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Ethical Trade Networks as a Catalyst for Corporate Compliance with Human Rights

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Abstract

Elaborating on Ethical Trade Networks as a Catalyst for Corporate Compliance with Human Rights, Kirsteen Shields considers why voluntary regulatory efforts channelled by social movements, in particular Fairtrade, may achieve compliance in areas beyond the reach of traditional regulatory methods of international law. Insights from network theory cast light on how ethical trading networks may serve as catalysts for corporate compliance. Moreover the development of transnational voluntary regulation challenges the democratic accountability of traditional methods of international law, whilst bearing its own democratic deficits.

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Notes

  1. 1.

    The UN constituted a Commission on Transnational Corporations [E.S.C. RES. 1913, U.N. ESCOR, 57TH Sess., Supp. No. 21, U.N. Doc. E/5570/ADD. 1 (1975)] but failed to establish draft norms on the code of Transnational Corporations due to disagreements between industrialized and developing countries. See generally Muchlinski (2007).

  2. 2.

    OECD, 21 June 1976 adopted the Guidelines for Multinational Enterprises.

  3. 3.

    ILO, November 1977 (revised November 2000), Tripartite Declaration of Principles concerning MNEs and Social Policy. The aim of the Tripartite Declaration of Principles, then, is to ‘encourage the positive contribution which multinational enterprises can make to economic and social progress and to minimize and resolve the difficulties to which their various operations may give rise, taking into account the UN resolutions advocating the Establishment of a New International Economic Order’ (para 2). Apart from specific references to fundamental worker’s rights as guaranteed under conventions and recommendations adopted within the ILO—including the ILO Declaration on Fundamental Principles and Rights at Work, adopted in June1998 by the International Labour—Conference—such as references to the principles of freedom of association and the right to collective bargaining, the prohibition of arbitrary dismissals or the protection of health and safety at work, the Tripartite Declaration contains a general provision relating to the obligations to respect human rights—Para 8 on General Policies.

  4. 4.

    See generally De Schutter (2006), pp. 1–41.

  5. 5.

    Ibid., pp. 474–476.

  6. 6.

    UN Doc. E.S.C. RES. 1913, U.N. ESCOR, 57TH Sess., Supp. No. 21, U.N. Doc. E/5570/ADD. 1 (1975).

  7. 7.

    Creation of the UN Global Compact, the UN Sub-Commission for the Promotion and Protection of Human Rights approved in Resolution 2003/16 of 14 August 2003.

  8. 8.

    UN ‘Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human Rights’ adopted 30 May 2003, Un Doc. E/CN.4/Sub.2/2003/12/Rev.1.

  9. 9.

    See International Commission of Jurists (2008).

  10. 10.

    Human Rights Council (2007).

  11. 11.

    Ruggie (2008).

  12. 12.

    Ruggie (2011). The sub-group refers to MNEs as TNCs for an account of the terminological influences of the terms see the introduction to Muchlinski (2007).

  13. 13.

    UNOG News Report (2011).

  14. 14.

    See for example International Federation for Human Rights Press Release (2011).

  15. 15.

    Human Rights Watch Press Release (2011).

  16. 16.

    Although some might argue that it bolsters competence to regulate corporations through municipal courts. See Muchlinski (2012), pp. 145–177.

  17. 17.

    The instruments listed are ‘the International Bill of Human Rights (consisting of the Universal Declaration of Human Rights and the main instruments through which it has been codified: the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural rights), coupled with the principles concerning fundamental rights in the eight ILO core conventions, as set out in the Declaration on Fundamental Principles and Rights at Work.’ Ruggie (2011), Commentary to Principle 12.

  18. 18.

    Indeed they may have already begun to do so through litigation under the US Alien Torts Claim Act and some developments in common law jurisdictions. See Muchlinski (2009), pp. 148–170.

  19. 19.

    See for example Kinley et al. (2007), p. 25; Human Rights Watch Press Release (2011). See also Jerbi (2009), pp. 299–320; Jerbi (2011).

  20. 20.

    Boyle (1999), pp. 901–913.

  21. 21.

    Guzman and Meyer (2010), p. 171.

  22. 22.

    Jessup, Philip C., is generally accredited with introducing the concept of transnational law in 1956. See Jessup (1956), p. 2, wherein Jessup introduces the term transnational law on the grounds that international law is ‘misleading since it suggests that one is concerned only with the relations of one nation (or state) to other nations (or states). […] [I]nstead of “international law,” the term “transnational law” [is used,] to include all law which regulates actions or events that transcend national frontiers. Both public and private international law are included, as are other rules which do not wholly fit into such standard categories.’ The term has subsequently been developed. See for example Friedmann et al. (1972); Tietje et al. (2006); Zumbansen (2006); Zumbansen proposes the concept of “transnational legal pluralism” central to which is “a shift in perspective, which leads to a focus on actors, norms and processes as the building blocks of a methodology of transnational law.” Zumbansen (2012b), p. 6.

  23. 23.

    Chinkin (1989), p. 850.

  24. 24.

    Id.

  25. 25.

    Shaffer (2003). Shaffer focuses mainly on how private firms collaborate with relevant government institutions in the US and the EU to challenge various trade barriers before the WTO dispute settlement system.

  26. 26.

    Dommen (2005), p. 201.

  27. 27.

    Mosoti (2005), p. 171.

  28. 28.

    Agreement between the UN and the ILO Art IV, 115 UN Treaty Series 194 (1948).

  29. 29.

    Mosoti (2005), p. 172.

  30. 30.

    See Anderson (2006).

  31. 31.

    As Shelton points out that ‘[f]urther, compliance may result not from the possibility of sanctions but from recognition of the need to ensure sustainability of the common good. Public goods theory may be more appropriate, in fact to the subjects of environment and human rights than game theory, which may apply to arms control and trade.’ Shelton (2000), p. 14. See also Brown Weiss and Jacobson (1998).

  32. 32.

    See Ireland (2003a). See also Ireland (2003b), pp. 453–509; Armour et al. (2009), p. 57.

  33. 33.

    Lewis (2003).

  34. 34.

    Christian Aid (2004). Christian Aid is not alone in this criticism. See Addo (1999); Sullivan (2003); Sullivan (2008); Henderson (2001); International Council on Human Rights Policy (2002).

  35. 35.

    See for example International Council on Human Rights Report Policy (2002), p. 8: ‘By definition, voluntary initiatives apply only to those who accept them. A company might accept a code of conduct because of genuine commitment to the principles or because its reputation is at stake. Even where there is genuine commitment, voluntary codes may not be respected if their principles clash with other, more powerful commercial interests. People sometimes argue that, if it makes good commercial sense to respect human rights, then market forces will ensure compliance. It is not self-evident however, that human rights norms are always “good for business”. Many companies have prospered under authoritarian regimes. In any case, the issues are often too complex for markets to understand and respond to. It would be difficult, for example, to insert into market mechanisms incentives and disincentives which would give competitive advantage to those companies that behave ethically.’

  36. 36.

    For examples see Cohen and Rai (2000).

  37. 37.

    The Kimberley Process Certification Scheme. http://www.kimberleyprocess.com. Accessed 30 July 2013.

  38. 38.

    The Rainforest Alliance Certification Scheme. http://www.rainforest-alliance.org/. Accessed 30 July 2013.

  39. 39.

    The Fairtrade Labelling Organisation International. http://www.fairtrade.net/. Accessed 30 July 2013.

  40. 40.

    Jones and Hartlieb (2009), pp. 583–600; Castaldo et al. (2009), pp. 1–15.

  41. 41.

    See Shields (2011, 2012).

  42. 42.

    Prevezer (2012).

  43. 43.

    Ibid., p. 23.

  44. 44.

    Granados et al. (2011), pp. 198–218. Horst (2008), pp. 171–185; Kogut and Zander (1992), pp. 383–397; Drucker (1991), pp. 69–79.

  45. 45.

    UN General Assembly Resolution [on the report of the Third Committee (A/64/432)] (11 February 2010) Cooperatives in Social Development. http://www.un.org/ga/search/view_doc.asp?symbol=A/RES/64/136. Accessed 30 July 2013.

  46. 46.

    As set out in the Generic Fairtrade Standards for Hired Labour, Fairtrade Labelling Organisation Docs (updated May 2011).

  47. 47.

    Ibid. For further discussion see Nicholls and Opal (2005).

  48. 48.

    See Jones et al. (2011); Ronchi (2002), pp. 1–42; Barrientos and Smith (2007).

  49. 49.

    See for example Fair Trade Foundation Press Release (2002), where we can read that “the Fairtrade Foundation is enabling farmers to meet with shoppers in UK supermarkets setting up internet links and running a competition so winners can visit coffee growers in Costa Rica.”

  50. 50.

    See for example Tea Growers Build School in Vietnam, 11 January 2012. http://www.fairtrade.net/967.html?&cHash=161b9e464989697b5493a6776ce47a5b&tx_ttnews[tt_news]=279. Accessed 30 July 2013. Many other examples are available at http://www.fairtrade.net/meet_the_producers.html. Accessed 30 July 2013.

  51. 51.

    Martin and White (2002).

  52. 52.

    Traditional writers such as Locke, Rousseau and Jefferson insisted that the ‘essence’ of democracy is to be found in complete political, social and economic equality. See Rejai (1967). This shift is detailed in my paper Dine and Shields (2008), pp. 163–186.

  53. 53.

    Schumpeter (1962). Similar thinkers of the same period include Friedrich (1950); Dahl (1956); Schattschneider (1960); Lipset (1963); Rejai (1967).

  54. 54.

    According to Schumpeter’s definition, the democratic method is that institutional arrangements for arriving at political decisions in which individuals acquire the power to decide by means of a competitive struggle for the people’s vote. Schumpeter (1962), p. 269.

  55. 55.

    Dine (2005).

  56. 56.

    Chomsky (1999). See also George (2011). See also generally Klein (2007).

  57. 57.

    Ochoa (2007).

  58. 58.

    Just one example is the extensive use of offshore tax havens. See Alldridge and Mumford (2005), p. 253.

  59. 59.

    Teubner argues that private law has become simply ‘juridification of economic action’ in Teubner (2007).

  60. 60.

    Scholte (2004).

  61. 61.

    On the demise of sovereignty, see generally: Brown (2002); Keene (2002); James (1999); Cox et al. (2001); Jacobsen et al. (2008); Lyons and Mastanduno (1995); Philpott (2001).

  62. 62.

    In 2001 it was claimed that corporations constituted 51 of the world’s top 100 powers, Anderson and Cavanagh (2000). Although subsequently contested on the basis that corporate economies cannot be subtracted from states economies (see for example Martin (2002 )).

  63. 63.

    Bernard (2002); Joerges (2007).

  64. 64.

    See Beitz (1999), p. 148.

  65. 65.

    Kaufmann, for example, grounds her support for centralised labour standards (as opposed to standards varying between states) on the basis of democracy, see Kaufman (2007).

  66. 66.

    See for example Haight (2011).

  67. 67.

    Tilly (2007). But see Elkins (2000), pp. 293–300.

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  1. School of Law, University of Dundee, Dundee, DD1 4HN, UK

    Kirsteen Shields

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  1. Graduate School of Law, Kyushu University, Fukuoka, Japan

    Mark Fenwick

  2. Graduate School of Law, Kyushu University, Fukuoka, Japan

    Steven Van Uytsel

  3. Graduate School of Law, Kyushu University, Fukuoka, Japan

    Stefan Wrbka

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Shields, K. (2014). Ethical Trade Networks as a Catalyst for Corporate Compliance with Human Rights. In: Fenwick, M., Van Uytsel, S., Wrbka, S. (eds) Networked Governance, Transnational Business and the Law. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-41212-7_7

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