United Nations Centre On Transnational Corporations Essay

Charged by the United Nations (UN) to provide research into foreign direct investment and the activities of multinational corporations, the United Nations Centre on Transnational Corporations (UNCTC) commenced operations in 1975. In 1992, it was disbanded and restructured as a component part of the United Nations Conference on Trade and Development (UNCTAD). The UNCTC became particularly noted for its investment policy assistance to developing countries, for its ultimately failed negotiations for a UN Code of Conduct on Transnational Corporations, and for initiating the annual World Investment Report, now published by UNCTAD.

The creation of the UNCTC may be seen as part of a wider movement initiated by developing countries called the New International Economic Order, in which they sought mechanisms to redress the economic power balance between themselves and richer developed economies. In 1972, against a background of rising concern by developing countries about the power wielded by multinational corporations, the UN Economic and Social Council enlisted a “group of eminent persons” to investigate the economic impact of such firms on developing nations. Out of their deliberations came the recommendation to establish a permanent commission of the Council on multinational corporations, with a supporting information and research center. Their recommendation was adopted, and a new Commission on Transnational Corporations with its supporting Centre on Transnational Corporations was created, the UN having preference for “transnational” over “multinational” in the title. In a program of restructuring, the UNCTC was closed in 1992, and after a year’s hiatus, the UNCTC’s activities became subsumed within an enlarged UNCTAD, eventually known as the Division on Investment and Enterprise.

Functions Of The UNCTC

When it was established in 1974, a priority for the UNCTC was to write and gain agreement on a code of conduct for multinational corporations. Similar efforts, albeit more limited in scope, were also being made by the Organisation for Economic Co-operation and Development (OECD) and the World Health Organization (WHO), but the UNCTC’s code was envisaged to provide explicit assurance to developing countries on the behavior of foreign (developed country) multinationals who were investing. The negotiations on the code were protracted, largely because of the differing perspectives among the developing countries, and reconciling these often divergent views became an insurmountable task.

A further problem was the breadth of the proposed code, which included corruption, human rights, the environment, transfer pricing, and international technology transfer. By the 1990s, the much-revised text looked dated, and some elements seemed irrelevant, as economic realities overtook the initial rationale. In particular, the proliferation of bilateral investment treaties (BIT) and the recognition of inward and outward foreign direct investment as an important part of economic development meant that negotiations over the code finally ceased. Elements of the draft code’s intent resurfaced in the UN’s Global Compact in 2000, a more all-embracing initiative on the fundamental ethics of corporate behavior.

A specific part of the UNCTC’s remit was to provide support to developing countries in helping them better understand multinational firms, foreign investment, and the creation of appropriate investment policy and legal frameworks. To achieve this, the UNCTC ran cross-country seminars to share information on matters such as technology transfer, export processing zones, transfer pricing, and investment promotion and policy. The UNCTC advisory teams also helped individual developing countries in drafting regulations and laws. Supporting all of this advisory work were the UNCTC’s original research and publications on multinationals and their investments. Its periodical The CTC Reporter (1976–90) summarized and disseminated some of this research, and in 1992, this evolved into a more conventional academic journal, Transnational Corporations.

A particular legacy of the UNCTC is its quinquennial publication Transnational Corporations in World Development, the last of which was published in 1988. This was superseded by the annual World Investment Report, which began in 1991, with the 1992 edition completed under the auspices of the UN Department of Economic and Social Development, before becoming a publication of UNCTAD from 1993 onward.

Bibliography:

  1. Sidney Dell, The United Nations and International Business (Duke University Press, 1990);
  2. A. Fatouros, ed., Transnational Corporations: The International Legal Framework (Routledge, 1994);
  3. Torbjörn Fredriksson, “Forty Years of UNCTAD Research on FDI,” Transnational Corporations (v.12/3, 2003);
  4. Tagi Sagafinejad, in collaboration with John H. Dunning, The UN and Transnational Corporations: From Code of Conduct to Global Compact (Indiana University Press, 2008).

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