Right to profit, or human rights

 
The debate on binding regulation of global business by Anne Jung, Communication department medico international

‘Supermarkets steal. We steal back’ – this was the banner of the artists collective Peng! in early 2018 when it announced its new campaign to steal food from discounters. The idea was to donate the purchase value directly to the producers of coffee, tea and bananas. The aim is to offer symbolic compensation for starvation wages and at the same time draw attention to human rights violations in the production chain. The Foreign Trade Association of German Retailers promptly responded, calling it an ‘absurd invitation to lawbreaking’.

However, the artists’ campaign is anything but absurd, rather, it reveals an atrocity. Through numerous international trade agreements, the politicians have legally safeguarded the right to profit for companies, while the protection of human rights is only secured by voluntary guidelines.

The legal safeguards for companies are nothing more than the legal entrenchment of the lack of rights of the affected people.

Who are the ‘architects’ of this legal inequality, and what consequences does this have for millions of people worldwide?

Economic globalisation has significantly expanded the scope of action for companies in the last few years. While profits are rising, the situation on global supply chains is dramatic in many places. This applies both to working conditions themselves and to the direct and indirect consequences of depletion of raw materials and production. According to a current UN study, some 40 million people are working worldwide in slave-like conditions, more than ever before.[1] Human rights activists, environmental protection activists and trade unionists are being murdered in their thousands, not infrequently with direct or indirect involvement of large corporations.[2]

Some 80% of global trade is tied up with the business practices of multinational corporations. According to Human Rights Watch, more than 450 million people work on the production and supply chains of transnational groups without adequate legal protection.[3]

Dispossession and displacement as a result of excessive land grabbing and raw materials depletion in the global South are depriving millions of people of a basis for living. Working conditions hazardous to health in the garment industry are still common practice, environmental disasters on the grand scale e.g. in the oil industry (Deepwater Horizon) or Bhopal (25,000 dead) recur in cycles.

The architects of legal immunity

Globalisation of world trade to maintain our ‘imperial lifestyle’ (U. Brandt) is structured and protected by numerous free trade and investment protection treaties which are formulated and promoted primarily by the industrialised nations, one example is the German Federal Government at national level and in collaboration with the European Union.

The core idea is that the industrialised nations force countries rich in natural resources and cheap labour to open their markets and lower taxes and tariffs, leaving companies a free hand for their business, and thereby preventing effective legal regulation.[4]

Many of the free trade agreements include clauses which establish arbitration tribunals, so-called investor-state dispute settlements (ISDS).

ISDS allows a foreign investor to start proceedings against a state where it has invested, if it feels its guaranteed rights are being violated. Trade agreements with investment protection basically allow only companies to file suit against states, which in turn can only assert their interests through national courts.

The proceedings are held before arbitration tribunals made up of private lawyers appointed by the parties to the dispute, rather than independent judges. They operate solely on the basis of the investment protection treaty to determine whether a state’s measures comply with investor rights. Investors here have only rights, and no obligations – such as to observe human rights or comply with environmental and social standards. Trade and investment protection treaties are an instrument for legally securing the right to profit.

Through their trade agreements, the policies of the industrialised nations free companies from excess ballast, such as

  • observing human rights
  • creating of labour and social standards
  • tax payments by large corporations
  • obligatory reinvestment.

Such deregulation of state control constitutes de facto nothing more or less than regulation in favour of business. A policy of disempowerment of people and empowerment of commercial companies.

This opens up a new dimension in a well-known context of long-time exploitation, moving from violence to law and shifting responsibility at the same time to the producer nations.[5]

If we look at the consequences of deregulation, we can speak of an asymmetric trade war. This is taking place between

  • interstate economic and political power (e.g. NAFTA, EPAs between individual African states such as Kenya and the EU, blackmail with development aid)
  • governments and companies (two thirds of complaints by companies are directed at emerging and developing countries, 85% of companies come from rich nations. Germany is one of the pioneers, most active users and so-far greatest beneficiaries of arbitration tribunals.)
  • companies and the population (because the population has no opportunities to file a complaint).

Case study 1 - No right to health: Big Food in Mexico

Since the North Atlantic Free Trade Agreement (NAFTA) between the USA, Canada and Mexico entered into force in 1994, industrial finished products and over-sweetened soft drinks from the USA have flood the Mexican market. Mexico is the world champion in consumption of Coca-Cola and other soft drinks. 120 litres a year.

One reason why the number of obese people has risen faster than anywhere else in the world. Just under 70% of the total population suffers from overweight, including a growing share of children – a sorry world record. 14% of adults suffer from (type 2) diabetes, tens of thousands die from it every year.

The costs of treatment of overweight-related illnesses and diabetes tripled in seven years from USD 228 million (2003) to USD 670 million (2010) (ApISA 2012).

The Mexican Government recognised the problem early on. In 2001, for example, it imposed a punitive tax of 20% on products containing the health hazard high-fructose corn syrup. The sugar substitute, which is reported to make you fat faster than conventional sugar, was imported from the USA on a grand scale. Based on NAFTA, the US company Corn Products International filed a complaint against the state of Mexico before an arbitration tribunal for loss of profits. Mexico had to repeal the punitive tax and pay damages of USD 58 million to the US group.

NAFTA accordingly not only promotes negative consequences for health, the arbitration procedure agreed in the treaty prevents effective countermeasures.

Corporate interests are legally protected, while human rights – in this case, the right of access to health – are violated.

After its defeat, the Mexican Government relied on changing individual behaviour, and no longer tried to address the companies as the cause of the problem. In 2014 a health levy of a peso (five cents) per litre was introduced for soft drinks containing sugar, with a special tax of 8% for sweets and salty snacks.

‘Mexican consumers are now paying more for food that kills them,’ is the verdicts of the NGO Genetic Resources Action International (GRAIN 2015).

(Further consequences of NAFTA for health: Let me just mention a few examples here  -  the destruction of the livelihoods of small-scale farmers through cheap grain imports from the USA, sickening working conditions in production etc.)

The NAFTA treaty is a good example of the chronic health consequences of a free trade policy focusing on profits.

A structural problem:

According to Margaret Chan, ‘Something is going wrong at the fundamental level, if companies are able to fight political measures intended to protect the public from products which are dangerous to their health.’

The ambivalent role of the UN

It is certainly no secret that access to judicial justice remedy remains the biggest challenge in the global business and human rights space.
John G. Ruggie

The debate about binding regulation of the global economy implicitly includes the question of how it is possible for such unacceptable situations to prevail 70 years after the UN General Assembly’s adoption of the Universal Declaration of Human Rights on 10 December 1948?

The weakness in enforcing human rights has less to do with the idea that they were not clearly described than with a political lack of will-

In the 1970s, an initiative - supported by communist countries on the part of countries described then as the Third World  - failed in the face of opposition by the OECD member states. The long history of attempts to enforce legally binding agreements and standards reflects the asymmetrical power relationships within the UN.

The 2003 UN initiative to set standards for transnational companies which sought to impose binding human rights standards on them failed in the face of resistance by internationally organised corporations.

In 2011, the UN Commission on Human Rights endorsed the UN Guiding Principles on Business and Human Rights (UNGPs). These are written by John Ruggie, UN Special Representative for Business and Human Rights. They include:

a) the duty of states to protect human rights (including against threats from economic actors)

b) the duty of companies to respect human rights, and

c) the right to restitution in the event of violations of human rights at the hands of economic actors.

‘One problem, however, is the inadequate linking of the pillars in the UNGPs. Within the framework of their duty to protect, states are not consistently enough obliged to compel companies to do human rights due diligence.’[6]

The agreements describe efforts by companies to protect human rights and the environment. But in the event of violations, regardless of their scale, nothing happens, and they can carry on as before. There is a lack of simple and effective sanctions mechanisms, mechanisms that companies themselves would never forget in formulating their trade and investment agreements. Here, important standards have been established, but they are not legally enforceable.

Case study 2 - Deadly voluntariness: the diamond trade in Sierra Leone

While legal security is being strengthened for companies, the governments of most industrialised nations are doing everything possible to politically contain public resistance to massive violations of human rights by means of nonbinding voluntary commitment. The consequences of voluntariness are deadly, as the international diamond trade shows.

Shortly before the turn of the millennium, the investigative research group global witness revealed that the bloody civil wars in Angola, Sierra Leone and the Democratic Republic of the Congo with tens of thousands of dead were being decisively financed from trad with diamonds. For the first time it was possible to show that international diamond corporations were doing business with all the parties to the civil wars. medico international publicised these business practices together with partners from Sierra Leone, the Democratic Republic of the Congo and European states, and called in an international campaign for binding regulation of conflict diamonds and other conflict resources. The industry became nervous (linking engagement rings and war is bad for business, while it is not so much a problem for oil), Hollywood made the blockbuster ‘Blood Diamond’, everyone was talking about the blood-stained jewels. But what did the politicians do? Nothing at first. Then, public pressure became too great. Politicians and business entered into the so-called Kimberley Process, which also involved NGOs as observers. The result of the consultations was the Kimberly agreement, which is misleading in itself. In fact, this is not an agreement at all, but a declaration of intent which does not provide for any legal recourse and also includes a completely inadequate definition of conflict diamonds.

The governments of the diamond importing and exporting countries ignored their duty to protect the population and relied on companies to voluntarily question themselves on the core idea of their existence – profit maximisation.

However, the stakeholders did achieve one goal -  relating to political communication.

The public perception the issue of conflict diamonds was that it had been settled by the Kimberley agreement, public pressure evaporated, the campaign was over. Trade with conflict diamonds is still continuing, however. Things could not have gone better for the industry.

The Kimberley Process shows the risks and limitations of these so-called multi-stakeholder initiatives.

‘The different parties or ‘stakeholders’ (…) gather in a consultative body or a forum for negotiations with the objective of coming to a ‘consensus’ on issues on which their interests are totally opposed. The consensus-based philosophy of multi-stakeholderism allows corporations to oppose ambitious proposals behind closed doors without the cost of appearing publicly as the ones responsible for obstructing the adoption of necessary regulatory measures. (…)

Hiding behind a pleasant discourse on the need for a “participatory approach”, multi-stakeholderism denies the existence of power imbalances and assumes that “stakeholders” pursuing private interests (which are typically over-represented in these forums and have much more resources) and those defending the public good are on equal footing’[7]

Human rights organisations such as the medico project partner Network Movement for Justice and Development, which has been fighting for decades for an equitable distribution of social wealth, have to deal daily with the consequences of this asymmetric trade war, which is affecting the whole country: slavery-like working conditions, injury to health, displacement, dispossession, starvation due to loss of a basis for living, growing domestic violence, dependence on aid.

‘We are degenerating as a society. We no longer have any control over our lives;’ says Abu Brima.[8]

The legally protected lawlessness leads to powerlessness and fury in the population, creating ideal conditions for these to erupt in violence again. The last war started in the diamond regions, and was caused by a sense of fundamental powerlessness stemming from living in a permanent state of lawlessness.

Case study 3 - A paradigmatic disaster: the garment market in Pakistan and Bangladesh

Or: the consequences of a policy which legally protects lawlessness.

On 11 September 2012 a factory owned by KiK supplier Ali Enterprises  burned down to its foundations in Karachi, Pakistan. 260 people died in the flames.

On 24 April 2013 the Rana Plaza building in Sabhar collapsed. 1,135 workers died, over 2,000 were injured. It is the biggest accident in the history of the textile industry, and caused horror and outrage worldwide. The well-established externalisation of responsibility developed cracks, as the direct link between price and production conditions could no longer be suppressed despite all efforts to do so (photo by Verona Pooth).

The garment industry’s supply chain acquired a face, a story on the one hand of death and suffering and protests against conditions (including protests by workers), and on the other hand of corporate interests, advertisers, and missed scope for action.

Questions arose in public and in the media: Why did the families of the dead and survivors have no legal claim to compensation, and are dependent on the charity of the industry or assistance from aid organisations (in short, medico and GK)? Why is it almost impossible to transfer recognised legal obligations on companies to implement safety regulations to transnational constellations?[9] What is the situation regarding international corporate criminal law?

The externalisation of responsibility could no longer be ignored. The dead in the man-made disasters of 2012 and 2013 are symbolic of a policy of lawlessness along the global supply chains. This put the German Federal Government under pressure, in view of the large number of companies based in Germany with producers in Pakistan and Bangladesh. German companies directly or indirectly involved: KiK, Adler Modemärkte, Kanz (Kids Fashion Group), Gueldenpfennig and NKD.[10]

The German Federal Ministry for Economic Cooperation and Development accordingly initiated the Textile Alliance[11] in 2014, in which business and NGOs were also involved, with the aim of improving the standards of production. Despite knowing better, it again relied entirely on the principle of voluntariness.

The aim was to create the impression among the public and the media that things were changing. But nothing was actually changed on the most pressing issue – giving human rights priority over corporate rights.

Ignoring the risk of being co-opted and instrumentalised, NGOs also joined the Alliance[12].

The lawlessness is currently reflected most concretely in a pending lawsuit.

No progress is being made in the hearing sought by four Pakistani workers from Karachi , supported by their trade union NTUF, medico and the ECCHR,  before the Regional Court of Dortmund, Germany. The defendant is KiK, allegedly the sole customer of the burnt-out Ali Enterprises factory, and also involved in the tragedies of Tazreen Fashion and Rana Plaza. KiK is relying on the statute of limitations it reportedly benefits from under Pakistani law.[13]

As the main customer of Ali Enterprises, the German garment discounter KiK took 70% of production, and would accordingly have been able to impact on working conditions at the supplier through its terms and conditions of procurement. It was not willing to do so.

Even so, after a remarkable public campaign,  KiK declared – without any admission of guilt –its willingness to pay compensation of over five million euro, initially to be transferred to the International Labour Organisation as trustee.

The lead human rights lawyer Faisal Siddiqi has reached the following conclusion: ‘On one hand, that’s a lot of money – the comfort of social security for the survivors – on the other hand it’s too little. Because nothing has changed in the conditions. It’s easier to work out one-time compensation than to achieve a basic change in production conditions. This case showed us the limits.

We failed to establish liability, accountability and structural changes or even new legislation and a functional system of inspection. What we did achieve has no effect on the rest of the garment industry, which accounts for almost 15 million female workers in Pakistan.

A milestone? The UN Treaty

In the middle of the struggle over expanding and restricting the power of transnational groups, something remarkable happened in 2014. On the initiative of Ecuador and South Africa, a working group called for a legally binding treaty for (transnational) companies. The UN Human Rights Commission followed up on the initiative and established a working group[14] (Open-Ended Intergovernmental Working Group, OEIGWG) in 2014 to formulate an international agreement to be designated a ‘UN Treaty’. Over 100 member states participated in the process.

After decades of the mantra of voluntary commitment in the interest of capitalism in its neoliberal disguise and expanding legal protection for business interests, the OWIGWG is finally calling for a treaty to confirm equal status for civil, political, economic, social and cultural human rights which will protect human rights against the activities of transnational corporations and other business entities.

  • Companies will be obliged to monitor, identify and evaluate the human rights implications of their business activities and to report on them, with regard to their own activities, those of their subsidiaries and units under the company’s direct or indirect control or which are directly involved in its products or services[15].
  • If companies do not perform their human rights due diligence, they would be made liable in the event of human rights violations.[16] Victims of land or water grabbing, labour law violations or environmental pollution would have an opportunity to seek justice before the courts.

Adoption of the UN Treaty would have the potential to significantly improve respect for human rights worldwide, and would contribute towards establishing a changed international economic order. This would be possible through a priority clause, as proposed by German human rights lawyer Markus Krajewski in a legal opinion.

That would particularly protect state freedom of action in implementing social and political human rights in international law. It would also mean that states would not be able to ratify trade agreements with dubious provisions for human rights. In the event of conflict, investment tribunals would also no longer be able to respond to human-rights enforcement measures by making damage compensation payments to investors.[17]

What would change?

For garment workers in Asia (and recently in African nations as well, plus everywhere else where the chances are poor of enforcing minimum labour protection standards) implementation of the UN Treaty would mean that those affected could claim compensation in court. Because it is typically impossible to prove violations of due diligence due to the lack of inspection of corporate processes, the burden of proof for compliance with due diligence standards would be on the companies.

Introduction of class action options for affected groups who have joined together as in the KiK case, would make it possible to press claims effectively and jointly without risking a clash with the state of limitations.[18]

Treaty states would be obliged to set clearly defined human rights due diligence standards for companies. This would finally resolve what companies have to do to protect human rights along the supply chain, and when there is a violation of due diligence as a result of failure to implement this performance and due diligence programme.

If a binding treaty was adopted, this would be a monumental step:  not by adding another category of human rights to the three existing ones but by ‘determining the locus’ (Thomas S.) where they primarily apply in the global supply and production chains, i.e. in the globalisation process itself.

However, there are massive power interests opposing implementation of such fundamental changes. Governments, companies, elite networks – they will all fight to the last. It is not surprising that the German Federal Government recently decided together with the USA and EU not to participate directly in the UN discussions and so to continue to protect the right to profit over protection of human rights.

Nevertheless, Germany is by no means passive. In 2017 in the UN General Assembly’s Economic and Financial Committee, the German Federal Government actually moved not to approve funds for further negotiations.[19] It is also trying to admit business representatives to the negotiating rounds within the framework of the EU.[20]

Refusal + sabotage - the role of the German Federal Government in the negotiating process can be summarised accordingly.

The very bodies posing in the Age of Trump as defenders of a multilateral world order are refusing to establish a truly multilateral framework based on human rights, and are instead backing a dense network of bilateral free trade and investment agreements, as criticised by Thomas Koller of attac.

The treaty process has become an arena for defending the privileges of the industrialised nations. The original draft was massively weakened after interventions by the EU.

1. The ties between state and business are not being addressed. There are no plans for requirements which would oblige states to take measures to protect against human rights violations by companies in state ownership or under state control.

2. The effects of transactions by international financial institutions are excluded.

However, including these is unavoidable, as there are many documented cases where projects by international financial institutions such as the World Bank have contributed to major violations of human rights (Dead Donkeys Fear No Hyenas, World Bank).

3. There are no plans to require human rights due diligence on the part of the state, if decisions with economic effect are involved.

However, this is necessary, as the state appears as not only the owner of state companies but also the party responsible for granting concessions and for supervision and regulation, as the source of subventions and export promotion (export guarantees etc) and in the framework of public procurement.

4. The present draft omits the priority clause. This implicitly defines the priority of trade and investment agreements over human rights obligations!

As described, the provisions of  trade and investment agreements massively restrict states’ scope to protect human rights.

Human rights obligations must be given unconditional priority over obligations under trade and investment agreements.

This is not a new insight. ‘Unless working conditions are changed, it will take centuries to restore humanity to this world, which imperialism has forced down to the level of the animals,’ as Frantz Fanon noted in 1966.

By weakening the binding treaty, states are again trying to escape from their duty to regulate, and this must be prevented under all circumstances.

Conclusion

To succeed in this, over 1,000 groups. social movements and NGOs, including Treaty Alliance and Global Campaign[21]  have formed an international coalition to put pressure on the governments of their countries.

The call goes beyond a treaty and takes into consideration that the institutional framework and requirements must be created for a possible Court of Human Rights.

The internationally binding Mine Ban Convention was finally adopted in 1997 despite all resistance after years of international campaigning jointly initiated by medico.

If recognition of human rights is denied today to those deprived of rights by the logic of capitalist globalisation, we must try and bring them and their claims back into the political arena, instead of degrading them to objects of a charity strategy and so setting ourselves apart from these people.

Hannah Arendt in her essay ‘Freedom to be Free’ emphasises the great importance of succeeding not only in freeing people from poverty but also releasing them from the incomprehensibility and obscurity of their own misery.

Seen in this way, the artistic campaign by Peng! mentioned at the beginning of this paper is an act of self-empowerment against the sense of powerlessness in the unwanted complicity in a globalised world which outsources risks and dangers in the production chain to secure a life of prosperity in the industrialised nations at the expense of the rest of the world.

If we are serious about the indivisibility of human rights, we must allow this reality to invade our lives and jointly seek ways for living together in solidarity. We do not want to be part of the infrastructure of separation and exclusion, but rather to ‘accept with open eyes the inextricable nature of the world’ (Achille Mbembe)

Human rights only seem to have a future if they are renewed ‘from the bottom up’. There is more at stake here than a treaty. It is a matter of the unalienable right to have rights.

Footnotes

[1] www.alliance87.org/global_estimates_of_modern_slavery-forced_labour_and_forced_marriage.pdf

[2] Misereor and Germanwatch 2017

[3] www.hrw.org/de/news/2017/05/17/g20-gipfel-der-arbeitsminister-menschenrechte-lieferketten-schuetzen

[4] Consequences for the population:

  • it is impossible to establish their own production facilities
  • vulnerability to price fluctuations in the raw materials and agricultural sectors
  • dramatic loss of arable land
  • The result: growing dependence on development aid.

[5] Stephan Lessenich:

  • outsourcing production to the South (sweatshops)
  • outsourcing waste: food residuals (destroying local markets) and rubbish
  • outsourcing and shifting frontiers, e.g. in the desert landscapes of African nations. All that Europe wants is raw materials and exactly the amount of labour useful for maintaining the status quo.
  • Transfer of responsibility: elites in Africa and population growth are held responsible, instead of effective measures against tax havens or debt burdens.

[6] Treaty Alliance: Briefing Paper on Zero Draft. 01/ 2019

[7] Goliath Watch 2018, p. 8.

www.rosalux.de/fileadmin/rls_uploads/pdfs/Bildungsmaterialien/RLS-Bildungsmaterialien_Intersektionalitaet_12-2016.pdf[8] Gebauer 2018. p. 105.

[9] Treaty Alliance 2017, p. 10.

[10] www.medico.de/blog/fuenf-jahre-nach-rana-plaza-17041/

[11] www.textilbuendnis.com

[12] youtu.be/_oiQEH_6QUg

[13] Thomas Seibert: ‘Tödliche Textilien. Nichts Neues unter der Sonne’ (Deadly garments: nothing new under the sun) Blog August 2018 www.medico.de

[14] The full title is: Open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights. ‘Open ended’ means that the working group is open to all UN member states and numerous NGOs.

[15] Article 9.2 (a-d)

[16] Treaty Alliance opinion on the Zero Draft, 2018.

[17] Treaty Alliance Germany: Briefing Paper on Zero Draft, 01/ 2019

[18] Treaty Alliance 2017, p. 10.

[19] Andreas Zumach taz 19 September 2018

[20] Goliath p. 18

[21] The Global Campaign to Reclaim Peoples Sovereignty, Dismantle Corporate Power and Stop Impunity (Global Campaign) is a network of over 250 social movements, civil society organisations (CSOs), trade unions and communities affected by the activities of Transnational Corporations (TNCs). These groups resist land grabs, extractive mining, exploitative wages and environmental destruction caused by TNCs globally but particularly in Africa, Asia, Europe and Latin America.


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