WRITTEN QUESTION E-2640/00

by Claude Turmes (Verts/ALE) to the Commission

(1 August 2000)

Subject: New OECD code of conduct

In its June 2000 ministerial meeting the OECD adopted a code of conduct on social and ecological aspects for multinationals. This exercise echoes an agreement of 1976 which did not contain sanctions and was therefore never of any help and remained totally forgotten. The new code, however, does not contains sanctions either.

Does the Commission think the new code will be respected more than the former one?

On what basis, given that the new code contains no sanctions?

Does the Commission intend to include a reference to this code in all future trade agreements with third countries?

What does the Commission think about Mexico's behaviour in the negotiations? (Mexico was strongly opposed to the code, but had to join finally because of the consensus principle). Does this not throw a very negative light on future cooperation with Mexico? Does the Commission intend to raise the question in the next EU-Mexico Joint Council and could it consider proposing an amendment concerning the inclusion of a reference to the OECD code of conduct in the EU-Mexico agreement at the next possible opportunity?

Answer given by Mr Lamy on behalf of the Commission

(18 October 2000)

The Ministers of the Organisation for economic cooperation and development (OECD) countries, as well as those of Argentina, Brazil, Chile and the Slovak Republic, adopted on 27th June 2000 the revised guidelines for multinational enterprises. They represent a set of recommendations addressed jointly by OECD governments to multinational enterprises (MNEs).

The revised guidelines themselves are non-binding principles and standards of corporate behaviour that OECD governments exhort multinational enterprises to observe when operating in and from their territory -that is, operating in non-OECD countries too. Compared to the guidelines adopted in 1976, this text has been substantially updated and expanded, not only on social and ecological aspects, but also for consumer protection, the fight against bribery and disclosure.

The previous guidelines were indeed insufficiently known, whether by MNEs or by other interested parties, and many adhering countries did not implement fully all the mechanisms that were foreseen, such as national contact points (NCPs).

As the Honourable Member rightly points out, the new guidelines do not contain sanctions and adhesion to the guidelines by MNEs remains voluntary. There is a consensus among OECD member countries that sanctions are not appropriate for this kind of instrument. One of the reasons is that there are sanctions foreseen in domestic law for most of the matters covered by the guidelines, such as competition or environment rules. Another reason is that the guidelines are not aimed at replacing this domestic regulation of corporate behaviour, but at complementing it by giving MNEs a basic standard set of recommendations that MNEs should voluntarily observe whatever the context. The public renown of good corporate citizenship will be an increasingly important incentive for MNEs to join.

Implementation is entrusted to national contact points that must be established in each adhering country in order to promote knowledge of the guidelines among MNEs and other interested parties and monitor their effective implementation, including through pursuing good offices, conciliation and mediation in specific instances where an enterprise is alleged not to have respected the guidelines. Adhering countries (and their NCPs) are politically accountable and subject to peer review in the OECD committee on investment and multinational enterprises (CIME).

The Community would not be in a position to include a reference to these guidelines in trade agreements, as they are addressed to enterprises, as an invitation or expectation to adhere voluntarily to certain minimum standards of conduct. Respect of these guidelines should not interfere with the legal obligations of MNEs under the laws of a host country. Thus, it would be inappropriate to give the guidelines a different legal status under international law. As to the (binding) provisions on implementation by governments, these are contained in a decision of the OECD Council, to which other countries can adhere voluntarily. To include a reference to this decision in bilateral agreements concluded by the Community with third countries would also appear not useful, since the whole mechanism of the guidelines and their implementation is based on the spontaneous commitment by adhering non-OECD countries to supplement, not to replace, national and international regulation. The Community, nevertheless, will certainly operate to encourage their observance by European firms since the guidelines constitute a step in the right direction towards enhanced investor responsibilities worldwide and to respond to civil society's concerns in relation to the behaviour of international investors.

As for the Mexican position during the negotiation, it was guided by some misconceptions about the functioning of the new framework which could be clarified during the OECD Ministerial in June 2000. The implementation of the revised guidelines will be subject to continuous bilateral and multilateral discussions in order to ensure that these new guidelines are a useful instrument for all concerned.