One question that was raised in today’s lecture was whether and
how states should be able to hold multinational corporations accountable for
their actions. On its face, in situations like the Basil Convention, states
play a clear role in curbing the negative externalities of MNC’s. The situation
becomes murky when there is no clear state actor, especially when international
laws are ambiguous, and the impacts of MNC actions are contentious.
One simple example of this global governance issue is the
role that international financial institutions play in the speculation of food
crops. Smita Narula, director of the
Center for Human Rights and Global Justice at New York University, argues that “in
the age of economic globalization, a variety of state and non-state actors may be
contributing to the state of world hunger, but not all actors are given equal
consideration under international law.”[1]
International Financial Institutions trade extensively in agricultural and food
crop futures, totaling $126 billion in transactions worldwide in 2013. [2] Agriculture
speculation leads to artificial inflation, causing food price and supply instability.Marc
Oliver, policy advisor for Oxfam EU, explains that this speculation is “a
matter of life and death to millions in the developing world.”[3]
The European Union has passed some regulations limiting the
magnitude of speculation in the agricultural commodity derivatives markets, but
these are largely left to member states to quantify and enforce, and
international financial institutions may not be forthcoming with data.[4]
This highlights several important issues for global governance- who is
responsible for assessing the impact of multinational corporations on
vulnerable populations? What mechanisms exist in international law to restrict international
financial institutions’ use of these derivative markets?
[1] Narula,
Smita. "The Right to Food: Holding Global Actors Accountable under
International Law." Columbia Journal
of Transnational Law. 44 (2005): 691.
[2] Robles,
Miguel, Maximo Torero, and Joachim Von Braun. When speculation matters. Washington, DC: International Food Policy
Research Institute, 2009, p. 1
[3] Angela
Corbalan, “EU deal on curbing food speculation comes none too soon,” Oxfam
International, 15 January 2014 (Accessed online 09 March 2015, http://www.oxfam.org/en/pressroom/reactions/eu-deal-curbing-food-speculation-comes-none-too-soon)
[4]
Ibid.
Ben - Great way to explain a prominent issue within International Relations. I think that as consumers from the developed world, we often forget that the very products that we enjoy are often produced and marketed at a detrimental cost for less developed countries. It also tells us that despite the efforts of regional organizations to minimize the external effects that trade agreements have, we are still a long way from ensuring the protection impoverished populations.
ReplyDeleteBen - I really like the example you choose here to demonstrate the conflict that can arise between the free market and those who are affected by it, directly or indirectly, without having the power to influence it. As you rightly point out, to prevent this from happening, some external body must be responsible for monitoring it, as it is unlikely to ever be in the interest of the corporations themselves to do so. So perhaps the next question is, not who is currently responsible, but how might we envision a body that might actually be effective in this capacity?
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