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GREATER TRANSPARENCY NEEDED IN NEGOTIATIONS
Continuous enhancement of the take that developing countries, T&T included, receive from multinational corporations (MNCs) for utilisation of their mineral and other resources has been ongoing over the last 150 years.
Economists may contend that at a time such as the present, low and unstable international prices for commodities, and something of a glut in the international petroleum market do not place mineral-producing states in the strongest position possible to negotiate for a “better deal”.
It may very well be that in such circumstances, with continuous decline in what developing countries receive from the MNCs, a way has to be found to secure for raw-material-producing countries an increase in the revenue they receive for their populations, present and future.
As suggested in last week’s column regarding the decision of bpTT to “take its platform and go”—to have its Angelin platform fabricated abroad rather than right here in T&T, with the resultant loss of thousands of jobs and revenue for state and private companies—one way to ensure greater benefits come to the people of developing countries would be to bargain for decision-making shareholder partnerships with MNCs.
And why not? Developing countries bring to the shareholder partnership the raw materials; a work force of skilled, semi-skilled and experienced workers; a physical and social infrastructure; and an environment which needs to be protected for the good of mankind. To this the MNCs add capital, markets, technology and know-how and a long history of exploitation of raw materials to create finished products with high value.
Neither of the shareholder partners can get the semi-finished and finished products to the market without bringing together their collective resources. A shareholder partnership as part of an institutional framework is one option for greater equity.
The industrial world has been in charge of the determination of prices and values placed on the two sets of resources and over the centuries far greater value has been allocated to the inputs of the MNC compared to the value of the source-country materials and services.
I am therefore advocating re-evaluation of the inputs into production to accord greater value to the resources developing countries bring to the bargaining table.
There is no better way to make a start to the needed re-evaluation than through transparency in the negotiations between the government, on behalf of the owners of the resources, the people, and the MNCs.
“Secret” arrangements between a government and an MNC protect governments from not having to account for weak-kneed and/or corrupt deals made with MNCs. At the same time, the secrecy protects the commercial interests of the MNC and provides advantage for one company over the other. No open and transparent market forces at work here.
As could be expected, MNCs will defend the advantages they now enjoy with great vigour, legal arguments, and the right to privacy in their business operations. No inherent natural right establishes such secrecy arrangements—they were negotiated with the MNCs holding the dominant hand.
For those who fear such a move would chase capital, technology and markets away, a review of the history of deals struck between developing countries and MNCs over the last 150 years demonstrates that benefits to host countries which were inconceivable 50, 30 even 10 years ago are now common-place in agreements between governments and corporations.
Has history stopped evolving?
Greater transparency in negotiations between governments and multinational corporations seeking to utilise the national patrimony of developing countries must be a requirement of the day. Such partnerships between MNCs and governments are not entirely alien in the international production environment. Joint-venture arrangements constitute such a form; shareholding rights will give the owners of the resources greater benefits and will also bring increased stability to the operations of the enterprise.
The opaque processes which now exist allow for every possible form of corruption and incompetence on the part of the government in office making the negotiations. The absence of transparency creates opportunities for MNCs to engage in less-than-acceptable practices. The examples of such corrupt practices between MNCs and governments have been well documented in several research studies.
Practices engaged in by MNCs such as transfer pricing in which companies shift production arrangements within their internal worldwide bases to pay taxes in jurisdictions with lower tax requirements are common. This results in developing countries cutting each others’ throats in an effort to get jobs and revenue. The shifting around never stops with the MNC always reaping the benefits.
There are also upsides to be had for the MNCs and their partnering states from such shareholder partnership arrangements. Unions and workers adequately compensated and treated fairly for their efforts become partners in the enterprise. They will have an interest in the highest possible production levels being attained.
It is not about utopia, but rather about establishing conditions which will contribute significantly to industry at the workplace; workers and their unions will have a stake in high levels of productivity and industrial peace.
No one developing country can achieve such a transformation in the relationship with the MNCs by itself. Companies will simply exploit the competition, and the need for revenue and jobs of each state, and move to more favourable bases to secure their interests.
Co-operation is needed.
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