Regulate corporate conduct abroad: UK parliamentary report

In a gentle but persuasive manner, a report by a British Parliamentary committee is telling the government how it must do more to embed human rights into the overseas operations of British multinationals.

Using forced labor, polluting neighborhoods, collaborating with repressive regimes, and helping in projects that force people out of their homes – these were among the serious corporate human rights violations that demonstrated the need for government action, according to the committee chair, Andrew Dismore.

The 129-page committee report, issued December 16, criticizes the Labor government for relying on voluntary codes of conduct and other non-enforceable measures instead of using tougher tools it has available to improve the global conduct of British corporations.

Leading a list of specific recommendations is that the government use its own “immense power as a purchaser [to] take responsibility for human rights impacts on its supply chain.” This would require “clear and detailed measures to ensure that the UK takes a lead as an ethical consumer.”

Among the other items on the report’s “to do” list:

-- Public investment: as in public procurement, “there is clear merit in encouraging public authorities to adopt an ethical or social responsible approach.”
-- Export credit guarantees: if the Export Credit Guarantee Department continues to resist requiring applicants to perform “due diligence of human rights impacts,” then the requirement should be written into law.
-- Company law: although the Company Act of 2006 was an improvement, it should be amended to require an annual human rights impact assessment.

Above all, the report urges the government to be “more proactive” in providing clearer guidance and support in the above and other areas.

The Parliamentary inquiry followed the framework established by John Ruggie, UN special representative on business and human rights, and quotes his 2009 UN report throughout. In fact, Ruggie testified at committee hearings, as did experts from a wide range of other organizations, including the Trades Union Congress.

For links to the report and related material, check the Business & Human Rights Resources Center website at:
http://www.business-humanrights.org/Links/Repository/886314

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A new model for trade agreements is U.S. aim, starting in trans-Pacific

The Obama administration is starting to move U.S. trade policy in a new direction – very new, or so it appears from the words of the top U.S. trade official, Ron Kirk.

President Obama will start the ball rolling soon. He intends to enter into negotiations for an Asia-Pacific trade agreement known as the Trans-Pacific Partnership, as U.S. Trade Representative (USTR) Kirk announced in a press statement and in letters to Congressional leaders December 14.

The goal is “a new kind of trade agreement for the 21st century, bringing home the jobs and economic opportunity we want all our trade deals to deliver,” Ambassador Kirk said in his press announcement.

He emphasized that USTR would intensify the already-begun consultation with congress to develop negotiating objectives seeking “the highest economic benefit for America’s workers, farmers, ranchers, manufacturers, and service providers” and reflecting “our shared values on labor, the environment, and other key issues.”

In separate letters to House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, Kirk reiterated the theme that successful conclusion of the Trans-Pacific Partnership negotiations requires “a high-standard, 21st century agreement,” one that “updates the U.S. approach to traditional trade issues. “

Among the issues he cited that need updating were:

-- “environmental protection and conservation, transparency, workers rights and protection, and development.”
-- “new opportunities for small and medium-sized businesses to increase exports to the region.”
-- U.S. firms’ participation in “production and supply chains in order to encourage investment and production in the United States.”

In concluding his two-page letter to the Congressional leaders, Kirk wrote:

“The TPP Agreement provides an opportunity to develop a new model for U.S. trade negotiations and a new regional approach that focuses more on jobs, enhances U.S. competitiveness, and ensures that the benefits of our trade agreements are shared by all Americans.”

U.S. negotiating partners under TPP so far include only seven countries: Australia, Brunei Darussalam, Chile, New Zealand, Peru, Singapore, and Vietnam. Others countries are expected to join soon. China is the wild card.

Initial negotiations are already scheduled to begin in March. Negotiations – oops, consultations -- with Congress and within Congress on priorities are already underway.

USTR is seeking public input on the “direction, focus, and content” of the TPP negotiations. A new webpage, http://www.ustr.gov/tpp is already operational with information for the public.

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Portland (OR) celebrates its progress toward ‘sweat-free’ procurement

“When we put on our uniforms and wear city-supplied hats and T-shirts, we need to be assured these products are not produced under sweatshop conditions.” That’s what Richard Beetle, business manager of the Laborers local union, said when the city council of Portland, Oregon, last year decided that the city would purchase only uniforms and other apparel that are “sweat-free.”

This Friday afternoon, November 18, Portland marks that breakthrough by holding an after-work party in City Hall. Mayor Sam Adams will be there to help celebrate the success of the “SweatFree Procurement Policy” he sponsored while he was a city commissioner. A former garment worker, Gloria Gonzalez, will describe her years in sweatshops and the plight of millions of women and girls still working in them.

City Hall will be adorned with profiles of garment workers around the world painted by Janet Essley. The Essley painting above, of a garment worker in Haiti, is one of the 23 in a traveling exhibit that gives “a human face to the workers behind the uniforms of our police, firefighters, and other public employees.”

The city now spends about $20,000,000 a year on uniforms, almost all made in “sweatfree” workplaces. Under the policy adopted on October 15 last year, the city plans to expand sweat-free procurement to other products, such as computers.

Portland isn’t pursuing this policy alone. It belongs to “SweatFree Communities,” a network of 39 cities, 15 counties, eight states, and more than 100 public school districts, all dedicated to ending the use of taxpayer dollars in global sweatshops and in domestic work places with substandard work places.

Portland has also joined a SweatFree Communities program, the national SweatFree Purchasing Consortium, a pioneering effort seeking to fill a vacuum on the production side.

At present there is a huge shortage of factories in the world that can be counted on to deliver sweat-free goods. With the purchasing power inherent in a much-enlarged group, the Consortium would represent enough demand to build a large set of reliable sweat-free suppliers.

The goal, therefore, is not only negative – to end public procurement from sweatshops -- but also positive: to establish incentives toward the creation of alternative sources.

Taking the “sweat” out of the world’s sweatshops will require a combination of governmental and nongovernmental levers. Public procurement with a conscience is one of them.

(Interested in displaying the Essley garment worker paintings in your community? Check the art section at http://www.sweatfree.org/presenteinfo.)

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Topmost business and human rights challenge for 2010

What is the No. 1 priority among the human rights challenges that business and governments must address next year?

The London-based Institute for Human Rights and Business says that governments face this challenge as the topmost among 10: “clarifying responsibilities ‘beyond borders.’” The Institute explains why:

“Pressure is mounting to lift the ‘corporate veil’which shields parent companies from liability for activities of their subsidiaries through stronger national and extraterritorial legal mechanisms. How should governments exercise jurisdiction beyond their borders when companies based in their countries or their subsidiaries transgress internationally recognized human rights standards abroad? How should companies operate in countries with weaker protection of human rights?”

I agree with the Institute’s position and said so in the following comment I posted on the Institute’s Website today:

“This is indeed the topmost challenge. Specifically, for example, the U.S. government, as part of its duty to protect human rights, needs to determine what that duty means in the case of U.S. corporations operating abroad. Those global corporations have the right to the protection of the United States in their extraterritorial operations. At present that right has no matching legal responsibilities. It is time to correct that anomaly. Doing so would end the risks that the present vacuum now poses to the corporation itself.”

On Human Rights Day, December 10, the Institute launched a “top 10 for 2010” campaign “as a reminder of the ongoing and emerging governance gaps and operational challenges requiring action by governments, business leaders, and civil society,” says Mary Robinson, former UN High Commissioner for Human Rights and chair of the Institute’s advisory board. (For the full list of 10 challenges, see the Institute’s Website at http://www.instittehrb.org.)

“Extraterritorial jurisdiction” stands out in the No. 1 challenge. John G. Ruggie, UN Senior Representative for Business and Human Rights, calls extraterritorial jurisdiction “the elephant in the room that polite people prefer not to talk about.” Talk about it he did last month in Stockholm, where he gave the keynote presentation at the European Union Presidency conference.

In his lengthy analysis, Professor Ruggie made an important distinction between
-- “true extraterritorial jurisdiction,” such as criminal legislation on child sex tourism, which has a clear nationality link to the perpetrator as the basis of jurisdiction, and
-- “domestic measures that have extraterritorial implications,” such as a human rights reporting requirement for the corporate parent and its foreign subsidiaries as well, the jurisdictional basis for which is territorial.

In the expanding global economy, governments have increasingly relied on both types, but have been delinquent in applying either to the area of business and human rights -- even when governments are supporting a business enterprise, such as providers of export credit or investment insurance.

“And so we have the oddity of home states promoting investments abroad – extraterritorially, if you will – often in conflict affected zones where bad things are known to happen,” Ruggie pointed out, “but not requiring due diligence from companies because doing so may be perceived as exercising extraterritorial jurisdiction.”

The European Commission has launched its study of the issue. So has the Netherlands. Ruggie, as part of his UN mandate, hopes “to promote an honest and non-doctrinal discussion.”

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Why are sweatshops so durable?….

….Why? Yes, I know, I know. Labor laws are weak or non-existent. Bureaucracies are understaffed or corrupt. Employers are greedy or opportunistic. Consumers are indifferent or disorganized. And so on.

Yet, do these explanations answer my question? Are they symptoms rather than causes?

Questions like these can be depressing, especially when you’re fighting a cold on a rainy day.

I don’t read the New York Review of Books to cheer me up, but the other day its holiday issue lifted my spirits. I flipped rapidly past essay-packed pages in favor of the many colorful full-page ads picturing fascinating new books.

Then, about two thirds through, an article headed “The Universal Attraction of Slavery” caught my eye – a review of a new book, “Abolition: A History of Slavery and Antislavery,” by a noted historian, Seymour Dresher. I started reading the review by another noted historian, David Brion Davis.

“Since I have been attempting for over 40 years to put slavery in a more global perspective,” Davis wrote, “I could not be more delighted by Seymour Drescher’s magisterial new history of both slavery and anti-slavery from the late middle ages to the end of World War II.”

Three paragraphs later, I picked up my pen and marked a passage that impressed me. By the time I finished reading the article’s two-and-a-half pages, I had marked one or more passages in 11 of its paragraphs.

Particularly impressive was the last paragraph of Davis’ review:

“By carrying the story of ‘the perennial institution’ from the late Middle Ages to the millions of slave laborers in the Russian Gulag and Nazi concentration and labor camps, Drescher’s monumental work has shown that while opposition to slavery in its various forms can serve as a model for abolishing evil, slavery also seems to be irrevocable, with an amazing capacity to endure or suddenly become resurrected, even in an apparently progressive and civilized nation like 20th century Germany. If Drescher’s profound history of human nature gives some cause for hope with regard to moral progress, it should also end complacency and put us on continual alert.”

Here are some facts, as relayed by Davis, that may be the basis for insights into the evil of today's sweatshops and the movement to abolish them:

-- The slave trade was very profitable, returning about 10 percent on investment. Its abolition was comparable to committing suicide for a major part of Britain’s economy. Drescher’s earlier book, “Econocide,” “destroyed the belief that the British slave system had declined in value before Parliament outlawed the salve trade.”

-- “In one New World system after another, slavery demonstrated its flexibility and durability until abolished by superior military, civil, or political pressure from within or from without.”

-- “No theme in Drescher’s book is more striking than the extraordinary success of abolitionism in mobilizing public opinion in Britain and then in the northern United States…as well as the failure of such efforts in continental Europe.” Important to this success was the institution of “representative government and the tradition of public petitioning, as well as the fact that newspapers, pamphlets, sermons, voluntary societies and associations, and a common-law tradition created in Anglo-American societies a degree of public participation unmatched in the rest of the world.’

-- “Slave labor could still be efficient, productive, and adaptable to a variety of trades and occupations ranging from mining and factory labor to the technologically modernized, steam-powered Cuban sugar mills.”

-- Women had a prominent role in the movement as writers, public speakers, leaders of campaign to boycott slave-grown sugar, and by the 1820s, in Britain, as signers of petitions and influential advocates of immediate, as opposed to gradual, slave emancipation. “By 1833, when public demands succeeded in achieving the emancipation of 800,000 slaves, the number of petition signers had risen to 1.3 million, about 30 percent of whom were women.”

Highly impressed, I was eager to learn more, so ordered Drescher’s book. Now to read its 462 pages.

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Linking Trade and Labor via the WTO, or much sooner

Why do China’s people spend so little compared to Americans? A major reason is that China’s workers are paid so little for their work.

That pretty much sums up an article on “The Frugal Republic” by James Surowiecki in the December 7 New Yorker.

“While [China’s] boom has been extraordinary, ordinary workers have not reaped the gains one might expect,” Surowiecki writes. “In the past decade, in fact, the share of GDP that goes to wages has actually fallen, while the share that goes to profits has risen.” Further, only a small fraction of the workforce receives unemployment benefits, and pensions are underfunded and haphazardly administered.

No wonder, then, that household consumption in China accounts for 35% of GDP, only half the rate of the United States, as the New Yorker financial writer points out, adding:

“Ultimately, all China’s barriers to higher consumption are a product of the fact that for the past three decades the entire economy has been focused on one thing: making stuff. The Chinese and American and American economies are mirror images of each other.”

In short, China makes things; the United States (and other countries) consumes them. An unsustainable imbalance, meaning that it can’t last.

A drawing accompanying the New Yorker article shows a Chinese woman packing fancy high-heeled shoes coming off an assembly line. The worker is in her bare feet, shoeless.

As early as a half century ago, many unions foresaw that kind of umbalanced result from free trade – workers deprived of their share of the benefits from working in the international economy. The unions argued for adding a “social dimension” to trade agreements.

What if their idea had been accepted then? Wisely implemented, it could have served as a guideline for a half century of trade agreements more balanced than the worker-unfriendly policies that now prevail.

The idea is not dead, but it needs updating for the 21st century. Since the global economy has exploded, especially in the past 15 years, the original concept would have to be buttressed with a set of other provisions ensuring that the complexities of globalization and its various institutions serve the common good.

Toward that end, the International Trade Union Confederation and its Global Union partners last month prepared a statement of priorities for the WTO Ministerial Conference held in Geneva November 30 to December 2. The conference was not a negotiation session, so it is impossible to know for sure what effect the statement, and the 60-member union delegation promoting it, had on the ministers.

One positive sign: in summing up the conference, its chairman cited “trade and social issues” as among the “new” topics that the WTO needed to address to conclude the stalled Doha Development Round next year. A high-level preparatory group is to meet in mid-December to consider those issues.

But it could be too late. New WTO policies take years to adopt, more years to enforce.

At the Geneva conference Ron Kirk, the U.S. Trade Representative (USTR), emphasized that trade can, and should, help the economic recovery “right at home – particularly in terms of creating the well-paid jobs that Americans want and need.” (See “In Geneva and in Washington the call is for Jobs, Jobs, Jobs.”)

In an interview with the Associated Press, Ambassador Kirk voiced his impatience with WTO procedures. “The whole notion of everything taking 10 years, 15 years, and 20 years is just antithetical to me,” he said. “The world changes too quick. Competition is too fierce. The consumers, businesses, workers can’t often wait 20 or 30 years just to get a result.”

Will the Obama administration, having become more job-conscious, set its own job-creation link to trade? It’s a safe bet that experts are pouring over all the options, before checking where WTO boundaries may or may not exist.

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In Geneva and in Washington the call is for Jobs, Jobs, Jobs

In his speech on the morning of the last day of the WTO Ministerial Conference in Geneva, U.S. Ambassador Ron Kirk only hinted at all that he had in mind. At a working session on the WTO’s contribution to development, Kirk, the United States Trade Representative (USTR), spoke of what “remains the linchpin to our efforts” to bring the stalled Doha negotiation round to a successful conclusion.

That, he said, “will require market-opening initiatives from all key players – not only developed but also advanced developing countries, commensurate with their role in the global economy.”

In a statement that afternoon, December 2, he reaffirmed the Obama administration’s commitment to a Doha agreement favorable to the poorest countries, but also emphasized another economic necessity:

“In the United States, we recognize that trade can be an important pillar of global economic recovery and of recovery right at home – particularly in terms of creating the well-paid jobs that Americans want and need.”

Then in subsequent talks with reporters Ambassador Kirk was more specific.

“We are turning out attention almost full time to how we can create jobs and continue to grow the economy,” he told the Associated Press. “Too many Americans believed…that our previous trade policies had been overly generous to our partners.”

So far what is offered on the negotiating table, he told the Wall Street Journal, doesn’t give the United States “meaningful market access in the part of the world that will be growing and driving GDP growth over the next few years,” referring to countries like China, India, and Brazil.

The Business Standard of India quoted Kirk along the same lines: “The United States has been clear that we will need to achieve meaningful opening of markets that results in significant new trade flows – China, India, and Brazil, and South Africa.”

Meanwhile, Washington was preparing for a White House “Jobs Summit” on December 3 with the participation of business, labor, academia, and non-profit groups on how to put Americans back to work.

The Alliance for American Manufacturing called for “aggressive action to spur manufacturing job creation.” On the AFL-CIO blog, the call was for Jobs, Jobs, Jobs.

Lori Wallach, director of Public Citizen’s Global Trade Watch division, issued a statement on December 2 calling for replacing the Doha Round agenda with a WTO “turnaround plan.” “Ten years after the world’s most powerful governments and corporations failed to launch a massive WTO expansion at the 1999 WTO Ministerial,” she said, “there is still no WTO expansion. BUT, there also is still no WTO turnaround, and the current rules are causing major damage on many fronts.”

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