This week we took a look at global, non-state economic actors and their effect on the international realm. With so many corporations setting up headquarters in one nation and operating in many more, governance of these corporations falls in a difficult grey area. Can these corporations face legal consequences for transgressions committed abroad?
Unfortunately, they often do not. Corporations are easily able to take advantage of nations with weak governance to set up operations there that would probably break the law in their headquarter nation. They get cheap labor, can ignore safety codes, and face few consequences for doing so. As a result, they're able to provide cheap products for consumers. Even if they break laws abroad, the weak governments there often struggle to prosecute and the home country looks the other way.
Another difficulty faced is the new means of production in global commerce. If something is wrong with a finished product, where do we lay the blame if the raw materials come from several countries, it is manufactured in one country, and the corporation is in another? With so many international inputs in the production chain, it is difficult to tell where exactly a product is coming from and what to do if something is wrong with it. Multinational corporations know this, and when something does go wrong with a product, no one takes the blame.
With so many global governance organizations, it is interesting that we do not have one governing commerce (I am not counting the WTO because they don't govern corporate behavior). Would this type of organization violate state sovereignty, even though corporations exploit state sovereignty to maximize profit? It would be interesting to see if this type of organization develops in the future - and since so much of the economic sector is globalized now, I would be very surprised if it didn't.
So with the "corporate governance" IO, how can jurisdiction be defined and how much leverage do you think such IO will have? Will it be another ICJ or ICC where it's great in principle but when it comes to prosecuting my citizen executives, we do not want to be a part of this? Is this likely to happen?
ReplyDeleteGood question. I think it could be sort of an "opt-in" system like many IOs that already exist and sort of set a precedent for MNCs to join, as it makes them look better in terms of corporate responsibility. Unfortunately, it would be difficult to enforce - perhaps national governments need to take a tougher stance on corporate behavior abroad, as they're really the only ones with any power to do anything.
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