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Session Six Outline: Options for Dealing with TNCs

Aims

• To acquaint study circle members with more examples where international solidarity has been built by workers and communities in different parts of the world
• To draw lessons from the experiences of international solidarity about TNCs

Additional materials available:

• ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, Summary
• Codes Can Work: the case of South Africa
• Making a Code Work
• COSATU Code of Conduct for Multinational Companies Investing in South Africa

Summaries of session 6

• BUL1 (Plamen Dimitrov)
• GBR1 (Les Ford)
• RSA1 (Martin Jansen)
• SWE1 (Ola Niclason)

Activities

Why International Solidarity?

Take turns to read the input from other study circles in the project about the importance of international solidarity. Discuss their ideas together with your own from Session 5, the readings since then and your own experiences. What common ideas are there about the importance of international solidarity? What are the differences? What conclusions can you draw? The facilitator records the key points from the discussion.

Regulating TNCs
The facilitator makes a short presentation about attempts to regulate the behaviour of TNCs in the past and today. Various international Principles, Guidelines and Codes still exist. Can they be used? Some organisations have drawn up codes (like the Clean Clothes Campaign, the ICFTU). Some TNCs have drawn up their own codes (like Nike and The Gap). How useful are these?

Discuss these attempts to regulate TNCs, drawing on the case studies you have read. Focus on:

• the limitations of codes that companies have drawn up for themselves
• the possibilities for international regulation of TNCs through intergovernmental bodies
• codes that are being drawn up by various non-governmental organisations
• the role that unions and communities can play to monitor the codes and make sure they are implemented.
  The facilitator records the key points of the discussions.

International Solidarity that is Effective
From all the discussions and readings so far, what do you think are the most effective ways for taking action on an international level? Draw up your ideas on flipchart for

• Trade Unions
• Community Activists
• Alliances between communities and unions

Summary and Evaluation of this session

The study circle evaluates the session, using the form provided

Activities before Session 7

• Study circle members have brought ideas about TNCs that are having a detrimental impact on workers or a community in ways outlined in Sessions 2 and 3. Choose to work in twos or threes. Each small group selects one TNC. Prepare a basic programme of action to oppose the TNC in ways highlighted in Sessions 4, 5 and 6. Use local alliances and international solidarity and various tools and methods raised in all the Sessions. Only draw up plans. Do not implement them yet. Bring your plans to Session 7.
• When you receive copies of all summarised discussions, read them.

Session 6: Notes for the Facilitator You will need:

• Regulating TNCs: Material for facilitators (one copy only)
• Codes and Charters: Material for facilitators(one copy only)
• Session evaluation sheet
• Flipchart paper and pens

Points to bear in mind:
For the section on Regulating TNCs, you will need to prepare a brief presentation on different attempts to regulate TNCs over the years, what the various instruments that exist are and the possibilities for using them. You can use the materials Regulating TNCs and Codes and Charters for your preparation.

The task between this Session and the next is to work in small groups to plan a programme of action about a TNC. One or more groups might like to continue with the case study of a local TNC begun earlier in the course. Others might like to select a different case study. The aim is to encourage them to use the ideas and skills built up in previous Sessions. The task now is only to draw up a plan, not to begin implementing it. They should bring their plans to Session 7.

Activities before Session 7:

bring together the notes from discussions in Session 4 and 5 about company information: useful sources your study circle has found, rights to company information, and your ideas for improving those rights, etc. Put the results of these discussions onto the Internet.

• download materials for Session 7.
• circulate to your study circle members summaries of all discussions in your circle to date.

Material for facilitators Regulating TNCs

In the 1970s there was a lot of concern around the world at the growth of powerful transnational corporations. Some saw TNCs as instruments of US imperialism. Many could see the shift of power from elected governments to private enterprises driven by their own profit-making interests. The role of the ITT corporation in the military overthrow of democratically-elected President Allende in Chile in September 1973 spurred governments into action.

The OECD is a body representing the industrialised countries. In 1976 it produced 'Guidelines for Multinational Enterprises'. The aim was to encourage TNCs not to take 'unfair advantage' of the developing countries of the Third World. A year later, the International Labour Organisation (ILO) adopted a 'Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy'. In the European Community, the Vredeling Directive laid down certain conditions on multinationals operating in the EC. Also in the same period the United Nations set up a Centre on Transnational Corporations to monitor the growth and activities of TNCs. Work was begun on a code of conduct that corporations should respect.

All these activities have largely failed, however. Today's 'free market' ideology says that the operations of companies should not be limited or interfered with. Most company directors are militantly against anyone other than themselves saying what they should or should not do. They even seem unhappy if their role is analysed and discussed.

The International Chamber of Commerce, a high-powered business lobby group, criticised the United Nations Centre whenever it mentioned a corporation by name. Business argued so strongly against the proposed UN code of conduct that it never got further than a draft. In 1992 the Centre was closed down and integrated into another UN agency, UNCTAD. Even the ILO today does little work on TNCs.

Under pressure to attract investment, most governments have backed away from supporting codes of conduct for TNCs. Rather, they have drawn up codes for themselves on how better to attract investors (called 'investment codes').

But as corporations continue to behave irresponsibly towards workers, communities and the environment, pressure is building again to place limits on their activities.

New Calls for a Code In March 1995, world governments met at the Social Summit in Copenhagen, Denmark. For the first time ever they agreed that poverty is a danger that must be eliminated. But still they said that we must follow the competitive market system which is dominated by transnational corporations. So, the challenge to TNCs will not come from governments, unless they in turn come under much greater pressure from workers, their organisations and communities.

The 1995 Social Summit was not only attended by governments but also by trade unions and hundreds of non-governmental organisations (NGOs). However, the trade unions and NGOs were in separate meetings.

The NGO Forum was deeply critical of the way the world is run. Their 'Alternative Declaration' speaks of "the most dangerous chasm in human history between an affluent, overconsuming minority and an impoverished majority of humankind in the South and also, increasingly, in the North". A key issue, they said, is getting democratic control over TNCs.

• "Global production and consumption must stay within the limits of the carrying capacity of the Earth. Political regulation is mandatory in order to prevent the global market system from continuing to reward irresponsible behaviour that cares nothing for the household, community, nation and humankind.
• Regulatory institutions and instruments of governance and law that are truly democratic and enforceable must be established to prohibit monopolistic structures and behaviour and to ensure that transnational corporations and financial institutions respect the fundamental rights of all peoples. In order to make this possible, TNCs must be reduced in size.
• Work to complete the Code of Conduct for TNCs should be urgently resumed. An international independent body and accountability mechanisms should be set up to monitor, evaluate and effectively regulate the behaviour of transnational corporations and their impact on individual nations, communities, peoples and the environment.

(Extract from the NGO Forum's 'Alternative Declaration', Copenhagen, March 1995)

Material for facilitators Codes and Charters
Various international instruments exist which we can use to build pressure on TNCs. These instruments come from a range of social forces:

• ILO Tripartite Principles

  These Principles are an important guide for governments and unions. They cover employment, training, conditions of work and life, and industrial relations. The ILO monitors the code, and complaints against companies can be raised in the ILO. But the code is voluntary, and there is no enforcement agency. Many more corporations break the code than respect it.

• OECD Guidelines
  These Guidelines cover trade union negotiating, bargaining and information rights, standards of employment and training, and retrenchment procedures which TNCs should respect. The Trade Union Advisory Committee (TUAC) of the OECD is trying to get the Guidelines put as an annexe to the Multilateral Agreement on Investment (MAI) which the OECD is likely to adopt and promote in the World Trade Organisation. The MAI is a dangerous instrument which will force countries to open up even more to foreign investment (see Session 3).
• Ceres Principles
  These were drawn up by the Coalition for Environmentally Responsible Economics which includes unions and churches in the USA. They were horrified by the environmental disaster caused when the Exxon Valdez oil tanker ran aground in Alaska. Among the issues covered are the sustainable use of natural resources, energy conservation, and informing the public.
• Business Charter for Sustainable Development
  This was adopted by the International Chamber of Commerce in 1992 to encourage companies to respect environmental principles.
• Cadbury Code
  This was drawn up in the UK to improve the way in that companies run themselves. It includes the duty of the directors to produce transparent financial reports.
• Principles for Global Corporate Responsibility
  Three church-based organisations in the USA, Canada and UK which work on economic justice have come up with these Principles in consultation with many church-based organisations worldwide. They draw on the ILO Declaration, the Ceres Principles, the Cadbury Code, and many other business principles. They propose how corporations should relate to:
• the ecosystem
• national communities
• local communities
• employees
• shareholders
• other businesses.
• Model Code of Labour Practice
  This is being drafted by the international trade union movement in the International Confederation of Free Trade Unions (ICFTU). The aim is to get TNCs to sign the Code and accept responsibility for the way that their goods are produced, sold and distributed, even in their subcontractors, and to ensure a trade union presence in the debates over codes. It is based on ILO Conventions that protect workers' rights and includes basic conditions of work such as hours, health and safety and a living wage. The first such agreement with the international labour movement has been signed by the international football federation FIFA where FIFA undertakes to boycott footballs produced with child labour.
• Clean Clothes Campaign 'Charter of Fair Trade'
  This Charter is aimed at the garment industry worldwide, attempting to bring consumer pressure on producers and retailers to respect the rights and basic working conditions of garment workers. (See handout Clean Clothes Campaign.)

  A weakness is that these are voluntary codes, up to each company to adopt or agree to. Mostly they rely on corporations to respond to public pressure, and on the public to bring this pressure. What is still unclear is how the codes are to be monitored and enforced, and the role of working class communities and organisations in monitoring and enforcement. Some believe that the task is so huge that it will have to be done by a new service industry of independent professional monitors.

  In the case of the Model Code of Labour Practice, unionised workers in TNCs could play a strong role, bringing the Code into their negotiations with management. This would require strong trade unions giving a high priority to the situation of workers in countries where labour rights are weak or non-existent. Real issues of competition with other workers would have to be confronted.

  Trade union concerns over codes in general include:

• codes/charters must be based on ILO standards as a minimum
• codes/charters must not displace or interfere with the collective bargaining rights of workers; on the contrary they must strengthen these rights
• monitoring and implementation must involve the workers that the codes/charters are meant to protect
• there must be a trade union presence in overseeing independent monitors.

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