Codes of Conduct
Codes of Conduct
The first widespread attempt to regulate direct investment on a multilateral basis was made in 1929 by the League of Nations. At that time the attention was on foreign exploitation of the tropical commodity industry. Proposals were discarded quickly, however, with the onset of the Great Depression. Since World War II there have been several attempts to form agreements that would deal in part with the relationship between foreign investors and governments. Among these were the International Trade Organization (ITO) of 1948, which never became operative, attempts in 1951 by the UN Economic and Social Council (ECOSOC) to regulate antitrust, and the 1961 Code for Liberalization of Capital Movements established by the Organization for Economic Cooperation and Development (OECD).35 None appears to have had much effect on MNE operations.
In 1975 the newly created Center on Transnational Corporations first met at the United Nations as a result of complaints issued by a large group of poor countries. (The so-called "Group of 77" now comprises more than 100 LDCs.) The Center provides for the collection of information on MNE activities, is a forum for publicizing common complaints, and has considered the adoption of several codes of conduct for the activities of MNEs. Meanwhile, the OECD, which is composed of industrial countries, approved its own code in 1976. The codes considered by the Group of 77, as well as the code set by the OECD, are necessarily vague so that consensus may be reached among various nations as well as among groups within the nations. The codes are also voluntary; thus adoption does not guarantee enforcement. The codes may, however, clarify a collective attitude toward specific practices of MNEs that could make it easier to pass restrictive legislation at the national level without fear that the legislation will be greatly out of step with external public opinion.36
The first widespread attempt to regulate direct investment on a multilateral basis was made in 1929 by the League of Nations. At that time the attention was on foreign exploitation of the tropical commodity industry. Proposals were discarded quickly, however, with the onset of the Great Depression. Since World War II there have been several attempts to form agreements that would deal in part with the relationship between foreign investors and governments. Among these were the International Trade Organization (ITO) of 1948, which never became operative, attempts in 1951 by the UN Economic and Social Council (ECOSOC) to regulate antitrust, and the 1961 Code for Liberalization of Capital Movements established by the Organization for Economic Cooperation and Development (OECD).35 None appears to have had much effect on MNE operations.
In 1975 the newly created Center on Transnational Corporations first met at the United Nations as a result of complaints issued by a large group of poor countries. (The so-called "Group of 77" now comprises more than 100 LDCs.) The Center provides for the collection of information on MNE activities, is a forum for publicizing common complaints, and has considered the adoption of several codes of conduct for the activities of MNEs. Meanwhile, the OECD, which is composed of industrial countries, approved its own code in 1976. The codes considered by the Group of 77, as well as the code set by the OECD, are necessarily vague so that consensus may be reached among various nations as well as among groups within the nations. The codes are also voluntary; thus adoption does not guarantee enforcement. The codes may, however, clarify a collective attitude toward specific practices of MNEs that could make it easier to pass restrictive legislation at the national level without fear that the legislation will be greatly out of step with external public opinion.36
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