TNC Commission focuses on environment and development.

Transnational corporations (TNCs) have been urged by the Commission on TNCs to observe international environmental standards and industry-agreed guidelines in their activities.

At its seventeenth session 10-19 April and 7, 10 and 15 May, New York), the Commission also approved a text authorizing the preparation of action-oriented recommendations to encourage and mobilize TNCs and other large enterprises to cooperate in efforts to protect and enhance the environment in all countries. The recommendations will be the Commission's contribution to the landmark UN Conference on Environment and Development, to be held in 1992 in Brazil.

The Commission also adopted resolutions on corrupt practices in international business transactions and TNCs operating in South Africa. It considered several reports of the Secretary-General on recent developments related to TNCs and international economic relations.

In debate, many speakers stressed the important role TNCs could play in development and protection of the environment. Peter Hansen, Executive Director of the Centre on Transnational Corporations (CTC), rioted that critical global problems, such as environmental deterioration and indebtedness, could not be tackled effectively without recognizing and understanding the role of TNCs.

Policy-makers had to recognize the need for preserving environmental quality in the interest of sustainable development, said Antoine Blanca, DirectorGeneral for Development and International Economic Cooperation. He hoped the 1992 Conference on Environment and Development would encourage them to consider that complex relationship in the interest of environmentally sound economic development.

Delegates pointed out that TNCs should consider their wide-ranging environmental responsibilities, including the "polluter-pays" principle, and accept full liability for any damage to life and property resulting from their activities.

In its omnibus resolution dealing with its contribution to the 1992 Conference, the Commission agreed that among the issues to be addressed should be: observing internationally-agreed standards and instruments; improving management and regulation of industrial processes; transferring environmentally-sound technologies to developing countries on favourable terms; using environment and development accounting and reporting methods; international environmental management, and preventive action and measures to minimize the risks to human life, property and the environment; and the question of reparations for damage.

The Commission requested that the findings of a special TNC research project-"Transfer of environmentally sound technologies to developing countries on favourable terms"-be transmitted to the Conference.

It also stressed the role of governmental and international cooperation in providing an appropriate framework for contributions by TNCs to sustainable development and environment protection.

In discussing its future work, the Commission decided to continue to give particular attention to the environment and to the role TNCs could play in newly-opened economies, as well as in overall global development.

Corrupt practices

In the resolution on corrupt business practices, the Commission asked the Secretary-General to report on UN efforts to address the issue, with the aim of elaborating a draft agreement on illicit payments. Such an agreement would facilitate the establishment of international standards to prevent corrupt practices and enhance fairness and competitiveness in transnational business to benefit the general public. This would also help in negotiations towards a code of conduct on TNCs, which have been under way since 1976.

As attitudes towards direct foreign investment evolved rapidly in Central and Eastern Europe and in developing countries, a comprehensive international code of conduct was needed now more than ever, said the CM Executive Director.

TNCs in South Africa

Taking note of the evolving situation in South Africa, including the proposed repeal of the major apartheid laws, the Commission reiterated its call on all TNCs to stop immediately any operations in South Africa and all forms of trade and economic links with the racist minority regime. At the same time, it asked the Centre to continue examining possible TNC contributions to the construction of a nonracial democratic South Africa, taking into account the special need to train black South African entrepreneurs.

The international community should, however, maintain vigilance as to the role of TNCs in South Africa in anticipation of a "post-apartheid era", delegates urged. Concern was expressed that widespread denationalization of industries there might ensure that the "heirlooms of apartheid" remained in the hands of the white minority, even after the transition to a multiracial government.

Changing economies

The Commission also focused on policy implications of foreign direct investment and strengthening the negotiating capacity of developing countries in dealing with TNCs.

Other matters considered include: the role of transnational banks; research undertaken by CTC; comprehensive information systems; and international standards of accounting and reporting.

Analysing the changes in the world economy and new patterns in direct investment, some delegates drew attention to such problems as "forced investment" in which bad debt was "swapped for quality assets" and the fact that 97 per cent of technology transfers took place within the "triad"-the United States, the European Economic Community and Japan. One expert adviser noted that "system friction" between triad members was creating regional investment clusters, impeding true globalization.

In its omnibus resolution, the Commission asked for an analysis of recent trends in foreign direct investment in the world economy, as well as an update of the work undertaken by CTC concerning the external indebtedness of developing countries.

The importance of the technical cooperation programme of the Centre to strengthen the negotiating capacity of developing countries was also stressed.

Discussing the present economic conditions in the world, delegates pointed out that policies to improve the climate for business operations had resulted in privatization, reduction or removal of exchange controls, wider currency convertibility, greater repatriation of profits and dividends, and the easing or lifting of price controls.

A growing number of countries utilized investment promotion programmes as a means of attracting export-oriented investment and reduced restrictions on TNC activities.

However, despite these policy changes, flows of foreign direct investment to developing countries had increased only slightly, concentrating in countries with large and growing internal markets, substantial productive resources or geographic proximity to major developed economies.