Business and Human Rights
The Proposed Norms on the
Responsibilities of Business Regarding Human Rights
A statement by
Timothy E. Deal
Senior Vice President,
Washington
United States Council for
International Business
To the Fund for Peace
Human Rights and Business
Roundtable
Washington, DC
February 6, 2004
I appreciate the opportunity
to present the views of the United States Council for International Business
(USCIB) on the "Norms on the Responsibilities of Transnational
Corporations and Other Business Enterprises with regard to Human
Rights." Thanks to the Fund for
Peace and Krista Hendry for inviting me to participate in this conference.
This text has attracted much
attention since its adoption last August by the UN Sub-Commission on the
Promotion and Protection of Human Rights.
Unfortunately, much of the media reporting and general commentary about
it is inaccurate, giving the false impression that it is an instrument that is
already in effect when, in fact, it has not even been considered yet by the
parent body, the UN Commission on Human Rights. The Commission's consideration of the norms will take place in
the spring.
I will outline our concerns
about these draft norms in greater detail in a few moments. But before doing that, I would like to make
some general remarks about how business
views its responsibilities with respect to human rights.
First, we believe that the
protection of human rights is an important element, but not the only element,
in what we refer to as corporate responsibility. We define corporate responsibility as "… a commitment by a
company to manage its roles in society - as producer, employer, marketer,
customer, and citizen - in a responsible and sustainable manner." That commitment can include a set of
voluntary principles - over and above legal requirements - that seek to ensure
that the company has a positive impact on the societies in which it
operates. In that regard, strategies
related to production and marketing of goods and services, business ethics,
environmental practices, treatment of employees, human rights, and community
engagement are all inherent to a comprehensive approach to corporate responsibility.
Second, companies today face
multiple challenges that go beyond the traditional objectives of running a
profitable business, serving shareholder interests, meeting the needs of
consumers, and providing a fair wage and good working conditions for employees. The demands on business have intensified
because the process of globalization, coupled with ineffective and, at times,
abusive human rights behavior by national governments, have heightened
expectations of what companies can and should do to contribute to social
progress. At issue here are the place
business should occupy in society and the respective roles of business and
government in the management of globalization.
Third, business recognizes
its responsibility to respect the human rights and civil liberties of
employees, customers, suppliers, and the communities in which they
operate. Business is also committed to
helping advance human rights in those countries where those rights are denied
by policy and practice. From a legal
perspective, practically every government in the world has national laws and
regulations protecting human rights and civil liberties. Companies -- foreign or domestic, local or
global -- are already obligated to comply with those requirements.
Procedural and Substantive Objections to the Norms
With these general remarks as
background, let me turn to the proposed norms.
We have two sets of concerns about them, one procedural, and one
substantive. On the procedural question,
as I said earlier, contrary to the impression given by many news reports, the
action by the UN Sub-Commission does not impart any governmental or UN support
for the norms. The members of the
Sub-Commission are twenty-six private individuals appointed by their
governments because of their expertise in the field of human rights, but acting
in their individual capacities. The
fifty-three member-states on the UN Commission on Human Rights have not
reviewed the proposal and will have their first opportunity to do so when the
Commission next meets in March.
It might be useful then to
recall some of the history surrounding the norms. In 1998, the Sub-Commission created a Working Group, consisting
of five members from Cuba, Russia, Korea, Senegal, and the U.S., with a mandate
to "examine the effects" of the activities of transnational
corporations "on the enjoyment of" human rights and to make
recommendations. At its first meeting
in August 1999, the working group agreed to develop a code of conduct for
companies based on human rights standards.
And after four years of work, the five members of the working group
agreed on a draft for the norms on August 7, 2003. The draft was reviewed by the other members of the Sub-Commission
and adopted on August 13. As finally
developed by the working group chaired by the U.S. member, Professor David
Weissbrodt of the University of Minnesota, the norms impose on companies a set
of obligations to promote, protect, and ensure respect of human rights as
recognized in international as well as national law.
We believe the Sub-Commission
not only exceeded its mandate, it also conducted its work in a less than
transparent fashion. For example, in
2001 the Working Group made the following statement in a "restricted"
report that was not generally available to the public: "Any draft
guidelines for companies raises difficult issues as to the human rights
obligations on non-state actors - a subject that requires further study by the
Sub-Commission." But no such study
was ever done, and the sentence I just quoted was removed from subsequent
reports distributed to the public.
We outlined our concerns with
the approach taken by the Working Group in a December 2001 letter to Professor
Weissbrodt. In 2002, we followed up
with a face-to-face meeting between him and members of our Corporate
Responsibility Committee. We noted the
lengthy, delicate multi-stakeholder negotiations that took place between
governments, trade unions, and business within the International Labor
Organization and the OECD before the adoption of the ILO Tripartite Declaration
concerning Multinational Enterprises and Social Policy and the OECD Guidelines
for Multinational Enterprises.
Unlike those negotiations,
the Sub-Commission process was less open.
Thus, the drafting group chair was basically free to accept or reject
any comments submitted. In addition to
my organization, the two largest and most representative global business
organizations - the International Chamber of Commerce and the International
Organization of Employers - offered comments and suggestions to the working
group on several occasions. In the end,
Professor Weissbrodt chose to ignore the issues that USCIB and our
international affiliates had raised.
In sum, we believe there are
strong grounds to object to the way the Sub-Commission carried out its mandate
from the very start. That said, these
procedural concerns pale when compared to the actual content of the draft
norms.
In its draft, the working
group has proposed a hugely burdensome and impractical code. Companies would be required to ensure
"that their activities do not contribute directly or indirectly to human
abuses, and that they do not directly or indirectly benefit from abuses of
which they aware or ought to have been aware." The norms include specific obligations related to equal
opportunity and non-discrimination, personal security, worker rights, national
sovereignty, consumer protection, and environmental protection. Implementation procedures would require
companies to:
·
Incorporate the norms
into an internal code of conduct;
·
Apply the norms
throughout the company's entire supply chain;
·
Agree to periodic
monitoring by national, international, governmental and non-governmental
mechanisms;
·
Conduct periodic
evaluations of the company's impacts on human rights; and
·
Pay reparations to
anyone affected by failures to comply with the norms.
The Sub-Commission's proposal
also calls for the creation of a panel of experts to receive and investigate
complaints against companies.
In our view, these provisions
are designed with a single objective: to make private business enterprises
liable for "human rights violations." This is a radical departure from existing practice since at the
present time only states have human rights obligations under international
law. Only a state can violate
international human rights. The establishment of a legal framework for
protecting human rights and ensuring enforcement is a task for national
governments, not multinational or national companies. Private organizations, including business, do not have the
democratic mandate to assume what are and should remain government
responsibilities and functions.
The rights in the Universal
Declaration, and the various UN human rights treaties, are the rights of
individuals against the state. The
individual is the right-holder, and the state is the corresponding
duty-bearer. In order to fulfill its
human rights obligations, a state will often have to enact national legislation
that imposes duties on, and creates rights in, private actors. If a private actor does not comply with the
national laws, then that actor can be held responsible under the state's civil
or criminal statutes.
As Sir Nigel Rodley, a
distinguished figure in the field of human rights, has pointed out the
proposition that international law imposes legal obligations on private actors
is a "radically new idea." In
an article in Human Rights in the Twenty-First Century, he explained that
international law "addresses itself to states," which it does by
requiring the state either to act or refrain from acting in designated ways as
set out, for example, in the various UN treaties and declarations.
The extraordinary nature of
this attempt to shift responsibility for enforcement of human rights cannot be
over-emphasized. As recently as 1998, the
UN General Assembly adopted a declaration that rejected the idea of imposing
human rights obligations on members of civil society. Ironically enough, many members of the NGO community that
fiercely opposed putting such obligations on private actors during the drafting
of the 1998 declaration vigorously supported the Sub-Commission's attempts,
through the norms, to impose human rights obligations on one particular group
of civil society actors, namely, private corporations.
Many of the obligations in the
norms come from the International Covenant on Economic, Social and Cultural
Rights. For example, that Covenant
recognizes the right of all workers to remuneration sufficient to "provide
a decent living for themselves and their families" and a right of everyone
"to an adequate standard of living.
The norms shift, or extend,
these obligations to private business.
Under Article 8 of the norms, "Transnational corporations and other
businesses shall provide workers with remuneration that ensures an adequate
standard of living for themselves and their families."
The norms declare that these
are "human rights obligations" of the private businesses (fourteenth
preambular paragraph and Articles 1 and 23).
This shift occurs not only in respect to human rights, but also to areas
that lie outside the body of human rights law, such as the laws of war,
environmental law, the controversial "right to development," and the
equally controversial field of the "rights of indigenous peoples"
(Articles 3,14, and 23).
While multinational
corporations are the principal focus of the norms, they cover all businesses
and business actors, including "…managers, members of corporate boards, or
directors and other executives - and persons working for them." Any they apply to "any business
entity," whether it is a corporation or an individual entrepreneur, or an
international or domestic enterprise.
The norms would create
significant conflicting requirements for companies. As one example, companies would be required to ensure that their
actions do not indirectly contribute to human rights abuses. Since tax payments support all governments,
companies presumably would be required to stop tax payments to any government
that is suspected of past or, possibly, future human rights abuses. Based on what the draft code considers as
basic human rights, the United States, for example, would not be in compliance
with the code for allowing prison inmates to work.
Further, as I noted earlier,
companies would be required to ensure that all companies in their entire supply
chain comply with the draft code. Under
Article 15, Commentary (c), companies would be required to break contracts with
suppliers that the company - not an impartial court or arbitration body - deems
to be in non-compliance with the code.
Given the legal ambiguities in the code, it would create a legal
justification, if not incentive, for companies to break contracts at will
simply by asserting that the other company does not comply with the code.
Also, to the extent that the
norms present potential legal and practical burdens on companies operating in
developing countries with poor human rights records, they would create a
deterrent to foreign investment there.
Rather than improving human rights in such countries, the draft code
would virtually eliminate the very investment that is the best hope for
economic development and the improved human rights that normally accompany such
development.
In the final analysis, the
norms create a legal no man's land.
They do not distinguish between binding and non-binding human rights
obligations or between absolute commitments and aspirational goals. They are presented as a set of norms or
standards when in fact many of the instruments from which they are drawn are
not themselves legally binding and those that are heavily qualify the rights
they are supposed to address. By
calling them "non-voluntary" and then using legal language where
there is no legal obligation, the draft code blurs the line between voluntary
and legal actions, and makes corporate compliance virtually impossible.
It is clear that many states
are failing to implement and enforce their human rights laws, some by design
and some by neglect. These failures
must be addressed directly by the UN Commission on Human Rights, not by
instruments such as the proposed code.
Legal Status of the Norms: The Relevance of Alien Tort Statute Litigation
At this point, I believe it
appropriate to address an important legal question surrounding the norms: their
legal status. In doing so, I will refer
to litigation underway in U.S. courts under the Alien Tort Statute, which, I
believe, is highly relevant to this conference's theme.
For its part, Amnesty
International has asserted in a recent paper that the norms are a move toward legal
accountability for business. Amnesty
states:
"Unlike codes of conduct
… the UN norms result from a formal, UN-authorized, and consultative
process. The process leading to the UN
norms is similar to that resulting in other 'soft law' standards, some of which
are now seen as part of customary international law."
Amnesty goes on to say,
"There is growing acceptance that international human rights treaties
create obligations - at least indirectly - on companies."
The theory of "soft
law" becoming part of customary international law is a major issue in
various Alien Tort Statute cases before U.S. courts. It is instructive in this context to consider what the U.S.
Government has said on the issue. In a
September 2003 petition for a Writ of Certiorari submitted to the U.S. Supreme
Court in the Sosa versus Alvarez-Machain case, a petition that the Court has
accepted, the Solicitor General of the United States said the U.S. Ninth
Circuit Court of Appeals in California had erred in ruling for the plaintiff in
the UNOCAL-Burma case, noting that this particular court:
"…Has an established
practice of inferring rights of action to enforce rights based on international
agreements that the U.S. has refused to join, non-binding agreements, and
agreements that are not self-executing, as well as political resolutions of
United Nations bodies and other non-binding statements."
The Solicitor General went on
to argue:
"If the political
branches of the United States refuse to ratify a treaty, or regard a United
Nations resolution as non-binding, or declare a treaty not to be
self-executing, there is no basis for a cause of action to enforce the norms
embodied in those materials."
The Solicitor General then
quotes two judges in two separate Alien Tort Statute cases. In one case in the U.S. Second Circuit Court
of Appeals (New York), Judge Cabranes explained that non-binding General
Assembly declarations, "are not proper sources of customary international
law because they are merely aspirational and never intended to be binding on
Member States of the United Nations."
Judge Randolph in the D.C. Circuit Court of Appeals went further in
saying that looking to an unratified treaty or human rights agreement to
establish rules of law is "… anti-democratic and at odds with principles
of separation of powers."
USCIB and several other
business associations have also argued along similar lines in an amicus brief
to the U.S. Supreme Court in this same case.
Our brief addresses some important constitutional questions that are relevant
to today's discussion. We noted that
the power to make treaties is given explicitly to the President with the advice
and consent of the Senate. It is wrong
therefore, we argue, to read the Alien Tort Statute as conferring status to
treaties that the President has not signed, or the Senate has not
ratified. We also said it was an error
to implement the human rights standards of, say, the European Convention for
the Protection of Human Rights and Fundamental Freedoms or the African Charter
on Human and Peoples' Rights, as one U.S. court did. That is because the President and Senate did not - and could not
- delegate their treaty power to international organizations.
If these arguments apply to
unratified treaties and General Assembly declarations, then the status of
instruments much lower down in the legal pecking order such as the norms, which
have not even been considered, let alone approved, by the parent body must be
even more questionable, at least under U.S. law.
I have gone on at some length
on this important legal question to demonstrate that the arguments made by
Amnesty about the legal status of the norms are not accepted by the U.S.
Department of Justice, major business associations, and several U.S. courts. As noted above, the Supreme Court is now
addressing the issue again in the Sosa versus Alvarez-Machain case. That decision will come later this year.
Conclusion
Let me conclude. The obligations that the norms impose on
private businesses are arguably much more extensive than those placed on states
by various UN human rights treaties.
Moreover, the intrusiveness of their monitoring and implementation
provisions far exceeds those imposed on states by UN treaties, and they even
surpass those contained in treaties relating to disarmament and other vital
issues.
But we can't lose sight of
the forest for the trees. Amending the
language cannot cure the problems with the norms. Changing shall to should, or adding qualifiers like appropriate
or reasonable, will not solve the problem.
Nor will cutting back of the scope of the application be a
solution. The problem is not the weeds
in the garden, but the garden itself.
States, not private parties, have the legal obligations to protect and
promote human rights. The
Sub-Commission's radical innovation is the proposed transfer of the state's
obligations to civil society actors --
to corporations in particular.
The business community
remains strongly committed to the promotion of human rights in the workplace
both at home and abroad. However the
best way to ensure a greater business contribution to social progress,
including the respect for basic human rights, is not through prescriptive codes
or regulations imposed from the outside.
The futility of trying to impose a universal code of conduct on
multinationals was amply demonstrated by the failure of negotiations that
lasted thirteen years in the UN Commission on Transnational Corporations. The effort finally foundered on an attempt
to introduce an implementation procedure that would have judged individual
corporate behavior in light of the code's provisions.
So, instead of binding, one-size-fits-all codes, it is
through voluntary initiatives that business can be most effective in helping to
promote human and other social rights.
Such an approach respects the responsibilities of the various actors -
governments, businesses, and individuals.
In the final analysis, business should continue to develop its own rapid
response to public demands in such areas as human rights by incorporating best
practices both into their day-to-day operations and their longer term strategic
planning.
More on USCIB’s Corporate
Responsibility Committee
