"The Regulatory Grass is Greener": A Comparative Analysis of the Alien Tort Claims Act and the European Union's Green Paper on Corporate Social Responsibility

Introduction

Google.com, the ultramodern measuring stick for social and political currency, lists some 17.6 million results for a search on "globalization."¹ Front pages and op-ed pieces from major international newspapers speak to the impact of globalization almost weekly, if not daily.² The influence and relevance of the phenomenon are unquestioned, as is the diversity of opinion on the nature of its impact. In simple terms, globalization is the continued integration of economies and societies. Individual state perspectives, governments, and boundaries have ceded to multilateral organizations, global economic and political regimes, and international markets. But is the shift from a state-based society to a global society really at the heart of the issue? Is that what activists are fighting against on the streets of Seattle and Genoa? Is that what technocrats and corporate executives consistently praise? The answer is not clear, for the notion of globalization is so broad, so nebulous, that it is indeed possible to find credible evidence to support conflicting sides of the same argument. In order to gain insight into globalization, one must break the concept down into distinct building blocks, and evaluate each one individually. Along these lines, this Note attempts to evaluate the impact of multinational corporations (MNCs) on worldwide human rights standards in order to gain insight into the efficacy of particular regulatory mechanisms in the context of economic globalization.³

Today's globalized international trade regime has expanded markets for MNCs through instruments like the World Trade Organization (WTO) and agreements like the North American Free Trade Agreement (NAFTA). Production and consumption markets have moved rapidly beyond national borders. On the one hand, private businesses have seen profits rise while consumers in developed countries have seen prices drop. On the other hand, agribusinesses have replaced subsistence farmers, Wal-Mart has overwhelmed Mom and Pop, and developing countries have felt pressure to limit environmental and labor regulations in order to attract foreign direct investment (FDI). MNCs have thrived in the era of globalization, rationalizing the use of relatively unfettered access to the developing world's treasure chest of abundant resources and inexpensive labor in order to benefit their bottom lines. With that said, it is irrational to decry expanded markets and increased profits as purely negative. In the post-World War II era of globalization, overall standards of living have improved, infant mortality has declined, life expectancy has increased, and more people have access to education.⁴ Over the same period of time, the gap between the "haves" and the "have-nots" has widened. The rich have been getting richer, often at the expense of the poor who have been sinking deeper into poverty.⁵

Heightened economic incentives and increasingly ineffective legal regimes have combined to create a single-minded monolith of MNCs. These organizations have little incentive to respect human rights and the environment in the wake of their profit grabbing. Consider the list of MNCs operating within the boundaries of repressive states, and in some cases in conjunction with these regimes, as a telltale example. This "race to the bottom" has not gone unnoticed or unchallenged. This Note evaluates two important regulatory trends undertaken by the United States and the European Union (EU) in order to reconcile two realities of the globalized world economy: first, the corporate-led drive to lower prices and increase profit margins, and second, the disrespect for basic human rights that has resulted. Section I evaluates the effect that globalization has had on human rights, focusing specifically on the lack of existing regulation and the tricky legal environment in which this conflict must be addressed. Section II provides an in-depth analysis of the current civil-liability movement in the United States, highlighting important recent developments in Alien Tort Claims Act (ATCA) litigation. Section III analyzes the latest regulatory development in Europe, focusing specifically on the 2002 Green Paper that is supposed to shape EU policy toward corporate compliance. After examining the strengths and weaknesses of each...