The Multinational Monitor


C O N S U M E R   M O V E M E N T

The Third Force

Consumers in the World Economy

by Anwar Fazal

Penang, Malaysia Several weeks ago, I received two reports-one from the U.S.A. and the other from Hong Kong.

The report from the U.S.A. concerned a popular TV series called "Edward and Mrs. Simpson" which had been brought by a major multinational from the U.K. for screening in the U.S. It was not entirely an act of public service; together with this series the corporation aired six 3-minute ads-"fables for now"-in which famous ballet troupes such as the American Ballet Theatre danced out modern fairy tales. As the report noted:

"The fables describe a society (pronounced 'you-sa') in which selfish environmentalists (portrayed by monkeys) and narrow-minded government regulators (who rub their hands together gleefully while planning new ways to increase their power) join forces to place limits on the good, benevolent and paternalistic [corporation's] industriousness-that provide society with the `vim and vigor juice' it needs to survive. The good animals cannot do this with their hands tied by the monkeys (that's us) and regulators that want to abolish profits or bring business effectiveness to a halt, through regulation.

"Along the way (this corporation) suggests a number of outrageous things: that oil spills are harmless, rare and easily cleaned up ... that growth can be unlimited, to name a few."

The report from Hong Kong gave the results of a test on household insecticides done by the go.vernment-financed Hong Kong Consumer Council: they found 5 of the 12 brands tested contained levels of their poisonous active ingredients exceeding the limits laid down by the British insecticides safety scheme,

These five brands contained dichlovos (DDVP), which has been implicated in numerous tests as a carcinogen and mutagen. Some brands also contained additional toxic chemicals, such as lindane, that were considered unsuitable for household use. I was struck by the fact that one of these five brands was manufactured for the same multinational that was sponsoring the TV series in the U.S. and undermining the credibility of environmental groups and regulatory agencies.

I checked the markets in Penang and discovered that the same brand was being sold in Malaysia, without any statement of its contents whatsoever.' ,

This brainwashing of consumers in the U.S. and this wanton violence against the consumers in Hong Kong and Malaysia (and probably elsewhere) has been perpetrated by the Mobil corporation-one of the largest multinationals in the world.

This type of behavior by multinationals is not new. What is new is the ability of consumers, continents apart, to respond to such actions. Over 100 consumer groups from 50 countries are now exchanging information and working together through the International Organization of Consumers' Unions, a non-profit, non-commercial public interest foundation based in the Hague, Netherlands.

Before a United Nations committee in 1973, the IOCU staked out its position on the inherent contradictions between ' the global interests of multinationals and those of consumers. Peter Goldman, then-IOCU President, told the UN's "Group of Eminent Persons" that "from the consumer viewpoint, marked concentrations of economic power and severe imperfections of competition are always danger signals. Multinational companies in consumer goods industries have readily distinguishable features. These include high profits and strong emphasis on marketing techniques and production differentiation as alternative forms of competition."

By manipulating transfer prices, Goldman continued, multinationals are, able to minimize their tax bill, which leaves consumers to make up the difference in national receipts. "Whatever the scale of this loss of tax revenue," he said, "a consequential loss is sustained by consumers whose national governments [must] . . . impose taxes on domestic goods, services and incomes heavier than would otherwise be necessary."

"Of more intimate concern to IOCU is the worldwide influence that may be exerted by multinational companies in shaping and distorting consumption patterns," Goldman said. "They are normally held to offer advantages to consumers through increased choice and availability of products. Sometimes these goods have been developed less because the consumer needs them than because he can be induced, through excessive and wasteful advertising outlays, to buy them. In the most industrially advanced countries, this is not desirable. In the less developed countries, the positive disutilities, social and economic, can be grievous."

Even after the dangers are observed, and articulated, a fundamental problem remains: how to respond to companies, often the size of nations, whose activities span the globe? In August 1972, the seventh IOCU conference called for the application of consumer protection laws "not only to the home market but also to exports and the activities of multinational companies."

As the first response to this call, IOCU member organizations cooperated in a case study covering 21 countries. It was probably the first international consumer survey of its kind. The study illustrated in detail how a multinational company can and does market a drug abroad without warnings of its dangerous, and even fatal side-effects as are mandatory in the home country. The drug was chloramphenicol; and the company primarily involved was Parke Davis.

The results were shocking: you could buy chloramphenicol over the counter in many countries. Of the 55 brand packs we examined from 21 countries, not one warned against all the conditions in which its use was contraindicated. Many failed to warn against serious and possibly fatal side-effects. Most extraordinary of all: there were wide variations in the warning given with the same brand produced by the same company in different countries.

The survey technique has been used for other products as well. In 1979 the IOCU regional office for Asia and the Pacific surveyed the promotion of sweetened condensed milk (SCM) in eight Asian countries. We found SCM was widely promoted as a suitable infant ,food; and Friesland Holland (a multinational cooperative), the Australian Dairy Corporation (a multinational government corporation), Nestle and Carnation Company, U.S.A., were directly or indirectly implicated in its promotion.

The survey found that the multinationals practiced a double standard. For example, Nestle marketed "Milk Maid" SCM in Indonesia with a label warning it is not suitable for infants, but distributed "Eagle" SCM in Hong Kong with a label promoting it as an infant formula..

As a result of this IOCU campaign, label changes have already been made by a number of companies. Labels for Friesland and Carnation SCM in Malaysia no longer recommend its use as infant food. In Hong Kong, Nestle changed its picture of a baby on the package to a boy.

IOCU has now developed an action register of problem drugs which will form the basis for a continuing campaign in the pharmaceutical area. IOCU is developing an international hazardous product warning network-a kind of "consumer interpol" to systematically collate and disseminate information on hazardous products.

No major issue demonstrates better the muscle of the international consumer movement than the campaign against the promotion of infant formulae. One of the highlights of the campaign was the public agreement in October 1979 made at the World Health Organization/UNICEF meeting on infant and young child feeding by representatives of governments, the U.N., safe infant formula groups, and the infant food industry to stop promotional advertising practices. A recent study compiled by the International Baby Food Action Network, however, found that six months later these multinationals were still engaged in direct consumer advertising and virtually ignoring all of the WHO/UNICEF proposals.

But in many ways, this campaign was a watershed for international consumerism. Firstly, it was a learning experience, forcing the participants to sharpen their knowledge of international codes and regulatory machinery, the United Nations, and the interaction between multinationals, the U.N., and individual national governments.

The issue also brought together a variety of social and development groups, each independent, and yet able to act in concert. A new organization-the International Baby Food Action Network-composed of several activist organizations such as INFACT and the Geneva Infant Food Association, was formed to coordinate activities in the international arena. Networking of this kind may be the model for other international campaigns. Finally, this was an issue that brought into sharp focus the dynamics of so-called "developed" world and "developing" world relations on consumer issues and how the "third system," the citizens of the world, could unite and change the irresponsible and inappropriate technology that infant formula represents.

The international consumer movement moves into the 1980's, with a new confidence and muscle in dealing with multinational corporations. The infant formula campaign, the worldwide concern about dumping, IOCU "consumer interpol," the increased research and action capability of third world consumer groups all indicate that the international consumer movement is alive and well.

We need to strengthen our links and build new networks, to bring those who believe in value for money closer to the view that value for people is even more important. Above all, we must make it clear that it is not enough to talk about the cost of living, when it is the cost of survival that is the problem for most.

Anwar Fazal is President of the International Organization of Consumers' Unions.

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