The Multinational Monitor

MAY 1983 - VOLUME 4 - NUMBER 5

N E W S   M O N I T O R

Landmark European Labor Law Nears Passage

by Ken Kilimnik

European trade unions are on the verge of winning an important legislative victory in the battle for greater worker control over corporate decision-making. Known as the "Vredeling Proposals" after the Dutch author of the plan, the directive will be the first binding, supra-national law requiring multinational corporations to inform and consult their employees before making major decisions about plant closures or the introduction of new technology (see MM, August 1982 and December 1982).

The final draft of the bill is expected from the European Economic Community's (EEC) ten-member Council of Ministers this summer. But trade unionists are worried that a massive corporate lobbying campaign - led by American multinationals - may severely weaken the directives.

As the Vredeling proposal moved closer to enactment last fall, multinational corporations initiated "the most expensive lobbying campaign" ever directed against the European Parliment, according to the London Economist. This effort was led by American companies, which controlled $77 billion in direct foreign investment in the European Community in 1980.

The lobbyists have vigorously attacked the Vredeling proposals as setting a dangerous precedent and a "totally unrealistic" infringement on corporate confidentiality. American giants such as Mars Inc., the secretive McLean, Virginia - based candy and rice company, along with International Harvester, Union Carbide, General Motors, Ford, Kodak, IBM, and others have thrown their weight and their dollars behind a high pressure campaign to sway European Governments and the EEC from implementing the plan in its present form.

The U.S. Chamber of Commerce and the National Foreign Trade Council have also joined the fray, linking forces with European business groups, such as the Confederation of Industries of the European Community. Extensive efforts have been made by business to appeal the `bypass amendment' of the proposals, the clause which would allow workers to carry grievances and inquiries directly to corporate headquarters.

As a result of this pressure, a center -right majority in the European Parliament passed 37 suggested amendments last fall which the drafting agency, the European Commission, must consider in preparing the final draft for the EEC Council of Ministers.

Some of the proposed changes to the directive were outlined by Ivor Richard, the Commission official responsible for the final draft, in a speech to attorneys in Washington last February. According to Richard, while labor-management consultation is "desirable," "it is not the intention to give the trade unions the power to veto management decisions or alternatively [give them] the means to obstruct the proper function of management." Richard also said the proposed changes would permit multinationals to delete information whose disclosure would "substantially damage its interests." But he added that the deletions must not mislead the workforce, and that unions would be able to challenge the deletions in court.

The European Trade Union Confederation, representing over 40 million European workers, claims that these suggestions take "essential elements" out of the directive. They also claim that the threshold of 1,000 employees worldwide and 100 in each EEC subsidiary will exclude entire countries, such as Ireland and Greece, from the directive and such important sectors as agriculture.

Although the AFL-CIO has not taken a formal stand on the bill, union officials in Washington express support for the Vredeling Proposals. Rudy Oswald, the AFL-CIO research director, says, "In general, we're sympathetic, and we think its good for multinational corporations to provide information to workers about their future plans." But he adds that "in general, U.S. companies are required to report more than European companies in stock holder reports. So we may not need such a strong bill."

Ben Sharman, International Representative for the International Association of Machinists and Aerospace Workers (IAM), expresses a different view: "Vredeling is in the wrong part of the world," he says, "we need it a lot more than the Europeans."

Leslie Nulty, research director for the United Food and Commercial Workers (UFCW), states that although U.S. labor law requires employers to provide unions with some information covered by Vredeling, the law is not being enforced. (U.S. law does not require companies to negotiate over the decision to close plants, but only over a closure's effects.) Nulty expects that European trade unions will share information with American workers of the same company. Such cooperation, she says, would improve the UFCW's ability to negotiate over the effects of plant closings here.

A bill along the lines of the Vredeling proposal has been introduced in the U.S. House of Representatives by Rep. Bill Ford (D-Michigan). The National Employment Priorities Act, H.R. 2847, would require businesses with over 50 employees to provide one }ear advance notice before displacing more than 100 workers, and six months notice before displacing 20-100 workers. In addition, the bill would make severance pa,., continued health and welfare benefits, and transfer rights mandatory. Federal financial assistance to dislocated communities and workers would be expanded.

But pro-business legislator, have responded with their own bill. In 1982, attorney Bart Fisher, who lobbies against Vredeling on behalf of the candy and rice empire of Mars, Inc., drafted the Protection of Confidential Business Information Act, a bill sponsored by Senator Steven Symms (R-Idaho). This bill would prohibit U.S. corporations from disclosing "confidential business information," as defined by the Attorney General, under penalty of $5,000, regardless of the requirements of foreign law c.

Introduced under the same name in the House of Reps. by Thomas Luken (D-Ohio) and John Dingell (D-Michigan), H.R. 1532 would permit the Securities and Exchange Commission, to issue a protective order barring disclosure of "confidential business information." The bill is partially directed against the effects of the Vredeling proposal. According to a congressional aide, Rep. Dingell is concerned about the ''extraterritorial effect" and insider trading possibilities in the proposed European law.

Ironically, when confronted with internationally binding norms, multinational executives are quick to embrace the sanctity of the nation state. Robert McMillan, vice president of Avon Products says, "There is contradiction in the possibility of international business activity and the possibility of social legislation on an international plane."

In the view of David Ruth, director of the U.S. Council for International Business, even if the European Parliament's amendments are adopted, Vredeling "would still internationalize industrial relations" and lead to serious delays in management decision making.

But the Vredeling directive does not curb the international flow of capital, it merely requires the affected workforce in the EEC to be informed and consulted before the capital flows. Still, this seems to be too much for the multinationals. As the assistant to the president of one large international union put it, "The bastards keep telling us we have to think internationally - and then they do everything they can to keep us from acting internationally."

Ken Kilimnik is a lawyer and freelance writer in Washington, D.C.

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