Regulating Corporations without Borders

As the recent tragedies in Bangladesh can attest,
multinational corporations (MNCs) have been able to run a bloody racket –
moving production from jurisdictions with relatively strong labour protections
for workers (like Canada) to developing nations where workers have few, if any,
labour protections. The result has been incredible profits for large MNCs and
immense human suffering for workers around the world.

For workers and unions to respond to this
particularly insidious aspect of globalization has proven difficult. As
reported in an earlier post, the ability of MNCs to shift the means of
production with ease undermines the negotiating power of unions and throws the
balance between labour and capital severely out of whack. MNCs have, by and
large, used this imbalance to exploit the desperation of workers from
developing countries and to force concessions from unions from more developed
nations. But the labour movement is not without hope and may yet have a strong
a sustainable response to a situation which once seemed dire.

International Framework Agreements (IFAs) have been
increasing in both use and popularity on the world stage, providing some
counterbalance to the gross power MNCs have enjoyed since trade became
internationalized. IFAs are agreements negotiated by companies and workers’
representatives. These agreements seek to address the imbalance by imposing
international labour regulations. Of course, a slew of ILO Conventions and OECD
Guidelines for MNCs have also sought to set international labour standards, but
as we have seen via Canada’s blatant disregard for many ILO Conventions it has
ratified, these attempts at setting international labour standards have met
with limited success.

What sets IFAs apart from other attempts at
regulation is their inclusiveness of workers in the regulation of labour. Where
the ILO Conventions must be agreed to and ratified by governments, IFAs operate
at the company level. IFAs represent an agreement between companies and
workers’ representatives. This is not to say the ILO doesn’t play a pivotal
role. It does. The ILO’s core conventions on labour standards are often
incorporated into IFAs which seek to define basic labour standards for the
workers involved.

Where IFAs can be an improvement upon the system of
relying on governments to uphold their international labour commitments is
found in the fact that IFAs directly involve workers. IFAs are agreed to by
workers’ representatives and companies. Workers’ representatives are involved
at every step, from implementation to monitoring. Workers have a voice and some
say in their own treatment.   

Why, some wonder, would MNCs ever agree to involve
the workers in the creation of IFAs that would limit the ability of MNCs to
exploit the vulnerability of workers for their own gains? One crucial reason is
public pressure. Tragedies like those in Bangladesh have amplified negative
public perception of the practices of MNCs. This impacts their bottom-line – hence
the willingness to negotiate IFAs.

The importance of IFAs cannot be overstated.
Companies need the endorsement of workers in order to restore their public
image and workers need companies to negotiate IFAs if they are to achieve the
labour rights they deserve. The relationship is one of symbiosis. IFAs have the
potential to bring a day when respect for the labour rights of workers will
become synonymous with good corporate governance – when the value of company’s
stock will be influenced not just by its quarterly financial statements, but
also by the treatment of its workers. IFAs, in other words, may yet correct the
imbalances brought about by globalization and restore the rights workers have
lost in the turbid waters of the new economy. 

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