The long journey towards a binding treaty on transnational corporations

At the end of October, negotiations led by a UN Intergovernmental Working Group (IGWG) continued in Geneva with the aim of drafting a binding treaty on respect for human rights by transnational corporations (TNCs).

Protected by market forces and buoyed by their economic strength and political influence, TNCs are largely able to evade democratic and legal control due to their transnational nature and complex structures, which they use to circumvent domestic and international regulations. To address this power imbalance and bring an end to the impunity of these corporations, the IGWG has been working on a binding international treaty since 2014.

Until recently, the IGWG Presidency, held by Ecuador, ‘took note’ of comments from States and other ‘stakeholders’ (civil society organisations, trade unions and business representatives) and presented a new version of the draft treaty at each session.

At the seventh session, the group adopted a new working method. The participating States presented their amendments directly during the discussions. Although this method is more transparent, it revealed the Presidency’s helplessness and lack of political will to obtain a majority that would enable to move forward in the elaboration of a strong treaty. In fact, it is impossible to reach a consensus due to the power of TNC lobbying and the lack of political will among some powerful States.

With this method, the negotiations looked set to stall. A new structure called ‘Friends of the Chair’ was set up with the aim of pushing the negotiations forward, but its vague, opaque nature inspires little confidence. Moreover, the fact that participation has been extended from umbrella organisations to any company in the business world may undermine the negotiations as they act as both judge and jury.

Obstruction, hedging and delays: the ‘waltz’ continues among opponents of the treaty

This year, States’ participation was weak due to constant pressure from TNC lobbies and public health restrictions. Despite this, a number of States from the Global South in particular (South Africa, Egypt, Pakistan, Philippines, Argentina, Venezuela, Cuba, Namibia, Palestine), as well as China and Russia, participated actively in the negotiations and made (largely) constructive suggestions in the perspective to respect the Human Rights Council’s mandate to draft a binding treaty targeting TNCs and their global value chain.

Meanwhile, the thunderous return of the United States to the IGWG is nothing to celebrate, as the country fights any binding regulations on TNCs. At best, the US proposes a series of political acrobatics to reintroduce the Guiding Principles established by former special representative of the Secretary-General, John Ruggie, which were adopted ten years ago and have since proven ineffective. The voluntary nature of these regulations for TNCs¹ position States as spectators to their human rights violations.

Throughout the week, the United States’ stance was defended by their loyal allies. The European Union and Switzerland praised the benefits of voluntary regulations, reiterating the view that the version of the binding treaty under discussion was too ‘prescriptive’. Brazil – and, to a lesser extent, Mexico – participated very actively but sought to drain the draft treaty of all substance.

Fault lines persist

The draft treaty that is currently on the table (the third version since negotiations began) still contains a number of important gaps. Although important elements have been included, it is lacking in key areas such as its scope, which is too broad as it includes local SMEs that have nothing to do with TNCs; specific obligations for TNCs with regard to human rights, and an effective, efficient mechanism for enforcing the treaty. In response, CETIM, which has played an active role in the discussions as a member of the Global Campaign², presented several amendments to address these gaps. These amendments relate primarily to the joint and several liability of parent companies to their value chains in civil, criminal and administrative matters, the rights of affected communities and individuals, the question of jurisdiction (home state, host state), and an effective, efficient international enforcement mechanism.

With such urgent issues at stake, States must overcome their differences if they wish to preserve their sovereignty and ensure that their people’s right to decide on their future is respected – indeed, it is the role of States to guarantee these rights. The ongoing negotiations concern far more than a mere international treaty; they represent the fight for global social justice. Social movements are determined to ensure that the process treaty is not derailed, that it guarantees access to justice for affected communities and that it regulates the activities of TNCs and their value chains in a binding manner.