Human Rights Violations by Transnational Corporations in China
The primary concern for most organizations is to pursue ventures that would culminate in the acquisition of maximum profits under set circumstances. In essence, profit is determined by the range between production costs and values obtained from end products. The amassment of optimal profits would thus require companies to limit production costs while simultaneously producing high-quality products that would fetch maximal market values. As the world continuously evolves into a smaller global market, companies embark on earnest quests to explore situations that would keep them profitable and confer competitive advantages over crucial rivals. As such, a company with modest beginnings eventually grows into a dominant entity that dominates local markets and expands outside the confines of national boundaries to set up bases in outside markets with potentials to yield equal or better returns than its home base. This concept has occasioned the rise of transnational corporations.
Different nations and jurisdictions have varied ethical and legal requirements that are modeled to attract particular investments. The development of transnational corporations is hinged on discoveries of markets that can adequately sustain various business models that guarantee long term sustainability. There thus exists a direct correlation between specific national laws and the willingness of foreign entities to up bases within such territories. Transnational corporations will more often than not prefer favorable business environments concerning such elements as taxes, availability of both skilled and casual labor, and the average price of labor, amongst other things. These are factors of production which vary immensely from one country to another. Further, the laws applicable in one jurisdiction concerning such factors may differ from those in another sovereign state, or become inapplicable altogether. There thus exists a gap in which corporations can exploit them to find appropriate markets that suit their business models.
In their bid to spread wings, transnational corporations frequently violate various international laws, ethical considerations, and guiding principles. Part of the reasons why these violations would happen revolves around the legal frameworks put in place by various sovereign countries to dictate the observation of human rights. Simply put, a country with little regard for human rights will be comfortable with corporations violating its citizen’s rights. Furthermore, if the regulatory frameworks of such countries tolerate observance of given rights, then corporations would not be legally bound within the particular jurisdiction to uphold the rights. This gap has been mainly explored in the People’s Republic of China.
Nonetheless, such a situation brings forth a legal conundrum since international laws bind all countries. Also, multinational corporations often have home bases that adhere to given guiding principles that may not be necessarily be guaranteed in other countries. Therefore under particular jurisdictions, these companies would be deemed to have performed illegalities while in another, it would be a different scenario altogether. Lastly, a conventional means by which these institutions violate rights is by practicing corporate complicity. Here, the companies willfully contract other parties known to violate human rights or sit back and watch as such parties perform the said illegalities. Thus the scope of violation is vast and happens in varied forms. However, in seeking legal recourse, most would wonder which laws have been violated inexactness.
International Guidelines that Transnational Corporations can violate
The current regulatory framework at the international community is only but guiding principles, with the majority of them lacking legal bindings and is aptly referred to as soft laws (Hazenberg, 2016, p. 492). Furthermore, the present requirement of these international laws is that companies and other private entities are not under a direct obligation to fulfill recommendations and guidelines by international bodies. As such, prosecution of these private players is almost entirely dependent on the policies, and legislative processes present within a particular country. From a legal point of view, transnational corporations are incapable of violating any international laws that touch on human rights. Therefore, as already mentioned, they are prone to infringe on human rights, where states are not keen to protect them or are not willing to. However, this does not wish away the fact that individual rights are violated even if the violations are not punishable within a given jurisdiction.
Multinational corporations can infringe on people’s right to own property. This infringement happens typically as they move in new territories intending to expand operations. In most of these circumstances, companies have to acquire such resources as the land from private citizens. However, article 1 of the “International Covenant on Civil and Political Rights, ICCPR” demands that disposal of natural resources should be voluntary and of mutual benefit to both parties. Further, it prohibits taking up personal wealth to disrupt a person’s source of daily living (United Nations Human Rights, 1966). However, in some countries, this right is outright ignored. In most cases, the explanation is the benefits a given corporation would bring to a given community, and individuals are thus conscribed to give up their resources, especially land. Whereas this could be legal in the given state, it nonetheless violates article 2 of the act that requires countries to respect the first article and ensure that their members are not deprived of this right under any circumstances. Also, article 3 of the act demands that nations party to the treaty to ensure that appropriate legal recourse is available for the wronged parties in case of any violation. Whereas this may not necessarily apply in countries with little democracy like China, Transnational corporations from more mature democracies ought to uphold the same.
Secondly, transnational corporations often infringe on the rights of their employees. These rights are guaranteed under the “International Covenant on Economics, Social and Cultural Rights, ICESCR.” Article six of the treaty states that every person has a right to work and earn a living from the same work. On the other hand, article seven states the need to have every person enjoy fair wages for work done. The wages should be able to provide for a decent lifestyle not only for the employees but also for their families. Also, persons doing similar work are required to be given similar compensations. Besides, part (d) of the same article requires workers to be accommodated within “reasonable working hours and periodic holidays.” Lastly, article eight of the treaty demands that workers be free to form or join trade unions, which should be guaranteed freedom of function. Transnational corporations can violate this treaty by paying their employees’ wages that can barely sustain their daily living. Such wages leave the workers and their families in deplorable working conditions. Furthermore, the principle of equal pay for equal work is often done away with once international borders are crossed. Remuneration often follows wage patterns in hosting countries. As a result, individuals doing similar jobs in different countries are rarely compensated at the same rate. Low compensation in countries with cheap labor forces workers to work overtime, thereby infringing their rights to rest and to work for reasonable amounts of time. Lastly, these corporations often limit the formation of trade organizations that would champion the welfare of their employees.
Also, multiple corporations have been found culpable of violating children’s rights. These rights are spelled out under the “United Nations Convention on the Rights of the Child.” The treaty defines a child as anyone under the legal age of eighteen years. Besides advocating for the rights of the child to be of most importance in article one, it also states in article twenty-seven that conditions in which a child is brought in should facilitate proper “physical, mental, spiritual, moral and social development.” Article twenty-eight requires that every child be provided with basic primary education, and necessary efforts are put in place to ensure both secondary and tertiary education is provided within the legal frameworks of countries party to the treaty. (European Commission, 1990) Most relevantly, the treaty also prohibits exploitation of children for economic reasons and incorporation into work that would antagonize the child’s education, or interfere with his or her development physically, mentally, morally, or socially (European Commission, 1990). How multinational corporations employ services of underage children violated their fundamental rights. First, employing children denies them the opportunity to pursue academic ventures, which in turn denies them countless opportunities available with the condition of the acquisition of formal education. Secondly, child labor interferes with the holistic development of the child. Partaking of such responsibilities at a tender age translates to missing out on milestones and activities that are critical in forming a total human. Lastly, employment is typically done under deplorable conditions. Children are often overworked owing to their inability to protest, which goes against international labor laws.
Furthermore, it is not an impossibility to find corporations violating fundamental rights on how to handle their employees in human nature. The right to be treated humanely is spelled out under the “Convention against Torture and other Cruel Inhuman or Degrading Treatment or Punishment.” This treaty defines torture as a painful experience inflicted either physically or mentally with the sole purpose of punishing or eliciting confessions or information (United Nations Human Rights, 1984). This inhuman treatment goes unabated in countries with little consideration for human rights like the People’s Republic of China. It occurs in such forms as physical punishment for reporting late to places of work, insults, and discrimination at places of work, amongst others. This not only diminishes an employee’s productivity, but it also dampens their spirits by creating feelings of worthlessness. Besides, it also creates animosity, which may eventually be expressed in different ways at places of work and could turn out to be catastrophic at the end.
Other multinational bodies have been created and mandated to provide legal frameworks for the operation of multinational organizations. The International Labor Organization is mandated by the United Nations to set working standards for employees worldwide to foster justice and equality. On the other hand, The Organization for Economic Co-operation and Development, OECD, comprises high-income countries that aim to set trends on the market economy and democracy. These two organizations borrow a lot from each other. For instance, both bodies hold that transnational corporations should employ the same employment standards in foreign countries as in their parent countries (UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT, 2000). The International Labor organization goes further to state that the multinational companies should provide “best possible wages, benefits and conditions of work within the framework of a government” if there are no standards to be compared with at the national level. This is vital in that the corporations are thus required to at all times ensure their employees operate at an optimal working environment. It gives precedence to the workers as the basic units of production and disagrees with the act of lowering production costs to their detriments. Also, they share universal principles with the treaties mentioned above. For instance, they require member states to allow workers to form trade unions, join trade unions of their choice, engage in collective bargaining agreements, and to practice their right of picketing. Although they may sound redundant, these are essential steps in ensuring that the rights of workers are protected. Bringing the treaties to regional levels guarantees to a greater extent that nations would put in place necessary policies and legislations that would hold the transnational corporations to account.
International Laws violated by Transnational Corporations in China.
Transnational corporations in China pay local employees low wages. China has a vibrant workforce that is never short in supply. Whether it is the law of supply and demand that weighs in, the reality is that China’s labor force is extremely cheap. Indeed, it is the primary reason why the United States of America, which has the most significant number of transnational corporations, has invested heavily in China over the past few years (Rapoza, 2019). Apple is a company that has taken advantage of the situation and set up a base in the Asian country. However, as it expanded its wings to the rapidly developing nation, it never carried the basic operations system from its parent country. Instead, it adapted to the prevailing market conditions in China (China Labor Watch, 2015). As a result, workers in one of the most profitable corporations globally located in China earn considerably low wages. Also, the pay is not in tandem with what workers of the same cadre earn in the USA. As such, the company violates two laws in the international treaty. Under the “International Covenant on Economic, Social and Cultural Rights” treaty, it fails to provide fair wages as stipulated under article 7(a). It also fails to provide a decent living for the workers and their immediate families, as stipulated in article 7(b). By so doing, the company fails in its corporate social responsibility. However, the company indirectly does this through what has been termed “corporate complicity.” In this case, the contracting of two companies, Pegatron and Foxcom, which inadvertently pay their workers low wages for production of materials used by Apple to produce products that fetch high market prices, ensures that apple escapes its responsibilities (China Labor Watch, 2015). Even more cruelly, despite the prevailing low labor cost in China, Apple has consistently shifted production of its materials to cheaper manufacturers. In essence, once the price of labor begins to rise, Apple, despite its substantial profit margins, leaves that particular station and its employees, thereby ensuring they are in a vicious cycle of impoverishment.
Also, multinational companies overwork their employees. The low wages given to the workers force them to work on overtime in order to meet their daily needs. Whereas overtime working hours is by no means illegal, guidelines exist to ensure workers’ welfare is not infringed on. Furthermore, the constitutional law in the People’s Republic of China only permits a total of thirty-six hours a month in overtime, translating to around one and a half hours every day. However, with the conditions workers in the companies contracted by Apple operate in, the wages are so low that working excessive overtime hours is barely enough to provide for a comfortable life. (China Labor Watch, 2015). This violates article 7(d) of the “International Convention on Economic, Social, and Cultural Rights.” The treaty here requires workers to be accorded adequate rest, leisure, and reasonable limitations of working hours.
The toy industry has also been implicated in violations of human rights in China. The companies in question include Disney, Hasbro, and NSI toys, amongst other world-renowned names. The toy industry in china produces three-quarters of all the toys in the world (China Labor Watch, 2015). Nonetheless, the companies involved still compensate their workers with ridiculously low wages. They have also been accused of recalling workers from their retirement in order to avoid paying their pensions. Additionally, they have been accused of hiring children, which violates the international treaties described above.
Legal Action
Unfortunately, despite the outright violations of international laws by transnational corporations in China, no legal action has been taken hitherto. However, it is not by lack of want to address the vile. The reality is that the existing legal framework does not provide room for the prosecution of transnational corporations. As stated earlier, private entities are not considered custodians of human rights. As such, whatever action they take to protect the rights is considered “goodwill.” On the other hand, failure to protect them does not necessarily translate into a breakage of any international laws. The United Nations reckons this weakness in the law, and, as things stand, the most that can be done to corporations breaking the international treaties is public shaming only (International Federation for Human Rights, 2010).
However, some countries have enacted legislation that would hold accountable some of the companies with bases in those specific countries. The United States of America has the Alien Tort Claim Act. This act allows cases being lodged in the US courts over human rights violations by transnational corporations. (Kahn, 2017). Even so, critical arguments are raised over the sovereignty of countries in which the said violations took place. As such, the jurisprudence of the law is severely limited. The act can only be invoked when piracy issues have been raised. Again, if the rights of an ambassador have been infringed upon, the act can be invoked. Finally, the Tort Claim Act can be invoked if there is a violation of safe-conducts. The law does little to address the plight of workers in foreign countries mistreated by corporations with a basis in the USA. Nevertheless, again, these corporations have acted legally in their host countries, and the affected workers would ideally not have a case.
What can be done?
As shown above, there are compounding weaknesses in international laws that make it impossible to hold transnational corporations in china accountable for violation of human rights. There are two solutions out of this conundrum. First is to change the responsibility of private players worldwide and make them legal entities punishable whenever they violate human rights. Secondly, corporate complicity ought to be made a punishable offense once the change has been made. This would go a long way in ensuring that companies do not support other entities that violate human rights.
Making corporate players legal entities would ensure that both local and foreign laws apply to them. As it is, the protection of human rights is a preserve of sovereign states. This is done in two ways, a negative and positive way. Negative protection demands that states do not interfere with certain rights of individuals. For instance, freedom of speech is universally guaranteed and so states are mandated not to initiate activities that would clamp down on this freedom. On the other hand, in positive protection, a state is required to initiate and sustain measures that would ensure the rights of its citizens are not violated. This would include having policies as well active measures that would guarantee such things as decent housing. From this, the scope of violation of human rights by transnational corporations can be considerably enormous. Besides not being expected to provide positive protection, the corporations cannot be held accountable for violating fundamental, internationally guaranteed rights and freedoms. However, if the laws are appropriately rectified, the corporations will take active measures in ensuring the rights are guaranteed. Besides, these corporations employ multinationals and have cash flows that better or rival those in other sovereign states.
Corporate complicity is just as gross direct violation of rights. Third parties subject their employees to deplorable working conditions at the behest of the contracting company. The contractors also look for the cheapest labor in the market thereby forcing third parties to provide cheap alternatives in a bid to maintain competitiveness. As such, it is the transnational corporations that do the violations by proxy, and this should not go unpunished.
References
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Hazenberg, J. L. J. (2016). Transnational Corporations and Human Rights Duties: Perfect and Imperfect. Human Rights Review, 17(4), 479–500. https://doi.org/10.1007/s12142-016-0417-3
International Federation for Human Rights. (2010). Corporate Accountability for Human Rights Abuses. Retrieved from https://www.refworld.org/pdfid/4c3d5ff62.pdf
Kahn, M. (2017, June 23). Enforcement of Human Rights against Transnational Corporations: How Much Does the United States Care? | Emory University School of Law | Atlanta, GA. Retrieved May 18, 2020, from https://law.emory.edu/ecgar/perspectives/volume-3/perspectives/enforcement-human-rights-transnational-corporations-united-states.html
Rapoza, K. (2019, September 3). Why American Companies Choose China Over Everyone Else. Retrieved May 19, 2020, from https://www.forbes.com/sites/kenrapoza/2019/09/03/why-american-companies-choose-china-over-everyone-else/#2ecf19571de2
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United Nations Human Rights. (1984). Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment. Retrieved from https://www.ohchr.org/en/professionalinterest/pages/cat.aspx