THE ROLE AND IMPACT OF PRIVATE BUSINESS IN THE FIELD OF HUMAN RIGHTS

• Globalization as a human rights issue
• Trade unions and the labor movement faced with globalization
• Human rights and corporate accountability of international investors
• Conclusion: Are shareholder interests compatible with human rights interests?

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THE ROLE AND IMPACT OF PRIVATE BUSINESS IN THE FIELD OF HUMAN RIGHTS

The marketization of domestic economies around the world has paralleled the globalization of capital flows, markets and services. Both trends, which have accelerated since the end of the cold war, have had important consequences for human rights. While the fall of communism has gradually strengthened civil and political rights in some countries, concurrent phenomena — including the fall in national barriers to trade and investment, privatizations, deregulation, aggressive entrepreneurial behavior, and structural adjustment programs — have had mixed, and often damaging, effects on economic and social rights. Meanwhile, significant reductions in overseas development assistance and increases in foreign direct investment are gradually privatizing the development process and making private business one of, if not the most powerful actor on the global stage. Yet, just as economic globalization is shifting power away from the State toward the private sector, the globalization of the human rights movement is shifting power away from the State toward local civil society and individuals. Pulling power in opposing directions, these two countervailing forces suggest the need for a new form of global governance to fill the vacuum left by the diminishing State.

Globalization as a human rights issue

Only a year ago, international financial institutions, multinational corporations and most developed countries were optimistic about the benefits of globalization insofar as it was widening the range of choices for investors, consumers and workers, and increasing global productivity through improved international division of labor based on comparative advantage. In October of 1997, World Bank President James Wolfensohn spoke enthusiastically to his Board of Governors about a 5.6% growth rate in global output, strong growth in developing countries generally and prospects for successful economic reform in many countries. By contrast, in October of 1998 he spoke to them despondently about "dark, searing images of desperation, hopelessness and decline. Of people who once had hope, but have it no more." During a year of global financial and economic crisis, the negative aspects of globalization have come to largely eclipse the positive aspects — even in the view of formerly devout advocates of unchecked globalization.

The social and economic consequences of the phenomenon were apparent long before the crash, however. While consumption per capita has increased steadily in industrial countries over the past 25 years, the average African household consumes 20% less today than it did 25 years ago. The dangers of free-market reforms have been dramatically illustrated in statistics showing the increasing number of people living in poverty, rising rates of structural unemployment and the diminishing availability of public services. As individuals cope with growing

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economic hardship, previous social bonds are being disrupted and social tensions are increasing, leading to new or intensified forms of inter- and intra-group conflict. Women's lives have been disproportionately affected, as those economically displaced by restructuring turn to the household as a safety net just as women are increasingly joining the labor force. A world in which social gaps are growing is also a world in which the enabling environment for the enjoyment of human rights is deteriorating. The negative effects of globalization run counter, therefore, to the highest aspiration of the common people as articulated fifty years ago by the members of the United Nations when they committed themselves in the UN Charter "to promote social progress and better standards of life in larger freedom," and reiterated that pledge in the UDHR.

Trade unions and the labor movement faced with globalization

As globalization alters the national and international division of labor, trade unions find the task of improving the livelihood of workers and underpriviliged members of society increasingly difficult. Unions must deal with States and employers who are increasingly dependent upon an international economic environment over which they have less and less control. The globalization of markets and the multinationalization of enterprises has removed decision-making power further and further away from the workplace.

To promote workers' rights on the international level trade unions have formed partnerships with one another, such as the International Confederation of Free Trade Unions (ICFTU), and seek a global structure to enforce labor standards. At the same time, they are grappling with ways to shape an international labor regime that is responsive to the rights of individuals in diverse local contexts. Unions directly confront the paradoxes of globalization, including the simultaneous centralization and decentralization of power, and integration of markets and fragmentation of production processes. For example, unions often challenge multinational corporations attempting to escape responsibility for poor treatment of workers by blaming local affiliates, suppliers and contractors.

Given that attempts to convince international investors not to do business in states with inadequate labor standards are more often than not futile, the international labor movement has chosen to focuses primarily on improving government and corporate compliance with international labor standards. Freedom of association is seen as the key to compliance, as it is an enabling right which helps foster the necessary environment for the enjoyment of other rights —including the right to decent working conditions. Members of the ICFTU promote freedom of association on the local level and the ICFTU itself promotes freedom of association on the international level by providing a forum and supporting framework for negotiations

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between labor organizations, governments and multinational corporations. International labor leaders maintain that, since the end of World War II, freedom of association and the strength of labor unions have contributed to the consolidation of democracy and the durability of peace.

Human rights and corporate accountability of international investors

Labor unions and other non-governmental actors are having some success in compelling multinational corporations to comply with international labor standards. Using the same simple maxim which American labor unionists used earlier in the century — that better workplace conditions lead to better quality products — contemporary worker's rights activists have convinced some multinational corporations to monitor their own work environments. Consumer boycotts, which have cost corporations a lot of money and damaged brand names, have also prompted multinationals to improve their treatment of workers. Civil lawsuits, such as those currently pending against UNOCAL for doing business in Burma and against Nike for using sweatshops in southeast Asia, have also helped hold corporations accountable for maintaining international human rights standards. Companies appear to have learned important lessons from this experience.

Three new realties give cause for optimism. First is the tendency of multinationals to accept responsibility for and seek to improve poor conditions inside factories, including those owned by sub-contractors. The second is the growing number of corporate codes of conduct based on human rights principles enshrined in the UDHR and worker rights principles enshrined in ILO conventions. Third, international brands are turning with increasing frequency to the local and international human rights and development organizations that monitor their behavior for guidance in how they can better protect human rights.

Reebok is one multinational which has improved its human rights record through use of these techniques, and by training its management to consider the human rights implications of its corporate practices. The company has gone beyond attempting to protect human rights to actively promoting human rights internationally and setting an example for other multi-national corporations. Reebok's collaboration with Amnesty International and its annual human rights award have drawn attention to the exploitation of workers around the world, motivated other corporations to change their behavior, and highlighted the ability of partnerships to bring about meaningful change in human rights conditions. The US's White House Apparel Partnership Initiative and Norway's consultative body on human rights and international affairs also exemplify the power of collaboration between civil society, the private sector, and governments in altering consumption and production patterns. The relative success of these initiatives does not diminish the

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fact that governments (at least powerful ones) remain the actors most capable of and responsible for compelling corporations to respect human rights.

Conclusion: Are shareholder interests compatible with human rights interests?

As the unregulated global market seems increasingly out of control, calls for the creation of a framework for global governance which would provide global public goods are becoming increasingly urgent. Global public goods include the rules, standards, and dispute-settlement procedures that comprise telecommunications and transportation regimes, finance and trade regimes, environmental and human rights protection regimes; and so on. Global governance would emphasize policy more than institutions and non-governmental actors more that governments. It would help establish a clearer link between macro and micro economic policy, between growth and equity, and between efficiency and sustainability. A strong global public sector would correct international market processes where necessary and check excessive concentration of economic power. Based on principles of international law, a global public sector would provide a minimum international state of social protection.

Many have suggested the idea of a need for a global framework based around the core concept of sustainable human development, but few concrete proposals have so far been offered for its construction. A strategy for mobilizing international society in pursuit of just, sustainable and participatory global governance was put forward by the NGO Forum held parallel to the 1992 Rio Conference, which emphasized: massive education campaigns; the removal from positions of authority by democratic means those who insist on advancing socially and ecologically destructive policies; and coalition-building across boundaries between civil society and government. While this strategy is useful, many believe it is insufficient, and some suggest that an international body should be established to provide a forum for discussion of global problems, such as an Economic Security Council or a people’s assembly. These ideas have not yet received significant political support at the United Nations.

While the current global economic crisis highlights the dangers of globalization, it also provides an opportunity for charting a new way forward. Having finally drawn the attention of international financial institutions, developed countries and multinational corporations to the need to balance the economic, social and political realms, the crisis holds the potential to produce a new approach to business which is more responsive to the concerns of the less powerful stakeholders affected by international business, such as workers, communities and minorities. In light of the recent derailment of negotiations on the Multi-lateral Agreement on Investment (MAI) by concerned civil society organizations and developing countries, it is

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possible that any attempt to create a new international financial architecture will have to be more participatory and responsive to human rights concerns than past international negotiations on economic matters. As civil society gains in strength it is becoming increasingly well-equipped to challenge those powerful business interests who advocate a global market driven only by short-term financial gain. Moreover, business-people themselves are becoming increasingly aware that their interests are compatible with human rights interests; because, to be sustainable, globalization must have a human face.