This essay seeks to gauge the ability of international governmental institutions to regulate the activities of transnational corporations and to determine if any inability to do this is fatal to the protection and promotion of human rights. The work begins with two definitions. The first definition is of transnational corporations and the kinds of activities in which they engage. The second definition is of international governmental institutions and the kinds of responsibilities they have in regard to the protection and promotion of human rights. Examples are provided to illustrate each definition. Following this clarification of terms the essay then describes two existing international instruments which attempt to regulate the activities of transnational corporations. These international instruments are subsequently used in the next section as a framework with which to evaluate the ability of international governmental institutions to regulate transnational corporations. Evidence is presented from development literature which supports and opposes the view that international instruments of international intergovernmental institutions are sufficient in regulating the activities of transnational corporations. This evaluation then determines if the protection and promotion of human rights is indeed fatally undermined. In conclusion the essay finds that although existing attempts to regulate transnational corporations are not wholly effective, this inability is not fatal to the protection and promotion of human rights as there is a possibility that the future will provide an international instrument able to control the complex activities of transnational corporations.
Transnational corporations (TNCs) are defined as “incorporated or unincorporated enterprises comprising parent enterprises and their foreign affiliates. A parent enterprise is defined as an enterprise that controls assets of other entities in countries other than its home country, usually by owning a certain equity capital stake.” (UNCTAD, 2002: para. 1). An example of a TNC is the Mitsubishi Corporation. Comprising of over 500 group companies, it has its main offices in Tokyo, Japan but has over 200 bases of operation in 80 countries in five continents. (Mitsubishi, 2005a, para. 1). Transnational corporations therefore are commercially active in many countries across the globe but the decisions regarding the operations of any corporation may be made in one country only. The commercial activities of TNCs are extensive and encompass “the production of goods and of services – in practically all areas of human activity”. (CETIM, 2005: para.2). Returning to the example of the Mitsubishi Corporation, as a brand name Mitsubishi is primarily identified with the manufacture of cars but as a corporation it is also “engaged in business with customers around the world in virtually every industry, including energy, metals, machinery, chemicals, food and general merchandise”, (Mitsubishi, 2005a: para 5), through its ownership of subsidiaries and affiliates such as Metanol de Oriente in Venezuela which manufactures and markets the sale of methanol. (Mitsubishi, 2005b: para.5). The raison d’être of TNCs as of many businesses is the maximization of profits for its shareholders, consequently TNCs are large holders of financial capital and “the trading volume of some half dozen of them is greater than the combined GDP of the 100 poorest countries” (CETIM, 2005: para. 3). As a result, the wealth of TNCs provides them with significant power in today’s ‘globalizing’ world.
International governmental institutions (IGIs) are characterized as “collective groups where the members are comprised of nation states, as opposed to individuals. To be considered an IG[I] a formal agreement or treaty must be convened and [it must have] a membership base of more than three governments…Three very easily identifiable IG[I]s are the International Monetary Fund (IMF), World Bank and the United Nations (UN).” (Foreign Policy Association, 2005, para. 3). Membership of international governmental institutions is organized into those which are open to all states of the world (the United Nations), and those which are established along regional, functional, historical or cultural based criteria (African Union, Organization of Petroleum-Exporting Countries, Commonwealth of Nations, Organization of the Islamic Conference). “International organizations so established are subjects of international law, capable of entering into agreements among themselves or with states. Thus international organizations in a legal sense are distinguished from mere groupings of states, such as the G-8 and the G-77, neither of which have been founded by treaty”. (Wikipedia, 2005: para. 2). These legal relationships reflect the fact that the system of international law places enforcement and compliance obligations on states.
The following section of this work is predominately focused on the efforts of one IGI, the United Nations, to regulate the activities of transnational corporations in order to protect and promote human rights. The United Nations as the preeminent and most extensive of IGIs has been charged with the responsibilities of establishing the most wide ranging of international legal frameworks for human rights and for this reason is the focal point of this analysis. Though two of it instruments for regulating TNC activities are described one, the Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights is given special focus as it is the most comprehensive effort so far to create a legal human rights framework for TNCs. However the work of other IGIs is not excluded and is provided to further illustrate the opinions expressed in the essay.
The United Nations has offered two key instruments which attempt to regulate the activities of TNCs in order to protect and promote individual and collective human rights; the Global Compact and the Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights (hereon referred to as the UN Human Rights Norms for Businesses). As businesses increasingly operated “across boundaries which exceed the regulatory capacities of any one national system,” (Amnesty International, 2004: 5), these instruments arose from the need to respond to the processes of trade globalization by offering international human rights standards. The dual progression of globalizing businesses and acceptance of international human rights standards “made it inevitable that companies would face the question of their responsibilities to human rights [as] companies may violate human rights through their employment practices, or through the manner in which their production processes impact on workers, communities and the environment.” (Amnesty International, 2004: 5). Although some companies had adopted voluntary human rights codes, a more independent and legally binding method to protect and promote human rights necessitated “a single, succinct statement, a comprehensive list of the human rights obligations of companies,” (Amnesty International, 2004: 5), as is found in the UN Human Rights Norms for Businesses.
The UN Global Compact (1999) is a set of ten principles which have been derived from The Universal Declaration of Human Rights, The International Labour Organization's Declaration on Fundamental Principles and Rights at Work, The Rio Declaration on Environment and Development and The United Nations Convention Against Corruption. As their derivation suggests, the ten principles of “[t]he Global Compact asks companies to “embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment, and anti-corruption”. (UNa: para. 1). As of March 2005 the United Nations has enlisted the support of 2000 companies in this regulatory effort. (UNb, para. 1).
The UN Human Rights Norms for Businesses were published in 2003 by the Sub-Commission on the Protection and Promotion of Human Rights of the UN Commission of Human Rights and outline the human rights obligations of TNCs and other businesses. There are seven sections.
Section A - General Obligations: sets out the responsibilities of TNCs to respect and protect human rights as recognized in national and international law.
Section B - Right to equal opportunity and non-discriminatory treatment: outlines that discrimination “based on race, colour, sex, language, religion, political opinion, national or social origin, social status, indigenous status, disability, age”, is a violation of human rights.
Section C - Right to security of persons: TNCs “shall not engage in nor benefit from war crimes, crimes against humanity, genocide, torture, forced disappearance, forced or compulsory labour, hostage-taking, extrajudicial, summary or arbitrary executions, other violations of humanitarian law and other international crimes against the human person as defined by international law, in particular human rights and humanitarian law.”
Section D - Rights of workers: discusses the need for TNCs to provide adequate, rising salaries and safe working environments as well as protection against compulsory labour.
Section E - Respect for national sovereignty and human rights: TNCs should respect political, civil, economic, social and human rights in the countries which they work.
Section F - Obligations with regard to consumer protection: ensures the safety of products in addition to TNCs acting with fairness in marketing and advertising products.
Section G - Obligations with regard to environmental protection: sets down the need for TNCs to carry out activities in the interests of sustainable development and in accordance with national environmental policies.
(UNESC, 2003: 1-7).
The greater detail regarding human rights obligations contained in the UN Human Rights Norms for Businesses means that it is “essential for understanding the scope of the general human rights provisions in the global compact.” (Amnesty International, 2004: 15). However the implementation of both of these instruments is heavily reliant on the cooperation of TNCs. Corporations involved in the UN Global Compact voluntarily publish an annual corporate report in relation to the ten principles and the UN Human Rights Norms for Businesses are still in the draft stage, i.e. not approved by the full UN Commission on Human Rights, and at present suggest at internal TNC adoption while seeking increased legal status. Are these instruments to regulate the activities of TNCs enough to protect and promote human rights? Is any failure on the part of these instruments a fundamental setback to the human rights cause? The next section looks at the case for and against.
In a Submission to the Office of the United Nations High Commissioner for Human Rights, Christian Aid acknowledges the need to work with TNCs on matters of human rights and adds that there is “huge potential for the transnational private sector to contribute to the development process”. (Christian Aid, 2004: 2). Projects such as the Business Leaders Initiative on Human Rights, which includes the corporations Barclays PLC and National Grid Transco, seek to mainstream the UN Human Rights Norms for Businesses into their operating practices and therefore constitute a willingness to conform to the human rights standards it sets out as well as to improve brand image. (BLIHR, 2003: 2-3). In addition to this movement among selected corporations to adopt human rights standards, a 2005 report by the United Nations High Commissioner on Human Rights summarized how the norms have strengthened the protection and promotion of human rights. It states that the norms are:
- The most extensive document detailing human rights standards for business.
- Adding to existing human rights standards.
- Providing human rights standards common to all businesses and therefore ‘leveling the playing field’ for competing corporations.
- Offering a template with which corporations can assess current practices and the effects those practices have on the communities in which they work.
- Outlining the responsibilities and role of the state in regard to companies by giving states primacy and companies secondary roles in regulating their activities.
- Dealing with the present discouragement among human rights groups with the voluntary codes of TNCs.
- Offering a possibility of remedying violations of human rights.
(United Nations High Commissioner on Human Rights, 2005: 10-11).
The above points concerning the UN Human Rights Norms for Businesses can be cited as examples of how IGIs are properly regulating the activities of TNCs. If the UN norms are seen in the context of ‘adding value’ to the regulatory instruments of other IGIs such as the Global Compact, the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises and the International Labour Organisation (ILO) Declaration of Fundamental Principles and Rights at Work, a comprehensive body of cross cutting human rights standards for TNCs now exist. In terms of implementation, the UN norms through their reference to agreed international instruments such as The Rio Declaration on Environment and Development and ILO declarations coupled with the weight that the UN carries signifies a considerable move from the voluntary codes of TNCs. “The provisions of implementation mentioned in the Norms are the key contribution of the Norms, as none of the other instruments include such detailed provision for companies in terms of implementation, monitoring, verification, reporting and stakeholder involvement.” (Oldenziel and Bohman, 2004: 12-13). Has there been any documented change in corporate behaviour in regard to human rights as result of the regulatory instruments of IGIs?
Evidence is available which suggests that the protection and promotion of human rights has strengthened due to an atmosphere of increased TNC accountability and IGI regulation. Human Rights Watch documents progress in the apparel and the oil and gas industries. Nike and Gap have changed corporate practices which were previously hostile to human rights standards to a more cooperative approach by working with NGOs and trade unions. In a security contract signed with between British Petroleum (BP) and the Colombian Ministry of Defense, Human Rights Watch “reported that human rights clauses were included in the new contract; an auditing mechanism was implemented to monitor the flow of funds; and a committee was established to monitor the performance of the military units providing security for the companies.” (Human Rights Watch, 1999: paras. 1-32).
In contrast, in a world where “TNCs aid and abet the continual destruction of the environment, the displacement of indigenous peoples, the theft of common intellectual property…drain countries of their resources, take advantage of lax laws in poorer nations, and maintain the economic power of the first world”, (Whitenton, paras. 4,5), how can it be justifiable to assert that the regulatory efforts of IGIs are protecting and promoting human rights? In this context TNCs have established commercial rights through international law but not acquired a parallel set of human rights responsibilities. (Shiva, 2003: 87-108). Analyses of the regulatory efforts of IGIs and especially of the UN Human Rights Norms for Businesses stress the weaknesses and lack of clarity of the implementation mechanisms and human rights content.
The implementation mechanisms of IGI regulatory efforts of TNCs are weaker than those of other international human rights instruments. At present the UN Human Rights Norms for Businesses are not approved by the UN Commission on Human Rights and therefore exist in ‘draft’ form. Although in the section titled ‘General Provisions on Implementation’ enforcement suggestions are made, marking a significant difference to the UN Global Compact, ILO and OECD guidelines, the norms ask that “as an initial step towards implementing these Norms, each transnational corporation or other business enterprise shall adopt, disseminate and implement internal rules of operation incompliance with the Norms.” (UNESC, 2003: 6). There is little scope for noteworthy change in TNC behaviour here as the norms carry a weight which is no stronger than suggesting to corporations that they change their operation practices to comply with principles which may become enforced at some unknown point in the future. In fact if that time did arise “[t]here is no reference to what would be the specific control and verification mechanisms and/or enforcement initiatives that would be set up by the UN, or eventually the EU or national governments to make sure that the Norms are respected and applied by companies.” (Oldenziel and Bohman, 2004: 13). The UN has come under fierce criticism because of this lack of clarity and willingness to enforce its human rights proposals for TNCs. “By embracing multinationals, the United Nations has tarnished its reputation and abdicated its role as a protector of human rights. In this day and age when huge companies have more power than many of the countries in which they operate, the United Nations should be establishing itself as a tough, independent monitor. Instead, it's jumped into bed with some of the most notorious companies in the world.” (Anonymous, 2000: para. 8).
In addition to the slow progress of implementation of the UN Human Rights Norms for Businesses, “[t]he human rights content of the draft Norms is vague and inaccurate. For example, the reference to international treaties and other instruments in the preambular paragraphs and under the definitions includes documents that are only recommendations, have low levels of ratification, are not self-executing or are not human rights instruments. Those documents are therefore not indicative of the state of international human rights law.” (United Nations High Commissioner on Human Rights, 2005, 2005: 9). This is a serious contention against the prospects of IGI regulation of TNCs to protect and promote human rights as “[t]he vagueness of some of the provisions in the draft Norms would make it difficult for a tribunal to adjudicate any communication that came before it”. (United Nations High Commissioner on Human Rights, 2005, 2005: 10) This interpretation reveals remote possibilities for ‘remedying human rights violations’ as proposed by the supporters of IGI regulatory instruments of TNCs.
The UN Human Rights Norms for Businesses have been charged with omitting details pertinent to a comprehensive document on the human rights responsibilities of TNCs. A key oversight is the need for TNCs to comply with a global system of taxation. At present TNCs are able to compel developing countries to compete with each other on offering generous tax incentives so that their nations can win contracts from TNCs and so bring valuable jobs to the national economy. An example of the ability of TNCs to work globally for the maximization of their profits by seeking cheaper centres of operation can be seen on the US-Mexico border where a number of ‘maquiladoras’ exist. There are over 4000 of these export-oriented factories along the border zone and they include bases of operation for corporations such as Sony, Xerox and BMW. (Soriano, 1999: paras 4-5). The existence of the maquiladoras can be seen as a welcome boost to a developing economy but evidence shows that working conditions and environmental standards are low. “Workers labor from sunrise to sunset. They never see day light,…they are sometimes exposed to toxic chemicals, and in one case workers were given ‘vitamins’ which turned out to be amphetamines. They rarely see their families; often wives will work for one shift, then switch with their husbands who take the next shift.” (Soriano, 1999: para. 7). The weakness of the UN Human Rights Norms for Businesses and other IGI guidelines in addressing the emergence of and abuses contained in the maquiladora example shows how TNCs are able to ‘slip the net’ of the tougher and more expensive environmental and labour standards of some states.
The lack of regulation to refrain TNCs from bribery and corruption in order to gain advantage over competitors for contracts from governments and the additional cooperation of some TNCs with repressive governments, as was seen in the association between Royal Dutch/Shell and the Nigerian government’s repression of Ogoni activists, has made the subject of the relationship between the developing state and TNCs high profile. The weakening of developing states through the multi-pronged pressures of World Bank conditionalities, TNC opportunism and “[t]he fact that Western governments have backed TNCs in negotiations rather than developing countries”, (Madeley, 1999: 168), in United Nations attempts to regulate corporations has led to a situation where governments in developing nations have lost some control over their national economies and must work with TNCs in order to expect any economic future for its citizens. The UN Human Rights Norms does little to empower developing states as it requests that businesses “promote, secure the fulfillment of, respect, ensure respect of and protect human rights” when “only States have legal obligations under international human rights law.” This principle also validates state neglect of human rights standards as “[t]he imposition of legal responsibilities on business could shift the obligations to protect human rights from Governments to the private sector and provide a diversion for States to avoid their own responsibilities”. (United Nations High Commissioner on Human Rights, 2005, 2005: 10).
In conclusion, the protection and promotion of human rights is not fatally undermined because of international governmental institution inability to regulate the activities of TNCs. That there is a need to regulate TNCs through international laws and so promote the right to development in developing nations is clear as the system of voluntary corporate codes has not restricted human rights abuses in TNC operations. This regulation necessitates a strong and clear method of implementation as exists for lex lata international human rights instruments such as the International Covenant on Civil and Political Rights. The existing lex feranda instruments for regulating TNC activity, such as the UN Human Rights Norms for Businesses are a step in the direction from voluntary codes run by individual companies and show that more can be done in securing rights in the areas of labour standards, the environment and anti-corruption. The concept of TNC regulation which is binding through international law now has an initial framework in the UN Human Rights Norms for Businesses. In addition to the realization of binding regulation, the call for businesses to be made aware of the benefits of human rights obligations, beyond public relations and brand image exercises, should be increased as the inevitability of enforceable human rights legislation, thus marking the achievement of international governmental institution ability to control TNC activities, becomes apparent.
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