MAI, Right to development and economic, social and cultural Rights

11/11/1998
Human Rights Commission

Statement on Item 5 et 6 : economic, social and cultural Rights and Right to development. Written Statement.

E/CN.4/1998/NGO/97

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I. In 1998, the Sub-Commission on the Promotion and Protection of Human Rights, duly concerned about the effect of the methods of work and the activities of transnational corporations on the enjoyment of human rights, decided to create a Working Group with the following six points mandate.

“1) to identify and examine the effects of the working methods and activities of transnational corporations…; 2) to examine, receive and gather information…; 3) to analyze the compatibility of the various international human rights instruments with the various investment agreements,…; 4) to make recommendations and proposals relating to the methods of work and the activities of transnational corporations in order to ensure that such methods and activities are in keeping with the economic and social objectives of the countries in which operate, and to promote the enjoyment of economic, social and cultural rights and the right to development, as well as civil and political rights; 5) to prepare each year a list of countries and transnational corporations, indicating, in United States dollars, their gross national product or financial turnover, respectively; 6) to consider the scope of the obligation of the States to regulate the activities have or are likely to have a significant impact on the enjoyment of human rights” (Sub-Commission Resolution 1998/8).

II. The frequent negative effects on human rights of the activities of transnational corporations and the delinquent or criminal character (as authors, instigators or accomplices) of certain activities of many of these corporations lead to the issue of submitting these corporations to an effective normative and jurisdictional framework. There is not an easy solution to this problem given that the transnational character of these corporations and the volatility and ubiquity of their activities result in serious difficulties to include them in national norms and jurisdictions. There are international norms, albeit with gaps, but no international jurisdiction competent to apply these norms directly to the companies. This problem appears to be the motivation of points 4 and 6 of the mandate conferred upon the Working Group.

III. The Working Group has dedicated a great part of its time in meetings to examining a project of directives for a voluntary code of conduct of the transnational corporations, presented by the United States member of the group, Mr. David Weissbrodt, entitled “Draft Universal Guideline for Companies”, for which the last version is dated May 21, 2001. While this does not appear to be part of the mandate of the Work Group, it is an interpretation highly pertinent for discussion by this group.

The AAJ and CETIM deem that voluntary conduct codes (whose usefulness is highly relative, as demonstrated by experience) are private initiatives and as such are not part of the normative activities of the States, of any normative activities (agreement, resolution, declaration, etc.) or initiatives to promote norms (directives, Declaration of Principles, etc.) of intergovernmental organisms directly received by the States and indirectly by private entities. AAJ and CETIM consider that the elaboration of such codes is a task outside of the realm of an organism of the United Nations and more appropriate for a consultant contracted by a transnational society.

IV. Nevertheless, given that the project has been presented officially, accompanied by an introduction and a bibliography, it is appropriate for the Working Group to evaluate the project in some detail. First, some specific aspects were analyzed and then the essential contents of the project. The project includes in the “Definitions” all companies, national or transnational and as such, ignores the specific character of transnational companies and their activities, which is precisely the objective of the study assigned by the Sub-Commission to the Working Group.

Article 1 of the project ignores the issue of prevention of human rights violations. Article 3 reduces the principle of equality to equality of opportunities, which are completely distinct concepts.

The sentence in Article 3 that reads “with a view towards eliminating discrimination” designates the right of non-discrimination the characteristic of a developing right instead of an immediately demandable right.

Article 4, which includes the phrase “handling demonstrations” in its second to last paragraph, constitutes a validation of the tendencies of privatization to maintain public order or that specific groups (private militia, for example) can interpret as “public order”.

In the chapter that refers to workers‚ rights, both the text and the comments enumerate many direct rights, but it should be pointed out that when applying the rule of interpretation of “inclusio unius, exclusio alterius”, the absence of some of the rights in this project that are recognized in the ILO Agreement is equivalent to their omission.

This chapter neglects to exclude employers‚ intervention in the formation and continuity of workers organizations. The absence of the principle of non-intervention in this chapter is notable. Also absent are guarantees for diverse trade union activities, including solidarity actions. In these cases, the “absence” can be interpreted as an exclusion.

Article 11 (which should be Article 6) is written in such a manner that it appears to award transnational companies with the extraordinary faculty of not recognizing national laws and authorities if they consider that they conflict with international standards relating to human rights. The correct principle should be that transnational corporations must observe national laws and authorities and respect the international standards relating to human rights.

Article 11b (which should be Article 6b) limits the right to education to just primary education, for no valid reason.

Article 17 (which should be Article 7) consecrates auto-regulation and the voluntary character of the proposed directives, as confirmed in the third paragraph of the comments to the article.

Article 17a (which should be 7a) complements the aforementioned article, establishing that the corporations will be in charge of auditing and overseeing the directives.

The third paragraph of the comments in this article states that corporations may accept independent controls “so long as the monitoring does not unduly interfere with work being performed”. This means that a company may first accept external controls and then refuse them, as did Philip Knight, owner of Nike, when he declared that the controls “didn’t allow him to earn a living”.

The last article, Article 17b (which should be 7b), establishes a type of safeguard clause in favour of the transnational corporations: “Nothing in the present guidelines shall be interpreted as restricting or adversely affecting the activities of companies”. This obliterates everything previously stated and all that is left is the bottom-line philosophy of the project: Trasnational corporations enjoy total freedom and are not obliged to follow norms or principles, but to respond to their own interests.

V. In the Introduction of the project, the author attempts to justify the voluntary nature of the directives being proposed, arguing that this is a first step and makes a comparison with the process of the States’ adoption of norms of international law, which begins with the adoption of Declarations, then becomes more concrete until, over time, ends with Conventions or Treaties. The author indicates that if these directives become a base for a treaty, the implementation of such treaty should be analogous to the six existing human rights treaties and adds “but taking into account the particular concerns and attributes of the companies” (paragraph 60 of the Introduction). The author points out that for lack of consensus a mandatory code of conduct could not be adopted by the transnational companies, yet neglects to say that it was the rich countries that objected to the adoption of such a code. In paragraph 40 of the Introduction, the author states that “It would be unrealistic to suggest that human rights standards with regard to companies should immediately become the subject of treaty obligations”.

The author forgets that while there is no specific mandatory code of conduct, human rights must be respected by transnational companies, including political, civil, economic, social, cultural and environmental rights. These rights are already consecrated in pacts and related Conventions and in Declarations with the weight of jus cogens, mandatory for all persons, physical and legal, public and private including, of course, transnational corporations.

It is therefore totally unacceptable to propose, in a document that hopes to be approved by the United Nations, that transnational corporations are apart from and above current international human rights law, or to accept that these companies can decide if they respect and accept the law or not, and when applying the law it is the companies themselves that decide which norms, how and when they apply or to accept that they also can “self-regulate” the transgressions that are committed.

The author of the project even proposes that the Directives, which confer upon transnational companies total freedom to decide whether or not to respect human rights, be used by Tribunals as a criteria to interpret the application of current norms (paragraph 52 of the Introduction). With this interpretive regulation, the judges should limit themselves to verify the conformity of the activities of transnational companies with the sovereign will of the very same companies and not their conformity with current judicial norms.

To accept this project of Directives, formulated in the name of “realism”, would mean establishing a treatment of exceptions, contrary to equal treatment under the law, favouring immunity and impunity for transnational companies. This would be a giant step backwards in the promotion, universal application and progressive development of International Human Rights Law.

VI. The AAJ and CETIM consider that the proposal presented by Mr. Weissbrodt is outside of the functions of the Working Group, in its character as an organism of the system of the United Nations that should involve itself in proposing orientation to the States and the international community through the organisms of the system to promote universal respect for human rights and cannot and should not act as a consulting body for private companies, proposing voluntary codes adapted to particular interests.

On the contrary, the Working Group should be involved in complying with the mandate conferred upon it by the Sub-Commission, and within the context of points 4 and 6 of this mandate should try to establish directives or orientations for the international community and for the States to achieve a framework for transnational corporations of current international and national norms relating to human rights (civil, political, economic, social, cultural and environmental) and to insure that these corporations respond to the appropriate jurisdictions in cases of transgression from the norms. In directive or orientations the Working Group should also propose ways to fill the normative and jurisdictional lacunas that exist on this area.

In order to comply with points 4 and 6 of the mandate and to establish directives and orientations, the Working Group could use as a base the Conclusions of the Seminar organized by AAJ and CETIM that was held in Céligny, Switzerland on May 4-5, 2001.

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CETIM has, for long, being monitoring developments of global importance which can have seriously effect the realization of economic, social and cultural rights and the right to development. It is with grave concern that we have been alerted to the drafting and negotiation by States members of the rich country club, the OECD, of a treaty of international significance which will severely endanger the realization of the totality of human rights contained the Declaration of Human Rights, the two international covenants on human rights and the Declaration on the Right to Development.

Since 1995, the Multilateral Agreement on Investments (MAI) is being negotiated in the greatest of secrecy and away from public scrutiny. If adopted, the treaty will grant absolute rights to the most powerful global entities – transnational corporations – and impose draconian obligations on peoples and States. In effect, the objective of MAI is to organize the transfer of sovereignty from States to international investors in all sectors: economic, social, cultural and political, undermining forever the principle that all sovereignty resides essentially in the nation.

In addition to the fact that the negotiators of MAI from the so-called «democracies» of the rich and powerful countries have violated the human right of expression and opinion, including the right to information, by the manner in which they have conducted the negotiations, the contents, procedures and mechanisms foreseen in the MAI contain draconian legal provisions which severely curb the sovereign rights of States and peoples to determine the type of society they wish to live in, in all its dimensions – economic, social, political and cultural.

Some of the most significant provisions in this connection include the following:

The treaty extends the definition of “investments” to include not only foreign direct investment (FDI) in its classical form, but also stocks, bonds and other monetary instruments; concessions concerning land and natural resources; intellectual property. In all these areas covering culture, industry, agricultural, services, etc., the treaty would force countries to treat foreign investors as favourably as national companies (principle known as “most favoured nation”) without being subjected to performance requirements related to employment, choice of suppliers, transfer of technology. Subsidies for domestic business and limits to foreign ownership would be forbidden. An enterprise that is bought can be closed down and capital and profits repatriated at any moment.

The treaty also seeks to transfer power away from national and local governments in favour of TNCs by imposing on States unconditional submission to international arbitrage in case of litigation1.

The defenders of MAI claim that “exceptions” or “reservations” can be made to protect culture, social rights, public health, environment, etc, but these, to be effective, must be also be accepted by all the other negotiators. In this case, the 29 members of the OECD. Countries that join subsequently, within the framework of the WTO, will not even be given this possibility. More importantly, under the treaty, the State is also under obligation not to introduce any new restrictive legislation in the domain covered by MAI (“standstill”) and to dismantle existing restrictions (“rollback”) including areas in which the State has lodged a «reserve», whether in the cultural, social, economic or political fields2.

MAI also limits the possibility for exceptions to the treaty and permits the practice by monopolies of differential princes in different geographical markets «when such differences are based on normal commercial conditions, notably the consideration of supply and demand in these markets»3.

The generality of the clauses related to the liberalization of investment means that the treaty, if signed and ratified, will become the rule of reference and render subsidiary other bilateral and multilateral treaties, including those governing regional arrangements. It is of significance that the only exceptions foreseen by MAI are those obligations of States as signatories of the International Monetary Fund and the OECD guidelines which, anyway, contain only ?recommendations? for TNCs.

MAI is not only ambitious in the domain covered but is also intended to become universally applicable. Although negotiated within the 29 rich member States of the OECD, it will be open for signature by all States members of the World Trade Organization and those, like China and Russia, aspiring to become members. MAI is envisaged as a complement to the global trade regime being elaborated with the WTO «until it can be integrated» and as a «step toward a veritable universal investment regime». Even in the case that these efforts to force MAI on to governments is defeated, the dominant forces behind MAI are, even now, seeking to establish an identical regime by other means.

All democratic forces must remain vigilant with regard to discussions within WTO on Trade Related Investment Measures (TRIMS); the negotiations on the New Transatlantic Market (NTM), negotiated, in the greatest secrecy, between the USA and Sir Leon Brittan for the European Union; the traditional institutions favourable to deregulations such as the International Monetary Fund and the World Bank. The recent financial crisis in Asia permits these institutions to obtain concessions on the freedom of investments. Even UNCTAD, once the champion of the Third World within the United Nations, now cooperates with the business lobby to draw Third World countries within liberalized investment regimes.

It is now known that behind MAI (and similar treaties being negotiated) are large economic and financial entities acting globally who are supported by powerful States, particularly the USA. All large organizations of TNCS have had either a direct or indirect influence in the negotiations around MAI. Among them, the International Chamber of Commerce, the US Council of International Business, the European Roundtable of Industrialists (45 heads of the largest European companies) and the Japanese employers (Keidanran).

Following the ratification of WTO, MAI constitutes another major step towards globalization and represents the choice of a totalitarian society.

For all these reasons, all democratic forces around the world must remain vigilant. The negotiators of such treaties have shown contempt for the multiplicity of other legal, political or moral engagements (which are in contradiction with these texts) that States have already undertaken. These include the international human rights instruments, ILO conventions, the declarations and programmes of action adopted by international conferences such as the Rio Summit, the Social Summit in Copenhagen, and in particular the provisions contained in the UN Charter on the Rights and Duties of States which provides that «each nation has the inalienable right to regulate foreign investments and to exercise control over investments» (GA resolution 3281 (XXIX) of 12 December 1974).

CETIM particularly denounces the logic behind such treaties that places profits above human beings. In adopting the Declaration on the Right to Development, States have clearly recognized that «development is a comprehensive economic, social, cultural and political process, which aims at the constant improvement of the well-being of the entire population and of all individuals on the basis of their active, free and meaningful participation in development and in the fair distribution of benefits resulting therefrom.» States have also recognized that «the human person is the central subject of development and should be the active participant and beneficiary of the right to development» (art.2.1). By doing so, States have recognized the necessity of reversing the logic that places profit over human well-being.

CETIM also recalls that the pre-condition for the realization of all human rights, including the right to development, is the rights of peoples to self-determination, by virtue of which they freely determine their political status and freely pursue their economic, social and cultural development. They also provide that all peoples may, for their own ends, freely dispose of their natural wealth and resources and in no case may a people be deprived of its own means of subsistence. These provisions are contained in the very first articles of the above instruments and not without good reason.

In the light of the urgency for action, particularly in the context of the forthcoming WTO Ministerial Conference due to meet in Geneva in May this year, CETIM reminds the Commission on Human Rights of its duty to take action in order to reverse the perverted logic behind these treaties which constitutes the most important obstacle to the realization of all human rights.

CETIM deeply regrets that the Commission on Human Rights, at its 1997 session, failed in its mission to even consider the recommendation of the Sub-Commission to establish an open-ended Working Group on the activities and methods of transnational corporations to, inter alia, make recommendations and proposals aimed at regulating the methods of work and activities of TNCs in order to ensure that these are in keeping with the economic and social objectives of the countries in which they operate, and to promote the enjoyment of economic, social and cultural rights and the right to development.

In the context of globalization where larger corporations organize themselves internationally, CETIM underlines the need to establish an international jurisdiction that is both independent and transparent and endowed with the authority and the means to counter the ravages created by TNCS. Is it possible to justify that TNCs and owners of capital have total freedom to act globally, whereas organizations of peoples are limited to take action only.


1) It will give TNCs the right to binding dispute resolution legislation enabling them to in initiate lawsuits against national and local governments to protect their interests TNCS would be able to challenge national laws such as protection for local jobs (local hiring requirements), recycling content laws and other community-based legislation. MAI will, for the first time, permit an investor to bring a complaint directly against a State if it deems that the State is responsible for the loss of revenue or even for the "loss of reputation". Investors can also bypass national courts: any litigation between a State and an investor can result in a binding ruling, without the possibility for appeal, issued not by a national court but by an international panel of industry experts meeting in camera. MAI also requires that States must guarantee, as an international prerequisite, conditions of profitability for their investments which can even extend to the control of the social and political order since it envisages that TNCS can bring States to "justice" in case of social movements affecting the profitability of international investments. MAI will, thus, severely curb the rights of governments and their citizens to control the entry and behaviour of TNCS and restrict the ability of nations, both in the North and the South, to control and improve their domestic economies and choose their economic, social and political systems in which they wish to live.
2) In other words, liberalization is irreversible. Measures known as "status quo" and "dismantlement" are without doubt the most dangerous innovations of the text. According to the treaty, dismantlement is a process of liberalization by which measures that are not in conformity with MAI will be reduced and finally eliminated. It states furthermore that this dismantlement is a dynamic element related to the status quo which, associated with the status quo, will produce a "lock" effect that, over the course of time, will not permit neither its abrogation nor its invalidation. This legal innovation will ruin the hopes of those believe in the utility of "reservations" or "exceptions". Since all measures of liberalization and the renunciation of reservations represent «progress», as defined in MAI, any renunciation by a State becomes legally part of the treaty and assumes a value superior to that of law, becoming irreversible whether or not the parliament or citizens intend to abrogate it.
3) This provision reveals the philosophy underlying the MAI reversing the fundamental principle recognizing the equality of citizens before public services. In other words, monopolies engaged in the public sector will no longer be permitted to maintain differential tariffs based on non-commercial considerations such as those often practiced in services such public health, education, public transport, etc.

Categories Human Rights Statements Transnational Corporations
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