BARTLEY_Power and the Practice of Transnational Private Regulation_2022.pdf

New Political Economy ISSN: (Print) (Online) Journal homepage: https://www.tandfonline.com/loi/cnpe20 Power and the Practice of Transnational Private Regulation Tim Bartley To cite this article: Tim Bartley (2022) Power and the Practice of Transnational Private Regulation, New Political Economy, 27:2, 188-202, DOI: 10.1080/13563467.2021.1881471 To link to this article: https://doi.org/10.1080/13563467.2021.1881471 Published online: 01 Feb 2021. Submit your article to this journal Article views: 2477 View related articles View Crossmark data Citing articles: 21 View citing articles Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=cnpe20 NEW POLITICAL ECONOMY 2022, VOL. 27, NO. 2, 188–202 https://doi.org/10.1080/13563467.2021.1881471 Power and the Practice of Transnational Private Regulation Tim Bartley Department of Sociology, Washington University in St. Louis, St. Louis, MO, USA ABSTRACT KEYWORDS Corporations, NGOs, and private regulatory initiatives have taken on functions once assumed to be the domain of the state and intergovernmental organisations. While researchers are racing to assess the impacts of private rules, theoretical statements remain focused on the design, legitimation, and intermediation of private initiatives or the hegemony of neoliberal governance. This paper instead highlights the grounded practices of transnational private regulation, and it argues that much about these practices can be explained through a straightforward (but multi-faceted) analysis of power. Speciﬁcally, unpacking the practice of private regulation requires a focus on (1) the distinctive power struggles that animate diﬀerent types of standardsetting projects (which should not be reduced to a single logic), (2) the saturation of private regulation with corporate power (not merely the capture of particular intermediaries), and (3) the construction of compliance in ways that accommodate state powers at the point of implementation. These points are illustrated with examples from research on private rules for land and labour and accounts of standards wars more generally. Transnational governance; global standards; contestation; corporate social responsibility; multi– stakeholder initiatives; regulatory intermediaries; global production networks; theory Introduction Transnational private regulation has exploded over the past three decades. Private bodies like the International Organization for Standardization (ISO) and International Accounting Standards Board have created authoritative standards for harmonising national business systems (Büthe and Mattli 2011, Farrell and Newman 2016). Multi-stakeholder initiatives for sustainable production have proliferated, from the Forest Stewardship Council to Roundtables on Sustainable Palm Oil, Soy, Biomaterials, and others (Cashore et al. 2004, Ponte 2014). So have labour-focused initiatives, from the Ethical Trading Initiative and Social Accountability International to numerous brand-speciﬁc ethical sourcing projects (Locke 2013, Bair and Palpacuer 2015, Barrientos 2019), as well as corporate policies to mitigate risks of human rights abuses (Buhmann et al. 2019). Voluntary standards can be shallow and self-serving for the ﬁrms that adopt them, but they have clearly imposed new requirements for these ﬁrms’ suppliers, fuelling demand for audits, management systems, traceability technologies, and assurances of best practices (LeBaron and Lister 2015, Clark and Hussey 2016, Power 2019). As private standards, codes, metrics, and assurances have become institutionalised as normal features of global production networks, research has blossomed and matured. It is no longer enough to analyze the rise of private regulation, the competitive landscape of industry-driven and multi-stakeholder initiatives, or the ascendant discourses of sustainability, responsibility, or governmentality. There is mounting evidence that private rules are routinely evaded, watered down, or redeﬁned CONTACT Tim Bartley [email protected] © 2021 Informa UK Limited, trading as Taylor & Francis Group NEW POLITICAL ECONOMY 189 on the ground (e.g. Anner 2019, Dietz et al. forthcoming), casting doubt on research that focuses solely on rules on paper or institutional design. Even research that documents partial eﬀectiveness comes with sobering caveats about blind spots and countervailing processes (e.g. Carlson et al. 2018, Amengual et al. 2020). Theories of transnational governance, though, remain mostly focused on emergence, design, or legitimation. To explain why voluntary initiatives take diﬀerent forms, for instance, scholars can look to theories of institutional design (Potoski and Prakash 2009, Auld 2014) and the politics of global standard-setting (Büthe and Mattli 2011, Farrell and Newman 2016). The legitimacy of private governance has likewise been theorised from numerous angles (Cashore et al. 2004, Dingwerth 2017, Hale 2020). Research on outcomes is growing, but theoretical guidance is sparse. To ﬁll this gap, this paper sketches several principles for a political economy of transnational private regulation that takes its consequences, contexts, and contents seriously. The central idea is that some simple stylised facts about intersecting expressions of power can help us make sense of the concrete practices of private regulation. This perspective rests on three foundations. First, it builds on the idea that transnational private regulation must be understood as ‘grounded’ in particular contexts and practices (Graz forthcoming), as opposed to being seen through decontextualized models of institutional design or universal diagnoses of transnational governance. This perspective emphasises not only outcomes on the ground in particular places (the ﬁrst conception of grounding, as described by Graz) but also actors’ locally situated practices (Graz’s second conception of grounding) – meaning stylised but not fully institutionalised ways of interacting with a given task. I will especially highlight corporate practices pertaining to the ‘pushing’ of rules and auditors’ practices in the construction of compliance. Second, this approach draws inspiration from the political economy of power in a world of global production networks, reconﬁgured but still relevant nation-states, and regimes of inequality and marginalisation (Clapp and Fuchs 2009, Mayer and Phillips 2017, Mikler 2018). By ‘power’, I mean the ability of an actor to inﬂuence the behaviour or outlook of other actors, such that the latter act and/or see diﬀerently than they would on their own. I follow Clapp and Fuchs (2009) in using a multi-dimensional conception of power (Lukes 1974), including instrumental actions to shape particular decisions, structural power over agendas and alternatives, and discursive power over how problems are perceived and talked about. The growth of transnational private regulation is in itself a reﬂection of corporations’ multifaceted powers, through which they have gained the right to write their own rules and avoid binding state regulation (Soederberg 2009, Mikler 2018). But an analysis of corporate power is also essential for making sense of dynamics within private regulatory arenas. Third, I draw empirical examples broadly from literatures on global standards (e.g. Büthe and Mattli 2011), with particular attention to research on the implementation of private rules for land and labour, especially pertaining to sustainable forestry (McDermott 2012, Malets 2015) or decent working conditions in manufacturing (Anner 2019, Amengual et al. 2020). This includes the comparative case studies in Bartley (2018), which are used here to illustrate a new account of power and demonstrate the value of seeing private regulation as a bundle of ‘practices localised in the many sites of global production networks’ (Graz forthcoming, p. 1). Other theoretical agendas, highlighting ‘regulatory intermediaries’ (Abbott et al. 2017) and ‘governance interactions’ (Eberlein et al. 2014) have become increasingly central to research on private regulation (Lambin and Thorlakson 2018, Brès et al. 2019, Fransen and LeBaron 2019). The ﬁrst draws attention to actors such as auditors and certiﬁers that sit in between regulators and their targets. The second highlights conﬂictual and collaborative interactions between ﬁrms, standard-setting initiatives, NGOs, and states at various points in the regulatory process. These are welcome insofar as they shift attention from emergence and legitimation to practices of interpretation and implementation. But they leave a great deal unspeciﬁed and indeterminate. The intermediaries approach oﬀers a widely applicable but open-ended theoretical vocabulary, and the interactions approach is explicitly intended as a ‘framework to facilitate analytical clarity’ rather than a theory with a ‘stronger 190 T. BARTLEY theoretical “bite”’ (Eberlein et al. 2014, p. 6, 8). I seek instead to make testable claims about the most powerful actors and intersections, and to draw substantive distinctions rather than naming generic processes. In the critical political economy literature, scholars have theorised links between private regulation and logics of neoliberalism, managerialism, and extractivism (Phillips 2016, Banerjee 2018, Sharma and Soederberg 2020). This research provides important critiques of ‘marketized social justice’ (Soederberg 2009), so-called ‘political corporate social responsibility’ (Banerjee 2018), and an ‘ethical audit regime’ based on illusion (LeBaron and Lister 2015). But this tradition oﬀers fewer tools for explaining variation across times, places, and arenas of private regulation (see Taylor 2011 for an exception). Though imprinted by their neoliberal origins and dependence on large corporations, private regulatory arenas are varied in their contents (from technical standards to labour rights), trajectories, and locations of implementation. I hope to provide some tools for describing and unpacking these diﬀerences. I proceed by developing three central claims: (1) Generalised images of power struggle and contestation must be unpacked to identify distinctive trajectories of transnational private regulation. (2) Despite widespread contestation, large companies exercise the most consequential forms of power over the practice of private regulation. (3) The power of the state at the point of implementation, far from being transcended, is routinely accommodated in the construction of compliance. Power Struggles: Distinctive Trajectories Private regulation is nearly always contested, as diﬀerent sets of actors vie for the power to legitimate their preferred approaches. Because private regulation depends on voluntary participation and rules that do not necessarily have the backing of the state, contestation has a wider scope here than in government regulation. It happens through ‘exit’ rather than only through ‘voice’, and it frequently spawns multiple competing rule-making projects. Contestation and power struggles are accordingly at the centre of many lines of research. Scholars of Global Production Networks have emphasised the ‘contested governance’ that arises as challengers press lead ﬁrms to adopt social or environmental standards (Levy 2008, Bair and Palpacuer 2015). International relations scholars have highlighted the distributional conﬂicts entailed in global standardisation (Büthe and Mattli 2011) and the ‘additional layer of contestation and rulemaking at the transnational level’ (Newman and Posner 2016, p. 774). Field theorists have characterised transnational regulatory ﬁelds as battleﬁelds in which ‘dominant actors occupy central positions and peripheral actors constantly struggle for greater inﬂuence and power’ (Djelic and Sahlin-Andersson 2006, p. 23), with particular forms of expertise being legitimated through ‘hierarchical and contested processes’ (Dezalay and Garth 2010, p. 114). There is also a large body of research on how various private regulatory initiatives ‘compete for rule-making authority or legitimacy’ (Cashore et al. 2004, p. 17), with this type of interaction ‘sometimes shading into conﬂict or domination’ (Eberlein et al. 2014, p. 4). This attention to contestation is essential, but there is a risk of conﬂating diﬀerent types of power struggles, which have distinct consequences for the practice of private regulation. Consider struggles over technical standards, such as the competition between Blu-ray and HD-DVD formats, compared to struggles over rules for sustainability and fairness in global production networks. Both can be treated as competitive struggles to establish the de facto standard in an industry (Büthe and Mattli 2011, pp. 25–27), but the content of the struggles and the likelihood of an eventual consensus would appear to be quite diﬀerent. As a diﬀerent example, the deadly collapse of the Rana Plaza complex of factories in Bangladesh in 2013 led not only to the rise of two transnational factory safety initiatives that competed for credibility but also a qualitatively diﬀerent power struggle with the Bangladeshi government, which challenged the initiatives’ authority (Rahman and Rahman 2020). NEW POLITICAL ECONOMY 191 Rather than lumping these together as generalised contestation, competition, or interaction, I will argue that power struggles are ubiquitous, but they take distinct trajectories depending on the particular contents of rule-making/standard-setting projects. Three varieties of power struggles are most apparent – what I call the politics of harmonisation, the politics of credibility, and the politics of grounding (See Table 1). This typology stems from an attempt to square diverse processes documented in the literature with a theoretical interest in the conditions under which ﬁelds are characterised by constant combat or gradual settlement (Krause 2018). Though not an exhaustive list, it captures central processes in the literature and provides a heuristic device for unpacking contestation. The Politics of Harmonisation: Struggles over Standardisation One type of struggle occurs as rivals from diﬀerent sectors and jurisdictions vie for the power to turn their preferred approaches into the global standard. ‘Standards wars’ of this sort can be seen in struggles between American and European industry groups over accounting standards (Botzem and Quack 2006, Büthe and Mattli 2011, Farrell and Newman 2016) and international commercial arbitration (Dezalay and Garth 2010); in complex contention over standardised practices for the oﬀshoring of service industries (Graz 2019); and in U.S.-China rivalries in the bid to control quality standards for the global cotton industry (Quark 2013). Power struggles in these cases are mainly rivalries between diﬀerent sets of companies, with national state agencies championing key ﬁrms and industries. Standards wars are endemic in globalising industries, but they typically centre on which standards are to become dominant – that is, which national industry gets to globalise its approach – not whether standards are attractive to companies. Private regulatory orders in these cases fundamentally serve a market-coordinating and market-expanding purpose – that is, to harmonise inconsistencies across jurisdictions and sectors in order to facilitate trade, investment, or other forms of integration. A shared interest in market expansion generates ﬁerce distributional conﬂicts about who will be in the best position to proﬁt, but there is a shared interest in standards nonetheless. As a result, one usually ﬁnds a period of intense conﬂict and debate, which eventually settles on a single standard, at least provisionally. U.S.-European rivalries over accounting standards heated up until the International Accounting Standards Board ﬁnally became the de facto single provider of global accountings standards in the mid-2000s (Büthe and Mattli 2011, Farrell and Newman 2016). Quality standards for cotton promoted by the U.S. and transnational merchants were challenged by Chinese rivals in the 2000s, but this led to a partial convergence on something like ‘U.S. standards with Chinese characteristics’ (Quark 2013, p. 182), reﬂecting a new settlement with rising powers. The settlement of standards wars institutionalises particular forms of expertise at Table 1. Varieties of contestation. Politics of harmonisation Politics of credibility Axis of conﬂict Competing national industries Companies, NGOs, trade unions Substance of conﬂict Intensiﬁes with … Examples Whose standards get globalised Credibility of private rules Divergent business systems, rising powers International Accounting Standards Board, cotton quality standards Conﬂict to settlement Exposés and disasters Sustainability claims and counterclaims (e.g. for coﬀee, apparel, palm oil) Spiralling credibility contests Market-coordinating standards Market-restricting rules Typical trajectory Typical content of project Politics of grounding Private regulators (initiatives, ﬁrms, auditors) and governments Authority to operate within borders Claims about national sovereignty Bangladesh Accord, FSC in China Punctuated periods of contention Rules with high political salience 192 T. BARTLEY the global scale, which then tend to be valorised within and beyond a particular private regulatory regime (Dezalay and Garth 2010). Although this process of struggle and settlement is often generalised, it is most likely in particular conditions. The Politics of Credibility: Contestation over Market-Restricting Rules Settlement on a single standard is less likely when rule-making projects attempt to restrict practices that would otherwise be proﬁtable – such as particular employment practices or forms of natural resource extraction. Here, private regulation is enmeshed in a spiralling politics of credibility, in which companies, NGOs, trade unions, and industry associations debate what should be covered in the rules, how much reform is necessary, who gets to decide, and who watches the watchers. These power struggles are central to research on the formation of sustainability and labour standards initiatives (Auld 2014, Bloomﬁeld 2017), competition between NGO-endorsed and industry-driven initiatives (Cashore et al. 2004, Fransen 2011), the evolution of claims over time (Levy et al. 2016), and the rise of meta-governance (Loconto and Fouilleux 2014). Both neo-Gramscian accounts of contested ﬁelds (Levy et al. 2016) and managerial accounts of ‘private politics’ (McDonnell et al. 2015) argue that reputation-sensitive ﬁrms will tend to accommodate some activist demands, while preserving their autonomy and market position, generating new demands and charges of hypocrisy. One need not delve into the intricacies of credibility contests to recognise that contestation means something diﬀerent here than in the politics of harmonisation discussed above. Perhaps most importantly, ﬁrms here are usually interested in private regulation for reputation-building and risk management reasons, not for the sake of coordination and market expansion. They face demands from activists, but these can be accommodated through rules for their operations or supply chains, rather than true standards that create uniformity across all ﬁrms. Settlement on a single set of rules is less likely than persistent and iterated contestation, since ﬁrms have fundamentally diﬀerent goals than their challengers (e.g. collective representation and bargaining power for trade unions, and public attention and leverage for reform for NGOs). There may be convergence on two or three central initiatives in an industry, but the institutionalisation of a single set of standards is unlikely. One can analyze the politics of credibility by tracing the revision of rules and oversight over time (e.g. Levy et al. 2016), the ebb and ﬂow of support for industry-driven and NGO-endorsed initiatives (e.g. Cashore et al. 2004), or the development of new approaches and technologies to improve the integrity of private regulation (e.g. Outhwaite and Martin-Ortega 2019, Power 2019). As discussed later, large companies have a privileged position in these power struggles, even if they cannot entirely control them. The Politics of Grounding: Private Regulators and State Sovereignty A diﬀerent sort of contestation may ensue when transnational private regulation confronts state control on the ground. As transnational rules are put into practice in a given location, they inevitably clash with pre-existing cultures of production, national strategies for economic growth, and often domestic law and governance. For example, transnational norms about workers’ freedom of association may clash with routine suppression of trade union rights. Rules about sustainable and fair use of land may conﬂict with long-standing practices of landowners or state land-use agencies. These clashes generate a distinctive kind of power struggle that I call the ‘politics of grounding’. The central players here are the array of actors operating a transnational private regulatory initiative (e.g. sponsoring companies, NGOs, or international unions; auditors or certiﬁers) and domestic government agencies at the point of implementation. As Marques and Eberlein (forthcoming) argue, in a growing number of cases, governments at the point of implementation have sought to ‘repurpose or replace’ transnational private regulatory initiatives. ‘Repurposing’ usually means combining transnational rules with export promotion NEW POLITICAL ECONOMY 193 projects. ‘Replacing’ represents a more direct and contentious response. Beyond the examples given by Marques and Eberlein (see also Giessen et al. 2016), consider the fate of the Accord on ﬁre and Building Safety in Bangladesh, an initiative of several global trade union federations, labour rights NGOs, and apparel brand signatories. As the ﬁrst ﬁve-year term of the Accord came to a close, the Bangladeshi government pushed it to transfer its operations to the state. In 2018, the Bangladeshi High Court ordered the Accord to cease operations, leading to a series of extensions and negotiations that ultimately led inspections to be transferred to a new but far less independent initiative run by the Bangladesh Garment Manufacturers Association and government, starting in 2020. The resistance from government stemmed from factory owners’ complaints about the costs of improvements (Oka et al. 2020), political tensions rooted in the perception that the Accord was ‘interfering with state aﬀairs’ (Rahman and Rahman 2020, p. 10), and the Accord’s emphasis on worker representation at a time of rising repression against labour rights activism in Bangladesh (Bair et al. forthcoming). Another stark example comes from the Forest Stewardship Council’s experience in China. While governments have often helped to build ‘homegrown’ competitors to the FSC (Cashore et al. 2004), Chinese government agencies went much further in also cracking down on the FSC’s ability to operate in the country. The State Forestry Administration and Chinese Academy of Forestry initially helped to expand FSC certiﬁcation into China. But as it became clear that their working group would not be recognised as an oﬃcial National Initiative/Oﬃce of the FSC, some actors within these agencies bristled and formed a competing initiative, the China Forest Certiﬁcation Council (CFCC). At the same time, the Certiﬁcation and Accreditation Administration of China (CNCA), tightened the rules for foreign certiﬁers operating in China, reversing an earlier agreement with the FSC. This forced smaller FSC-accredited certiﬁers (e.g. Smartwood and the Soil Association) to cease forest management audits in China and left others (e.g. SGS and Bureau Veritas) unsure of how to meet some of the requirements. WWF-China, which had the State Forestry Administration as its required sponsor, was asked to end its devotion to the FSC and lend its support to the Chinese programme. The FSC did not get pushed out of China entirely. It managed in 2015 to get assurances that its standard could still be used, even as new rules endorsed CFCC as authoritative. But the amount of FSC-certiﬁed land in China fell from a peak of 3.4 million hectares in 2014 to 1.5 million hectares in 2015, and then to less than 1 million hectares by 2019 (Bartley 2018, Forest Stewardship Council 2019a). Certiﬁcation under the Chinese standard grew rapidly to 5.6 million hectares by late 2015, just two years after aﬃliating with the FSC’s global competitor, the Programme on the Endorsement of Forest Certiﬁcation (PEFC 2015). The Chinese government’s actions were simultaneously a reassertion of state sovereignty, a reﬂection of concerns about market access for Chinese forest products, and the outgrowth of personal squabbles among a small group of practitioners. This was not an outright rejection of foreign/transnational standards, which had initially been embraced, but rather an emergent response to the FSC’s procedures and standards, which conﬂicted with Chinese deﬁnitions of what counts as a ‘natural forest’ among other things (Bartley 2018). These examples suggest that the politics of grounding are especially contentious when transnational rules in practice are interpreted as an infringement on national sovereignty. Governments that feel conﬁdent about their domestic industry’s position in global production networks are more likely to mount a direct challenge to transnational initiatives, while others will more quietly resent the intrusion. Although these examples cannot speak to trends over time, it is likely that the resurgence of nationalism (in the form of both authoritarian populism and resource nationalism) intensify the politics of grounding. Unlike the conﬂict-settlement pattern in the politics of harmonisation and the constantly spiralling politics of credibility, the politics of grounding is likely to be punctuated by periods of contention and subsequent shifts in the geography of transnational private regulation. 194 T. BARTLEY Corporate Power: From Capture to Saturation Recognising the contested character of transnational private regulation should not lead one to assume that the players are competing on equal footing in an open and pluralistic arena. I will argue that transnational private regulation is saturated with corporate power, even as initiatives manage their credibility and navigate state controls at the point of implementation. This argument provides an alternative to the growing interest in ‘capture’ in the regulatory intermediaries literature. Researchers have often emphasised the power of companies to write their own rules and use private regulation to protect their reputations and promote narrow forms of transparency, whether through the lens of institutional design (Abbott and Snidal 2009, Auld 2014) or the political economy of corporate responsibility (Levy et al. 2016, LeBaron and Rühmkorf 2019). To get closer to the concrete practices of turning rules on paper into reforms on the ground, scholars are turning to the regulatory intermediaries approach, which highlights auditors/certiﬁers and their relationships with regulators (usually large retailers/brands in the case of private regulation) and targets (usually supplier factories, farms, etc.). Adopting the language of ‘capture’ from theories of state regulation, Abbott et al. (2017) note that intermediaries may serve as watchdogs that prevent targets from capturing regulators, but also that intermediaries can be captured themselves. They are likely to be captured by targets, Abbott et al. argue, when the target is responsible for paying for the intermediary’s services and can choose among several intermediaries. Researchers have extended this insight through analyses of captured credit rating agencies (Kruck 2017) and the creation of captured intermediaries by fracking companies (Avidan et al. forthcoming), among other cases. These are useful analyses, but a focus on captured intermediaries is far from a full account of corporate power, and it may obscure as much as it reveals about the practice of private regulation. In particular, it highlights the contingencies of capture in an otherwise pluralistic environment, composed of various regulators, targets, and audiences. This obscures several ways in which private regulation is saturated with corporate power. As Davis et al. (2018) argue, lead ﬁrms exercise varied powers in global production networks, from writing the rules that suppliers must follow to sanctioning non-compliance. Civil society and state actors shape these processes when their interests converge with those of lead ﬁrms, but when interests diverge, ﬁrms’ concentrated resources and capacities to act across national borders give them a privileged position. Similarly, Clapp and Fuchs (2009) argue that ﬁrms with large market shares and central ‘chokepoint’ positions in global production networks have a kind of structural power that bolsters their instrumental lobbying of governments and discursive framing eﬀorts. Two features of transnational private regulation are especially important in this light. First, the lead ﬁrms that set expectations for their supply chains are also the key enforcers of these rules. Intermediaries may do the interpretive work to decide what counts as compliance, but the consequences of (non)compliance, improvement, or backsliding depend on the rewards and penalties issued by the ﬁrms that demanded rules/standards in the ﬁrst place. Structural power over suppliers may be a necessary condition for meaningful enforcement, but it is far from suﬃcient. Research on the apparel industry shows that large brands often fail to apply meaningful rewards/penalties for compliance/noncompliance with their rules for decent labour conditions, which reduces their impact on practices in factories (Anner 2019, Amengual et al. 2020). Conversely, when brands and retailers align their sourcing decisions with factories’ compliance ratings, there is mounting evidence that it pays oﬀ – for both factory owners (Distelhorst and Locke 2018) and workers (Amengual and Distelhorst 2019). Here we see how corporations’ concrete and instrumental enforcement practices, as opposed to the judgments of intermediaries, shape the meaning of private regulation. Second, even when buyer-supplier relationships are mediated by multi-stakeholder initiatives that give NGOs or trade unions a seat at the table, these initiatives are structurally dependent on large ﬁrms that agree to push the standards through their supply chains. Factories, farms, ﬁsheries, and forest management operations most often adopt standards or seek certiﬁcation (to NEW POLITICAL ECONOMY 195 challenging performance standards at least) in response to speciﬁc demands from lead ﬁrms in global production networks, not as a proactive strategy for attracting business (Vandenbergh 2013, Auld 2014, Poulsen et al. 2016). Large brands and retailers – of food, clothing, electronics, and other consumer products – may agree to ‘push’ rules through their supply chains in order to build their reputations or accommodate demands of activist groups. Multi-stakeholder initiatives (MSIs) oversee the rules and assessments, but they depend far more on large brands/retailers than any other type of stakeholder, due to these ﬁrms’ ability to demand or incentivize compliance on a large scale. This gives large companies a great deal of structural power over an MSI’s operations, growth strategy, and rule revision. Research on institutional design has revealed important variation in the meaning of ‘multi-stakeholder’ governance (Schleifer 2019), but this may be outweighed in practice by a similar form of dependence on large brands and retailers. Consider several leading multi-stakeholder initiatives. The Forest Stewardship Council has a design that limits the power of companies, ampliﬁes the voice of non-industry actors, and uses democratic decision-making to revise standards – which has limited the watering down of its standards for forest management (Klooster 2010). But for its standards to reach forests around the world, the FSC has long depended on retailers such as B&Q, The Home Depot, and other large paper, packaging, and furniture ﬁrms to demand certiﬁcation among their suppliers (Conroy 2007, Auld 2014). Ikea’s various pledges to increasing its wood supply from FSC-certiﬁed forests have been especially important in driving forest certiﬁcation on the ground in Russia (Malets 2015), China – where Ikea partially subsidised certiﬁcation costs (Bartley 2018) – and elsewhere. Other multi-stakeholder standards have likewise depended on corporate commitments. Marine Stewardship Council certiﬁcation of ﬁsheries increased sharply after Wal-Mart promised in 2006 to sell only MSC-certiﬁed seafood within ﬁve years (Auld 2014). This was followed by commitments from Marks & Spencer in 2010, McDonalds in 2011–2013, and the MSC’s growing reliance on fees from licensing its logo, which account for approximately 80 per cent of yearly income (Zwerdling and Williams 2013, Marine Stewardship Council 2019). Sales of palm oil certiﬁed by the Roundtable on Sustainable Palm Oil increased by roughly 400 per cent from 2010 to 2016 as Unilever, Nestlé, McDonalds, Kellogg’s, and Procter & Gamble responded to activist campaigns by promising to demand certiﬁcation in their supply chains (Dauvergne 2017). MSIs’ dependence on large brands/retailers does not ensure corporate dominance, since MSIs also depend on NGOs for credibility. Still, once MSIs are well-established, departures of prominent NGOs may not be devastating (Dingwerth 2017). The Fair Labor Association lost links to the International Labor Rights Forum in 2009 and the Maquila Solidarity Network in 2013; it did not have a major labour rights NGO on its Board of Directors in the years that followed. Social Accountability International’s Advisory Board once included a prominent international trade union leader, but its ‘non-business’ seats have frequently been sparsely ﬁlled, sometimes by academic researchers or industry associations (e.g. the Foreign Trade Association).1 The Forest Stewardship Council’s 2018 loss of a founding member, Greenpeace International, over concerns that FSC standards are ‘not consistently applied across regions, especially where there’s weak governance’ (Greenpeace International 2018), may ultimately damage its standing with other environmental NGOs. But in the short term at least, there has been continued growth in the number of FSC forest management certiﬁcates (roughly 5 per cent growth) and chain of custody certiﬁcates (roughly 20 per cent growth) since the departure (Forest Stewardship Council 2019b).2 Some analyses suggest that the consolidation of buying power has weakened standards on the ground. The coﬀee sector, for instance, has seen a consolidation of coﬀee buyers over the past 15 years – ﬁrst through the growth of Starbucks and more recently through acquisitions, and the entry of private equity ﬁrms (Grabs and Ponte 2019). Large ﬁrms’ growing interest in Fairtrade certiﬁcation aligned with Fair Trade USA’s 2011 decision to allow certiﬁcation of large-scale coﬀee plantations (rather than just cooperatives) (Jaﬀee 2012) and the subsequent adoption of labour standards for hired agricultural workers that are weaker than those elsewhere in the Fairtrade system (Raynolds and Rosty forthcoming). Consolidation among coﬀee roasters also increases the 196 T. BARTLEY potential for large ﬁrms to abandon third-party certiﬁcation for their own internal traceability systems (Grabs and Ponte 2019) – and this threat of exit likely enhances their voice. The saturation of transnational private regulation with corporate power should be a starting point for careful analysis, not the end of the inquiry. Put diﬀerently, MSIs’ degree of structural dependence on large corporations and ﬁrms’ instrumental exercise of power to sanction compliance/noncompliance should be seen as variables rather than constants. One important task is to examine variation over time and across cases in the degree of structural dependence of MSIs on large ﬁrms. Researchers should also look carefully at how lead ﬁrms manage penalties, rewards, and relationships as they push rules onto their suppliers. To the extent that lead ﬁrms combine structural power over suppliers with well-established instrumental practices for fostering and rewarding improvements and remediating or penalising backsliding, we should expect private regulation to be far more inﬂuential on the ground. Several studies examine this in the apparel industry (Schuessler et al. 2019, Amengual et al. 2020), but this is rare in other industries, where scholars often limit themselves to counting certiﬁcates or estimating price premiums for certiﬁcation. The Construction of Compliance and the Accommodation of State Power How can one acknowledge both the power of transnational corporations to push rules through their supply chains and the centrality of state controls in the politics of grounding? What happens if companies are pushing rules that clash with domestic governance at the point of implementation? In this section, I argue that this tension is commonly smoothed over by constructing compliance in a way that accommodates state power while appearing from a distance to uphold transnational norms. Scholars of ‘audit cultures’ have long argued that auditing puts a premium on formal written documents and easily quantiﬁable indicators, and some have extended this into the construction of compliance with transnational rules for sustainability or fairness (Silva-Castañeda 2012, LeBaron and Lister 2015). Taking state power seriously adds another layer, in which the meaning of compliance is shaped not only by metrics and documentation, but also by private regulators’ on-the-ground understandings of what is realistic to demand within a particular national or sub-national context. These understandings can vary depending on what auditors/certiﬁers are pushed to perceive or problematise. Even when indicators of compliance are highly speciﬁed, auditors must decide what to scrutinise most closely, how to decide between major and minor problems, and what sorts of corrective actions to require. This depends in part on the normal way of doing business in a given location and what kinds of changes are considered realistic. For instance, if independent trade unions are prohibited or commonly repressed, private regulators will tend not to heavily scrutinise the independence or integrity of organisations claiming to represent workers, such as state- or company-controlled unions. If the state grants land-use rights to companies regardless of community or customary claims, private regulators will tend at most to check the community compensation agreements and dispute resolution procedures that companies have set up, as opposed to questioning the state’s designation of the land. Yet well-networked watchdogs may also be able to push toward ‘maximalist’ rather than minimalist deﬁnitions of compliance. When present in a given location, NGOs, unions, or other civil society groups organise and amplify the voices of stakeholders in private regulatory assessments (Malets 2015) and exert pressure on ﬁrms to take compliance more seriously (Oka 2016). This may push the bounds of what is considered realistic. For example, when independent community organisations or Indigenous rights NGOs are involved in the assessment of a sustainable forest, companies may be pushed to strengthen compensation agreements or engage in new mapping of forest boundaries and claims. Where civil society is weak – including but not limited to authoritarian settings – private regulators are more likely to utilise minimalist constructions of compliance that more fully accommodate the state. National-level governance has a structuring inﬂuence on civil society organising, but there can be signiﬁcant sub-national diﬀerences as well (Spires 2011, Brass 2016). NEW POLITICAL ECONOMY 197 Other characteristics of the exporting country may shape the extent to which auditors are likely to accommodate the state. When a national industry is a major exporter of a given product – such as palm oil in Indonesia, electronics in China, or apparel in Bangladesh – and lead ﬁrms in global production networks are unable or loathe to ﬁnd substitutes, private regulators should have a greater incentive to accommodate state power. Otherwise, they would risk having to reject the vast majority of operations in the country as deeply noncompliant or uncertiﬁable. In addition, if exporting companies’ interests and a strong state’s dictates are closely aligned, then private regulators are more likely to be ‘realistic’ and accommodating to maintain their operations in that setting, as compared to a setting where state-exporter interests are divergent or wavering. Consider transnational rules about workers’ freedom of association as assessed in China, where the state controls the All-China Federation of Trade Unions (ACFTU) and restricts association more generally (see Friedman 2013, Gallagher 2004). One solution is for codes to include loopholes that subvert the international norms they appear to endorse, as with Walmart’s requirement that suppliers ‘respect the rights of workers to join, form or assist a trade union, or refrain from doing so, in accordance with applicable law and practice’ (emphasis added). Another solution is for auditors to downplay the problem or treat ACFTU-aﬃliated unions as legitimate, as has most often happened with the FSC’s standards on forest workers’ freedom of association in China (Bartley 2018). Some brands and multi-stakeholder initiatives have instead identiﬁed structures and practices that may count as acceptable alternatives in China or other places where independent unions are banned. Social Accountability International’s SA8000 standard calls for facilities to ‘allow workers to freely elect their own representatives’ (SA8000 standard, 2014, criterion 4.2), typically to a worker committee. The Fair Labor Association gradually endorsed a mix of worker committees, internal grievance procedures, and human resource management systems as indicators that factory managers are listening to workers’ voices (Bartley 2018). In addition to encouraging committees that are most often weak and fragile, these constructions of compliance have allowed seemingly stringent rules about labour rights to take hold in a labour-repressive location. In fact, SA8000s accommodation of the Chinese context was seemingly one reason it did not face the same backlash from the state that the FSC did (Bartley 2018), in spite of government agencies’ early fears that SA8000 would be ‘a new export barrier’ that challenges China’s competitive advantage (Jin 2004, p. 1). The role of civil society in shaping the degree of accommodation can be seen in the assessment of land rights in FSC certiﬁcation in Indonesia and China. The FSC requires that forest management enterprises have clear documentation of land tenure and uphold the customary rights of Indigenous peoples, unless they have granted ‘free and informed consent’ to others (Forest Stewardship Council 2002).3 These are challenging to implement in Indonesia, where land tenure is contentious and Indigenous peoples’ customary rights have been ignored by the state – both historically and in recent practices of the Ministry of Environment and Forestry, which grants timber harvesting concessions (McCarthy 2012). Certiﬁers have generally accepted state designations as legitimate – even while some admitted that ‘doing FSC 100 per cent would require changing the national regulation’ (qtd. in Colchester et al. 2003, p. 18). They have mainly assessed whether there is a suﬃcient agreement regarding compensation to communities (Ruslandi et al. 2015). When domestic NGOs are active, though, certiﬁers’ practices have sometimes included careful attention to how consent was granted or new projects to map community claims. ‘You’re lucky if there’s an NGO there’, one auditor said, explaining that it is otherwise diﬃcult to understand company-community relationships (qtd. in Bartley 2018, p. 110). In China, there is an even stronger tendency for private regulators to adopt ‘realistic’ and ‘pragmatic’ deﬁnitions of compliance. With few independent watchdogs or organised social movements that can organise stakeholders or contest claims, certiﬁers have rarely been pushed to scrutinise land rights or problematise acts of dispossession. For instance, a government-sponsored group in southwestern China helped to develop a large eucalyptus plantation for the Swedish-Finnish company Stora Enso through tactics that were misleading of villagers at best and a ‘land grab’ at worst (Li and Nielsen 2010). When Stora Enso sought FSC certiﬁcation to repair its reputation, it had to 198 T. BARTLEY show that land acquisition practices were reformed and a robust dispute resolution process was in place. But the certiﬁcation was granted quickly – just six months after the pre-assessment (much faster than in similar Indonesian cases) – based on deﬁning many of the initial land acquisition tactics as ‘historical issues, not directly attributable to Stora Enso’, as one auditor put it (qtd. in Bartley 2018, p. 158). These examples illustrate how tensions that might otherwise lead to a contentious politics of grounding can be smoothed in the construction of compliance – and to a greater extent where civil society is weak or coopted. While further comparative research is needed, it is also likely that constructions of compliance tend to be more deferential to the state when the problem at hand is politically salient in that location – that is, where the state most needs to assert its authority – and when it has high capacities to do so. Overall, this section emphasises that while transnational private regulation can introduce new norms, its practice on the ground often ends up merely tweaking existing cultures of production and papering over repressive state polices. Conclusion Private standards, best practice metrics, and assurances of compliance are signiﬁcant components of ‘the world that trade built’ (Farrell and Newman 2016). The three central claims in this paper capture important features of this world. First, it is ﬁlled with contention over the power to make one’s particular approach into an unquestioned global norm. But these power struggles take diﬀerent forms: A politics of harmonisation pits ﬁrms against each other but often settles on a dominant standard. A politics of credibility pits ﬁrms against critics in civil society and trade unions, and it tends to spiral more than settle. A contentious politics of grounding ensues when state agencies reassert their sovereignty against particular rule-making projects, and this may reshuﬄe transnational orders. Second, large corporations exercise power in private regulatory arenas in ways that the language of ‘capture’ struggles to represent – often through a combination of structural and instrumental powers. The saturation of private regulation with corporate power is especially crucial for analysis of enforcement and of multi-stakeholder initiatives, where NGOs and unions might otherwise appear to be on equal footing. Third, to expand the scope of private regulation, auditors and their overseers routinely accommodate the power of the state to prescribe and proscribe particular actions within its borders. Often this serves the interest of companies that want assurances of compliance while continuing to operate in repressive environments. Deferring to the state in the construction of compliance may also help to prevent a highly contentious politics of grounding – linking two of the central points above. Going further, there may be links between the type of contestation and exercise of corporate power. For instance, when power struggles are between ﬁrms (i.e. the politics of harmonisation), one may ﬁnd something akin to ‘quiet politics’ (Culpepper 2011), where power is exercised out of the spotlight and in the guise of technical speciﬁcations; this contrasts to noisier public confrontations in the politics of credibility. These notes on power illustrate the value of taking the substance and grounded practices of transnational private regulation seriously. In contrast to generic frameworks for conceptualising interactions and intermediaries, the power-centric approach sketched in this article shows how the contents of rules/standards underlie diﬀerent trajectories over time, diﬀerent styles of contestation, and diﬀerent relationships with states. Moreover, this power-centric approach treats corporations not merely as one actor among many, but as occupying a privileged position within the apparatus of transnational private regulation. Political economy scholars have long recognised multidimensional corporate powers, but mainly in order to situate and challenge naïve celebrations of corporate responsibility. This article suggests a revised path, which retains a focus on power but orients it toward unpacking diﬀerences in the trajectories and consequences of private regulation. In addition, by highlighting situated practices rather than universal logics (Graz forthcoming), this paper underscores the need for comparative research on diﬀerent locations, rather than making the general limits of private regulation the end of the analysis. NEW POLITICAL ECONOMY 199 Several guidelines for the next wave of research follow from this paper’s arguments. First, to analyze power struggles over private regulation, researchers should ﬁrst diagnose the variety of contestation at hand. They can then better identify the relevant factions and the resources they bring, and assess the claims made above about the trajectory of struggles (i.e. settling, spiralling, and punctuating). Second, to unpack corporate power, researchers should look for variation in the structural power of business over MSIs and examine the instrumental practices through which ﬁrms enforce rules/standards in their supply chains. Third, scholars should analyze the situated practices of constructing compliance in diﬀerent arenas and locations. This might involve assessing the claim above about the role of domestic civil society in pushing for maximalist constructions, or more broadly inquiring into how ‘rituals of veriﬁcation’ (Power 1997) vary across places. It also seems that the ground is moving under us just as research on transnational governance is becoming normal science. Trade wars and resurgent nationalisms are challenging the neoliberal order that gave rise to transnational private regulation. Brands and retailers that have pushed rules through their supply chains face massive online competitors, which have so far not been pushed to take responsibility for their suppliers. Attempts to automate technologies of traceability promise to either strengthen or hollow assurances of compliance. As scholars puzzle through this shifting terrain, we need robust tools for unpacking intersecting powers in particular places, not stylised diagnoses or vocabularies. Notes 1. Advisory Board Listing as of June 2016, https://web.archive.org/web/20160610005251/http://www.sa-intl.org/ index.cfm?fuseaction=Page.ViewPage&pageId=494 2. The amount of certiﬁed land has hovered around 200 million hectares since mid-2017. 3. This was upgraded to ‘free, prior, and informed consent’ with version 5.0 of the standard in 2015. Acknowledgments For helpful comments on previous versions of this paper, I thank Jean-Christophe Graz, Janina Grabs, Thomas Dietz, Nicole Helmerich, and other participants in the Lausanne workshop on Grounding the Politics of Private Governance. The paper also beneﬁtted from feedback at the Research Seminar in Political Science at the University of St. Gallen, including comments from Klaus Dingwerth, Oliver Westerwinter, and James Davis. Disclosure Statement No potential conﬂict of interest was reported by the author(s). Notes on contributor Tim Bartley is a Professor of Sociology at Washington University in St. Louis. His most recent book, Rules without Rights: Land, Labor, and Private Authority in the Global Economy (Oxford University Press, 2018), examines the implementation of fair labor and sustainable forestry standards in Indonesia and China. The book received the Harold and Margaret Sprout Award from the Environmental Studies section of the International Studies Association and an honorable mention from the Global and Transnational Sociology section of the American Sociological Association. He has published articles on Social Movements, Regulation, and Global Governance in the American Sociological Review, American Journal of Sociology, Annual Review of Sociology, Social Forces, Socio–Economic Review, Global Networks, and a number of other journals. ORCID Tim Bartley http://orcid.org/0000-0002-0049-0607 200 T. BARTLEY References Abbott, K.W., Levi-Faur, D., and Snidal, D., 2017. Theorizing regulatory intermediaries: the RIT model. The annals of the American academy of political and social science, 670, 14–35. Abbott, K., and Snidal, D., 2009. The governance triangle: regulatory standards institutions and the shadow of the state. In: W. Mattli and N. Woods, eds. The politics of global regulation. Princeton: Princeton University Press. Amengual, M. and Distelhorst, G. 2019. Can sourcing help enforce global labor standards? Evidence from the Gap Inc supply chain. Working paper. Amengual, M., Distelhorst, G., and Tobin, D., 2020. Global purchasing as labor regulation: the missing middle. ILR review, 73, 817–840. Anner, M., 2019. Squeezing workers’ rights in global supply chains: purchasing practices in the Bangladesh garment export sector in comparative perspective. Review of international political economy, 27, 1–28. Auld, G., 2014. Constructing private governance: the rise and evolution of forest, coﬀee, and ﬁsheries certiﬁcation. New Haven: Yale University Press. Avidan, M., Etzion, D., and Gehman, J., forthcoming. Opaque transparency: how material aﬀordances shape intermediary work. Regulation & governance, 13, 197-219 . Bair, J., Anner, M., and Blasi, J., forthcoming. The political economy of private and public regulation in post-Rana Plaza Bangladesh. ILR Review, 73, 969-994 . Bair, J., and Palpacuer, F., 2015. CSR beyond the corporation: contested governance in global value chains. Global networks, 15, S1–S19. Banerjee, S.B., 2018. Transnational power and translocal governance: the politics of corporate responsibility. Human relations, 71, 796–821. Barrientos, S., 2019. Gender and work in global value chains: capturing the gains? New York: Cambridge University Press. Bartley, T., 2018. Rules without rights: land, labor, and private authority in the global economy. Oxford: Oxford University Press. Bloomﬁeld, M.J., 2017. Global production networks and activism: can activists change mining practices by targeting brands? New political economy, 22, 727–742. Botzem, S. and Quack, S., 2006. Contested rules and shifting boundaries: international standard-setting in accounting. In: M.-L. Djelic and K. Sahlin-Andersson, eds. Transnational governance: institutional dynamics of regulation. New York: Cambridge University Press, 266–286. Brass, J.N., 2016. Allies or adversaries: NGOs and the state in Africa. New York: Cambridge University Press. Brès, L., Mena, S., and Salles-Djelic, M.L., 2019. Exploring the formal and informal roles of regulatory intermediaries in transnational multistakeholder regulation. Regulation & governance, 13, 127–140. Buhmann, K., Taylor, M.B., and Giuliani, E., 2019. Editorial – business and human rights in global value chains. Competition & change, 23, 337–345. Büthe, T. and Mattli, W., 2011. The new global rulers: the privatization of regulation in the world economy. Princeton: Princeton University Press. Carlson, K.M., et al., 2018. Eﬀect of oil palm sustainability certiﬁcation on deforestation and ﬁre in Indonesia. Proceedings of the national academy of sciences, 115, 121–126. Cashore, B., Auld, G., and Newsom, D., 2004. Governing through markets: forest certiﬁcation and the emergence of nonstate authority. New Haven: Yale University Press. Clapp, J. and Fuchs, D.A., 2009. Corporate power in global agrifood governance. Cambridge: MIT Press. Clark, P. and Hussey, I., 2016. Fair trade certiﬁcation as oversight: an analysis of fair trade international and the small producers’ symbol. New political economy, 21, 220–237. Colchester, M., Siriat, M., and Wijardjo, B. 2003. Obstacles and possibilities: the application of FSC principles 2 and 3 in Indonesia. Report published by WAHLI and AMAN. Conroy, M.E., 2007. Branded!: How the certiﬁcation revolution is transforming global corporations. Gabriola Island, BC, Canada: New Society Publishers. Culpepper, P.D., 2011. Quiet politics and business power: corporate control in Europe and Japan. Cambridge: Cambridge University Press. Dauvergne, P., 2017. Is the power of brand-focused activism rising? The case of tropical deforestation. The journal of environment & development, 26, 135–155. Davis, D., Kaplinsky, R., and Morris, M., 2018. Rents, power and governance in global value chains. Journal of worldsystems research, 24, 43–71. Dezalay, Y. and Garth, B., 2010. Marketing and selling transnational ‘judges’ and global ‘experts’: building the credibility of (quasi)judicial regulation. Socio-economic review, 8, 113–130. Dietz, T., Grabs, J., and Chong, A.E., forthcoming. Mainstreamed voluntary sustainability standards and their eﬀectiveness: evidence from the Honduran coﬀee sector. Regulation & governance. Dingwerth, K., 2017. Field recognition and the state prerogative: why democratic legitimation recedes in private transnational sustainability regulation. Politics and governance, 5, 75–84. NEW POLITICAL ECONOMY 201 Distelhorst, G. and Locke, R.M., 2018. Does compliance pay? Social standards and ﬁrm-level trade. American journal of political science, 62, 695–711. Djelic, M.-L. and Sahlin-Andersson, K., eds., 2006. Transnational governance: institutional dynamics of regulation. New York: Cambridge University Press. Eberlein, B., et al., 2014. Transnational business governance interactions: conceptualization and framework for analysis. Regulation & governance, 8, 1–21. Farrell, H. and Newman, A., 2016. The new interdependence approach: theoretical development and empirical demonstration. Review of international political economy, 23, 713–736. Forest Stewardship Council, 2002. FSC principles and criteria for Forest Stewardship. Bonn, Germany: Forest Stewardship Council, FSC-STD-01-001(Version 4-0) EN, https://ic.fsc.org/preview.fsc-std-01-001-v4-0-fsc-principlesand-criteria-for-forest-stewardship.a-315.pdf. Forest Stewardship Council, 2019a. FSC facts and ﬁgures.

BARTLEY_Power and the Practice of Transnational Private Regulation_2022.pdf

Related

Transcript

Tags

Upgrade to continue