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Equitable Legalization: Give Consumers Legal Protection against Amoral Trade

Visiting Scholar

By Kim Beng Phar | October 31, 2006

Hammurabi's Code, an early legal innovation.

How accountable is something that is unstoppable? That is the moral issue of globalization: It is widely promoted without any proper regard for due process.

If the World Trade Organization (WTO) is seen as the embodiment of responsible globalization, especially on international trade and services, then why does its International Arbitration Panel (IAP), which adjudicates on commercial conflicts, not accept cases from consumers or citizens that may be affected by unfair trade practices?

Indeed, their laments have to be routed through their respective governments first. Such a circuitous process denies them not only the right to procedural justice, but also more substantive rights. Of the 300 cases that have been brought to the attention of IAP over the last decade, none were from individuals.

European citizens fare only marginally better. Affected citizens can bring their problems to the attention of the European Commission (EC). The EC will then decide on the merits of each case before they are sent to the European Human Rights Courts. But with a huge backlog in work, even the EC is finding itself unable to tend to all these cries in the dark. The result is a suboptimal outcome in the application of human rights standards.

Under the Alien Torts Claims Act (ATCA), the U.S. second, ninth, and eleventh circuit courts have allowed foreign citizens whose rights have been abused by foreign government agencies, even American multinational companies, to file their suits in American courts.

But the U.S. Supreme Court, in a verdict that will circumscribe the application of ATCA, has ruled that under the Foreign Sovereign Immunities Act (FSIA), no American or foreign citizen is allowed to seek legal redress.

In the cases above, the legal rights of individuals—let alone their human rights—remain extremely confined. They can bring the suits only in the hope that the defendants will settle out of court for a lump sum. That said, even such a negotiated window of opportunity may be closing.

Multinationals and foreign governments have urged the U.S. State Department and Attorney General's office to put a curb on ATCA. The Clinton administration and the Bush administration have complied, invariably to protect government leaders and multinationals from being sued for a litany of offenses abroad.

Since the current phase of globalization does not allow citizens and consumers to fully exercise their right as plaintiffs in courts other than their own, it is little wonder that the dissent has often manifested in the form of street protests.

Nevertheless, if the key drivers of globalization are the daily discovery of new technology and the lowering of the cost of shipping, transportation, and freight, then one can fairly say that the current process of globalization is at best an amoral one.

But like all amoral phenomena, they do produce their own moral problems when engaged in excesses. If globalization proceeds without the proper legal accoutrements at the national, regional, and international level, there will be no room for proper redress.

When a French hypermarket in Thailand destroys the livelihood of the farmers in Chiang Mai without any due compensation and restitution, it is little wonder that the displaced local owners may bear a grudge against foreign competition.

To a large extent, multinationals have tried to assuage the pain and suffering by way of improving their corporate social responsibility (CSR). But CSR still does not resolve the issue of allowing citizens and consumers the right of legal petition, not merely within their countries, but abroad too.

For globalization to be accepted as a work ethic, governments and multinationals must indeed acknowledge their damaging impact. Capitalism, for instance, is considered good but flawed. Consumers are therefore allowed the benefit of individual or class action, as marked by lawsuits against tobacco companies that had hitherto promoted an indulgent life of nicotine consumption as an unalloyed good.

Globalization has its problems too. With General Electric having an asset base larger than the entire gross domestic product of Indonesia, for instance, it is clear that globalization is not only propelled by technology, but also by economies of scale. In other words, it is not merely the survival of the fittest companies, but the fattest as well. There are tens of thousands of multinationals that are not merely fit, but due to decades of profits, are fat too. Their sociological impacts are undeniable.

How can the balance of power be restored? It can be restored only when more countries and multilateral institutions pay heed to the problems of the individuals affected by the unmitigated process of globalization. The way to start is by giving more citizens the room, and the right, to file their legal appeals.

Such flexibility and latitude would cease a cascading effect, to be sure, as had happened to the European Commission. But moral problems caused by amoral processes are by nature difficult. No one can skirt the issues regardless of how difficult they may be.

Put differently, globalization must proceed hand-in-hand with fair, judicious, and equitable legalization. How does one begin?

At the minimum, an International Consumer and Civic Union (ICCU), formed of the most representative consumer and civic associations throughout the world, should be formed. The institution could model itself on the International Labor Organization (ILO).

Like the ILO, where national and non-national labor unions are full-fledged members of the organization, the ICCU would provide similar leeway for such participation from organized consumers groups and civic unions. These groups must be democratically elected by the stakeholders they wish to represent.

The goal of the ICCU is to function as a lobby group that encourages national, regional, and international communities to adopt legislation that allows cross-border legal petition. Finally, the ICCU would also have a mechanism for weeding out fraudulent claims, so as not to clog the legal systems of other countries even as globalization is brought under greater scrutiny.

Read More: Ethics, Human Rights, Trade, Global

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