INTERNATIONAL REGULATION OF MULTINATIONAL ENTERPRISES: TRADE UNION AND MANAGEMENT CONCERNS*
| Author | Bruno Liebhaberg,B. C. Roberts |
| Date | 01 November 1977 |
| DOI | http://doi.org/10.1111/j.1467-8543.1977.tb01140.x |
| Published date | 01 November 1977 |
British Journal
of
Industrial Relations
Vol.
XV
No.
3
INTERNATIONAL REGULATION
OF
MULTINATIONAL
ENTERPRISES: TRADE UNION AND MANAGEMENT CONCERNS*
B. C.
ROBERTS^
and
BRUNO
LIEBHABERGS
IN
June
1976
the Council
of
Ministers of the Organisation of Economic Co-operation
and Development approved on behalf of member governments a declaration estab-
lishing guidelines for multinational enterprises.' Although the O.E.C.D. was the first
international agency to adopt such guidelines, no fewer than five other international
bodies are actually engaged in developing codes of behaviour which they are anxious
should be followed by the multinational enterprises. In this situation there is clearly a
danger that the plethora
of
promised codes could lead to confusion and conflict instead
of the constructive and effective regulation
of
international business organisations.
The notion of establishing an international code of behaviour emerged at the end of
the
1960s
from the welter of discussion which had begun on the significance of the
multinational enterprise as an institution which seemed likely to dominate economic
and social life. The concept
of
a code was first advocated as a managerial strategy by
business economists who were principally concerned with possible governmental re-
strictions on the development
of
multinational enterprises;2 but the idea
of
a code was
soon taken up by the trade unions and later by representatives
of
the third world
countries whose concern was to monitor and control the activities
of
multinationals.
GROWTH
OF
UNION
CONCERN
The first response
of
the unions to the development
of
the multinational enterprise at
the industry level was to seek to develop mutual assistance through the International
Trade Secretariats3 The International Metal Workers' Federation (I.M.F.), the Inter-
national Union
of
Food
and Allied Workers (I.U.F.) and the International Federation
of
Chemical and General Workers Unions (I.C.F.) began to gather data and
to
establish
world councils, through which information could
be
supplied and bargaining tactics
co-ordinated.
At the same time as the International Trade Secretariats were developing these
activities the global international trade union bodies, the International Confederation
of
Free Trade Unions, the World Confederation
of
Labour and the World Federation of
Trade Unions began to consider the problem of the multinational enterprise from more
explicit ideological perspectives and international political relations.
In December
1970
the I.C.F.T.U. Executive Committee, meeting in Brussels,
decided to call for an international conference to be held under the auspices of the
United Nations in order to set up a regulatory code for multinational enterprises. 'Such a
code could include an obligation to respect all appropriate
I.L.O.
conventions and
recommendations; to conform to national social legislation and industrial relations
systems."
Two years later in July
1972
the Tenth World Congress of the I.C.F.T.U. decided to
seek the creation of a joint working party together with the International Trade
*
This article originated from
a
conference
on
this topic sponsored jointly
by
the
L.S.E.
and
INSEAD with the assistance
of
the Foundation
on
Automation and Human Development,
Fontainbleau, June
1976.
t
Professor
of
Industrial Relations, London School
of
Economics and Political Science.
$
Ph.D candidate, Industrial Relations Department, London School
of
Economics and Political
Science.
356
INTERNATIONAL
REGULATiON
OF
MULTINATIONAL
ENTERPRISES 357
Secretariats, which would concentrate on the promotion
of
legislation, national and
international, for controlling the activities
of
these companie~.~
The I.C.F.T.U./I.T.S. working party came to the conclusion that it would ideally like
to see the establishment
of
a multinational treaty on multinationals under the auspices
of
the U.N. In the absence
of
such a treaty and the establishment
of
an effective U.N.
agency the working party proposed as an immediate line
of
action
(1)
The establishment
of
international guidelines;
(2)
The co-ordination
of
national legislation and of government control;
(3)
The conclusion
of
conventions imposing enforceable standards;
(4)
The adoption of a machinery to keep under constant review the impact
of
multi-
The working party criticised the concept
of
a voluntary code
of
conduct as ‘too timid
and inadequate in face of the challenge posed by the activities
of
multinational com-
panie~’.~ The working party was only prepared to accept such a code as a first step
towards binding regulations set out in international conventions to which governments
could give legal force by embodying them in national legislation.
The concept
of
control recommended by the working party was essentially the same
as the system the I.L.O. adopted when its International Labour Code was established in
1919. Namely the adoption
of
international conventions that are ratified by member
states and made legally binding by the passing of national legislation. The I.L.O. has
tripartite committees
of
experts to monitor the application of the conventions and the
I.C.F.T.U./I.T.S. w.vking party wished to see similar methods adopted by the U.N.
Infringements
of
the conventions, especially with regard to social standards, would be
reported to these committees, whose hearings would be held in public.
national companies on industrial and economic development.B
CHARTER
OF
TRADE
UNION DEMANDS
FOR
THE
CONTROL
OF
MULTINATIONAL COMPANIES
At its Eleventh World Congress held in Mexico, in October
1975,
the International
Confederation of Free Trade Unions adopted a comprehensive Charter of Trade Union
demands for the legislative control
of
multinational companies based upon the report of
its joint working party with the I.T.S8 The Charter calls upon the appropriate inter-
governmental organisations to take the necessary steps to adopt international con-
ventions in seven areas where the unions are deeply concerned and their members
interests seriously affected
by
multinational enterprises. These are:
(i) Public accountability;
(ii) Social obligations of the companies;
(iii) Control of foreign direct investment and takeovers;
(iv) Restrictive business practices and oligopolistic pricing;
(v) Taxation
of
multinationals;
(vi) Transfer of technology and the role of multinationals in development;
(vii) Short-term capital movements.
On each of these areas
of
concern the I.C.F.T.U. provided a draft basis for
a
convention which is summarised in the Appendix.
The I.C.F.T.U. Charter, which covers virtually every aspect of the business activities
of multinational enterprises, raises issues
of
great significance not only for multinational
enterprises and the trade unions but also for the sovereignty
of
nation states. Exami-
nation of the proposals in detail suggests that
if
they were more vigorously enforced each
nation state would have to establish a monitoring and enforcement agency which would
need to be supplied with a vast amount
of
information. This would impose a con-
siderable cost burden upon multinational enterprises. The administration of the reg-
ulations envisaged by the Charter would give rise to much uncertainty, to a vastly
increased role for lawyers, and an inevitable slowing down of decision making. In their
response to the I.C.F.T.U. Charter multinational enterprises have emphasised that the
To continue reading
Request your trial