MNCs and human rights

Is the relationship between multi-nationals and society being re-engineered?

Is the relationship between multi-nationals and society being re-engineered?

by Francisco Letamendia (Professor of Political Science, UPV-EHU (University of the Basque Country)

The universal power of transnationals is also a universal concern. Academic works are now emerging which study how to articulate a counter-hegemonic strategy in the face of these companies. In my last book [Estructura Poíitica del Mundo del Trabajo, Tecnos 2009] I describe multinationals as:

“hypermobile global players moving about on the chessboard of the post-Fordist world in search of territories with higher subsidies and lower labour costs. Multinationals manipulate governments into meeting their demands by preventing them from dealing with their workforce’s welfare; multinationals often turn their contract workers into subjects without individual or collective rights; and they use the dislocation of their factories as a tool for the search of greater profit as well as a threat to employees, populations and governments in order to achieve their goals.”

A publication that I think brings more elements in order to build this [anti-hegemonic] strategy and which compellingly analyses the nature of transnational corporations with a profusion of well documented detail is the book just published by professor Juan Hernandez (UPV-EHU), based on his doctoral thesis, and entitled: «Las empresas transnacionales frente a los derechos humanos: historia de una asimetría normativa» [Transnational corporations versus human rights: a history of regulatory asymmetry] (Hegoa, 2009).

Against the widely accepted idea, including within the ranks of the Left, according to which this powerful product of neoliberalism works on the basis of a “laissez faire” policy and on wholesale deregulation, Hernandez describes the very complex network of rules and regulations which are to be found at the base of a coercive Global Commercial Law in the service of multinationals. He also reveals the theory -and practice – of the mechanisms of Social Corporate Responsibility and the “internal codes of conduct” masking a bleeding asymmetry in favour of multinationals together with discursively concealing their activities and violations of human and labour rights throughout the entire world.

The book explains how the Global Trade Law or Lex Mercatoria, a legally effective and ‘hard’ international legislation with sanctioning powers, is based on celerity and the confidentiality of the company, while it tightly regulates the core of the transnational activity, namely the contracts of operation and the rules of trade and investment, which are placed well above international human rights and labour legislation. Arbitration tribunals (ICSID) provide full legal safety and security to the investments made by multinationals against host states, bypassing the courts of these states. The Dispute Settlement System of the World Trade Organization (WTO) resolves the disputes between transnational corporations and the states, which result, especially for the weak states of the  South- in legislative modifications, trade sanctions and fines. In Latin America, for example, the system has brought about neoliberal reforms consisting of flexibility, informal economy, and lack of labour and individual or collective human rights guarantees. The “legal certainty” of the Lex Mercatoria is used against those states such as Bolivia, which want to regain national sovereignty over their resources.

This asymmetry is shifted to international bodies. While the decisions of the International Monetary Fund (IMF), the World Bank, the WTO and the G8 are applied directly to non-member and impoverished countries, the Tripartite Declaration of Principles concerning Multinational Enterprises of the International Labor Organization, ILO, rests on consensus decision making, with which it is displaced towards a kind of “soft” law that becomes a form of semi-blockade. Similar constraints are levied on the OECD Guidelines for Multinational Enterprises and the UN Global Compact.

The new globalised company produces an ethical discourse based on confidence among the parties involved, respect for human rights, responsibility to the community and the environment … Social, labour and environmental rights are thus displaced towards soft, non-normative regulatory systems. The patterns of Corporate Social Responsibility (CSR) are based on voluntary agreement, self-regulation and non-enforceability. Class struggle must be replaced by shared responsibility between employers, workers and civil society, collaboration with international institutions and harmony with the states. However, the power of multinationals allows them to “legislate” as well as delimiting the scope of their responsibility, which in turn slows down the whole system of control. The aim of the CSR is to replace the interactivity, coercion and judicial control of the state’s legal guidelines by “soft” patterns of voluntary participation, unilateral corporate activity, and a process of audits outside the judicial system…

The “business ethics” take specific shape through instruments such as the internal codes that intend to establish a new balance between democracy and the market outside the legal system and without relinquishing the capitalist logic. The result of all this is the contrast between such “ethics” and the actual practices of multinationals, to which must be added the disparity, in the field of labour relations, between the discourse of quality assurance, training in values, mission of the company … and the reality of flexible working hours, outsourcing, subcontracting, job insecurity and loss of employment and social rights.

Hernandez highlights, for instance, the bleeding contrast between the [Banco Bilbao Vizcaya] BBVA’s CSR report, prepared on the basis of the information provided by the company, and the information provided by social organizations, trade unions and environmentalists to the Permanent Peoples’ Tribunal. Whereas the CSR report fails to discern any negative practice, the Permanent Tribunal emphasises the following practices: “promotion of wars by financing arms trade, the purchasing of political wills, money laundering, anti-humanitarian practices, the financing of highly polluting projects, labour exploitation, micro-financing, commodification of pensions, exorbitant salaries, the use of tax havens and financial abuse and fraud of customers”.

The codes of conduct have been incorporated into the reports of the CSR as an instrument of labour regulation. Although they still share common patterns of voluntary participation and unilateralism, Hernandez notes positive developments in its midst: The emergence of the Global Framework Agreements can allow workers’ participation and negotiation, and opens the way for monitoring instruments to be set in place.

In the conclusion of the book, Hernandez offers a normative proposal based on the dismissal of voluntary agreement. Its implementation would shift between (i) the aforementioned rules of the ILO, OECD and UN- provided that they take into account the extension of the responsibility from the parent company to the subsidiaries, suppliers and subcontractors, (ii) the subordination of multinationals to the sovereignty of States -if that is consistent with the right to development of their own peoples and (iii) the fulfilment of international law by the multinationals.

In the sphere of the workplace, the reference would be the ILO Declaration of Fundamental Principles and Rights at Work (1998), which defines the content of “decent work”. The control of multinationals requires uniting wills between the union movement, NGOs and new social movements. There already exists for it, he points out, a common channel: the World Social Forums.

In a paper presented at the First Meeting of Critical Political Analysis in Bilbao (2008), Juan Hernandez and Mikel de la Fuente proposed the following bases of an anti-hegemonic strategy against multinationals:

  • To denounce the governments of the countries that provide cover to the economic and legal strategy of the multinationals’ parent companies.
  • To support the anti-neoliberal allegations of social movements and trade unions in the countries of destination for these companies
  • To demand international norms and standards that affect upon the responsibility of transnational companies.
  • Bringing together representatives of employees feom multinational companies beyond their geographical location.

The necessity for deepening the institutional mechanisms that compel transnationals to abide by international and state-based norms and regulations, say these authors, has become a major challenge for the international community. This requirement should be part and parcel of the agendas guiding trade unions as well as political and social actors.

PS .- My appreciation and admiration for a person who has fought tirelessly against neoliberalism and corporate power, Rafa Diez Usabiaga, and my solidarity with those arrested in connection with the same [police] operation.

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Translators’ note: This article first appeared in Spanish in the GARA newspaper (2009, October, 17). To read the original clik here

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