Markkinoiden juridinen toimintaympäristö Kalvot 6 Kansainvälisten markkinoiden normiympäristö Yhteiskuntavastuu (CSR) ja yritysetiikka Matti Rudanko

Responsibilities of Companies 1 OECD: duties of states industrialized states (Finland 1969) economic growth and employment stability of the financing system environment, development cooperation WTO: duties of states most favored nation (mfn) principle discrimination ban national treatment protection clause against market disruptions settlement of disputes special treaties Markkinoiden juridinen toimintaympäristö Kalvot 6

Responsibilities of Companies 2 WTO special treaties (free trade) TRIMS: trade related investment measures TRIPS: international protection of industrial property rights TBT: technical barriers to trade (e.g. standards) GATS: trade in services UNCTAD (duties of states) developing and transition economy countries the customs preferences system GSP raw materials and technology; environment Markkinoiden juridinen toimintaympäristö Kalvot 6

Responsibilities of Companies 3 Rio (-92) and Kioto (-98) conferences on environment and trade UN climate, biodiversity the rights of states to their territories (with no damage to others) openness of trade; discrimination and disguised barriers share of economic growth to all and sustainable development Other environment treaties CITES 1973: endangered species Montreal protocol (in force 1988): ozone Basle treaty: dangerous waste includes Finland Markkinoiden juridinen toimintaympäristö Kalvot 6

Legal Obligations of Companies OECD, UNCTAD, environmental treaties have an impact on the environmental legislation of the member states OECD: e.g. criminalization of bribery in international trade international competition and marketing law (EU) harmonization of national rules: national supervision supranational authorities (EU rules of competition) Markkinoiden juridinen toimintaympäristö Kalvot 6

Law and Morals In a developing legal system the rules are modified by morals notice e.g. the proposed MAI and TTIP treaties the role of morals the (moral) purpose of a business undertaking is to be profitable (instrumental – inherent value)? relation to other moral values? morals as a (pecuniary) image value Markkinoiden juridinen toimintaympäristö Kalvot 6

law as a tool of business management Law and Morals 2 knowledge of the legal development and different legal orders offers a touch with moral development (and vice versa) this role is especially important in international trade contractual relations and tax planning marketing, finance labor relations and environment management etc. law as a tool of business management Markkinoiden juridinen toimintaympäristö Kalvot 6

Lawyering as Justice E.g. rules on the just arrangement of business relationships crystallizes ethics and other ”value dimensions” equity, equality, aspects of income distribution (i.a. remuneration of labor and capital) no controversy with efficiency, at least with that of Pareto type (no one’s welfare is not reduced), but there is mutual dependency between them) cf. Kaldor-Hicks efficiency with a hypothetic compensation Markkinoiden juridinen toimintaympäristö Kalvot 6

Profitability as a Moral Value an instrumental value for realizing other values national economy: economic growth, employment profit as an incentive: e.g. technical progress (cf. the socialist ideology) “byproduct” a good business idea prevents alienation (owners, workers) e.g. shopping as an experience (clients) Markkinoiden juridinen toimintaympäristö Kalvot 6

The Changing Role of Firms ”marketization” (privatization) multinationals are taking over more and more global activities from states environment social values (e.g. equality, distribution of income, values of labor life, human rights) the contents requirements of the decision-making in companies the values of companies Markkinoiden juridinen toimintaympäristö Kalvot 6

Case 1 A multinational uses wood from a tropical rain forest as raw material that is processed elsewhere the government of the country of origin of the raw material supports the firm because it brings money as a price of the stuff (and other payments, even “unofficial” ones) and improves employment the government is alleged to violate the human rights of a minority lumbering of rain forest has caused evacuation of the population Markkinoiden juridinen toimintaympäristö Kalvot 6

Case 2 The foreign business partner of firm A may use child labor because of what civic organizations have demanded a boycott of the business partner the firm has activities in “rogue country” X that is on a black list of civic organizations as well and is at risk to fall into boycott by the “international community” Markkinoiden juridinen toimintaympäristö Kalvot 6

Case 3 The international marketing of consumer goods effected by a company is considered offensive in countries in which different views of equality prevail the company investing in environment management has promised a share of the profit from the campaign for the benefit of endangered species Markkinoiden juridinen toimintaympäristö Kalvot 6

Case 4 The funds marketed by a common fund invest i.a. in tobacco and arms industry a pension insurance company considers buying fund units in question because it is well-grounded from the point of view of rational investment activity Markkinoiden juridinen toimintaympäristö Kalvot 6

Impact on the employment and wealth of the target country Argumentation, case 1 Impact on the employment and wealth of the target country cf. Rawls: a process is just if it improves the position of the weakest (increased income differences do not matter) Impact on the environment law: Rio (bio-diversity), Kioto,CITES cf. MAI project the social structure of the target country governmental system human rights Markkinoiden juridinen toimintaympäristö Kalvot 6

Argumentation, Case 1, cont. The international distribution of income (raw material / value added by processing economic efficiency) transaction costs environmental costs of logistic solutions Markkinoiden juridinen toimintaympäristö Kalvot 6

A Solution Scheme Markkinoiden juridinen toimintaympäristö Kalvot 6 + profit + other business economic value added - legal sanctions: probability of realization (e.g. the effectiveness of control) x estimated monetary value (x time factor) etc. - quantifying a moral reaction is difficult - assessing the social aspect (i.a. human rights) is likely to be impossible Markkinoiden juridinen toimintaympäristö Kalvot 6

Argumentation, case 2 The social significance of employment the possibility of social influencing by corporate culture The image as as profit seeker by social dumping (case 1) the probability of a state boycott could be in favor of a withdrawal as early as possible (case 2) a boycott would probably weaken most the situation of the weakest the possible interference by competition authorities with the boycott (case 1)? Markkinoiden juridinen toimintaympäristö Kalvot 6

Argumentation, case 3 The legal norms on marketing have to be checked The result of the campaign the possibility of social influencing by advertising moral judgment: the reaction by whom image questions equality “cultural imperialism” The legal norms on marketing have to be checked national / supranational (EU) self-regulation of the trade: the basic international rules of advertising the influence of the reactions on the result Markkinoiden juridinen toimintaympäristö Kalvot 6

“the dilemma of the bishop” (Ahlfors) Argumentation, case 4 Business economic criteria the social responsibility of a pension insurance company No legal barriers questions of image “the dilemma of the bishop” (Ahlfors) Markkinoiden juridinen toimintaympäristö Kalvot 6

Moral judgment in world trade 1 Ethics of obligations (means) - ethics of consequences e.g. the boycott and its consequences business ethical criteria (L. Koskinen, Mikä on oikein [What is Right] 1995): evaluation by the following criteria honesty environment personnel policy social responsibility business idea Markkinoiden juridinen toimintaympäristö Kalvot 6

Moral judgment in world trade 2 An evaluation scale +3 innovations, on top of the moral development Exemplary activity, active improvements +2 Investments to comply with the spirit of the law +1 Complying with the letter of the law, avoiding legal sanctions -1 Repeated admonitions from authorities Sentences e.g. of environmental offences -2 Markkinoiden juridinen toimintaympäristö Kalvot 6