uk/Media/Draft_Papers/Agora/Lavranos.pdf.

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recent tragedy in the Bangladeshi garment factory. The International Labor Rights Forum has

petitioned the USTR’s office on numerous occasions regarding labor rights and working

conditions in both the Philippines and Bangladesh to no avail. The review process is

apparently completed and the GSP privileges continue unabated. Perhaps prior to amending

trade regimes or creating new trade-based levers for change, the USTR, with the State

Department’s urging could simply offer better enforcement of the mechanisms already

present.

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Conclusion

This report outlined a suite of solutions that can leverage the resources and

relationships of the U.S. Department of State in implementing the UNGPs. The three

recommendations aim to ensure efforts are being targeted at the company level, the national

level as well as the international level to develop greater integration and adoption of the

UNGPs. At the company level operationalizing, greater awareness of supply chain managers

and workers, third party contact point for grievance mechanisms, and support for judicial

remedy can greatly enhance remediation of grievances. At the national level, effective

collaboration between NCP liaisons and NHRIs can strengthen national mechanisms for

access to remedy. At the international level, utilizing trade regimes can provide incentives for

countries to implement the UNGPs.

Additionally, they build on the work that is currently being carried out by the

Department of State, and attempts to utilize the comparative advantage of the Department to

bridge the gap in access to remedy. Comprehensive interventions aimed at seeking solutions

at all levels ensure sustainable and prolonged impact that can ultimately create an

environment conducive to promote, respect and remedy human rights.

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Text Box Endnotes:

1 Liptak, Adam. "Justices Bar Nigerian Human Rights Case From U.S. Courts." New York Times 18 Apr. 2013: A22. New York Times. Nytimes.com. Web. <http://www.nytimes.com/2013/04/18/us/justices-bar-us-suit-in-nigerian-human-rights-case.html?_r=1&>.

2 Angwe, Bem. "Nigeria: 'NHRC Ready to Defend Any Nigerian Whose Rights Are Violated'" Interview by Tony Amokeodo and Ahuraka Isah. All Africa. N.p., 26 Oct. 2012. Web. <http://allafrica.com/stories/201210260276.html>.

3 Letjolane, Corlett, Connie Nawaigo, and Andrea Rocca. "NIGERIA: Defending Human

Rights: Not Everywhere Not Every Right International Fact-Finding Mission Report." The Observatory for the Protection of Human Rights. Frontline Protection of Human Rights Defenders, Apr. 2010. Web.

4 Ibukun, Yinka. "Nigeria Harnesses Pidgin English Power." The Guardian. Guardian News

and Media, 09 Nov. 2010. Web. 24 Apr. 2013. <http://www.guardian.co.uk/education/2010/nov/09/nigeria-pidgin-learning-english-ibukun>.

5 "The World Factbook." CIA.gov. N.p., n.d. Web. 24 Apr. 2013.

<https://www.cia.gov/library/publications/the-world-factbook/geos/ni.html>. 6 Rees, Caroline and David Vermijs. 2008. “Mapping Grievance Mechanisms in the Business

and Human Rights Arena”. Corporate Social Responsibility Initiative Report No. 28. Cambridge. MA.:John F. Kennedy School of Government. Harvard University.