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MULTINATIONALS: Summons to the U.N.

3 minute read

The debate over multinational corporations has traditionally been carried on between industrialized nations, which saw the giant firms as creators of needed economic growth, and Third World nations, which often regarded them as agents of “neo-Imperialism.” Lately, even economists and political leaders of larger nations have wondered aloud whether the multinationals might indeed be growing too large, too far beyond any government’s control. Last week the United Nations held its first hearings on a subject that some members regard as one of the organization’s central missions during the century’s last quarter: finding a way to regulate multinational corporate growth, which currently is proceeding twice as fast as that of the world economy in general.

Ironically, the panel formed to study the multinational question was approved largely because of Chile’s explosive accusations that ITT, the $8.6 billion U.S. multinational, had tried to prevent Salvador Allende from assuming the nation’s presidency in 1970. The hearings began on the day of Allende’s overthrow.

ITT declined the opportunity to testify, but a surprisingly large number of multinational officials were eager to contribute their thoughts−and not just their hostile ones. Irving S. Shapiro, vice chairman of Du Pont, suggested that the panel should consider sponsoring a U.N.-wide agreement on international investment. Under such a plan, he said, investment funds might be governed in much the same way that the independently organized General Agreement on Tariffs and Trade (GATT) lays out rules for the movement of goods between nations. Emilio G. Collado, executive vice president of Exxon Corp., favored the notion of a proposed voluntary U.N. code of conduct for multinationals, under which, among other things, corporations operating abroad would pledge not to seek political leverage from their home governments.

As for more direct forms of control, however, multinational chiefs showed little enthusiasm. GM Vice Chairman Thomas Murphy complained that U.N. regulation would simply add one further and unnecessary layer of bureaucracy to those already faced by businessmen investing abroad. Jacques G. Maison-rouge, president of IBM’s huge World Trade Corp., noted that Third World nations frequently seek to dilute the power of multinationals within their borders by requiring that subsidiaries of foreign-based corporations be partly or even primarily owned by local investors. Maisonrouge cautioned against any U.N. attempt to foster such rules because they “cripple the effectiveness of many high-technology companies, most certainly including IBM.”

Supertestifier Ralph Nader challenged the panel to concentrate on forcing multinationals to divulge information on profit, safety and other policies, which they are not now required to furnish publicly anywhere. Such open accountings of their activities, charged Nader, would reveal that many “world-corps” dump mislabeled and dangerous goods in foreign outlets, seek out nations with low pollution standards for new sites on which to build plants and condone “snakepit” working conditions in the Third World.

Actually, the multinationals have little to fear from any U.N. attempt to regulate their activities. Until the U.N. can persuade its own members to abide by rules to which all have theoretically agreed, it is unlikely to be able to influence private corporations. But proponents of U.N. involvement hope that the probe will strengthen member nations’ efforts to harness multinationals’ capital and know-how to the cause of equitable development. If so, last week’s little-noted hearings may be the opening peep in a debate that will eventually grow much larger.

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