Trade Liberalization and Human Rights

Liberalization:

The meaning of liberalization is to liberate the economy from the clutch of the government and provide the platform for the enhanced role of the private sector in economic activities. Liberalization seeks to see the transformed role of the government from ruler to facilitator in order to strengthen the market forces in resource allocation and mobilization.

It refers to the opposite of economic regulation by the State and includes deregulation of markets, deregulation of prices, privatizations of public enterprises, de-licensing and removal of quota system in international trade. The World Bank has defined it as: “Economic liberalization means freeing of pieces, trade and entry to markets from state control while stabilizing the economy.”

It is the tool for non- interventionist approach to development, and it is pursued through reducing public expenditures, privatizing government owned enterprises, deregulation and de-licensing and curtailing grant and subsidy provided by the government to different sectors of the economy.

Trade Liberalization:

The term liberalization refers to gradually reducing government role and intervention in the economy in exchange for greater participation and role of private sector. It is about redefining the role of government as a regulator, catalyst and facilitator in an economy. It is reducing government role and intervention in economy, adopting greater flexibility in the market, and freedom for private initiatives in market based on interaction of demand and supply.

Trade liberalization is the process of reducing government intervention and trade barriers, and increasing role of market or private sector in activities related to trade, whether it may be domestic or international in nature and scope.

The efforts for trade liberalization in Nepal includes: introduction of ‘Structural Adjustment Program (SAP) in 1987, which called for deregulation of interest rate, exchange rate and financial sector, issuance of ‘Commercial Policy’ in 1991 as government’s initiative for trade liberalization, membership of Nepal in regional free trade arrangements such as SAFTA, BIMSTEC free trade area etc., accession of Nepal to WTO on 23rd April, 2004 as 147th member which had opened wide avenues for trade liberalization, and ‘Commercial Policy,2072’ is also another mile stone for the trade liberalization in Nepal.

Benefits of Trade Liberalization:

There are many advantages of trade liberalization which can be termed as benefits of trade liberalization. The major benefits of trade liberalization can be made clear with the help of following points:

1. Removal of all kinds of trade barriers which ensures free flow of goods and services and other tradable or marketable phenomenon,
2. We can take advantage of comparative as well as competitive advantages through international trade,
3. Promotion of export trade,
4. Reduction of the regulation costs of the government,
5. Qualitative goods and services availability for the consumers from the global market,
6. Increased role of the private sectors in the trade promotion of the country which creates efficiency and effectiveness in the international trade,
7. Encourages the private and foreign investments in the trade and business related activities,
8. Increased trade and business activities leads towards the better sources of revenue for the government and employment opportunities for the human resources of the country,
9. It helps to eradicate and eliminate the syndicate, cartel and monopoly in the market,
10. It seeks regional and global trade connectivity and focuses on the global governance on trade and business activities that ensures corporate good governance in the areas of trade and business,
11. It reduces the different tariff and non-tariff barriers and focuses on the free trade,
12. Promotes globalization,
13. Development of new and innovative technologies in the market,
14. Attraction of foreign investments (FPI and FDI),
15. It develops regional and international connectivity and presence through different trade and business related forums,
16. Backward and forward linkages for the overall economic development of country by reducing the poverty, increasing the per capita income and boosting up the Gross Domestic Product (GDP) through trade and business related activities,
17. Development of different legal and policy instruments regarding international trade due to liberalized business activities across the globe,
18. New and advanced way of conducting international trade through innovative ideas and technologies also helps to transfer knowledge, capital and technologies in the domestic trade related activities as well.

Thus, all these are the major benefits of the trade liberalizations in different dimensions of economy, which focuses on the taking advantages of trade liberalization by enhancing the performance of the private sector regarding the trade and business in national and international arena. The positive support of the government and the honest implementations of different business guidelines and principles as well as best practices around the globe related to trade and business must be considered as valuable sources of success in this field that always leads us towards more advantages and benefits in the days ahead.

Trade Liberalization and it’s Challenges Over National Economy:

There are many advantages of trade liberalization, though it has some challenges as well. The main challenges of trade liberalization over national economy can be pointed out as follows:

1. High competition in the domestic market creates challenges towards the internal or domestic trade and industries,
2. Financial, technical as well as social risks increases due to liberalized trade and business activities,
3. Increased borderless and faceless transactions of international trade may create erosion of sovereignty and the question of nationalism,
4. Less regulation and de-regulation may create the problems of unethical trade and business activities of the private sector,
5. Trade liberalization may create challenges towards the domestic labor market and policies and practices regarding it,
6. The removal of tariff and non-tariff barriers may create the challenge of dumping of goods from another country to pose threats of survival of the domestic industries,
7. It can create the situation of capital flights, trade based money laundering, and financing for terrorism through international trade and commerce,
8. The cyclical effects and spillover effects of global economy regarding the financial risks may lead domestic economy in problem as well as in disaster,
9. The revenue amount and base becomes comparatively weaker due to the removal of tariffs of trade,
10. The rapidly changing innovative ideas, technology and digitized international trade has posed serious challenges on our trade and business sector of national economy,
11. It has given priority on reduction of subsidy in many sectors, but in some sector, it is the life blood of survival and to contribute in the economic development of the country,
12. It may create the problems of corporate good governance in the trade sectors of the economy,
13. The tax evasion and the irresponsible behaviors of some trade houses and business groups are another main challenges caused by the trade liberalization,
14. The quality of goods and services need to be of high standard, otherwise it creates challenges towards the human rights and health related aspects of the consumer and the general public,
15. Challenges to maintain the ‘Balance of Payment’ status smooth and strong,
16. The unnecessary trade war caused by the liberalized trade and business activities may create challenges of applying unethical standards of behaviors to win the race of trade war,
17. The deregulation, de-licensing, and freedoms of trade related activities may create the challenges of inflows and outflows of illegal items and things which destroys the good market structures of trade and business,
18. Developing the competent and well-qualified human resources, better policies related to the trade and commerce is another important challenge caused by the trade liberalization in the economy.

Thus, these are the major challenges of trade liberalization over the national economy. The demerits and disadvantages of the trade liberalization may be the main reason and cause of the challenges. The better implementation of the international as well as national legal and policy instruments ultimately leads us towards the different opportunities, which can help to tackle the challenges caused by many factors.

Impacts of Trade over Human Rights:

The rapidly growing trade and business related activities across the globe have both positive and negative impacts on human rights issues or situations all over the world.

Human rights are the right inherited to all human beings by the virtue of being human. It includes the natural and legal rights endowed to human, from cradle to grave. Human rights are the basic rights and freedom, to which all humans are entitled without discrimination irrespective of their nationality, origin, race, color, region, ethnicity or any other grounds. These rights are universal, inseparable, and equal to all in nature.

Human rights are the means for establishing human dignity, human value and relation. Universal Declaration on Human Rights, 1948 adopted human rights as basis for peace, freedom, and development. UN Charter also incorporates the basic tenets of human rights. Human rights are legally ensured, protected and promoted through different codified international and national laws.

There are different impacts of trade over human rights situations of many people living around the globe. The business and trade related activities of one country and one place has great impact on another place or country.

The fundamental document which describes about the guiding principles regarding the business and human rights is ‘ United Nations Guiding Principles on Business and Human Rights (UNGP on BnHR), 2011 and it can be termed as a framework of ‘Protect’, ‘Respect’, and ‘Remedy’.

As we know that more trade related activities should increase economic welfare, protection of human rights with respect for individual dignity. The impacts on local business and trade, availability of foods and medicines, consumable goods and their price, trade and investment agreements, conservation of the environment, protection of the investors, migrant workers and their human rights, protection of life, liberty and property of the general public, implementation of internationally recognized human rights and labor standards, regulatory principles, guidelines, and practices in the trade and business related activities are the key areas of impacts of trade on human life or human rights issues.

The proper balance and combination of the trade and human rights are crucial in the today’s globalized and liberalized business world. The basics of how far trade impacts over human rights can be highlighted through the different theoretical and practical aspects as prescribed and described in the UNGP on Business and Human Rights, 2011 as three pillars, which we must consider properly.

Pillar-1: The State duty to protect human rights: prevent, investigate, punish, redress:

1. Protect the abuses of human rights by third parties including business,
2. Through laws, policies, regulation and adjudication,
3. States are not responsible for abuses by private businesses, but need to prevent, investigate, punish and provide adjudication/ redress,
4. Through policy coherence and special steps on special cases.

All these are the key areas of pillar one of the UNGP on BnHR, 2011, and it has described in 2 foundational principles and 8 operational principles of pillar one.

Pillar-2: The corporate responsibility to respect human rights:

This second pillar has described and prescribed 5 foundational principles and 9 operational principles to protect the human rights in trade and business related activities. The implementation of such can be through:

1. Corporate policies, due diligence, remediation process,
2. Business may cause or contribute, or be directly linked to human rights abuses,
3. Businesses have to avoid infringing on the rights of others and to address negative impacts with which they may be involved,
4. Articulate ‘Human Rights Policy Commitment’ consistent with all human rights,
5. Conduct ‘Human Rights Due Diligence’ to identify, prevent, mitigate, and account for the impact of their operations on human rights,
6. Establish “Remediation Processes’ for adverse human rights impacts that a business causes or contributes to cause.

All these are the main foundational as well as operational principles to protect the human rights and balancing the nexus between trade and human rights situations.

Pillar-3: Access to Remedy:

There are 1 foundational principle and 6 operational principles in the third pillar of the UNGP on Business and Human Rights.

This pillar has focused on:

1. Effective access for survivors /victims, judicial and non-judicial,
2. States need to provide for access to effective remedies for survivors/ victims of business related human rights abuses,
3. Businesses need to provide for operational- level grievance mechanisms to identify and address grievances early, and to cooperate in legitimate processes to remedy adverse impacts that have caused or contributed to the abuses.

Thus, all these are the subject matters covered in the third pillar of the United Nations Guiding Principles on Business and Human Rights.

Conclusion:

The wave of trade liberalization has covered the all most all (near about 97% of global trade and business) trade and business activities which has created many advantages to the national economy and shown some challenges towards the domestic economy as well. The trade and human rights issues are the critical aspects of trade liberalization in the today’s globalized world. The proper implementation of the international trade and business related laws, agreements, arrangements, conventions as well as UNGP on Human Rights are important to create and maintain better business environment all over the world. This ultimately leads towards better production, better distribution and better consumption of the goods and services around the globe through free and fair trade as expected by all the human beings living in this world.