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Global firms need codes, not lawsuits

By Peter C. Choharis / September 26, 2000


As the International Monetary Fund and World Bank gather for their annual meeting this week in Prague, they will be joined by another group that is becoming a fixture at global gatherings such as this: thousands of protesters.

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Some are marching to support the rights of workers in developing countries, some to protect human rights and the environment. But even as some activists are winning support from politicians and reforms from businesses, others may be endangering these gains by targeting multinational corporations and the foreign investments they provide.

In one of the biggest recent victories for reformers, 45 multinational corporations last month entered into a UN-sponsored Global Compact, pledging to follow nine principles of corporate conduct in human rights, labor, and the environment. On a smaller scale, McDonald's announced last month that it would require the farmers who supply it with 1.5 billion eggs annually to adopt more humane methods of raising hens.

Political leaders, too, have begun demanding that corporations take responsibility. The Clinton administration has been boosting its "model business principles" - another corporate code of conduct - as one of the hallmarks of its human rights policies. Al Gore's acceptance speech before the Democratic convention urged: "We must set standards to end child labor, to prevent the exploitation of workers and the poisoning of the environment. Free trade can and must be ... a way to lift everyone up, not bring anyone down to the lowest common denominator."

Despite this progress, some activists are not content with incremental steps toward corporate reform. Rather, they want wholesale labor, human rights, and environmental changes, not just by multinational companies but by foreign countries as well. If they can't deter bad behavior and achieve reforms immediately, these activists would rather see companies abandon parts of the developing world and deprive the offending countries of desperately needed foreign capital.

For example, activists opposed to particular regimes are trying to drive multinational companies out of those countries by filing lawsuits. Such lawsuits have been filed in American courts against energy companies doing business in Burma and Nigeria, alleging complicity in the human rights violations of those countries.

Last month, a federal judge in California ruled in favor of Unocal and the other defendants, despite finding that the company knew the Burmese military was brutally forcing villagers to work on a pipeline co-owned by Unocal - the legal equivalent, the court held, of modern-day slavery.

If the appellate court reverses the district court, Unocal may yet be held liable. But the goal of the plaintiffs was not just to compensate the victims or even punish Unocal; it was also to drive Unocal and other foreign corporations out of Burma. According to the district court's decision, one prominent human-rights group told the company point blank that it could not condone any investment in Burma because of the regime's pervasive practice of forced labor.