Made in Bangladesh: corporations and the common good

June 10, 2013

By Nicolás Zambrana-Tévar, Professor (Private International Law), University of Navarra

The recent death of over a thousand workers in a textile factory in Bangladesh necessarily poses again the question of the responsibility of multinational businesses, not for the harm they cause –which may indeed be big, in some cases- but because of what they do not do. Delocalization of production, taking it from North-America or Western Europe to developing countries, has ethical implications, for several reasons: in the first place, there are job losses in the “first world” (and also jobs created outside that world); in the second place, one must take into account that that delocalization is made, many times, not by locating factories outside the country of origin of the multinational, where the production is still under the business control of the aforementioned multinational, but by making a commercial agreement with local providers who will manufacture the products or their parts, so they can afterwards be distributed under a Western brand and the well known “Made in Thailand” trademark. This second option is much more profitable sometimes.

The problem lies in the fact that manufacturers-providers, in this case from Bangladesh, are only bound by Bangladeshi laws, which are much less protective of workers or the environment than, for instance, the laws of Canada, France or Germany.The multinational which receives the products made in Asia, in order to resell them in the West, makes a killing: it has fewer costs because the workers earn much, much less and, in addition, it does not have to worry about ‘annoying’ trade unions nor collective bargaining agreements. Unions may not exist or may be gagged by the Government or by thugs hired by the company. Collective bargaining agreements… well, maybe they are a luxury that those who are starving do not miss.

From a legal point of view, this matter does not have, in principle, an easy solution because states have a wide discretion to regulate their labour markets. They are also bound by applicable ILO conventions and international human rights law, and international organisations, such as the ILO, can denounce the breach of such multilateral conventions for the protection of workers, but not much more. The countries of origin of multinationals may impose duties to that kind of corporations in order to force them to behave in a humane way in their international transactions but those countries of origin may also be very keen on carrying on well with companies from which they obtain a big part of their budgetary income by means of taxes and which, who knows, may also fund their election campaigns (See here). Furthermore, there is still much discussion on the lawful reach of extraterritorial legislation. The Lotus case (S.S. Lotus (Fr. v. Turk.), 1927 P.C.I.J. (ser. A) No. 10 (Sept. 7) settled the principle that States could assert jurisdiction over their territory in any way they like –subject to any express international law prohibition in that regard- even if that jurisdiction produced effects beyond the borders of that State. In fact, nowadays some national laws undeniably have extraterritorial effects (e.g. capital markets laws) and some scholars (e.g. de Schutter) and institutions (e.g. the ETO Consortium, which has developed the Maastricht principles) argue that there is room for States to regulate the behavior of their nationals (individuals and corporations) abroad on the basis of the international human rights obligations of such States.

The ones which can do more, in the eyes of many, are the corporations that buy the products from the manufacturers located in developing countries. These companies –European, American, Canadian, etc- may condition their commercial deals with the manufacturers to the fulfilment by the latter of the minimum standards of behaviour which are represented by human rights, or they could refuse to buy products from a manufacturer which harasses its workers, the indigenous population of the place where it operates or the environment that surrounds them. Western companies defend themselves and usually claim, among other issues: that they do call the attention of the manufacturers towards issues that need improvement, but that the last word –legally- lies with local manufacturers; that there are so many codes of conduct put forward by NGOs and international organisations that they do no longer know which one they should fulfil; or that they do not understand why they should be the ones who fund, for instance, external audits in order to check the fulfilment or violation of human rights.

Why should they be the ones? The answer is so easy that it may sound simplistic: because they can, because they are best placed to do it, because with great power comes great responsibility. The social function of private property (Spanish Constitution, art. 33.2; Rerum Novarum, n.17) does not only imply that the public interest may prevail over individual ones so that, for instance, our government may expropriate a chunk of our land in order to build a highway needed by many. It also implies that everyone, individuals and corporations alike, must use our belongings for the good of society, starting with that which we need for ourselves and our families, given the fact that they are also members of society and that solidarity is hierarchical: I must first achieve my own sustenance, then my family’s, then my neighbours’, etc.

There is a tendency to think that, in the relationships among the different social entities (individuals, corporations, the State…) the only form of justice that must prevail is commutative justice –I give you something because you give me something-, but that distributive justice is a matter for the State and that the only way we have to build a fairer society is paying taxes, the more the better. This is a forgery of justice because we must all care about others as much as we reasonably can and, yes, in a globalized world, Bangladesh and its more than one thousand recently charred workers are part of our society and we are responsible for them, to some extent. Furthermore, Western companies which benefit from their efforts and work more directly have more responsibility than those who, for instance, only buy the products that they manufactured. Those workers are now our neighbours.

 

The author is grateful to Olga Martín-Ortega for her comments and support.

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