PHM-Exch> Report on the Open-Ended Intergovernmental Working Group on Transnational Corporations (TNC) and Other Business Enterprises (OBE) (15-19 October 2018)

Wed Oct 24 10:32:56 PDT 2018

By <alexandre_gajardo at hotmail.com> representing PHM

*Report on the Open-Ended Intergovernmental Working Group on Transnational
Corporations (TNC) and Other Business Enterprises (OBE) (15-19 October
2018)*

*List of Participants:*

Afghanistan, Albania, Algeria, Angola, Argentina, Austria, Azerbaijan,
Bahrain, Belgium, Bolivia, Brazil, Cameroon, Chile, China, Colombia, Congo,
Costa Rica, Côte d’Ivoire, Cuba, Czech Republic, Democratic Republic of
Congo, Denmark, Ecuador, Egypt, El Salvador, Ethiopia, Finland, France,
Germany, Ghana, Greece, Guatemala, Haiti, Holy See, Honduras, Hungary,
India, Indonesia, Iran, Iraq, Jordan, Kuwait, Laos, Lebanon, Lesotho,
Libya, Liechtenstein, Lithuania, Luxembourg, Madagascar, Malaysia, Malta,
Mauritania, Mauritius, Mexico, Monaco, Mongolia, Morocco, Montenegro,
Mozambique, Myanmar, Namibia, Nepal, Netherlands, New Zealand, Nigeria,
Palestine, Pakistan, Panama, Paraguay, Peru, Philippines, Poland, Portugal,
Qatar, Republic of Moldova, Romania, Saudi Arabia, Senegal, Slovenia, Sri
Lanka, South Africa, Spain, Sweden, Switzerland, Thailand, Togo, Trinidad
and Tobago UK, Ukraine, Uruguay, Venezuela, Zimbabwe.

Many NGO delegations.

*Context*

*Regulating TNCs in International Human Rights law?*

Since the 1970s, in light of the increasing power of transnational
corporations and their impact on human rights, many discussions were held
at the United Nations on the possibility of regulating TNCs in
international human rights law. However, not any initiatives undertaken
were successful to put an end to impunity and to provide effective remedy
for the victims and affected communities.

Indeed, in line with the growing influence of the neoliberal doctrine, many
States - especially those hosting TNCs - were opposed to any kind of
binding regulations that could go against the market forces, arguing that
voluntary measures were sufficient. In their views, imposing human rights
obligations to the business sector would have a chilling effect with regard
to foreign investment and development, and was contrary to the
state-centered structure of international law: only States have obligations
with regard to human rights and they are the one that shall promote,
protect, respect and fulfill human rights. To impose direct obligations to
TNCs could, in their opinion, provide an excuse for States to not fulfill
their own obligations.

In line with this theory, in 2011, the Human Rights Council unanimously
adopted the UN Guiding Principles on business and Human Rights (UNGP), with
the broad participation of businesses. While recalling the primary
responsibility of States to protect, respect and fulfill human rights and
to provide an effective remedy to victims, this voluntary code of conduct
also recommends TNCs to respect Human Rights. However, as an instrument of
a non-binding nature, the UNGP were considered by many States and NGOs, as
insufficient to stop impunity of TNCs and provide effective remedy for
victims.

As a result, in June 2014, at the 26th regular session of the Human Rights
Council, with the support of many NGOs, the delegations of Ecuador and
South Africa announced their intention to hold informal discussions on a
resolution on business and Human Rights.

The 26 June 2014, the UN Human Rights Council adopted the Resolution 26/9,
which created an OEIGWG *“whose mandate shall be to elaborate an
international legally binding instrument to regulate, in international
human rights law, the activities of transnational corporations and other
business enterprises”[1] <#_ftn1>.* The draft resolution, submitted by
Ecuador and South Africa, was adopted with the support of the voices of the
countries of the South, despite strong opposition from the United States,
the European Union along with Japan and South Korea. These countries argued
that the resolution was a threat to the effective implementation of the
UNGP, whereas other considered that the UNGP and the process of the binding
treaty were complementary.

*The three first sessions: and the boycott continues...*

The first two sessions of the WG were dedicated to conduct discussions and
deliberations on the context, scope, nature and form of the future treaty.
Many delegations and several NGOs took part to these sessions and brought
constructive and meaningful inputs. While the United States were
conspicuous by their absence, the European Union did not behave any better.

During the three working sessions of 2015, 2016 and 2017 and during the
several informal consultations held between May 2017 and July 2018, the EU
constantly questioned the mandate of the WG.

At the very beginning of the first session, the EU took the floor and
expressed its opposition to the process, recalling its position that
voluntary measures such as the UNGP are sufficient. They recalled that the
UNGP were adopted unanimously and expressed their regret that such process
could divide the Human Rights Council and undermine the implementation of
the UNGP.

The EU also opposed the very first Program of Work, arguing that the future
treaty (if adopted) shall not be limited to TNCs, but shall also regulate
small and medium enterprises at the national level. By doing so, the EU
managed to paralyse the debates for at least 4 hours. Many States and NGOs
considered this as an attempt to dilute the scope and the purpose of the
treaty, by ignoring the complex nature of TNCs and their huge power. In a
spirit of consensus, many deliberations were held between the core group
and the EU, but finally the delegation of Ecuador considered that they
could not go into this. They rejected the proposal of the EU, which decided
to leave the room and to boycott the debate, until the third session.

If the EU decided to boycott the deliberations, it doesn’t mean that they
were not in the room at the beginning and at the end of all sessions, to
criticize the mandate, in order to put in the final report their strong
opposition.

During the third session, in line with resolution 26/9, the presidency
proposed a compilation of Elements for the draft legally binding
instrument. The “Elements document” contained very concrete, meaningful and
constructive proposals and was welcomed by civil society as steps towards
the good direction. However, the EU and other countries saw those elements
as going well beyond the consensus reached with the UNGP. Many meaningful
discussions were held during this session and concrete proposals were made
towards the presentation of a first draft treaty at the fourth session.

*Towards the fourth Session: The “Zero Draft”*

During budgetary discussions held at the UN in New York on November 2017,
with regard to the 2018-2019 programme, the EU questioned the holding of a
fourth session in October 2018. Indeed, the EU stated that *“it is our
understanding that resolution 26/9 of the HRC only foresees the servicing
of three sessions {...}”.* However, the UN services recalled that *“no
further action is required in respect of the working group’s resources,
given the perennial nature of the mandate”.*

Besides, in view of the political evolution in Ecuador and the election of
a right wing president in 2017, the position of the delegation of Ecuador
has been affected.

In May 2018, a first unofficial “Zero draft” was leaked among some NGO
representatives. It seemed that it was drafted by the former
Chair-Rapporteur and contained very bold, meaningful and constructive
provisions, such as direct obligations to TNCs.

However, the official “Zero draft”
<https://www.ohchr.org/Documents/HRBodies/HRCouncil/WGTransCorp/Session3/DraftLBI.pdf>
and its Optional Protocol
<https://www.ohchr.org/Documents/HRBodies/HRCouncil/WGTransCorp/Session4/ZeroDraftOPLegally.PDF>
presented by the new Chair Rapporteur, Luis Gallegos, in June 2018,  were
qualified by some NGO representatives as “catastrophic”, as it was not
reflecting the previous version leaked in May and the “Elements document”
presented during the 3rd session, rather taking on board many proposals
made by States hosting or supporting TNCs.

Considering that it represented only a first step towards a meaningful
instrument regulating TNCs in international human rights law,
public-interest NGOs, in particular the Global Campaign, strongly
criticized the document for the following reasons:

-       It does not contain any direct obligations to TNCs

-       It does not provide the creation of an effective implementation
mechanism, such as an International Court on Transnational Corporations and
Human Rights

-       It does not contain a gender-based approach

-       It does not lift the corporate veil, as it ignores the inherent
complex structure of TNCs and their value chain

-       It does not contain provisions to regulate International Economic
and financial Institutions and other financial entities

-       It does not contain provisions on conflict of interests and undue
influence from TNCs in the political process

Some NGO representatives expressed their concern that some States would try
to kill the process, by disputing the legitimacy of the mandate, and by
trying to re-negociate a resolution at the next session of the Human Rights
Council. There were indeed some clues that suggested these concerns. In
particular, the EU made a troubling statement regarding the legitimacy of
WG without clear mandate during the September 2018 HRC session. It also
repeatedly questioned the legitimacy of the binding nature of the treaty,
of the presidency and of the working group regarding the UNGP.

*The Fourth Session*

The fourth session was opened by Kate Gilmore, the Deputy High Commissioner
for Human Right, with a strong statement of support from the OHCHR. She
called on States to address the perverse disbalance between victims and the
impact of transnational corporations on Human Rights. She recalled that
there were many divergences among states to ensure accountability but that
there was a shared aspiration that corporate impunity ends.

*Luis Gallegos* was elected as Chair-Rapporteur. Many NGO representatives
saw his election as a threat for the future of the process, as it seemed
that he was not aware of all the issues and generally too favourable to the
views of western countries.

*Dominique Pottier*, member of the french National Assembly, was invited to
make a statement as a keynote speaker.

The whole 4th Session was structured as an interactive dialogue between
experts panelists, States, NGOs and other relevant stakeholders, to discuss
and share views on Articles of the zero draft.

In the opening of the session,* Togo*, *on behalf of the African Union, *made
a strong statement and expressed its attachment to the spirit of the
resolution 26/9, to the whole process and to the mandate. It recalled the
necessity of having a strong instrument, as TNCs are using legal
disparities and policies to increase their profit, therefore affecting
Human rights. African States generally took constructively part to the
whole process, making meaningful proposals and actively participating to
the discussions (in particular *South Africa, Mozambique *and *Namibia*).

*The Holy See* also made a strong and victim-oriented statement, expressing
its support to the process. It is worth noting that it mentioned the fact
that FTAs and Investment treaties can be obstacle to legitimate measures
protecting HR. *South Africa* was also a strong supporter of the treaty,
stating that *“we must adopt such treaty”*. They recalled the need to close
the current gaps relating to unregulated activities of TNCs, to impose
direct obligations to TNC and to address the problem of access to justice
and remedies.

The* European Union* said that it was time to overcome divisions among
States. They expressed their disappointment that many of their proposals
were not accepted. They said they would like to adopt a new resolution to
reaffirm the mandate of the WG, but regret that their proposals have not
been taken on board. They recalled their position regarding the scope of
the treaty, called on a broader participation of the private sector. They
stated that they reserved their position and that they would not engage in
the discussion formally, as they don’t have a negotiating mandate.

This kind of statement was generally supported by *Peru*, which made a
introduction statement *on behalf of Brazil, Chile, Colombia and
Mexico, *expressing
the same views and concerns regarding the process. During the fourth
session, these countries were strong opponent to the views of NGOs,
conveying the voices of the EU and its supporters. They recalled several
times the role of the UNGP and their “authoritative” nature. They tried to
extend the scope of the treaty to all enterprises and to exclude any direct
obligations to TNCs. Brazil in particular, was a very strong opponent to
the process.

This kind of opposition was also conveyed by *Albania*, which seems to have
been mandated by the EU to make its statements.

*Argentina* seemed to be very prudent with this issue, calling for caution
and recalling the existing initiatives, especially the OECD guidelines. *Costa
Rica* made an ambivalent statement. While supporting the process and
affirming that they conducted national consultation, they affirmed the need
to include all enterprises in the scope of the treaty.

*Indonesia* supported the process, but it seems that they were concern
about their need to strike a balance between their different priorities
(development, environment, poverty eradication, etc.). They recalled that
they host many TNCs, including in the extractive sectors. They are aware of
the need to ensure that the business activities promote HR within their
community and to provide remedies if violations occurs. But at the same
time, they recalled their development priorities. They expressed their view
that the scope of the treaty should not include small and medium
enterprises. *Sri Lanka *supported the mandate and the process and made
some substantive suggestions during the session.

*Philippines* fully supported the process, made very good statements and
engaged constructively with civil society during the whole week.

*Egypt, Algeria, Cuba, Azerbaijan, Uruguay, Bolivia, El Salvador and
Venezuela *made good statements to support the mandate and the process and
took meaningully part to the discussions. They expressed the need to
regulate TNCs. *Egypt* called on the need to strike a balance between
investments needs and Human rights and was strong in defending the mandate.
They made quite good statements in this regard, all along the process.

*Palestine* was also a strong supporter of the process. They were very open
to inputs from public interests NGOs and made very good statements in this
regard.

*France* took the floor three times during the process. In the beginning,
under the Article related to prevention (Article 9) and at the end of the
session.They basically conveyed the views of the EU, while talking about
their national experience and the recent adoption of a law regulating TNCs.

*New Zealand *didn’t play a constructive role, took the floor at the
beginning of the session, opposed the legitimacy of the mandate and left
the room.

*Azerbaijan* took substantively part to the debate. They often insisted on
the respect for equal sovereignty and territorial integrity as the main
principles governing this WG, while also calling to regulate TNCs under
international law.

*Switzerland *said they were skeptikal and announced that they won’t
participate. However, they said the draft zero was an improvement compared
to the elements presented at the 3rd session. They expressed their concern
that this process could slow the implementation of the UNGPs and called on
better define the scope of the treaty, by including national enterprises.

*China India and Russia *played a vague and ambivalent role during the
fourth session. While constructively participating to the discussions, even
defending the mandate of the WG, they also expressed their thought that it
was too early to have a binding treaty on this issue. Russia thought that
the scope of the treaty was too broad. China recalled the intergovernmental
nature of the WG. India said they held intensive national consultations and
that the treaty should not include national enterprises. All three
countries said that there was a need for flexibility in order to reach a
broad consensus.

*End of the session: Conclusions and Recommendations*

At the end of the session, the Chair-Rapporteur presented its conclusions
and recommendations. A draft report
<https://www.ohchr.org/Documents/HRBodies/HRCouncil/WGTransCorp/Session4/DraftReport.docx>
of the session was also circulated.

To express its opposition, the EU didn’t take part to the adoption of these
conclusions and recommendations. Moreover, many States expressed their
opposition, and hours of discussions followed on whether the dialogue was
“constructive” or not, or if the participation was “broad” or not. Brazil
was particularly virulent in this.

Finally, the conclusions and recommendations were adopted, after several
amendments and the EU came back in the room, to take the floor and deliver
a very long statement, underlining the current division among states and
called on negotiating and clarifying the mandate of the WG.

*South Africa* made a very powerful final statement and express its strong
support to the WG. *The Global campaign* was the final speaker of the
session. It made a strong statement in favour of the process and the
mandate.

------------------------------

[1] <#_ftnref1> 20 members of the HRC voted in favour, 13 abstentions
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