Dear Mr. Hennecke, thank you very much for your comment and question!
Indeed, this topic is relevant, and, in my opinion, it is a reason for divided opinions.
The underlying idea is that, in the contemporary interconnected global economy, global supply chains work as platforms that allow public and private rules to travel.
On the one side, consumers and social activists argue that supply chain rules play an important regulatory function in the global arena, filling gaps. They recognized that industrial governance structures established by lead firms to manage their global supply chains could be leveraged to compensate for states’ inability/unwillingness to regulate/enforce environmental and social rules.
On the other side, some in the business community question why they should be responsible for state failure abroad at the cost of their own competitive advantages. Besides, from the perspective of producing countries, particularly commodity exporters in developing countries, public and private standards are often perceived as illegitimate extraterritorial legal incursions and disguised protectionism in the form of non-tariff trade barriers.
Generally, the positive or negative perception of private and public supply chain rules depend on how these rules penetrate countries’ important economic sectors and affect individual business’ interests. Not coincidentally, there are political (and sometimes legal) disputes regarding supply chain rules. Examples are the current WTO cases brought by Indonesia and Malaysia against EU palm oil measures.
WTO dispute settlement, however, was designed to be applied to public rules, and there must be evidence of direct or indirect government involvement with private standards for concerns to be raised under the WTO system.
Because of these intrinsic differences between public and private standards, some welcomed supply chain laws as a way of making commitments largely foreseen under voluntary standards legally binding. Others remember, however, that national sovereignty concerns and the international trade regime are less of an obstacle to private social and environmental governance than they are to public regulation. Although these aspects are seen as beneficial by some, it does not necessarily solve legitimacy and accountability challenges raised by these forms of extraterritorial law-making, which continue to cause contestation and uncertainty among different stakeholders.
In sum, I agree that there is a pressing need for making production and consumption practices more sustainable, for which corporations share a huge responsibility. Companies cannot hide behind the argument of state failure elsewhere while profiting from environmental and human right abuses. But I also see many limits to private and public supply chain rules, especially considering their indirect consequences on an already unequal international economic system.
I hope this answers your question, but I am more than happy to continue this conversation!
Dear Mr. Hennecke, thank you very much for your comment and question!
Indeed, this topic is relevant, and, in my opinion, it is a reason for divided opinions.
The underlying idea is that, in the contemporary interconnected global economy, global supply chains work as platforms that allow public and private rules to travel.
On the one side, consumers and social activists argue that supply chain rules play an important regulatory function in the global arena, filling gaps. They recognized that industrial governance structures established by lead firms to manage their global supply chains could be leveraged to compensate for states’ inability/unwillingness to regulate/enforce environmental and social rules.
On the other side, some in the business community question why they should be responsible for state failure abroad at the cost of their own competitive advantages. Besides, from the perspective of producing countries, particularly commodity exporters in developing countries, public and private standards are often perceived as illegitimate extraterritorial legal incursions and disguised protectionism in the form of non-tariff trade barriers.
Generally, the positive or negative perception of private and public supply chain rules depend on how these rules penetrate countries’ important economic sectors and affect individual business’ interests. Not coincidentally, there are political (and sometimes legal) disputes regarding supply chain rules. Examples are the current WTO cases brought by Indonesia and Malaysia against EU palm oil measures.
WTO dispute settlement, however, was designed to be applied to public rules, and there must be evidence of direct or indirect government involvement with private standards for concerns to be raised under the WTO system.
Because of these intrinsic differences between public and private standards, some welcomed supply chain laws as a way of making commitments largely foreseen under voluntary standards legally binding. Others remember, however, that national sovereignty concerns and the international trade regime are less of an obstacle to private social and environmental governance than they are to public regulation. Although these aspects are seen as beneficial by some, it does not necessarily solve legitimacy and accountability challenges raised by these forms of extraterritorial law-making, which continue to cause contestation and uncertainty among different stakeholders.
In sum, I agree that there is a pressing need for making production and consumption practices more sustainable, for which corporations share a huge responsibility. Companies cannot hide behind the argument of state failure elsewhere while profiting from environmental and human right abuses. But I also see many limits to private and public supply chain rules, especially considering their indirect consequences on an already unequal international economic system.
I hope this answers your question, but I am more than happy to continue this conversation!