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Developments in the Law and Institutions of International Economic Relations*

Reflections Concerning the United Nations Commission of Transnational Corporations

Published online by Cambridge University Press:  27 February 2017

Seymour J. Rubin
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Extract

When there is no meeting of minds, agreement on a form of words, and the creation of machinery for discussion, are idle. Charles Kindleberger, in Global Companies, 84 (1973).

… the successful negotiation of an international treaty which could facilitate a massive movement of capital and of business from the industrialized to the developing nations through “multinational” companies is among the most urgent tasks of diplomacy.

Eugene V. Rostow, id. 113.

Type
Research Article
Information
American Journal of International Law , Volume 70 , Issue 1 , January 1976 , pp. 73 - 91
Copyright
Copyright © by The American Society of International Law 1976

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Footnotes

**

Executive Vice President, American Society of International Law and United States Representative, UN Commission on Transnational Corporations. The views expressed herein are entirely personal. The assistance in editing of Mr. A. Jason Minchito is gratefully acknowledged.

*

Stanley D. Metzger, Editor.

References

1 UN Doc. E/5655; E./C.10/6. Hereinafter cited as Report.

2 The exact phrase is “a detailed programme of work on the full range of issues relating to transnational corporations” (emphasis added).

3 The “all States” formula permits invitations to states which are not UN members, subject to the opinion of the General Assembly. It is thus possible that a state whose membership in the United Nations has been blocked, either by the General Assembly or the Security Council (as has happened recently in regard to North and South Vietnam and South Korea), may become a member of the Commission.

4 Res. 1913, para. 1(a). The present members are listed in Report, para. 80.

5 UN Doc. E/5500/Rev.1, ST/ESA/6 (1974). The Group of Eminent Persons was established to study the impact of multinational corporations on the development process and on international relations, its members having been named by the Secretary-General on an expert level, pursuant to a request addressed to the Secretary-General by the Economic and Social Council of the United Nations (ECOSOC Resolution 1721(LIII)). The cited document includes both the report and the comments of individual members, many of whom expressed views at variance with certain of the recommendations or analysis of the report itself.

6 Res. 1913, para. 4.

7 Report, para. 11.

8 Report, para. 51.

9 Report, para. 13.

10 These informational requirements and the list of “priority areas” are set out in Report, para. 15.

11 Mr. Klaus Sahlgren, a Finnish diplomat, has now been designated as Director of the IRC. The Secretariat has sent some preliminary questionnaires to governments. Previous experience with UN questionnaires does not encourage the hope that all governments will have responded by the time of the next Commission session.

12 Report, para. 26. It is informally understood that some governments have designated one or two of their own nationals as such experts, though Resolution 1913 implies that the selection would be by the Commission in consultation with the Secretary-General.

13 E.73.II.A.11; ST/ECA/190.

14 UN Doc. E/5500, Nov. 1, 1974.

15 Thus, see GA Res. 523(VI), Jan. 12, 1952; 626(VII), Dec. 21, 1952; 1803 (XVII), Dec. 19, 1962, which emphasized Res. 1314(XIII), Dec. 12, 1958. Res. 1314 established the Commission on Permanent Sovereignty over Natural Resources.

16 The texts are reprinted in 13 ILM 715 (1974) and 14 ILM 252 (1975) and 68 AJIL 798 (1974) and 69 AJIL 484 (1975).

17 The roll call vote was 120 in favor to 6 against, with 10 abstentions. Negative votes were cast by Belgium, Denmark, Federal Republic of Germany, Luxembourg, United Kingdom, and United States. See 14 ILM 252 (1975); roll call at 265.

18 For a muted description of this vigorous debate, see Report, Ch. II, para. 29.

19 See resolutions cited, supra note 15.

20 GA Res. 1710((XVI), Dec. 19, 1961 and Res. 1715(XVI), Dec. 19, 1961.

21 GA Res. 2626(XXV), Oct. 24, 1970.

22 GA Res. 2186(XXI), Dec. 13, 1966.

23 GA Res. 1995(XIX), Dec. 31, 1964.

24 This is essentially the point made by the Mexican Ambassador to the United Nations, Mr. Garcia Robles, at a seminar held during the Annual Meeting of the American Society of International Law in April 1975.

25 Ch. II, Art. 2, para. 2(c). 14 ILM 255 (1975); 69 AJIL 487 (1975).

26 See Rubin, Private Foreign Investment-Legal and Economic Realities 14–15 (1956).

27 Report, Introduction, para. 1.

28 This list of concerns is contained in Report, Annex I.

29 Conf. Room Paper No. 6, March 25, 1975.

30 Conf. Room Paper No. 7, March 26, 1975, entitled “Areas of Concern which relate to relations between transnational corporations and governments.” See Report, Annex II.

31 An objective observer might well feel that neither of the “areas of concern” papers was a balanced presentation. Conf. Room Paper No. 7 was drafted as a response to the paper presented by the Group of 77 so that the two taken together might achieve some balance rather than as a list which in itself would be either inclusive or balanced.

32 Report, Annex II. There may be, in the opinion of some, a bit of irony in this sponsorship of an expression of concern for the exercise of trade union rights, which at least to some Western views include such rights as freedom from governmental interference, the right to strike, and so forth.

33 Report, para. 15(b).

34 Report. para. 37.

35 Report, para. 35.

36 Res. 1913, para. 4(c).

37 The Eminent Persons stated: “The Group recommends that the United Nations should strengthen its capacity to assist host countries, at their request, in such negotiations with multinational corporations, as well as to train their personnel in the conduct of such negotiations.” UN Doc. E/5500/Add.I, May 24, 1974; 13 ILM 818 (1974).

38 Report of the Secretary-General, Draft Program of Work on the full range of issues relating to Transnational Corporations, UN Doc. E/C.10/2, Feb. 28, 1975, at 35–45. See also Multinational Corporations in World Development, supra note 13, at 87–88.

39 Report, para. 23.

40 Report, para. 66.

41 E.g., in The International Firm and the National Jurisdiction, in Kindleberger (ed.), The International Corporation (1970) and in International Rules for Transnational Corporations, 1 J. of Int. Trade Law 1, at 10 (1975).

42 Müller, A Qualifying and Dissenting View of the Multinational Corporation, in Global Companies 36 (1973).

43 See “Automobiles and Foreign Affairs,” editorial in Wash. Post, Dec. 9, 1975. For a more extended statement of the thesis expressed in the above paragraphs, see Rubin, The Multinational Enterprise at Bay, 68 AJIL 475 (1974).

44 Article 85 deals with restrictive agreements; Article 86 deals with “improper exploitation by one or more undertakings of a dominant position.” Both are directed only at practices affecting trade between members of the Common Market, or which restrain trade within the Market. Distortions produced abroad, and only abroad, are not prohibited.

45 Report, para. 57. It was presumably thought that the advantages of state trading methods over those of private enterprise would thus be demonstrated; however that may be, the inquiry would seem necessarily to require some examination of the current practices and effects of state trading enterprises before the comparison can validly be made.

46 Report, para. 9. The phrases “to be oberved by” and “dealing with” are both in the text, both enclosed in brackets indicating disagreement as to which should be used.

47 For the points made in the subsequent sentences, see Report, paras. 41–50.

48 The Rapporteur’s Report, dated Jan. 9, 1975, has not been publicly released; but the main points mentioned below are included in Annex I of the Report of the UN Commission.

49 73 Dept. State Bull. 425 (1975).

50 Id. 353.

51 Resolution adopted July 10, 1975. Permanent Council Res. 154 (167/75), Corr. 1.

52 For a description of the Canadian legislation, see Comment, The Canadian Investment Review Act: Red, White and Grey, 5 Law & Pol. Int’l Bus. 1018 (1973).

53 See the discussion of Decision 24 of the Andean Group (Andean Private Investment Code), in Oliver, The Andean Foreign Investment Code: A New Phase in the Quest for Normative Order as to Direct Foreign Investment, 66 AJIL 763 (1972); text of decision in 10 ILM 152 (1971).

54 The suggestion was that, in the first instance, a bilateral arrangement involving Germany and the United States might be worked out as “an international standard of behavior: which could later be a model for adoption and application on a world-wide scale.” Wash. Post, Nov. 28, 1974, at C20, col. 1.

55 “… [B]ecause of changing economic and political circumstances … the balance between the sovereignty of nations and the power of multinationals is being, if it has not already been, restored.” Rubin, The Multinational Company as a Superpower, in Global Companies, supra note 42, at 155.

56 Foreign Investment Study Act of 1974, Pub. L. No. 93-479, 88 Stat. 1450, effective Oct. 26, 1974.

57 See such bills introduced in the 94th Cong., 1st Sess. as S. 329, which would monitor all investment in the United States by foreign investors involving more than 5 percent stock acquisitions; other bills, H.R. 411 and 945, which would set up a supervisory agency; and S. 425, which would permit the President to block foreign acquisitions on grounds of national security, foreign policy, or domestic economic considerations.