Conservatives believe in private enterprise and the free market. However, in any business negotiation you have certain conditions which you wish to see met by the other side. You want to know whether you can trust them. One can tell a lot about businessmen’s ethics by the ethics of their business partners. You do not go into a business partnership, or an investment, with just anyone.

On the international level, we cannot dictate to other countries how they should treat workers or what corporate ethics they should adopt. We cannot force them to change. However, we can and should insist on certain standards before British businesses, or European businesses, can enter into a business deal in another country. If that country or company fails to meet those standards, then the deal should fall.

This is not a new idea. It is something that is currently much talked about in corporate circles, and is known variously as “corporate social responsibility” or “global citizenship”. Many multinational companies have adopted “Codes of Conduct”, setting out standards for human rights, labour and environmental protection for their subsidiaries in the developing world.

The Foreign & Commonwealth Office has published a paper called Global Citizenship, in which it acknowledges that companies which operate in countries where there are widespread abuses of human rights run a risk that their “operations could inadvertently be a party to human rights abuses”. The Foreign & Commonwealth Office has taken the step, in co-operation with the United States State Department and several British and American companies and human rights organisations, of launching a set of “Voluntary Principles” to provide guidance to companies on how to fulfil human rights objectives.

However, these “principles” are still voluntary and many companies continue to operate in countries with regimes which have no regard for these principles. Our government also contravenes these principles. For example, the Department for Trade and Industry produced a publication promoting trade with Sudan. It is time to change.

The use of sanctions
Economic sanctions have long been used as a tool in foreign policy. From 1993-96 the United States promulgated 61 laws and executive actions imposing unilateral sanctions against over 35 countries. It has enacted specific laws against countries such as Burma and Sudan. Sanctions have been imposed by some countries to punish another country for its human rights record, its development of weapons of mass destruction, its protectionist trade policies or its failure to comply with international agreements.

For example, British American Tobacco (BAT) has defended its joint venture in Burma, claiming that to withdraw “would not be in the best interest of employees and would not benefit their communities”. The firm adds: “We believe that businesses can contribute to a positive future by operating within developing countries to internationally recognised standards of business practice and corporate social responsibility, and that multinational companies have a key role to play in leading by example and influencing in the areas where they can have influence, such as standards of employment, business practice, environmental management and community support.”

While this policy is undoubtedly a worthy aspiration, in reality it is not possible to co-operate with the Burmese military regime on respectable terms. In Burma, any joint venture with a state-owned enterprise is pumping money into the hands of that regime. This regime allocates over 40 per cent of its total budget to the military, so partnerships with the junta are, in effect, helping to arm them. Those arms will be used to continue the genocide against the ethnic minorities in that country. That is not in the “best interest” of the citizens of Burma, nor is it responsible investment.

However, the idea that businesses can help developing countries by operating according to internationally recognised standards of business practice is one which we support. That is why we believe it should be a legal requirement for British business to operate by internationally recognised standards – and to be prohibited from investing under any other terms.

By insisting on certain standards as a pre-condition of doing business, companies and governments in some countries may begin to change their ways. Countries such as China, India, Brazil, Kenya and Nigeria, which are already open to quality companies, will be prepared to move towards these standards if the companies demand them – and then their neighbours will follow. Currently the developing world needs Western investment even more than Western companies need their markets and resources.

The terms of business
So what are the terms under which business should operate? The International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work is a starting point. Freedom of association, the elimination of forced labour, the abolition of child labour and a ban on discrimination on grounds of gender or race would be a start.  Practices set out in the Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy should be enforced. And measures set out in a voluntary code for businesses by the United States Department of Commerce in 1996 provide an idea of the principles involved:

And aside from any ethical considerations, the practice of slave-labour runs directly against Britain’s economic interests.  It is very difficult for British businesses to compete with companies which use slave labour, or corrupt enterprises, or those with no concern for the environment.

But, some companies may ask, how do we ensure acceptable practices in our subcontractors’ factories? It is not difficult. It is easy to invite independent human rights organisations, or commercial investigators such as Pinkerton and Kroll, to carry out “human rights audits” of subcontractors’ factories.

Many forward-looking corporations already take these issues seriously. However, in past years companies such as Nike, Reebok and McDonald’s have had a bad press due to the sweatshop conditions of some of their factories in Asia. While some companies are forced to change their ways through poor publicity, sustained campaigns from human rights organisations and shareholder influence, would it not be better to prevent them engaging in business deals that fail to meet internationally accepted standards in the first place? That requires legislation.  Wilberforce and Shaftesbury fought for legislation against unjust practices in their times.  So should we. The UK can take a lead in this, and aim to bring the EU with us.

If the United States could legislate against corrupt practices overseas in its Foreign Corrupt Practices Act, and Britain endorse the same principles by signing the OECD’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, why should we not legislate against abuse of workers in the overseas factories of British companies? All that is required is to make it law for every British business that operates overseas to adopt the principles of corporate social responsibility, and to enforce them. All it requires is legislation that means British companies say “no” to practices abroad that they would not accept at home. We are not proposing new regulation, only that existing regulation be applied to a wider area.