For Human Rights Beyond Borders

Human Rights have been locked up behind domestic bars to prevent their universal application to globalization and its much needed regulation. Extraterritorial obligations (ETOs) unlock human rights.

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Finance Regulation, Tax

Finance Regulation 

Continuing instability, impunity and biased regulation in the financial sector poses systemic threats to human rights), even more so post-2008. The failure of some states to effectively regulate and protect against the abuses of financial enterprises has vast effects on many economies and, in turn, on public budgets and the enjoyment of economic, social and cultural rights, in particular to work, to food, to housing, to education and to social security, with significant trans-boundary effects  

Financial markets are thoroughly global both in their operations and in their repercussions on society.  Yet, financial regulation remains for the most part stubbornly national. Given the systemic and global impact of financial markets, States carry obligations to address the failures of regulation and establish accountability to protect and prevent human rights impacts both domestically and beyond borders. States have a duty, in other words, to regulate banks and funds that are based (or have substantial business activities) in their territories with impacts on ESCRs abroad (implied in ETOPs 24, 25).   ETOs provide an innovative tool in reinforcing these duties, clarifying the delineation of responsibilities between states and providing a normative framework to close the perilous vacuum in accountability of private financial actors. 

Tax Evasion

Almost $1 trillion was lost in 2009 in developing countries due to illicit financial flows, about 60% of which stems from tax evasion and corporate tax dodging. This equates to more than 10 times ODA in developing countries annually. A number of governments actively help rich people, corporations and criminals hide their money away from national tax authorities by facilitating and maintaining tax havens, many industrialized countries among them. Tax evaders and those States complicit in tax evasion undermine governments’ ability to mobilize the maximum available resources and conduct non-discriminatory fiscal policy in accordance with the obligation to progressively realization ESC rights. By eroding the State’s capacity to exercise its sovereignty in taxing legal and natural persons in its jurisdiction, tax evaders and the countries which encourage them also destabilize the transparency, participation and accountability of public institutions. Despite several common-sense and feasible ways to limit tax evasion, the duty to cooperate in the mobilization and use of the maximum of available resources for economic, social and cultural rights fulfilment continues to be undermined by governments North, South, East and West through the support and maintenance of abusive tax havens.

The Maastricht ETO Principles identify international tax cooperation as a duty of states. (ETOP 31)  The Maastricht Principles reiterate the obligations of States to take deliberate, concrete and targeted steps, separately, and jointly through international cooperation, to create an international enabling environment conducive to the universal fulfilment of ESCRs, including in matters relating to finance and taxation (ETOP 29). Moreover, the obligation to international cooperation and assistance implies that States must cooperate with—and not undermine—efforts to mobilize the maximum of available resources for the universal fulfilment of economic, social and cultural rights. (ETOP 31)

Focal Group 1 of the ETO Consortium deals with financial regulation and tax evasion. If you want to get in touch with this focal group, please contact the Consortium’s Secretariat at