A/HRC/38/48 I. Introduction A. Background, focus and rationale of the report 1. The starting point for the present discussion is the Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework. Since their unanimous endorsement by the Human Rights Council in 2011, the Guiding Principles have become the authoritative global reference for preventing and addressing adverse human rights impacts arising from business-related activity. 2. In an earlier report, the Working Group examined how States — pursuant to pillar I of the Guiding Principles, the State duty to protect ��� should lead by example as economic actors by ensuring that State-owned enterprises respect human rights (A/HRC/32/45). The present report focuses on another area where States play an important role as economic actors: trade promotion, also referred to as economic or commercial diplomacy. 3. States act as gatekeepers when they provide much needed support to businesses by providing trade finance and advisory services aimed at expanding export opportunities. As gatekeepers, States can use their leverage to promote a race to the top by setting out clearly the expectation that businesses respect human rights as a precondition for receiving government support for export activities. States can also promote responsible imports by restricting the flow of goods in supply chains that involve serious human rights abuses. 4. Why should States focus on human rights and the role of business in relation to human rights in the context of trade and investment promotion? The short answer is that global supply chains in cross-border trade present significant human rights risks and challenges. In the export context, sellers of products in global markets need to ensure that the products they are selling will not cause, contribute or be directly linked to adverse human rights impacts. In the context of imports, a buyer of goods in the global marketplace also needs to ensure that the goods it is purchasing were not produced or manufactured in a way that caused, contributed to or was directly linked to adverse human rights impacts, such as forced labour or human trafficking. 5. While there is a much larger connection between the global trading system and adverse human rights impacts, the present report focuses solely on the role States play as service providers and public financiers, insurers and guarantors to companies seeking support for export/import transactions. The report does not address issues of global trade rules or the role of trade treaties and multilateral trade organizations with respect to adverse business-related human rights impacts. 6. In the present report, the Working Group unpacks Guiding Principle 4, which sets forth the expectation that States should take additional steps to protect against human rights abuses by business enterprises that receive substantial support and services from State agencies including, where appropriate, by requiring human rights due diligence. The commentary to Guiding Principle 4 indicates that if State agencies do not explicitly consider the actual and potential adverse impacts on human rights of beneficiary enterprises, they put themselves at risk and may add to the human rights challenges faced by the recipient State. 7. Furthermore, in general comment No. 24 (2017) on State obligations under the International Covenant on Economic, Social and Cultural Rights, the Committee on Economic, Social and Cultural Rights calls on States to revise relevant tax codes, public procurement contracts and export credits, and other forms of State support, privileges and advantages in the case of human rights violations, thus aligning business incentives with human rights responsibilities. In 2017, the leaders of the Group of 20 also recognized the connection between human rights and trade when they referred to the Guiding Principles in a call for more sustainable supply chains.1 1 See “G20 Leaders’ declaration: shaping an interconnected world” (July 2017). 3