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Privatizing Human Rights: Can Multi-Nationals Excel Where Governments Fail?
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Privatizing Human Rights: Can Multi-Nationals Excel Where Governments Fail?


J. Oliver Williams

Professor of Political Science

North Carolina State University, USA



I. Introduction


Recognition of the link between business and human rights has increased significantly in recent years placing a greater emphasis on social and economic rights. Although human rights are principally the responsibility of governments, this has become increasingly an important issue for business. Responsibilities of businesses, especially multi-national corporations, in fields of labor rights [child labor, freely chosen employment, wages and working conditions inhuman treatment] are contained in national and international law and are recognized my responsible multinational corporations. Now, social, cultural and even civil rights are being privatized as expectations of companies regarding human rights emerge among governments and non-governmental organizations [NGOs].


An important question is the prospects of promoting human rights standards beyond traditional areas of labor law into the realms of political and civil rights. 


Can business succeed, where government has failed, in spanning the cultural gap between countries and regions in human rights that are regarded as universal in western societies but culturally relevant in Asian countries?


Although the commitment of business in human rights are voluntary, unless backed  by national and international law, public opinion, shareholders, and international organizations can bring support and pressure to incorporate human rights standards in international commerce.  


Can the reach of business across national borders play an effective role in promoting human rights?  If so, will businesses that engage in global commerce help to create harmonious environments among countries that promote international trade but differ on cultural principles of rights of individuals?


II. Business and Human Rights


Recognition of the role of business in advancing human rights has increased significantly in recent years. As a result evidence indicates that discourse on human rights is increasing in corporations that span national borders, expectations regarding human rights have increased among the largest companies, and that businesses operating in global commerce are under greater pressure from the public, from government and from human rights [NGOs] to avoid business practices that violate human rights. Likewise, increasingly, there is evidence that more of the largest companies are following business practices that are consistent with legal principles embodied in national and international laws.


The social responsibility movement is relatively new in the history of capitalism.   In 1800, Adam Smith wrote, in Wealth of Nations:


“By pursuing his own interest [an individual] frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.”


As late as 1970, Milton Friedman, modern day proponent of free market economy, wrote:


“There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” 


“That’s the orthodox view among free market economists: that the only social responsibility a law-abiding business has is to maximize profits for the shareholders.”


Today, in both the European Union and North America, codes of social conduct are prevalent in a wide variety of international corporate sectors. Business for Social Responsibility lists 98 corporations in North America with a human rights policy in its business codes of conduct, along with economic and social rights and environmental protection. BSP for over a decade has helped companies to achieve success in ways that demonstrate respect for ethical values, people, communities and the environment. BSR connects members to a global network of business and industry peers, partners, stakeholder groups and thought leaders. BSR also convenes and facilitates cross-sector dialogue and collaboration and includes human rights among its other concerns which include business ethics, responsibility to communities and the environment.  In 2005, the UN Commission on Human Rights requested the UN Secretary-General to appoint a special commission on the issue of human rights and transnational corporations and other business enterprises. The SRC, while recognizing that human rights principles were intended to limit state actions towards individuals or groups, has taken the stance that human rights principles relate directly to private sector actions.


The SCR categorizes human rights into economic, social. cultural, political and civil Most notably, the SRC takes the positions that corporate responsibility includes protecting civil rights, as well as economic and social. At the same time, it refutes the contention that human rights are a western or northern concept that do not apply universally. Noting that economic and social rights, including the avoidance of forced prison labor and child labor, has been a longer and more publicized area of corporate responsibility, the SRC recognizes that the United Nations Universal Declaration of Human Rights is the most widely recognized human rights benchmark and holds that corporate concerns must preclude activities that that deprive citizens of basic civil liberties.


Recognition of the link between business and human rights, the SRC points to two recent trends which include [1] inclusion of human rights and civil rights corporate codes of conduct; [2] inclusion of human rights into global business principles that include trade sanctions on nations  that broadly disregard international human rights standards. The attention paid to human rights by consumers and investors as well as shareholder resolutions calling upon corporations to ensure that business is conducted consistent with human rights standards, is cited by the SRC as the stimulus for the embodiment of civil rights standards in business practice. 


Apart from corporate response to consumes, NGOs and shareholders, human rights embodied in national and international law has been a major factor.  In the U.S. and Europe, courts have accepted lawsuits alleging that multinational companies have contributed to human rights violations, particularly in third world countries. To avoid legal responsibility, the SRC states that both business practice and corporate codes of conduct needs to be consistent with local and international laws to avoid challenges to their global operations.


The most comprehensive data on business practices in the field of human rights is a recently released survey undertaken by the UN Secretary-General’s Special Representative for Business and Human Rights. Respondents to the survey, released in September, 2006, were a “global Fortune 500”, included the world’s largest firms defined by revenue.  Some 450 of these firms were located in the United States [176], Europe [195] and Japan [80].


Among these large multinational corporations, nine out of ten reports having an explicit set of human rights principles or management practices in place.  Significantly fewer, about half, reported to have had a significant human rights issue.  At the same time, corporate leaders stated that embarrassing relegations created an immediate necessity to drive an uptake of human rights concerns.


Of significant interest, corporations include in their concerns issues that span the spectrum of human rights included in the UN’s declaration on universal rights and the social and economic rights embodied in other UN covenants. 


Among the 450 responding companies:


     Recruitment and promotion based on merit, not race, gender or religion or other factors, and workplace health and safety were cited by all of the 450 respondents.

     Freedom of association and collective bargaining were included by 87 percent.

     Forced, bonded or compulsory labor and child labor was cited by 80 percent of the companies.

     Three out of four companies indicate that they recognize a right to privacy.


Some variation occurred among countries in various regions of the global and across corporate sectors.  Apart from non-discrimination and workplace safety, which were virtually universal concerns, extractive industries more frequently that European, listed freedom of association and collective bargaining.  Forced labor and child labor were mentioned more frequently by European firms, and European firms were more likely to recognize right to life, liberty and security of the person.  Right to privacy showed little regional variation and is supported across sectors.



The overall clear and strong levels of support do show some slight regional differences, at least in rankings. U.S. companies rank employees and suppliers higher in their concerns but place lower emphasis on community and country of operation than do European firms. Japanese companies are least likely to include countries of operation in their human rights concerns.


When asked what if any human rights instruments influence policies and practices, not surprisingly international business organizations were cited. However, outside of business groups, the Universal Declaration of Human Rights was the most cited. A fourth of the companies cited no international instruments, but notably all extractive industries cited the universal declaration and nearly half of Japanese firms indicated that no outside international agreements affected human rights practices.


III. Assessing the Impact Business Human Rights Initiatives


Non-governmental participation in human rights is receiving considerable emphasis.  However, the premise that capitalist markets will necessarily foster human rights improvements is far from being realized. Still the growth of international trade, and the increasing influence of international trade organizations, and the willingness of multinational corporations to articulate a human rights commitments hold promise that the privatization of human rights will become an important strategy of attaining human rights globally. Not only are corporations and international business groups assuming greater roles in formulating and advancing human rights concerns; businesses have begun to establish code of conduct and monitoring business practices. 


The growing number of non-state actors, among multinational corporations, international leading institution as well as insurgency groups and even terrorists are part of the growing privatization movement. Non-governmental organizations [NGOs], including Amnesty International and  Human Rights Watch that serve monitoring and advocacy roles have taken the stance that private sector action is important but must be accompanied by legislation and continued governmental leadership.


Nevertheless, important questions are raised by the privatization movement. While bringing greater emphasis to economic rights, will privatization lead, on the other hand, to less emphasis on non-economic, civil rights embodied in the Universal Declaration? Will the power of citizens’ groups hold corporate human rights abusers accountable through information campaigns and even product boycotts? Will good citizen corporations set standards that third-party suppliers and companies that violate human rights will be compelled to follow?


Of great importance is what effect wills commercial human rights practices have on countries with serious violations of universal rights?


On several of these questions, the record does not allow an assessment yet of the effectiveness of the privatization movement.


1.  Has the privatization movement embraced non-economic rights?


Concern for political and civil rights of citizens in countries where they operate has been expressed widely in the codes of conduct of the largest multinationals. Business for Social Responsibility on its web site lists the codes of human rights practices of 21 top companies with human rights reports.


Cisco is among the corporations that affirm support of the United Nations Universal Declaration of Human Rights and Global Compact, Cisco's codes of conduct, employee policies and guidelines substantially incorporate laws and ethical principles including those pertaining to freedom of association, non-discrimination, privacy, collective bargaining, compulsory and child labor, immigration and wages and hours.


Cisco’s approach is to have codes, policies and guidelines are reviewed by a corporate citizenship council consisting of an executive committee and a broad-based global membership of Cisco management.


Hewlett-Packard, another international corporation that cites human rights in its code of conduct, states:


“We also engage globally with various stakeholder communities to address issues related to the environment, economic development, digital divide, privacy, labor and human rights.”

HP has a policy of encouraging employees to apply time and effort to help solve problems in their communities.


In reference to human rights, the HP code of business conduct “upholds and respects human rights as reflected in the Universal Declaration of Human Rights.”


HP is also states a commitment to fair labor practices and the respectful treatment of all employees, including the protection of workplace health and safety and data-privacy protections.


Publishing reports on social concerns and adopting codes of conduct do not guarantee respect for human rights in corporative practices any more than human rights are practiced in countries that a signature nations in United Nations covenants.


Amnesty International, on of the most respected non-governmental organizations in the field of human rights, believes that the business community also has a wider responsibility -- moral and legal -- to use its influence to promote respect for human rights and advocates national and international legal instruments that promote greater corporate responsibility for human rights, including those that assure the risk of legal accountability if a company commits or is complicit in human rights abuses in their operations.


II. Status of Universal Rights in Government and Business


It is in the area of individual rights embodied in the basic United Nations’ Universal Declaration of Human Rights, where governments have so widely diverged in the support and the practice of human rights principles. It is in coming to an agreement on the principles of this declaration that nation’s having failed so basically in human rights practices. Throughout Europe and North America and some areas of South and Central America and Africa these principles are considered universal rights that all individuals want and deserve. In most of Asia, however, governments consider these rights to be based on western values that do not reflect the values of Asians who culturally have greater regard for social harmony and stability.


Until there is agreement on these principles there is likely to be little harmony on human rights among the major countries of the world. 


Despite the Bangkok Declaration that states a commitment to principles contained in the Charter of the United Nations and the Universal Declaration on Human Rights,  leaders in most Asian nations continue to advocate a cultural relevance in universal rights, act on the principle that individual rights conflict with social harmony and stability, and cite Asian values as contradicting the western ideal of universality.  In fact, it was from the Bangkok meetings that Asian leaders began to promote a cultural relevance approach to universal rights, although the principle had been argued before then.


International NGOs which are largely prohibited from monitoring and reporting human rights violations in these countries, through contact they maintain with human rights advocates in Asia, conclude that non-democratic rulers are a bigger impediment to human rights than the cultural and social value system of the region. Some Asian scholars, as well, believe that the Asian values, historically from the time of Confucius, have philosophical roots in individual freedoms and rights.


II.   Has there been an increase in the concerns for economic rights and the rights of women and children? 


The damaging exposure of the Nike Corporation, and later as many of ten more multinational companies, in the treatment of women workers and use of child labor shifted the debate over corporate social responsibility for human rights. It created a watershed in the past decade by developing a positive role in business and trade in enhancing respect for human rights in countries with widespread violations. Revelations of child labor and abysmal working conditions led corporations to express respect for essential human and labor rights, such as freedoms of association and expression, as well as an end to cruelty and discrimination and inequality on the basis of ethnicity or gender. Advocacy by human rights groups, repeated media exposure, and legislative interest in banning products made by child labor from import in the United States has made child labor and women’s working conditions a foremost human rights issue in the global economy. The extensiveness of child labor, estimated at over 250 million children working around the world, has indicated a major social problem of condemning children to a life of poverty by putting them to work in lieu of education. 


Whether the attention has improved significantly, or even marginally, women’s working rights or reversed a trend in child labor has not been documented. Journalist reports indicate that poor working conditions of women China is less a problem with joint venture companies in Special Economic Zones [SEZs] than small scale manufacturers surrounding these zones. 


III.  Has privatization affected country human rights policies?


The ascension of China to the World Trade Organization, which facilitated dropping annual assessments of China’s human rights under Most Favored Nation trading status, has moved human rights from a central place in U.S. foreign policy to in most cases subordinate to trade policy.  From a high point in the Carter administration, when human rights were prominent in foreign policy debate, human rights concerns now are raised in conjunction with trading issues. While trade policies mandate that the U.S. advance human rights through its voting in multinational trade groups and its security assistance to other countries, the subordination of human rights to trade and security concerns has not led to consistency in current U.S. policy. Countries important to U.S. economic and political interests are not subjected to the same degree of human rights scrutiny as nations deemed less vital to U.S. interests. Recognizing that human rights are not central in U.S. foreign policy, and inconsistent as well, NGOs that watch human rights compliance have pushed for sanctions against nations committing gross human rights violations.


The internet restrictions agreed to in China by American internet providers illustrates two sides of a problem with international corporations violating principles in the Universal Declaration. The actions by the large information providers were viewed as corporate complicity in restricting rights of freedom of speech and information. The enormous outcry from western NGOs and citizens in western countries indicate the scrutiny the corporations receive in social and human rights issues. Although public opinion has not led to any reversal of agreements made by Google


Actions by Yahoo, Google and Microsoft are viewed in the West as corporate complicity in restricting freedom of speech and information. The enormous public outcry has not reversed agreements made by Google. However, these corporations are likely to be more reluctant in making further restrictions and will be especially guarded in the types of information that they filter.


The issue also acerbates China’s problem of human rights in international business. Private markets thrive on information and to remain a hub in international trade and manufacture, China confronts a conflict between information flow that is vital to business and the government’s ability to control, or even appear to control, speech and information. The expectations of multinational corporations in upholding human rights are likely to reverberate inside China as much as outside, with as much scrutiny as social and economic rights have previously received.


 IV. Conclusions


In the past decade, there has been considerable advancement in the trend toward injecting human rights issues in global trade. In the business world, public opinion, non-governmental organizations, and trade organizations that have become a leading source for business throughout the world have worked to raise the expectations of companies in social and civil rights. This has led to the adoption of business codes of conduct in many of the world’s largest companies.  Significantly, western businesses have included many of the rights considered as universal rights in the United Nations declaration. Harmony on human rights has been impeded by conflicting value systems toward universal rights between western nations and the economically advancing nations of Asia. It remains to be seen if global trade will become a vehicle for bridging the gap this basic human rights divide.



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