Crafting a treaty to stop corporate impunity: the challenges we face in the Fifth Session
14 October 2019
Social movements, environmental groups, trade unions and campaigners have once again organised a “Week of Mobilisations” in Geneva to follow and influence the five-day negotiation process of the United Nations Open-Ended Intergovernmental Working Group (OEIGWG) on the Binding Treaty on Transnational Corporations and Other Business Enterprises (UN Binding Treaty on TNCs). The Fifth Session of the OEIGWG runs from October 14 to 18, it has been five years since Resolution 26/9 sponsored by Ecuador and South Africa was agreed by members of the UN Human Rights Council in June 2014. Since 2016 Global Justice Now has been working in the UK and globally to realise the universally binding treaty.
The process has faced a lot of obstacles from the beginning, foremost of which is the opposition of the governments in Europe and other countries where most TNCs come from. The treaty goes against the interests behind trade and investment treaties as well as international financial agreements dominated by the same countries. At the same time, influential corporations, trade associations and other representatives of corporate interests also threatened governments supportive of the treaty with loss of foreign investments. This was expressed clearly in the Fourth Session in 2018.
This year, it is not just the continuation of the process that is at stake. More importantly, it is about ensuring that the treaty being negotiated will not just be another piece of paper. The contents and their formulation must address what affected people and communities have been struggling and waiting for over the last four decades: making TNCs accountable, to stop their human rights abuses and other destructive practices.
The five-year battle between corporate giants and communities so far
The First and Second Sessions in 2015 and 2016 respectively deliberated on the content, scope, nature and form of a future international instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises. In the Third Session in 2017, the elements to be included in the treaty were presented by Ecuador as Chair-Rapporteur of the process. This three-year period was already challenging as governments in the European Union, including the UK government, and other rich countries refused to engage in the process. They favour the UN Guiding Principles on Business and Human Rights, which is a voluntary mechanism that offers a set of guidelines for states and companies to prevent, address and remedy human rights abuses committed in business operations.
A draft of the binding treaty text or Zero Draft was presented in July 2018. GJN and allies welcomed the draft as it symbolises the continuation of the process. However, we joined the more than 250 member organisations of the Global Campaign to Reclaim People’s Sovereignty, Dismantle Corporate Power and Stop Impunity (Global Campaign) in the critique that the draft lost many elements discussed in the first three years of the process. These include the lack of direct obligations for TNCs; failure to establish an effective international implementation mechanism; and missing provisions on social participation. It also does not contain provisions on the role of international financial institutions and references to international trade and investment agreements, which give undue power and protection to TNCs.
Worrying contents of the revised draft text of the treaty
In July 2019, a revised version of the draft was presented, which will be negotiated in this Fifth Session. Many hoped that there will be improvements on the document, however the revision proved to be disappointing and in fact a rollback from what was achieved in the last four years. The provisions that many affected communities and social movements proposed were not included. I will briefly enumerate some of those key concerns here.
The primary concern for frontline communities, social justice groups and rights defenders is the recognition of the primacy of international human rights law above international trade and investment agreements. This principle is in the Zero Draft and no longer included in the current draft. The primacy of human rights gives obligations to states and the international community not to do harm to the bearers of rights and enables rights holders to demand accountability against entities like TNCs and international financial institutions.
The Scope of the text has also been changed to include “all business” to cover all companies instead of concentrating on TNCs. This has lost the focus of the process on TNCs - whereas the original Resolution 26/9 is very clear on TNCs. The expansion of the scope is a clear attempt to dilute the mandate of the resolution. The new coverage addresses the demand of the EU for the treaty to cover all companies. The possible implications of this are that the developing countries that strongly support the treaty process will see that their interests are once again sacrificed to accommodate the demands of richer and more powerful states.
Another setback in the revised draft is on Joint Liability of TNCs to their supply chain. The term “contractual relations” was placed in the current draft, which opens the risk of excluding other forms of non-contractual control. The revised draft also fails to mention “lifting the corporate veil”, which is a key element in determining the legal responsibility of the parent company in violations committed along the whole supply chain of operations. The revised draft also assigns the primary responsibility of respecting human rights and preventing violations exclusively to states alone instead of directly putting the responsibilities on TNCs. This will not put obligations on TNCs and allow the companies practicing impunity in their operations to continue.
Beyond crafting a universal legal instrument
The process of putting in place a binding treaty for TNCs is very complex. It is beyond having a set of legally binding rules to regulate TNCs. It means much more. It is about changing the power relations between the now too powerful transnational corporations and the communities and sectors affected by their operations in their entire global supply chains.
At the same time, it is about addressing the growing asymmetry of power between states and transnational corporations resulting from the decisions of governments in various political and economic arenas that has shaped the current global trade and investment regimes. We have seen that for a few decades now, investment and trade liberalisation have significantly undermined the sovereignty of the state and this has compromised the ability of governments to protect communities, workers, indigenous peoples and the environment in general.
Supportive governments, mostly from developing countries, are now more engaged in shaping the content of the treaty, however they have less resources to intervene in the negotiation process. The binding treaty is part of the battle for redefinition of our understanding of development and progress, which has been shaped for so long by the corporate agenda.
Early this year European groups, including Global Justice Now, have launched the campaign ’Rights for Peoples, Rules for Corporations‘, linking issues on investor-state dispute settlement (ISDS) and the binding treaty. In the binding treaty campaign, there is also the involvement of MPs at national and Europe level in the form of the Intergovernmental Parliamentary Group. This process is also important due to the worsening situations of human rights violations in developing countries due to the rise of far-right governments and groups.
Photo: Dorothy Guerrero with Anna Shahnazaryan from the Armenian Environmental Front join the peoples mobilisation in Geneva.