The EU and the Negotiations for a Binding Treaty on Business and Human Rights

Outlining the key demands of Global South states

Global South states, which are commonly host states of TNCs, are facing increasing domestic pressure to address human and environmental rights violations, with many exploration or extractive projects in several of these countries having been halted. For example, in South Africa, a Shell seismic survey for oil and gas was interdicted by the wild coast community due to a flawed human rights due diligence process. There are weak governance zones and challenges in the implementation of legislation in some of these states, which adds another layer of difficulty in addressing these vio­lations. This has increased the need to pursue cases in the home states of TNCs, as with the landmark verdict by the Court of Appeal in The Hague, Netherlands, that found Shell Nigeria liable for pollution caused by leaking oil pipelines.

These states are also mainly initiators and proponents of the resolution for an LBI on business and human rights. Ecuador, as the long-term Chair, and South Africa are keeping the negotiations alive and shaping the process significantly. States such as South Africa, Cuba, Bolivia, Namibia, Alge­ria, Panama, Palestine and Cameroon re­main strong supporters of a comprehensive, broad-spectrum treaty. These states argue that the voluntary nature of the UNGPs is insufficient and demand a comprehensive legal instrument at the international level, as they continuously experience the preva­lence of human rights violations by busi­nesses and challenges to access remedy.

A 2021 study by Ullah and co-authors shows that Global North-listed TNCs are often engaged in violations of human rights and/or environmental rights, which mostly occur in developing countries and are often related to the extractives sector. The vast majority of these companies institutionalised sustainability committees and are signatories of the Global Compact, but they fail to disclose violations of this kind and hamper access to remedy.

An illustrative case is what is now known as the 2012 Marikana Massacre in South Africa, where 34 workers were killed during a strike at a platinum mine. Responsibility and remedy are still being negotiated today. At the centre remains the question of liabil­ity of the British mining company operating in South Africa, Lonmin, which had export relations mainly internationally, including with BASF in Germany. Issues such as lia­bility and access to remedy remain key con­cerns for many TNC-host countries, which the non-binding UNGPs do not address: Cor­porate veils lead to complex liability issues, and the jurisdiction of courts in legal dis­putes often has a negative impact on the protection of human rights. Suing the parent company in the TNC’s home state, or the main buyer’s, is fraught with considerable obstacles.

Moreover, these states often weigh the pursuit of an LBI against the fear of losing foreign investment. But this may change if more Global South states join the negotiations. The African group can also be ex­pected to strengthen. For example, with Ghana’s announcement to implement the UNGPs through the establishment of a National Action Plan (NAP), it may re-join and actively shape the negotiations. Fur­thermore, despite concerns from civil socie­ty about not having an African representative in the Friends of the Chair Group, Cam­eroon’s announcement to join the group in the 8th session indicates that there is still a commitment from the African group as a regional bloc. Greater regional coordination in the area of business regulation is also likely to minimise inter-state competition in light of new investments. In the wake of the geopolitical changes of the last two years, major economies – the US, the EU and China – are seeking to secure partner­ships with the Global South, especially for critical minerals but also other strategic supply chains, which increases the leverage of these states, including on the protection of human rights.

Fragmented BRICS: An opportu­nity to strengthen dialogue with like-minded states?

Except for Brazil, which abstained, the other BRICS states all voted in favour of elaborating on an LBI back in 2014 and have been actively engaged in the negotiations, thus showing their commitment to multilateral negotiations. However, as argued by some scholars, the Global North/South distinction can obscure important power dynamics and resources as it relates to businesses, includ­ing accountability, because TNCs are also located in developing and emerging econo­mies, as with the BRICS states. Their region­al – partly global – economic influence is already pronounced.

Their view regarding international stan­dards is interesting to observe, as their political leverage is continually increasing, with the forum planning to expand and form an alternative to the G7. Although they all emphasise the protection of their right to socio-economic development, they take different stances towards the provisions of the Third Revised Draft.

South Africa has strongly advocated for an LBI since the beginning and remains invested in the process, despite concerns about the direction of the Cyril Ramaphosa presidency. It sees extraterritorial obligations (ETOs) as key to access justice. ETOs guarantee the rights of those impacted by human rights violations to be heard in all stages of proceedings and removes legal ob­stacles such as the doctrine of forum non con­veniens. The doctrine is a common measure used by TNCs to evade accountability in places where foreign courts may dismiss a case to be heard in another “appropriate” jurisdiction, usually where the violation occurred. Some scholars, such as De Schut­ter, argue that ETOs are weakly formulated by the UNGPs and should be clarified in an LBI.

However, as a state that is also home to TNCs, South Africa is currently facing such a case. In 2020, Zambian communities filed a lawsuit against mining company Anglo American for lead poisoning in one of its operations in Zambia. As of January 2023, a South African court is currently deciding whether the subsidiary of the Anglo Ameri­can min­ing company will face a class-action lawsuit.

Compared to South Africa, China, Russia and Brazil are engaging actively in the nego­tiations with textual proposals but reject several key provisions of the treaty, especially those relating to ETOs. Most notably, all three strongly emphasise the protection of national sovereignty and, in line with this argument, reject the removal of the doctrine of forum non conveniens.

With this type of engagement, China is pursuing a longer-observed approach in UN human rights bodies and attempting to rewrite norms in its interest, especially in its pursuit of new strategic partnerships with other Global South states.

In Brazil, the government change to a left-leaning President Lula da Silva is likely to have an impact on the government’s stance in the coming negotiations. Lula recently came out against the deforestation of the Amazon rainforest, which shows a stronger political commitment to the protection of human and environmental rights than with the previous government. Whether Lula will be able to achieve a balancing act between Brazil´s domestic development needs and the protection of human and environmental rights remains to be seen in the upcoming negotiations.

Under President Narendra Modi’s govern­ment and in line with its support for (re­formed) multilateralism, which is the inclu­sion of developing states in institutions of global governance, India supports the UN process for an LBI. India’s representatives, however, emphasise their national initia­tives and need for a flexible agreement that takes into account their right to development. Once the EU comes to the fore, it may be in India’s best interest to align itself by using a long-observed foreign policy ap­proach that usually emphasises its values on the rule of law and democracy. As a potential partner, this would set India apart from China.

At the moment, one can conclude that the BRICS’ participation in the negotiations is fragmented. Thus, the EU should use the binding treaty negotiations as an opportu­nity to intensify dialogue with these emerg­ing economies with which a closer partner­ship is envisioned. These include South Africa as well as the observation of develop­ments in Brazil and India. Additionally, noting what these states consider as impor­tant in the treaty negotiations is necessary if potential partnerships are to be built.

Possible Global North constel­lations: The EU needs its own strategic position

Since the 7th session in 2021, more Global North states have participated in the nego­tia­tions, presenting their positions and influencing the process. These states’ par­ticipation is significant because of their economic influence worldwide as the home states for many TNCs, and through them they can shape integrated transnational supply chains. For example, Australia and Japan re-joined the negotiations in 2021 and 2022 after being absent for several years. The US participated for the second time at the 8th session in 2022 after vehe­mently rejecting the process at the begin­ning. Therefore, all G7 members (except for Canada) as well as the EU were present in Geneva. The G7 labour ministers also an­nounced their support for an LBI in 2022 – a reflection of changing attitudes among many Global North states.

Nevertheless, several Global North states such as Norway, Australia and Japan openly reject the Third Revised Draft and are not actively engaging in the negotiations. In doing so, these states are broadly aligning themselves with the position of the US, which is experiencing a changing landscape domestically, especially as it relates to the rights of indigenous groups. For example, Arizona is currently dealing with resistance from Native American groups against a copper-mining project backed by Rio Tinto and BHP. US-based civil society groups that support the rights of indigenous groups were also actively participating in the nego­tiations at the 8th session.

However, with its statements and textual proposals, the US still rejects a broad-spec­trum treaty. It favours voluntarism by, for example, suggesting to change “obligations” of businesses to “responsibility” – a key feature of the non-binding nature of the UNGPs. These proposals are in line with the suggestion for a framework agreement and as a less “prescriptive” approach in regulat­ing business. Nonetheless, the US also aims to diversify and reduce its dependency on China. Considering the increasing domestic pressure for the protection of human rights, the US can be expected to remain committed to negotiating in the coming sessions. However, it remains un­likely that it will ratify a broad-spectrum treaty. In this sce­nario, an alliance of states with the US can be expected. This may weaken some of the strong demands com­ing from certain Global South states.

The majority of EU member states have not yet established their own positions on the LBI – they continue to act as a regional bloc, awaiting an EU mandate. However, having voted against the establishment of the OEIGWG in 2014, the EU’s initial ab­solute opposition to a binding instrument has softened. For example, a long-time demand of the EU was the broadening of the treaty’s scope of application, and this is now fulfilled with the provisions of the Third Revised Draft. Additionally, the EU concession can be seen as a reflection of increasing international debates about the responsibilities of business and increased awareness of consumers.

In alignment with other Global North states, the EU critiques the level of detail and lack of clarity of various legal formulations and terms of the Third Revised Draft, including liability clauses, despite not hav­ing an official mandate yet. However, these arguments are opposed by states that insist the option to seek clarity on the text is available by means of negotiating the Third Revised Draft, as opposed to not establishing a mandate.

Some EU member states are increasingly sympathetic to the process and are pushing for an EU negotiating mandate, including clarification on competencies between the EU and its member states. This will deter­mine which provisions the EU and the mem­ber states can negotiate on respectively. The LBI covers various aspects that fall under the EU’s competence, such as international trade, which will expand further with the adoption of the CSDDD. However, there are still many aspects of the LBI that will remain within the competence of the member states, such as provisions related to proce­dural law. This coordination will also affect the timely establishment of a mandate.

France and Portugal, both participants from the EU since 2016, have agreed to be part of the Friends of the Chair Group. And, with Germany having passed the German Supply Chain Act (LkSG) and shown support for the upcoming EU regulation, the politi­cal will for an LBI seems to be growing. How­ever, there seems to be no agreement yet on a common government position in Germany. Labour Minister Hubertus Heil stated in October 2022 that the negotiations in the UNHRC should be constructively supported and that an EU mandate was over­due, but the responsible Foreign Office re­mains hesitant, as does the Ministry of Jus­tice. A common German position is integral to advancing the process regionally and internationally.

Potential alliances with the EU – and especially with the US – are likely. Once a mandate has been established by the EU, building an alliance with the US without taking into account the key demands of the Global South and potential ramifications may negatively impact the EU’s partnership efforts. This warrants a strong EU position of its own.