Corporate Accountability on Sustainability

The corporate business model for International trade, as it is now, is not sustainable nor respectful of human dignity and environmental sustainability.

As John Erik Meyer of “The Social Contract” and “The Perfect Currency”, states “Free Trade and Globalization are centred on the concept of maximizing consumption. They strive to narrow the base of national economies to the few sectors in which they are most competitive internationally. Although consumption and international trade are both maximized under the current approach, globalization increases social and economic instability along with international interdependence.”

He also notes that the term ‘competition’ is “used to imply vitality, efficiency and progress in a business environment.  When applied to the issue of free trade it is lauded as allowing the most efficient supplier to prevail hence maximizing the benefits of the division of labour.  It assumes a level playing field.”

The reality is far from a level playing field. We cannot deny this. We see this in the news all the time, whether exploitative and inhuman conditions of temporary migrant workers, sweatshops and child labor, farmers being sued and losing their generational family business from lawsuits from Monsanto, mining corporations that have rendered whole towns uninhabitable due to pollution and deadly diseases. And this is not just the exploitation of citizens of developing nations but in our own cities in Canada and the United States.

Currently, International Investment Agreements (IIAs) as used in NAFTA and TPP, are negotiated between states to govern the protection of foreign investments. They have proven to give no consideration for the well-being of those they now control. From the 2015 report by the Canadian Council for International Cooperation (CCIC) titled “Who’s Rights Are We Protecting”, the evidence to date indicates that the role of IIAs in generating increased foreign direct investments is ‘relatively small’, let alone generating investments that support sustainable development and the realization of human rights in the host country. Not only do IIAs lack transparency, they limit the policy space necessary for states to legislate in the public interest, do not guarantee equal enforcement power, and show little or no consideration for human rights.

In a seminar and panel discussion of experts on trade and law at the University of Ottawa, which presented this document, Sanya Reid Smith, Legal Advisor and Senior Researcher for the International Centre for Trade and Sustainable Development and Third World Network,  explains (and later is interviewed by Inter Pares) further explains this ongoing case research of the realities. The chapters on Intellectual Property hold a monopoly on expensive  patents on prescription drugs and copyrights to textbooks for 20 years. Whereas farmers who often swap and exchange seeds when a neighbor’s crop was not doing well or lack the capital to buy seed, these large companies have monopolized on seeds. With the trade agendas of the TPP, farmers can no longer partake in seed exchanges and now have to pay 20 year loyalties. Furthermore, unlike a developed country where annual tariff revenues are only a minor fraction of the budget, tariffs on goods and services are necessary and contribute significantly towards the revenues of developing countries.

Thus, there is not a level playing field as the developed markets bolster. From the rise of Free Trade Agreements came the the push to reduce and remove their tariffs. Sanya Smith points to a study the International Monetary Fund conducted regarding the removal of such tariffs in the developing countries. They found that whereas developed countries rely on tariff revenue for less than 1% of their government revenue, for some developing countries, it is 70% of the government revenue is from tariffs. In other words, these developing countries are in fear of businesses possessing the ability to sue governments for potential loss in profits due to environmental treaties. Furthermore, the loss of the tariff revenue cannot be recovered in the developing country. Aside from internal factors such as corruption and lack of transparency, this permanent loss in tariff revenue most often comes from the health or education budgets.

These choices of doing business comes full circle, not only to the citizens and producers in developing countries but to the local producers in Canada. Farmers in developing countries cannot compete with subsidized agriculture from the US and EU and are exploited with inhuman conditions and unsustainable pay, while our own local business close because the superstores choose to use the exploited products at the cheapest cost.

It is not effective calling mining itself “evil”; it is the methods of exploitation so many corporations and trade partners are using without respect or protection of human rights. Like we say in mediation, it is not the person, it is the behavior that is toxic. In order to effectively address these catastrophic choice of doing business, human rights advocates and lawyers must ensure they are addressing the methods of business, rather than running the risk of losing the case shaming the industry which is not inherently bad. That is what Professor John Packer, Director of the University of Ottawa Human Rights and Education Centre, Faculty of Law and I had recently discussed. We need to remove ourselves from this all-or-nothing business mindset.

Scholars like John Erik Meyer push for Cooperative Development. It would build on the international cooperation used to implement free trade and revise its goals and methods.  A set of rules and common objectives would produce the following structure:

1. All nations place a 30% tariff on all imports.

2. A Progress Indicator is calculated for each nation based on per capita income, equality and environmental sustainability.

3. Nations can trade with nations which are in the same strata of score, say a window of + or – 5 points with no additional tariff.

4. The tariff goes up by 10% for each differential step in strata.

5. Nations would want to trade in a higher strata which would contain wealthier buyers.

So what can you or I do in the meantime? The consumer’s choice has great power and impact. There are documented lists accessible anywhere separating business which do and do not respect sustainable development, and UN Declarations. Each day, become a little more aware of where your products come from. It is human rights advocates that uphold sustainable development.……

Karli Zschogner

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