Glimpsing Another Mindset

Glimpsing Another Mindset

Hrab Op-ed in Regulation Magazine
April 28, 2004


Kevin Danaher and Jason Dove Mark's new book Insurrection presents the views and strategies of those who resist global free trade and markets. The activist authors sketch out five highly detailed, succinct case studies of the movement's various constituencies in action. The case studies make up the bulk of the book, and give readers insight into how the movement's organizers build and deploy coalitions in policy debates.

As illuminating as the case studies are. I found the book's conclusion to be the most interesting section. The authors use the closing chapter to explain how the anti-globalization movement can advance from merely opposing the trend toward freer global trade to actively undermining and reversing that trend. The conclusion iricludes a bold plan to turn the United Nations into a kind of weapon that the movement can wield against its most hated enemies: transnational corporatioris.

The authors want to revive something called the "United Nations Center on Transnational Corporations" (or UNCTC). The center is barely remembered today, but during its brief life from 1977 to 1992 it was a kind of think tank within the UN organization. The UNCTC studied transnational corporations and worked to create what the authors call a "sweeping — thorough voluntary — code of conduct for [those] corporations." The authors call for the creation of a new UNCTC to "help draft, oversee the ratification of, and implement [an] international treaty on corporate accountability."

Insurrection claims that the United States ordered the UN to close the UNCTC in 1992 out of fear that its efforts would hurt American businesses. That is one version of events. Those close to the actual talks over the center advance a more nuanced explanation. The effort to create a code never escaped the nettlesome snag of what Alan Keyes, then U.S. ambassador to the UN, described in congressional testimony in 1987 as "fundamental philosophical/ideological differences" between the Western bloc and the Eastern bloc regarding trarisnational firms.

According to Keyes, the United States' position revolved around the following key points:

"Market forces rather than government intervention should determine international capital flows."

Investors who risk their capital abroad should be entitled to "prompt, adequate and effective compensation, in the everit of expropriation."

■ Investors should have the right to transfer profits and capital freely" and "the opportunity for impartial third-party settlement of disputes with governments of host countries."

None of this, of course, sat well with the UN's strong socialist bloc. Keyes correctly diagnosed that bloc's interest in the creation of the transnational corporate code as primarily "political" in nature, rather than economic. That is, the USSR and other proponents of state control over the economy saw the code as a chance to promote an adversarial relatioriship between Western firms and third world countries that received investments from those firms. The socialist bloc promoted this adversarial position by using discussions on the code to propose bans on, for example, "interference" by companies in the "internal affairs of host countries," which was a popular 1970s bogeyman.

The socialist bloc cultivated additional tension by' attempting to insert language into the code enshrining the right of host governments to nationalize the assets of transnationals, without laying down a clear standard for appropriate compensation,

Given the enormous gulf between the United States and the socialist bloc, it is no surprise that the search for a code collapsed in the early 1990s and did not restart. After years of perpetual jaw-jawing, it had become a pointless exercise. Around the same time, the UNCTC's responsibilities were transferred to other UN bodies. and the center itself shriveled up.

I am optimistic that the global shift in favor of free markets makes the idea of reviving the UNCTC and its code of conduct a lost cause. Still, a revitalized UNCTC would be useful to the anti-globalizers, if they could somehow capture and use it for their own ends. If this idea does indeed catch on, then future historians will no doubt look back on Insurrection as a most prescient book.