Human Rights under Pressure
This book is primarily a response to deeply troubling contemporary shifts in international human rights discourse in favour of corporations1 and to the related idea that the corporation is an… SHOWING 1-10 OF 32 REFERENCES SORT BYRelevanceMost Influenced PapersRecency NGOs and human rights : promise and performance
The proliferation of nongovernmental organizations, or NGOs, is one of the most striking features of contemporary international politics. While states remain the major protectors-and abusers-of human… Social Responsibility and the Utilities
This paper examines recent developments in U.K. utility regulation from a business ethics perspective. The regulatory framework that facilitated privatisation of the utility companies has foundations… Development as freedom
In Development as Freedom Amartya Sen explains how in a world of unprecedented increase in overall opulence millions of people living in the Third World are still unfree. Even if they are not… DOI link for Multinational Corporations and the Ethics of Global Responsibility: Problems and Possibilities Multinational Corporations and the Ethics of Global Responsibility: Problems and Possibilities book DOI link for Multinational Corporations and the Ethics of Global Responsibility: Problems and Possibilities Multinational Corporations and the Ethics of Global Responsibility: Problems and Possibilities book
HUMAN RIGHTS QUARTERLY Human Rights Quarterly 25 (2003) 965–989 © 2003 by The Johns Hopkins University Press Multinational Corporations and the Ethics of Global Responsibility: Problems and Possibilities Mahmood Monshipouri* Claude E. Welch, Jr.** Evan T. Kennedy*** ABSTRACT Multinational corporations (MNCs) have provoked considerable debate about the issues of “efficiency” and “social justice.” The simultaneous surge in economic growth and inequality has led to serious implications for economic rights in developing countries. Using a rights-based perspective, we argue that in the human rights area the responsible party is generally the state. In the context of neoliberal globalization, however, the wrongdoers are often corporations. Reliance on state duties alone may not be sufficient * Mahmood Monshipouri received his Ph.D. from the University of Georgia. He is Professor and Chair of the Political Science Department at Quinnipiac University. He specializes in human rights, democratization, comparative politics, Middle Eastern politics, and Western European politics. He is co-editor of Constructing Human Rights in the Age of Globaliza- tion (NY: M.E. Sharpe, 2003). His most recent articles have appeared in International Peacekeeping , Yale Human Rights and Development Law journal , Journal of Church and State, and Middle East Policy . ** Claude E. Welch, Jr. received his B.A. from Harvard and his D.Phil. from Oxford. He is SUNY Distinguished Service Professor in the Department of Political Science at the University at Buffalo, where he also directs the Program in International and Comparative Law. Among his books are: NGOs and Human Rights: Promise and Performance (University of Pennsylvania Press, 2001), Protecting Human Rights in Africa (University of Pennsylvania Press, 1995) and Human Rights and Development (State University of New York Press, 1984). Professor Welch has published HRQ articles on the impact of the World Council of Churches’ Program to Combat Racism, the effect of CEDAW and other treaties on the rights of African women, and the effectiveness of the African Commission on Human Rights. *** Evan T. Kennedy received his B.A. in English and Political Science from Quinnipiac University in Hamden, Connecticut, where he served as Research Assistant for the Political Science Department during 1999–2000 academic year. He currently lives in Berkeley, California.
Vol. 25966 HUMAN RIGHTS QUARTERLY to broadly protect human rights. Certain corporate behaviors are detrimen- tal to internationally recognized norms of human rights. Although private actions, media exposure, and lawsuits based on civil law appear to be the only practical way to put the pressure on MNCs, it is important to examine the possibility of an outside governing body to hold in check unfettered global capitalism and to bring accountability to MNCs’ policies that are socially detrimental. I. INTRODUCTION The global economy and the forces of globalization have become promi- nent characteristics of the current paradigm of world politics. In this context, the political spotlight has eventually rested on the balancing claims and criticisms of the multinational, or transnational, corporations (MNCs or TNCs). What makes MNCs a pertinent subject is their dynamic growth and influence on the world stage, and the ways in which they affect the life chances of millions of people around the world. Human rights groups and organizations insist that free trade and its rules, or lack thereof, are insufficient to promote a fair game and that the push for greater social responsibility of the MNCs is necessary given their increasing influence and the trend toward further privatization.1 Because MNCs have gained powers traditionally vested only in states, they should arguably be held to the same standards that international law presently imposes upon states. As Garth Meintjes put it, “the idea of a corporation as a legal fiction without responsibilities is no more sacred or accurate than the idea of unfettered state sovereignty.”2 The MNCs’ power to control international investment, especially portfolio investments, has had enormous bearing on the economies of developing countries. Faced with pressures to attract such investments, governments in the South have had little or no alternative but to be receptive to the terms of MNCs. The lack of leverage with the MNCs has meant, for example, that minimum wage has been set unrealistically low in developing countries so as to attract foreign investment. A related criticism of MNCs is that their overall strategy to relocate from the North has kept wages and living conditions down and resulted in the expansion of sweatshops in the South. This has led to the view that globalization is a euphemism for “sweatshop global economy.”3 1. Garth Meintjes, An International Human Rights Perspective on Corporate Codes, in GLOBAL CODES OF CONDUCT: AN IDEA WHOSE TIME HAS COME 83–99, at 86 (Oliver F. Williams ed., 2000). 2. Id. at 87. 3. Steven Greenhouse, Critics Calling U.S. Supplier In Nicaragua A Sweatshop , N.Y. TIMES, Dec. 3 2000, at 9.
2003 Multinational Corporations and Global Responsibility 967 Critics argue that the current neoliberal global economy allows MNCs to utilize Southern workers as cheap labor and to exploit lower standards on working conditions, basic worker rights, and environmental regulations. MNCs have provoked considerable debate around the conflicting issues of “efficiency” and “fairness,” and the resultant balance of economic growth and social injustice. The simultaneous surge in economic growth and inequity has led to serious implications for human rights in the developing world. The MNCs’ advocates, in contrast, regard them as benign engines of prosperity—enhancing local living conditions by generating employment, income, and wealth, as well as by introducing and dispensing advanced technology to the developing world.4 There are three emerging perspectives that inform corporate social responsibilities. First is the so-called “reputation capital” view that sees corporate social responsibility as a strategy to reduce investment risks and maximize profits. The second view, referred to as the “eco-social” view, considers social and environmental sustainability crucial to the sustainability of the market. The third perspective is the “rights-based” view, which underscores the importance of accountability, transparency, and social/environmental investment as key aspects of corporate social responsibility.5 Using a rights-based perspective, we argue that in the human rights domain the responsible party is generally the state, and that, especially in the context of neoliberal globalization, the wrongdoers are often corpora- tions. Some experts have argued that states are not and should not be the sole target of international legal obligations and that reliance on state duties alone may not be sufficient to broadly protect human rights.6 A consensus has emerged that certain corporate behavior is detrimental to internationally recognized norms of human rights. This paper examines the possibility of an outside governing body to hold in check unfettered global capitalism and to bring accountability to MNC policies that are socially detrimental. Through an examination of the mixed results of globalization and an increased awareness of social responsibility, this paper concludes that MNCs will not address specific human rights violations if assigned only to a voluntary set of principles set up in the UN Global Compact of 1999. Although the Compact provides a helpful framework within which to examine ethical concerns, 4. CHARLES W. KEGLEY, JR. & EUGENE R. WITTKOPF, WORLD POLITICS: TREND AND TRANSFORMATIONS 230 (8th ed. 2001); see also John Stopford, Multinational Corporations , FOR. POL’Y, 12–24 (1998/1999). 5. John Samuel & Anil Saari, Whither Corporate Social Responsibility?, available at http:// www.infochange.org/CorporatersIbp.jsp#csrh5. 6. We have borrowed the assumption developed in the seminal work of Steven R. Ratner, Corporations and Human Rights: A Theory of Legal Responsibility, 111 YALE L. J. 461 (2001).
Vol. 25968 HUMAN RIGHTS QUARTERLY without any teeth it serves only as public relations while delaying or blocking any real action to fundamentally address human rights deficien- cies. While we leave open the argument as to where this governing body should be located institutionally, we argue that restructuring international organizations, such as the World Trade Organization (WTO), might be a good place to start. It is also worth mentioning that the United Nations may provide an appropriate base for mobilizing support for a code of conduct. For now, however, private actions, media exposure, and lawsuits based on civil law seem to be the only practical way to put the pressure on MNCs to consider observing global standards. II. THE GLOBALIZATION–HUMAN RIGHTS INTERSECTION Although there is no broadly accepted definition of the term “globaliza- tion,” it is about the way in which the world is changing. A simple description is offered by Allan Cochrane and Kathy Pain: “Cultures, economies and politics appear to merge across the globe through the rapid exchange of information, ideas and knowledge, and the investment strate- gies of global corporations.”7 The main conceptual properties of globaliza- tion include: stretched social relations, intensification of flows, increasing interpenetration of economic and social practices, and institutional infra- structure of interaction made possible by information and communications technologies.8 Some popular interpretations of globalization include the view that it is “an evolutionary process of change driven by technological and scientific progress in the modern era.”9 A force behind this definition is the recent communication and information technology revolution, from which corpo- rations operate in a world market outside of national boundaries. The new technologies have led to international corporate infrastructure, developed “in order to attain relative advantages among their global counterparts.”10 Another popular definition of globalization maintains that it magnifies and intensifies the level of interaction and interdependence among nation- states and societies. As markets become available on a worldwide level, once-separate societies deepen their relationships, politically and economi- 7. Allan Cochrane & Kathy Pain, A Globalizing Society , in A GLOBALIZING WORLD? CULTURE, ECONOMICS, POLITICS 5–21; see esp. 6 (David Held ed., 2000). 8. Id. at 15–17. 9. Mahmood Monshipouri & Reza Motameni, Globalization, Sacred Beliefs, and Defi- ance: Is Human Rights Discourse Relevant in the Muslim World? 42 J. CHURCH & STATE 709–36, at 712 (2000). 10. Id. at 713.
2003 Multinational Corporations and Global Responsibility 969 cally. From a realist perspective, globalization is seen as a new hegemonic system upheld by the world’s major capitalist economies of the post–Cold War world to promote their own political and economic interests. Seen in this light, globalization is a tool of the wealthy nations used to maintain their economic dominance. In its present mainly neoliberal course, global- ization is connected with the rationalist structure of knowledge, the capitalist mode of production, technological innovation, and technical and procedural standardization. This last dynamic entails the establishment of regulatory measures that guarantee property rights for global capital and legalize global organizations and activities.11 Finally, some scholars see globalization as a paradigm shift, in which values, lifestyles, tolerance for diversity, and individual choice are simulta- neously undergoing transformations on a global scale. Globalization as such relates not only to an increased interconnectedness between markets, but also to a shared culture of globalization, often effecting a social shift away from some traditional ideas and values.12 As the world moves into the twenty-first century, global interdepen- dence has increased. At both the local and global levels, the protection and promotion of human rights have been caught up in this globalization process. But as more institutions function at the global level, organizations such as MNCs, the IMF, and the European Commission of the European Union have rarely, if ever, been held to the standard of democratic accountability. The language of human rights has increasingly arisen to encounter such a neoliberal globalization. As the third millennium begins, an emerging normative consensus has begun to take shape on the realization of some fundamental human rights. We are nevertheless far from the creation of a single moral universe, shared by all cultures, nations, and civilizations. Rather, what has happened through conditions of chronic globalization, as one observer notes, is that the fate of communities throughout the world has become linked through complex and dynamic systems that create moral connections between the agents and the subjects of social action regardless of territorial and political boundaries. Although there still are varying conceptions of what constitute rights and what priorities should be assigned to varying types of rights, the philosophical and political debate underlying these disagreements is itself conducted in a global context.13 The concept of human rights entails a wide range of entitlements. For our analysis here, we divide human rights into three categories: first- 11. JAN AART SCHOLTE, GLOBALIZATION: A CRITICAL INTRODUCTION 106 (2000). 12. Monshipouri & Motameni, supra note 9, at 715–16. 13. Id.
Vol. 25970 HUMAN RIGHTS QUARTERLY generation rights, with emphasis on civil-political rights (right to life, freedom from slavery and torture, right to participate); second-generation rights, the substance of which is based on economic, social, and cultural rights (right to health, education, and decent standards of living); and third- generation rights, the content of which stresses human “solidarity” (right to a clean environment, right to peace, right to self-determination, right to humanitarian intervention, and the right to the benefits of an international common heritage). There are two sides to the human rights discourse. Western powers’ domination of world politics for the past two centuries has affected the human rights discourse. Thus conceived, as one expert points out, “power- ful western states have been in a central position to advance or retard ideas about the human being in world affairs.”14 From another angle, it seems reasonable to argue that “rights are increasingly seen as empowering weaker sections of communities and as the basis for social and political mobilization.”15 In such a view, both the privileged and disadvantaged in society share a common respect for the legitimacy of human rights. That is to say, the regime of rights is the best tool to advance these beliefs.16 The protection and promotion of the second-generation rights have focused attention on nonstate individuals and institutions such as the MNCs.17 Although development should not be narrowly conceived as economic growth and output, the promotion and success of economic development should be judged by improvement in a wide range of effective capability and human choices.18 Because MNCs are not equipped to deal with the questions of international ethics themselves, they need the help of human rights NGOs and other actors to deal with various human rights concerns. The key to this process is making corporations realize the benefits that social responsibility will bring to them. Understandably, businesses have other concerns, such as profits and obligations to shareholders, that must be taken into account when discussing human rights issues.19 But the true means to developing a sustainable global economy is to integrate the concerns of business and 14. DAVID P. FORSYTHE, HUMAN RIGHTS IN INTERNATIONAL RELATIONS 33 (2000). 15. Yash Ghai, Rights, Social Justice, and Globalization in East Asia, in THE EAST ASIAN CHALLENGE FOR HUMAN RIGHTS 249 (Joanne R. Bauer & Daniel A. Bell eds., Cambridge Univ. Press 1999). 16. Id. at 249–50. 17. Lee A. Tavis, The Globalization Phenomenon and Multinational Corporate Develop- mental Responsibility, in GLOBAL CODES OF CONDUCT: AN IDEA WHOSE TIME HAS COME 1336; see 21 (Oliver F. Willimans ed., Univ. of Notre Dame Press 2000). 18. AMARTYA SEN, DEVELOPMENT AS FREEDOM (1999). 19. Kevin T. Jackson, The Polycentric Character of Business Ethics Decision Making in International Contexts , J. BUS. ETHICS (Jan. 2000).
2003 Multinational Corporations and Global Responsibility 971 human rights. Business and human rights interests are not necessarily in opposition. By emphasizing their mutual concerns, both communities may find themselves better positioned to concurrently advance their objectives.20 In this context, several questions must be raised. How will MNCs react to the rising tide of global human rights? What implications will lie ahead if MNCs choose to bypass such normative standards in the name of economic rationality and efficiency? Can MNCs be subject to some form of interna- tional regulation or litigation? Will mandatory/legal compliance work better than a voluntary approach to achieving corporate social responsibility? These questions are highly relevant to the discussions regarding the role that MNCs play in today’s era of rising interconnectedness and globalization. III. THE POWER OF CAPITAL With the increased interaction and globalization of world markets, it is impossible to ignore the impact of MNCs on the human rights conditions worldwide. Like state action, global corporate action has an immense impact that stretches much further than the boardroom where the decisions are made. Consequently, there has been a recent upsurge in the opinion that MNCs are accountable for their actions and should transform their practices in lieu of the human rights debate. Because MNCs have a direct impact on the economic, political, and social landscape of the countries in which they operate, their activities have considerable effect on individuals and human rights, both positively and negatively. Steven R. Ratner, who sees noticeable limits to holding states solely accountable for human rights violations in modern international affairs, asserts that “corporations may have as much or more power over individuals as governments.”21 Corporations control a great amount of capital, generating about one-fifth of the world’s wealth. Only six nations (the United States, Germany, Japan, United Kingdom, Italy, and France) have tax revenues larger than the nine largest MNCs’ sales. Wal-Mart, which is not regarded as one of the top ten revenue-earning MNCs, still profits more per year than the Canadian government’s annual tax revenues, while relying on developing countries’ labor to produce many of its products.22 Wal-Mart is one of many MNCs with operations in Asia and Latin America, where MNC activity has come under increased scrutiny for its effect on the local economy and society. 20. Elliot Schrage & Anthony Ewing, Engaging the Private Sector ., FORUM FOR APPLIED RES. & PUB. POL’Y (Spring 1999), available at http://proquest.umi.com. 21. Ratner, supra note 6, at 461. 22. All data taken from chart in FORSYTHE, supra note 14, at 192.
Vol. 25972 HUMAN RIGHTS QUARTERLY MNCs’ activities in the developing world result in myriad rewards as well as costs. As a potent force for economic integration, MNCs can generate large amounts of income and wealth for host countries, while at the same time providing jobs in markets with high levels of unemployment. Some studies on MNC activity, including one by William Meyer, argue that the presence of MNCs in Third World economies is beneficial, leading to increased life expectancy and reductions in illiteracy and infant mortality rates, along with increases in first- and second-generation rights as a whole.23 Despite evidence that corporate activities in the developing world improve human rights standards, it is still fair to say that MNCs often react to human rights concerns slowly and callously. David P. Forsythe character- izes two groups in the international political economy—the “in” group, “us,” the main beneficiary of money and goods; and the “out” group, “them,” the laborers and governments that help to produce said goods. As long as the benefits of these operations continue to flow to “us,” our concern for “them” is reduced: “On the one hand, the TNC must have cozy relations with the (all-too-often reactionary) government that controls access to the resource. The TNC and local government share an interest in a docile and compliant labor force. On the other hand, the TNC has little interest in other aspects of the local population.”24 Finished products, Forsythe asserts, are sold abroad, with a considerable portion of the profits going to the governmental elite. If that elite does not reinvest the profit into infrastruc- tures that improve the lot of the local population, such as education, health care, and ecological protection, this short-term profit will remain just that.25 MNCs have consistently held and continue to argue that the responsi- bility to improve the socioeconomic standards of living in Third World countries is that of the local government, not of a corporation. The chasm between maximizing economic self-interest and promoting human rights, which has separated the operations of TNCs from those of human rights activists, characterizes the existing tensions between the two. In the second half of the twentieth century, “the globalization of the economy and the globalization of human rights concerns developed separately from each other . . . .”26 MNC activity in the Third World has enhanced the inequitable tendencies of the market and further widened the gap between the rich and the poor. MNCs have also become the principal sites of economic and political power in the developing world. One Asian expert has argued that 23. WILLIAM H. MEYER, HUMAN RIGHTS AND INTERNATIONAL POLITICAL ECONOMY IN THIRD WORLD NATIONS: MULTINATIONAL CORPORATIONS, FOREIGN AID, AND REPRESSION (1998). 24. FORSYTHE, supra note 14, at 196. 25. Id. at 196–97. 26. Id. at 197.
2003 Multinational Corporations and Global Responsibility 973 the removal of barriers to trade as well as to the movement of capital has given MNCs “enormous flexibility in the organization of production and has made them ‘footloose,’ able to exploit economic opportunities around the world.”27 Many other factors contribute to the increase in the power of corpora- tions. These include international protection of their property and their prominent role in international institutions that regulate trade, such as the World Trade Organization (WTO). It is important to bear in mind the mounting power of corporations in the context of international trade. Throughout the world, trade, investment, and information technology are constraining governments’ ability to provide social safety nets and public services to cushion the negative consequences of globalization.28 The power of capital is changing the relationship between states and the market. States are forced to lower their tax rates to entice capital to their economies, and are sacrificing public expenditures to do so. In order to get a company to invest in an area, the state has to provide conditions that the corporation prefers over those offered by other countries. States are inclined to do so because they see the opportunities for employment and revenues as investments in the future—not merely opportunities to skim off bribes. To the extent that the state has become increasingly subordinated to interna- tional capital, policy making has often been dictated by the exigencies of capital movement.29 This imbalance of power gives capital and capitalists the advantage over the state and labor, but there are good reasons states are willing to take risks. The ability of MNCs to coerce states into lowering labor standards highlights the inequities of the global market. Globalization as such invites controversy.30 IV. CORPORATE HUMAN RIGHTS ABUSES Corporations frequently infringe on human rights, but sometimes they are directly complicit in abuses. Steven R. Ratner argues that MNCs have the responsibility—“complicity-based duties”—to avoid any situation that would lead to abuse.31 The duties of corporations are directly linked to their capacity to harm human dignity. In some cases, private actors prevent their employees from leaving the country, as evidenced by the problem of forced 27. Id. at 251. 28. Jeffrey E. Garten, Globalism Doesn’t Have to be Cruel , BUSINESS WEEK, Feb. 9, 1998, available at http://proquest.umi.com. 29. Ghai, supra note 15, at 252. 30. Id. at 251. 31. Ratner, supra note 6, at 512.
Vol. 25974 HUMAN RIGHTS QUARTERLY prostitution.32 Likewise, corporations are liable if they fail to exercise due diligence over their agents, including by not attempting corrective measures after the fact.33 Given the close connection between economic development and socioeconomic rights, it is argued, MNCs’ operations in the developing world are likely to enhance human rights. To the extent that MNCs create jobs, bring new capital and new technology, and provide such employee benefits as health care, they necessarily advance economic and social rights.34 The difficulty with such logic is that it overlooks the issue of uneven development. MNCs operations usually accentuate existing inequalities, both in terms of income and wealth, by simultaneously creating pockets of poverty and wealth, development as well as underdevelopment.35 Perhaps the most troubling aspect of MNCs’ operations in the new global economy has to do with the inordinate amount of importance attached to the portfolio investment as compared to foreign direct invest- ment (FDI). Critics claim that MNCs’ preference for portfolio investment has had devastating impacts on the economies of developing countries, espe- cially during the 1997 Asian crisis. Importance attached to portfolio investment, which is liquid capital, flies by night and is largely driven by profit, often resulting in crony capitalism. This type of capitalism was shown to be associated with the involvement of the Salinas and Suharto families in the banking systems of Mexico and Indonesia respectively. Portfolio investment spurs purely speculative economic activities such as arbitrage, causing further economic corruption and disruption. Furthermore, the geographic flexibility that MNCs enjoy—mostly in the form of plant relocation—leaves local communities that are dependent on them for employment increasingly vulnerable. Wealthy MNCs in the new globalized economy routinely displace well-paid workers in the North in order to exploit Southern workers in what amounts to sweatshops character- ized by low pay, hazardous working conditions, child labor, and the absence of basic worker rights.36 William Meyer’s study on the effects of MNCs’ involvement in the Third World gets to the essence of the ambivalent effect they have on Third World countries. While holding to his claim that MNCs have a “net beneficial impact” on rights, Meyer acknowledges that some corporations have a 32. Id. 33. Id. at 523–24. 34. Kathleen Pritchard is cited as the main advocate of such thesis. See MEYER, supra note 23 at 90. 35. Id. at 91. 36. GEORGE F. DEMARTINO, GLOBAL ECONOMY, GLOBAL JUSTICE: THEORETICAL OBJECTIONS AND POLICY ALTERNATIVES TO NEOLIBERALISM 181 (2000).
2003 Multinational Corporations and Global Responsibility 975 history of human right abuses.37 It is easy enough to prove that a Wal-Mart factory in Honduras, for example, lowers unemployment in the region, providing jobs for persons that would not have them without such a factory. This improvement does not mean, however, that this hypothetical Wal-Mart operation is in compliance with universally accepted standards of human rights. As of yet, there is no universal protocol or method to weigh the benefits and drawbacks of MNCs’ activity in the Third World. Meyer cites specific examples of MNC operations that violate second- and third-generation rights in the Third World. The Bhopal environmental disaster in India; maquiladoras (export-oriented factories) in Mexico, Hon- duras, and El Salvador; and Nike sweatshops in Indonesia and Pakistan are prime examples of human rights “violations.”38 Meyer asserts that “some MNCs try to destroy labor unions. Many MNCs do harm to the environ- ment.”39 Currently, there are no guidelines that the international community can use to regulate corporate activity. Some have expressed a fear that MNCs, if left to themselves and without regulation, will “opt for short-term profits at the expense of human dignity for many persons affected directly and indirectly by their practices.”40 The evidence to support this claim comes about through increasing media coverage of human rights abuses in the developing world, especially concerning so-called “sweatshop” factories used by such companies as Nike, Wal-Mart, Gap, and Reebok. One situation often studied and cited as an example is Nike’s operation in Indonesia. Jim Keady, a former soccer coach at St. John’s University in New York City, a school that uses Nike apparel allegedly imported from Indonesian sweatshops, quit his post as coach and went to Indonesia in August 2000 to live on the average salary a factory laborer would earn, about US $1.26 a day. Keady and his assistants set up a website41 and kept a diary detailing their stay. Indonesia produces more Nike products than any other nation, manu- facturing 36 percent of the sneaker and apparel giant’s commodities.42 Keady, in his online journal, breaks down his projected income for a month’s work at a Nike factory in Indonesia and what his paycheck amounts to: “Tomorrow, we will begin to live on the monthly wage that Nike pays the workers in the factories here (325,000 Rp [Indonesian currency], or $37 a 37. MEYER, supra note 23, at 198. 38. Id. at 198, 202–03. 39. Id. at 199. 40. FORSYTHE, supra note 14, at 199. 41. See available at http://www.nikewages.org. Portions of Keady’s journal excerpted from the New Haven Advocate , Sept. 21–27, 2000. 42. MEYER, supra note 23, at 202.
Vol. 25976 HUMAN RIGHTS QUARTERLY month).”43 The 325,000 Rp is remuneration for eight-hour days, six days a week, excluding overtime. After substituting for major expenses (rent, water, transportation, etc.), Keady reported having 214,000 Rp to spend for the month on food, or a little more than 7,000 Rp a day. An average meal of rice and vegetables will cost an estimated 2,500 Rp—leaving him only enough money per day for two meals, with the rest going to other necessities, such as toothpaste and soap. This leaves little if any money for other major expenses; health care, child care, or even clothing. “The reality is,” Keady wrote in his diary, “even with 18–30 overtime hours per week, the workers still cannot make ends meet.” Along with the squalid living conditions Keady described, he filled his diary and website with first-hand stories from factory workers. Some laborers said they were told to lie to factory inspectors when asked if they used harmful chemical agents daily (they did, and reported not doing so to auditing firms such as PriceWaterhouse Coopers), and spoke of unsanitary conditions within the factories, with only five toilets for over 2,000 workers. If Keady’s report is accurate, Nike laborers in Indonesia make barely enough money to survive on, and are subject to abuses of their second- and third- generation rights to health and a clean environment. Companies other than Nike also find themselves under intense scrutiny from human rights organizations and other forces. Wal-Mart factories in China and Honduras have been found in violation of certain human rights in their operations, especially during the Kathie Lee Gifford clothing and handbag scandal that gave the anti-sweatshop movement considerable space in mainstream US media. In Honduras, workers in maquiladoras reported working up to twenty hours a day making only thirty-one cents an hour; and in China, a factory used by Wal-Mart set up a phony workshop that was up to Chinese labor code to mask conditions of illegally low pay and forced overtime.44 Human rights abuses are not limited to Asian and Latin American factories set up by Western mercantilists, evidenced by the charges against the Unocal Oil Corporation and its operations in Myanmar (formerly Burma). A group of Burmese citizens, in conjunction with some human rights organizations, say that in building a gas pipeline through Myanmar to Thailand, Unocal participates in a project that includes “slave labor, the 43. Taken from Advocate article paraphrasing Keady’s online journal. Remainder of information for this paragraph and the next two taken either from Keady’s website or the Advocate article. 44. MEYER, supra note 23, at 205. See also Dexter Roberts & Aaron Bernstein, A Life of Fines and Beating , BUSINESS WEEK, Oct. 2, 2000; Roberts & Bernstein article available at http:// proquest.umi.com.
2003 Multinational Corporations and Global Responsibility 977 forced relocation of entire villages, and, in some cases, torture, rape, and murder by Burmese soldiers.”45 The pipeline is estimated to generate about $200 million a year in revenue, money that Unocal is not likely to turn away because of a few isolated human rights concerns. In a similar case, European Union member states have consistently acted through the Euro- pean Parliament to embarrass British Petroleum (BP) over its policies in Colombia that allegedly led to the repression of labor rights through brutal actions by the Colombian army in constructing a BP pipeline.46 The case of Royal Dutch/Shell in Nigeria is another vivid example of how MNCs have been socially irresponsible in their operations. In 1958, Royal Dutch/Shell began its oil operation in one of the most densely populated regions of Nigeria, an area in the Niger River Delta named Ogoni after the region’s dominant ethnic group. Though oil production dramati- cally increased Nigeria’s GNP, this growth, experts note, came at a horrendous cost to the 6 million people living in the Niger River Delta. The region suffered severe environmental damage, and the inhabitants of the Ogonilands who protested were subjected to systematic violent repression at the hands of the ruling military dictatorship.47 According to some sources, twenty-seven incidents between 1982 and 1992 resulted in a total of 1,626,000 gallons of oil being spilled from Shell’s Nigerian operations. Public health has suffered as a result of a massive pollution of farmlands, fishing areas, and water supplies. In addition to poor environmental and public health safeguards, regional negligence has aggravated the country’s income disparities. Since 1958, Royal Dutch/Shell has extracted some $30 billion worth of oil from the region.48 Despite this, the Ogoni are among the poorest in the country. Of Shell’s 5,000 employees in Nigeria in 1995, only 85 were Ogoni.49 Human rights activists, including the late Ken Saro-Wiwa and other Ogoni activists, who spoke out and organized protests against such continued environmental damages, were persecuted. Shell denied any involvement in such persecutions but admit- ted that it had imported arms for the Nigeria military. Shell refused to intercede with the Nigerian government to object to acts of violence against the Ogoni people.50 45. Morton Winston, John Doe vs. Unocal: The Boardroom/Courtroom Battles for Ethical Turf , WHOLE EARTH (Summer 1999), available at http://proquest.umi.com 46. FORSYTHE, supra note 14, at 208. 47. Id. at 197; see also Joyce V. Millen & Timothy H. Holtz, Dying for Growth, Part I: Transnational Corporations and the Health of the Poor, in DYING FOR GROWTH: GLOBAL INEQUALITY AND THE HEALTH OF THE POOR 177–223; see 194–95 (Jim Yong Kim, Joyce V. Millen, Alec Irwin, & John Gershman eds., Common Courage Press 2000). 48. Charles W.L. Hill, Royal Dutch/Shell: Human Rights in Nigeria, in INTERNATIONAL BUSINESS 113–16; see 114 (London: Irwin McGraw Hill 2000). 49. Id. 50. Millen & Holtz, supra note 47, at 194.
Vol. 25978 HUMAN RIGHTS QUARTERLY V. DEVELOPING A REGIME OF CORPORATE RESPONSIBILITY Perhaps due to a growing list of human rights abuses attributable to corporate activity in the developing world, a movement for a code of conduct for MNCs is gaining momentum internationally. The idea for a code of conduct for MNCs dates back to the mid-1970s, with the first meetings of the UN Commission on Transnational Corporations.51 This commission considered, among other things, whether the code should be mandatory or voluntary, and whether or not MNC/TNCs were significant enough actors in international economic and political relations to warrant such a code. With the increased international attention on corporate human rights abuses in the 1990s, the international community, headed by the United Nations, addressed the issue again in the form of the Global Compact. Outlined by UN Secretary-General Kofi A. Annan at the World Economic Forum on 31 January 1999, the Compact “provides a basis for structured dialogue between the UN, business, labor, and civil society on improving corporate practices in the social arena.”52 With roots in the Universal Declaration of Human Rights (1948), the fundamental principles and rights of the International Labour Organization, and the environmental backing of the Earth Summit’s Agenda, the Global Compact has a prestigious basis of literature supporting it. The Compact sets out its guidelines for corporate practices in its nine principles. The first two principles deal with human rights in a general sense, asking corporations to support the protection of universal human rights and ensure that they are not complicit in human rights abuses. Corporations that commit themselves to the human rights cause would ensure and adhere to human rights practices not only in the workplace, but would also condemn human rights violations in the wider community. The Compact advocates workplaces that have safe and healthy working condi- tions, rights to basic health, education, and housing, and an end to forced or child labor.53 The Compact asserts that in the wider community corporations should prevent forced migration, protect the local economy, and most importantly, contribute to the public debate—MNCs have both the right and the responsibility to express their views on matters that affect their operations in the community.54 51. Seymour J. Rubin, The Transnational Corporations , 32 ACADEMY POL. SCIENCE 120–21 (1977). 52. See available at http://www.un.org. 53. This, and all information regarding the Nine Principles, available at http://www. unglobalcompact.org. 54. See generally Business and Human Rights Center, available at http://www.business- humanrights.org/categories/issues/other/housing.
2003 Multinational Corporations and Global Responsibility 979 Principles three through six deal exclusively with labor issues. In these labor principles, Secretary-General Annan asked MNCs to support workers’ freedom of association and right to unionize, to eliminate forced labor (such as mandatory overtime), to abolish child labor, and to eliminate discrimina- tion in the workplace. This labor-friendly proclamation argues that unions allow for increased dialogue between workers and managers, and lead to more efficient and effective problem solving. The Compact defines forced labor as “all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily.” Forced labor and child labor lower the level of productivity and can damage a company’s reputation internationally, the Compact asserts. It also condemns discriminatory practices, as they restrict the pool of workers available to a corporation and generally promote social fractional- ization. Principles seven through nine of the Compact address environmental issues. These three principles emphasize that MNCs should promote environmental responsibility, encourage the development of environmen- tally friendly technologies, and support a “precautionary approach” to environmental challenges. A precautionary approach to environmental protection suggests that companies take early actions to ensure that irreparable environmental damage does not occur because of their prac- tices, instead of waiting until the damage is done before addressing the problem. Doing this, the Compact suggests, is more cost-effective and also protects the corporation’s public image. VI. THE CASE FOR THE SYSTEMATIC REGULATION Will codes of conduct offer a role for MNCs to play in promoting the human rights of their workers? It is generally believed that MNCs are profit- maximizing and profit-seeking corporations that use codes as public relations tools, not for the benefit of workers.55 Urging corporate self- regulation is a false proposition: “it is untenable to expect companies to enforce their codes voluntarily.”56 Governments and international bodies should ultimately control the workers’ rights by regulating companies through both national and international legislation. Medea Benjamin, executive director of Global Exchange, notes that “It is important to talk more about international codes rather than codes that each company designs. Most codes of conduct are based on internationally recognized 55. CARNEGIE COUNCIL ON ETHICS AND INTERNATIONAL AFFAIRS, HUMAN RIGHTS DIALOGUE 2 (2000). 56. See An Interview with Medea Benjamin , 2 HUMAN RIGHTS DIALOGUE 7–9 (2000).
Vol. 25980 HUMAN RIGHTS QUARTERLY rights, on the ILO’s own standards. These codes have been forced on companies. The companies did not want to have the codes, so the code itself is not the companies’ agenda.”57 Cynicism about international codes and instruments is widespread. At present, the standards by which the conduct of MNCs should be judged are neither uniform nor effective. Strategies that human rights NGOs have employed against governments may, therefore, be the best hope for confronting irresponsible MNCs.58 Although the Global Compact does represent a step toward curtailing human rights abuses by MNCs, the fact remains that it is voluntary—not a mandatory set of resolutions—and does not hold corporations accountable by way of penalties or sanctions for violating its principles. In its own words, the Compact “is not a code of conduct . . . it highlights the global citizenship qualities of corporations, and opens up opportunities for focused, mediated, directed, and constructive dialogue.”59 Its failure to demand enforceable standards has rendered the Compact only a voluntary endeavor. Human Rights Watch maintains that three obstacles stand in the way of the Compact’s effectiveness: “The lack of legally enforceable standards, the lack of a monitoring and enforcement mechanism, and a lack of clarity about the meaning of the standards themselves.”60 It follows that the UN may be tarnishing its image as a protector of universal human rights by issuing a document with broad definitions of complicity that fall far short of enforcing stricter guidelines or establishing a monitoring body to ensure corporate compliance with the human rights agenda. To guard against the Compact becoming a forum for hypocrisy, the UN should also develop a mechanism for monitoring and evaluating corporate compliance. In the absence of such a mechanism, there is a troubling possibility that the guidelines could be misinterpreted, misapplied, or ignored. That would result in corporations being given what they might claim is a “UN Seal of Approval” without having taken meaningful steps to implement the Compact’s standards. A similar view echoes this concern: the UN should never align itself with MNCs that violate the human rights that the organization holds dear. “By embracing multinationals,” it is argued, “the UN has tarnished its reputation and abdicated its role as a protector of human rights. . . . The United Nations should be establishing itself as a tough, independent monitor. Instead, it’s jumped into bed with some of the most notorious 57. Id. at 9. 58. Meintjes, supra note 1, at 96. 59. See http://www.un.org. 60. See http://www.hrw.org.
2003 Multinational Corporations and Global Responsibility 981 companies in the world.”61 By embracing MNCs through the Global Compact, the UN is sending a message that companies will voluntarily abide by the principles of the Compact, even though history has proven otherwise. In taking this view, the Compact will do little more than burnish the reputations of companies that are complicit in human rights violations. Corporations, however, are increasingly realizing that they cannot continue to ignore human rights concerns. There is an increasing realization among executives of large MNCs that in order for their companies to thrive, the communities in which they do business must prosper as well. British Petroleum, for instance, has made some adjustments. The oil conglomerate has invested in computer technology in Vietnam for flood-related damage control, provided refrigerators in Zambia for the storage of anti-malaria vaccines, and has helped to replant a forest destroyed by fire in Turkey, to name a few examples.62 This blossoming movement is likely to help transform the human rights practices of MNCs. The challenge remains, however, to find the most effective way (voluntary or coercive) to promote corporate social responsi- bility. Some experts have pointed to voluntary adoption of socially respon- sible policies as a vital component of running a business. They have sought ways in which to modify corporations’ internal cultures. The key here, they argue, is to create an environment conducive to moving beyond the legal to the ethical realm of corporate social responsibility.63 Such a voluntary approach to code formation and enforcement, they note, “would minimize the need for further governmental regulation, which is invariably more expensive and less efficient.”64 Some have looked to the United Nations and its Global Compact, contending that the most encouraging part of the Compact is its emphasis on the social responsibility of corporations, an aspect critical to the protection of human rights. MNCs, according to the Compact, have a responsibility not only to obey the laws of the host communities, but also to contribute to the vitality of those communities. Judgments regarding MNCs operations are directly linked to their transparency and good gover- nance.65 The first principle of the Compact asks that MNCs support and respect internationally proclaimed human rights “within their sphere of 61. Anonymous, The UN Sells Out, Progressive (Sept. 2000), available at http:// proquest.umi.com. 62. Garten, supra note 28. 63. Alan Jones, Social Responsibility and the Utilities , 34 J. BUS. ETHICS 219–29 (2001). 64. S. Prakash Sethi, Corporate Codes of Conduct and the Success of Globalization , 16 ETHICS & INT’L AFF. 89–106, esp. 106 (2002). 65. Anthony F. Lang, Jr., Enhancing the Role of Ethics in Business , PERSPECTIVES ON ETHICS & INT’L AFF. 4–5 (2000).
Vol. 25982 HUMAN RIGHTS QUARTERLY influence.”66 While the language is vague, the Compact makes it clear that corporations’ responsibilities to protect human rights do not stop at the doorsteps of their factories. MNCs have a wider responsibility—through their efforts and actions—to promote human rights interests in the surround- ing community. Within this guideline, there are some suggestions for how companies can help to promote a human rights agenda. The Compact’s recommenda- tions include MNCs taking the lead in protecting the rights of unions, especially in countries with tight labor restrictions such as China, providing medical care for laborers who have fallen ill as a result of their work, raising awareness in the community about child labor, and providing education and training for working children. The mere adoption of a code of conduct is only the first step in a long process.67 International law has to protect these rights by holding corpora- tions liable if they do not comply with universally accepted human rights standards, such as those outlined in the Global Compact. By focusing solely on the economic effects of the MNCs, international law has yet to hold these companies accountable for the social effects they have on developing countries.68 The issue of international regulation and transnational litigation, also known as “foreign direct liability,” is gaining momentum and poses a real challenge for the MNCs’ operations. MNCs should adopt minimum interna- tional standards throughout their operations. Global standards can and should be enforced. The 1789 Alien Tort Claims Act is an example. Legal recourse is based on allegations of corporate complicity in violations of fundamental human rights or principles of international environmental law in controversial regimes. Several cases against US multinationals for alleged violations occurring in other countries have been heard in US courts. The victims of India’s Bhopal disaster sued Union Carbide in US courts. Texaco was sued by some indigenous Amazonians for environmental damage in Ecuador. What is more, litigation is based on a call for parent companies of the MNCs to ensure that their corporate activities abroad match standards held at home.69 There are signs that MNCs are realizing the importance, and value, of social responsibility. US-based corporations used to hold more of a “hands- 66. See http://www.unglobalcompact.org; all information in this paragraph taken from this website. 67. Doug Cahn & Tara Holeman, Business and Human Rights , FORUM FOR APPLIED RES. & PUB. POL’Y (1999), available at http://proquest.umi.com. 68. FORSYTHE, supra note 14, at 201. 69. Halina Ward, International Litigation: Joining Up Corporate Responsibility? (7 Dec. 2000), available at http://www.dundee.ac.uk/cepmlp/journal/htm/article7–19.html; see also Tavis, supra note 17, at 22.
2003 Multinational Corporations and Global Responsibility 983 off” policy toward human rights abuses abroad, claiming they could not realistically be held responsible for abuses undertaken in foreign factories. With increased human rights activism, sharper media scrutiny, and the intensive communications made possible by information technology, US corporations find it immensely difficult and costly to sustain the old hands- off policies. Mounting pressure has compelled them to accept responsibility for the labor practices and human rights abuses of their foreign subcon- tractors.70 VII. FILLING THE ENFORCEMENT GAP The rights of workers and the obligations of business to the community are arguably too important to be left to the voluntary good will of the corporations. Implementing socially responsible standards for MNCs is a significant task, which needs to be “backed up by effective sanctions to motivate corporations to take such standards seriously by detecting and preventing misconduct throughout their global operations.”71 It is impera- tive for an outside governing body to help monitor corporate practices, and to hold MNCs accountable for documented abuses of universally accepted human rights standards. Where will this come from? And will there ever be an international regime to govern corporate social responsibility? The preceding discussions have revolved around four key points: (1) that companies cannot be trusted to monitor their own compliance to new human rights standards; (2) that there are no existing international legal obligations that require corporate social responsibility, let alone an effective legal regime to enforce such obligations72; (3) that the Global Compact has made great contributions, both in terms of setting standards and monitoring standards; (4) that the lack of enforcement mechanisms or its reliance on self-monitoring should not detract from the value of the Global Compact as a first step to developing and monitoring codes of conduct.73 There is a need for a monitoring system outside of the corporations themselves. In the past, some MNCs have themselves contracted factory- monitoring firms to check out their overseas operations; firms such as 70. Debora L. Spar, The Spotlight and the Bottom Line: How Multinationals Export Human Rights , 77 FOR. AFF. 7–12 (Mar./Apr. 1998). 71. Kevin T. Jackson, A Cosmopolitan Court for Transnational Corporate Wrongdoing: Why its Time has Come , J. BUS. ETHICS 758 (May 1998), available at http://proquest.umi.com. 72. William H. Meyer & Boyka Stefanova, Human Rights, the UN Global Compact, and Global Governance , 34 CORNELL INT’L L. J. 501–21, esp. 514–15 (2001). 73. Ambassador Betty King, The UN Global Compact: Responsibility for Human Rights, Labor Relations, and the Environment in Developing Nations , 34 CORNELL INT’L L. J. 481– 85, esp. 485 (2001).
Vol. 25984 HUMAN RIGHTS QUARTERLY Pricewaterhouse Coopers (PWC), which performs more than 6,000 factory inspections per year for corporations such as Nike.74 Having a corporation pay a firm of its choosing to oversee its operations, however, is like holding an election in which only members of one party can vote—the results are basically pre-determined. When the corporation itself hires the firm to examine its Third World factories, the odds are high that inspecting the firm will return a favorable review. PWC has come under fire recently by various study groups and human rights NGOs for their conflicted role in these types of deals. A recent independent study of factories in China and Korea indicates that PWC “had a pro-management bias, did not uncover the use of carcinogenic chemicals and failed to recognize that some employees were forced to work 80-hour weeks.”75 This same study indicated that PWC and other auditing firms have a decidedly pro-corporate tilt, and do not undertake very thorough inspections, overlooking problems such as tam- pered time cards and a lack of safety equipment to keep workers from injuring themselves. Certainly a cosmopolitan body to adjudicate corporate wrongdoing will not spring up overnight, nor will it ever develop without finding a balance between corporate concerns and human rights concerns. Once the interna- tional community reaches a consensus on the need for such a system, the focus should turn to finding a balance between corporate and human rights concerns, and how to give the court the power it needs to hold corporations accountable. As noted above, the issue is where will the power for this international court come from—should it have its basis in the United Nations or should it be independent of all corporate, political, and nongovernmental organizations (NGOs)? With the introduction of the Global Compact (January 1999), some human rights NGOs such as Human Rights Watch saw the UN as the logical place to house an international, unbiased corporate monitoring system for human rights abuses. “The UN forum,” Seymour Rubin wrote, “is the appropriate arena for the analysis of TNC issues in the context of global economic relations.”76 A marked imbalance, however, exists in the United Nations between the political side, exemplified by the General Assembly and Security Council, and the economic side, represented by ECOSOC and associated functional groups, notably the ILO, IMF, World Bank and WTO. An additional theme of the draft article could be reviewing and/or revising standard views of UN effectiveness and functional organization. 74. Steven Greenhouse, Report Says Global Accounting Firm Overlooks Factory Abuses , N.Y. TIMES, Sept. 28, 2000, at A12. 75. Id. 76. Rubin, supra note 51, at 126.
2003 Multinational Corporations and Global Responsibility 985 Other advocates of an international court visualize it as a system outside of the United Nations. Economist Stephen Hymer has, since 1979, advocated an alternative strategy for Third World development that cautions against reliance on MNCs: “move away from MNCs toward a system of regional economic integration.”77 Such a policy preference has been supported by the South Commission, chaired by Tanzania’s Julius Nyerere, in its final report. The South Commission has embraced the notion of regional integration and new controls over MNCs through regulation of foreign investment.78 Whether such regional integration would prove feasible in the wake of rising global corporate power remains to be seen. One nagging question persists: how would the controls over MNCs be established and implemented as part of the monitoring system at the regional level? Another idea has been to link the ILO with the WTO, hoping that the ILO’s rights-oriented culture might join with the WTO’s enforcement power and sanctioning process.79 The ILO has observer status at the WTO, making it possible for the two to coordinate their activities. The difficulty with the WTO is that while the organization has begun to address environmental issues, member states have shied away from considering human rights and labor issues as part of its mandate.80 An alternative suggestion has been to create an intermediate institution that is largely free from the WTO’s exclusive trade orientation and the ILO’s crippling tripartite system.81 This idea, however, is called into question by those who argue that the functions necessary for the global governance can hardly be assigned to a single entity, regardless of its enforcement capaci- ties.82 Increasingly, some critics call for restructuring international organiza- tions, such as the WTO, IMF, and the World Bank, so that they can perform more effective functions of monitoring labor and environmental standards across the globe. What is needed, they argue, is a major effort to democratize the WTO. A horizontal equity-of-voting system—reflecting disjunctures between one-country, one-vote and the distribution of wealth— may be an initial step toward achieving that goal. Only then can the WTO be entrusted with the task of crafting and implementing policies for better environmental and labor standards.83 77. Quoted in MEYER, supra note 23, at 93. 78. Id. 79. HUMAN RIGHTS WATCH, WORLD REPORT 2001: EVENTS OF 2000, at xviii (2000). 80. Ratner, supra note 6, at 538. 81. WORLD REPORT 2001, supra note 79, at xviii. 82. Meyer & Stefanova, supra note 72, at 519. 83. Baushik Basu, Compacts, Conventions, and Codes: Initiative for Higher International Labor Standards , 34 CORNELL INT’L L. J. 487–500, esp. 499 (2000).
Vol. 25986 HUMAN RIGHTS QUARTERLY The WTO is widely regarded “as a preserve of powerful and rich nations.”84 Many developing countries simply lack the resources, including money or expertise, to fight drawn out legal battles in Geneva. Almost one quarter of the members of the WTO cannot even afford representation in Geneva.85 A case can be made that the hyper-legalization of the WTO process does more harm than good for poor countries. The trade-law expertise of developed countries gives them a disproportionate advantage over developing countries before WTO tribunals.86 Such structural inequali- ties explain why developing countries are opposed to the idea of empower- ing the WTO.87 VIII. WHAT ROLE FOR THE NGOS? Debate continues as to what impact NGOs may have on strengthening the democratic accountability of such international organizations as the WTO. Some experts insist that NGOs’ direct influence on policy should be channeled through national governments, because governments usually are more accountable to their citizens.88 It is nation-states that negotiate the rules within the WTO, an arena in which struggles take place over what form globalization should assume, and at whose benefits or costs.89 Although NGOs are self-selected, and not democratically elected, they can play a positive role in increasing transparency in international organiza- tions. They deserve an observer status and a voice, but not a vote.90 Others observe that given the pluralistic and multidimensional nature of social responsibility, neither NGOs nor governments have the wisdom or the right to lay down what corporations must do.91 Many critics of international organizations have challenged the notion that the WTO as presently constituted can be reformed, arguing that as long 84. Id. 85. See Mike Moore, Director-General of the WTO, Open Societies Do Better, a speech given on 9 Feb. 2000, available at http://www.wto.org/english/news_e/spmm_e/ spmm22_e.htm. 86. CLAUDE E. BARFIELD, FREE TRADE, SOVEREIGNTY, DEMOCRACY: THE FUTURE OF THE WORLD TRADE ORGANIZATION 35–36 (2001). 87. Basu, supra note 83, at 492. 88. BARFIELD, supra note 86. 89. Ron Labonte, Globalization and Reform of the World Trade Organization , 92 CANADIAN J. PUB. HEALTH 248–49 (2001). 90. Joseph S. Nye, Jr., Globalization’s Democratic Deficit: How to Make International Institutions More Accountable , FOR. AFF. (July/Aug. 2001), available at http://www. foreignaffairs.org/articles/Nye0701.html. 91. Jagdish Bhagwati, Coping with Antiglobalization: A Trilogy of Discontents , 81 FOR. AFF. 2–7 (Jan./Feb. 2002).
2003 Multinational Corporations and Global Responsibility 987 as power resides in the hands of large transnational corporations and the big powers that support them, the WTO is unreformable.92 It is thus essential that NGOs pressure the WTO into observing global labor, environmental, and human rights standards. Human rights NGOs are exerting increasing pressure on the MNCs to rectify their human rights abuses. FoodFirst Information and Action Network (FIAN) has contributed to the strengthening of socioeconomic and cultural rights by drafting a code of conduct on the right to food. FIAN has demanded that MNCs be made accountable to this code.93 The pressure for progressive change will most likely come from private actions, civil society, media exposure, and lawsuits based on civil law. Such actions would endanger the corporations’ brand name and profit margin, while exposing MNCs’ Achilles’ heel in any attempt to ignore criticism about their labor practices.94 Evidence suggests that corporate behavior has been increasingly influenced by means of public stigmatization. As a result, more companies may seek to avoid such negative exposures by adopting and enforcing internationally recognized human rights codes of conduct before they have been targeted.95 Ultimately, however, without national enforcement not much can be achieved by relying solely on consumers. It is the responsibility of national governments to enact and implement global labor, environmental and human rights standards for the MNCs.96 IX. CONCLUSION Given the many questions and controversies surrounding the operations of MNCs, a case can be made for holding MNCs accountable to human rights standards and for pressuring MNCs to reorient their policies and practices. Two broad conclusions can be drawn. First, MNCs have thus far shown meager interest in the sociocultural welfare or human rights of the vast majority of the people living in host countries.97 MNCs are under no legal— much less ethical—obligations to the governments of the countries within 92. Yash Tandon represents an NGO called International South Group Network, Transpar- ency—A Casualty of Democratic and Ethical Deficit WTO , available at http://www. seatini.org/reports/transparency. 93. Brigitte Hamm, FoodFirst Information and Action Network, in NGOS AND HUMAN RIGHTS: PROMISE AND PERFORMANCE 167–81 (Claude E. Welch, Jr. ed., 2001). 94. FORSYTHE, supra note 14, at 209–10. 95. Morton Winston, NGO Strategies for Promoting Corporate Social Responsibility , 16 ETHICS & INT’L AFF. 71–87, esp. 86 (2002). 96. Id. at 87. 97. Robert McCorquodale & Richard Fairbrother, Globalization and Human Rights , 21 HUM. RTS. Q. 756–66 (1999).
Vol. 25988 HUMAN RIGHTS QUARTERLY which they operate, even as their policies and actions affect hundreds of millions of people. Conversely, it is states that are accountable to the transnational business forces and economic private regimes set by the MNCs.98 In the absence of international regulatory agencies, MNCs have been entirely free to devise their own rules, creating an environment less hospitable or indifferent to human rights.99 Secondly, corporate policies and practices are arguably subject to constant evolution, as are corporate responsibilities and obligations. MNCs have an inherent responsibility to provide for their workers and the good of the community as a whole. Workers in developing countries’ factories have the same inherent human rights as the company’s shareholders, and need to be treated with the same amount of dignity and respect. The urgency of “growth” and “efficiency” need not detract from the importance of preserv- ing the human rights and dignity of labor in the developing world. In the future, growth will be problematic if it further exacerbates existing dispari- ties. Notwithstanding the recent surge in the rhetoric of social responsibility, many corporations cannot, and will not, apply the necessary human rights agendas to their developing countries’ operations without an outside monitoring agent or structure enforcing a set of standards. The lack of consensus between states and the absence of leadership among MNCs have prevented the emergence of coherent and effective standards to assess the operation of the MNCs. The UN Global Compact is unlikely to completely end MNCs’ misconduct, but it is a step in the right direction. The standards addressed therein necessitate a substantial supportive system to gain merit in the international community. Corporate codes of conduct are useful to the extent that they are an integral part of the employment contracts and the right to organize.100 Such codes, however, lack mechanisms for implemen- tation and external monitoring and audit.101 Views differ with respect to the effectiveness of NGOs’ strategies. Some analysts, most notably Margaret Keck and Kathryn Sikkink, find success in a series of case studies. They focus on transnational advocacy networks, which seek to bring issues to the public agenda by framing them in innovative ways and by seeking hospitable venues. Keck and Sikkink isolate four approaches. Information politics , they argue, involves promoting change by reporting facts—whose impact is heightened if the information is timely and dramatic. Symbolic politics refers to major events, such as the 98. Peter Schwab & Adamantia Pollis, Globalization’s Impact on Human Rights, in HUMAN RIGHTS: NEW PERSPECTIVES, NEW REALITIES 209–21, esp. 212 (Admantia Pollis & Peter Schwab eds., 2000). 99. Id. at 214. 100. UNITED NATIONS DEVELOPMENT PROGRAM, HUMAN DEVELOPMENT REPORT 2000, at 75 (2000). 101. Id. at 80.
2003 Multinational Corporations and Global Responsibility 989 1973 coup in Chile, that help create awareness of major international issues. Leverage politics allows weak NGOs to influence state practices directly, both materially and morally. Finally, accountability politics relies upon governments’ public positions on democracy, human rights or (for purposes of this paper) corporate responsibility, to expose the distance between discourse and practice.102 Morton Winston utilized Keck and Sikkink’s typology in his analysis of Amnesty International (AI), arguably the world’s preeminent human rights advocacy organization.103 However, he modified their concept of network, noting that formal movements like AI grew out of a pre-existing social movement within global civil society. This human rights network gave rise to AI and other such organizations or transnational advocacy networks. Winston also notes some inherent weaknesses in AI: its reliance on the mass media for attention and the limited political analysis of its reports; the limited thrill of its prisoner of conscience campaigns in recent years; the lack of action from its efforts to use MNCs for leverage on governments; and the need to focus on implementation of existing human rights norms, not on creation of new norms. AI urged MNCs to engage in dialogue and adopt codes of conduct. Human Rights Watch has also focused on corporations and human rights, although its main attention has been given to its five regional divisions and three thematic divisions.104 Whether the answer lies in restructuring international organizations, linking their strengths, enhancing private actions and media exposure, or creating a single intermediary institution, or regional or global governance, the case for the MNCs’ self-policing is utterly unpersuasive. In the current global economy, MNCs and their shareholders are able to reap enormous benefits, and use their power to take advantages of workers and govern- ments alike. If they can benefit from this increasingly interdependent global economy, it is only fair that they accept the responsibilities that go along with these economic gains. 102. MARGARET E. KECK & KATHRYN SIKKINK, ACTIVISTS BEYOND BORDERS: ADVOCACY NETWORKS IN INTERNATIONAL POLITICS 16–25 (1998). 103. Morton E. Winston, Assessing the Effectiveness of International Human Rights NGOs: Amnesty International, in NGOS AND HUMAN RIGHTS, supra note 93, at 26–54, esp. 31. 104. Widney Brown, Human Rights Watch, in NGOS AND HUMAN RIGHTS, supra note 93, at 72– 84. |
Multinational corporations and the ethics of global responsibility: problems and possibilities
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