The Multinational Monitor


C O N S U M E R   R I G H T S

The International Rights of Consumers

by Ralph Nader

It was Adam Smith who over 200 years ago wrote that "consumption is the able end and purpose of all production." Today, not much attention is directed, either by governments or economists, to this central point of consumer sovereignty: that the basic measure of an economy's worth is the health, safety and economic well-being of consumers.

Instead, economies are evaluated largely from the perspective of sellers. Conventional indices of gross national product are quantitative reflections of sellers' values. Thus, the volume of drugs sold, rather than the advance of consumers' health, is the measure of the drug industry's progress, even if massive amounts of useless or harmful drugs are merchandised under monopoly pricing practices. o

The growth of multinational corporations -- selling common products and services in many countries -- is producing a new bond between people of different nations. Worldwide, consumer values are being asserted against the sellers' "cash register" misbehavior. Consumers in Japan are expanding a boycott campaign against fruits imported from the United States with residues of the fungicide Sodium O-phenylphenate which has caused bladder tumors in experimental animals. In dozens of countries an interconnected consumer challenge to multinational baby formula firms, and their deceptive promotion leading to higher rates of infant sickness in Third World countries, has produced a boycott of Nestle products and more activism by church groups. An Australian consumer association is analyzing the impact of multinationals on consumers there.

Information on consumer rights is diffusing throughout the world. Lawyers representing victims of unsafe goods in the United States have been conducting seminars in Western Europe on the American laws of product safety and strict liability for corporations selling hazardous products. Jury verdicts against U.S: or European companies selling hazardous goods in the U.S. naturally receive more media coverage in Europe when the same companies are selling these products there as well. As a result, European countries are moving to enact strict liability laws to protect consumers from these kinds of corporate negligence or crime.

All this has not escaped the attention of U.S. insurance carriers interested in expanding their overseas business. In a widely distributed message, the Insurance Company of North America sounded a potentially lucrative market alert:

"Consumerism is only beginning to spread abroad ... attitudes overseas have altered to a degree that is already affecting U.S. companies doing business, abroad. Publicity about large product liability awards in the U.S. has sparked more foreign plaintiffs to initiate suits in American courts. In foreign courts, too, liability actions against U.S. companies are on the rise, and so is the size of the awards ...

"Companies must face the possibility that it may not be long before they incur the risk of an explosion of litigation, as one faulty product triggers thousands of suits throughout the world."

Other multinational activities are fueling the rise of the international consumer movement. Exports of hazardous products that are banned or restricted in the originating country are an intensifying cause celebre for consumer groups. There is a serious lack of fair play, a double standard, an absence of comity between nations that is exhibited when drugs, pesticides and other products are considered too dangerous for the people of the exporting nation but not for the natives abroad.

The Social Audit (9 Poland St., London, WIV3DG), a British consumer research group, recently released a report "Drug Disinformation: What British and Multinational Drug Companies Tell Doctors About Their Products, At Home And Abroad," that contains a specialization of detail and analysis that would have been unheard of ten years ago. A comparable concentration by the Carter White House on hazardous exports reflects a maturation of the consumer issue that would not have been conceivable a few years back.

International commodity and service arrangements negotiated between nations-which sometimes amount to cartel agreements-raise the issue of consumer representation in the deliberative councils. This is a major frontier area, as the experience of airline passenger advocate Mimi Cutler (see page 5) within the councils of bilateral aviation treaty negotiations reveals. Five years ago, President Gerald Ford was persuaded to establish an Office of the Consumer Coordinator at the State Department. Joan Braden, who held that post, saw first hand how consumers pay for decisions by the participants in the International Coffee Agreement, or for tariffs and quotas imposed on foreign imports that raise prices. She concluded that the consumers' voice was not heard very often. Consumer groups are beginning to see that they must make their voices heard in price and safety negotiations between multinationals and governments. .

Sophistication grows in other areas as well. Multinational telecommunications and satellite firms will inadvertently stimulate consumer drive for access to these technologies. It is now technically and economically feasible for consumer groups to have instant and continual communication with one another just as multinationals do.

Consumers have at times organzied economically to respond to marketplace abuses. Prior to World War II, monopolies helped provoke the formation of consumer cooperatives in many European countries. The giant Swiss cooperative, Migros, was founded in direct response to cartels and monopolies (see page 20). Cooperatives such as those in Sweden do have programs to help farm co-ops in developing countries.

Although some large European co-op federations do aspire to international cooperation, the reality has been modest. In the early 1950s, the International Cooperative Petroleum Association, composed of oil co-ops in the U.S.A. (largely farmer co-ops), Scandinavia and other countries, conducted direct negotiations with Iranian Prime Minister Mohammed Mossadegh after he nationalized the oil industry in 1951.

Murray Lincoln, a U.S. cooperative leader and insurance executive participated with IPCA in presenting a proposal for developing Iran's oil not for the profit of multinationals, but for the public benefit, by the member oil cooperatives of IPCA. The co-ops offered to provide management arid marketing services. Co-op historian Jerry Voorhis attributes the decisive factor in the failure of the negotiations to "the sheer overweaning power of the international oil cartel" which "was able to shut the markets of the world to Iranian oil, thus bringing Mossadegh's economy to a quick standstill."

What could have been a major escalation ' of consumer cooperative power worldwide, with a momentous shift in power from multinationals to consumer organizations in other areas as well, was blocked:

Today, the consumer movement in Western countries centers around better enforcement of existing laws, enhanced direct legal rights for consumers to challenge abuses on a, case basis and publications disseminating information to consumers on the model of Consumer Reports.

But in some developing countries, the consumer movement is grappling with such grave problems as epidemic diseases, contaminated water, hunger and dangerous products that it has broadened its scope to the entire area of economic development.

The Consumers' Association of Penang, Malaysia, led by Anwar Fazal, has brought together consumer leaders from East and South Asia for seminars and workshops on national development strategies and the consumer. They discuss action projects, like backing local small fishermen servicing the Malaysian community against the incursions of pollution and large trawlers. Or they reflect on the problems of adulterated food in Bombay slums, or the explosion of kerosene stoves in the Fiji islands. Fazal calls countering these abuses illustrations of a broadly-conceived quality of life movement. If fishermen cannot catch unpolluted fish, consumers are affected and they should help the fishermen, as the Malaysia group did. Likewise, medical brain drains out of developing countries affect health care and therefore constitute a consumer problem.

Fazal writes that "from Mexico City through Jamaica, Lagos, Nairobi, Tehran, Bombay, Jakarta, Manila, Seoul to Fiji there is now a consumer movement rooted in the realities of the particular country's conditions and yet interlinked with others through the network provided by the International Organization of Consumers Unions (IOCU)." Fazal is now president of IOCU, which presently has as members 120 consumer organizations in more than 50 countries (See page 15).

Fazal understands that awareness is the first stage of change for socio-economic movements. So he is busy developing with others an articulated set of consumer rights. The Association of South East Asian Nations, in an early October meeting issued a declaration and action program that recognized consumer protection as an integral part of the development process. Seven categories of consumer rights were recognized: the right to basic goods and services, fair prices and choice; the right to safety; the right to information; the right to representation; the right to redress; the right to consumer education; the right to a healthy environment.

Such assertive declarations by Third World consumer groups are sensitizing the United Nations social, economic and human rights councils. Consumer groups and inter-national bodies are just beginning to proceed from resolutions to studies, to recommendations that directly connect consumer justice with greater accountability by multinational corporations. And there is interest on other fronts: some labor unions are taking notices of these consumer rights, both out of self-interest for their workers and an emerging belief that a worker-consumer alliance is the way of future effectiveness.

None of these currents and trends yet amount to much actual power. But they represent the kind of dissent, especially in authoritarian societies, that is deep-rooted, non-ideological and politically difficult to ignore. Poland's troubles began with consumer deprivation-a shortage of meat, and higher food prices. The troubles with the United States' dependency on foreign oil began decades ago when consumers were too unorganized to require the automobile companies to change their hugely wasteful internal combus-tion engine that still powers 110 million gas guzzling cars in America.

Consumer protection is really reducing the economy of nations (and the world) to the basics: what is an economy supposed to be doing for its people? Assessing the level of consumer protection provides a detailed, empirical system to evaluate multinational corporate activity. Moreover, it points to the necessary shifts of power to consumers, as individuals and as a group, if a just and prosperous economy is to be shaped for present and future generations. The academic, journalistic, and political discussion of multinationals will henceforth be counting the consumers in far more than ever in the past. And the multinationals themselves, in their profound disregard of consumer rights, can be counted on to advance consumer movements as much as any other factor.

For more information on the IOCU-which produces a range of publications including a newsletter, an annual journal, abstracts of specialized consumer data, and a biennial reference index to consumer organizations throughout the world-write:

International Organization of Consumers Unions
9 Emmstraat
2595 EG The Hague

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