ICAR Government Procurement Project Geneva Summary

Government Procurement: Promoting Procurement Policies that Ensure Business Respect for Human Rights Summary of Forthcoming Report December 2013 Professor Robert Stumberg Professor Anita Ramasastry Bama Athreya

A Project Of:

Table of Contents I. INTRODUCTION....................................................................................................................................................1 II. FRAMING HUMAN RIGHTS IN THE CONTEXT OF PROCUREMENT ..............................................2 A.

Which Human Rights are Applicable to Government Procurement? ...................................2

B.

What Kind of Human Rights Violations are Occurring? .............................................................4

C.

Why Are Human Rights Violations Occurring? ..............................................................................4

II. UNPACKING THE PROCUREMENT PROCESS .........................................................................................6 Stage 1 – Plan Procurement Needs and Contract Terms .....................................................................7 Stage 2 – Solicit Bids and Give Notice ..........................................................................................................7 Stage 3 – Evaluate Bids ......................................................................................................................................7 Stage 4 – Award Contract, Set Contract Terms ........................................................................................8 Stage 5 – Enforce Contract ...............................................................................................................................8 III. ANALYSIS OF PROMISING ADDITIONAL STANDARDS ......................................................................9 A.

Federal Law on Tariff Preferences ......................................................................................................9

B.

Federal and State Law on Conflict Minerals................................................................................. 10

C.

Human Rights Due Diligence .............................................................................................................. 10

D.

State and Local Sweatfree Policies ................................................................................................... 11

IV. QUESTIONS ABOUT LEGAL AUTHORITY ............................................................................................. 12 A.

Executive authority to set human rights standards.................................................................. 13

B.

Concerns about trade agreements ................................................................................................... 13

V. CONCLUSION ...................................................................................................................................................... 14 AUTHOR BIOGRAPHIES ...................................................................................................................................... 15 ENDNOTES ............................................................................................................................................................... 16

I. INTRODUCTION In 2011, the United Nation’s Human Rights Council endorsed the United Nations Guiding Principles for Business and Human Rights.1 The Guiding Principles (UNGPs) set forth three pillars to guide governments and businesses: Protect, Respect and Remedy. Under Pillar I, governments retain their role as duty bearers of human rights, including “taking appropriate steps to prevent, investigate, punish and redress . . . through effective policies, legislation, regulations and adjudication.”2 The UNGPs elaborate that “States should promote respect for human rights by business enterprises with which they conduct commercial transactions.”3 Further, as the Commentary to UNGP 6 clarifies: “This provides States—individually and collectively—with unique opportunities to promote awareness of and respect for human rights by those enterprises, including through the terms of contracts, with due regard to States’ relevant obligations under national and international law.”4 This summary document elaborates on the duty to protect human rights in the context of commercial transactions, and specifically procurement. It is the first product for the “Government Procurement Project” launched by the International Corporate Accountability Roundtable.5 With annual procurement of $350 billion, the U.S. federal government is the largest single purchaser in the global economy.6 Like other mega-consumers, it procures goods and services through global supply chains, and many of these goods and services are linked to serious violations of human rights. Our goal is to incorporate respect for human rights as a standard for doing business with the U.S. government.

The “Government Procurement Project” commissioned Professor Robert Stumberg, Professor Anita Ramasastry, and Bama Athreya to develop and release a report in January 2014 examining the following questions:  What human rights are applicable to government procurement? Are human rights violations taking place?  How do U.S. procurement rules create or exacerbate potential human rights violations by government contractors?  How can existing federal procurement rules expanded or strengthened to protect human rights?  What are some of the legal concerns that constrain federal agencies from expanding human rights standards?

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II. FRAMING HUMAN RIGHTS IN THE CONTEXT OF PROCUREMENT This section seeks to answer questions related to the applicability of human rights to procurement rules. It further provides examples of human rights violations linked to government contracts and explains factors that enable such violations to occur.

A. Which Human Rights are Applicable to Government Procurement?

Before the U.S. government can require its contractors to comply with human rights standards, it must define those rights and identify their source. Human rights have an international source—either a treaty or customary international law. For procurement, human right requirements must also have a domestic source, which usually takes the form of legislation, an executive order, or the U.S. Constitution.

When governments ratify a human rights treaty, they assume obligations to respect, protect, and fulfill human rights.7 Ratification, in turn, means that a State has committed to implementing its human rights obligations through domestic legislation and actions.

The United Nations lists ten “core” human rights treaties. All governments have ratified at least one; 80 percent have ratified four or more.8 There is a general consensus among States that four treaties create an international bill of human rights. They include:    

Universal Declaration of Human Rights (UDHR)9 International Covenant on Civil and Political Rights (ICCPR)10 International Covenant on Economic, Social and Cultural Rights (ICESCR)11 ILO Constitution and Core Labor Standards12

The United States has ratified some (the ICCPR13 and ILO Constitution14) but not all (not the ICESCR) of the UN’s core treaties.15 Furthermore, in its procurement code, known as the Federal Acquisition Regulation (FAR), the United States implements standards for some, but not all, of the rights in these treaty commitments. For example, the FAR has procurement standards to prohibit forced or indentured child labor and human trafficking, but not to protect freedom of association or right to life.16 Therefore, the U.S. government’s procurement rules do not mirror the set of human rights obligations it has undertaken to protect nationally. The following chart presents an overview of FAR coverage of human rights and select U.S. treaty commitments. The left hand column indicates where current coverage extends either fully (Y), partially (P), or not at all (N).

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FAR

Human Right

Select Treaty source

Domestic source

ILO C. Forced Labor,18 ILO C. Worst Forms of Child Labor19

EO 1312620

Protocol to Prevent Trafficking22

EO 1362723

Y

Prohibition on severe forms of trafficking21

ICCPR

EO 1124625

P

Prohibition on discrimination at work (U.S. territory)24

ICCPR

Crime of Murder;27 Occupational Health and Safety Laws28

ICCPR, ILO Const., ILO Declaration

National Labor Relations Act,29 First Amendment30

N

Freedom of association/Right to Bargain Collectively Freedom of expression

ICCPR

First Amendment31

N

Free exercise of religion

ICCPR

First Amendment

Right to dignity

ICCPR

FLSA,32 Minimum wage laws33

Right of privacy

ICCPR

Prohibition on torture

Conv. Against Torture ICCPR

Employee Polygraph Protection Act, HIPPA Gramm-Leach Bliley, etc.34 Civil Rights Act,35 Torture Victims Protection Act36

Labor standards Prohibition on forced labor and Y forced child labor17

Civil and Political Rights Right to life26 P

N

N

N

N

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B. What Kind of Human Rights Violations are Occurring?

Even where procurement requirements incorporate standards of respect for human rights, they may be improperly developed or fail in their enforcement. Hence, there are a number of contemporary examples of human rights harms linked to U.S. government contracts. These include: Contractors that withhold overtime pay – A defense contractor that makes body armor and tactical gear failed to pay overtime wages at its factory in Tijuana, Mexico.37 Subcontractors that fire organizers – A subcontractor in the Tehuacán region of Mexico contributes to the supply chain of a major defense contractor that makes uniforms for public employees. After initial organizing to protest an “official union,” 13 leaders were fired.38 After workers voted to affiliate with a union, the subcontractor shut down the factory, and then it blacklisted over 400 workers who supported the union from jobs in its other factories.39 Electronics that contain conflict minerals – The Democratic Republic of the Congo (DRC) is a leading exporter of minerals like cobalt and tantalum that are needed to produce electronic products. Extraction industries in the eastern DRC are also rife with slavery, forced labor, and human trafficking, which is closely associated with widespread rape and forced marriage.40 Without close tracking and disclosure, it is not possible to tell whether DRC-based supply chains contribute to $74 billion in procurement of electronics by U.S. executive branch agencies each year.41 Contractors that use forced labor – In a pending lawsuit, the families of workers from Nepal allege that a U.S. defense subcontractor fraudulently recruited the workers in Nepal and transported them to Iraq via Jordan against their will. While en route to a U.S. military base, the unarmed convoy was captured by Iraqi insurgents in a combat zone. The workers were videotaped as they were executed, and the video was broadcast on Nepali television, to the horror of their families.42 Other workers who made it to the military base were forced to stay and work there against their will.43 Factories that kill – Military exchanges license production of apparel with Marine, Navy, Army, and Air Force logos in some of the most dangerous factories in the world. Shirts with Marine logos were found in the charred rubble of a factory fire in Bangladesh that killed 112 workers.44

C. Why Are Human Rights Violations Occurring?

The examples above make clear that when contractors are willing to compete for government business by violating human rights, they start a race to the bottom.45 4

There is, in fact, a strong argument that governments are complicit in the sense that they set the rules for this race and preside over the results. Four factors contribute to inhumane outcomes and explain why governments are slow to respond to human rights violations related to procurement.

Low-bid competition - Suppliers compete by maximizing hours of work and minimizing spending on wages, benefits, training, facilities, and equipment.

Governments use competition to assure value, and the most common approach is to award a contract to the lowest responsible bidder. Lowest-price competition often leads governments to favor contractors who can source their production through supply chains in low-wage countries that impose minimal regulations.46 Their production is located outside of U.S. regulatory jurisdiction, and U.S. procurement standards do not hold them accountable for compliance with domestic law in the country of production.47 Supply chain transparency – Human rights problems with international sourcing are compounded by the nature and opacity of international supply chains. Supply chain managers—the government contractors—benefit from intense price competition among factories, farms, mines and other links in their supply chain. It is well understood that competition up and down the supply chain seeks the bottom in terms of workers’ bargaining power and producers’ legal accountability.48 Scale – Globally, procurement is equivalent to 82 percent of total exports.49 In the United States and other OECD countries, procurement is about 20 percent of GDP (7 percent federal, 13 percent state and local); in non-OECD countries it is 14.5 percent.

On this scale, government does not merely purchase in the market; it creates markets. For example, the U.S. government annually purchases $2.7 billion of ores and minerals, $2.6 billion of electrical equipment, and $2.4 billion of apparel.50 This means that government has the purchasing power to drive low-price competition, which can result in a race to the bottom. But it also has the purchasing power to avoid companies that compete by violating human rights.51 Government capacity to manage – Efforts to persuade government to use its purchasing power have been limited by strains on government capacity to manage procurement. As a consequence, managers of this system approach reform in terms of technical, incremental changes.52 They have yet to respond on a scale that would address what some advocates see as “gaping holes in federal procurement policy, allowing the federal government to purchase products made . . . in the most egregious sweatshop conditions . . . .”53

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II. UNPACKING THE PROCUREMENT PROCESS The U.S. government has set some human rights standards for federal procurement through the Federal Acquisition Regulation (FAR),54 which draws upon public laws adopted by Congress, executive orders issued by the President, and treaties that have the force of law in the United States.55 In addition, most executive agencies have issued supplements to the FAR. For example, the most extensive of these is the Defense Federal Acquisition Regulation Supplement (DFARS) created by the Department of Defense.56 Generally, procurement starts at the planning stage where governments determine their needs. Governments then must solicit bids and provide notice of the terms of the bid. After this solicitation and notice, they then evaluate bids for the capacity to perform the contract obligations. Next, they award the contract and insert their compliance obligations. Finally, a government would enforce the obligations stipulated in the contract.

These stages are detailed in the chart below, along with criteria that guide our evaluation of how procurement rules could be enhanced at each stage to better ensure respect for human rights. The criteria include: coverage, clarity, risk, capacity, remedies, and monitoring.

Stage

Evaluation criteria

1. Plan procurement needs and contract terms Coverage – In sectors where the government purchases, are human rights being violated? Which of those rights are covered and which are not?

Clarity – Are human rights clearly and consistently defined?

2. Solicit bids, provide notice Risk – Do agencies notify potential contractors when there is a significant risk of a human rights violation? Does notice of risk support a burden of due diligence on potential contractors?

3. Evaluate bids Capacity – Are potential contactors asked to disclose enough information to evaluate their capacity to comply with human rights obligations?

4. Award contract, set contract terms See Coverage and Clarity as noted at stage 1.

Capacity – Are contractors required to stand behind their certifications by having compliance plans or systems in place for due diligence?

5. Enforce contract Remedies – Are remedies that are available for violations of human rights used?

Are the available remedies feasible in terms of agency resources?

Monitoring – Do agencies have the capacity to respond to evidence of violations in procurement sectors? When evidence exists, do agencies monitor contractors?

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Stage 1 – Plan Procurement Needs and Contract Terms Coverage of human rights – At the planning stage of procurement, there are currently major gaps of coverage, even when the scope of human rights is limited to those that are “domesticated” in U.S. law. The FAR provides prohibitions on forced child labor,57 several types of human trafficking,58 and prohibits discrimination within U.S. territory.59 The DFARS also protects life as an obligation of private security contractors.60 But the FAR does not implement procurement standards to implement other treaty obligations that include rights to life and dignity (outside of security contracting), freedom of association, right to privacy, and freedom of expression.

Clarity of covered human rights – The current standard for compliance with some human rights could be clearer. For example, it is not clear whether forced labor is defined to cover threats other than serious harm or physical restraint.61 It is not clear whether discrimination “in employment” applies to more than hiring and firing (e.g., wages, promotion, and benefits).62 Stage 2 – Solicit Bids and Give Notice Risk – The current practice of notifying bidders when there is a risk of forced child labor is a model that should be expanded both to other sectors and to other human rights. The Department of Labor publishes a list of products and countries of origin where there is evidence of a significant risk of this violation.63 Purchasing agencies then notify potential contractors when they solicit bids.64 A bidder must then either certify that (1) its supply chain does not source a listed product/country, or (2) if it does, it has made a good faith effort to avoid products made with forced child labor.65 One gap in implementation is that suppliers are not required to certify if the work is performed in 41 countries with which the United States has a trade agreement.66 Stage 3 – Evaluate Bids Capacity – Federal agencies must evaluate bidders to ensure that they are responsible,67 meaning that they have the capacity to perform their contract obligations. This entails screening based on integrity and business ethics, and the burden is theoretically on the contractor to establish capacity.68 The gap here is that under current rules, integrity and business ethics do not extend to compliance with human rights; it is limited to certification that a potential contractor has not recently violated certain federal statutes that prohibit fraud, bribery, tax evasion, and a few other crimes.69 This gap could be addressed by making clear that integrity and business ethics require respect for human rights, and that contract officers must evaluate evidence of potential violations in a supply chain before awarding a contract.

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Stage 4 – Award Contract, Set Contract Terms Coverage and clarity – See the issues at stage 1 for planning contract terms.

Capacity – Requiring contractor certification of knowledge or capacity in stage 3, as the FAR does, means little more than “trust me,” especially when the FAR requires contract officers to rely on the certification.70 But there are three places where the FAR goes further—to require contactors to implement a measure of due diligence that backs up their certification. These include:   

Discrimination – The FAR requires contractors to develop a written affirmative action plan, which requires due diligence for work performed in the United States on non-construction contracts over $50,000.71 Trafficking – The FAR requires contractors bidding for contracts over $500,000 to develop and maintain compliance plans relating to the prevention of human trafficking.72 Life and other human rights – The Department of Defense supplement to the FAR (DFARS) requires security contractors to follow an industry standard for establishing a management process to anticipate and preempt human rights risks.73

These three innovations show where the FAR has evolved to require contract compliance obligations for due diligence. Without these a contractor does not have the capacity to comply with human right standards throughout a complex supply chain. The examples also reveal a gap, which is that the FAR does not require due diligence (having a plan) for other human rights that the FAR covers.

A closely related gap in capacity is that when human right harms occur in a supply chain (e.g., in the recent factory fires), some contractors claim that they do not even know who their subcontractors are.74 Given the complexity of supply chains, disclosure of locations where work is performed is a remedy for the gap in capacity for compliance with human rights. At the very least, the FAR could require disclosure in procurement sectors where there is a proven risk of human rights violations (e.g., conflict minerals in electronic components and apparel).

Stage 5 – Enforce Contract Remedies – The FAR provides the most severe remedies—suspension and debarment—for contractors that violate the human right standards in their contracts. The problem is that these remedies require extensive agency resources and risk disruption of government work. While the FAR provides mid-range remedies such as withholding payments, those remedies are authorized for only some, not all, human right standards.75 There are several current FAR remedies that could be adapted to provide appropriate enforcement options for human rights obligations. These include: termination of employees or subcontractors;76 8

liquidated damages for cost of investigations;77 publishing contractor names;78 and reducing payments or award fees.79 Monitoring – An equally important gap is the limited capacity of federal agencies to generally monitor compliance with human rights standards or investigate violations when third parties present evidence. The DFARS standards for private security contractors could be expanded as a model for human rights compliance under the FAR generally. The DFARS incorporates industry standards to require due diligence by contractors to prevent threats to life or property; it also provides contract remedies in the form of reducing award fees, and it authorizes third-party audits of human rights compliance.80

III. ANALYSIS OF PROMISING ADDITIONAL STANDARDS Having identified gaps in human rights standards for procurement, this section identifies promising additional standards that could fill those gaps. Research to date identifies numerous promising standards from a variety of sources including federal law, state and local law, and the UNGPs, particularly around human rights due diligence. The following chart maps the gaps that could be filled with the sources identified at each phase of the procurement process.

Filling the Gaps in Procurement Standards fo r Human Rights Sources of Promising Additional Standards

A. Federal law on tariff preferences B. Federal/state law on conflict minerals C. Human Rights Due Diligence/GPs D. State/local sweatfree policies

Stages of the Procurement Process 1.

Plan contract terms

2.

Solicit bids, provide notice

3.

Evaluate bids

X

4.

Award contract, insert terms x

x X

5.

Enforce contract

X

X

x

x

x

x

x

x

x

A. Federal Law on Tariff Preferences Federal law that provides tariff preferences sets a precedent for expanding coverage of human rights compliance in procurement rules. This model addresses gaps in the coverage of human rights in the FAR.

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The tariff law authorizes benefits based on compliance with the ILO’s core labor standards (with some modifications).81 Specifically, the law covers several rights that the FAR does not cover:82    

the right of association; the right to organize and bargain collectively; a minimum age for the employment of children; and in place of prohibiting discrimination, the right to acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.

Therefore, this law shows how additional core labor standards could be incorporated into procurement requirements.

B. Federal and State Law on Conflict Minerals California and Maryland have adopted laws to bar a company from procurement if it has violated federal disclosure obligations regarding conflict minerals.83 These state laws are a model for stronger enforcement of disclosure obligations. But more importantly, the federal disclosure law—which requires disclosure to the Securities and Exchange Commission84—is a model for disclosure by contractors under the FAR. Therefore, this promising additional standard shows how states have linked their state procurement to compliance with a federal statute. The federal government could also link its own procurement in the same way. This would then have implications for evaluation of contractor performance throughout the performance period as well as address enforcement of contract requirements.

C. Human Rights Due Diligence Governments have a duty to protect human rights, including by requiring businesses they contract with to respect human rights.85 One clear way for the government to effectuate its duty to protect is to require contractors to respect human rights by conducting human rights due diligence. The UNGPs define human rights due diligence in UNGP 17: In order to identify, prevent, mitigate and account for how they address their adverse human rights impacts, business enterprises should carry our human rights due diligence. The process should include assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed.86

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Thus, human rights due diligence requirements could be built into the FAR with impacts throughout the stages of procurement, including by requiring contractors to respect human rights by assessing their risk of doing harm, taking steps to avoid potential harms, communicating potential findings, and providing a remedy if they find a violation. Such due diligence should apply throughout the supply chain and cover subcontractors as well.87 As stated above, federal contractors have these obligations with respect to a limited set of human rights already. Specifically, two FAR requirements for a due diligence programs are models that could apply broadly to all contractors. The first model implements Executive Order (EO) 13627, “Strengthening Protections Against Trafficking in Persons in Federal Contracts.”88 Under the authority of this EO, the FAR requires contractors bidding for contracts over $500,000 to develop and maintain compliance plans relating to the prevention of human trafficking.89 It requires contractors and subcontractors certify their compliance annually.90 Specifically, this EO requires annual certifications that neither the contractor nor their employees have engaged in trafficking-related activities.91 And, for contracts above $500,000, contractors and subcontractors are also required to maintain compliance plans and post such plans at their work sites.92 The plans must include procedures to prevent subcontractors at any tier from engaging in trafficking in persons or trafficking-related activities, and to monitor, detect, and terminate any subcontractors or subcontractor employees that have engaged in such activities. Failure to comply with any of these provisions may result in suspension, termination, or debarment.93 The second model applies to private security services, where Department of Defense contractors are required to conform to a new technical standard developed by the American National Standards Institute (ANSI). This Standard prescribes the principles and requirements for a quality assurance management system for contractors performing private security functions outside the United States.94 The Standard aims to establish a comprehensive and systematic process to preemptively manage the risks, including human rights abuses, associated with private security contractor operations. In the words of ANSI, the Standard “requires the creation of an on-going, dynamic, and interactive management process that serves to promote a culture of respect for human rights, laws, and fundamental freedoms.”95 Clearly, the promising additional standard of human rights due diligence impacts all phases of the procurement process, and therefore holds tremendous potential for ensuring business respect for human rights that are recognized by the United States.

D. State and Local Sweatfree Policies Seven states and over 60 local governments have implemented “sweatfree” purchasing policies that enable the governments to avoid doing business with 11

suppliers using sweatshop sources for apparel or textiles. Fifteen state and local governments have organized the Sweatfree Purchasing Consortium to support their efforts.96 One of the Consortium’s early initiatives is to produce a Model Sweatfree Policy that builds on many of the best practices from its members’ laws and operating experience.97 Provisions of the model policy relate to several stages of the federal procurement process. For example: 





Plan procurement needs, set contract terms – The model policy expands human rights coverage in two important ways. One is to require contractors to comply with domestic law in a country of production.98 The other is to incorporate all of the ILO’s core labor standards and then clarify them with intermediate-level standards of compliance and more specific examples of compliance.99 Evaluate bids – The model policy requires potential contractors to disclose their factories and locations, and it evaluates bidders based on their capacity to comply with human rights obligations (e.g., with monitoring and information systems).100 Enforce contracts – The model policy requires investigation of complaints, and it authorizes third-party auditing and investigation.101

This promising additional standard has both substantive and procedural aspects to help ensure that businesses respect human rights when they do business with the government. Substantively, this model policy expands the rights that are recognized in procurement rules, and procedurally, it engages contractors in a disclosure process to provide critical information that is relevant for both evaluation and enforcement of contract terms.

The standards presented above are just some of the examples of ways that gaps in the FAR could be filled. They include procedural requirements on contractors to conduct human rights due diligence and substantive ways to provide missing protections. Finally, they address each aspect of the procurement process, seeking to underscore that some may be more relevant standards than others depending on the specific phase of the procurement process being examined.

IV. QUESTIONS ABOUT LEGAL AUTHORITY This section explores remaining questions about the legal authority to amend the FAR. The section underscores the complexities involved in the executive authority of the President to enact such reforms. Further, this section examines the international trade regime and discusses why ensuring business respect for human rights in procurement rules comports with existing obligations under trade rules.

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A. Executive authority to set human rights standards As discussed above, one of the key challenges is that the United States is not a signatory to all core human rights treaties. Thus, the scope of procurement standards is limited to those international human rights to which the United States is committed to protect by treaty or to rights protected by domestic legislation in the absence of a treaty. For example, the United States enacted anti-trafficking legislation before it ratified the Palermo Protocol on prevention of trafficking.102 The domestic legislation formed the basis of the subsequent Executive Order103 mentioned above.

Presidential power to issue an Executive Order is highest when an express or implied grant of congressional authority exists, and presidential power is lowest when the terms of the Executive Order are in direct conflict with congressional action.104 Furthermore, there is a presumption against the extraterritorial application of U.S. statutes.105 Hence, if laws do not state that they apply overseas, they do not. The U.S. Foreign Corrupt Practices Act, which provides for criminal liability for U.S. companies that engage in bribery overseas, is an example of a statute with explicit extraterritorial reach.106 These factors make it difficult for the Executive to act in setting human rights standards through procurement absent an express or implied grant of authority by Congress. It also means that some rights (e.g., those contained in the ICECSR) may not be included in federal procurement requirements unless Congress has enacted specific legislation with respect to particular rights contained in the treaty.

B. Concerns about trade agreements There is a long-standing concern that human right standards for procurement tend to discriminate against developing countries. Or they might violate trade rules that aim to rationalize procurement decisions. As a consequence, the FAR goes out of its way to avoid encroaching on contractors that hail from countries that are party to the WTO’s Agreement on Government Procurement107 or bilateral free trade agreements (FTAs) with procurement chapters.108 For example, the FAR obligation to certify knowledge about forced child labor does not apply to contractors that source their work in countries with which the United States has a trade agreement.109 Three types of trade rules might generate a conflict with human right standards for procurement. These include rules on technical specifications (evaluating products based on performance, not how a good is made),110 rules on qualification requirements (evaluating bidders based on their capacity to perform),111 and rules

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against discrimination.112 However, our analysis reveals that the general exceptions in procurement agreements leave room for governments to adopt human rights standards for procurement.113 In particular, the exception for measures “necessary to protect public morals, order or safety” appears to cover human rights standards that are (a) based on nearly universal standards of public morality, order or safety, and (b) implemented by the purchasing country.114 The core UN conventions should satisfy the requirement for universal standards of public morality. But because these standards are written in the general language of human rights treaties, they require governments to draft their own procurement standards with greater specificity.

When doing so, governments should be careful to avoid arbitrary standards or discriminatory effects, as one or the other could trigger a trade violation and disqualify a country from using the general exception.

V. CONCLUSION This document is intended to provide an overview of questions addressed by the “Government Procurement Project.” They include questions about the human rights applicable to supply chains for government procurement, how U.S. procurement rules currently protect human rights, opportunities to expand these rules, and finally, the legal considerations for such an evolution. Ultimately, the “Government Procurement Project” will issue a final report in 2014 detailing the ways that the FAR can be amended to factor in human rights standards at the various stages of the procurement process—all with the aim of ensuring that respect for human rights is a standard for doing business with the U.S. government.

Should you have comments, reactions or thoughts, please contact Amol Mehra, Director, International Corporate Accountability Roundtable at amol@accountabilityroundtable.org.

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AUTHOR BIOGRAPHIES Professor Robert K. Stumberg is a Professor of Law at Georgetown University Law Center, where he is also the director of the Harrison Institute for Public Law. The Harrison Institute is a teaching and service program that works with public officials and nonprofit organizations. His past positions include policy director at the Center for Policy Alternatives and legislative counsel for Montgomery County, MD. Professor Stumberg has 38 years of experience in economic development, trade, climate, and health policy. Most recently, he has studied the impact of trade agreements on state and local government and procurement strategies to promote healthy food and labor rights.

Professor Anita Ramasastry is the UW Law Foundation Professor at the University of Washington School of Law in Seattle, where she also directs the graduate program in the Law of Sustainable International Development. Her teaching and research focuses on commercial law, law and development, business and human rights and anti-corruption. From 2009-2011, she served as a senior advisor to the International Trade Administration of the U.S. Department of Commerce on trade policy in emerging markets, anti-corruption and business and human rights.

Ramasastry has previously served as an expert for ICAR's Human Rights Due Diligence project. As part of this project, she co authored an expert report entitled Human Rights Diligence: The Role of States (with Olivier De Schutter, Mark Tayor and Robert Thompson), which was published in December 2012. Ramasastry is also a Senior Fellow of the Institute for Human Rights and Business.

Dr. Bama Athreya has a life-long commitment to human rights and corporate accountability. During her twelve-year tenure as Deputy and then Executive Director of the International Labor Rights Forum (ILRF), Dr. Athreya was recognized as a leading voice in the United States on the issues of forced labor, trafficking and child labor. In 2009 she was appointed by Secretary of Agriculture Tom Vilsack to a special Consultative Group on Forced and Child Labor. While at ILRF she also served as one of the founding Board members of the Sweatfree Purchasing Consortium. Most recently, Dr. Athreya served as Executive Director of United to End Genocide, a human rights organization dedicated to ending mass atrocities worldwide.

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ENDNOTES 1

Human Rights Council Res. 17/4, U.N. Doc. A/HRC/RES/17/4 (June 16, 2011).

2

Special Representative on Business and Human Rights, Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework, unanimously adopted by the United Nations Human Rights Council, Principle 1 U.N. Doc. A/HRC17/31 (June 2011) (by John Ruggie) [hereinafter, “Guiding Principles”].

3

Id., at Principle 6.

4

Id., at 10 (commentary to Principle 6).

5

INT’L CORP. ACCOUNTABILITY ROUNDTABLE, Government Procurement and Human Rights Due Diligence, http://accountabilityroundtable.org/initiatives/procurement/ (last visited Nov. 18, 2013).

6

Mission Statement, OFFICE OF MGMT. AND BUDGET, http://www.whitehouse.gov/sites/default/files/omb/procurement/mission.html (last visited Nov. 7, 2013).

7

The obligation to respect means that States must refrain from interfering with or curtailing the enjoyment of human rights. The obligation to protect requires States to protect individuals and groups against human rights abuses. The obligation to fulfill means that States must take positive action to facilitate the enjoyment of basic human rights. International Human Rights Law, OFFICE OF THE HIGH COMM’R FOR HUMAN RIGHTS, http://www.ohchr.org/EN/ProfessionalInterest/Pages/InternationalLaw.aspx (last visited Nov. 13, 2013).

8

Core International Human Rights Instruments, OFFICE OF THE HIGH COMM’R FOR HUMAN RIGHTS, http://www.ohchr.org/EN/ProfessionalInterest/Pages/CoreInstruments.aspx (last visited Nov. 6, 2013).

9

While not a treaty, the Universal Declaration of Human Rights, adopted as a UN General Assembly Resolution, is viewed as the first articulation of a common set of human rights. The Universal Declaration led to the drafting of the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights.

10

International Covenant on Civil and Political Rights, March 23, 1976, 2 U.S.T. 999, 30 U.N.T.S. 23 [hereinafter ICCPR].

11

International Covenant on Economic, Social and Cultural Rights, Jan. 3, 1976, 993 U.N.T.S. 3 [hereinafter ICESCR].

12

Treaty of Versailles, XIII, June 28, 1919, 109 L.N.T.S. 219 [hereinafter ILO Constitution]; Convention Concerning Forced or Compulsory Labor, May 1, 1932, 49 Stat. 2712, 39 U.N.T.S. 55; Freedom of Association and Protection of the Right to Organize Convention, July 4, 1950, 68 U.N.T.S. 17; Right to Organize and Collective Bargaining Convention, July 18, 1951, 96 U.N.T.S. 257; Equal Remuneration Convention, May 23, 1953, 165 U.N.T.S. 303; Abolition of Forced Labor Convention, Jan. 17, 1959, 320 U.N.T.S. 291; Discrimination (Employment and Occupation) Convention, June 15, 1960, 362 U.N.T.S. 31; Minimum Age Convention, June 19, 1976, 1015 U.N.T.S. 298; Convention Concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labor, Nov. 19, 2000, 2133 U.N.T.S. 161.

13

ICCPR, supra note 10.

14

ILO Constitution, supra note 12. The U.S. has also ratified two of the eight core labor conventions: the Convention on the Abolition of Forced Labor and the Convention Concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labor. (Abolition of Forced Labor Convention, Jan. 17, 1959, TREATY DOC. NO. 88-11, 320 U.N.T.S. 291; Convention Concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labor, Nov. 19, 2000, S. TREATY DOC. NO. 106-5, 2133 U.N.T.S. 161). In furtherance of both of these treaties, the

16

executive branch issued executive orders to prevent forced labor and child labor in government contracts.

15

For a list of the human rights treaties the U.S. has ratified see: International Human Rights Documents, U.S. DEP’T OF STATE, http://www.humanrights.gov/references/international/ (last visited Nov. 6, 2013).

16

Exec. Order No. 13,126, Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor (June 12, 1999), 64 Fed. Reg. 32,383 (June 16, 1999); FAR, 22.1703 Combat human trafficking – policy; 22.1704.

17

FAR, 22.1504 Violations and remedies; Exec. Order No. 13,126, Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor (June 12, 1999), 64 Fed. Reg. 32,383 (June 16, 1999).

18

Abolition of Forced Labor Convention, Jan. 17, 1959, 320 U.N.T.S. 291.

19

Convention Concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labor, Nov. 19, 2000, 2133 U.N.T.S. 161.

20

Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (2012).

21

FAR, 22.1703 Combat human trafficking – policy; 22.1704, Violations and remedies.

22

Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children, supplementing the United Nations convention against Transnational Organized Crime, Nov. 15, 2000, 2237 U.N.T.S. 319.

23

Exec. Order No. 13627, 77 Fed. Reg. 60029 (Oct. 2, 2012).

24

FAR 22.807(b)(1) and (2) Exemptions.

25

Exec. Order No. 11,246, 3 C.F.R. 339 (1964-1965).

26

Contractors Performing Private Security Functions, 48 C.F.R. § 252.225-7039 (2013).

27

E.g., 18 U.S.C. § 1111 (2012).

28

E.g., Occupational Safety and Health Act, 29 U.S.C. §§ 651-678 (2012).

29

29 U.S.C. §§ 151-169 (2012).

30

U.S. CONST. amend. I.

31

U.S. CONST. amend. I.

32

Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (2012).

33

E.g., Davis-Bacon Act, 40 U.S.C. § 3141 (2012); Walsh-Healey Public Contract Act, 41 U.S.C. §§ 6501-6511 (2012); McNamara-O’Hara Service Contract Act, 41 U.S.C. §§ 6701-6707 (2012).

34

Center for Democracy and Technology, Existing Federal Privacy Laws, https://www.cdt.org/privacy/guide/protect/laws.php (last visited November 20, 2013).

35

42 U.S.C. § 1981 et seq. (2012).

36

Pub. L. No. 102-256, 106 Stat. 73 (codified in scattered sections of 28 U.S.C.).

37

Bjorn Skorpen Claeson, SUBSIDIZING SWEATSHOPS II 39 (Steven Brown ed., 2009).

38

Maquila Solidarity Network, Vaqueros Navarra background (Sept. 18, 2007), http://en.maquilasolidarity.org/node/711=.

39

Id.; Bjorn Skorpen Claeson, SUBSIDIZING SWEATSHOPS 31-33 (Liana Foxvog & Victoria Kaplan eds., 2008); Claeson, SUBSIDIZING SWEATSHOPS II, supra note 37, at 17-18.

40

E-mail from Amol Mehra, Coordinator, Int’l Corp. Accountability Roundtable, et al., to Sec. and Exch. Comm’n (July 29, 2011), available at http://accountabilityroundtable.org/wpcontent/uploads/2011/08/ICAR-1502-SEC-Letter-July-29.pdf.

17

41

Face the Facts USA, U.S. Government is Tops in IT Spending – but with how much waste? GEORGE WASHINGTON UNIV. (March 24, 2013) http://www.facethefactsusa.org/facts/feds-spend-74-billionit#sthash.HJH0hV0J.dpuf.

42

Adhikari v. Daoud and Kellog Brown Root, et al, No. 09-1237 (S.D. Tex. Aug. 23, 2013) 1-3. (Order granting and denying in part KBR’s motion for summary judgment), available at http://www.cohenmilstein.com/media/pnc/9/media.1359.pdf.

43

Id., at 4.

44

Matthew Mosk, Bangladesh Factory Fire: Patterns for Marine Corps Sweats, Tank Tops Found in Ashes, ABC News, (Dec. 4, 2012), http://abcnews.go.com/Blotter/bangladesh-factory-firepatterns-marine-corps-sweats-tank/story?id=17875010&singlePage=true.

45

See Ioana Cismas, The Integration of Human Rights in Bilateral and Plurilateral Free Trade Agreements: Arguments for a Coherent Relationship with Reference to the Swiss Context, CURRENTS: INT’L TRADE L.J., Oct. 4, 2013, at 2, 9.

46

See Claeson, SUBSIDIZING SWEATSHOPS, supra note 39 (case studies in seven countries) and Claeson, SUBSIDIZING SWEATSHOPS II, supra note 37.

47

Christopher McCrudden, Corporate Social Responsibility and Public Procurement, in THE NEW CORPORATE ACCOUNTABILITY: CORPORATE SOCIAL RESPONSIBILITY AND THE LAW 4-5 (Doreen McBarnet et al. eds. Cambridge Univ. Press 2007) [hereinafter, McCrudden, CSR and Procurement].

48

See WORKER RIGHTS CONSORTIUM, GLOBAL WAGE TRENDS FOR APPAREL WORKERS, 2001–2011 3 (2013) (“Among the top four apparel exporters to the United States, prevailing wages in 2011 for garment workers in China, Vietnam, and Indonesia provided 36 percent, 22 percent, and 29 percent of a living wage, respectively. But in Bangladesh, home to the world’s fastest-growing export-apparel industry, prevailing wages gave workers only 14 percent of a living wage.”).

49

Denis Audet, Government Procurement: A Synthesis Report, 2 OECD J. ON BUDGETING 149, 150-151 (2002), available at http://www.oecd.org/gov/budgeting/43506020.pdf; Robert D. Anderson, Philippe Pelletier, Kodjo Osei-Lah and Anna Caroline Muller, Assessing The Value Of Future Accessions To The WTO Agreement On Government Procurement (GPA): Some New Data Sources, Provisional Estimates, And An Evaluative Framework For Individual WTO Members Considering Accession 9 (World Trade Org., Staff Working Paper No. ERSD-2011-15), available at http://www.wto.org/english/res_e/reser_e/ersd201115_e.pdf; See also OECD, DAC GUIDELINES AND REFERENCE SERVICES: HARMONIZING DONOR PRACTICES FOR EFFECTIVE AID DELIVERY, VOLUME 3, STRENGTHENING PROCUREMENT CAPACITIES IN DEVELOPING COUNTRIES 35 (2005).

50

Prime Award Spending Data, www.usaspending.gov/search (search by “product class” for fiscal year “2012”) (last visited October 26, 2013).

51

See McCrudden, CSR and Procurement, supra note 47, at 13.

52

See, e.g., Exec. Order No. 13627, 77 Fed. Reg. 60029 (Oct. 2, 2012) (“Strengthening Protections Against Trafficking in Persons in Federal Contracts”).

53

Principles For International Sweatfree Federal Government Procurement, Working Draft, Compiled by SweatFree Communities, Contributing Organizations: AFL-CIO; American Federation of Government Employees, AFL-CIO; Change to Win; International Labor Rights Forum; SweatFree Communities; Worker Rights Consortium; Workers United (November 10, 2009) 2.

54

Federal Acquisition Regulation (FAR), 48 CFR 101 et seq. In this report, we cite directly to FAR part/subpart/section numbers rather than to the CFR. The FAR is available online and for downloading at http://acquisition.gov/far/index.html.

55

FAR, 1.101 Purpose.

56

The DFARS is available online and for downloading at http://www.acq.osd.mil/dpap/dars/dfars/index.htm.

18

57

FAR, 22.1504 Violations and remedies; Exec. Order No. 13,126, Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor (June 12, 1999), 64 Fed. Reg. 32,383 (June 16, 1999).

58

FAR, 22.1703 Combat human trafficking – policy; 22.1704, Violations and remedies.

59

FAR 22.807(b)(1) and (2) Exemptions.

60

Contractors Performing Private Security Functions, 76 Fed. 52133 (Aug. 19, 2011) (to be codified 48 C.F.R. 225.302).

61

See FAR, 22.1702 Definitions.

62

See FAR, 52.222-26(c) Equal Opportunity.

63

List of Products Requiring Contractor Certification as to Forced or Indentured Child Labor, U.S. DEP’T OF LABOR (July 23, 2013), http://www.dol.gov/ilab/regs/eo13126/main.htm.

64

FAR, 22.1503(c) and (d), Procedures for acquiring end products on the List of Products Requiring Contractor Certification as to Forced or Indentured Child Labor.

65

Id.

66

FAR, 22.1503(b).

67

FAR, 9.103(a), Policy; FAR, 14.408-2(a), Responsible bidder—reasonableness of price.

68

FAR, 9.103(b), Policy.

69

FAR, 52.209-5, Certification Regarding Responsibility Matters.

70

FAR, 22.1503(c) and (d), Procedures for acquiring end products on the List of Products Requiring Contractor Certification as to Forced or Indentured Child Labor.

71

FAR, 22.804 Affirmative action programs; 22.804-1 Nonconstruction.

72

Id.

73

DFAR 252.225-7039

74

E.g., Matthew Mosk, Bangladesh Factory Fire: Patterns for Marine Corps Sweats, Tank Tops Found in Ashes, ABC News, (Dec. 4, 2012), http://abcnews.go.com/Blotter/bangladesh-factory-firepatterns-marine-corps-sweats-tank/story?id=17875010&singlePage=true.

75

See, e.g., FAR, 32.503-6 Suspension or reduction of payments, (b) Contractor noncompliance; 52.232-16 Progress Payments, (c) Reduction or suspension; FAR, 16.305 Cost-plus-award-fee contracts.

76

See FAR, Subpart 22.17—Combating Trafficking in Persons; 22.1704 Violations and remedies; 52.222-50(e)(1) Combating Trafficking in Persons.

77

See FAR, 22.302(c) Liquidated damages and overtime pay.

78

FAR, 22.809 Enforcement.

79

See FAR, Subpart 16.4—Incentive Contracts, 16.401 General, (2) Award-fee amount (“Award fee shall not be earned if the contractor’s overall cost, schedule, and technical performance in the aggregate is below satisfactory.”); 16.405-2 Cost-plus-award-fee contracts.

80

48 C.F.R. § 252.225-7039.

81

The preferences include the Generalized System of Preferences, the Africa Growth and Opportunity Act, the Andean Trade Preference Act, and the Caribbean Basin Initiative. See U.S. Trade Representative (USTR), Information on Countries and Products Eligible for GSP and on Procedures for Modifying the GSP Program, 2013, http://www.ustr.gov/sites/default/files/uploads/gsp/asset_upload_file5_14711.pdf (last visited Nov. 15, 2013); USTR, 2008 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth and Opportunity Act, p. 145,

19

http://www.ustr.gov/sites/default/files/asset_upload_file203_14905.pdf (last visited Nov. 15, 2013); USTR, Caribbean Basin Initiativ: CBERA Beneficiary Countries, http://www.ustr.gov/tradetopics/trade-development/preference-programs/caribbean-basin-initiative-cbi (last visisted Nov. 15, 2013); USTR, Seventh Report to the Congress on the Operation of the Andean Trade Preference Act as Amended, http://www.ustr.gov/about-us/press-office/reports-andpublications/2013/seventh-report-atpa (last visited Nov. 15, 2013).

82

19 U.S.C. § 2462(b)(2)(c)(7) (2012). Trade Act of 1974, 19 U.S.C. § 2467(4) (2012) (definition of “internationally recognized worker rights”).

83

CAL. PUB. CONT. CODE § 10490(b) (West 2013); MD. CODE ANN., STATE FIN. & PROC. § 14-413(a)(3) (West 2012).

84

The Dodd–Frank Wall Street Reform and Consumer Protection Act § 1502; 15 U.S.C. § 78m(p) (2012); Darren Fenwick, The SEC’s Final Rule on Conflict Minerals: Reporting Requirements for Companies, THE ENOUGH PROJECT (Aug. 30, 2012), http://www.enoughproject.org/files/SECFinalRule.pdf.

85

Guiding Principles, supra note 2, Principle 6.

86

Id., at Principle 17.

87

Id., at 16 (commentary to Principle 17).

88

Exec. Order No. 13627, 77 Fed. Reg. 60029 (Oct. 2, 2012).

89

Id.

90

77 Fed. Reg. 60029 (Oct. 2, 2012).

91

Id..

92

Id.

93

48 U.S.C. 52.222-50 (2012).

94

MGMT. SYS. FOR QUALITY OF PRIVATE SEC. CO. OPERATIONS – REQUIREMENTS WITH GUIDANCE (American National Standards Institute 2012)

95

Id. at 33

96

SWEATFREE PURCHASING CONSORTIUM, www.buysweatfree.org (last visited Nov. 13, 2013).

97

Model Sweatfree Procurement Policy, SWEATFREE PURCHASING CONSORTIUM, http://buysweatfree.org/model_policy (last visited Nov. 13, 2013).

98

Model Sweatfree Procurement Policy, supra note 97, at 5 (domestic labor standards).

99

See, e.g., Model Sweatfree Procurement Policy, supra note 97, at 5(b)(1) (freedom of association and the right to collective bargaining).

100

Model Sweatfree Procurement Policy, supra note 97 at 6.a(2) (requesting bids, required information) and 6.b(2) (evaluation criteria).

101

Model Sweatfree Procurement Policy, supra note 97 at 7.a (Complaints) and 7.b (Investigations).

102

See, e.g., A Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children, supplementing the United Nations convention against Transnational Organized Crime, Nov. 15, 2000, 2237 U.N.T.S. 319.

103

Exec. Order No. 13627, 77 Fed. Reg. 60029 (Oct. 2, 2012).

104

Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 635-36, 72 S. Ct. 863, 96 L. Ed. 1153 (1952).

105

Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659, 1664, 185 L. Ed. 2d 671 (2013).

106

15 U.S.C. § 78dd-1 et seq. (2012).

107

Plurilateral Agreement on Government Procurement, Apr. 15, 1994, Marrarkesh Agreement

20

Establishing the World Trade Organization, Annex 4(b), 1869 U.N.T.S. 508 [hereinafter GPA] (parties and observers to the GPA, available at http://www.wto.org/english/tratop_e/gproc_e/memobs_e.htm). These include 27 members of the European Union (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, the Netherlands, Portugal, Spain, Sweden and the United Kingdom (1996), followed

by Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovak Republic and Slovenia (2004), and then Bulgaria and Romania (2007)), Canada (1996), Hong Kong, China (1997), Iceland (2001), Israel (1996), Japan (1996), Korea (1997), Liechtenstein (1997), the Netherlands with respect to Aruba (1996), Norway (1996), Singapore (1997), Switzerland (1996), and the United States (1996).

108

U.S. FTAs include Australia, Bahrain, CAFTA (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua), Chile, Colombia, Israel, Jordan, Korea, Morocco, NAFTA (Canada and Mexico), Oman, Panama, Peru, and Singapore. See USTR, Free Trade Agreements, http://www.ustr.gov/Trade_Agreements/Bilateral/Section_Index.html (last visited Nov. 13, 2013).

109

FAR, 22.1503(b) Procedures for acquiring end products on the List of Products Requiring Contractor Certification as to Forced or Indentured Child Labor; 22.1505(a) Solicitation provision and contract clause.

110

GPA, supra note 107, at art. VI.

111

GPA, supra note 107, at art. VIII; see CAFTA art. 9.8, Aug. 5, 2004, Pub. L. No. 109-54, 119 Stat. 462.

112

GPA supra note 107, at art. III:1; see CAFTA, supra note 111, at art. 9.2.

113

GPA, supra note 107, at art. XXIII:2.

114

GPA, supra note 107, at art. XXIII:2.

21