The glass is still half full: the second revised draft of the negotiation text for the UN treaty on transnational corporations and human rights

The glass is still half full: the second revised draft of the negotiation text for the UN treaty on transnational corporations and human rights

By: Dorothy Guerrero
Date: 28 August 2020

The United Nations’ (UN) process of creating a Legally Binding Instrument (LBI) to regulate the activities of transnational corporations (TNCs) and other business enterprises reached another stage on 6 August in the publication of the Second Revised Draft of the negotiation text of the treaty. Since the passage of the UN Human Rights Council Resolution 26/9, which mandated the Open-ended Intergovernmental Working Group (IGWG) under the chairmanship of Ecuador to develop the LBI, five sessions of debates and negotiations have already taken place in Geneva. Together with hundreds of social movements and non-governmental organisations worldwide, Global Justice Now has followed the developments in the treaty process and participated in four sessions of the negotiations from 2016 to 2019.

For us and fellow campaigners, especially in the global south, the LBI is a historic and important process, which did not come about easily. It was born out of hard-fought struggles of communities and workers groups who are in huge conflicts with TNCs whose operations have negatively affected them, their environment and territories. The governments of home countries of most TNCs and the TNCs themselves, through their powerful lobby, have a long history of resisting this kind of regulation. Already, they have been successful in systematically blocking attempts by southern governments to regulate and control them since the 1970s. The existing laws, as well as trade and investment agreements, have also given enormous powers to TNCs to advance and protect their interests from those who challenge their privileges and power.

Progressive organisations and southern governments have pushed for an LBI that complements and goes beyond the UN Guiding Principles on Business and Human Rights (UNGPs) of 2011. The UNGPs only have voluntary mechanisms in protecting human rights against abuses by corporations. In principle, the LBI should address the gaps that could not be tackled by the UNGPs, especially in this period when TNCs are very difficult to regulate due to the nature of their operations throughout their global supply-chains.

The continuation of the negotiations and the publication of the new draft are a step further towards a treaty. The new draft will also be the basis for substantive future negotiations whether they will be held in Geneva in October 2020 or a later date due to the global Covid-19 pandemic.

Is the revised draft a step forward or a step back?

The current draft is meant to take into consideration the debates in the 2019 Fifth Session of the process, as well as the submissions of concerns and proposals from governments and NGOs after the session. There are some aspects of the text that improved on the UNGPs. The gender aspects are strengthened and some concerns from civil society were addressed.

However, the spirit of the treaty – its reason for being, which is to regulate TNCs – is weakened. The key aspects that would allow it to regulate the operations of TNCs and guarantee justice to those that they negatively affect and abuse are still missing from the Articles in the 21-page draft document.

The treaty must be strong in its political spirit, rock-solid in its legal capacity, as well as reach farther than the already existing international instruments to regulate TNCs. For this reason the current negotiation text is not yet fully achieving the real objectives of the process, based on the mandate established by Resolution 26/9.

With the broadened scope, which covers all kinds of businesses, including state-owned enterprises (SOEs) that do not have international operations, the draft further deviates from its original mandate. The organisations within the Global Campaign to Reclaim People’s Sovereignty, Dismantle Corporate Power and Stop Impunity (Global Campaign), which GJN is a part of, share the view that the extension of the scope of the treaty is dangerous for the its effectiveness.

We need to go back to the history of the negotiations. From the beginning, the entities that are against the treaty have been the TNCs, the northern countries where they are from and some of their allies from the global south (for example some that abstained in voting like Argentina, Brazil, Chile and others). Given that the countries that opposed the treaty failed to block it in 2014, it is understandable that their next strategy has been to weaken the transnational character of the treaty under negotiation and reduce its effectiveness and power. The Global Campaign’s statement notes the continuing weaknesses in the document. It highlighted the following:

  • The absence of recognition of human rights obligations for TNCs;
  • The omission of global value chains, which are the key character of the international corporate architecture;
  • The lack of effective international legal mechanisms to implement the Treaty and to sanction in case of non-compliance (such as the international court proposal advanced by the Global Campaign); and
  • The lack of unequivocal recognition of the primacy of international human rights law over any other legal instruments, in particular over trade and investment agreements.

We have seen many examples in developing countries which show current problems on liability like in the case of Chevron’s violations in Ecuador. When the company left the country, the affected communities were not able to get justice. The treaty, in its current form, will not be able to address similar problems.

The section related to trade and investment (Article 14) has clearer language on compatibility and obligation to fulfil human rights compared to the previous draft. However, we know from history and experience that there are a number of problematic trade treaties that need reviewing (or abrogating) and future treaties that are even more problematic due to secretive courts that favour investors. There is still no assurance that human rights will have primacy over trade agreements in the current draft. In fact a lot of the concerns expressed in the negotiation in the Fifth Session and submissions afterwards on the topic were not included.

The need for solidarity with southern countries and movements

In the current draft all the burden is carried by states. They will need to do realignments of national laws while the TNCs remain with no direct obligations and no international court that can rein in them. The power relations between frontline communities and powerful TNCs are not often corrected by governments who have long embraced neoliberal policies and have given away their powers to corporations.

With the looming long-term economic impacts of the global Covid-19 pandemic that will run deep in the economies of poor and less developed countries, there will be added pressures to lure in investors. The weakness and gaps in international law and a future LBI without teeth will hinder the assurance of protection of human rights, as well as labour, social and environmental standards. It is very problematic, even unacceptable that parent companies could still avoid obligations in their global supply chains.

Progressive groups in the north should strongly stand in solidarity with countries that voted for and are still maintaining the position that the treaty should focus on TNCs. These include South Africa, Namibia, Mozambique, Egypt, Palestine, Algeria, Azerbaijan, Cuba, Venezuela and Nicaragua. Countries like the Philippines and Indonesia, although they accept that TNCs will not be the focus, are nonetheless worried about the impacts of the treaty on small and medium scale enterprises.

The inclusion now of even SOEs without transnational activities could be problematic. According to Raffaele Morgantini of the Geneva-based Centre Europe Tiers Monde (CETIM), which has a long history of engagement with the UN, “TNCs and related organizations could use it to attack the activities of southern SOEs, which are against their interests”. For him, “the extension of scope to all businesses: big or small, local and transnational, deviates from the real problem, which is the architecture of impunity that TNCs managed to create over the years.” Other members of the Global Campaign agree with him.

The negotiation on the LBI demands strong commitments from campaigners to prioritise the interests of frontline communities in the global south. It also requires a deep understanding of the problems linked with corporate capture and power relations.

Photo: Civil society participants at the Fifth Session in 2019 in Geneva. Credit: Global Campaign