Code of Conduct of Transnational Corporations

Transnational Corporation (TNC) is the most important and most visible innovation of the postwar period in the economic field. According to the document prepared by the Organisation for Economic Cooperation and Development (OECD), transnational enterprises usually consist of companies or other entities whose ownership is private, state or mixed, established in different countries and so linked that one or more of them may be able to exercise a significance influence over the activities of others and in particular to share knowledge and resources with the others.

The UN commission on TNCs is required to undertake a comparative study of existing international code of conduct or guideline and of existing national and regional legislations and regulations enacted with the purpose of regulating the operations and activities of TNCs, as well as suggestions which might help in formulating a code of conduct. The commission is the body with primary responsibilities for the drafting of the code.

The Draft UN Code of Conduct of TNCs was approved in the special session (7-8 March and 9-21 May 1983) of the commission on the TNCs. In the Draft UN Code of Conduct on TNCs, containing 71 articles, the definitions and universally applicability are incorporated in article 1 and 5. The first part of the code consists of the activities of TNCs under the headings of: (a) general and political; (b) economic financial and social; (c) disclosure of information. The next part relates to the treatment of TNCs by the countries in which they operate, nationalization and compensation and jurisdiction. The last part relates to implementation of the code of conduct at the national level, international institutional machinery and review procedure.

Article 66 states that states should follow the implementation of the code within their territories. The UN Commission on TNCs also shall assume the function of the international institutional machinery for the implementation of the code (Article 67). Commission shall act as the focal international body within the UN system for all matters related to the code (Article 68). As article 69, the commission shall have following functions:

  1. To discuss at its annual session matters related to the code.
  2. Periodically to access the implementation of the code.
  3. To provide classification of the provisions of the code.
  4. To report annually to the General Assembly on its activities regarding the implementation of the code.
  5. To facilitate intergovernmental agreements on specific aspects relating to the TNCs upon request of government concerned.

The UN Centre on TNCs shall provide assistance relating to the implementation of the code by collecting, analyzing information and conducting research and surveys as required and specified by the commission (Article 70). The commission also shall make recommendations to the General Assembly for the purpose of reviewing the code (Article 71).

Prospective of the TNCs

The World Investment report in 1992 described several developments that pointed to a rapidly changing context for economic growth, alog with the growth for TNCs in the process. Those include:

  1. Increasing emphasis o market forces and a growing role for the private sector in nearly all developing countries.
  2. Rapidly changing technology that is transforming the nature of organization and location of international production.
  3. The globalization of firms and industries.
  4. Regional economic integration, which has involved both the world’s largest economic as well as selected countries.

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