The Multinational Monitor

JULY 15, 1985 - VOLUME 6 - NUMBER 9

T H E   F I G H T   T O   B A N   B O G U S   D R U G S

Tackling the Transnationals

An Interview with Peter Hansen

Peter Hansen, the Executive Director of the United Nations Centre on Transnational Corporations (UNCTC), has ever increasing responsibilities.

Hansen, appointed to the post in January of this year, must help developing countries deal with transnational corporations (TNCs) on several fronts. It's not an easy task, especially while under fire from Reagan administration operatives Jean Kirkpatrick and Murray Weidenbaum, who charge that the United Nations is already overstepping its Charter by acting as a "Consumer Cop" or "Global Nanny."

Daniel Elias, a former Multinational Monitor intern, spoke with the Danish-born Hansen about the UNCTC - its past successes and potential - and the highly controversial Corporate Code of Conduct proposal and the recently enacted Guidelines for Consumer Protection.

Multinational Monitor: What do you consider the most important achievements of the Centre on Transnational Corporations, and what do you hope to accomplish in your tenure as executive director?

Peter Hansen: Among the main achievements has been the building up of a body of data on transnational corporations which has vastly improved our understanding of their operations and production. Furthermore the Centre has established an entirely new line of assistance to countries dealing with TNC's by setting up a framework for investment in host countries and helping them in negotiations. I would like to have been able to mention as a main achievement the conclusion of a Corporate Code of Conduct. But, the fact that a Code has not yet been achieved should not signify a failure of the Centre because after all, progress has been made.

Monitor: Is passing a code of conduct for transnational corporations the Centre's next major goal?

Hansen:: Our goal is expansion of assistance to developing countries in dealing with TNC's as they become an ever more pervasive element in trade, production and the international economy. I would also like to see the conclusion of the Code and, more importantly, to work on the implementation of this Code in the future through interpretation, through clarification and through solution of the issues that invariably arise between individual home/host countries and TNC's.

Monitor: There are both advantages and disadvantages for developing countries opening their doors to TNCs. For example, they are an important source of capital and should play a major role in the transference of technology, but often their resources are not used to the benefit of the host country. Do you have any fresh ideas on how to maximize their positive effects and eliminate their more negative aspects?

Hansen:: I would not claim that it would be a fresh idea to enable host developing countries to deal more effectively with TNC's. I think that considerable progress has been made in this respect during the ten year existence of the Centre. I think that all the main instruments which have been developed to maximize the beneficial impact of TNC's, such as through training and expansion of markets, will have to be pursued in the future, but under less favorable economic circumstances. I also think that through the work on the Code of Conduct more precision has been given to the instruments available to developing countries for minimizing the negative impact of the operations of TNC's.

Monitor: The recent tragedy in Bhopal, India - the world's worst industrial disaster - has raised again the complexities surrounding the relative responsibilities of TNC's and governments of the home and host countries. Could the U.N. initiatives - the Corporate Code of Conduct and the Consumer Protection Guidelines-have helped to prevent or resolve these problems?

Hansen:: The Code of Conduct stipulates the responsibilities of TNC's to their environment, but they are put in fairly general terms and frankly I don't think that their adoption would have had much impact one way or the other on the Bhopal disaster. An event such as that in Bhopal was the subject of so many factors that it could not have been prevented by a code, but it is an example of one of the areas I mentioned before where the adoption of a code would have helped by contributing to a further elaboration of the ground rules for the operation of TNC's. That is through more precise guidelines for safety precautions, training, industrial location, etc.

However, we are talking about guidelines and definitions here, rather than an enforcing power. The Code deals with its various provisions in terms of recommendations - not binding regulations.

Monitor: The Bhopal disaster has also highlighted the question of the potential hazards of TNC's in developing countries, and the discrepancy in safety standards established at home and in the host countries. How do the multinationals justify such discrepancies?

Hansen:: If you ask what the justification is it presumes some standard of justice is to be applied. Quite clearly the motives for foreign direct investment have to do, among other things, with the conditions of operation in the host country. In certain cases a more flexible regulatory environment might be an advantage from an operational point of view and might also be seen by host countries as a reasonable trade-off for attracting foreign investment, Ideally of course one would like to see all the precautions that history and political pressure have taught us to adopt in the most industrialized countries, mainly the safeguarding of workers and consumers, applied to the populations of developing countries.

Monitor: How effective and comprehensive are the laws of developing countries in governing the safety standards which the TNC's use?

Hansen:: The laws of the host countries govern in principle, all the aspects of the operations of transnationals. But saying this is not the same as saying that these laws, where they exist, can always be implemented to the letter, because developing countries only in a few instances have the administrative capacity to monitor fully the implementation of all the laws concerning foreign direct investment.

Monitor: How do you react to criticism from certain quarters that the United Nations is being overly regulatory in an area far from its designated responsibilities towards the maintenance of peace and security?

Hansen:: I would say that this is a reflection of the ignorance of such critics with regard to what the main purpose of the United Nations is, and to what the United Nations is actually doing in the areas where it is accused of regulation.

With regard to the first issue, it is true that the Charter gives the United Nations a definite role in international peace and security issues. However, it is equally clear that the Charter gives the United Nations an undisputed role in the discussion and solution of international economic issues. Incidentally it was very much because of U.S. insistence that these parts of the U.N. responsibilities figure as strongly as they do in the Charter.

With regard to the second misunderstanding, concerning the U.N. activities in a variety of areas that are called regulatory, the U. N, has very few regulatory powers and has proposed very little international regulation. Most of what is called "regulation" is merely recommendations to member countries - informing them about issues that they are dealing with in their own national legislation. The United Nations merely provides for an exchange of experience.

Monitor: The United States was the only country to vote against production and publication of the directory listing hazardous materials. How difficult has this made preparation of the Consolidated List?

Hansen:: It has made it difficult in the sense that a great deal of information that would have been extremely useful in the preparation of the list has not been provided to the United Nations directly from the U.S. government. However, some of the difficulties created thereby have been compensated by the very active cooperation of public interest groups and the contributions of the business community in the United States and elsewhere. It is in the best interest of business to provide full and accurate information - correct information is better than no information, or false information.

Monitor: Many industrialized countries argue that the usefulness of certain products leads us to accept a certain amount of risk, the idea of a risk-benefit ratio. Do the Guidelines and List take such a ratio into account?

Hansen:: Both of them take it very clearly into account. Neither of these instruments in and of themselves can be used for regulating the traffic in products. They have to be measured against the local conditions under which they are to be used, and measured against alternative products that could be used.

The List itself warns against being taken as the gospel and emphasizes that it is only a set of first indicators on the basis of which importing countries should make further analysis and assessments about their own needs. The whole purpose of it is that they should be able to make their decisions on the best informed basis - no solutions are being forced upon them.

Monitor: How do you respond to U.S. assertions that the Corporate Code of Conduct, the Consolidated List and the Consumer Guidelines are harmful to free trade?

Hansen:: I would respond to it by claiming that one might equally convincingly put forth the opposite argument - that the Code of Conduct, the Consumer Guidelines and the Consolidated List could facilitate international trade, by increasing the similarity of the information on which decisions are being made, and the ground rules through which international trade and investment take place. The purpose of the Code is to provide a common ground that would increase mutual confidence between the various parties of the foreign direct investment process, and as such it , should be seen as an instrument to free global exchange rather than the opposite.

Monitor: The fact that consumer protection is being discussed in the United Nations today surely reflects the world's growing awareness of its importance and the recent passage of the Consumer Guidelines is a major breakthrough for consumer activists the world over. Do you see emerging from these concerns what Jean Kirkpatrick calls a "New International Economic Order"?

Hansen:: I do not see the Consumer Guidelines as being in any way regulatory or setting an international regulatory order. I do not think that the United Nations is in a position to even dream about establishing such an order, even if it were deemed to be desirable. What the guidelines try to set down are some principles which have been widely accepted over many years in the United States and Western Europe. Guidelines which basically are moral in nature and which developing countries deserve to benefit from as much as developed countries do.

That being said, in many areas the capacities of international organizations to meet the often unsettling forces of the international economic situation has forced many countries to seriously consider the argument for international trade regulations, perhaps in the form of an international institution like the European Economic Community. Thousands of regulatory measures have been found necessary in Western Europe in order to further free and open flows of trade among these countries which are all basically freemarket countries. As has been shown even cooperation among free-market countries requires a great deal, not of original regulation but of harmonization of the regulations between member countries.

Monitor: Is this harmonization where your own personal ideal would lie?

Hansen:: I think that the United Nations is very far from talking about ideals in this respect, because in the climate of discussion about multilaterals on the global scale, ideals of freer exchange among the nations of the world are often distorted into meaning greater regulation, and evoke fears of powerful global agencies which do not exist.

However, I think that as the international public increasingly understands how much they depend upon international trade and how small the capacities of the international community are to analyze future trends, they will realize the need for international cooperation. Whether you call it regulation or international agreement is less important than achieving the means by which international cooperation and growth arise.

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