Draft Integrated Text-Chapters and Commentary:

OECD Guidelines for Multinational Enterprises
DAFFE/IME/WPG(99)18/REV1

17 December 1999

Comments by the TUAC Secretariat

TUAC is concerned that with certain exceptions the changes made to the latest draft (17 December 1995) of the text and commentary of the Guidelines weaken it compared with earlier drafts. This in particular concerns the status of the Guidelines, which are now described as “principles” rather than “standards”. The OECD is not negotiating a binding treaty covering MNE’s but is should be seeking to enhance the relevance of a set of Guidelines which represent the collective expectations of governments with regard to the standards of behaviour of multinational enterprises. This is far more than talking about a set of “voluntary principles”, which risk remaining largely optional. 

Specific comments

The comments should be read in conjunction with the TUAC submission to the December 1999 CIME Working Party on the Guidelines.

Preface: The preface is a step backwards, as the Guidelines are no longer a “standard” of good practice to be met, but rather voluntary “principles”. Further drafts must re-instate “standards”. The TUAC delegation (and others) to the December 1999 consultations argued that the preface should be more balanced between the positive contributions that MNEs bring and the “anxieties” or “perceptions” around their negative actions. We also suggested that the text be more forward looking, in the sense that the Guidelines should be a standard, that when met by enterprises, would put them on the “high road” to corporate success, while meeting the needs of all stakeholders, and thus contribute to increasing a nation’s wealth, in the face of increasing competitive pressures through globalisation.
 

Concepts and principles: the replacement of “standards” by “principles” continues into this section (paragraph 1). Paragraph 2 now undermines the content of the Guidelines, in that observance should take into account the “particular economic, political and cultural characteristics of each host country.” Some countries, for example view child labour or the suppression of trade union rights as falling under that matrix: a loop-hole to be exploited by worst case enterprises. Paragraph 5 as drafted allows for differential and less strict observance by small-and medium-sized enterprises, undermining the general applicability of the instrument. Paragraph 8 forecloses on any improvements that may be made to the implementation procedures, and fails to mention dispute resolution in any sense. Rather than weakening them the text should strengthen these provisions.

General Policies: Previous TUAC recommendations on strengthening paragraph 2 covering respect for human rights should be incorporated. Paragraph 8 on protection for “whistleblowers” is a weakening of the text. The previous text should be re-instated, as should that in the following chapter on corruption. Paragraph 9 has been weakened, not just by the replacement of “standards” by “principles”, but also by the replacement of “responsibility” by “conduct”. As regards the commentary to this section, TUAC is concerned by paragraph 2 that implies that businesses should be “partners” in the development of voluntary and regulatory policies, while the views of others should be merely considered. The final paragraph of the commentary should be deleted, as no evidence exists that corporate codes of conduct are in practice trade or investment distorting.

Disclosure: the deletion of “internationally acceptable” from paragraph 2 reduces the value of the Guidelines relative to contemporary custom and practice. Previous TUAC comments to bring coherence and consistency to the chapter should also be incorporated.

Employment and Industrial Relations: still lacking is a reference to the 1998 ILO Declaration in the chapter itself. Paragraph 2c is a welcome development, however, “promote” should be replaced with “engage in”. TUAC would urge the replacement of paragraph 4b on occupational health and safety by: “Provide a healthy working environment by instituting mechanisms that promote worker involvement, training and education, the right to refuse unsafe work, and that include attention to the natural environment.” In view of past clarifications of the Guidelines the new last sentence should be replaced by: “Management should give such notice at the earliest opportunity, and at least no later than prior to the final decision being taken.” The original language in paragraph 8 should be re-instated, to make it consistent with paragraph 2c.

Turning to the commentary, the new last sentence in paragraph 3 should be deleted. Given the 15 million (and rising) child labourers producing goods and services for export, often in subsidiaries of or suppliers to MNEs, it may be wise to delete the new text in paragraph 5. Paragraph 10 should include immediately following the second last sentence: “Compliance could be achieved through the implementation of measures that recognise workers’ fundamental right to be involved in their own protection; hence the reference to the rights of participation, knowledge and refusal of dangerous work.” The last paragraph should be revised to take account of the TUAC formulation covering reasonable notice.

Environment: the addition (“local conditions”) to the chapeau undermines the goal of the chapter, and should therefore be deleted.  For similar reasons “consultation” rather than “communication should be re-instated to the second tiret of paragraph 2. A new third tiret should be added to paragraph 2: “provide workers with information, training and education that satisfies their fundamental need to know as a prerequisite to health and safety practices.”

The following should be added to paragraph 5: “to include social and employment transition programmes that ensure the workers’ interests in secure employment.” A new tiret 5 should be included in paragraph 6: “worker involvement in enterprise assessments, target setting, monitoring and reporting. A new paragraph is needed to read: “Recognise the role of workers’ health, safety and environmental representatives and the right of workers to refuse unsafe, unhealthy or environmentally damaging work, according to internationally agreed standards and practices.”

As regards the Commentary, a new last sentence should be added to paragraph 4: Workers are primary stakeholders and should therefore be involved in consultations, agreements, and implementation practices that recognise their interests as producers and consumers.”

Combating Bribery: the original title “Bribery and Corruption” better captured the essence of this issue. As noted above the previous text protecting “whistleblowers” should be re-instated.

Consumer Interests: paragraph 1 would better read as: “Ensure that the goods and services they provide meet all required standards for consumer health and safety, are produced in accordance with international labour and environmental standards, and include all required health warnings and product safety labels.” As regards the commentary, the following new sentence should be added to paragraph 3: “The objective of transparency should be extended to include relevant information on process and production methods, especially those that reflect a growing consensus on the importance of labour and environmental standards.”