Law, Social Justice & Global Development



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4. Approaches at the Regional Level


Several approaches were identified at different regional levels, including the European Union (EU), the North American Free Trade Agreement (NAFTA), and the OECD.

4.1 The European Union


The EU has been interested in issues of corporate responsibility since the 1970s and has issued a series of Directives, mostly on working conditions, with relevance to MNC behaviour (see Celia Mather, excerpts from Can companies be ‘good citizens’?, in ER 1.3). Existing EU mechanisms for accountability include the European Court of Human Rights, the human rights provisions contained in the Amsterdam (1997) and Maastricht (1992) treaties, and the collective complaints provision of the EU Social Charter, which has been used successfully in a handful of cases concerning, for example, child labour in Portugal.
Willem van Genugten (Faculty of Law, Tilburg University) suggested that it could be useful to bring test cases to the European Court in Luxembourg, and also spoke of the need to fight for horizontal force in the application of human rights decisions in the EU framework. However, he warned that MNCs have used EU instruments for their own ends on several occasions, such as the Nord/Nolde case of 1974, in which a German company sued the EU for violating its right to property.
Most recently, a parliamentary resolution based on a report by Richard Howitt, MEP, led to the adoption in January 1999, of the idea of a European Code of Conduct for European Enterprises Operating in Developing Countries. The European Commission (EC) is now instructed to draw up a model code based on existing minimum standards for MNCs (Mather in ER 1.3). This will not be legally binding; but, by adopting the Howitt report, the EP has called on the EC to enforce an existing requirement – that private companies undertaking work for the EU in third companies should respect fundamental rights in accordance with the Treaty of Europe, or lose their funding (ibid.).
The main use of the Howitt resolution lies in its creation of a Monitoring Platform, consisting of independent experts, trade unionists and European business representatives, which would investigate complaints and hear evidence from representatives of corporations about their actions in other countries. This forum would rely for effectiveness on subjecting companies to the glare of publicity and a semi-judicial setting. The EP Committee on Development and Co-operation will hold public hearings at least once a year to which cases of abuse may be presented (see below).

4.2 NAFTA


The North American Free Trade Agreement contains a specific provision (11.14) which allows citizens to bring claims for environmental or labour violations against companies operating in the NAFTA region. Some cases have been brought, but with little success, and it must be concluded overall that NAFTA has been much more favourable to corporations than to anyone trying to challenge them.

4.3 OECD Guidelines for Multinational Enterprises


The OECD is not truly international, and is heavily weighted towards the global North, its members being the governments of 29 industrialised countries. Nonetheless, it has a series of agreements and guidelines for member governments concerning corporations A strength of OECD instruments is that they are drawn up by and for governments. They could, and should, be brought into national legislation; but governments rarely do this. Moreover, implementation is notoriously weak (ibid.).
The OECD Guidelines for Multinational Enterprises, drawn up in 1976 and revised several times, most recently in 1999, are wide-ranging, covering employment, industrial relations, environmental considerations, information disclosure and transparency, competition, taxation, and other aspects of corporate activity (see Duncan McLaren, ‘The OECD’s revised Guidelines for Multinational Enterprises: A step towards corporate accountability’ (February 2000), ER 3.4, PR p12). However, they are widely seen as out of touch with current corporate behaviour and crippled by their voluntary nature. In particular, the inertia and ineffectiveness of the National Contact Points (NCPs) which constitute the Guidelines’ enforcement mechanism are criticised.
The OECD Guidelines were discussed at length in the Seminar. Roger Blanpain, the rapporteur for the 1999 revision of the Guidelines, outlined the revision process, which had been relatively open: trade unions and to a lesser extent NGOs were consulted by the working party responsible for the review, and information was available on the Web. He listed areas where new text has been introduced, including:


  • extraterritoriality: making all MNCs domiciled in OECD countries responsible for their activities even when operating through subsidiaries outwith the OECD area;



  • introduction of positive aspects, such as ‘encouraging human capital formation’, which should apply also to subcontractors and suppliers;



  • changes in the 1976 text on industrial relations, including access to decision-makers and compliance with prevailing labour law;



  • age discrimination;



  • a new guideline on health and safety;



  • new rules on giving notice prior to restructuring a company.

New text has also been introduced on the use of environmental impact assessments, child and forced labour, bribery and corruption, and consumer interests. Suppliers and subcontractors are encouraged to apply the Guidelines. But there are many loopholes (McLaren, ibid.) and, above all, the proposals for improving implementation are toothless, since they focus strongly on reviving and strengthening the NCPs, which have already proved useless. For instance, the revised guideline on extraterritorial application of the Guidelines, which could cover some of the worst abuses by MNCs in developing countries, is positive. But without an effective enforcement mechanism, this too stands to be as widely ignored by companies as the Guidelines have been hitherto.


Discussion at the Seminar centred on the limited use of the Guidelines (in the 24 years of their existence, the OECD has examined only about 30 cases presented under the Guidelines, and only two in the 1990s), and to what extent a voluntary code could ever be effective in practice. Roger Blanpain argued that although the Guidelines were not legally enforceable. The fact that they have been agreed and promulgated by many countries, companies, and labour organisations gives them moral force. He recommended that NGOs should take up more cases, present them to the OECD, and lobby around them, on the grounds that the public opinion mobilised by such cases can make MNCs change their practice. Given the present lack of implementation, however, it is not surprising that there is little confidence in the system.
According to Saman Zia-Zarifi, a much more interesting and effective OECD instrument is its Convention on Corruption, which holds companies criminally liable for bribing public officials in third countries. The existence of this convention gives the lie to corporations which have always claimed such a law would be unworkable. However, as so often, implementation to date has been weak.

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