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

2. 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

3. 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

4. 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

5. 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

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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. “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

21. 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

22. 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