Multinational Corporations

The primary objective of this post is to highlight the importance and gravity of the existing tax evasion in Latin America and the Caribbean today. A study conducted by Santiago Diaz de Sarralde Miguez reports that Latin America and the Caribbean are characterized by a relatively low tax burden, which averages 22.8% of GDP. That is 11.5% less than the OECD (2015). While it is true that there are large differences between countries, as the tax burden varies from 12.4% in Guatemala to 38.6% in Cuba.

Global value chains (GVCs), as a dominant form of capitalism today, have been a vehicle for entrenching the concentration of economic resources and power in the hands of multinational corporations. While COVID-19 compounded health and economic crisis, reports emerged that suppliers in the garment industry value chains have been facing mounting challenges as a result of unreasonable demands from big clients, mainly corporations in the United States and the United Kingdom.

The COVID-19 pandemic has exposed the weaknesses of the current patterns of production and consumption, exemplified by GVCs and the global trade and investment order in which they operate. These fragilities have resulted in the aforementioned social, economic and financial crises but what they represent most of all, is a crisis of responsibility in which powerful actors, state and private, that have been the main beneficiaries of GVCs, have failed to discharge their ethical and normative obligations to those most vulnerable within their production and supply chains. To this end, a new approach is sorely needed to address the vulnerabilities of a global economy built on fragile GVC governance that serves as new nodes of global inequality and precarity.

The quest for Africa’s decolonization is existential and must therefore go beyond platitudes and rhetoric. The exhortation by Sabelo J. Ndlovu-Gatsheni on the risk of decolonization losing its “revolutionary potential” is germane: decolonization “comes from within, as a revolutionary concept that speaks about rehumanization—which is a fundamental planetary project”.

The optional subjects being offered at SAU also have considerable number of readings that focus on South Asia. They also include the works of South Asian scholars and Third World scholars. All the optional courses offered at SAU address international issues of relevance to South Asia, in varying degrees. Discussions on general topics include special reference to South Asia in most of the courses. Thus, the LL.M. course at SAU is heralding in a South Asian approach to IL.

Through our analysis of the course outlines of the above subjects, we have arrived at the conclusion that the LL.M program at SAU has the potential to make a significant contribution to the development of South Asian perspective of IL. All the compulsory courses taught at SAU address issues of international law relevant to South Asia, scholarly works focussing on South-Asian issues have been given due consideration, as have the works of South Asian and TWAIL scholars.

The Mozambican case of odious debt is an illustration of several similar cases around the world whereby consultants from multinational corporations identify development countries with something of value, such as minerals, and persuade the authorities of these countries to secretly take on huge development loans with banks. In most cases, the money never reaches the countries. Rather, the money is transferred directly from the banks to contractors and the countries are then left with massive debts. Resources and companies from developing countries are given as collaterals for these loans. Therefore, the resources that countries should use to invest in development are transferred to service these odious debts. In summary, this is what happened in Mozambique.

By ensuring that highly digitalized businesses have nexus, these multinational corporations will cease to be “free-riders” leeching off the domestic taxpayers. It is also envisaged that this approach will ensure that highly digitalized businesses contribute to the social contracts of the societies from where they are making profits and whose public goods they are using for this purpose.

Our ethical conundrum as we think about issues of global distributive justice in the post-pandemic era is that social contract theory fails to provide an adequate framework for conceptualizing duties and obligations of international organizations to individuals, as opposed simply to their member states. The tension comes from the fact that people intuitively have a sense of justice which is offended by the manner in which power is wielded by those at the helm of the global financial order to place the interests of international organizations, banks, and multinational corporations over and above those of individual human beings, particularly those at the margins of the world economy.

The purpose of this post is to examine some of the principles of International Private Law related to jurisdiction and how it is important to re-visit these foundations to assure that multinational corporations do not use it as a shield against national norms on due diligence and corporate accountability.