Iinterpreting the Tripartite Declaration on Multinational Enterprises (Dan Gallin, 1997)

On the occasion of the twentieth anniversary of the “Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy”, adopted by the Governing Body of the International Labour Office on November 16, 1977, the ILO is preparing a compilation of comments and observations on the Declaration. GLI Chair Dan Gallin was among the persons asked to contribute to this anthology.

The principles laid down in the Declaration offer guidelines to transnational corporations (in ILO terminology: multinational enterprises), governments, other employers and workers in such areas as employment, training, conditions of work and life and industrial relations. It refers to 28 ILO Conventions and an equal number of Recommendations. Triennial surveys are conducted to monitor the extent of the application of the Declaration by governments, employers and transnational corporations. The Declaration is a voluntary instrument, and it does not provide for complaints against companies or governments (unlike the procedure for the examination of complaints against infringement of trade union rights on the basis of the relevant Conventions.) However, in the event of disagreement over the application of the Declaration, the parties, using a procedure instituted in 1981, may submit to the ILO a request for an interpretation of the meaning of its provisions.

The following are Gallin’s comments on the occasion of the twentieth anniversary of the Declaration.

Like any instrument that seeks to establish ground rules in the relationships between social forces, the Tripartite Declaration must be understood in the context of the time when it was adopted. All constitutions and most laws, especially social laws, represent such an instant picture of a compromise; the balance between the forces they are intended to reconcile on the basis of a common denominator. This is especially true for instruments, like the Tripartite Declaration, which are not binding and therefore must rely entirely on voluntary compliance: like the snapshot of a beach-ball balancing on the nose of a trained seal, it reflects an unstable and fleeting moment, in this instance, a moment in world politics and social relations.

The balance of forces involved here is, of course, that between workers and employers, with governments in varying roles of arbitrators or supporters, more often of the employers than of the workers. The ILO as an institution has always been most successful when the two main forces involved, workers and employers, have been more or less equally balanced, in other words, when the employers’ side was politically weak. Because of the enormous disproportion of the economic forces, it is only through politics that the workers’ side has ever been able to achieve what appeared to be a balance between equals, resulting in a political compromise with a social dimension. For that to happen, the employers had to be in a position of political weakness, and therefore interested in a compromise.

Indeed, the very existence of the ILO is owed to such a moment in history. The victors of the First World War, when imposing their new world order through the Treaty of Versailles, included a provision (Part 13 of the Treaty) on labour, establishing the ILO. In the preamble of that provision, it is stated that “universal peace” can only be established on the basis of social justice.

The rest of the preamble is worth quoting in full:

“….and whereas conditions of labour exist involving such injustice, hardship and privation to large numbers of people as to produce unrest so great that the peace and harmony of the world are imperilled; and an improvement of those conditions is urgently required: as for example, by the regulation of the hours of work, including the establishment of a maximum working day and week, the regulation of the labour supply, the prevention of unemployment, the provision of an adequate living wage, the protection of the worker against sickness, disease and injury arising out of his employment, the protection of children, young persons and women, provision for old age and injury, protection of the interests of workers when employed in countries other than their own, recognition of the principle of freedom of association, the organisation of vocational and technical education and other measures; Whereas also the failure of any nation to adopt humane conditions of labour is an obstacle in the way of other nations which desire to improve the conditions in their own countries; the High Contracting Parties, moved by sentiments of justice and humanity as well as by the desire to secure the permanent peace of the world, agree to the following: A permanent organisation is hereby established for the promotion of the objects set forth in the Preamble.”

Why, might one ask, did it take the High Contracting Parties so long to discover and act upon their sentiments of justice and humanity? After all, much the same issues had been on the agenda of the Bern Conferences of 1905 and 1906. George Barnes, a British trade unionist who was to lead the British government delegation at the 1919 Peace Conference in the Commission which prepared the Charter of Labour and laid the foundations of the ILO, observed that the Bern Conferences had had “but little practical result”: governments “merely pigeonholed the reports of their delegates as a matter only of academic interest to theorists and propagandists.” As an aside, Barnes remarks that “governments have seldom done anything in the way of social or industrial progress except as the result of persistent and consistent pressure.” What had changed in 1919?
Barnes, writing in 1926, concludes his history of the origins of the ILO with a warning. After stressing that the ILO depends for its success on the continued confidence of Labour, and pleading for strong support from the “European organised industrial democracies” without which the ILO “might survive in a feeble way, but (as) a body without a soul, a machine without the necessary impulse to give it vitality”, he says that there is a special reason for supporting the ILO at this time “by all those who want to see orderly and evolutionary progress in social and industrial betterment”: “The forces of disorder and anarchy are active and unscrupulous, especially in the international sphere. And internationalism has come to stay.”

“What kind of internationalism is it to be?” Barnes asked, and went on to say: “That is the question which has emerged from the political upheavals of the last few years and which gets more insistent for an early answer. Is internationalism to be voiced by all in the interests of all? Or is it to be left to be voiced by violent revolutionists in the alleged interest of some? The ILO stands for the former. It affords and opportunity for Governments, employers and employed to come together to advance common interests, it spreads knowledge from all for the benefit of all, and it helps maintain peace by fostering the right spirit. If Governments, however, withdraw their support, then Labour might be lured into the revolutionary camp.”

Capitalism was under threat. Millions of people throughout Europe and elsewhere were deeply revolted by the senseless slaughter and destruction of the war and held the system responsible. Communism, not yet clearly distinguishable from radical socialism and not yet identified with Stalin’s totalitarian police state, appeared as a beacon of hope or, at least, as a plausible alternative to millions. Although, in Barnes’ words, the average employer believed the ILO – already then – “to be a something which is only adding to his burden”, employers as a class, also pressured by governments who were able to exercise greater power than they can today, were prepared to pay the price of fear and to support the ILO as a vehicle of social compromise and a rampart against revolution.

The other major founding document of the ILO, the Declaration of Philadelphia, must also be seen in its context. Adopted in 1944, the Declaration asserts that “labour is not a commodity” and that “freedom of expression and association are essential to sustained progress.” It states that “the war against want requires to be carried out with unrelenting vigour within each nation, and by continuous and concerted international effort in which the representatives of workers and employers, enjoying equal status with those of governments, join with them in free discussion and democratic decision with a view to the promotion of the common welfare.”

In the following chapter, the declaration states that “all human beings … have the right to pursue both their material well-being and their spiritual development in conditions of freedom and dignity, of economic security and equal opportunity” and that this should be a “central aim of national and international policy” and a “fundamental objective”. Strong and clear language.
At the end of the Second World War, about the time the Declaration was adopted, the employers were again on the defensive. In Germany, Italy and Japan, they had been part of the war machine of the Axis powers and, in the case of Germany, several leading corporations had built and supplied the Nazi extermination camps and benefited from the forced labour supplied by these camps, by prisoners of war and by conscript workers from the occupied and satellite countries. Also in occupied and neutral Europe business collaborated, with a few honourable exceptions. In this regard, the post-war nationalization of Renault in France, among other enterprises, was a politically exemplary act of retribution. Even corporations in the Allied camp were involved: with the knowledge and support of the head offices, the General Motors and Ford subsidiaries kept producing vehicles for the German army throughout the war, an ITT subsidiary held a major share in the company producing Focke-Wulff fighter-bombers and IBM not only contributed to the Nazi war effort but managed to get its profits out through a Swiss holding company. Corporate business had much to be forgiven for.

Left-wing parties were strong throughout Europe. As their leaders returned from exile or emerged from concentration camps, the moral contrast with those who had amassed wealth in the service of one of the largest criminal enterprises in political history could not be more telling. With socialists in government in most European countries and with Christian-Democracy in Germany adopting a socialist program, it was again time for compromise. No one on the employers’ side questioned the value of the ILO in those days: neither its standard-setting activity, nor its commitment to freedom and dignity and to economic security and equal opportunity for all as a “central aim of national and international policy.”

When the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy was adopted in 1977, multinational enterprises, or transnational corporations as many prefer to call them, were again under attack, this time not so much because of the unresolved “social question” but because of the development issue: the growing gap between the “North” and the “South” of the planet and the demands of the “South” for economic self-determination. Nationalist and radical reforming governments in what used to be called the Third World, often looking to the Soviet bloc for support, perceived transnational corporations as an interventionist and threatening force. The political intervention and, indeed, the military intervention by proxy of companies such as United Brands making sure that Central American states would remain “banana republics”, or of ITT and Kennecott Copper in Chile, helping to overthrow the Allende government, to mention only the most blatant instances, demonstrated that such fears had a basis in reality.

The trade union movement had meanwhile experienced how the corporate centers of decision making had shifted from the national level, where management decisions could be challenged by established collective bargaining procedures, to the international level, where a comparable challenge could only be mounted through international organization and a co-ordinated trade union approach. From the mid-1960s, but especially in the 1970s, International Trade Secretariats such as the IMF, ICF (later ICEM) and IUF were developing the appropriate structures and policies and scoring isolated but significant successes.

The Tripartite Declaration reflects some of the concerns of unions and of developing nations and, as far as the employers are concerned, it is essentially a defensive document. Was it ever more for the employers than a public relations exercise in response to the political and trade union pressures of the early 1970s? Also in this case, the measure of a statement of principle must be taken through its practical effects.

So far as the international trade union movement is concerned, the experience has been severely disappointing. When it comes to specific cases, that is to say requests for interpretation of the Tripartite Declaration as it applies to the actions of specific companies, two are particularly instructive: that submitted by the IUF in 1992 regarding the operations of Pepsico in Burma and the request of the ICEM in 1993 seeking to establish whether the Malaysian subsidiary of Exxon was entitled to prevent one of its employees from attending an ILO meeting in Geneva and to withhold occupational safety and health information from him.

The IUF was seeking to establish whether a company operating in a country where basic human and trade union rights were denied on an exceptionally severe and widespread basis had not put itself in a position where it could not possibly observe the principles of the Tripartite Declaration. Its request for interpretation was declared irreceivable by a majority in the ILO Committee on Multinational Enterprises composed of the employers’ group and some governments. The employers’ view that “it was dangerous and ill-advised to attempt to link investment decisions to the human or trade union rights record of a country. … had this been the intention of the Tripartite Declaration – which it is not – the Employers would never have supported its adoption.”
In the end, of course, the great ideological battle waged by the employers’ group and its allies in the ILO to defend the right of companies to do business with dictators and to thus participate in the oppression of peoples in dictatorship countries, was fought in vain: Pepsico withdrew from Burma anyway, together with other companies, not out of respect for the fundamental principles of the ILO and much less for those of the Tripartite Declaration, but because the combined pressure from trade unions and human rights groups was threatening their public image and their markets.

The ICEM request was rejected by the same majority of professional hardliners on the employers’ side and representatives of governments anxious to do nothing that could antagonize transnational corporations. The reaction of the ICEM was blunt: “This case, by common consent one of the strongest ever referred to the ILO under the Tripartite Procedure, dragged on as a direct result of the clear and calculated blocking tactics of the employers’ side and a number of governments… it had no chance against the clear political agendas of the majority of governments and the employers.” The Tripartite Declaration, ICEM observed, was being “cynically used by multinational enterprises aided by a number of governments as a means of delaying an issue until it quietly disappears” and the reason why it was adopted in the first place was that “governments and multinational enterprises recognized from the outset that it would be largely meaningless and that it would not bind them in any way.”

The ruling of the Committee on Multinational Enterprises in the case of the closure by Michelin of a plant in Belgium, which confirmed that transnational corporations should not unilaterally shut down workplaces without consulting the workers, hardly suffices to restore a balance, and it is significant that the request for interpretation in this instance, which is exceptional inasmuch as it was modestly successful and did reflect some concern for natural justice, originated from a government and not from a trade union organization.

In the twenty years since the Tripartite Declaration was adopted, the world has changed fundamentally. The emergence of a globally integrated, borderless economy, of which the transnational corporations are the spearhead and the chief beneficiaries, has led to an increasing dependence of national states on transnational corporate investment and, by way of consequence, to an increasing inability of national states to assert an agenda of social justice against the wishes of transnational corporate power. The role of the State as an agent of social compromise has declined and is under challenge where it remains significant; only where the activities of the State are supportive of the interests of transnational capital has State power remained intact or has even increased.

This is true of the Western industrial democracies, and even more so of the former Communist countries where the old nomenklatura has converted into a kleptocratic capitalist ruling class in partnership with transnational capital, or China, which has evolved into a form of market Stalinism where the same type of partnership rules the economy and society, or in the former Third World where society is now equally defenseless against the partnership of its own so-called elites with transnational capital. In this world, the economies and societies of even successful and advanced States and regions – in terms of wealth and power – such as the United States, the European Union or Japan, are overtaken by more powerful forces operating independently and outside of their control.

Not unnaturally, this is also reflected at the level of international institutions, with the UN Center on Transnational Corporations being neutered and other branches of the UN system, also suspect of trouble-making and disobedience, financially blackmailed and restrained by the leading conservative powers, particularly the United States under the Reagan, Bush and Helms administrations.

Capital has finally broken loose from society: it has no limits, it has no fear, and does not feel any necessity for social compromise. Never before in history has it exercised such power, and never before has this power been exercised so irresponsibly. As Milton Friedman put it: “Business as a whole cannot be said to have responsibilities. The doctrine of social responsibilities is a fundamentally subversive doctrine. In a free society there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits as long as it stays within the rules of the game.” In a world where such principles prevail, the Tripartite Declaration stands as a forlorn monument to a bygone area, a time when vice still felt obliged to pay tribute to virtue.

That, at any rate, is the short term view. The picture in the long run is very different. Only a profound ignorance of society and history could lead one to believe that the present balance of power between labour and capital, and the balance of political forces that is its result, can be stable or lasting. The realization is spreading that the “free market economy” touted by Milton Friedman and the political demagogues who are his followers, is an ideological construct, a fiction, bearing no relationship to reality or to any society existing on earth. Evidence is mounting that peoples everywhere, particularly in the countries where they are most oppressed, will not accept its real outcome which, all other things remaining equal, will be a world society with a few prosperous high-tech garrison states surrounded by a sea of miserable, suffering and rebellious humanity. All other things will not remain equal. The labour movement, declared dead many times in its long history, is responding to globalization as it has responded to economic developments in the past: by becoming better organized, more effective and more militant, also at global level. It is linking up with other forces in civil society striving for a future where human needs will be the social priorities. Meanwhile, we can say with Jacques Prévert: do not be surprised when the elephants are trampling over your billiard tables when they come to reclaim their ivory.

Not all employers are addicted to short term thinking. A small but growing group, including transnational corporations, recognizes that employers do have general responsibilities for society. For example, a number have accepted that business must act responsibly on environmental issues. Others also accept that social responsibilities include responsible industrial relations as building blocks of a democratic world society. The reason this group is small is, in the first place, because they are more intelligent than the majority: long-term thinking requires more knowledge and a greater effort of imagination than most possess or are capable of making. However, this group will grow in strength and numbers as resistance to the slash-and-burn capitalism of the current majority will grow and its political price will become ever more costly.

Some of these companies have taken the first steps towards global industrial relations by entering agreements with international trade union organizations. Like all agreements, also national CBAs, these too reflect a given time in history and are subject to improvement and change, but they are fundamentally distinguished from general codes of conduct insofar as they are binding by mutual agreement with reciprocal rights and responsibilities, and therefore reflect a seriousness of purpose and a sincerity of commitment which is entirely absent from the Tripartite Declaration as interpreted by the apparatchiks of the employers’ organizations and their cheerleaders on the government benches.