ESPM 169: Private Economic Actors in IEP

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ESPM 169: Private Economic Actors in IEP

October 22, 2002

- motivation: profit, protecting investments

- simple model: corporations act when interests are threatened by environmental regulations

- but: story can be more complex: corporate environmentalism - not always "the enemy"

- often accept regulations when they realize opportunity costs of not accepting them are higher; some firms are even pro-active (personal interests cf. institutional constraints)

- above all: want a predictable regulatory environment and maintain competitiveness in international markets

- but: don't walk to the beat of the same drum, cf. other sorts of actors

- MNCs, role in IEP negotiations (trade associations), developing private regulation, CBD and Biosafety

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1. Multinationals

- defining MNCs: vertical and horizontal integration; firms with large export markets also important

- global spread: economic power: 7000 in 1970, 45,000 in 1995

- involved in 70% of world trade; more than 30% of this is intra-firm

- sales by foreign affiliates outweigh total international trade

- 300 firms account for one quarter of the world's productive assets

- PHH

- economic power translating into political power

- "green" activities: Karliner's view of the Environmental Services Industry

2. Emergence in IEP

- most important thing they do: lobby national governments - but have recently started playing more direct roles in IEP

- Rio: Business Council on Sustainable Development

- technocratic, private, top-down approach to international regulation

- various positions: need good science, support trade rules, combat environmental NOT social problems

- cases: ozone, hazardous waste, climate change

- regulatory capture cf. regulatory entrepreneurialism

- firms: Shell, BP and emissions trading

What does involvement and influence depend on?

- relationship with governments; regulations

- nature of issue

- industry structure, firm structure

- shareholders

ISO 14001, 14000 series and environmental management standards

- environmental management scheme

- ecolabelling and certification

 private environmental regulation

3. Private Economic Actors and the CBD: The Biotech Industry

 biosafety protocol

 also international food and agriculture, pharmaceutical regulations

 what biotechnology is: modification of existing organisms - genetic modification the most contentious type

 issues around CBD include the property rights around genetic resources (pharmaceuticals, especially) and the possible threat to biodiversity from GM seeds (agriculture)

- note that these resources were free prior to CBD

 CBD set up as alternative to other organizations, thought to be more pro-industry - or less pro-BD… (WIPO, WTO, FAO)

- key forum for conflict; argued that biotech industry in US key in blocking ratification

Biotech industry: sees itself as saving the world, protecting BD

Public, especially in poorer countries: sees unknown risks, economic control by large firms

 biotech firms located overwhelmingly in the North

Firms most affected by CBD measures: firms engaged in bioprospecting (as opposed to R&D type firms or marketing firms)

Industry structure: has been rapidly changing

- large pharmaceuticals, industrial agriculture firms - Monsanto, Novartis, Merck

- small start-ups (often developing a single drug - ImClone) - face serious constraints

- industry v. networked

- 1995: 1300 firms in US, 485 in Europe

- represented by trade associations: Biotechnology Industry Organization; Senior Advisory Group on Biotech (based in Brussels)

 seen as a highly innovative sector; firms viewed the CBD as "market-eroding"; bigger clout in US, therefore influenced policy process more strongly

Raustiala's argument: that firms in the US opposed the measure owing to strict and litigious (judicial) enforcement of environmental regulations, as opposed to UK's more flexible, informal stance - impose fewer costs of adjustment on firms

 biosafety protocol: opposed - "must comply with international trade rules"

- Miami Group strongly supported by industry - ultimately defeated

- though not entirely: e.g. labeling likely to be vague, e.g. "may contain"

- WTO may be forum for dispute resolution

- optimistically: provides a framework

- parts of industry claim governments lagging behind them

 still - but one dimension over international biotechnology struggles

- industry moving towards targeting SD initiatives: "feed the world"

- made representation at WSSD; battle continuing on many fronts

- strong opposition to GM foods in Europe

- genetic medicine (less high-profile)

Links

http://www.nal.usda.gov/bic/Federal_Biotech/biodiversity.treaty/biosafe.ngo.html