hANACINC CLDALIZATIDN: CHALLENCES

FAClNC lNTERNATl0NAL LAW lN THE 21

st

CENTURY

INAUCUPAL LECTUPE




y

Professor A F | |anIruzzaman
Pro]essor o] lnternctoncl cnd 8usness Lcw
School o] Lcw
UnIversIty of Portsmouth


2 |ay 2007


2


hANACINC CLDALIZATIDN: CHALLENCES
FAClNC lNTERNATl0NAL LAW lN THE 21
st

CENTURY*











8y

Professor A F h hanIruzzaman














--------------------------------------------------------------------------------
*Ths s a slyhtly modjed verson oj the author's Projessoral lnauyural Lecture
delvered to the Unversty oj Portsmouth, Unted Knydom on 2 May 2007.



3



INTPD0UCTDPY

LadIes and gentlemen, for my Inaugural lecture tonIght have chosen a
topIc that concerns the burnIng Issues of managIng globalIzatIon In the
world at present. shall dIscuss the Issues of human rIghts and development
of the ThIrd World In the age of globalIzatIon, global economIc governance
and how globalIzatIon has posed a tremendous challenge to tradItIonal
InternatIonal law as we have known It. We shall also search for a just global
legal order that could manage globalIzatIon well and make It work faIrly for
all for a better future.

Although 'globalIzatIon' Is a buzzword these days, the phenomenon Is
not new at all. ClobalIzatIon may be traced back to the hIstory of
colonIalIsm when InternatIonal trade took place across the globe.
1
Some
would argue from the hIstorIcal poInt of vIew that globalIzatIon In some
degrees had started much earlIer wIth the InteractIons of varIous
cIvIlIzatIons across the globe.
2
8e that as It may, the modern globalIzatIon
that we have been lIvIng wIth now Is starkly dIfferent from the old
globalIzatIon that had gone through the process of rollercoaster motIons In
varIous perIods In the past. Dver the last two decades or so the world has
moved very fast wIth the superb technologIcal InnovatIon for InformatIon
superhIghway, superfast means of communIcatIons, and global electronIc
commerce that have turned the world Into a global vIllage of borderless
states. The world Is physIcally shrInkIng for the travellIng publIc wIth the
avaIlabIlIty of cheap aIrfares and frequent flIghts across the globe provIdIng
for rapId crossfertIlIzatIon of culture and human InteractIons In varIous
spheres of InternatIonal lIfe and actIvItIes IncludIng trade and polItIcs.
ClobalIzatIon Is a powerful process that we realIse when see coco
colonIzatIon and hamburgerIzatIon all around us across the globe wIth the

1
See generally, A. C. HopkIns (ed.), ClobalIzatIon In World HIstory (2002).
2
bId. Jurgen Dsterhammel and NIels P. Petersson, ClobalIzatIon: A Short HIstory (PrInceton
UnIversIty Press (PrInceton, Dxford, 2005).
4
same taste of rock and roll musIc and televIsIon programmes and movIes.
WIth the facts that 8angladeshI and Kenyan vegetables beIng sold In the
same freshness sIde by sIde In the markets of London's East end and ndIan
maths tutors gIvIng lessons onlIne sIttIng In a boxroom In some part of
8angalore to AmerIcan hIgh school kIds boostIng theIr exam. grades at a
fractIon of US tuItIon cost charged there, one Is convInced how far the world
has shrunk. Thomas FrIedman of the New York TImes has wrItten a
bestseller "The World Is Flat"
J
InterestIngly descrIbIng these phenomena.
The world Is Indeed beIng flattened now In the crushIng wave of
globalIzatIon.

The word 'globalIzatIon' has no fIxed defInItIon In the modernday
world, however. The EconomIst has called It "the most abused word of the
21
st
century". t has been noted, "CertaInly no word In recent memory has
meant so many dIfferent thIngs to dIfferent people and has evoked as much
emotIon. Some see It as nIrvana - a blessed state of unIversal peace and
prosperIty - whIle others condemn It as a new kInd of chaos."
4


Dver the last quarter century, the Ideology of globalIzatIon has been
vIgorously pursued by certaIn developed countrIes, e.y. the UnIted States
and the UnIted KIngdom. The concept of globalIzatIon has been IncreasIngly
coloured by dIfferent Interested quarters and schools of thought In dIfferent
ways such as geographIcal, economIc, crossborder busIness, socIologIcal,
polItIcal, cultural and legal. ThIs means that dIfferent dIscIplInes have
dIfferent Ideas to offer to the concept of globalIzatIon.






3
The World is Flat: The Globalized World in the Twenty-First Century (publIshed by Allen Lane,
2005, and publIshed wIth updates In PenguIn 8ooks, 2006).
4
http://ycleylobcl.ycle.edu/cbout/esscy.]sp

5

What Is gIobaIIzatIon!

A common modern defInItIon of 'globalIzatIon' may be: "The gradual
IntegratIon of economIes and socIetIes drIven by new technologIes, new
economIc relatIonshIps, and the natIonal and InternatIonal polIcIes of a wIde
range of actors, IncludIng governments, InternatIonal organIzatIons,
busIness, labor and cIvIl socIetIes (NCDs)."
5
Another expansIve defInItIon has
been offered by Professor John FuggIe In the followIng words:
"ClobalIzatIon does not come In tIdy sectoral or geographIcally demarcated
packages. t Is all about InterconnectIons - among people; across states; In
productIon networks and fInancIal markets; between greed and grIevance;
among faIlIng states, terrorIsm, and crImInal networks; between nature and
socIety."
6


The recent movement towards globalIzatIon Is the manIfestatIon of the
neolIberalIsm phIlosophy sponsored by the socalled WashIngton Consensus.
The neolIberal thInkIng of development Is the InItIatIve of the WashIngton
based InternatIonal fInancIal InstItutIons such as the |F and the World 8ank
backed by the US government, In partIcular by the U.S. Treasury, supported
by networks of varIous opInIon leaders such as thInk tanks, Investment
bankers and global fInance mInIsters who meet each other In WashIngton to
collectIvely forge an understandIng amongst themselves about global
development, hence the notIon of 'WashIngton Consensus'. The neo
lIberalIsm sponsored by the WashIngton consensus Is prIncIpally geared to
economIc growth across the globe.


5
Quoted n Ceorge Lodge and CraIg WIlson, A Corporate SolutIon to Clobal Poverty: How
|ultInatIonals Can Help the Poor and nvIgorate TheIr Dwn LegItImacy (PrInceton UnIversIty
Press, 2006), p.12.

John Cerard FuggIe, The UnIted NatIons and ClobalIzatIon: Patterns and LImIts of
nstItutIonal AdaptatIon", 9 Clobal Covernance (200J), p.J01, at p.J01.

6
n the followIng dIscussIon we wIll be concerned wIth economIc
globalIzatIon, rather than the other senses In whIch the word Is also used,
and Its Impact maInly on human rIghts and the ThIrd World development.

Now a few words about human rIghts and development. The notIon of
human rIghts Is no longer confIned to stereotype senses such as torture,
vIolatIon of property rIghts, polItIcal harassments, etc. The notIon has
evolved through dIfferent generatIons. The most recent thInkIng about
human rIghts revolves round the notIon of development and peace. As
LeIsInger descrIbes them as the thIrd generatIon of human rIghts whIch
"encompasses collectIve rIghts such as the rIght to peace, to development,
or to a socIal and InternatIonal order In whIch the rIghts and freedoms
proclaImed In the UnIversal 0eclaratIon can be fully realIzed."
7
The 1986 UN
0eclaratIon on the FIght to 0evelopment
8
uses the concept of
'development' In the Preamble as a comprehensIve economIc, socIal,
cultural and polItIcal process whIch arIses at the constant Improvement of
the wellbeIng of the entIre populatIon. Thus, there has evolved an
Interface between human rIghts and development
9
as the framers of the
UnIversal 0eclaratIon of Human FIghts took a forwardlookIng broader vIew
of human rIghts.
10
Susan Ceorge notes, they "devoted theIr attentIon to the
choIces of socIety wIth regard to the just dIstrIbutIon of materIal and non
materIal advantages. The notIon of 'just dIstrIbutIon' Includes InequalItIes
both wIthIn and between natIons; the shares allocated to dIfferent socIal
classes In partIcular socIetIes and also the dIsparItIes between rIch and poor
at the InternatIonal level."
11
However, It has to be realIsed that In
tradItIonal InternatIonal law the concept of human rIghts has been

7
K.|. LeIsInger, "Dn Corporate FesponsIbIlIty for Human FIghts" (8asel, AprIl 2006).
8
Adopted 4 0ecember 1986, CA Fes. 41/128 (Annex), UN CADF, 41
st
Sess., Supp. No. 5J, at
186, UN 0oc A/41/5J (1987).
9
0avId KInley, "Human FIghts and the World 8ank: PractIce, PolItIcs, and Law", at
http://ssrn.com/abstract=962987, J57.
10
Susan Ceorge, "ClobalIsIng FIghts:", In ClobalIsIng FIghts (DUP, 200J), p.15, at pp. 16
17.

11
Susan Ceorge, "ClobalIsIng FIghts:", In ClobalIsIng FIghts (DUP, 200J), p.15, at pp. 16
17.

7
developed vertIcally wIthIn the natIon State gIvIng It the responsIbIlIty to
protect It and not horIzontally across the globe between States.

As Professor AnghIe observes:
"WhIle human rIghts dIscourse outlInes a set of legal prIncIples that
further justIce wIthIn states, no such prIncIples have been formulated
In InternatIonal law to achIeve substantIve justIce between states. The
major concepts we use to dIscuss justIce - concepts of democracy, of
good governance, of legItImacy - have been developed and elaborated
prIncIpally wIthIn the context of the relatIonshIp between a state and
Its cItIzens."
12


These are some of the challenges now facIng tradItIonal InternatIonal
law as we have known It. shall now turn to some of the transformatIve
forces of globalIzatIon that have Impacted on the establIshed fundamentals
of InternatIonal law.


CHANCINC FUN0AhENTALS DF INTEPNATIDNAL LAW IN THE
FACE DF CLDALIZATIDN

The present movement towards globalIzatIon has posed tremendous
challenges to tradItIonal InternatIonal law and, In fact, Its varIous branches
IncludIng InternatIonal economIc law. The challenges are both horIzontal
and vertIcal. t Is horIzontal In the sense that varIous new actors
1J
such as
transnatIonal corporatIons (TNCs), cIvIl socIety and other nonstate actors
are IncreasIngly playIng an Important role In InternatIonal lIfe and socIety
whIch Is not recognIzed In tradItIonal InternatIonal law. From the spatIal
poInt of vIew, the terrItory of InternatIonal law Is IncreasIngly broadenIng In
lIght of recent developments In the wake of globalIzatIon. The new norms
that are rules In the fIeld of InternatIonal law In varIous new contexts are

12
Antony AnghIe, "TIme Present and TIme Past: ClobalIzatIon, nternatIonal FInancIal
nstItutIons, and the ThIrd World", J2 N.Y.U.J. nternatIonal Law E PolItIcs (2000), p.24J,
at p.27J.

1J
n her artIcle, "Power ShIft", In the January/February 1997 ForeIgn AffaIrs, JessIca T.
|athews descrIbes a shIft away from the state - up, down, and sIdeways - to suprastate,
substate, and, above all, nonstate actors.
8
also supposed to be evolvIng vertIcally to regulate effectIvely the new
phenomenon of globalIzatIon In Its varIous spheres. So, from the contextual
poInt of vIew tradItIonal InternatIonal law Is also evolvIng vertIcally.
SeemIngly, the power of sovereIgnty from the state Is gradually shIftIng
to market forces In a globalIzed world gIvIng rIse to multIfarIous norms,
standards and rules to deal wIth the new phenomenon. n the new agenda of
globalIzatIon the role of the state Is beIng mInImIsed and that of the non
state actors maxImIsed. We now lIve In a world where InternatIonal
actIvItIes are IncreasIngly less statecentrIc and more multIdImensIonal In
terms of theIr nature, extent, operatIonal mode and the actors Involved
thereIn.
14


WIth the phenomenon of globalIzatIon, global governance has also
stIrred a great debate as to Its nature and content. 8oth concepts are
equally Important as the latter Is the vehIcle for the former, .e. the
Ideology. WhIle global governance does not mean world government, varIous
models of global governance have been put forward by varIous schools of
thought whIch may be descrIbed as the lbercl nternctonclst, the neo
medevclst and the trcnsyovernmentclst. The lbercl nternctonclsts
favour the strengthenIng of InternatIonal InstItutIons by transferrIng
regulatory authorIty from the natIonal level to an InternatIonal InstItutIon
such as the nternatIonal |onetary Fund (|F), the World 8ank (W8) and the
World Trade DrganIzatIon (WTD) and the desIgnIng of suItable InternatIonal
rules for global governance. However, the lbercl nternctonclsts tend to
guard agaInst the global dIsmantlIng of the regulatory State In thIs
InternatIonalIzatIon process led by globalIzatIon.
15
The neomedevclsts
uphold the notIon of borderless States and proclaIm the end of the natIon
state. AccordIng to them, power Is rapIdly shIftIng from the State to non
state actors whIch constItute global governance networks In theIr

14
See generally, F.A. HIggott, C.F.0. UnderhIll and A. 8Ieler (eds.), NonState Actors and
AuthorIty In the Clobal System (2000); L. A. Khan, The ExtInctIon of NatIonStates: A World
WIthout 8orders (|artInus NIjhoff PublIshers, 1996); S. Strange, The Fetreat of the State:
The 0IffusIon of Power In the World Economy (CambrIdge UnIv. Press, 1996).
15
Ann|arIe Slaughter, "The Feal New World Drder", ForeIgn AffaIrs, vol.76 (no.5), p.18J,
p.192.
9
operatIons. The Influence of the nonstate actors or the InternatIonal cIvIl
socIety on InternatIonal affaIrs and world polItIcs cannot be Ignored or taken
lIghtly. Examples abound. The currently oftquoted ones are the
development of the InternatIonal treaty to ban the use of land mInes, the
fruItIon of the Fome statute creatIng the nternatIonal CrImInal Court, the
demIse of the |ultIlateral Agreement on nvestment (|A) under the DEC0.
Towards the progressIve development of InternatIonal human rIghts law the
Influence of the InternatIonal cIvIl socIety, .e. NCDs, epIstemIc
communItIes, IncludIng that of the scholars of InternatIonal law, and
InternatIonal actIvIst networks, Is well known. The trcnsyovernmentclsts
fInd yet a thIrd way for global governance. To them the
transgovernmentalIsm Is an emergIng new world order In whIch the
IndIvIdual elements of the State such as courts, regulatory agencIes,
executIves and even legIslatures Interact dIrectly wIth theIr counterparts
abroad, thus creatIng a dense web of relatIons that constItutes a new
transgovernmental order.
16


CertaInly, the new phenomenon of globalIzatIon has posed a bIg
challenge to some of the fundamentals of InternatIonal law, .e. the notIon
of natIonstate and Its sovereIgnty that we have tradItIonally known. The
tradItIonal InternatIonal socIety of states based on the WestphalIan notIon
of sovereIgnty and the InternatIonal legal framework In whIch It has
operated so far are equally threatened In the era of globalIzatIon. For
tradItIonal InternatIonal law WestphalIan sovereIgnty Is the archstone
whIch Is now beIng gradually eroded In the wave of globalIzatIon. t Is
IncreasIngly apparent In the present day and age that the orthodox
WestphalIan InternatIonal legal order Is not receptIve of the postmodernIsm
or of the ever changIng scene In the InternatIonal arena whether that
relates to the IncreasIng role of the multIfarIous actors In the fIeld apart
from the state, or developIng countrIes' needs, or, for that matter, the

16
Anne|arIe Slaughter, "The Feal New World Drder", ForeIgn AffaIrs, vol.76 (no.5, 1997)
p.18J, at p.184; Anne|arIe Slaughter and 0avId ZarIng, "NetworkIng Coes nternatIonal:
An Update", Annu.Fev.Law Soc.Sc. 2006.2:21129; Anne|arIe Slaughter, A New World
Drder (PrInceton, NJ: PrInceton UnIversIty Press, 2004).
10
needs of the oppressed bIllIons of people across the globe bonded by the
fraternIty of sufferIng under the ever pressIng wheels of modern
globalIzatIon.
17

n one extreme, the hyperglobalIzers or the neomedIevalIsts see the
demIse of the natIonstate and progressIve shIft of sovereIgnty from
States to market forces
18
, whIle In the other the sceptIcs of globalIzatIon
consIder It a nonIssue for the natIonstate and Its sovereIgnty, and In
theIr vIew globalIzatIon Is nothIng but a myth.
19


8etween the two extremes such as hyperglobalIsm and sceptIcIsm there
are the IntergovernmentalIsts,
20
lIberal democratIc theorIsts,
21

transformatIonalIsts, and lIberal InternatIonalIsts
22
who vIew that the
natIonstate Is there to stay, but the modern notIon of sovereIgnty of the
natIonstate has to be shaped dIfferently from Its WestphalIan paradIgm In
order to respond to the phenomenon of globalIzatIon. Whatever the sceptIcs
of globalIzatIon mIght contend It Is true that we cannot run away from the
realIty of globalIzatIon more than we can from our own shadows. TheorIes
abound as to the modalItIes of the new notIon of sovereIgnty of the natIon
state In the lIght of globalIzatIon.
2J
t Is not the natIonstate but the nature
of Its sovereIgnty that needs to be transformed wIth globalIzatIon. ThIs Is

17
See generally, Antony AnghIe, mperIalIsm, SovereIgnty and the |akIng of nternatIonal
Law (CambrIdge UnIversIty Press, 2005).
18
See generally, KenIchI Dhmae, The End of the NatIon State : The FIse of FegIonal
EconomIcs (1995, HarperCollIns, London); 0. Held, 0emocracy and the Clobal Drder : From
the |odern State to CosmopolItan Covernance (1995, PolIty Press, CambrIdge); 0. Held, A.
|cCrew, 0. Coldblatt and J. Perraton, Clobal TransformatIons : PolItIcs, EconomIcs and
Culture (1999, PolIty Press, CambrIdge); Susan Strange, The Fetreat of the State : The
0IffusIon of Power In the World Economy (1996, CambrIdge UnIversIty Press, CambrIdge);
Jean|arIe Cuehenno, The End of the NatIonState (UnIversIty of |Innesota Press, 1995).
19
See generally, P. HIrst and C. Thompson, ClobalIzatIon In QuestIon : The nternatIonal
Economy and the PossIbIlItIes of Covernance (PolIty Press, CambrIdge, 1999); L. WeIss, The
|yth of the Powerless State: CovernIng the Economy In a Clobal Era (PolIty Press,
CambrIdge, 1998);
20
Ann|arIe Slaughter, "The Feal New World Drder", ForeIgn AffaIrs, vol.76 (no.5), p.18J.
21
John Fawls, The Law of Peoples (Harvard UnIversIty Press, CambrIdge |assachusetts;
London, England, 1999).
22
0avId Held, Clobal Covenant: The SocIal 0emocratIc AlternatIve to the WashIngton
Consensus (PolIty Press, CambrIdge, 2004), Chp.8.
2J
Abram Chayes and AntonIa Handler Chayes, The New SovereIgnty : ComplIance wIth
nternatIonal Fegulatory Agreements (Harvard UnIversIty Press, CambrIdge, |assachusetts;
London, England, 1998); 0avId Held, Clobal Covenant: The SocIal 0emocratIc AlternatIve to
the WashIngton Consensus (PolIty, 2004), Chapters 7,8 and 9; 0avId Held, "Law of States,
Law of Peoples: The |odels of SovereIgnty", 8 Legal Theory (1).
11
what the transformatIonalIsts preach that globalIzatIon and State
sovereIgnty are not mutually exclusIve, rather they are mutually
constItutIve.
24
The complete denIal of sovereIgnty of a natIonstate and Its
total transfer to the market forces cannot be realIstIcally accepted. n the
recent past the demIse of the 8CC (8ank of CredIt and Commerce
nternatIonal) - jokIngly sometImes called the 8ank of CocaIne and Crook
nternatIonal - because of Its InternatIonal money launderIng and other
IllIcIt fInancIal actIvItIes and the collapse of the gIant transnatIonal
corporatIon Enron because of Its fraudulent corporate actIvItIes have proved
that the role of the regulatory State Is quIntessentIal for the stabIlIty In the
global marketplace, otherwIse anarchy and chaos are InevItable. A
substantIal transfer of sovereIgnty from the natIonstate to market forces
wIll not help the prosperIty of the global marketplace and the current of
market forces. 8y the way, who wants to hIre a fox to guard the chIcken
coop In the dead of the nIght: Too much unbrIdled authorIty beIng
transferred from the State to the global marketplace wIll perhaps have the
boomerang effect because of the legItImacy crIsIs of such transfer of
authorIty.

The realIty at the present tIme though Is that the natIonstate Is
constraIned to exercIse Its tradItIonal sovereIgn authorIty by varIous
external forces IncludIng market forces In the global economy. nternatIonal
lawyers, polItIcal scIentIsts, InternatIonal relatIon scholars and, above all,
globalIsts must thInk of InnovatIve ways how the notIon of the natIonstate
sovereIgnty can be reconfIgured to respond to the phenomenon of
globalIzatIon. SImIlarly, there also needs to be an urgent shIft from the
tradItIonal InternatIonal law of coexIstence of States the WestphalIan
tradItIon to the prospectIve modern InternatIonal law of cooperatIon

24
See generally, S. Sassen, LosIng Control : SovereIgnty In an Age of ClobalIzatIon
(ColumbIa UnIversIty Press, New York, 1997); . Clark, ClobalIzatIon and FragmentatIon :
nternatIonal FelatIons In the TwentIeth Century (Dxford UnIversIty Press, Dxford, 1997); .
Clark, ClobalIzatIon and nternatIonal Theory (Dxford UnIversIty Press, 1999); FIchard Falk,
Predatory ClobalIzatIon : A CrItIque (PolIty Press, CambrIdge, 1999); |Ichael |ann, "Has
ClobalIzatIon ended the rIse and the rIse of the natIonstate:, In T.7. Paul and J. Hall
(eds.), nternatIonal Drder and the Future of World PolItIcs (CambrIdge UnIversIty Press,
CambrIdge, 1999).
12
amongst States In the era of globalIzatIon whIch should be the legal
framework for global governance.
25


Some suggestIons about the reconfIguratIon of the tradItIonal notIon of
sovereIgnty have been put forward In dIfferent captIon banners that
underscore the concept Itself as essentIally beIng contested.
26
Thus, Abram
and AntonIa Chayes wave the banner of "The new sovereIgnty"
27
, and John
Jackson "SovereIgntymodern".
28
n the latter context, the author puts
forward hIs Idea of "slIcIng the concept". n hIs vIew 'allocatIon of power' In
most cases "Involve(s) some gradatIon of "cedIng of sovereIgnty" as a
matter of degree, not kInd."
29
n hIs theory of 'The Law of Peoples'
desIgned for the SocIety of Peoples, .e. lIberal democratIc peoples, John
Fawls felt the need to reformulate the notIon of tradItIonal sovereIgnty as
he InsIsts that "we must reformulate the powers of sovereIgnty In the lIght
of a reasonable Law of Peoples and deny to states the tradItIonal rIghts to
war and to unrestrIcted Internal autonomy."
J0
t Is beyond the scope of thIs
paper to engage In a detaIled dIscussIon of the current thInkIng on the
reconfIguratIon of sovereIgnty.
J1



25
See generally, Eyal 8envenIstI and |oshe HIrsch (eds.), The mpact of nternatIonal Law
on nternatIonal CooperatIon : TheoretIcal PerspectIves (CambrIdge UnIversIty Press, 2004).
26
Dan Sarooshi, International Organizations and their Exercise of Sovereign Powers (OUP, 2005), pp.
3-6.
27
Abram Chayes and AntonIa Handler Chayes, The New SovereIgnty: ComplIance wIth
nternatIonal Fegulatory Agreements (Harvard UnIversIty Press, CambrIdge, |assachusetts,
1998).
28
John H. Jackson, "SovereIgnty|odern: A New Approach to an Dutdated Concept", 97
A.J..L. (no.4, 200J), p.782, esp. at p.802: "To cope wIth the challenges of Instant
communIcatIon, and faster and cheaper transportatIon, combIned wIth weapons of vast and
/ mass destructIon, the world wIll have to develop somethIng consIderably better than
eIther the hIstorIcal and dIscredIted WestphalIan concept of sovereIgnty, or the current,
but hIghly crItIcIzed, versIons of sovereIgnty stIll often artIculated. That somethIng Is not
yet well defIned, but It can be called "sovereIgntymodern," whIch Is more an analytIc and
dynamIc process of dIsaggregatIon and redefInItIon than a "frozenIntIme" concept or
technIque."
29
John H. Jackson, Sovereignty, the WTO, and Changing Fundamentals of International Law (CUP,
2006), pp. 251 ff.
J0
John Fawls, The Law of Peoples (Harvard UnIversIty Press, CambrIdge, |assachusetts,
1999), at pp.2627.
31
See Ann-Marie Slaughter, Sovereignty and Power in a Networked World Order, 40 Stan.J.Intl. L.
(2004), p.283; Stephen D. Krasner, The Hole in the Whole: Sovereignty, Shared Sovereignty, and
International Law, 25 Michigan Journal of International Law (2004), p.1; Winston P. Nagan and Craig
Hammer, The Changing Character of Sovereignty in International Law and International Relations,
43 Columbia J. Transnatl. L. (2004-2005), p.141.
13

CLDALIZATIDN AN0 ITS 0ISCDNTENTS

The bIg questIon today Is whether the westernled or the WashIngton
Consensusbased globalIzatIon has, In realIty, anythIng to do wIth the
economIc growth and development of the developIng world. Dr, Is It for the
benefIt of a few developed countrIes, and partIcularly theIr mIghty
multInatIonals, at the expense of the poor of the world:

EvIdence suggests that the WashIngtonConsensusbased globalIzatIon
over the last quarter century has served lIttle to the cause of development
of the ThIrd World generally. Although It Is not saId that globalIzatIon Is all
that bad and has nothIng good to offer, the problem Is that the mode and
the manner In whIch globalIzatIon operated over the last quarter century
has brought about more economIc mIsery and fInancIal dIsasters to many
countrIes and peoples than the prosperIty that It InItIally promIsed. t Is
obvIous that somethIng has gone serIously rotten somewhere In the present
style of economIc globalIzatIon. Numerous studIes have shown that In
varIous sectors such as global fInance, trade and Investment the global
south has turned hostage In the hands of the global north, despIte sporadIc
and shortterm blessIngs In some countrIes In the global south and also In
some developIng countrIes such as ChIna, ndIa and the tIger economIes of
East AsIa In the wake of globalIzatIon. t Is not the purpose here, however,
to catalogue the Ills of globalIzatIon. Father the aIm here Is to gIve the aIr
that If globalIzatIon does not turn to be prodevelopment for the
underdeveloped sectIon of the InternatIonal socIety, but to embellIsh the
posItIon of the developed countrIes and the mIghty multInatIonals of the
world, then that globalIzatIon Is undesIrable for the majorIty and,
therefore, unsustaInable for the future of the world.

Dnly a few Instances of dIsparItIes between natIons In the age of
globalIzatIon wIll explaIn the dIscontents of globalIzatIon as follows:

14
Df the 6 bIllIon plus people of the world today, 900 mIllIon people
lIvIng In the Western world enjoy 86 per cent of world consumptIon
expendItures, 79 per cent of world Income, 58 per cent of world
energy consumptIon and 74 percent of all telephone lInes. 8y
comparIson, the poorest 1.2 bIllIon lIvIng In the ThIrd World have to
share only 1.J per cent of world consumptIon, 4 per cent of world
energy consumptIon and 1.5 per cent of all telephone lInes.
J2


n 1820 the fIfth of the world's populatIons lIvIng In the world's
rIchest countrIes collectIvely receIved three tImes the combIned
Income of the fIfth of the world's populatIon lIvIng In the poorest
countrIes. A century later thIs ratIo had Increased to 11 to 1. 8y 1960
It was J0 to 1; by 1990, 60 to 1; and by 1997, 74 to 1. These fIgures
suggest not only an IncreasIng gap between rIch natIons and poor
natIons, but an IncreasIng rate of growth In thIs gap, whIch grew at
an annual rate of 1.66 percent between 1820 and 1960, but between
1990 and 1997 grew at an annual rate of J percent.
JJ


Nearly half the world's populatIon stIll lIves on less than S2 a day,
and onesIxth (I.e. 1.2 bIllIon) get by on less than S1 a day, of whIch
70 per cent are women. The Nobel PrIzewInnIng economIst Joseph
StIglItz regrettably saId:
"The average European cow gets a subsIdy of S2 a day (the
World 8ank measure of poverty); more than half of the
people In the developIng world lIve on less than that. lt
cppecrs thct t s better to be c cow n Europe thcn to be c
poor person n c developny country."
J4



J2
0avId Held, Clobal Covenant (PolIty, 2004), at p.J4.
JJ
1999 UN Human 0evelopment Feport, quoted In Peter SInger, Dne World (2002), pp.812.

J4
Joseph StIglItz, |akIng ClobalIzatIon Work (PenguIn, 2006), p.85.
15
0espIte repeated promIses of poverty reductIon made over the last
decade of the twentIeth century, the . number of people In poverty
has actually Increased by an average of 2.5 percent annually.
J5


n the emergIng new global InformatIon order there seems to be lIttle
provIsIon for the ThIrd World countrIes to have suffIcIent Infrastructure In
place to cope wIth the new challenge and to have easy and cheap access to
the nternet. The dIgItal dIvIde wIll soon make the ThIrd World much worse
off than It has so far been the case wIth other adverse economIc fallouts. A
recent study confIrms that there apparently remaIn sIgnIfIcantly:

"(8)Ig gaps In InformatIon and communIcatIon technologIes (CT)
capacIty, connectIvIty, and content between IndustrIalIzed and
developIng countrIes. There are more computers In the UnIted States
than In the rest of the world combIned, greater nternet access In
|anhattan than In subSaharan AfrIca, more nternet hosts In FInland
than In LatIn AmerIca and the CarIbbean, and as many telephones In
Tokyo as In all of AfrIca. f these technologIes have created a global
InformatIon socIety, as Is often claImed, some 4 bIllIon people - out
of a total world populatIon of 6 bIllIon - are excluded from It
today."
J6


AccordIng to the 0eclaratIon on the FIght to 0evelopment, States
should ensure "equalIty of opportunIty for all In theIr access to basIc
resources, educatIon, health servIces, food, housIng employment and the
faIr dIstrIbutIon of Income." The access to the nternet - a human rIght
complementIng the rIght to educatIon may now be counted In the lIst of
basIc resources essentIal to human development. CommunIcatIon and
busIness on the nternet can contrIbute enormously to the economIc
development of a country. The InternatIonal legal order Is Inadequate as of
today to take thIs new phenomenon Into account from the ThIrd World
developIng countrIes' perspectIve. The present InternatIonal legal order

J5
bId.
J
John Cerald FuggIe, "The UnIted NatIons and ClobalIzatIon: Patterns and LImIts of
nstItutIonal AdaptatIon", 9 Clobal Covernance (200J), p. J01, at p. J08. See also KofI A.
Annan, We the Peoples : The Fole of the UnIted NatIons In the 21
st
Century (New York:
UnIted NatIons, 2000), p.J2; "Feport of the HIghLevel Panel of Experts on nformatIon and
CommunIcatIon Technology," A/55/75/E/2000/55 (22 |ay 2000), p.4.

16
makes also lIttle provIsIon for mobIlIzatIon of global scIence and technology
as a result of whIch the poor countrIes of the world are beIng retrogressIvely
relegated to the backyard of the current scIentIfIc and technologIcal state
of world cIvIlIzatIon.

t Is not thus dIffIcult to fathom why the WashIngton Consensus has
proved so unpopular not only In the ThIrd World but also amongst many
InfluentIal advocates of the Consensus. The recent events of antIglobalIst
protests In Seattle, Cenoa, and Cancun, and also the strong vIews expressed
around the world on the adverse Impact of globalIzatIon show a crack In the
consensus that Is IncreasIngly wIdenIng. n thIs Interdependent world In the
growIng crossborder InteractIons between peoples In varIous sectors from
busIness to culture to educatIon In the new era of InformatIon
superhIghway, It Is out of the questIon to turn the clock back. ClobalIzatIon
Is happenIng and It Is happenIng fast. Now It Is tIme to thInk of alternatIve
ways to the WashIngton Consensus so that globalIzatIon could be made to
work for the poor of the world. The vIew Is often expressed that the present
style of globalIzatIon Is faIlIng the majorIty of the developIng countrIes of
the world. Whose Interest does globalIzatIon serve then: ClobalIzatIon
should not reflect the Interests of a few rIch countrIes and theIr
transnatIonal corporatIons and as a tool for new global hegemony.
J7

ClobalIzatIon should mean for all and especIally It should be more
responsIve to the needs and development consIderatIons of the deprIved
bIllIons who lIve In the ThIrd World. As KofI Annan, the former UN Secretary
Ceneral, saId: "The central challenge we face today Is to ensure that
globalIzatIon becomes a posItIve force for all the world's people, Instead of
leavIng bIllIons of them behInd In squalor."
J8




J7
|ost of the largest multInatIonal corporatIons, by revenue, are AmerIcan or Japanese. n
1996, 162 of the 500 largest companIes globally were from the UnIted States and 126 from
Japan.
J8
KofI A. Annan, We the Peoples: The Fole of the UnIted NatIons In the 21
st
Century (New
York: UnIted NatIons, 2000), p.6.

17

TPANSNATIDNAL CDPPDPATIDNS (TNCs) CLDAL USINESS

"Companies have bodies, but they have no souls; if no souls, no consciences" - John
Pollexfen

"After all, corporations don't have a conscience; it is only the conscience of those
who run the corporation. Their conscience often takes a backseat to profits" - Joseph
Stiglitz




The IncreasIng domInatIon of TNCs or multInatIonals In the global
economy In the process of lIberalIzatIon of trade, fInance and Investment
has also created an unbalanced sItuatIon In the power game between
natIonstates and TNCs who are the prIme mover and shaker of economIc
globalIzatIon. ClobalIzatIon Is In large part drIven by the TNCs, twothIrds of
whIch In 2005 were based In Western Europe and the UnIted States.'
J9

There Is, however, an emergIng breed of ndIan and ChInese multInatIonals
that are also makIng mark In the corporate world In the current state of
globalIzatIon.
40
At the threshold of the current century the corporate
domInatIon on world stage dubs the century as the corporate century. n the
current of globalIzatIon, TNCs' actIvItIes have Increased multIfold In recent
years as are frIghtenIngly notIceable even In the last fIve years (20012006).
AccordIng to the UN's World nvestment Feport 2001 the world had about
45,000 transnatIonal fIrms controllIng 280,000 foreIgn affIlIates. WorldwIde
sales of the latter amounted to about S7 trIllIon. The largest 100 companIes
own about S1.7 trIllIon of foreIgn assets - a fIfth of the estImated global
total. |ultInatIonal companIes account for 51 of the world's largest
economIc entItIes (the other 49 are natIon states). The UN's World
nvestment Feport 2006 noted that more than 77,000 TNCs currently span
the globe, wIth roughly 770,000 subsIdIarIes and mIllIons of supplIers. 8y the
early 1990s TNCs accounted for more than twothIrds of global trade In
goods and servIces. The 1999 UN0P Human 0evelopment Feport noted that

J9
Ceorge Lodge E CraIg WIlson, A Corporate SolutIon to Clobal Poverty (2006) p.14.

40
See "6lobclzcton's D]]sprny", The EconomIst (AprIl 7
th
1J
th
2007), at p.11.
18
many global corporatIons now wIeld more economIc power than natIon
states. Today 50 of the largest 100 economIcs In the world are run by
multInatIonals, not by countrIes. |ItsubIshI Is bIgger than SaudI ArabIa and
Ceneral |otors Is larger than Creece, Norway or South AfrIca. n 2000,
Exxon|obIl, the world's largest corporatIon, was bIgger than 180 of the
world's 220 natIonal companIes and certaInly much larger In economIc sIze
than most of the countrIes In whIch It operated.
41
Dn January J0, the US oIl
major, .e. Exxon|obIl, announced the largest profIt In US corporate hIstory
SJ6.1 bIllIon after tax In 2005.
42
The combIned annual revenues of the
bIggest 200 corporatIons are greater than those of 182 natIonstates that
contaIn 80 per cent of the world's populatIon.
4J
n 1995 the sales fIgures for
the twenty largest multInatIonal corporatIons ranged from S61.5 bIllIon to
S152.5 bIllIon. The smallest of these companIes had sales that exceeded the
C0P of nInetyeIght of the 1J8 countrIes provIdIng data to the World 8ank.
44

n 2004, the revenues of U.S. car company Ceneral |otors were S191.4
bIllIon, greater than the C0P of more than 148 countrIes.
45
n Its fIscal year
endIng 2005, retaIler Wal|art's revenues were S285.2 bIllIon, larger than
the combIned C0P of subSaharan AfrIca.
46
The world's largest prIvate
corporate employer Is Wal|art, wIth 1.J mIllIon workers.
47


SInce multInatIonals prove to be much mIghtIer than natIonstates, they
can exploIt theIr economIc power and manIpulate polItIcal forces In a
country to theIr advantage. Apart from that, varIous allegatIons of vIolatIon
or abuse of human rIghts, labour rIghts and the envIronment often arIse In
respect of TNCs' actIvItIes. Examples of such allegatIons abound lIke that

41
Ceorge Lodge E CraIg WIlson, A Corporate SolutIon to Clobal Poverty (2006) p.14.

42
See FT |agazIne - FT Clobal 500 SpecIal ssue (The World's Top CompanIes In 2006) (June
10/11, 2006), p.J2.
4J
Wayne Ellwood, Nononsense CuIde to ClobalIzatIon (New nternatIonalIst PublIcatIons
Ltd., 2002), pp. 5455.

44
UnIted NatIons, World nvestment Feport 1997 : TransnatIonal CorporatIons, |arket
Structure and CompetItIon PolIcy, Table 1.7.
45
Joseph StIglItz, |akIng ClobalIzatIon Work: The Next Step to Clobal JustIce (PenguIn
8ooks, 2006), p.187.
46
Joseph StIglItz, |akIng ClobalIzatIon Work: The Next Step to Clobal JustIce (PenguIn
8ooks, 2006), p.188.
47
bId.
19
agaInst Exxon |obIl Corp. for Its actIvItIes In ndonesIa, Fresh 0el |onte
Produce nc. In Cuatemala, ChevronTexaco Corp. In NIgerIa and In Ecuador,
Unocal In |yanmar, and DccIdental Petroleum Corp., CocaCola Co. and
coal mIner 0rummond Co. In ColombIa, to name but a few.
48
f the TNC's
motIve Is maInly propelled by profIt and It Ignores the welfare consIderatIon
of people who are Involved In and affected by Its operatIons, there cannot
be any sense of altruIsm. Although It sounds funny, It Is, however,
InstructIve to note the attItude of TNCs. n the context of scarcIty of
drInkIng water the soft drInk gIant CocaCola can have Its day. Thus, the
CED of CocaCola stated, when Coke reentered ndIa after 20 years, 'our
market Is guaranteed because If people cannot have water, they wIll drInk
Coke.'
49
The 199J Annual Feport of the CocaCola corporatIon made a
greedsome statement that:
"All of us In the CocaCola famIly wake up each mornIng knowIng that
every sIngle one of the world's 5.6 bIllIon people wIll get thIrsty that
day .. f we make It ImpossIble for these 5.6 bIllIon people to escape
CocaCola .. Then we assure our future success for many years to
come. 0oIng anythIng else Is not an optIon."
50


ThIs Is very tellIng. ThIs shows CocaCola's attItude In undermInIng
people's rIght to water. ts actIons mIght tell more. ThIs reflects the
phIlosophy of |Ilton FrIedman, the guru of TNCs' profItmakIng attItude,
who famously wrote: "Few trends could so thoroughly undermIne the very
foundatIons of our socIety as the acceptance by corporate offIcIals of a
socIal responsIbIlIty other than to make as much money for the stockholders
as possIble."
51
Such attItude of TNCs has caused theIr abuse of human rIghts
and degradatIon of the envIronment. These are the challenges facIng
InternatIonal law today.


48
See http://www.business-humanrights.org/Links/Repository/473088/link_page_view

49
Quoted In 7andana ShIva, "Food FIghts, Free Trade, and FascIsm", In |atthew J. CIbney
(ed.), ClobalIzIng FIghts (200J, DUP), p.87, at p.95.

50
bId.
51
|Ilton FrIedman, CapItalIsm and Freedom (UnIversIty of ChIcago Press, ChIcago, 1982),
p.1JJ.
20
There Is yet no bIndIng code of conduct of multInatIonals. t has been
noted, "There are a multItude (well over 400) Codes of Conduct whIch seek
to Impose control over the operatIon of multInatIonal corporatIons but none
of those have any legal remedIes for breach. |onItorIng the complIance of
corporatIons wIth these Codes Is extremely dIffIcult, not least because much
of the relevant InformatIon Is under the control of the company Itself."
52
As
of today, nternatIonal law Imposes responsIbIlIty only on States for the
protectIon of human rIghts, and TNCs do not have any dIrect duty as such.
John FuggIe, a Harvard academIc, appoInted by the UN SecretaryCeneral to
IdentIfy standards of corporate responsIbIlIty and clarIfy the accountabIlIty
of busIness wIth regard to human rIghts, observed In hIs latest report (2007)
as follows
5J
:
"nternatIonal human rIghts Instruments do not seemIngly Impose
dIrect legal responsIbIlItIes on TNCs for the protectIon of human rIghts.
Father, these treatIes maInly attrIbute such responsIbIlItIes to States.
However, there are some soft law standards and InItIatIves undertaken
by States wIth busIness and cIvIl socIety, whIch are consIdered to play
a key role In any future development of defInIng corporate
responsIbIlIty for human rIghts."

'Corporate socIal responsIbIlIty' (CSF) Is Indeed stIll a fluId concept In
corporate legal parlance. CSF Is a clIch wIthout any welldefIned
substantIve content so far. TNCs often take advantage of CSF reportIng for
Image creatIon / damage control and PF campaIgn / management.
54
Even
under such veneer truly TNCs are what they hold, .e. 'pro]tmckny s our
only motto whctever t tckes'. There Is an emergIng lIne of thought In
whIch busIness and socIety are consIdered Interdependent and CSF Is seen

52
Janet 0Ine, "FesearchIng ClobalIsatIon", AmIcus CurIae Journal of the SocIety for
Advanced Legal StudIes (vol.61, Issue September / Dctober, 2005), p.12.
5J
"8usness cnd Humcn Ryhts: Mcppny lnternctoncl Stcndcrds o] Responsblty cnd
Accountcblty ]or Corporcte Acts", A/HRC/4/0J5 ( Februcry 200Z), pcrc. 44.

54
See generally, Aaron K. ChatterjI, et al, "0o Corporate SocIal FesponsIbIlIty FatIngs
PredIct Corporate SocIal Performance:" (February 2007), A WorkIng Paper (No.JJ)
Corporate SocIal FesponsIbIlIty nItIatIve, John F. Kennedy School of Covernment, Harvard
UnIversIty; John Cerald FuggIe, "Corporate SocIal FesponsIbIlIty as FIsk |anagement: A
|odel for |ultInatIonals (|arch 2005), A WorkIng Paper (No.JJ) Corporate SocIal
FesponsIbIlIty nItIatIve, John F. Kennedy School of Covernment, Harvard UnIversIty.
21
as a busIness strategy.
55
AccordIng to It, "the prevaIlIng approaches to CSF
are so fragmented and so dIsconnected from busIness and strategy as to
obscure many of the greatest opportunItIes for companIes to benefIt
socIety. f, Instead, corporatIons were to analyze theIr prospects for socIal
responsIbIlIty usIng the same frameworks that guIde theIr core busIness
choIces, they would dIscover that CSF can be much more than a cost, a
constraInt, or a charItable deed - It can be a source of opportunIty,
InnovatIon, and competItIve advantage."
56
The reasons why busIness and
socIety need each other have been explaIned as follows: "The mutual
dependence of corporatIons and socIety ImplIes that both busIness decIsIons
and socIal polIcIes must follow the prIncIple of shared value. That Is,
choIces must benefIt both sIdes. f eIther a busIness or a socIety pursues
polIcIes that benefIt Its Interests at the expense of the other, It wIll fInd
Itself on a dangerous path. A temporary gaIn to one wIll undermIne the long
term prosperIty of both."
57
Although such spIrIt of togetherness of busIness
and socIety Is stIll a far way off Its realIzatIon In law, to say the least,
companIes these days seem to turn theIr heads round under the pressure of
corporate adverse publIcIty and IncreasIng NCD pressure to ponder over thIs
lInk for theIr longterm busIness strategy and gaIn. Such a lInk could
reInvent the wheel for corporate thInkIng of the protectIon human rIghts
and the envIronment, and the development needs of a socIety.

TNCs have often been found engaged In corrupt practIces such as
brIbery and abuse of theIr unparalleled economIc power to gaIn busIness at
the expense of developmental consIderatIons of a State.
58
Not surprIsIngly,
In many countrIes In the recent waves of prIvatIzatIon, a dImensIon of
globalIzatIon, Instances of brIbery to government offIcIals are rampant for
gaInIng busIness by foreIgn companIes, hence prIvatIzatIon Is often jokIngly

55
|Ichael E. Porter and |ark F. Kramer, "Strategy E SocIety: The LInk 8etween
CompetItIve Advantage and Corporate SocIal FesponsIbIlIty", Harvard 8usIness FevIew
(0ecember 2006), avaIlable at:
http://hcrvcrdbusnessonlne.hbsp.hcrvcrd.edu/hbrsc/en/ssue/012/crtcle/R0120Pr

56
bId.
57
bId.
58
See generally, 0avId Hall, "PrIvatIsatIon, |ultInatIonals, and CorruptIon", 9 0evelopment
PractIce (no.5, November 1999), pp.5J9556.
22
dubbed as 'brIberIzatIon'.
59
AccordIng to one estImate of the World 8ank,
on average annually there could be transactIons worldwIde worth USS1
trIllIon taInted by corruptIon,
60
and one AsIan country alone has lost almost
USS40 bIllIon over the past two decades to corruptIon.
61
CertaInly,
corruptIon has a tremendous negatIve Impact on development. n the words
of KafI Anan, the former UN SecretaryCeneral, corruptIon Is "one of the
bIggest obstacles to development".
62


However, the UN ConventIon agaInst CorruptIon (200J)
6J
, the DEC0
ConventIon on CombatIng 8rIbery In nternatIonal 8usIness (1998), the US
ForeIgn Corrupt PractIces Act, the nterAmerIcan CorruptIon ConventIon
(1996), the efforts of Transparency nternatIonal, varIous InItIatIves of the
World 8ank and other InternatIonal organIzatIons are expected to make a
posItIve contrIbutIon to combat thIs antIdevelopment phenomenon.
However, a caveat must be made here that TNCs have developed
sophIstIcated kIckbacks and payment mechanIsms such as "clever current
payoffanddeferredgIft structures to relatIves and frIends of host country
offIcIals"
64
practIces beyond the scope of the DEC0 antIbrIbery conventIon
or any host or home country antIbrIbery laws IncludIng the US ForeIgn
Corrupt PractIces Act. Dne can also note that there are about 2,J00plus
bIlateral Investment protectIon treatIes between States that make no
mentIon of brIbery or corruptIon, let alone the measures to combat It.
Above all, the polItIcal wIll of the State partIes Involved In antIbrIbery and
antIcorruptIon conventIons Is crucIal for the task of combatIng corruptIon.
At the tIme of the adoptIon of the UN AntICorruptIon ConventIon the
nternatIonal Chamber of Commerce experts warned that for the UN

59
Joseph StIglItz, ClobalIzatIon and ts 0Iscontents (PenguIn 8ooks, 2002), at p.58.
60
See 0. Kaufman, "8ack to 8asIcs - 10 |yths about Covernance and CorruptIon", FInance
and 0evelopment, vol.42 (J), 2005.
61
"Fact Sheet: UnIted NatIons ConventIon agaInst CorruptIon", UNS/CP/484 of |ay 10,
2004.
62
bId.
6J
t became effectIve on 0ecember 14, 2005 wIth the requIred ratIfIcatIon of the thIrtIeth
state.
64
T. |oran, "How |ultInatIonal nvestors Evade 0eveloped Country Laws to Prevent 8rIbery
and CorruptIon In the 0evelopIng World - ncludIng the US ForeIgn Corrupt PractIces Act -
and What Can 8e 0one About t" (at p.J) avaIlable at: http://www.ycscndol.com/oyel/

23
ConventIon to be effectIve, Its ImplementatIon needed monItorIng by the
UN to ensure consIstency from one country to the next. t Is stIll too early to
suggest how successful all these InternatIonal InItIatIves wIll be to fIght
corruptIon In InternatIonal busIness. However, the encouragIng aspect of
8oth the UN ConventIon agaInst CorruptIon (200J, Art. 42.2) and the DEC0
ConventIon on CombatIng 8rIbery of ForeIgn PublIc DffIcIals In nternatIonal
8usIness TransactIons (1997, Art.4.2) Is that they gIve the State party the
jurIsdIctIon to prosecute Its natIonals (both natural and legal persons,
IncludIng TNCs) for offences commItted abroad. Such an ImposItIon of an
oblIgatIon on the home State of the TNC Is a way forward to deal wIth
corruptIon when the host State of the TNC turns to be Its accomplIce In
corruptIon. Unfortunately, InternatIonal law of human rIghts Imposes no
such oblIgatIon on States 'to exercIse extraterrItorIal jurIsdIctIon In order to
contrIbute to the protectIon and promotIon of InternatIonally recognIzed
human rIghts outsIde theIr natIonal terrItory'.
65
However, It should be
mentIoned that In some jurIsdIctIons such as the UnIted States, England,
AustralIa and Canada domestIc laws Impose In varyIng degrees, however
restrIctIvely, the extraterrItorIal corporate human rIghts accountabIlIty.
66

Along the lInes of the UN and DEC0 conventIon, there Is a growIng need for
a new InternatIonal law Instrument whIch should 'Impose an oblIgatIon on
the home States of TNCs to provIde effectIve remedy for vIctIms of human
rIghts abuses commItted abroad by these entItIes, where no such remedy Is
avaIlable before natIonal jurIsdIctIons of the host country...'
67
t should
oblIge the home State to exercIse a form of extraterrItorIal jurIsdIctIon over
the corporatIons whIch have Its natIonalIty for theIr operatIons overseas .
thIs oblIgatIon could take the form eIther of parentbased extraterrItorIal
regulatIon.".
68
There exIsts a good reason for such a vIew as Professor
Sornarajah observed: "0eveloped States owe a duty of control to the

65
DlIver 0e Schutter, "ExtraterrItorIal JurIsdIctIon as a Tool for mprovIng the Human FIghts
AccountabIlIty of TransnatIonal CorporatIons",p.18, (J4 November 2006 semInar

66
See generally, Sarah Joseph, Corporations and Transnational Human Rights Litigation (Hart
Publishing, Oxford, 2004).
67
bId., at pp. 5152.
68
bId.
24
InternatIonal communIty and do In fact have the means of legal control over
the conduct abroad of multInatIonal corporatIons."
69


n the wake of globalIzatIon TNCs and theIr natIonal states' dream of
extreme lIberalIzatIon of foreIgn Investment across the borders through the
vehIcle of a |ultIlateral Agreement on nvestment (|A) under the auspIces
of the DEC0 has not been realIzed. The DEC0 proposed |A was an
unbalanced legal Instrument that favoured foreIgn Investors more than the
host States where Investments are to be made. These rIghts that were gIven
In the |A to the foreIgn Investors could leave the host States vIrtually
powerless and wIthout any effectIve rIght to theIr economIc self
determInatIon. ThIs unbalanced state of the |A brought about Its
spectacular faIlure. A sImIlar InItIatIve for an |A under the auspIces of the
WTD wIll speak for Itself, If ever undertaken, In the future. The exIstIng
2,J00plus bIlateral Investment protectIon treatIes between States are
maInly focused on the foreIgn Investor's protectIon and have very lIttle to
do wIth the host State's development consIderatIons. n other words, those
treatIes provIde for the foreIgn Investor's rIghts but no responsIbIlItIes
whether they relate to human rIghts, development consIderatIons of the
host State or the protectIon of the envIronment. Thus, there Is lately a call
under the InItIatIve of the UnIted NatIons for socIally responsIble Investment
In the host State. The world wIll stIll have to prescrIbe what the sensIble
corporate responsIbIlItIes are that relate to envIronment, human rIghts, and
labour, etc., and the rules about good corporate cItIzenshIp In the host Sate
for the greater good to come out of globalIzatIon for the benefIt of the
world at large.

There have been, however, certaIn InItIatIves lately that are Intended
to promote greater respect by TNCs of human rIghts and envIronmental
prIncIples. Among these are the UnIted NatIons Clobal Compact, the
7oluntary PrIncIples on SecurIty and Human FIghts, the KImberly Process for
monItorIng the global dIamond trade, the ExtractIve ndustrIes Transparency

69
|. Sornarajah, The Law on ForeIgn nvestment (CUP, 2004), p.169.
25
nItIatIve, PublIsh What You Pay, and Fevenue Watch. The UN Clobal
Compact, establIshed In 1999, has set up a voluntary framework of ten
prIncIples to guIde busIness actIons In developIng countrIes. The prIncIples
relate to human rIghts, labour standards, envIronment and antIcorruptIon.
The Clobal Compact Is not a regulatory body, but pursues TNCs to
Implement those ten prIncIples In theIr operatIons and Investment
actIvItIes. The ExtractIve ndustrIes Transparency nItIatIve (ET), launched
by the UK government at the World SummIt on SustaInable 0evelopment In
Johannesburg In 2002, Is an effort to put pressure on host countrIes to
requIre all Investors (equally) wIthIn a gIven host country to publIsh what
they pay whIle host authorItIes sImultaneously reveal how they dIspose of
the revenues. "PublIsh What You Pay" campaIgn
70
Is Intended to help
prevent natural resource Investment from turnIng polItIcal elItes In host
developIng countrIes Into rentseekIng kleptocrats, by requIrIng that
Investors In extractIve IndustrIes be requIred to make publIc all taxes and
fees paId to host governments before beIng allowed to lIst theIr shares on
the US or other major stock exchanges. These voluntary InItIatIves are
geared to more transparency and accountabIlIty for TNCs actIvItIes around
the world. t Is hoped that such InItIatIves wIll shape the desIrable conducts
of TNCs In the long run.











70
See www.ylobclwtness.ory. http://www.publshwhctyoupcy.ory/enylsh/


26
INSTITUTIDNS DF CLDAL ECDNDhIC CDVEPNANCE

t has been observed that "The whole power structure of the
InternatIonal communIty Is desIgned to serve the Interests of TNCs. The
World Trade DrganIzatIon, the World 8ank and nternatIonal |onetary Fund
are the three most powerful InstItutIons on earth and multInatIonal
companIes are theIr treasured darlIngs, cosseted and protected from any
form of natIonal and InternatIonal control."
71
As mentIoned earlIer, the
authorIty of the State has shIfted to market forces. TNCs, InternatIonal
fInancIal InstItutIons such as the |F and the World 8ank, and the WTD have
encroached on the sovereIgn authorIty of the State In varIous ways. The
questIon Is whether the actIvItIes / operatIons of TNCs, the holder of the
market force, the |F, the World 8ank and the WTD have adversely affected
human rIghts and development perspectIves of ThIrd World developIng
countrIes In the era of globalIzatIon. These aspects merIt an appraIsal.

The 8retton Woods trIo
72
, .e. the World 8ank, the nternatIonal
|onetary Fund (|F), and the Ceneral Agreement on TarIffs and Trade
(CATT), whIch were created as economIc and fInancIal archItecture for the
postWorldWar reconstructIon of the global economy, have now been In
charge of economIc globalIzatIon over the last quarter century.
7J
These
InternatIonal economIc InstItutIons were desIgned to promote longterm
prosperIty through stable exchange rates, worldwIde development, and free
trade.
74
SInce the creatIon of these InstItutIons they have been the pIllars of
the legal framework for InternatIonal monetary matters, InternatIonal
fInancIal system and InternatIonal trade. n the postcold world era, these

71
Janet 0Ine, "FesearchIng ClobalIsatIon", AmIcus CurIae (Issue no.61, Sept/Dct 2005, p.7,
at. P.8.

72
The |F and the World 8ank orIgInated In World War as a result of the UN |onetary and
FInancIal Conference at 8retton Woods, New HampshIre, In July 1944, part of a concerted
effort to fInance the rebuIldIng of Europe after the devastatIon of World War and to save
the world from future economIc depressIons.
7J
The 8retton Woods had called for a thIrd InternatIonal economIc organIzatIon - a World
Trade DrganIzatIon to govern InternatIonal trade relatIons.
74
FIchard N. Haass E Fobert E. LItan, "ClobalIzatIon and ts 0Iscontents: NavIgatIng the
0angers of a Tangled World", ForeIgn AffaIrs, vol. 77, no.J, |ay/June 1998, p.2, at p.2.

27
InstItutIons have formulated global polIcIes for lIberalIzatIon of trade,
Investment and fInance, deregulatIon and prIvatIzatIon and have been
pursuIng to Implement them by varIous means for securIng economIc
globalIzatIon.

|y prIncIpal aIm here Is to appraIse the actIvItIes of these InstItutIons
In lIght of human rIghts and development perspectIves to Inform how they
are farIng In global economIc governance carrIed out by these InstItutIons.
shall argue that In many ways the actIvItIes of these InstItutIons do not
confIrm the requIrements of human rIghts and development.

The InternatIonaI honetary Fund (IhF)

The |F was establIshed to manage the macroeconomIc sItuatIon of the
warravaged world economy by promotIng InternatIonal currency exchange
stabIlIty and aIdIng shortterm balance of payments problems that mIght be
encountered by States. t was to enhance confIdence In member States by
provIdIng them wIth 'the opportunIty to correct maladjustments In theIr
balance of payments wIthout resortIng to measures destructIve of natIonal
or InternatIonal prosperIty'.
75
Dver the years, however, the |F's focus has
shIfted from promotIng exchange stabIlIty and InternatIonal monetary
cooperatIon amongst the rIchest countrIes to managIng and monItorIng the
economIes of the poorest. As StIglItz notes, "The |F has devIated from Its
orIgInal purpose of promotIng global economIc stabIlIty to capItal market
lIberalIzatIon whIch, In fact, has done more to serve the Interests of the
fInancIal communIty than of global stabIlIty."
76






75
|F ArtIcles of Agreement, ArtIcle 1.
76
Joseph StIglItz, ClobalIzatIon and ts 0Iscontents (PenguIn 8ooks, 2002).

28
The WorId ank (W)

As a sIster organIzatIon the World 8ank was desIgned to provIde
fInancIal assIstance to Europe and former European colonIes for
reconstructIon and development In the postwar perIod, hence the name of
the bank 'nternatIonal 8ank for FeconstructIon and 0evelopment' (8AF0).
Under the |arshall AId programme once the western European countrIes
became well nourIshed wIth the US fInance after the Second World War, the
World 8ank turned Its attentIon to developIng countrIes and It became a
major source of theIr development loans. n the wake of globalIzatIon In the
1980s the role of the World 8ank In the context of ThIrd World lendIng
changed enormously. The developIng countrIes' borrowIng has become more
cumbersome sInce 1986 wIth the attachment of condItIons to structural
adjustment or wIth polIcybased loans requIrIng prIvatIzatIon, Investment
and trade lIberalIzatIon. SInce the 1990s the World 8ank has further
attached condItIons concernIng governance to Its loans. For the World 8ank,
'good governance' Is synonymous wIth 'sound development management'.

IhF W

t has to be mentIoned that although the two fInancIal InstItutIons (.e.
the |F and World 8ank) were orIgInally entrusted wIth the task of balance
of payments of countrIes and macroeconomIc management of the world
economy respectIvely, theIr terms of reference and authorIty have been
extended far beyond theIr orIgInal bounds of mIssIon towards the goal of
realIzatIon of economIc globalIzatIon. StIglItz notes, "The Ideas and
IntentIons behInd the creatIon of the InternatIonal economIc InstItutIons
were good ones, yet they gradually evolved over the years to become
somethIng very dIfferent."
77


The |F and the World 8ank are now authorIzed to undertake
InterventIonIst measures for enforcIng theIr polIcIes In the |ember

77
Joseph StIglItz, ClobalIzatIon and ts 0Iscontents (PenguIn 8ooks, 2002), at p.16.
29
CountrIes for theIr economIc management and other related actIvItIes. n
many ways these two InstItutIons' actIvItIes have IncreasIngly IntertwIned In
recent years. For example, In the context of the World 8ank's 'structural
adjustment loans' the |F's approval and |FImposed condItIons on the
country concerned are now part of the game. The |F's role seems to have
been IncreasIngly to mIcromanage the economIc affaIrs of ThIrd World
countrIes. There Is no denyIng that the aIms and polIcIes of the two
InstItutIons have converged In many ways. ThIs has vIolated human rIghts
and straIned development prospects of the peoples of ThIrd World
developIng countrIes. TheIr rIght to development has been vIolated as they
are denIed to partIcIpate In and to control the dIrectIon of development.
The |F and the World 8ank prescrIbed polIcIes of 'structural adjustment'
and 'shock therapy' bear the testImony to thIs. Structural adjustment loans,
whIch constItute 1520 of World 8ank loans, condItIons requIre countrIes to
adopt polIcIes of lIberalIzatIon of foreIgn Investment, prIvatIzatIon, cuts to
government spendIng on health and educatIon, labour market deregulatIon,
lowerIng of mInImum wages, and a focus on productIon of goods for export
rather than domestIc productIon. The 'shock therapy' was aImed at
achIevIng a shock transItIon of Eastern Europe to capItalIsm In the late
1980s. t requIred currency devaluatIon, swIft dIsmantlIng of protectIonIst
trade barrIers, massIve cuts to government spendIng, Increased exports,
prIvatIzatIon and constItutIonal reform In target states. These condItIons
Imposed by the |F and the World 8ank have left many countrIes bereft of
the rIght to exercIse theIr economIc selfdetermInatIon as they are not free
to choose forms of economIc and socIal arrangements, and development
plans that dIffer from the models chosen by the |F and World 8ank
experts. The Impacts of these polIcIes In the target states have, In fact,
proved to be devastatIng In many countrIes, as mentIoned earlIer, In terms
of Increased poverty, unemployment, InsecurIty, food scarcIty, fInancIal
crIsIs, unequal development In dIfferent layers of the socIety wIthIn the
same state and so on. The current soarIng debt problem of the ThIrd World
has worsened Its poverty sItuatIon and has proved a stumblIng block for Its
development. The debt problem has exacerbated over the last two decades
30
for the IrresponsIble lendIng of the InternatIonal fInancIal InstItutIons to the
corrupt regImes of the ThIrd World on bogus projects and unproductIve
spendIng and also for the ImplementatIon of wrong polIcIes of the |F and
the World 8ank In the restructurIng of the ThIrd World debt whIch escalated
from lIttle less than S400 bIllIon In 1980 to over SJ,000 bIllIon In 2000. The
people of the ThIrd World have thus plunged Into fInancIal dIffIcultIes and
mIserIes wIth the heavy debt burden. They are the vIctIms of the lack of
sound InternatIonal fInancIal legal regIme agaInst IrresponsIble lendIng and
money launderIng of the corrupt regImes of the ThIrd World. The
IrresponsIble lendIng tendency of InternatIonal fInancIal InstItutIons and
prIvate banks has been fuelled by the |F's polIcy of baIlIng out the credItor
lenders to assIst the debtor developIng countrIes to sort out theIr balance of
payment problems. As mentIoned earlIer, for new loans to the Indebted
developIng countrIes the World 8ank and the |F have Imposed on them
'Structural Adjustment Programs' (SAPs) to follow. Dver the last two
decades many developIng countrIes have fallen prey to the SAPs and theIr
debt burden has worsened. The countrIes under SAPs have lost theIr
economIc selfdetermInatIon and the peoples have lost theIr rIght to
development. The plIghts of these countrIes under SAPs have been well
documented In varIous studIes. 0ebt servIcIng by developIng countrIes under
SAPs has led them to cut government spendIng on vItal and urgent socIal and
human needs such as educatIon and health and has thrown mIllIons of
people Into mIserIes. As It stands today, every man, woman and chIld In the
ThIrd World, many of whom lIve In the poorest countrIes wIth less than a
dollar a day, owes over S400 to the credItors of the west.

The |F's polIcy of the capItal market lIberalIzatIon and Its baIl out
mechanIsm to serve the Interest of the InternatIonal credItors have often
caused great InstabIlIty of the InternatIonal fInancIal system leadIng to
economIc meltdowns across the globe from AsIa to FussIa to LatIn
AmerIca.
78
Free flow of capItal movement across the borders turns the

78
See Joseph StIglItz, ClobalIzatIon and ts 0Iscontents (PenguIn 8ooks, 2002), (Chapters 4
E5).
31
world Into a global casIno for speculatIve nature of transactIons, and It has
proved to be of lIttle productIve effect on the world economy except for the
benefIt of the players Involved. The benefIts from capItal movement In
foreIgn exchange markets are maInly speculatIve rather than productIve.
nvestors are after shortterm benefIts and are able to transfer money
across the borders before theIr Investments In a country turn to be at rIsk.
Such actIvItIes have caused great fInancIal dIsasters and mIllIons jobless as
contagIon across the globe. Free flow of capItal across the borders Is the
phIlosophy of the market fundamentalIsm a boon for global capItalIsm. n a
1999 estImate It was reported that more than S1.5 trIllIon (S1,500 bIllIon)
changed hands daIly on global currency markets In 1998, whereas the annual
global trade In the same year In merchandIse and servIces was S6.5 bIllIon,
the equIvalent of just 4.J days of tradIng on foreIgn exchange (forex)
markets. An estImated 95 of all forex deals are shortterm speculatIon.
Such an enormous amount of global fInance Invested In the nonproductIve
sector does lIttle to the global development, and If thIngs go wrong they
may have devastatIng effect throughout the world.

The reasons for the faIlure of the |F and the World 8ank to conform
theIr polIcIes and actIvItIes to human rIghts are not far to seek as may be
mentIoned as follows:

There Is no compulsIon In the mandates of the |F and the World
8ank to confIrm and promote human rIghts.
79

There Is no systematIc IncorporatIon of human rIghts norms In the
polIcy formulatIon of the |F and the World 8ank, nor Is there a
system of assessIng the Impact of theIr polIcIes and actIvItIes on
human rIghts and the rIght to development of the developIng world.

79
See, Skogly, "The PosItIon of the World 8ank and the nternatIonal |onetary Fund In the
Human FIghts FIeld", In F. HanksI and |. SuksI (eds.), An ntroductIon to the nternatIonal
ProtectIon of Human FIghts (1997), 19J, at p. 194; 0avId KInley, "Human FIghts and the
World 8ank: PractIce, PolItIcs, and Law" (February 2007)(Legal StudIes Fesearch Paper,
no.07/11, Sydney Law School, UnIversIty of Sydney), avaIlable at:
http://ssrn.com/abstract=962987

32
The representatIon and decIsIonmakIng process In the |F and the
World 8ank are fundamentally undemocratIc. They operate accordIng
to a weIghted votIng system based on the contrIbutIons made by
members, .e. the one dollar, one vote system. ThIs gIves more
manoeuvrIng power to the wealthy member states. Furthermore, the
people who bear the severe consequences of the decIsIons of the |F
and the World 8ank have no representatIon In theIr formulatIon.
There Is a serIous lack of accountabIlIty of the |F and the World
8ank for theIr decIsIons to the people that affect them. As a response
to such crItIcIsm although the World 8ank nspectIon Panel
80
was
establIshed In 199J the purpose of whIch Is to InvestIgate and revIew
complaInts from any group of two or more people who allege that
they have been harmed by breaches of the 8ank's operatIng
procedures, IncludIng breaches of guIdelInes relatIng to resettlement
or envIronmental Impact assessments, the effectIveness of thIs Panel
Is lImIted by factors such as the lack of enforceabIlIty of the
complIance of Its recommendatIons and lIttle accountabIlIty of the
human rIghts effects of the projects undertaken.
The InternatIonal fInancIal InstItutIons have no accountabIlIty for the
adverse effects of theIr polIcIes and actIons. nternatIonal law has not
yet addressed these Issues adequately.

Thus, whIle the |F and World 8ank polIcIes have not been congenIal to
the protectIon of human rIghts and expected development In the target
states, they have served well varIous InternatIonal economIc actors,
IncludIng TNCs, as the vehIcle of economIc globalIzatIon and theIr backers,
the major developed countrIes, that have tradItIonally made theIr trade and
Investment agenda part of the |F fundIng condItIons.
81




80
See generally, Alexander DrakhelashvIlI, "The World 8ank nspectIon Panel In Context", 2
nternatIonal DrganIzatIons Law FevIew (no.1), 2005, p.57.
81
|artIn FeldsteIn, "FefocusIng the |F", ForeIgn AffaIrs, vol.77, no.2, |arch/AprIl 1998,
p.20, at p.J2.

33

CATTlWTD

To complement the responsIbIlItIes of the then newly created
InternatIonal fInancIal InstItutIons, .e. the |F and the World 8ank, the
1944 8retton Woods Conference recognIzed the necessIty of an nternatIonal
Trade DrganIzatIon (TD). 8ut the establIshment of the proposed TD dId not
materIalIze for Its rejectIon by the UnIted States In 1950 for some polItIcal
consIderatIons. The CATT, establIshed In 1947, operated as an arrangement
In the InterIm perIod for about fIve decades untIl 1995 when eventually the
World Trade DrganIzatIon (WTD) was establIshed In the Uruguay Found of
trade negotIatIons as the ""mIssIng leg" of the 8retton Woods System"
82
.
The WTD, whIch has 149 member countrIes today, has replaced Its
predecessor the Ceneral Agreement on TarIffs and Trade (CATT) consIstIng
of 128 member countrIes. Dver the last sIxty years the CATTWTD regImes
have been based on certaIn fundamental prIncIples of free trade such as
mostfavourednatIon (|FN) (.e. all natIons are to be treated equally),
natIonal treatment (.e. a thIrd country natIonal should be treated equally
wIth the natIonals of the State), equalIty, and nondIscrImInatIon. These
prIncIples do not consIder the dIfferences between developed and
developIng countrIes as they are all consIdered on an equal footIng. 8ut It
has to be realIzed that they are dIfferent as regards theIr economIc
resources, Influence, polItIcal leverage, and effectIve ImplementatIon of
trade regulatIons. The CATT/WTD regIme has proved to be an unlevel
playIng fIeld for developed and developIng countrIes as the former have
benefIted enormously at the expense of the latter.

The current InternatIonal tradIng system has raIsed many Issues
concernIng human rIghts and development In the developIng world. Here,
shall hIghlIght some of them.


82
John H. Jackson, SovereIgnty, the WTD, and ChangIng Fundamentals of nternatIonal Law
(CambrIdge UnIversIty Press, 2006), at p.92.
34
The world has realIzed that onesIzefItsall trade rules do not
practIcally work. Although the CATTWTD regImes have recognIsed SpecIal
and 0IfferentIal Treatment (S0T) to developIng countrIes, theIr very purpose
has been frustrated tIme and agaIn. The S0T, based on the prIncIple of non
recIprocIty, to the trade of developIng countrIes Is geared to Its preferentIal
access to the market of developed countrIes. Such specIal treatment to
developIng countrIes by developed countrIes has been manIfested In the
CeneralIzed System of Preferences (CSP) In the CATT legal regIme. The
oblIgatIons of developed countrIes under the CSP are not legally bIndIng on
them. Worse stIll, the usefulness of the CSP, especIally the U.S. CSP
programme, to the trade of developIng countrIes Is blIghted by the
unIlateralIsm of the treatment grantIng country, the exclusIon of the most
competItIve goods and condItIonalIty. n practIce, more often than not, the
CSP has been used as a polItIcal ploy or a bargaInIng chIp to serve the
Interests of developed countrIes. Although the CSP was aImed at curbIng
InequItIes In InternatIonal trade In favour of developIng countrIes, It tends
to be abused sometImes to the benefIt of developed countrIes. The prIncIple
of dIfferentIal treatment as provIded In varIous WTD agreements, for
example, the TradeFelated Aspects of ntellectual Property FIghts (TFPS)
and the TradeFelated nvestment |easures (TF|S) Is translated Into the
concept of transItIon perIods for developIng countrIes whereby a certaIn
delay In the ImplementatIon of theIr oblIgatIons under such agreements Is
allowed. n practIce, the tImescales allowed for deferred ImplementatIon
of oblIgatIons by developIng countrIes In the varIous agreements proved
arbItrary, Inadequate and InsensItIve to the partIcular dIffIcultIes and
development needs and concerns of developIng countrIes. As StIglItz notes:
"The current system, however, makes preferentIal treatment
completely voluntary, provIded by each of the advanced IndustrIal
countrIes on Its own whIm. Preferences can be taken away If the
developIng country does not do what the grantIng country wants.
PreferentIal treatment has become a polItIcal Instrument, a tool for
gettIng developIng countrIes to toe the lIne."
8J



8J
Joseph StIglItz, |akIng ClobalIzatIon Work: The Next Step to Clobal JustIce (PenguIn
8ooks, 2006), p.82.
35
Dn the whole, the lofty goals of S0T to Integrate developIng countrIes
Into the globalIzatIon of world trade and economy seem to have the
dwIndlIng prospect unless the tradItIonal attItudes of developed countrIes
are changed for the better.


0emocratIc 0efIcIt In the WTD

The decIsIonmakIng process under the CATT/WTD regIme has been
undemocratIc. Trade decIsIons have been tradItIonally taken through the so
called Infamous "CreenFoom" method In whIch the major powerful tradIng
countrIes such as the UnIted State, the European UnIon, Canada and Japan
(.e. the Quad countrIes as often known) engage dIrectly In negotIatIons
wIth only a few selected countrIes from the developIng world leavIng the
most others outsIde of It. What, In fact, has happened Is: on major Issues,
once these Quad countrIes have reached agreement, the results are then
passed off to the formal meetIng merely for approval as by that tIme they
often are, In essence, a ]ct cccompl. However, In the face of protests by
developIng countrIes and nongovernmental organIzatIons (NCDs) In WTD
meetIngs In Seattle to Cancun and elsewhere, the "Creen Foom" method
has now been formally abandoned. 8ut the developIng countrIes' lack of
effectIve partIcIpatIon In trade negotIatIons and decIsIonmakIng stIll
persIsts owIng to theIr lack of expertIse, adequate staff and resources In
complex trade negotIatIons. Some of them even fInd It dIffIcult to maIntaIn
an offIce In Ceneva, one of the world's most expensIve cItIes, where the
WTD Is headquartered, not to mentIon though that the telephone lInes of
the offIces of some may be cut off for months at a tIme for faIlIng to pay
bIlls. As a result many developIng countrIes have lIttle opportunIty to
partIcIpate In trade negotIatIons, rather the decIsIons of the able and the
powerful are Imposed on them. There Is thus a great need for the
establIshment of procedural faIrness In InternatIonal trade law whIch should
36
"deal wIth the asymmetry of power and the asymmetry of InformatIon
among WTD members."
84



Trade Human PIghts

The WTD regIme has raIsed many human rIghts Issues. The Uruguay
Found has Incorporated many new areas of concern whIch were absent In
the CATT regIme such as Intellectual property rIghts, trade In servIces and
Investment measures. At the constant persuasIon of TNCs and theIr home
countrIes, whIch are maInly western developed countrIes, these matters
were Included as trade matters In the Uruguay Found. Under the varIous
trade regImes such as the Trade Felated Aspects of ntellectual Property
FIghts (TFPs), the Trade Felated nvestment |easures (TF|s), and the
Ceneral Agreement on Trade In ServIces (CATS) developed countIes are
placed In a more advantageous posItIon than theIr developIng country
counterparts. |any wellknown crItIcs IncludIng StIglItz and 8hagwatI raIsed
theIr eyebrows lIke many to see the InclusIon of Intellectual property
matters In the WTD agenda as they are not a trade subject and there Is the
World ntellectual Property DrganIzatIon (WPD) whIch could be used to deal
wIth It. t Is because of the prospect of success of the Uruguay Found that
InspIred TNCs and transnatIonal pharmaceutIcal companIes to push forward
the Intellectual property matter and led theIr countrIes to wrap It up In the
trade deal. t begs the questIon: "If Intellectual property rIghts are a fIt
subject for the WTD, why not labour rIghts, or human rIghts:"
85
Under TFPs
the WTD has turned to be the "royalty collector" on behalf of TNCs.
86


84
Joseph E. StIglItz and Andrew Charlton, FaIr Trade for All: How Trade Can Promote
0evelopment (DUP, 2005), at p.82.
85
Ceorge Soros, Dn ClobalIzatIon (PublIc AffaIrs Ltd., Dxford, 2002), p.48.
86
Professor JagdIsh 8hagwatI wrote: "That InstItutIon (.e. the WTD) must be about
mutually gaInful trade. ntellectual property protectIon, on the other hand, Is for most poor
countrIes a sImple tax on theIr use of such knowledge, constItutIng therefore an
unrequIted transfer to the rIch, producIng countrIes, We are turnIng the WTD, thanks to
powerful lobbIes, Into a royaltycollectIon agency, by pretendIng through contInuous
propaganda that our medIa bought Into, that somehow the questIon was "traderelated".
"Letter to The Financial Times on Intellectual Property Protection." The Financial Times, February 14,
2001, posted at: http://www.columbIa.edu/-jbJ8/FT20Letter20on20PP.pdf
37
StIglItz saId, "TFPs reflected the trIumph of corporate Interests In the
UnIted States and Europe over the broader Interests of bIllIons of people In
the developIng world."
87
He further noted, "As they sIgned TFPs, the trade
mInIsters were so pleased that they had fInally reached an agreement that
they dId not notIce they were sIgnIng a death warrant for thousands of
people In the poorest countrIes of the world."
88
t Is necessary that the
spIrIt of InnovatIon and creatIvIty should be protected wIthIn reasonable
lImIts; otherwIse the whole spIrIt wIll be frustrated. Such protectIon Is felt
needed most when one looks at the scene as recently descrIbed by The
EconomIst: "CopyIng In ChIna goes far beyond fake 070s, watches and
handbags. "We can copy everythIng except your mother," goes a sayIng In
ShanghaI. Soy Sauce wIth fIzzy water passed off as PepsI, fake CIsco network
routers (known as "ChIsco's") and mobIle phones that look lIke the latest
offerIngs from NokIa can all be easIly found. So, too, can fake blood
plasma."
89
WhIle there are genuIne reasons for the protectIon of Intellectual
property rIghts, the excessIve use of such protectIon Is unjust In other areas
where that Is tantamount to deprIvatIon of human rIghts.

The TFPs regIme has raIsed two prIncIpal Issues that bear on human
rIghts and the rIght to development. They relate to: (I) TNCs' bIopIracy and
theIr encroachment on the tradItIonal knowledge of a socIety, and (II) the
Poor's access to lIfesavIng medIcInes. Under the TFPs regIme TNCs from
developed countrIes have been enabled to patent tradItIonal knowledge
that has evolved and developed In a socIety for hundreds or even thousands
of years and natIve plants for medIcInal propertIes and healIng In many
developIng countrIes deprIvIng them of theIr rIghts to use them wIthout the
permIssIon of the patent holders. 0evelopIng countrIes vIew these acts of
TNCs as a form of pIracy, .e. bIopIracy, because theIr people are deprIved
of theIr tradItIonal practIce and rIghts wIthout beIng compensated for. Thus,


87
Joseph StIglItz, |akIng ClobalIzatIon Work: The Next Step to Clobal JustIce (PenguIn
8ooks, 2006), p.105.
88
Joseph StIglItz, |akIng ClobalIzatIon Work: The Next Step to Clobal JustIce (PenguIn
8ooks, 2006), p.105.
89
The EconomIst (AprIl 7
th
1J
th
2007), at p.76.
38
the patentIng of turmerIc, a spIce used In South AsIa, for healIng purposes,
oIl from ndIa's neem tree known for Its cosmetIc, medIcInal, and pest
control propertIes, basmatI rIce whIch has been cultIvated and eaten In
ndIa for hundreds of years are some examples of bIopIracy entertaIned by
TFPs. t has been noted, "Almost half of the 4,000 plant patents granted In
recent years by the UnIted States pertaIn to tradItIonal knowledge obtaIned
from developIng countrIes."
90
n ndIa there Is a lot of anger over the recent
patentIng of some yoga posItIons whIch the ndIans have practIsed for
thousands of years. Who knows 'Kamasutra posItIons' wIll not be the next!

Another crucIal matter concernIng TFPs Is that transnatIonal
pharmaceutIcal companIes control many lIfesavIng drugs for H7A0S, for
example. The poor A0S sufferers from many AfrIcan and developIng
countrIes cannot afford hIghly expensIve drugs. f transnatIonals prIorItIze
profIts over people, they could be consIdered to be In breach of moralIty
and also people's rIght to health as a human rIght by denyIng theIr access to
lIfesavIng drugs.
91
They have long opposed the Issuance of compulsory
lIcense by whIch developIng country fIrms can produce a drug and sell It
competItIvely at just above cost benefItIng mIllIons of poor people.
However, under tremendous pressure from the ThIrd World drug companIes
relaxed theIr stance and wanted to restrIct compulsory lIcenses only to
cases of epIdemIcs or sImIlar catastrophes. The 2004 UNA0S report on the
Clobal A0S pandemIc documents Its shockIng devastatIon In SubSaharan
AfrIca. A few salIent facts wIll Inform Its ravagIng Impact. n 200J, 2.2
mIllIon people dIed of A0S In SubSaharan AfrIca whIle J mIllIon became
newly Infected. n 2001, a total of 28.5 mIllIon people were Infected wIth
H7/A0S In the regIon. Df the 28.5 mIllIon, fewer than J0,000 were
receIvIng treatment wIth antIretrovIral drug. There should not be any doubt
that the global pharmaceutIcal Industry has a moral oblIgatIon at least In
the extreme cIrcumstances to allow A0 sufferers from the poor ThIrd World

90
Joseph StIglItz, |akIng ClobalIzatIon Work: The Next Step to Clobal JustIce (PenguIn
8ooks, 2006), p.105.
91
JamIe Crook, "8alancIng ntellectual Property ProtectIon wIth the Human FIght to
Health", 2J 8erkeley Journal of nternatIonal Law (2005), p.524, at pp.5JJ5J9.
39
countrIes easy access (.e. cheaper access) or even free access, where
necessary, to the lIfesavIng drugs.


The WTD 0Ispute SettIement System - a mIrage for deveIopIng
countrIes!

The WTD 0Ispute Settlement System suffers from the lack of procedural
faIrness In some respects.
92
The system weIghs more favourably for
developed countrIes In law as well as In fact. n many cases It Is found that
trade dIsputes are often very complIcated and enormously expensIve and
resource IntensIve. 0evelopIng countrIes fInd It beyond theIr means to
pursue It. ThIs explaIns why between 1995 and 2002, the UnIted States of
AmerIca, the European CommIssIon and Japan were complaInants In almost
half (14J of J05) of all bIlateral trade dIsputes In the WTD system, whIle In
the same perIod 49 developIng countrIes dId not brIng a sIngle dIspute. ThIs
Is despIte the fact that the WTD mechanIsm was an Improvement over the
CATT dIspute settlement system whIch was hardly used by developIng
member countrIes. Except for some developIng countrIes' partIcIpatIon as
thIrd partIes (e.y. NIgerIa and AfroCarIbbean PacIfIc countrIes) wIth other
countrIes, no least developed country, let alone any AfrIcan country, has
ever partIcIpated In proceedIngs before the appellate body of the WTD
0Ispute Settlement 8oard (0S8). The success rate of the developed and
developIng countrIes that partIcIpated In the CATT/ WTD dIspute
settlement system Is also IndIcatIve of the Imbalance caused by the uneven
capacItIes of countrIes to employ resources for the cause. StIglIz and
Charlton note, "Whereas developIng country complaInants have Increased
theIr success rate under the WTD rules . up from J6 per cent of cases under
the CATT to 50 per cent under the WTD - developed countrIes have been
even more successful - theIr success rate rose by 40 percent under the CATT

92
See 0anIel Altman, "|anagIng ClobalIzatIon: An unlevel playIng fIeld wIthIn the WTD",
nternatIonal Herald TrIbune (Tuesday, |ay 2, 2006).
40
to 74 per cent under the new regIme."
9J
The AfrIcan Croup recently In an
Informal paper
94
poInted out that the provIsIons on specIal and dIfferentIal
treatment (S0T) have not fully and coherently addressed the core
dIffIcultIes (.e. shortage of human and fInancIal resources) developIng
country members face In seekIng to use the WTD dIspute settlement system.
They have appealed for the establIshment of a permanent fund fInanced by
the wealthy WTD membershIp to help developIng countrIes overcome the
InstItutIonal and human constraInt they face In usIng the complex dIspute
settlement procedure.


Pecent IIateraI and PegIonaI Trade 0eaIs - A Ieak Future for
0eveIopIng CountrIes!

t should be mentIoned that there have been contInuous efforts on part
of the powerful countrIes, led by the USA and the European UnIon, to strIke
deals, whIch are dIffIcult to attaIn In the face of protests and dIsagreements
at the WTD, wIth poor developIng countrIes through bIlateral and regIonal
trade agreements. ThIs trend has accelerated wIth the faIlure of the 0oha
Found of multIlateral trade negotIatIons. A recent Dxfam report
95
notes that
25 developIng countrIes have now sIgned free trade deals wIth developed
countrIes, wIth more under negotIatIon. n total, there are more than 250
regIonal or bIlateral trade agreements In force, governIng J0 of world
trade. The head of Dxfam's |ake FaIr Trade CampaIgn observed
96
that
"They (the agreements) requIre enormous IrreversIble concessIons from
developIng countrIes and almost nothIng In return from rIch countrIes."
They also "demand much faster lIberalIzatIon and strIcter Intellectual
property rules than the WTD. They strIp developIng countrIes of the rIght to

9J
Joseph E. StIglItz and Andrew Charlton, FaIr Trade for All: How Trade Can Promote
0evelopment (DUP, 2005), at p.84.
94
The paper entItled "NegotIatIons on the 0Ispute Settlement UnderstandIng: Proposal of
the AfrIcan Croup In the WTD", dIstrIbuted In September 2002.
95
Dxfam 8rIefIng Paper: "SavIng Away the Future" (Dxfam nternatIonal) |arch 2007,
avaIlable at: http://www.ox]cm.ory/en/news/200Z/pr0Z0J21_]ree_trcde_cyreements

96
http://www.ox]cm.ory/en/news/200Z/pr0Z0J21_]ree_trcde_cyreements

41
govern theIr economIes and threaten theIr abIlItIes to protect theIr poorest
people and lIft them out of poverty." These new bIlateral and regIonal
agreements are now consIdered to be 'steppIng stones to future multIlateral
agreements'.

To sum up, from the above brIef survey It Is clear that globalIzatIon has
often been manIpulated for some selfIsh hIdeous purposes that wIden the
gap between the rIch and the poor of the world, and InternatIonal economIc
InstItutIons have been used as the means towards that. ClobalIzatIon Is seen
to have hItherto run roughshod over human rIghts, development,
Intellectual property, tradItIonal knowledge and other values. As StIglItz
observes that "The problem Is not wIth globalIzatIon, but wIth how It has
been managed. Part of the problem lIes wIth the InternatIonal economIc
InstItutIons, wIth the |F, World 8ank, and WTD, whIch help set the rules of
the game. They have done so In ways that, all too often, have served the
Interests of the more advanced IndustrIalIzed countrIes - and partIcular
Interests wIthIn those countrIes - rather than those of the developIng
world."
97




TDWAP0S A JUST CLDAL LECAL DP0EP

f the current of globalIzatIon cannot be managed properly In an orderly
fashIon, there wIll be IncreasIng vIolence, relIgIous fundamentalIsm or
fanatIcIsm, ethnIc chauvInIsm, dIstrust and hatred towards the west, many
more 9/11 threats and terrorIsm In all fashIons, reprIsals and counter
reprIsals, and the world wIll be a vIolent place to lIve In. Perhaps, the
recent global unrest Is a byproduct of the adverse Impact of the current
style of globalIzatIon that has caused more frustratIon than hope for the
future. n the face of all these the globalIsts' faIry dream of 'market

97
Joseph StIglItz, ClobalIzatIon and ts 0Iscontents (PenguIn, 2002), pp. 214
15.

42
fundamentalIsm' wIll dIsappear through the wIndow causIng a deadly threat
to a sustaInable global economy. Dne can realIze today how the fIght
agaInst global terrorIsm Is IncreasIngly causIng the global economy very
dearly whIch resources could be used for posItIve benefIts of the world
communIty at large. As Professor Held observed that:
"(T)here must be a headon acknowledgement that the ethIcal and
justIce Issues posed by the global polarIzatIon of wealth, Income and
power, and wIth them the huge asymmetrIes of lIfe chances, cannot be
left to markets to resolve alone. Those who are poorest and most
vulnerable, lInked Into geopolItIcal sItuatIons where theIr economIc
and polItIcal claIms have been neglected for generatIons, may provIde
fertIle ground for terrorIst recruIters. The project of economIc
globalIzatIon has to be connected to manIfest prIncIples of socIal
justIce; the latter need to frame global market actIvIty."
98


n the fIeld of InternatIonal law It Is not only law that needs rethInkIng
and Its reformulatIon wIth a human face but also there should be
revolutIonary structural InnovatIon of global governance that can gIve effect
to the new legal values for the greater benefIt of the world. Perhaps the
bIggest challenge posed by globalIzatIon Is the one facIng natIonal
governments and regulators. As YergIn noted, "Dne of the bIg Issues of
government now, Is to fIgure out what kInd of cooperatIve legal regImes are
needed to provIde a stable foundatIon".
99
Professor FuggIe has sketched
some aspects of cooperatIve elements of the prospectIve legal regIme In
the followIng words:
"At the conceptual level, the consensus encompasses the centralIty of
governance, the rule of law, educatIon, and health to economIc
success; the posItIve role of Investment, IncludIng the skIlls and
technologIes embodIed In foreIgn dIrect Investment; the need for
further debt relIef and other forms of development assIstance for the
poor countrIes; the urgency of lowerIng trade barrIers Imposed on
developIng country exports by agrIcultural subsIdIes and other nontarIff
barrIers In the rIch countrIes; the protectIonIst potentIal posed by

98
0avId Held, Clobal Covenant: The SocIal 0emIcratIc AlternatIve to the
WashIngton Consensus (PolIty Press, CambrIdge, 2004), at p.146.

99 0anIel YergIn, quoted In ElIsa WestfIeld, "ClobalIzatIon, Covernance, and |ultInatIonal
EnterprIse FesponsIbIlIty: Corporate Codes of Conduct In the 21
st
Century", 42 7a.J.nt'l.L.
1075 (20012002).

43
pursuIng socIal and envIronmental objectIves through lInkages to trade
agreements; and the need for governments and InternatIonal
InstItutIons alIke to forge partnershIps wIth the prIvate sector and a
wIde range of cIvIl socIety actors.
100


The just global legal order to correct all the Ills of globalIzatIon and to
make globalIzatIon work faIrly for all should be based on InternatIonal
dIstrIbutIve justIce. The very notIon of InternatIonal dIstrIbutIve justIce and
the modalItIes In whIch It Is supposed to work have stIll remaIned
controversIal among phIlosophers and scholars. nternatIonal dIstrIbutIve
justIce or global justIce debate has generated as many theorIes as there
are phIlosophers and scholars. The basIc tenet, however, of dIstrIbutIve
justIce Is the redIstrIbutIon of wealth accordIng to one's due In the socIety.
7arIous scholars have Interpreted the Issue of "one's due" - whIch Is what
the notIon of justIce proposes - In dIfferent senses such as "basIc human
needs", "basIc human rIghts", "entItlement" and "hIstorIc entItlement",
etc. The nature of the debate of dIstrIbutIve justIce thus not only concerns
the content of the notIon but also the spatIal context In whIch It has to be
understood such as the natIonal or the global dImensIon. n explaInIng theIr
theorIes of justIce most phIlosophers are belIeved to have derIved theIr
InspIratIon from the ArIstotelIan notIon of justIce meant In the sense of
"otherness" (pros heteron), .e. the quest for justIce must be for and In
relatIon to other human beIngs In socIety.
101
n hIs book "The Theory of
|oral sentIments" Adam SmIth, the father of modern capItalIsm, developed
the notIon of what he calls 'fellowfeelIng', whIch Is basIcally the human
InstInct for faIrness and justIce."

The theory of InternatIonal or global dIstrIbutIve justIce starts wIth the
premIses that the moral concern for the welfare of IndIvIduals Is not

100 John Cerard FuggIe, "The UnIted NatIons and ClobalIzatIon : Patterns and LImIts of
nstItutIonal AdaptatIon", 9 Clobal Covernance (200J), p.J01, at pp. J045. [Some of thIs
vIews are expressed In a joInt statement by the heads of |F, DEC0, UN, and World 8ank, A
8etter World for All (WashIngton, 2000)

101 ArIstotelIs, Ethcc Ncomcchec, FecognovIt 8revIque AdnotatIone CrItIca nstruxIt .
8ywater (Dxford, 1959), 1129 b, 2627; See also ArIstotle, Ncomcchecn Ethcs (translated
wIth Notes by HarrIs Fackham, 1996), Wordsworth ClassIcs of World. LIterature.

44
confIned to a partIcular terrItory rather It transcends the boundarIes of
natIon states, and the IndIvIduals across the globe that constItute the
global communIty are the target of the theory. ThIs cosmopolItan approach
to justIce, as opposed to communItarIan, concerns the welfare of
IndIvIduals across the globe on the basIs of the mInImum standard of lIfe,
be It 'the basIc need', 'subsIstence', or 'basIc human rIghts - the moral
mInImum'.
102
The protectIon of human lIberty depends on the preservatIon
of such mInImum standard of lIfe as the rIght to food, the rIght to shelter,
the rIght to freedom of speech, the rIght to health, the rIght to clean
water, etc. These are the basIc human needs the moral mInImum
wIthout whIch the exIstence of human beIng Is meanIngless. The theory of
InternatIonal dIstrIbutIve justIce has to be fashIoned as rIghtbased
otherwIse the concept of charItable dIspensatIon of 'the haves' to 'the
havenots' wIll weaken the foundatIon of the theory. The deprIved people
across the globe are entItled to the basIc human needs, and the rIch have
the oblIgatIon to respond to that needs. The deprIved peoples' rIght to
development also sprIngs out of basIc human needs. The proposed just
global legal order should determIne the oblIgatIons of the rIch natIons to
respond to such needs and the modalItIes to perform such oblIgatIons.
Thus, It must be our top prIorIty that globalIzatIon should work faIrly for
the whole InternatIonal communIty. Professor FuggIe noted, "PrevIous eras
of globalIzatIon unravelled because they faIled adequately to embed
market forces wIthIn frameworks of rules and values that secured the
needs of human communIty and the desIre for socIal justIce."
10J


As IndIcated earlIer, the prospectIve just global legal order cannot
operate wIthout any global InstItutIonal framework. The current structure
and operatIonal methods of InternatIonal InstItutIons are not satIsfactory as
globalIzatIon has turned Its ugly face over the last decades In many ways.

102 Charles Jones, Clobal JustIce - 0efendIng CosmopolItanIsm" (Dxford UnIversIty Press,
1999).
103
Opening Statement of Professor John G. Ruggie as the Special Representative of the Secretary-
General for Business and Human Rights to the United Nations Human Rights Council (Geneva, 25
September 2006), available at: http://www.business-humanrights.org

45
The current InstItutIonal framework needs to be reformulated In order to
contaIn the values that have proposed above. t has to be acknowledged,
however, that there have been recently varIous efforts to study the role
and effectIveness of InternatIonal InstItutIons. For example, In November
1998, the US Congress establIshed the nternatIonal FInancIal nstItutIon
AdvIsory CommIssIon (FAC), better known as the |eltzer CommIssIon, an
elevenmember panel headed by Professor Allan |eltzer of CarnegIe |ellon
UnIversIty, to study the |F, the World 8ank, nterAmerIcan 0evelopment
8ank, the AfrIcan 0evelopment 8ank, the 8ank for nternatIonal
Settlements and the WTD In order to recommend future U.S. polIcy
towards them.
104
n 2005 the WTD produced a report called the "the
Sutherland Feport" on InstItutIonal reform of the WTD.
105
The
recommendatIons of the reports on varIous InstItutIonal reforms are yet to
be tested In practIce.

No doubt, there wIll be many more such studIes In the future from
varIous angles dependIng on the Interests of the governments, the
InstItutIons or the persons undertakIng It. What Is needed Is that
InternatIonal InstItutIons should be studIed for such structural reform and
mandates that can brIng about effectIve global governance In order to
make globalIzatIon work faIrly for all on the basIs of the prIncIples of
InternatIonal dIstrIbutIve justIce.

LadIes and gentlemen, want to conclude In the words of the former
UN SecretaryCeneral KofI Annan: "f we cannot make globalIzatIon work
for all, In the end It wIll work for none."



104
The CommIssIon's complete report Is avaIlable on Its websIte at: nternatIonal FInancIal
nstItutIon AdvIsory CommIssIon: www.house.yov/]ec/m]/]cc

105
The full tItle of the report Is "The Future of the WTD: AddressIng nstItutIonal
Challenges In the New |IllennIum." (Report by the Consultctve 8ocrd to the 0rector
6enercl Supcchc Pcntchpckd). The report Is publIshed by the WTD SecretarIat In January
2005. For useful comments on the varIous aspects of the report, see the papers contrIbuted
to the FDFU|: THE FUTUFE DF THE WTD In 2 nternatIonal DrganIzatIons Law FevIew (no.1)
2005, pp.127225.
46


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