International Economic Development Law

The Organization for Economic Cooperation and Development (OECD), the United Nations Conference on Trade and Development (UNCTAD) and the GATT/WTO ("World Trade Organization") have been the primary international organizations impacting on international economic development law. The three organizations reflect the often divergent agendas of developing countries and industrialized countries. The OECD is widely viewed as an exclusive club of major industrialized nations, and the guidelines and other instruments that it has produced reflect this orientation. UNCTAD was established to advocate for the economic agenda of the developing countries and to promote trade matters relevant to their economies, such as multilateral commodity agreements for primary products such as jute, rubber, sugar and tropical timber. Although it contains provisions for assisting in mitigating possible negative effects of liberalized trade on socio- economic conditions in developing countries the WTO structure is geared principally toward addressing complex trade concerns of advanced market economies. The GATT/WTO's principal concession to environmental concerns is a Ministerial Decision on Trade in Services and the Environment. It merely recommends that the WTO Committee on Trade and Environment examine whether there need to be provisions in addition to the existing Article XIV (b) of the GATT referring to measures necessary to protect human, animal or plant life or health, in order to address conflicts between trade and environmental protection measures. The impact of trade and trade policies on human rights is not expressly addressed either in the GATT or in supplemental ministerial declarations. In the areas of environmental protection and human rights, the GATT/WTO structure does not adequately facilitate a symmetrical relationship with trade considerations.

Despite the fact that UNCTAD's instruments have evidenced concern over international inequities regarding terms of trade and use of resources between North and South, much of economic law produced by the industrialized states has related to regulating the flow of finance among private international banking institutions and has not addressed social equity or environmental impacts. The economic law instruments produced by the OECD have primarily addressed economic issues of importance to developed countries, such as the global movement of capital, the regulation of and standardization of international financial instruments, trade-policies concerning trade and financial services primarily in advanced industrialized markets.

Previous influential paradigms for economic development assumed that economic development entailed foregoing human rights priorities during the period that countries were on the road to achieving "development". A major corollary of this view was that curtailing civil and political rights, as well as equitable economic distribution, enhanced capital accumulation, infrastructural development and economic growth. Several Latin American countries including Brazil and Chile pursued this approach between the 1960s and 1980s. In the case of Brazil, the resulted has been the development of a nation with one of the most asymmetrical income distributions between rich and poor of any country in the world. Attempts at achieving economic development through this approach have also produced negative side-effects threatening the sustainability of long-term economic growth. These include contamination and other degradation of important natural resources such as soil, freshwater and forests as well as serious health consequences for human populations. It should be noted that the notion that civil and political rights are expendable in order to achieve economic growth has not been limited to countries pursuing capitalist development strategies. It was also employed extensively in the socialist bloc as evidenced by the collectivization policies of the Soviet Union in the pre-World War II period and China following 1948.

Emergence of North vs. South Equity Issues

The perspective of developing countries (the so-called "South") regarding international economic development has been reflected in the strategy supported by UNCTAD for the creation of a new international economic order. The position of the majority of the South throughout much of the past three decades concerning resource management and development was articulated in two major groups of documents in the period leading up to the agenda laid out in Our Common Future in 1987. The first of these is the series of United Nations General Assembly resolutions dealing with national sovereignty over natural resources. These resolutions were aimed at changing politico- economic relationships by articulating new international normative legal standards.

By the early 1960s, many developing countries had just recently attained political independence from former colonial overseers. Important economic assets, however. such as mineral deposits in the new states were often still owned or controlled by interests of the former colonial ruling state or other foreign business entities. Under these circumstances, many intellectuals and leaders in developing countries believed that Third World formal de jure independence was a sham, and that developing countries could realize de facto political independence only if they also had effective sovereignty over all economic assets including natural resources, located within their jurisdictions.

The most well-known of these resolutions is UNGA 1803 of 1962, declaring "...the right of peoples and nations to permanent sovereignty over their natural wealth and resources in the interest of their national development." Its contents are generally considered to be reflective or declarative of existing customary international law. In a sense, this was a triumph for developing countries; they obtained recognition from the industrialized states that the South's position regarding ownership, management and use of natural resources as articulated in UNGA 1803 evidenced the accepted international law on the subject.

Subsequent UN General Assembly resolutions developed further the South's perspective regarding ownership and management of natural resources and expressed developing country objectives for restructuring international politico-economic relations. These included UNGA Resolution 3281: the Charter of Economic Rights and Duties of States; and 3201 (S-VI) (1974): Declaration on the Establishment of a New International Economic Order ("NIEO"). Both reaffirmed UNGA 1803 and, inter alia, proclaimed the right of states to nationalize their natural resources.

Many western writers, by contrast, argue that 3201 is not reflective of customary international law, particularly regarding 3201's standards for compensation for state-acquisition of foreign-owned property. The demands for restructured economic relations between the North and the South contained in UNGA 3201, however, continue to be made in the dialogue between developing and industrialized countries.

Various parts of the agenda promoted in UNGA 3201 have influenced the articulation of rights and duties of states under international legal instruments. These are observable in sections of recent environmental protection agreements, in the provisions relating to "common but differentiated responsibilities", and "equitable sharing" between states of the benefits for the use of environmental knowledge and other resources. Some developing countries used the agenda articulated in these resolutions to justify nationalization and expropriation of foreign-owned natural resource concessions and other assets. These measures were the subject of a string of well-known arbitration decisions, several of which discussed at length both the legal validity of the nationalizations and the normative status of the General Assembly resolutions.

In addition to the General Assembly resolutions, key of note within the UN system that concerned North-South economic relations, and emphasize considerations of equity and the need to address global environmental problems arising out of the development process for both developing and industrialized countries. The other major group of materials are three important texts reflect this movement: the Founex Report in 1971, the Stockholm Declaration in 1972, and the Cocoyoc Declaration in 1974. Each of these texts sought to address in varying degrees greater equity in relations between North and South over utilization of natural resources and in drawing further attention to the serious socio-economic problems in developing countries that were contributing to environmental degradation. They provide the intellectual foundation for the Rio Declaration of 1992. "Development" As Articulated In International Instruments

The term "development" is widely used, but rarely specifically defined, in international agreements or other instruments. Two representative definitions for the term are provided by the World Conservation Strategy ("WCS") and the United Nations Declaration on the Right to Development. The definition provided by the WCS is directed at the relationship between conservation and development. According to the WCS, development is:

"... modification of the biosphere and the application of human financial, living and non-living resources to satisfy human needs and improve the quality of human life."

The United Nations Declaration on the Right to Development characterizes development as:

"...a comprehensive economic, social, cultural and political process, which aims at the constant improvement of the well-being of the entire population and of all individuals on the basis of their active, free and meaningful participation in development and in the fair distribution of benefits resulting therefrom."

Although both characterizations stress the improvement of human welfare, the WCS includes environmental resources in this process. The UN Declaration on the Right to Development does not refer at all to the environment despite its pronouncement six years after the publication of the WCS. The Declaration on the Right to Development was supported overwhelmingly by developing countries, and articulates their concerns with improving immediate socio-economic conditions in the Third World. The omission of any reference to the environment reflects both the low level of attention accorded to environmental issues until recently as well as developing country fears that preoccupation by industrialized countries with environmental issues would jeopardize the South's development needs.

International Law on Sustainable Development

Despite many often conflicting concerns and goals, the Earth Summit (UNCED) in 1992 witnessed a remarkable forging of environmental protection, human rights, and economic concerns and strategies. This convergence is most accurately reflected in what has been called "international law of sustainable development." The UNCED documents suggest that sustainable development is already a part of the general body of international law and that a distinct area of law already exists covering its subject matter. Principle 27 of the Rio Declaration, proclaims that

"States and people shall cooperate in good faith and in a spirit of partnership in the fulfilment of the principles embodied in this Declaration and in the further development of international law in the field of sustainable development." [emphasis supplied]

Likewise, Agenda 21's Chapter 39, entitled "International Legal Instruments and Mechanisms" refers to "...[t]he further development of international law on sustainable development ..." as one of the "vital aspects of the universal, multilateral and bilateral treaty-making process..." [emphasis supplied]

Whether there actually exists a field of law known as the international law of sustainable development has been the subject at several meetings of international legal experts. The highlighted portions of the above texts suggest that there is an already existing corpus of international law, namely the "international law in the field of sustainable development." Assuming that there is an emerging corpus of legal components which comprise the law for achieving sustainable development, opinions are divided on its contents. Is "sustainable development" a body of law in its own right, or a subsidiary component to the established fields of environmental, human rights and development law? This question remains unanswered at the moment. However, it is suggested that the rights and principles discussed in Section(s) III and IV of this paper offer a useful normative framework for law in the field of sustainable development where human rights, environmental protection and economic development objectives clash and converge.

The meaning of "sustainable development" is discussed as follows. Chapter 2 of Our Common Future (the report of the Brundtland Commission) begins:

"Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

Although these words are often quoted in isolation, as if to imply that the Brundtland Commission had nothing more to say on the matter, the text is qualified by the following language:

"It [‘sustainable development'] contains within it two key concepts:

* the concept of "needs", in particular the essential needs of the world's poor, to which overriding priority should be given; and

* the idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs."

Two points, which constitute basic elements of sustainable development, stand out from the above language. The first is recognition that there are environmental limitations on how human needs can be met. In other words, development strategies need to complement and enhance the natural resource base; and development policies must be fully integrated with the maintenance of environmental quality. This is reflected in Principle 4 of the Rio Declaration and Chapter 8 of Agenda 21. It is made abundantly clear by the World Commission on Environment and Development in Chapter 2 of Our Common Future:

"...Sustainable development requires the promotion of values that encourage consumption standards that are within the bounds of the ecological possible and to which all can reasonably aspire ... At a minimum, sustainable development must not endanger the natural systems that support life on Earth: the atmosphere, the waters, the soils, and the living beings ..."

Second, is the emphasis on the ability of present and future generations to meet their own needs. This is a paraphrase of the related concepts of "inter-generational" (fairness between members of succeeding generations) and "intra-generational" equity (fairness among persons currently living). Each person and accordingly each society has a legal obligation to use the natural resources of the world in a manner which does not foreclose options for either future generations or for other persons currently alive to enjoy the benefits, both quantitatively and qualitatively, of the same existing natural resource base.

The idea is summarized in the work of the Legal Experts Group of the WCED ("Legal Experts Group") concerning conservation of natural resources:

"It obliges States to manage the environment and natural resources for the benefit of present generations in such a way that they are held in trust for future generations ... This implies, in the first place, a basic obligation for States to conserve options for future generations by maintaining, to the maximum extent possible, the diversity of the natural resource base ."

The international community agrees that states must pursue development which is environmentally, socially and economically sustainable. Perspectives differ, however, on how to best address current needs within this paradigm without also prejudicing future needs. Although ideally sustainability entails providing equal attention to environmental, social and economic needs, viewpoints diverge on the methodology for balancing the three phenomenon.

The difficult question is finding appropriate criteria to balance human rights, environmental, and economic considerations in an inter-temporal context. International instruments to date often do not provide clear and coherent guidance. As noted elsewhere in this paper, arguments are still heard that intergenerational equity and sustainability relate only to a state's own future citizens. The challenge of sustainability, however, is not restricted to activities within a state's own jurisdiction. It is manifest in the international arena with potentially serious transboundary consequences impacting on national sovereignty. For example, the U.S. Government's recent decision to permit oil exploration on the border between Canada and Alaska could have major negative effects on Canada's Arctic wildlife and dependent Guich'in aboriginal communities.

The inter-relatedness of the problems presented by the challenge of sustainable development mandates that decision-makers take more holistic approaches than in the past to solving human rights, environmental, and economic development problems. International law needs to be approached creatively and cross-sectorally. Contemporary international instruments concerned with human rights, economic development or environmental protection, such as the Convention on Biological Diversity, the Desertification Convention, and Vienna Declaration, reflect this emerging tripartite approach. Their texts seek to incorporate these three areas of concern within their scope. It is unlikely, however, that existing legal instruments sufficiently adequately address the serious challenges posed.

Proceed to Part VI

For more information, contact: Owen J. Lynch (olynch@ciel.org)
or Shivani Chaudhry (schaudhry@ciel.org).