Transnational Corporations, Other Business
| Author | Sagarika Chakraborty |
| Position | Student VII semester, National Law University, Jodhpur, India |
| Pages | 04 |
Page 20
Sagarika Chakraborty, student VII semester, National Law University, Jodhpur, India.
TODAY, TRANSNATIONAL CORPORATIONS (TNC) rule the world in terms of business and economic power. These TNCs are regarded as the money machine for various developed and developing countries.
Transnational corporations evoke particular concern in relation to recent global trends because they are active in some of the most dynamic sectors of national economies, such as extractive industries, telecommunications, information technology, electronic consumer goods, footwear and apparel, transport, banking and finance, insurance, and securities trading. TNCs bring along with them new jobs, capital and technology.Some corporations make real efforts to achieve international standards by improving working conditions and raising local living conditions; they certainly are capable of exerting a positive influence in fostering development1.
The social power of TNCs is, however, a different matter. For although their social power is enormous and global, it has been, until recently, far less obvious, rarely acknowledged and minimally regulated. By virtue, specifically, of their economic and political muscle, TNCs are uniquely positioned to affect, positively and negatively, the level of enjoyment of human rights. On these bases, there are an abundance of reasons why the legal regulation of TNCs' activities at all levels is sought, ought to be sought and is sometimes achieved.
Some TNCs, however, do not respect minimum international human rights standards and violate such standards by employing child laborers, discriminating against certain groups of employees, failing to provide safe and healthy working conditions, attempting to repress independent trade unions, discouraging the right to bargain collectively, limiting the broad dissemination of appropriate technology and intellectual property and dumping toxic wastes. Some of these abuses disproportionately affect developing countries, children, minorities and women who work in unsafe and poorly paid production jobs, as well as indigenous communities and other vulnerable groups.2
It must be acknowledged at the outset that foreign direct investment injected by TNCs into developed and developing countries alike can and does bring jobs, capital, and technology. TNCs thereby in effect protect and promote the right to work and to obtain adequate living conditions, along with such basic rights as health, education, housing and even political freedoms. It is equally certain that human rights abuses by TNCs occur and do so frequently in the economic, social and cultural sphere. Many TNCs, including Nike and The Gap, have been accused of violating their workers' rights to just and favorable work employment by paying unfair and inadequate wages, requiring unreasonable overtime and providing unsafe working conditions. Furthermore, there is ample evidence of the involvement of TNCs in suppressing trade unions and thereby denying workers the right to organize. It has been alleged, for instance, that Coca-Cola in Colombia and Phillips-Van Heusen in Guatemala have been associated with, or are directly responsible for, the systematic intimidation, torture, kidnapping, unlawful detention and murder of trade-unionist employees by paramilitaries operating as both of these corporations' agents.
TNCs in the extractive industries have caused environmental disasters which threaten the right to adequate food and an acceptable standard of living. Royal Dutch/Shell's oil production in Nigeria, and BHP Billiton's copper mining in Papua New Guinea, for example, seriously damaged the environment and Page 21the livelihood of peoples in local communities, which depended on fishing and farming. Such instances of a lack of corporate responsibility for, or complicity in, human rights abuses are increasingly widely publicized, especially by non-governmental organizations (NGOs) using the immediacy of global communications. Mounting activism by NGOs, workers and consumers in developed countries in the form of protests, product boycotts and selective purchasing has forced many TNCs to accept some level of human rights responsibility by adopting internal codes of conduct.
On August 13, 2003, the United Nations Sub- Commission on the Promotion and Protection of Human Rights approved the "Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights" (Norms) in its Resolution 2003/16. The Norms represent a landmark step in holding businesses accountable for their human rights abuses and constitute a succinct, but comprehensive, restatement of the international legal principles applicable to businesses with regard to human rights, humanitarian law, international labor law, environmental law, consumer law and anticorruption law.
Several issues arose during the drafting process3 of the Norms: (1) how to define TNCs; (2) whether to include domestic enterprises in the definition and, if so, how to distinguish between domestic and international businesses; (3) how to distinguish between larger and smaller businesses so as to avoid a one-size-fits-all approach; (4) what human rights concepts to include and (5) how to characterize the legal status of the Norms after their adoption by the Sub-Commission. However, for the purpose of this paper we shall limit the scope of analysis of the issues to only two, namely (1) how to define TNCs and (4) what human rights concepts to include.
Generally, the term "transnational corporation" refers to a corporation with affiliated business operations in more than one country.4 A more specific definition deems an enterprise a TNC if "it has a certain minimum size, if it owns or controls production or service plants outside its home state and if it incorporates these plants into a unified corporation strategy5." According to yet another definition, a TNC is "a cluster of corporations of diverse nationality joined together by ties of common ownership and responsive to a common management strategy6."
The Draft UN Code of Conduct on Transnational Corporations defines a TNC as [... an enterprise, whether of public, private or mixed ownership, comprising entities in two or more countries, regardless of the legal form and fields of activity of these entities, which operates under a system of decision-making, permitting coherent policies and a common strategy through one or more decision-making centres, in which the entities are so linked, by ownership or otherwise, that one or more of them [may be able to] exercise a significant influence over the activities of others, and, in particular, to share knowledge, resources and responsibilities with the others7.]
The Norms specifically define a "transnational corporation" as "an economic entity operating in more than one country or a cluster of economic entities operating in two or more countries - whatever their legal form, whether in their home country or country of activity, and whether taken individually or collectively."
The Norms, however, do not limit their application to TNCs but also include other business enterprises8. The working group defines the phrase "other business enterprise" as "any Page 22business entity, regardless of the international or domestic nature of its activities, including a transnational corporation, contractor, subcontractor, supplier, licensee or distributor; the corporate, partnership, or other legal form used to establish the business entity; and the nature of the ownership of the entity." 9
Hence, even though the Norms define TNCs and focus some attention on transnationals, they are written to include all business entities, regardless of their stated corporate form or the international or domestic scope of their business. Its' breadth deemphasizes the definition of TNCs and does not restrict the Norms' scope of application.10
The Norms reflect and restate a wide range of human rights, labor, humanitarian, environmental, consumer protection and anticorruption legal principles in addition to incorporating the best practices for corporate social responsibility. Further, the Norms do not endeavor to freeze standards by drawing on past drafting efforts and present practices; they incorporate and encourage further evolution.
The Norms appear to be more comprehensive and more focused on human rights than any of the international legal or voluntary codes of conduct drawn up by the International Labor Organization (ILO), the Organization for Economic Co-operation and Development (OECD), the European Parliament, the UN Global Compact, trade groups, individual companies, unions, NGOs and others. The Norms and Commentary provide for the right to equality of opportunity and treatment; the right to security of persons and the rights of workers, including a safe and healthy work environment and the right to...
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