In recent years, the number of Japanese corporations operating abroad has increased as the Yen becomes stronger. However, overseas investment and business activities are in fact unregulated due to the absence of guidelines or regulations restricting their activities. As a result, numerous incidents, including unfair labour practices, ignoring human and basic labour rights, and environmental destruction, have occurred. Naturally, criticisms have come quickly against the activities of Japanese TNCs.

Through its position of raising public opinion against Japanese TNCs while demanding social restrictions against them, People's Action Network to Monitor Japanese Transnational Abroad (PAN) drafted guidelines for overseas operations of Japanese corporations and reviewed how, as a citizen's group, to work on the government, relevant authorities, economic and business organisations, political parties and labour unions to make the necessary changes. The following are the draft guidelines developed by PAN

People's Action Network to Monitor Japanese TNCs

TNC Monitor Japan

October 1997

I. Introduction

Aim of Charter

1. Foreign investments by corporations from the East Asian region including Japan, Hong Kong, South Korea and Taiwan as well as from other transnational based in other countries, have been flowing into Asia, the current hotbed of economic growth. These investments have seriously affected the local economies, cultures and the lives of the people in the host countries.

While it is explained that investments by transnationals contribute to economic growth and increased employment in the host countries, such investments have also been the root cause of human rights violations, unfair labour practices, exportation of hidustrial pollution, environmental destruction, over-exploitation of natural resources and cultural conflicts.

2. The problems relating to transnational corporations are primarily due to the managerial responsibilities of the corporations themselves. I however, at the same time, there are no legal or binding criteria or regulations on the investments by transnational corporations in the host countries. in the home countries and in the international arena.

There have been numerous guidelines, statements, and declarations on transnational corporation's activities by international organisations such as ILO and OECD, and by government or regional organisations. Even the corporations themselves have issued guidelines. However, none of them has legal binding power and most of them are limited to guidelines on business principles.

3. This draft charter was developed by citizens' groups, labour organisations and other NGOs working on the issues of transnational corporations in Asia. In reflecting their work on these issues, the draft charter has incorporated the code of conduct on transnational corporations and the guideline on monitoring transnational corporations (TNC) by citizens and workers at the international level.

With ever-increasing investments in Asia by TNCs, the monitoring of their activities by NGOs is becoming increasingly important. Therefore, this draft charter primarily aims at establishing criteria to monitor TNCs by concerned NGOs.

II. Code of Conduct for Transnational Corporations

Principles of conduct for transnational c orporations

1. When investing or doing business in the recipient country, transnational corporations must not only contribute to the interests of the host country's government and its business partners, but also provide benefits to the society and public interest of the host country. The business operations of the TNC must be in harmony and coordinated with the local economy and culture. The TNC should make every possible effort to help develop the economic and social independence of the host country.

2. When planning to do business in the host country, the TNC shall stipulate its basic principles and guidelines for conducting business overseas. Such principles and guidelines must be disclosed in a fully open manner both inside and outside of the company. In particulars the TNC shall ensure access of information to all the rank and file of the company regarding the company's business and activities. At the same time, the TNC shall conduct periodic inspection of its business conduct in reference to its guidelines and prnciples and the results of the inspection must be publicised.

Conforming with international criteria/guidelines while respecting the sovereignty ox the recipient country

3. As a matter of course, the TNC when doing business in any country shall strictly observe the laws, regulations and administrative orders/practices of a country. However, when a country's laws and regulations in regards to pollution controls, environmental conservation/protection, consumer protection and the basic labour rights are not up to par with international standards, the corporation shall follow the relevant international regulations.

Respecting and upholding basic human rights and freedom of thoughts and beliefs

4. The TNC when conducting business must respect the basic human rights and fully observe the relevant international standards such as the ILO Charter and the Universal Declaration of Human Rights. In particular, no TNC shall exercise any form of discrimination based on race, gender, religion, language, ethnic group or nationality. At the same time, the TNC shall not discriminate against any individual or group based on philosophy, beliefs or political positions/opinions.

Respecting social and cultural values and customs

5. The TNC must fully respect and place priority on the social and cultural values and customs and traditions of the locality where it operates. It shall not carry out production, manufacturing or sales activities nor provide services or goods that are deemed by the national or local government and citizens to negatively affect the cultural and traditional values and customs in the locality where it operates.

Ban on political and illegal activities such as bribes

6. The TNC shall not be involved in or conduct any political and illegal activity wherever it operates includhig bribes to local and/or national governments, to political or administrative figures, or to specific groups or organisations. It shall not unlairly purchase public or private entities for its own benefit.

Information disclosure

7. The TNC must publicise, through appropriate means, to the public of the country where it operates, information on the company's entire organisational structure, details of its business activities, and financial and non-financial management conditions. Such information shall be regularly publicised every six months in general or in exceptional cases, every year.

The information publicised shall include at least the following:

(1) Names and addresses of the local corporation and the investing corporations including the parent company, the form and breakdown of the investments, the fond or nature of the business relationship such as technology transfers and related local and overseas business entities;

(2) The contents of the major businesses, the financial statements including the balance sheet and the revenue statement and other relevant information of the local corporation;

(3) The number of employees, working conditions and the information on the labour and management relationship of the local corporation and;

(4) The pricing policy for merchandise/commodity transfers among the affiliates and other related companies.

8. The TNC must provide all relevant information on its business activities when required by the local governments, authorities and general public of the place where it operates as well as its labour union.

Guarantee of the three basic labour rights

9. Regardless the country or region where the TNC operates, it must respect the three major labour rights of works, i.e. the right to organise, bargain and strike. In respecting such labour rights, the following must be specially observed:

(1) Workers shall be free from any intervention in voluntarily organising themselves into a labour union. Management shall not dismiss, or force a worker to resign or discriminatively treat any individual worker on the grounds that he/she organised or attempted to organise a labour union

(2) When so requested by the workers representatives who were chosen by the workers, management shall come to the negotiating table in good faith. Management shall observe the following requirements during negotiations:

(i) Management shall provide the relevant and necessary information on the entire business operations of the company when requested by the workers representatives.

(ii) Management shall assign a manages who is responsible or has decision-making authority on the issues being negotiated: and

(iii) Management shall not resort to any forms of threats, such as closure of the plant/factory in response to the workers demands.

(3 ) The TNC must guarantee its workers the right to strike or engage in talks to settle labour disputes. The TNC shall not dismiss or unfairly treat any of its employees or workers on the grounds he/she organised or participated in a strike or labour meeting at work. The TNC shall not use violence or any forms of oppression to disperse a labour strike or any labour dispute.

Employment, working conditions and labour-management relations

10. The TNC shall not exert any form of unfair discrimination against an employee/worker regarding recruitment, employment, job allocation, promotions or any other treatment while making efforts to expand and stabilize employment opportunities in the country it operates. When doing so, the tallowing provisions must be taken into account:

(1) In order to stabilize and expand employment opportunities, the corporate shall operate on the principle of maximizing local supply of raw materials, parts and facilities while placing priority on local business entities when establishing its business agreements/contracts.

(2) In making significant changes in its business activities that would have a major impact on employment conditions, the management of the TNC shall submit to the workers and the representatives of the workers

organisation a notice of change at the earliest stage possible so that there is enough time for consultation and making any alterations to the plans if necessary. Especially in the case of closures of plants/factories involving massive lay-offs or dismissals, the TNC is required to submit an early notice of such plan and provide sufficient time for negotiations with the workers or their representatives.

(3) When employing/recruiting, allocating jobs, providing education and training, and promoting employees/workers, the management of the TNC shall adopt the principle of equal employment opportunities and treatment while ensuring no form of discrimination. At the same time, the management shall fully respect the social, cultural and religious customs of the locality where it operates.

11. In order to contribute to improved employment standards and working conditions in the country where it operates, the TNC shall make conscious efforts to ensure the highest level of working conditions and the optimum labour-management relationship. When doing so, it shall into account the followings

(1) The wages and working conditions shall be the highest level among the business entities of the same or similar industry in the country or region it operates. In terms of the labour-management relationship, the TNC shall seek the highest prevailing level.

(2) Regarding occupational safety, health and hygiene, the TNC shall strictly conform to the relating laws and regulations of the country where it operates as well as to the relevant international conventions, treaties and recommendations. Even within the territory of the country that has not ratified the relevant international agreements or conventions, the TNC shall adopt the relevant standards incorporated within them in the attempt to maintain the highest level of occupational safety and health. In particular, responsible education and appropriate information must be provided to the workers and local residents respectively on safety, health and hygiene related to the company's business operation.

Consumer protection

12. The TNC, taking full consideration of the effects its business has on the daily consumption patterns and conditions in the place where it operates, shall fully comply with the national and local laws and regulations regarding consumer protection (within the country it operates) as well as with the relevant international standards and regulations. When doing so, the following provisions shall be taken into account:

(1) Prohibition of the supply of goods and services that a) may harm consumers' health, threaten their safety or impose undesirable effects on them; and b) impose considerable impact on the traditional consumption patterns and lifestyles.

(2) Consumers shall be clearly and effectively informed the accurate information on the nature and details of the goods and services to be manufactured or sold as well as all the available information on the safety and health regarding such goods and services.

(3) False and erroneous advertisements shall be illegal. Protection of nature the environment and natural resources

Protection of nature, the environment and natural resources

13. The TNC shall take full account of its effect and impact on the environment and natural resources and fully conform to national/local laws and regulations regarding protection of the environment and the ecosystem, and the conservation of natural resources in the country/region where it operates while conforming to the relevant international standards. When doing so, the TNC shall observe the following:

(1) Implement an environmental assessment and follow up with a review.

(2) Establish an environmental/conservation policy and guideline and develop a pro-environmental management system.

(3) Freely disclose information on the company's environmental policy.

14. When any environmental destruction or other negative impact due primarily to the operations of the TNC, it shall take the appropriate measures including compensation for the damage caused by the environmental damage and restore the environment to its original state.

Responsibility in resolving a dispute

15. In the case of labour-management disputes and problems with local residents over the TNC's business operations, the TNC shall, as the responsibility of an investor company or as a parent company, make positive efforts to resolve the dispute or problem. When doing so, the TNC shall observe the following:

(I) Sincerely and honestly respond to demands for information on the TNC's business operations and to questions regarding disputes or problems from the labour union, workers association, local residents, local/national governments or authorities.

(2) Be fully receptive to the demands for negotiations set forth by the labour union or residents.

Domestic emplovee issue

16. The TNC shall not close a plant or factory, or reduce/dismiss employees/workers of low work skills on the grounds that the company is going to transfer its operations overseas or is going to invest overseas. The TNC shall not make foreign investments or transfer its business overseas if it leads to destabilised employment conditions at home. When making such moves overseas, the management of the TNC shall consult with its labour union before implementing such a plan. The TNC shall submit information and data on the following subjects to the labour union for preliminary consultation:

(1) Aims and purposes of deploying business operations overseas and the details of such plans.

(2) Current and medium-term plans on production, sales, purchases, capital funding and employment for the planned overseas business.

(3) Production and employment plans of the currently operating business in the respective country.

II. TNC Monitoring Activities

1. In monitoring TNCs, it is necessary to establish an organization(s) and system to monitor TNCs on a daily basis and to strengthen national and international networks both in the parent countries of the TNCs (i.e. investors) and the affiliated countries (i.e. recipients of the TNC'sinvestment).

2. TNC monitoring requires closer cooperation among NGOs in various sectors and of different backgrounds. In particular, it requires stronger links and networks between citizens organisations and labour unions/organisations. International cooperation and the network of NGOs between the investors countries and the host countries are especially important.

Responsibility and roles of the NGOs in the investor's countries

3. In the investors' countries, it is required for NGOs to conduct daily research on the movements/trends of TNCs based in their own country. When any problem relating to TNC operations is confirmed, the NGO shall immediately contact the head office of the TNC and the relevant authorities for confirmation and submit the necessary demands and proposals for a solution.

4. In the investors countries, the NGOs shall provide the necessary information including the managerial data when they are requested by labour unions, residents or citizens organisations or other NGOs working on issues in the host countries.

5. When the NGOs receive requests for support actions from NGOs in other countries working on the problems relating to a TNC based in their country, they shall plan and carry out the following support actions. However, in such cases, they shall adopt the principle of developing responses to direct requests from the NGO in the other country who is directly involved with the problems relating to the TNC. They shall acquire accurate and clear information on the chronology of events and other details on the issues of dispute or problems the other party is involved in.

(1) Confirm and clarify the details of the dispute or problems by contacting the head office of the TNC, the relevant authorities and relathig organisations.

(2) When the dispute or problem is confirmed on their side, the following intiatives shall be taken;

i) Present the demands for a solution to the TNC management and/or perform protest actions if necessary.

ii) Develop closer communications and cooperation for the solution among the relevant authorities and organisations and;

iii) Organise a campaign within their country.

6. Standing on the principle that a settlement to the dispute must be carried out through direct negotiations with the parties involved, the NGOs in the investor countries shall press the TNC head office to work for a solution as the responsibility of the investor. When the representatives of the directly-involved party such as the labour union and the local residents association visit the country to seek negotiations with the TNC's head office, the NGOs shall offer their full support. Such support shall be provided on the understanding of the following principles:

(1) The TNC shall fully respect the decision of the representatives on the agenda, the demands and agreements regarding the negotiations with the TNC head office, as they are the directly involved party. (The negotiations shall be carried out based on the decisions and responsibility of the mission of the representatives.)

(2) The TNC shall fully respect the decision of the host NGOs, i.e. the supporting group in the investor's country regarding how and what to support and organize for the representative's mission.

Roles of NCOs in recipient countries

7. The NGOs in the countries where the TNC has made investments, may inform and request for the necessary cooperation to the NGOs in the countries where the head offices of the TNCs are located when human rights violations, environmental destruction and other similar problems have occurred due to or in relation to the TNC's business.

International support and solidarity actions

8. The strengthened global NGO network is required to effectively monitor and regulate the TNCs. As a first step for such a network, the directory of NGOs working on and are involved with TNC issues in Asia shall be completed while strengthening the communications among them.

9. In terms of logistics and desirable formation of the international support and solidarity on the problems caused be TNCs, labour unions/workers associations have developed their own networks and rules as a result of their experiences in dealing with many cases. However, NGO in other sectors need to build up and share the lessons from actual cases in the various countries to serve as a guideline 10. In the international support and solidarity actions relating to TNC issues, the following shall be taken into account with special attention:

(1) Provide and inform accurate information.

(2) Respect the demands of the directly-involved parties while conforming to the integrated strategy and objectives as a shared group.

(3 ) Develop and grow based on face-to-face support and solidarity actions.

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