In this treatise, we set out to answer the following question: How effective is the current legal framework in ensuring a functional commodity sector? In approaching this task, we first provided conceptual clarity regarding its different components before entering a qualitative assessment.

FormalPara Conceptualising GCG

In a first step, we conceptualised Global Commodity Governance (GCG) as the governing mode of the global commodity sector—which is naturally tasked with ensuring its functionality. Secondly, we clarified the scope of the term ‘commodity’, which constitutes the historically and dogmatically consistent notion that should be employed for legal purposes. Based on Article 56(1) of the Havana Charter, we defined the term as ‘any product of agriculture, forest, fishery or mining and any mineral product in its natural (=raw) form and in such forms that are customarily required for its international trade, especially shipment, in substantial volumes.’ Thirdly, we characterised a functional commodity sector as one, in which the commodity governance matrix exhibits a balance between the five commodity interests it is composed of: economic gain, development, preservation, control, and participation.

As our appraisal of historical approaches to governing the global commodity sector revealed, the disruptive feature of GCG lies in the fact that it perceives commodity activity not exclusively as an economic issue, but as a comprehensive regulatory challenge, which requires the consideration of its social and ecological prerequisites as well as effects. Therefore, it constitutes a commodity-directed emanation of the global sustainable development (SD) agenda and is ultimately faced with the task of achieving and maintaining equilibrium between the interests associated with commodity activity.

FormalPara Conceptualising TCL as the Legal Framework of GCG

Law can be a catalyst in this quest, where it contributes to the balancing of these interests. It is effective, where it provides guidelines for states—as the central actors of GCG—in their decision to extract.

In order to be able to assess the effectiveness of the current legal framework underpinning GCG, we first conceptualised Transnational Commodity Law (TCL). We started by outlining the methodological foundations of conceptualising fields of law. Accordingly, we elaborated the organisational framework of TCL based on, for one, the definition of commodity law as ‘all law that regulates commodity-related human activity and its impacts’; and, for the other, the factual context, in which commodity-related human activity typically occurs: the removal of an item from earth for a specific purpose that relates to the removed item. It is this factual context, which constitutes the pertinent social behaviour that needs to be regulated in order to address the commodity policy trade-offs arising in the commodity matrix. Addressing these trade-offs reflects the ‘analytical and instrumental aims’ of the conceptualisation of TCL.Footnote 1

The TCL framework has been further qualified by the nature of its sources, which can be largely ascribed to the four different categories of the classical inter-national framework; private standards; the domestic legal framework; as well as transnational contract law.

Also, the structure of TCL has been sketched pointing to its ‘qualified sovereignty’ outline. Accordingly, various fields of transnational, especially international law, such as i.a. Human Rights (HR) and environmental protection norms, have qualified how states shall exercise their permanent sovereignty over natural resources (PSNR). Moreover, PSNR comprises the right to transfer commodity rights. Both, the transfers themselves, as well as the responsibilities of rights transferees, are governed by a variety of international standards, most of which are of private nature. Once these transfers have been effectuated, states are under the obligation to protect these rights under international investment law, which is thus further qualifying PSNR. In addition, ‘secondary qualifications’, which can stem from various norm subsets of TCL, set forth the procedures to regulate externalities, including dispute settlement mechanisms.

Our conceptualisation of TCL has been conducted based on the hypothesis that the effectiveness of a legal framework results at least partly from the degree to which it reflects a conscious consideration of the policy trade-offs it is intended to govern. Therefore, it has been deemed to be effective where it provides ‘balancing norms’ that balance the five interests associated with commodity activity and thus answers to questions such as: How much to extract? Where to extract? How to extract? How to process or trade? How to make a decision to extract? How much to trade? How much and what to tax? What resources to protect? What land rights to protect? Where it cannot provide these answers, for instance since the privilege of ultimately answering them falls within the political domain, it has been deemed to be effective where it provides guidelines on how these questions should be answered.Footnote 2

FormalPara The Limited Effectiveness of TCL

Our assessment revealed that TCL provides only little guidance on how commodity equilibrium shall be achieved or maintained.

We ascertained that the sustainable use principle constitutes one of the few balancing norms. Its normative content, as defined by the International Law Association (ILA), reconciles all five commodity interests. Therefore, the sustainable use principle exhibits the normative contents needed in order to effectuate a functional sector. Thus, the TCL framework would be effective where it concretises what sustainable use requires. This would involve providing balancing norms, which further detail how the commodity interests need to be balanced in respective commodity scenarios, e.g. depending on the subsector, actors, or individual commodity concerned.

However, the current normative patterns of TCL prevent the field from spelling out more concretely what constitutes sustainable commodity use:

First, most of TCL is ‘indirect’, i.e. it has not been created for the purpose of regulating commodity activity. As such, it is not designed to balance commodity interests, but pursues distinct regulatory objectives.

Second, the rather scarce incidents of direct TCL are neither balancing commodity interests comprehensively. Instead, they typically balance a maximum of two commodity interests with one another; at times three where for instance environmental protection norms are being integrated with ones protecting Human Rights. Besides, as the examples of the law applicable to shared resources as well as the norms covering trade and development within the GATT have demonstrated, those hard rules of direct TCL that address states tend to contribute little to remedying commodity policy trade-offs. They will either be aimed at achieving a mere inter-state balance or, where they could remedy for instance a trade-off between economic and development interests, are ‘declaratory’ rather than of substantial legal effect. Moreover, direct TCL is largely of soft or private legal nature, thus typically unfolding limited or no legal effects for states. The latter, however, are naturally the central actors when it comes to decisions to extract. Also, direct TCL is generally little specific, i.e. it does not spell out in great detail what is required from the stakeholders of commodity governance. Rules addressing private actors, especially those that are intended to cover particular commodity sectors, tend to be more specific than the abstract norms addressing states.

Third, what, too, hinders coherence and thus limits balancing effects of TCL, are the few incidents of full integration between its rules and standards.

Fourth, what both contributes to the limited effectiveness of TCL and illustrates this status quo, is the imbalance of the current framework in favour of economic objectives—primarily investment protection and trade liberalisation. Overcoming this imbalance constitutes a major challenge in rendering TCL more effective.

Moreover, fifth, the TCL framework exhibits regulatory gaps especially with regard to aspects that are specific to commodity activity. It particularly lacks effective remedies against harmful conduct of transnational commodity corporations. Also, it does not address potential clashes between global, national, and local SD objectives; provides little to no guidance on how foreign investments as well as trade need to be designed in order to foster a functional commodity sector; and does not spell out what constitutes adequate policy space for SD measures.

All in all, the current TCL framework barely contours what sustainable commodity use legally requires. It is thus little effective in ensuring a functional commodity sector.

FormalPara Fostering the Effectiveness of TCL

To my mind, particularly two approaches can serve to foster the effectiveness of the sustainable use principle and thus of TCL: defining SD as the object and purpose of TCL and specifying the normative content of SD by fully integrating benchmarks from the substance of TCL.

Regarding the former approach, we first noted that the sustainable use principle constitutes the concretisation of SD for the commodity context. We then demonstrated that given the universal nature of the SD agenda, the specific normative quality of SD as a legal concept, and its status within a sizable series of international treaties, sustainable use can be defined as a regulatory objective. In addition, we pointed to the fact that—as I have argued elsewhere—SD already holds this status with regard to Natural Resources Law (NRL). Subsequently, we illustrated that TCL constitutes a sub-category of NRL, which is more suitable when it comes to this specific economic use of natural resources related to its removal from the natural environment. Consequently, sustainable use can be defined as the object and purpose also of Transnational Commodity Law (TCL). The effects of doing so are generally twofold: For one, it constitutes a primary norm that obliges states to ‘act sustainably’; for the other, it constitutes a methodical norm, which serves as a guideline how legal obligations shall be interpreted. As a consequence, it coheres and integrates the field and thus fosters its effectiveness.

The second approach advocated for relates to the full integration of benchmarks from other instruments of TCL into the sustainable use principle, thus rendering it more specific and ultimately effective. Benchmarks in this respect can stem particularly from the many detailed standards regulating technical matters of commodity activity. The SDGs and corresponding industry ‘maps’ or ‘atlases’ may be useful in guiding the efforts to identify the most suitable rules and parameters in this respect. Given the complexity of the task and the vast substance of TCL, computational text analysis may constitute a helpful tool.

Apart from these suggestions aimed at the sustainable use principle, developing rules by involving the ‘governance triangle’, consisting of states, businesses, and NGOs, could foster TCL’s acceptance, coherence and ultimately effectiveness. An example insofar is provided by ILO conventions, which are reflected coherently in a large number of TCL instruments. Given their example, what may be particularly effective, could be to combine tripartite approaches with binding international agreements.

FormalPara ICAs de lege ferenda as Instruments Specifying Sustainable Commodity Use

International Commodity Agreements (ICAs) de lege ferenda could serve to remedy the current deficits of the TCL framework. They could codify direct, hard, specific, state-oriented law, which balances all five commodity interests comprehensively—and thus spell out more precisely what sustainable commodity use requires.

This would significantly contrast the status quo, in which the legal relevance of ICAs is limited. We insofar distinguished between three types of ICAs: ICAs sensu originali, albeit pursuing a comprehensive approach tackling an entire sector and seeking to foster SD, remain without ‘bite’ due to a lack of corresponding substantive obligations. ICAs sensu stricto, to the contrary, often exhibit a narrow scope, which is focused on a clear-cut, somewhat ‘singular’ objective. As such, commodity-directed law may quite intensively regulate some specific activities associated with commodity operations in some specific sectors. While some regional instruments address challenges of GCG more comprehensively and recent EU Free Trade Agreements (FTAs) exhibit a trend to consciously consider specificities of commodity activity, most ICAs sensu stricto still provide no guidance on how to balance the five commodity interests. Where they do, these provisions are often rather aspirational or soft and generally do not entail concrete obligations. As a consequence, ICAs sensu lato currently clearly are of the greatest significance for GCG—a paradigm which once again underlines the lack of a coherent, targeted legal regime underpinning GCG.

FormalPara Principle of Proportionality

In order to concretise the sustainable use principle, we have suggested that ICAs de lege ferenda could implement a principle of proportionality. Accordingly, the degree to which one or more commodity interests are being emphasised in a concrete balancing decision needs to be proportionate to the degree to which other interests are being neglected. In addition, a rule that requires states to prevent irreversible effects of commodity activities could limit states’ scope of discretion when carrying out a balancing exercise. Moreover, the principle could correspond to a transparency obligation for states to disclose their balancing method as well as the line of reasoning that led to the respective weighing of the interests associated with the commodity decision.

FormalPara Obligation to Detail Terms of Sustainable Use in National Legal Frameworks

Apart from these rather abstract rules, ICAs de lege ferenda could obligate states to transform certain best practices into national law. In general, they could be required to elaborate commodity-directed national frameworks, which comprehensively regulate challenges associated with commodity activity, including rights allocation, establishing a robust tax regime, and the offsetting of environmental and social costs of extraction. In line with principle #13 of the Addis Ababa Principles and Guidelines for the Sustainable Use of Biodiversity (AAPG), states could be required to establish the internalisation of the social and ecological costs of commodity activity ‘within the area of management’ and the reflection of these costs in the ‘distribution of the benefits from the use’. Moreover, the conservation and management of NR could be implemented ‘as an integral part of development planning’, i.a. through resource management plans applicable to individual commodities. Going beyond the obligation to prevent irreversible effects of commodity activity, the national framework could require the prevention of alterations to the ecosystem, which are ‘not reversible over a reasonable period of time’ in line with Article 4(1)(d) of the ASEAN Agreement on the Conservation of Nature and Natural Resources (ACNR). In addition to these general principles, ICAs de lege ferenda could obligate states to detail the terms of sustainable use also in the context of individual commodity sectors.

As a side benefit of this obligation, ICAs de lege ferenda would help aligning regulation on the global, national, and local levels. Public–private contracts should be embedded in this coherent, effective regulatory framework, thus isolating potential power asymmetries between states and transnational corporations.

FormalPara Further Effects of ICAs de lege ferenda Conducive of SD

Furthermore, ICAs can incorporate SD as their regulatory objective, thus contributing to gradually cohering TCL and fostering its effectiveness. Also, ICAs can reinforce the rule of law in the commodity sector by clarifying the applicable legal framework, closing regulatory gaps, and expanding TCL.

FormalPara Formal Reflections on ICAs de lege ferenda

Given the continued, intense antagonism between Global North and Global South, a multilateral ICA—despite being highly desirable—appears to be little realistic. What seems more actionable instead, not least in view of the commitments the EU has made according to Articles 21(2)(f) TEU, 207(1) TFEU, is the incorporation of gradually more commodity-directed rules—and eventually chapters—in the EU FTAs and Preferential Trade Agreements (PTAs). In this respect, an ‘open treaty’ approach to the elaboration of commodity-directed or -specific bi- or plurilateral agreements appears worthy of consideration.

FormalPara Outlook: If We Are to Take SD Seriously, We Need To Be More Specific

Commodity activity, i.e. removing (economically) useful items from the natural environment, potentially processing them as required, and then trading, and/or shipping them, constitutes one of the core economic activities of our globalised economic system. It is high time for us international lawyers to accord this sector the attention it deserves.

What our examination has brought about in essence comes down to the understanding that the global commodity sector is functional, where it is sustainably managed. The sustainable use principle constitutes the core balancing norm—within the vast body of TCL, it is the only concept, which reconciles all five commodity interests. This again points to the extensive regulatory potential, which is associated with SD as a legal concept. It is our task to further operationalise it and to thus deliver guidelines to states and other stakeholders what sustainable commodity activity means. If we are to take SD seriously, we need to be more specific.

Therefore, the international community is now faced with the challenge to create concrete rules on what constitutes sustainable resource use. We shall distinguish between the roles that state governments, academics, and international as well as national jurisprudence should assume in this endeavour.

State governments are now tasked with initiating political processes that lead to the codification of TCL. Elaborating ICAs de lege ferenda of the type described above, be they of bi-, pluri- or multilateral character, would be the most direct, clearest way to do so. During their negotiation, it will be crucial to strike the right balance between sufficient specificity of the rules codified and policy space that remains with national governments. This balance can only result from political processes—ideally, they will bring about a robust legal framework ensuring sustainable commodity activity.

Academics worldwide can contribute to this process by perceiving TCL as a proper discipline of international law. The legal rules covering the commodity sector should be researched and discussed in light of their quality to balance the commodity interests at stake. Legal analysis should measure their effectiveness by interrelating the individual rules with TCL’s object and purpose of sustainable use. As the normative suggestions made above demonstrate, advancing the legal underpinnings of GCG may require legal scholarship to abandon beaten paths and make innovative propositions—whilst mastering the challenge of adequately tying them to the dogmatic foundations of inter- and transnational law.

Lastly, courts and tribunals worldwide are assuming a key role in the normative evolution necessary for humankind to master the transformation of our economies and societies towards sustainability. They are tasked with interpreting the rules applicable to commodity activities in the light of SD as the object and purpose of TCL—and thus with translating the substantial normative weight of the regulatory objective of sustainable use into specific normative instructions. Particularly where political processes are blocked, judges may be responsible for providing the legal impulses necessary to advance SD.

All in all, we cannot overestimate what bold actions will be needed in order to achieve a functional commodity sector as one of the key requirements of SD.Footnote 3 It will depend on lawyers worldwide whether or not this process will be based on a reliable legal framework. In view of the great many challenges and policy trade-offs at stake, we should waste no time to get to work.

FormalPara The Implementation Challenge Remains

Recalling the words of Dr Denis Mukwege, which have set the tone at the very outset of this treatise, a sentiment of humility shall accompany our efforts. The challenge of fostering good GCG rather than constituting an issue that could be solved by legal or academic approaches alone, to a significant degree is one of implementation. As Cotula puts it, ‘…law is only a part of the story.’Footnote 4

In this story—the great implementation challenge for the many stakeholders, public and private, global and local—I hope that my work can contribute to an intensified understanding of the transnational regulatory environment, in which commodity activity is taking place. And perhaps it may be understood as an act of encouragement for the many persons and institutions striving to implement a functional—a sustainable—commodity sector. An act, which visualises that their contributions ultimately relate to a greater framework, a shared objective: our universal agenda of sustainable development.