“A HRIA Tool Research by IGJ for the Protections of Human Rights on Corporate Practices Related to Trade and Investment Agreements”
An introduction
by Rachmi Hertanti
Why HRIAs?
There are several factors why the use of HRIAs instruments continues to develop since the 1990s (James Harison, 2011), namely: First, UN Secretary General’s call in 1997 encouraged the mainstreaming of human rights into all of UN work and in particular on a rights-based development approach, both in project planning and design; Second, HRIAs began to be developed by various actors as an extension of social impact assessments; Third, HRIAs are recommended as a tool to monitor and improve work in other fields, and especially health policy, were deemed to be less focused on vulnerable and disadvantaged groups[1].
HRIAs have been interpreted as a way to ‘measure the impact of policies, programs, projects and interventions on human rights’, and includes activities assessments that directly and deliberately aim to change the situation of human rights or assess the activities that may have undesirable human rights consequences like the activities of multinational companies. The impact assessments can assess the activities that have occurred in the past (ex post) as well as planned activities in the future (ex ante). At least thus far HRIAs activities have been carried out in six issue rooms, namely: First, HRIA’s in the field of development; second, Health and human rights; third, Children’s rights impact assessment; fourth, HRIA’s on Multinational companies; fifth, International trade; and sixth, Public authorities[2].
HRIAs have added value compared to social impact assessment. In the 2010 UN expert seminar on HRIA on the Trade and Investment Agreement, it was found that: social impact assessments are often partial and arbitrary, HRIAs have a strong normative framework that is based on international treaties and conventions, which have codified states’ human rights obligations. This framework puts pressure on duty-bearers, engages international and national human rights institutions and emphasizes the importance of transparency, participation and empowerment. It shifts the perspective from the aggregate to addressing the disaggregated needs of the poorest and most vulnerable[3].
There are even expert views assess that HRIAs are more comprehensive than Sustainability Impact Assessment (SIA). Elisabeth Buorgi Bonanomi[4] (2018) in her view considered that many criticisms emerged from human rights experts on SIAs that has been used by the European Union to conduct trade agreements assessment with their economic partner countries. This is due to the current methodology and practice of SIAs trade are deemed failed to produce an adequate assessment of how a trade agreement will affect human rights; In addition, the SIAs toward trade agreements have failed to resolve the fundamental challenges faced by poor countries, such as weak productive capacity, vulnerability of external shocks due to limited diversification, high unemployment, and lack of infrastructure. Elisabeth also sharply points out the fundamental differences between HRIAs and SIAs: trade HRIAs tend to focus on risks and their prevention, whereas trade SIAs tend to concentrate on finding ways to optimally capture the opportunities offered by a new trade agreement.
Among the strengths of HRIAs compared to other valuation tools, there are also several HRIAs challenges in the use, especially in the context of evaluating international trade agreements, which are related to methodological issues and indicator issues.
At least, according to the UN experts (2010), there are 3 special notes regarding the challenges of using HRIAs for evaluating international trade agreements: First, HRIAs require flexibility and adaptability. Different approaches are required for different provisions of a trade or investment agreement. Methodological issues will vary depending on the provision. There is no single blueprint for all provisions; Second, HRIAs need to be robust and user-friendly. HRIAs are complex and time-consuming, but if the methodology is too complex it will alienate governments and other actors. HRIAs should ideally form part of a cyclical process that provides ongoing input to inform policy decisions. Other types of assessments and feasibility studies could assist the HRIA process; Third, HRIAs should include relevant experts and maintain independence. It is important to include experts from various disciplines − including trade, investment, law and social sciences − in the HRIA process. If the government takes the lead in the HRIA, there is a need to ensure independence and impartiality in the process[5].
Methodological challenges are also recognized in practice in a publication of The Berne Declaration (October 2014) related to the HRIAs of UPOV 1991[6]. Special note from the study stated: “This HRIA process stretched over two years, and absorbed considerable resources and efforts from the core team and the research teams in the field. But once a blueprint for using HRIA in standard contexts becomes available (as is the case with environmental impact assessments), a much-improved cost/benefit ratio can be expected. However, it might still take some time until a well-established HRIA methodology becomes available. And so far, there is very limited experience of applying this methodological approach to public policy issues. The guiding principles on HRIA of trade and investment agreements published by the UN Human Rights Council (De Schutter, 2011) are certainly a good starting point when embarking on an HRIA, but they do not provide hands-on guidance on the methodology. Moreover, an HRIA has not previously been applied to IP in the agricultural sector. This project can therefore be seen as pioneering research, which resulted in additional costs in terms of time and effort”.
The focus of the challenge of using HRIA on international trade agreements specifically also lies on the issue of indicators. Up to this moment the formation of indicators in the HRIA on trade and investment agreements still faces many challenges to find the right indicators. S. Bakker (2009) underlines this issue that states: “As the formulation of human rights indicators is a recent development and limited to some rights only, most existing HRIA tools have been developed without such agreed indicators and instead have their own ways to measure impacts.”
The discussion of the UN experts (2010) concludes about the importance of compiling appropriate indicators for HRIAs on international trade agreements: “The use of human rights indicators is an important consideration in HRIAs, given the focus in HRIA methodology on empirical evidence to assess impacts. For HRIAs of trade agreements, it is necessary to choose appropriate human rights indicators that can demonstrate changes between the baseline and future enjoyment of a right after the introduction of a new trade measure. This requires establishing a limited number of valid and reliable indicators that can focus data collection and analysis while effectively demonstrating impact. Criteria for selecting human rights indicators are proposed in the literature[7].
Related to the indicator issue, Olivier de Schutter in The Guiding Principles on HRIAs of Trade and Investment Agreement[8] stated: Human rights impact assessments should rely on indicators that measure the following: (a) Whether the trade or investment agreement will make it more difficult for the State concerned to ratify particular human rights instruments, to adapt its regulatory framework to the requirements of human rights, or to set up the institutional mechanisms, that ensure compliance with its human rights obligations (structural indicators); (b) Whether it creates obstacles to the implementation of the State’s policy measures and programmes, or to the functioning of institutional mechanisms, that ensure effective fulfilment of State’s human rights obligations, particularly insofar as such obligations require budgetary commitments (process indicators); and (c) Whether the trade or investment agreement may make it more difficult for a State to make progress in the realization of the human rights it has undertaken to comply with, measured from the perspective of full enjoyment of all human rights by all (outcome indicators).
The Urgency of HRIA on Trade and Investment Agreement in Indonesia
- The Loss of Human Rights Agenda
The Government of Indonesia intensively proposed Free Trade Agreements (FTA) with various partner countries by reason of boosting export value and encourages re-export commodities to third countries. At least Indonesia bounded into 10 trade agreements and added 13 other negotiation initiatives. Throughout 2018-2019, the Government of Indonesia has signed 9 trade agreements.
However, in 2019, the Government of Indonesia will pursue the completion of several other free trade agreements, such as: Indonesia-Korea CEPA, Regional Comprehensive Economic Partnership (RCEP), Indonesia-Japan Economic Partnership. The other agreements that become the priority targets for immediate completion such as the Indonesia-European Union CEPA.
The massive development of Indonesia’s trade cooperation carried out by the Government in response to the declining of national economy after the protection trend of developed countries, especially the United States, which then leads to the current trade war situation. This condition impacted on the value of export trade which has not increased, and ultimately has a domino effect on the deteriorating macroeconomic conditions in Indonesia. This was particularly felt throughout 2018. BPS recorded that 2018 was the worst trade deficit in history up to 8.5 billion USD. This was accompanied by a worsening balance of payments which also negative. Therefore, the current strategy of the Government of Indonesia is only directed to the efforts to increase the exports value by opening more access to export destination markets.
The direction of Indonesia’s trade policy which focused on the strategy to increase exports has finally forgotten the agenda of human rights protection. Whereas the implementation of international trade and investment agreements also impacted on the enforcement and protection of human rights and the responsibility of the state in fulfilling human rights.
Free trade agreements are not only negotiate about market access, but also negotiate the “Rules” which contain principles or legal rules regarding how the state carries out its obligations to implement the agreement, including what the state may or may not do in making domestic regulations. It is impacted on the policy space owned by a state. For example, about the principles of transparency, non-discrimination, regulation coherence (harmonization of national laws), dispute settlement mechanisms, Rachet, Standstill, prohibitions on performance requirements, includes rules relating to other trade-related agreements chapters such as IPR protection and investment. Therefore, the legal provisions in the FTA are potentially have impact on the country’s performance in carrying out its obligations to protect, respect and fulfill human rights in Indonesia.
Below will be further explained about the situation occurs in several sectors related to transnational business activities in the trade and investment liberalization agenda and their impact on the enforcement, protection and fulfillment of human rights in Indonesia.
2. Constitutional Mandate
In current practice, the Government of Indonesia only conducts cost and benefit analysis studies from the economic side before free trade agreement negotiations are conducted. Therefore, social impacts or impacts on human rights over the implementation of an Indonesian trade agreement felt by the people are often missed attention of policy makers, especially in managing the impact risks.
It is time for the government and parliament to no longer only focus on economic growth issue when establishing international trade and investment cooperation. However, social justice issue including human rights should be an integral part in the formulation of international trade and investment policy and diplomacy strategies. Therefore, in ensuring social justice and human rights issues are calculated in an international trade and investment agreement, a comprehensive impact assessment of human rights is needed when the agreement is negotiated, and shortly before the agreement is ratified, and after the agreement is implemented.
In Indonesia, there is no formal mechanism that requires a Human Rights Impact Assessment (HRIA) when a trade and investment agreement are negotiated, and shortly before ratification, and after the agreement is implemented. However, in the development of legal practice in Indonesia, a new legal breakthrough has emerged as a result of judicial process in Constitutional Court.
Presence of Constitutional Court Verdict No. 13 / PUU-XVI / 2018 concerning the review of Law No.24 of 2000 on International Treaties against the 1945 Constitution of the Republic of Indonesia has presented new norms related to international trade and investment agreements. The verdict was issued in November 2018 at the petition of a judicial review lawsuit from civil society group incorporated in an Advocacy Team for Economic Justice.
In its verdict, the Constitutional Court stated that in determining an international agreement requires the approval of Indonesian Parliament could no longer determined in a limitative manner, but rather had to be assessed casuistically for the impact caused in accordance with the criteria contained in Article 11 paragraph (2) of the 1945 Constitution of Indonesia, namely the international agreement which have broad and fundamental effects on people’s lives related to the state’s financial burden, and / or require changes or forming the law.
Before this Constitutional Court’s verdict, international trade agreements were often ratified without the approval of the Indonesian Parliament. Moreover, for technical reasons, the Government of Indonesia has finally take unilateral decision regarding the need of approval by the Indonesian Parliament for an international trade agreement. This is due to, trade and investment agreements are often only considered as technical cooperation agreements and do not cause broad and fundamental consequences for people’s lives. This has been impacted on the flawed process of people’s democratization in ratifying international trade and investment agreements in Indonesia.
After the Constitutional Court’s verdict No.13 / PUU-XVI / 2018, the democratic process is guaranteed by the Constitution and intends to ensure that the contents of a free trade agreement should not contradict with the Constitution. The Constitutional Court’s verdict has legal implications, namely: In terms of deciding an international agreement requires or does not require the approval of House of Representatives of Republic of Indonesia, the House of Representatives of Republic of Indonesia should first conduct a comprehensive impact analysis of international agreements in accordance with the criteria set out in Article 11 paragraph (2) The 1945 Constitution of Indonesia. Indirectly, the results of this impact analysis could also be consideration of Indonesian Parliament to approve or not the ratification of international treaty[9].
Article 11 paragraph (2) of the 1945 Constitution of Indonesia states:
“President in making other international agreements that have broad and fundamental effects on people’s lives related to the state’s financial burden, and / or require law changes or forming should be with the approval of the House of Representatives”.
There are at least three impact criteria arising from the aforementioned article from an international agreement that requires the approval of the Indonesian Parliament, namely:
- The agreement has broad and fundamental effects on people’s lives;
- The impacts related to the country’s financial burden;
- Require changes or forming of laws.
Therefore, the Constitutional Court’s verdict has become a legal basis for civil society groups in Indonesia to urge the immediately presence of an impact assessment mechanism on international trade and investment agreements. The study of HRIA Tools that conducted could become a constructive input from civil society groups for policy makers regarding the implementation of Constitution mandate in the procedures of drafting and ratification of international agreements, including trade and investment, in Indonesia. ****
Download The Human Rights Impact Assessment Tool on The Free Trade and Investment Agreements Here:
[1] James Harrison, “Human Rights Measurement: Reflections on the Current Practice and Future Potential of Human Rights Impact Assessment”, 2011, Journal of Human Rights Practice Vol.3, Pg.162-187, Oxford University
[2] Ibid
[3] Report of The Expert Seminar, “Human Rights Impact Assessment for Trade and Investment Agreements, June 23-24, 2010, Geneva
[4]Elisabeth Buorgi Bonanomi, “Measuring Human Rights Impacts of Trade Agreements – Ideas for Improving the Methodology: Comparing the European Union’s Sustainability Impact Assessment Practice and Methodology with Human Rights Impact Assessment Methodology”, 2017, Journal of Human Rights Practice Vol.9, pg.481-503, Oxford University
[5]Report of The Expert Seminar, “Human Rights Impact Assessment for Trade and Investment Agreements, June 23-24, 2010, Geneva
[6]Thomas Braunschweig, et.all, “Owning Seeds, Accessing Food: A Human Rights Impact Assessment of UPOV 1991 Based on Case Studies in Kenya, Peru, and The Philippines” , 2014, The Berne Declaration (BD)
[7] Report of The Expert Seminar, “Human Rights Impact Assessment for Trade and Investment Agreements, June 23-24, 2010, Geneva
[8] The Guiding principles on human rights impact assessments of trade and investment agreements, A/HRC/19/59/Add.5
[9] Kertas Kebijakan, “Implikasi Hukum Atas Putusan Mahkamah Konstitusi No.13/PUU-XVI/2018”, IGJ, September 2019.