United Nations

Doing business with rights-abusing regimes

PUBLISHED : Wednesday, 16 June, 2010, 12:00am
UPDATED : Wednesday, 16 June, 2010, 12:00am


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The United Nations has long been involved in the debate on when, where and how businesses should trade and invest.

Later this month, the UN Global Compact will celebrate its 10th year of defining and promoting corporate citizenship around the world. Founded on the principles of human rights, anti-corruption, and labour and environment protection, the compact is now a voluntary association of 6,000 companies - up from 40 a decade ago. At a leaders' summit in New York, the compact will unveil protocols on corporate involvement in conflict zones. The guidelines are a welcome extension of the compact's engagement with some of the most difficult issues facing companies.

Through economic sanctions, the UN has from time to time placed selected parts of the global society off-limits for business. Its leading member, the United States, regularly uses embargoes as a foreign-policy tool. Typically, target states are governed by rights-violating regimes.

However, while sanctions are good at expressing moral condemnation of rights abusers, they have a poor record of promoting desired change. More often than not, the target regime is affected only minimally. It is thus high time for a reassessment.

In any debate, some will insist on taking a strict moral position - never do business with rights-violating regimes. Others will argue not in terms of moral absolutes, but rather on pragmatic grounds. Both are fine, provided they are adhered to consistently. There is little evidence, however, that they are.

Just looking at Asian cases, few voices now condemn corporate involvement with China or Vietnam. Yet a chorus of disapproval rains down on proposals for business engagement with Burma or North Korea. All four are authoritarian states with long histories of gross human rights abuse.

It is necessary, then, to move beyond double standards. If pragmatism is acceptable in some corners of global society, it should be permissible in all. In place of selective moral scruples, projected costs and benefits should be weighed in every case. Examples of successful business practice - now legion - should be examined fully and applied widely.

It could be that, even when this is done, global opinion will remain largely unchanged. Maybe Burma and North Korea are simply very different from China and Vietnam, with perverse incentive structures ruling out a positive role for business. But that seems unlikely, and it is not the conclusion drawn in most of Asia. The key point is that we will never know as long as vetoing moral condemnation is applied selectively.

The 10-year-old Global Compact is best placed for triggering debate. Through local networks of companies committed to responsible and sustainable business practice, it can amass contributions from around the world, and help corporations work together and learn from each other. As the motor of global development, business merits a still more active UN presence in the decade ahead.

Professor Ian Holliday is dean of social sciences at the University of Hong Kong