Capturing the Benefits of Trade? Local Content Requirements in WTO Law and the Human Rights-Based Approach to Development

Abstract

Governments have often taken steps to require businesses to source some or all of their inputs locally - that is, have imposed 'local content requirements' - in order to encourage regional development and the growth of local manufacturing industry. This paper looks at the ways in which WTO law on trade in goods now constrains the ability of developing countries to implement local content requirements and considers two issues arising. First, WTO constraints on the use of local content requirements raise general concerns about a narrowing of the range of development strategy options open to developing countries. Secondly, the constraints are not compatible with understanding about the connections between trade law, industrial development strategy options and the realisation of human rights and fundamental freedoms. A human rights-based approach to development has grown, partly out of frustration at the failures of contemporary processes of globalisation to resolve fundamental development problems. Much of this frustration is directed at the WTO. To become an effective, contemporary institution, the WTO needs to be 'delinked' from the theory of neo-liberalism and to be reoriented with a high priority on a human rights-based approach to the relationship between trade and development.