Transnational Corporations: Now is the time to call for a Binding Treaty

Source: Transnational Institute
18 June 2014
Brid Brennan and Gonzalo Berrón

Maxime Combes of Attac France interviews Gonzalo Berron and Brid Brennan on the eve of the debate at the 26th Session of the United Nations Human Rights Council (UNHRC) on the need for a new legal framework to end corporate impunity.

You are saying that there is “a historic window of opportunity to initiate the negotiation for a binding Treaty on TNCs” under the UNHRC. Could you explain?

For decades, communities across the world who have suffered systemic and continuing corporate violations of human rights and of economic and ecological crimes and been denied justice have been calling for binding rules on the operationns of TNCs. The long silence on the need for binding obligations on Transnational Corporations was shattered in September 2013, when 85 states led by Ecuador placed a resolution on the agenda of the United Nations Human Rights Council (UNHRC).This addressed a yawning gap in the current Human Rights mechanisms and institutions which lack a mandate to impose binding rules on the operations of TNCs and have therefore consistently failed to guarantee access to justice for affected communities.

This demand for binding rules has been consistently raised by civil society and the call is currently supported by more than 500 movements and networks. When this is combined with the resolution of 85 governments, we begin to call this moment a “historic window of opportunity”. The UNHRC is expected to address the issue during its current 26th Session before the end of June.

Decades of neoliberal international policies have strengthened the corporate powers on our economies, on nature and on our lives. Can you explain how this corporate power has grown exponentially and operates with impunity?

We have witnessed in the past decades a process of accelerated concentration of capital – through “fusions and acquisitions” of corporations – which has led to the consolidation of the neoliberal model, accelerated by the end to the cold war which had functioned as a barrier to the expansion of big capital.

This trend of capital expansion has been intensified and aggressively pursued through multiple Free Trade Agreements (FTAs) & Investment Agreements (BITs)–starting in 1989 with the Canada-US FTA. The terms of these agreements were set and continue to be set by transnational corporations demanding liberalisation of markets, access to minerals and raw materials and privatisation of public services as we see in the latest Transatlantic Trade and Investment Partnership (TTIP) proposed between the US and European Union or in the Trans Pacific Partnership (TPP) involving the US and Latin American and Asian countries on the Pacific.

These Trade and Investment Agreements as well as the policies of the WTO and other International Financial Institutions (IMF & WB) have put in place legal frameworks which give unilateral protections to the operations of TNCs (including the right to sue governments for actual or perceived loss of profit or to demand changes in environmental legislation) yet impose no obligations on TNCs. In terms of impacts on affected communities these unilateral legal protections create what we call an “architecture of impunity”. In this context governments have become complicit and have failed to defend the public interest or the interests of their citizens. This has meant that TNCs have continued to commit systematic violations of human rights and labour rights as well as devastation of the environment.

In addition, new technologies and an increasing financialisation of capitalism, gave TNCs unprecedented opportunities for expansion all over the world, and into all dimensions of our lives. The multiple inter-related crises – economic and environmental - but especially the financial crisis of 2008 show the limits of this capitalist model, as well as how corporations profit from the turbulence. The process of concentration of capital has intensified through the crisis resulting in a deeply asymmetrical distribution of wealth – where the rich individuals and corporations have become far richer and the poor have become more impoverished in all regions of the world.

As they have become economically as well as politically stronger, big TNCs can operate with increasing impunity mainly in poor and developing countries in the global South’s, but also more recently in the global North. In their operations they continue to violate the whole spectrum of human rights. They do this in a direct way: labour rights are violated in enterprises every day but it is only the major incidents that make the headlines – as the case of Rana Plaza in Bangladesh (where 1,100 workers died) or Marikana in South Africa (where 31 miners were shot).

TNCs also violate the right to livelihood as in the cases of widespread land grabs or through sustained and systematic pollution by oil companies such as Shell and Total in Nigeria or Chevron in Ecuador. These human rights violations are not only systemic,, they are carried out with impunity. Thirty years after one of the world’s major industrial disasters - Union Carbide/Dow Chemical in Bophal, India - justice is still pending for the families of those who died and their second generation also suffering the effects of the environmental contamination.

Taking advantage of their “investors rights” gained in FTAs and IIAs and WTO agreements, TNCs have been able to shield themselves from responsibility as well as to dictate the price and the profits from their operations. Their profits have soared as they continue to benefit from intellectual property rights (TRIPs) that operate for example as barriers to access affordable medicines; from the increasing privatisation of public educational and health systems and from the commodification and marketisation of access to water and other public services.

This deep restructuring in our societies not only marks the establishment of a corporate economic model, it has also resulted in a re-configuration of political power and the role of the state. There is a growing popular understanding of the phenomenon of corporate capture of government policy decision making – whereby corporate lobby organisations are able to usurp the function of elected governments at the national and international institutions of democratic political power and bend these for corporate profit. 

In the case of impoverished or developing countries the asymmetry of power is huge and domestic law systems have been undermined and rendered incapable of defending their people from corporate violations and crime. In many cases laws have been adapted to favour TNCs operations or to protect their “investor’s rights” at the expense of basic human rights of people. Decisions by national tribunals and courts are side-lined and not implemented or rejected outright by TNCs as in the case of Chevron and Ecuador, where the California-based corporation has refused to submit to an Ecuadorian court ruling demanding $9.5 billion in damages.

However, while corporate power has grown exponentially and has been able to entrench its privileges in seemingly copper-fastened legal frameworks, this new conjuncture of a broad spectrum of governments of the South and the strong campaigns of affected communities and social movements confronting corporate power have built support for binding regulations on TNCs.

Moreover, citizens’ battles with corporations, over water for instance, have continued to spread from cities in the global South like Cochabamba and Manila to increasing and effective struggles against the privatisation of water in Europe. These include struggles in Thessaloniki; the Italian Water referendum and the European Citizens Initiative (ECI) where the European Public Services Union (EPSU) initiated campaign that collected 1,884,790 signatures saying ¨No to Privatisation of water” in Europe.

How can such a Treaty under the UNHRC limit the powers of TNCs they have under WTO, FTAs and investment regimes? How could it work? Would this treaty be more effective than Corporate Social Responsibility measures and the many charters that have been developed globally?

The process that could be opened this June in Geneva is a process to negotiate a Treaty for binding obligations on TNCs and include the establishment of an Institution/body mandated to enforce sanctions and give access to justice for affected communities.

What is being asked of the UNCHR at this stage is to establish an intergovernmental Working Group with an open ended mandate to initiate the process of establishing a Binding Treaty. This is still a very new and open process. That is why we say that this is just a first step in our struggle to rein in the political and economic power of TNCs. It is a struggle that will take some years especially if it aims to include the comprehensiveness of human rights – this will come under strong contestation - not least from the corporate lobby itself.

But such a Binding Treaty and an instrument to enforce it will definitely diminish the TNCs’ power to violate human rights with impunity. It will also be an instrument that provides access to justice for affected communities and people that are currently deprived of such access to a fair juridical process at the both the national and international levels. 

The international instruments we have until now (UN Guiding Principles, OECD Guide lines, ILO MNE Declaration, Global Compact, etc.) are all nonbinding and are in the realm of “soft law” and are therefore unable to provide justice. In fact these operate as window-dressing exercises since there is no independent verification of implementation. Besides continued documentation on the ground by affected communities demonstrates that TNC violations of human rights, labour rights and environmental standards are intensifying, which shows the ineffectiveness of such voluntary codes.

Corporate Social Responsibility (CSR) is mainly promoted as a publicity exercise for TNCs and is a method of projecting a more friendly image to the public and costs less than traditional expensive propaganda.

This is not the first time we try to get binding regulations on TNCs operations. Why should it work this time? What kind of citizen mobilization did you expect to reach this goal since such an international debate could be seen as very far from what is happening on the ground ?

Although there have been several previous attempts throughout the 1970s and 1990s within the UN to develop a “hard law” framework for TNCs, this is the first time 85 governments have converged on a demand to propose a process towards a Binding Treaty on TNCs. It is obvious that the voluntary UN Guiding Principles for Business and Human Rights do not diminish corporate human rights violations. We can rightly ask what happened at Rana Plaza – a building which housed a concentration of top clothing brands, but where workers did not even have the right to refuse to work in a dangerous building. 

From our point of view and experience in working over several years documenting and mobilising solidarity with affected communities – the demand for international action is very strong on the ground. Besides, there is increasing experience and capacity to link across local struggles or develop common strategies in addressing a particular TNC. For example in the Permanent Peoples Tribunal Hearing being prepared for Geneva, communities from five countries will present joint testimony on the corporate giant Glencore and its operations in the Philippines, Peru, Columbia, Zambia, DRC. Some of these communities come from member states of the UNHRC. It definitely gives a new momentum to the debate when the affected communities speak for themselves both in the national and international arena and speak consistently for an end to corporate impunity.

Until now, the international community has failed to tackle corporate power despite a growing public consciousness of the unacceptable abuse of political and economic power exercised by these big economic actors. This can be seen in the daily destruction of livelihoods and the environment caused by the model of extractivism of fossil fuels and minerals and other natural resources. In addition, the outbreak of the 2008 financial and economic crises has highlighted the phenomenon of the yawning chasm between Big banks, Big Business, Corporations and Citizens – what the Occupy movement calls the 1% and the 99%.

Even with all the difficulties and challenges for movements mobilising in Europe and the US, we see this era as generating a significant political opportunity to strengthen social struggles and to develop new links globally that continue to resist corporate power.

Together with different international and national organizations, social movements, trade unions, grassroots groups and networks, you launched “a global campaign to dismantle corporate power and stop impunity”. In this campaign, you are promoting an International Peoples Treaty. What for? Would it be the foreshadowing of the Treaty under the UNHRC ?

Yes in June 2012 during the RIO+20 People’s Forum, the Global Campaign to Dismantle Corporate Power was launched. This initiative culminated a year of global consultation with affected communities, movements and networks campaigning and seeking justice for human rights violations and corporate crime.

Many organisations who became involved in this Campaign had worked in the framework of the Permanent People’s Tribunal from 2006-2010 and had extensively documented corporate economic and ecological crimes and widespread human rights violations across the broad fields of TNC operations – in Public Services, Water, Food, Land and Agriculture, Energy, Mining, Environment & the Commons and in the world of Work and Finance.

It became clear that these violations took place in a context of an architecture of impunity and legitimation provided by the international trade and investment regime which expanded ever more investors´ rights and denied citizens´ rights and moreover sanctioned governments who defended public policy and public interest. Furthermore, while affected communities had no redress or access to justice, corporations could sue governments for huge sums of money at such Tribunals as the International Center for the Settlement of International Disputes (ICSID) through the use of the investor-to-state dispute system (ISDS) or advance their interests through the WTOś Dispute Settlement Mechanism (DSM).

The development of the People’s Treaty is a key strategy of the Campaign – providing both the political process to strategise on how to dismantle corporate power and end impunity as well as the space to articulate and visibilise alternatives. Its juridical proposals in some instances intend to contribute to the Binding Treaty process currently before the UNHRC, while the work on alternatives aims to root a new vision of a a world beyond corporations in the transformative action arising in the midst of the confrontations with corporations. We believe people are the protagonists of fundamental changes that go beyond the juridical instrument of a Binding Treaty on Transnational Corporations. 

Therefore the Campaign’s International Call to Action urges the building of a powerful movement of solidarity and action against TNCs, the ending of TNCs’ impunity and the building of a world free from corporate power and corporate capture. 

The Peoples’ Treaty being developed by the Campaign is an important strategy and process for building broad consensus on the urgency and necessity of Binding Obligations on TNCs & for an international mechanism to enforce these.

In France, the common sense is to think that the French TNCs would not be the worst ones in the world and would rather be good examples. In response, some CSOs recently launched new campaigns against French TNCs like BNP-Paribas, Société Générale, Areva, Total, etc. What would you expect from these organisations and from French people in order to contribute to the establishment of binding and stronger regulations on TNCs?

Decades of neoliberalism and corporate propaganda have led to a popular understanding that ‘national’ TNCs are flagships of prosperity for the home states as well as for the states and peoples where the TNCs operate. The economic, social and environmental costs of extractivism has for instance been well hidden from the public in the home states of the TNCs.

However, the past five years of the economic, financial and systemic crisis is cumulatively demonstrating that this era of capitalism dominated by corporate rule is in deep crisis. There is a shift in the conjuncture, with growing popular support for a just transition and system change which sees a dynamic and participative role of social movements and civil society organisations advancing alternatives to the hegemony of corporations in both theory and in practice from the ground up.

These new campaigns launched in France are also a strong indication that people are looking critically behind the glossy image of national corporate flagships and seeing that the corporate model of development is unsustainable.

Our expectation is that these campaigns will expose the human rights violations and environmental destruction of the TNC model. Furthermore the campaigns can challenge the French government both in its role and responsibility as a member of the European Union and of the UN Human Rights Council (UNHRC).It will be important to urge the French government to vote in the June session of the UNHRC in favour of an inter-governmental process to initiate the steps to develop a Binding Treaty on TNCs.

We also expect that French organisations will participate during the Week of Mobilisation in Geneva (June 23-27) and give a strong message to the French government and its Permanent Mission in Geneva. In terms of the ongoing campaign beyond Geneva, we look forward to joining with French movements and organisations in challenging the corporate capture of the Climate Negotiations at COP 21 scheduled to take place in France in June 2015. Indeed the COP 21 People´s Forum will provide an inspiring context in which to undertake a major public consultation on the International Peoples’ Treaty.