Thursday, October 28, 2010

Internationalism at its Limit, Nationalist Prerogative Tested--Liu Xiaobo and the Nobel Peace Prize

China and the West have been having increasingly more complex and frustrating conversations since the turn of the current century.  There are many reasons for the complexity and frustration.  The recent award of the Nobel Peace Prize to Liu Xiaobo illustrates a particularly difficult aspect of these conversations.  

For Europe, the award serves as a reaffirmation of its assumptions about the way in which global society must be organized and the objectives towards which all global political organs must contribute.  That vision is internationalist and grounded in the understanding of human organization in a set of consensus derived universal (or at least communally binding) substantive values principles that must necessarily limit and inform the actions of any one state in the organization of its government and in the substantive principles that limit its discretion to define the rights and powers of a government toward its citizens.   These are the fundamental assumptions at the heart of transnational constitutionalism.  See Larry Catá Backer,  .  These notions also are critical for the construction of aa system of states organized within an increasingly coercive transnational system of norm production first organized in its current form with the establishment of the United Nations. 

The recent efforts of Thorbjorn Jagland, the Chair of the Norwegian Nobel Committee, provides an excellent summary and application of these views:
THE Chinese authorities’ condemnation of the Nobel committee’s selection of Liu Xiaobo, the jailed political activist, as the winner of the 2010 Peace Prize inadvertently illustrates why human rights are worth defending.
The authorities assert that no one has the right to interfere in China’s internal affairs. But they are wrong: international human rights law and standards are above the nation-state, and the world community has a duty to ensure they are respected.
The modern state system evolved from the idea of national sovereignty established by the Peace of Westphalia in 1648. At the time, sovereignty was assumed to be embodied in an autocratic ruler.
But ideas about sovereignty have changed over time. The American Declaration of Independence and the French Declaration of the Rights of Man and of the Citizen replaced the control of the autocrat with the sovereignty of the people as the source of national power and legitimacy.
The idea of sovereignty changed again during the last century, as the world moved from nationalism to internationalism. The United Nations, founded in the wake of two disastrous world wars, committed member states to resolve disputes by peaceful means and defined the fundamental rights of all people in the Universal Declaration of Human Rights. The nation-state, the declaration said, would no longer have ultimate, unlimited power.
Today, universal human rights provide a check on arbitrary majorities around the world, whether they are democracies or not. A majority in a parliament cannot decide to harm the rights of a minority, nor vote for laws that undermine human rights. And even though China is not a constitutional democracy, it is a member of the United Nations, and it has amended its Constitution to comply with the Declaration of Human Rights.
However, Mr. Liu’s imprisonment is clear proof that China’s criminal law is not in line with its Constitution. He was convicted of “spreading rumors or slander or any other means to subvert the state power or overthrow the socialist system.” But in a world community based on universal human rights, it is not a government’s task to stamp out opinions and rumors. Governments are obliged to ensure the right to free expression — even if the speaker advocates a different social system.
These are rights that the Nobel committee has long upheld by honoring those who struggle to protect them with the Peace Prize, including Andrei Sakharov for his struggle against human rights abuses in the Soviet Union, and the Rev. Dr. Martin Luther King Jr. for his fight for civil rights in the United States.
Not surprisingly, the Chinese government has harshly criticized the award, claiming that the Nobel committee unlawfully interfered with its internal affairs and humiliated it in the eyes of the international public. On the contrary, China should be proud that it has become powerful enough to be the subject of debate and criticism.
Interestingly, the Chinese government is not the only one to criticize the Nobel committee. Some people have said that giving the prize to Mr. Liu may actually worsen conditions for human-rights advocates in China.
But this argument is illogical: it leads to the conclusion that we best promote human rights by keeping quiet. If we keep quiet about China, who will be the next country to claim its right to silence and non-interference? This approach would put us on a path toward undermining the Universal Declaration and the basic tenets of human rights. We must not and cannot keep quiet. No country has a right to ignore its international obligations.
China has every reason to be proud of what it has achieved in the last 20 years. We want to see that progress continue, and that is why we awarded the Peace Prize to Mr. Liu. If China is to advance in harmony with other countries and become a key partner in upholding the values of the world community, it must first grant freedom of expression to all its citizens.
It is a tragedy that a man is being imprisoned for 11 years merely because he expressed his opinion. If we are to move toward the fraternity of nations of which Alfred Nobel spoke, then universal human rights must be our touchstone. Thorbjorn Jagland, Why We Gave Liu Xiaobo a Nobel, New York Times, Oct. 23, 2010.
This view of the direction of the dynamic movement in the shape of transnational governance, and of the importance of the development of consensus based transnational principles of substantive normative values that must inform the behavior of states and other political actors represents an advanced development of a structural framework for international relations and the ordering of global societies that has perhaps found its best expression within Norway.  Norway has chosen to project its power along these lines not merely against China, in the public sphere, but also against the United States.  See, e.g., Larry Catá Backer, Rewarding the American State Apparatus for Good Behavior: Understanding and the Awarding of the Nobel Peace Prize to Mr. Obama, Law at the End of the Day, Oct. 9, 2010.  It has made the incorporation of this framework a matter of high principle in the way in which it has sought to project its power in private markets through its sovereign wealth fund.  Larry Catá Backer, Sovereign Wealth Funds as Regulatory Chameleons: The Norwegian Sovereign Wealth Funds and Public Global Governance Through Private Global Investment,  Georgetown Journal of International Law, Vol. 41, No. 2, 2009.  In an ironic and idiosyncratic way, Norway perhaps represents the best developed and most aggressively applied flowering of the internationalism born out of the restructuring of the global political and economic community after 1945.

For China nothing could be more alien. China did not participate in the construction or elaboration of this system.  It has not  been a major participant in the development of its sensibilities. and its culture.  Chinese elites have not had the luxury of full membership in the Family of Nations for many centuries, nor has the current government been generally recognized as the legitimate organ of the state until very recently. Many of the current leadership, including tastemakers, academics and others, are the children of those who remember efforts to dismember China for the benefit of others.  All of this was done quite lawfully (loosely understood in the context of international law, perhaps better understood as legitimately) using the very framework of international law that the Nobel Committee now deploys.  It is true enough that the Nobel Committee references  international law and international norm frameworks revolutionized by the development and institutionalization of post 1945 international institutions.  But that is a subtle distinction to make where the effects of the application of international law feel like those of an earlier era. 
This creates something of a tension within Chinese intellectual and political culture circles.  It is a tension that will require resolution--and sooner rather than later.  But it is a tension nonetheless rooted in the history of China and its self understanding within the international community.   What for Norwegians are efforts to implement the new global consensus on shared norms, the Chinese continue to understand as efforts to project European power on uncivilized and therefore second class states within the Family of Nations. For the traditional view before 1945, see, e.g., Pollock, The Sources of International Law, 2 Colum. L. Rev. 511, 512 (1902);  Westel Willoughby, The Fundamental Concepts of Public Law (New York: MacMillan, 1924). That is both threatening and insulting within the conceptual universe within which news of the announcement of the Nobel Peace Prize are received. 

A recent explanation of that tension in the context of the Nobel Award by Xiangfeng Yang provides an excellent window into these tensions from the Chinese perspective:
For many years after market reform started in the early 1980s, the people and government of the People’s Republic waited impatiently for their first Nobel Prize to glorify their scientific and literary advancements. But the Nobel they wanted never came, and the Nobel Prize that came is not wanted – at least, not by the government. Twenty-one years after the Dalai Lama was awarded the Nobel Peace Prize, the Norwegian Nobel Committee announced this month that Liu Xiaobo was this year’s winner. Beijing officials reacted in a familiar and angry manner, denouncing the decision as a desecration of the Nobel spirit and putting human rights activists and China’s cyberspace under even tighter surveillance.

. . . . .

A remarkable man, Liu indisputably deserves the prize for his ceaseless struggle.   for nonviolent democratic reform over the past two decades. His winning of the prize adds pressure on Beijing to stop its human rights violations. While I believe the combination of domestic and international pressure will eventually result in more political openness and respect for basic human rights, the democratic future of the People’s Republic resides in its people alone: they will have to want democracy, believe in democracy and act to advance democracy. Towards this goal, democracy advocates like Liu play an indispensable role by providing an impelling and practical vision of how a democratic polity will not impede, but advance, prosperity and stability in China. Critically, however, they must also demonstrate their patriotic bona fides, which naturally extend to some fundamental concerns about national sovereignty and territorial integrity with regard to Tibet and Taiwan.

In today’s China, having foreign associations can create doubts about a person’s devotion to his or her country – a fact I am acutely aware of after being asked many times by my friends and family to reaffirm my loyalties. Such suspicion stems from the nation’s painful experience with Western and Japanese imperialism, which is frequently played up by the regime to shore up its legitimacy. True, the Communist Party itself relied heavily on Soviet assistance for decades, but their path to power is also stained with blood and violence. However, today’s democracy advocates, having no other choice but to resort to persuasion and activism, cannot ignore the charge that they are more beholden to their international supporters than to their own people.

In this age of global connectedness, who is free of foreign influence?   . . . . The notion of zhong ti xi yong (Chinese learning as the essence and Western learning for its usefulness) was popularised in the late 19th century, yet when it is promoted or sponsored by foreign organisations or governments, it takes on a different meaning and can have dangerous implications for those who advance it.

Liu has been accused by the government and even some prodemocracy intellectuals of championing wholesale Westernisation in 1988 and refusing to back down from it. His alleged support for the Iraq war under the George W. Bush administration sent out another wrong message that, if amplified and extrapolated, might weaken the cause of democracy in the eyes of ordinary Chinese people.
Exiled, jailed or under vigilant watch by the government, many Chinese activists are forced to look overseas for information, platforms, funds and other resources. This dilemma adds to the difficulties of performing a balancing act between short term needs and a long-term perspective. . . . .

There is a lesson here for foreign governments and international organisations as well. The road to China’s democratisation promises to be tortuous and long, and their continued support is important in encouraging democracy loving Chinese. But such support should be strictly limited to the moral and diplomatic levels, or take shape – through official channels – in specific programmes or projects aimed at enhancing good governance, rights protection, judicial reform, and so forth. The Norwegian Nobel Committee may have done the right thing in putting the awful state of human rights in China under an international spotlight, but ultimately the prize will best serve its purpose if left unclaimed.  Xiangfeng Yang, The Bigger Prize, South China Morning Post, Oct. 28, 2010.

None of this is meant to serve as an apologia for Chinese actions on the global stage.  Nor is this meant to suggest acquiescence in Chinese exceptionalism.  Likewise this discussion is not meant to serve as a paean to modern legal formalist internationalism.  Nor does any of this suggest the inevitability of Norwegian sensibilities in the construction of an integrated global community.  Indeed, certain influential elements in the United States continue to be as skeptical as the Chinese of the Norwegian internationalist perspective.  Yet China (and the United states for that matter), like other great powers, are participants in the emerging international system, gladly or reluctantly.  They all profit from its harmonization of many aspects of human interaction, and in a subsidiary and more tentative way, of values. 

The reaction to and defense of the Nobel award, like two rhetorical ships passing in the night, suggest some of the difficulties of communication across a vast cultural and historical divide, the bridging of which will require forbearance and sensitivity on both sides if both sides mean to interact in meaningful ways.  And it suggests the continuing contests for control of the basic normative structure for the emerging world order. Values matter, and the stakes are high, indeed.  See, e.g., Larry Catá Backer, God(s) Over Constitutions: International and Religious Transnational Constitutionalism in the 21st Century. Mississippi Law Review, Vol. 27, 2008. It is easy to understand the politics of both the decision to award the prize to Mr. Liu and the criticism of that decision.  It is more useful to understand the greater stakes involved, not just in China, but for the development of a consensus view of the organization of global society. From that perspective, the expected rhetorical positions of the parties take on greater meaning.

Wednesday, October 27, 2010

Michael Komesaroff on China and Global Minerals Markets

Michael Komesaroff, one of the most astute observers of China's natural resource policies and practices and its effects on global markets recently reported the following:

The consequences of a recent collision between a Chinese fishing boat and a Japanese coast guard vessel in the East China where Beijing is alleged to have suspended shipments of rare earths to Japanese companies, has, once again, drawn attention to the world's dependence on China for its supply of rare earths. The reality and consequences of this dependence were highlighted in a presentation I gave earlier this month to a UBS sustainable development conference in London.  Entitled Resource Scarcity? - A Case Study in Geological and Political Realities can be found here.

With much of the developed world in a period of prolonged recession, China is now clearly the driver for global demand of minerals and metals.  In Can China Sustain the New Normal, a presentation I gave in August to the Australian clients of Investec Bank (Australia) Ltd, I canvass China's ability to continue devouring the world's minerals and metals.  The presentation can be found here.

My September contribution to the China Economic Quarterly discussed the implications for China of the Australian government's proposed mineral resource rent tax.  The article, A taxing relationship, can be found here.

For the past several years, China has wisely chosen to focus on a coordinated approach to minerals markets.  It has integrated its programs of targeted foreign direct investments abroad with coordination of foreign investment within China.  The object is twofold--first to maximize the profit potential inherent in key mineral resources for manufacturing of products with global impact.  The second is to ensure that other manufacturing states will be dependent on Chinese control of key minerals.  This later objective can ensure that Chinese manufactures can undercut other in pricing and also that in the event of shortages, the Chinese state can better control the distribution of these minerals to keep its own production up (while extracting a premium for exports abroad or from Chinese owned producers).  All of this is to be effected carefully, to avoid triggering market protective reactions from competitors. 

Two recent stories suggest the importance of this strategy, and its perils.  The first:
Rare-earth metal prices have surged this year, with neodymium prices up 13% this month and cerium prices up almost sixfold from last year, the Nikkei business daily reported Thursday, citing trading house officials. Prices for rare-earth metals have spiked as imports from China have dropped, according to the report. Rare-earth metals are used to produce automobile and home appliances although they account for a small amount of production costs, the report said. Rare-earth metal prices seen surging, Market Watch, Oct. 27, 2010.
The second:
US trade officials say they are looking into a New York Times report that China is blocking shipments of rare earths to the US and Europe.
China mines 97% of the specialist metals crucial to green technology.
The report, citing anonymous industry sources, said Chinese customs officials had broadened export restrictions.
Meanwhile China's commerce ministry has denied a report by the official China Daily that it will cut quotas by 30% next year to stop overmining.
"The report is completely false," the ministry said in a statement.
"China will continue to supply rare earths to the world, and at the same time, to protect usable resources and sustainable development, China will also continue to impose restrictive measures on exploration, production and import and export of rare earths."US inquiry into China rare earth shipments, BBC News Online, Oct. 20, 2010.
In the emerging economic-political order, in which governments project power in private markets through corporations and corporations assert public power in weak governance zones, economic globalization has produced a zone beyond traditional state control.  But states have not thereby left the field strictly to private activity.  Rather, states continue to develop new approaches to the projection of power.  In a new world order of markets beyond direct state regulatory control, the transformation of states into corporations (projecting power through private market activities), and of corporations in state like entities (projecting regulatory power through contractual arrangements down their respective supply chains), will mark the transformation of states and corporations as governance actors.   As Jianjun Tu recently noted in a similar vein
The ascendance of the Chinese RE supply chain is the outgrowth of Beijing’s long-term planning, the invisible hand of the free market and, as this paper has shown, strategic miscalculation made by the U.S. government. Though sizable RE production capacity may be developed outside China, Beijing is expected to remain the leading producer with the formidable power to squeeze out any new competitor, thus China is able to continuously reserve the right to use REs as a political bargaining chip in the years to come—in spite of what its leaders claim.  (Jianjun Tu, An Economic Assessment of China’s Rare Earth Policy, China Brief Volume: 10(22), November 5, 2010).

Tuesday, October 26, 2010

Operationalizing Cuba's New Economic Model: The New Regulations Are Published

RESOLUCION No. 35/2010

POR CUANTO: Por Acuerdo del Consejo de Estado de la República de Cuba, de 2 de marzo de 2009, la que suscribe fue designada Ministra de Trabajo y Seguridad Social.

POR CUANTO: Conforme al Acuerdo No. 4085 del Comité Ejecutivo del Consejo de Ministros de 2 de julio de 2001, el Ministerio de Trabajo y Seguridad Social, es el organismo encargado de proponer, dirigir, controlar y evaluar sistemáticamente la política del Estado y el Gobierno en materia laboral, salarial, seguridad y protección en el trabajo y de prevención, atención y seguridad social.
POR CUANTO: Las experiencias acumuladas aconsejan la necesidad de perfeccionar el tratamiento laboral y salarial a los trabajadores disponibles e interruptos y dejar sin efecto un grupo de resoluciones dictadas por el Ministro de Trabajo y Seguridad Social que no se ajustan a las condiciones actuales de la economía, con el objetivo de garantizar el empleo racional de la fuerza de trabajo y fortalecer el papel del salario y su relación con los resultados del trabajo.
POR CUANTO: El Comité Ejecutivo del Consejo de Ministros en fecha 30 de septiembre de 2010, acordó el tratamiento diferenciado de seguridad social para los trabajadores declarados disponibles que reúnen los requisitos establecidos en la Ley, sin encontrarse vinculados laboralmente.

POR TANTO: En el ejercicio de las facultades que me están conferidas resuelvo dictar el siguiente:
So begins the nearly one hundred page set of regulations that are meant to provide a legal and regulatory framework for the potentially far reaching efforts to create a small sole proprietorship based private sector in Cuba just published in the Cuban Official Gazette.   Gaceta oficial de la República de Cuba Ministerio de Justicia, No. Gaceta: 012, Tipo de Edición: Extraordinaria Especial, Fecha: 2010-10-08, Pages 89-168.  The regulations may also be downloaded in pdf form here.

I have been following the potentially significant changes to the Cuban economy as the Raul Castro government seeks to carve out a space for small scale private sector.   Now at last, the government has issued the first of what are likely to be an increasingly reworked set of regulations for the taxation and containment of this new private sector.  The BBC has reported that
The Cuban authorities have set out in detail new rules and taxes for the self-employed and small businesses as they move to overhaul the economy.  Taxes will range from 25% for incomes more than 5,000 pesos (about $225, £142) a year to 50% for those earning more than 50,000 pesos (about $2,300). Many self-employed business people will be allowed to hire workers. Cuba sets out rules and taxes for self-employed workers, BBC News Online, Oct. 26, 2010.
Patricia Grogg recently reported that
Several different taxes were created: a personal income tax ranging from 25 to 50 percent, a 10 percent sales tax, social security payments, and a payroll tax amounting to 25 percent of the salary paid to the employee.

"I would like to open a business in my home selling snacks and juice," a middle-aged woman with her copy of the Gazette under her arm commented to IPS. "But if on top of the cost of the licence, the sales tax, and I don't know what else, I have to buy whatever I need for the business at the prices of the 'shopin' (government stores that accept only hard currency), I don't see where the profit is."

The new system, which was first announced in mid-September, will expand the activities in which self-employment is allowed. In 2009, more than 140,000 people had licences to work on their own in Cuba, although many more do so without a permit.

Under the new legislation, small businesses will be able to hire employees other than relatives for the first time, and Cubans -- even citizens living abroad -- will be able to rent out entire houses, instead of just rooms.  Patricia Grogg,
Cubans Queue Up for Copies of New Self-Employment Rules, IPS News Service, Oct. 26, 2010.

Within Cuba, reports indicate the popular reaction. Again Patricia Grogg:
"To rent out a room in my house, I have to pay 331 convertible pesos (357 dollars) a month, including the cost of the permit and other taxes that were gradually added on," a woman who lives in Havana's Playa neighbourhood told IPS. "Of course I also pay an annual personal income tax.

"Now I have to study this document carefully, and wait for the meeting that we will undoubtedly have with Housing Ministry authorities, to find out what we can expect," she said.

The rental business, along with small private family-run restaurants known as "paladares", are seen as the most flourishing areas of private enterprise in Cuba, despite the strict regulations to which they are subject.

The taxes will be paid in Cuban pesos. For the self-employed who do business in convertible pesos or "CUCs", the current exchange rate in the government exchange houses, where the CUC is worth 24 pesos, will apply.  Id.
Two things are worth noting here.  First, it is clear that the Cuban government is intent on controlling and closely managing this new private sector.  I have already suggested that one means to contain private activity is to deny it access to vehicles for aggregation of capital--particularly corporate form.  That remains available only to sate sector enterprises.   Second, it is likely that the regulations represent a first attempt at managing a new form of economy.  It is likely that the government will have to revisit its regulations as the economy begins to acquire shape.  Once  it becomes viable it will not be clear whether the state will be able to control this sector or whether this sector will control the state.  Either way, the Cuban people will acquire a greater stake in both the state and in their governance structure.  If the Cuban government can make this work they will go a long way to  achieving a measure of stability that may withstand the impact of Cuba's reentry into the conventional global economy.  Then the irony:  the most important achievement of the Cuban revolution--its education of the masses--may well provide the necessary base for the establishment of successful  entrepreneurship, and it may also equip these new private sector businesses with the sophistication necessary to strategically engage the new regulatory environment.  That may well provide the basis for the greatest change in the relationship between the people and the state apparatus.    

Saturday, October 23, 2010

Cuba's Global Engagement--Joint Venturing Biotechnology

While much global attention has been focused on the ramifications of Cuba's potentially sharp reconstruction of a portion of its economic model, many have been oblivious to the steady march of Cuban state sector businesses into high end usually Western dominated markets.  The failure to adequately take these moves into account in assessing Cuban economic policy (and its potential) can lead to serious miscalculations of the potency and prospects for the Cuban economy.  This is especially the case with respect to the deployment by the Cuban state of its vast investment in education for the production of high end technology that can be sold at a premium to the aging populations of the developed states.

Patricia Grogg, for example, recently reported on the efforts to penetrate European Union with new drug treatments developed in Cuba.  Patricia Grogg, Biotecnología cuban toca las puertas del Norte, Cuba a la Mano--IPS News Serives (Visiones) Oct. 22, 2010), available in loosely translated English as Cuban Treatment for Diabetic Foot Ulcers Heads for Europe (IPS News Services (Oct. 22, 2010).

Grogg writes:
 Cuba's biotechnology industry is hoping to conquer the European Union market with Heberprot-P, a therapeutic drug used to prevent foot amputations in patients with diabetes.
Heberprot-P, developed by the Genetic Engineering and Biotechnology Centre (CIGB), stimulates tissue healing in deep, hard-to-heal foot ulcers that frequently occur as a complication of diabetes. It was approved in Cuba in 2006 and has been in clinical use on the island since 2007. 
Cuban Treatment for Diabetic Foot Ulcers Heads for Europe (supra). 

[The Spanish version reads:] La industria biotecnológica de Cuba aspira a entrar por la puerta ancha al mercado de la Unión Europea (UE) con Heberprot-P, medicamento terapéutico capaz de evitar las amputaciones en pacientes de "diabetes mellitus", que padecen casi 300 millones de personas en el mundo.
The drug has already been approved in Algeria and several Southern Hemisphere states, including Venezuela and Argentina.  Id.  Its marketing and sale in Venezuela has been augmented through Cuba's state to trade commercial trade arrangements under the ALBA regime.    But the big news the potential for penetration of the lucrative Euriopean market:
Ernesto López Mola, head of CIGB's business and project development department, told IPS that last week, a Phase II clinical trial was given the green light at hospitals in Spain, with a view to approval of the product in that European country.
The clinical trial is part of a trade agreement between CIGB and AEMPS, the Spanish agency for medicines and healthcare products, which falls under the Ministry of Health and Social Policy. If successful, it will open the door to sales of Heberprot-P throughout the European Union.
Cuban Treatment for Diabetic Foot Ulcers Heads for Europe (supra).
The Spanish version suggests the importance of this phase more directly:
Pero la novedad es que la semana pasada se aprobó la fase dos de un estudio clínico en instituciones hospitalarias de alto nivel de España, a fin de registrar el producto en ese país europeo, dijo a IPS el director del Departamento de Proyectos y Desarrollo de Negocios del Centro de Ingeniería Genética y Biotecnología, Ernesto López Mola.
La operación es parte de un acuerdo comercial entre esa institución cubana y la Agencia Española de Medicamentos y Productos Sanitarios (AEMPS), entidad pública con carácter autónomo adscrita al Ministerio de Sanidad, Política Social e Igualdad de la nación ibérica. De resultar exitosa, permitirá la comercialización de Heberprot-P en toda Europa comunitaria.
Patricia Grogg, Biotecnología cuban toca las puertas del Norte
The forms through which this penetration will be effected suggest a new approach to Cuban engagement with the global economy, one that is more willing to adapt to the conventional forms of economic activity even in the service of the state sector.  While the terms of joint venture are not yet clear, the article suggests a cooperative venture with European entities inthhe production and marketing of the product in Europe.  "It is the first time we are breaking into a market of this size with one of our products," López Mola said, adding that a considerable investment has been made to ensure production standards in Cuba comply with EU regulations. "In this case, we will produce the active principle here, and Spain will complete production of the finished product for use in the trial."  Cuban Treatment for Diabetic Foot Ulcers Heads for Europe (supra). ("Es la primera vez que estamos incursionando con un producto en un mercado de esta magnitud", comentó López Mola. Añadió que se hizo una inversión productiva importante para adecuarse a las regulaciones de la UE. "En este caso, fabricamos acá el principio activo y en España se termina el producto que se usará en el estudio", explicó. Patricia Grogg, Biotecnología cuban toca las puertas del Norte).

But most important, perhaps, the Cubans have an eye on the enormous American market.  The consideration of the American market suggests an increasing preparation for the day the American embargo ends (and it appears likely sooner rather than later) and the need to position Cuban high end industry for that eventually well before markets are open.  
 En tanto, el mercado de Estados Unidos sigue prohibido para Cuba por el embargo que aplica Washington desde los años 60. "Pero no hay duda de que la población de ese país necesita este medicamento y es un área que en algún momento podemos trabajar de conjunto con empresas de ese país", comentó López Mola.
Según datos citados por el funcionario, en Estados Unidos habría casi 21 millones de pacientes diabéticos, de los cuales 15 por ciento desarrolla una úlcera que en 15 de cada 100 casos lleva a la amputación. "En costos, se habla de 64.000 dólares por amputado", comentó.
Aparte del bloqueo económico impuesto por Washington a Cuba, "siempre hay resistencia a creer que los latinoamericanos podemos ser capaces de crear medicamentos únicos en el mundo, como el Heberprot-P. Además estamos hablando de un producto nuevo que por primera vez va del Sur al Norte", destacó López Mola.
Patricia Grogg, Biotecnología cuban toca las puertas del Norte
In the English version:

Meanwhile, the U.S. market continues to be off-limits for Cuba because of the embargo imposed by Washington since the 1960s. "But there is no doubt that the U.S. population needs this medicine, and at some point we could come to a joint arrangement with U.S. companies," López Mola said.
According to statistics cited by López Mola, there are 21 million diabetes sufferers in the United States, of whom 15 percent develop ulcers. Fifteen out of 100 of these cases eventually lead to amputations. "In economic terms, the healthcare costs for each amputated patient are said to be around 64,000 dollars," he said.
Aside from the U.S. economic blockade against Cuba, "there is always resistance to the idea that Latin Americans are capable of producing original medicines like Heberprot-P, the only one of its kind in the world.  Cuban Treatment for Diabetic Foot Ulcers Heads for Europe (supra). 

To that end, the European connection will be immensely helpful.  López Mola is quoted as suggesting  that "'La experiencia en la UE será decisiva para la credibilidad. Además, en Cuba existe una farmacovigilancia intensiva sobre los más de 4.000 pacientes que han usado el producto', comentó."  Patricia Grogg, Biotecnología cuban toca las puertas del Norte("The experience with the drug in the EU will be decisive for its credibility. More than 4,000 Cuban patients who have been treated are also being carefully monitored" for adverse side-effects, he said." Cuban Treatment for Diabetic Foot Ulcers Heads for Europe (supra). )  

But it is more than credibility that is at stake.  The European connections, and the  opportunity to season Cuban economic operations within the conventional parameters of economic globalization  will also serve to protect these Cuban efforts from being overwhelmed by its larger and more experienced competitors. These will provide both a base for learning the most effective forms  and methods of economic global engagement, and a measure of protection of cuban industry through a well woven set of joint venture arrangements with European companies supported by European regulators.  The willingness of the Cuban state to adapt to these forms of enterprise (at least with respect to its activities abroad) and its ability to learn and conform its operations to the commercial expectations these markets, remains to be seen.  t requires, at a minimum, the overcoming of some ideological hurdles that have not yet been completely worked through.  See Larry Catá Backer, Cuban Corporate Governance at the Crossroads: Cuban Marxism, Private Economic Collectives and Free Market Globalism. Transnational Law & Contemporary Problems, Vol. 14, No. 1, 2005.   More importantly, it will test the ability of the Cubans to conform to the behavioral expectations of commercial activity abroad, especially with respect to human rights expectations within the developed world.  See, e.g.,  Larry Catá Backer, Globalization and the Socialist Multinational: Cuba and ALBA’s Grannacional Projects at the Intersection of Business and Human Rights (August 1, 2010).

More importantly, perhaps, this move suggests the outbound phase of the great restructuring of the Cuban economic model.  While the focus has been on the tentative steps toward opening Cuban economic activity at the very bottom of wealth producing activity within the Island, it may be as important to examine the equally significant efforts to restructure Cuban outbound investment.  Here again, the model appears to be undergoing something of a change.  This change embraces the conventional forms of economic activity against which a more vigorous Fidel Castro once  fulminated.  See, Larry Catá Backer,  Ideologies of Globalization and Sovereign Debt: Cuba and the IMF. Pennsylvania State International Law Review, Vol. 24, 2006; Larry Catá Backer, Economic Globalization Ascendant: Four Perspectives on the Emerging Ideology of the State in the New Global Order. University of California, Berkeley La Raza Law Journal, Vol. 17, No. 1, 2006. A

Friday, October 22, 2010

Measuring Interdisciplinarity in Scientific Research

My colleague at the School of International Affairs, Caroline Wagner, has just published a n insightful study, Caroline S. Wagner, J. David Roessner, Kamau Bobb, Julie Thompson Klein, Kevin W. Boyack, Joann Keyton, Ismael Rafols and Katy Börner, Approaches to understanding and measuring interdisciplinary scientific research (IDR): A review of the literature, Journal of Informetrics (in Press, corrected proof, available online 16 October 2010).
Abstract: Interdisciplinary scientific research (IDR) extends and challenges the study of science on a number of fronts, including creating output science and engineering (S&E) indicators. This literature review began with a narrow search for quantitative measures of the output of IDR that could contribute to indicators, but the authors expanded the scope of the review as it became clear that differing definitions, assessment tools, evaluation processes, and measures all shed light on different aspects of IDR. Key among these broader aspects is (a) the importance of incorporating the concept of knowledge integration, and (b) recognizing that integration can occur within a single mind as well as among a team. Existing output measures alone cannot adequately capture this process. Among the quantitative measures considered, bibliometrics (co-authorships, co-inventors, collaborations, references, citations and co-citations) are the most developed, but leave considerable gaps in understanding of the social dynamics that lead to knowledge integration. Emerging measures in network dynamics (particularly betweenness centrality and diversity), and entropy are promising as indicators, but their use requires sophisticated interpretations. Combinations of quantitative measures and qualitative assessments being applied within evaluation studies appear to reveal IDR processes but carry burdens of expense, intrusion, and lack of reproducibility year-upon-year. This review is a first step toward providing a more holistic view of measuring IDR, although research and development is needed before metrics can adequately reflect the actual phenomenon of IDR.
 The article suggests three important insights that are especially worth considering.  The first is the governance implications of measurement.  The authors suggest the possibilities of unpacking the assumptions inherent in understandings of interdisciplinarity, and consequently, its measurement.   Yet measurement trends that fail to expose their assumptions can have a significant effect on the substance of interdiciplinarity, and the legitimacy of its practice, through the definition of the parameters of its measure.  The second suggests the limits of a purely quantitative approach to the measurement of a thing.  Numbers do not lie.   Yet numbers may not tell any particular "truth" either.  In a society increasingly taught to approach numbers like fetish objects, the reintroduction of qualitative measures to analysis, and to measurement, provides an important and useful framework that avoids the indeterminacy of qualitative measures and the decontextualized and sometimes false certainty of quantitative measures.  The third suggests the power of economics and complexity in the  choice of measurement methods.  Sophisticated measures tend to be complex and expensive.  Economics factors may become as important a factor in the development of  consensus measures of interdisciplinarity as other factors.  That suggests that, perhaps at the limit, measurement remains fundamentally a political and cultural measure. Professor Wagner and her co-authors' engagement with these issues is worth careful consideration.

Sunday, October 17, 2010

Ideological Fears and Cuba's New Economic Model: Fear of the Chinese Approach and of Globalization

I have written recently about the much discussed efforts by the Cuban leadership to effect what may be substantial changes in the traditional centrally planned economic model model which Cuba has been managed since the early 1960s.  See Larry Catá Backer, Cuba Responds to Globalization and Reorganizes its Political Economy: Revolution, Retrenchment or Small Steps Towards Market Engagement Within a Marxist Framework Under the Leadership of a Vanguard Party Apparatus,  Law at the End of the Day, September 24, 2010.

 Jorge Martin, Mexico, el militante, ¿A dónde va Cuba? ¿Hacia el Capitalismo o al Socialismo? (Sept. 20, 2010)

While the reactions from the Cuban community in Miami are interesting, as are those from the global left and right, the most useful barometer of the changes, and its deeply felt ideological effects are best discerned by a close reading of socialist economists.  A recent article by Jorge Martin, Kaos en la Red: ¿A dónde va Cuba? ¿Hacia el Capitalismo o al Socialismo? (Sept. 20, 2010). Martin raises two particularly insightful issues.  The first focuses on the Chinese model and its viability as a path for Cuban economic development. The second looks to the perceived dangers of engaging with the current framework of economic globalization.

With respect to the first, Martin raises concerns that may well reflect the fears of a substantial portion of the old Fidelista economic intelligentsia.  Specifically, the a younger generation of even socialist economists have abandoned the Soviet style economic model to which  Fidel Castro had devoted a large portion of his life to preserving, and that a necessary consequence of that abandonment would be the introduction of a capitalist economic order within Cuba.
Hablemos francamente: hay una fuerte corriente de economistas cubanos que están abogando por estas medidas porque están a favor de abandonar la economía planificada, y de introducir mecanismos de mercado en todos los niveles y abrir el país a la inversión privada en todos los sectores. Es decir a favor del capitalismo.  Jorge Martin, Kaos en la Red: ¿A dónde va Cuba? ¿Hacia el Capitalismo o al Socialismo? (Sept. 20, 2010).
Martin suggests that the fig leaf that is placed on this drive toward Cuban capitalism is the Raulista drive to move toward a Chinese or Vietnamese model of Marxist-Leninist organization of the economy. 
Esta gente básicamente está proponiendo una “vía china”, aunque, debido a las enormes críticas que se han desarrollado en Cuba contra China entre varias alas de intelectuales de izquierda, ellos prefieren hablar del “modelo Vietnamita”. El cambio de terminología es irrelevante. Una rosa con cualquier otro nombre huele igual de bien. ¡Y el capitalismo con cualquier otro nombre huele igual de mal!

A pesar de cómo quieran llamar a su modelo, los propósitos son claros. “El Estado no deberá planificar más la economía, sino regularla”, “La industria y la agricultura deberán abrirse a la inversión extranjera”, etc. No dudamos de las buenas intensiones de aquellos que proponen estas medidas. Pero el camino al infierno está pavimentado de buenas intenciones, y la restauración del capitalismo sería el Infierno para la gente de Cuba, aunque algunos aún no lo reconozcan.  Id.
Martin reminds his readers that Fidel Castro had strenuously rejected the Chinese model.  He also suggests that the Chinese model has reintroduced the evils of a capitalist economy within China, including the reintroduction of a capitalist wage slave economy especially among the booming factory sectors in Guandong.
Hace tiempo que Fidel Castro rechazó el “modelo Chino” porque éste era sólo otro nombre para la restauración del capitalismo. Pero incluso si consideráramos esta opción, inmediatamente se volvería claro que no puede aplicarse a Cuba. Las condiciones concretas son completamente diferentes. Cuba es una pequeña isla con una población pequeña y pocos recursos. China es un territorio vasto con más de mil millones de habitantes, muchos recursos y una base industrial poderosa.

El enorme campesinado Chino ha provisto a las empresas capitalistas chinas de una vasta reserva de mano de obra barata, que ha suministrado constantemente a las fabricas de Guandong con obreros que trabajan prácticamente bajo condiciones de esclavitud, por salarios muy bajos. La única cosa que una variante cubana podría compartir es esto último: los salarios bajos.  Id.
Martin then suggests that neither the Chinese nor the Vietnamese model is useful to understand Cuban transition  Instead, he suggests that any move away from Stalinist economic organization would move Cuba toward the neocolonialist subaltern role for dependent states that would be closer to ElSalvador or Nicaragua than to Vietnam.
Una Cuba capitalista no se asemejaría ni a China ni a Vietnam, sino más bien a El Salvador o Nicaragua después de la victoria de la contrarrevolución. Pronto se revertiría a una situación similar a la existente antes de 1959 –una de miseria, degradación y dependencia semicolonial–. E independientemente de las intenciones de aquellos responsables, las medidas que han empezado a ser implementadas, desatarán un poderoso movimiento hacia la restauración del capitalismo, que destruirá todas las conquistas de la revolución. Es el inicio de una pendiente resbaladiza, y una vez que comience será difícil de detener. Id.
 Jorge Martin, Mexico, el militante, ¿A dónde va Cuba? ¿Hacia el Capitalismo o al Socialismo? (Sept. 20, 2010)

This view, of course, is widely held within leftist circles, suggesting that the only alternative to a rigorous state sector is the movement toward subordinating domination by a global economic system designed to reduce secondary states to the status of dependent client states.  See, e.g., Larry Catá Backer,  Economic Globalization Ascendant: Four Perspectives on the Emerging Ideology of the State in the New Global Order. University of California, Berkeley La Raza Law Journal, Vol. 17, No. 1, 2006.  It also reminds us of the tenor and approach of conservative elements within the Chinese Communist Party in the late 1970s and 1980s, whose own resistance to the reforms of Deng Xiaoping were expressed in similar language, and who were reminded that neither time nor theory stood still.  See, e.g., Deng Xiaoping, The Two Whatevers Do Not Accord With Marxism (May 24, 1977). ("We cannot mechanically apply what Comrade Mao Zedong said about a particular question to another question, what he said in a particular place to another place, what he said at a particular time to another time, or what he said under particular circumstances to other circumstances.").  See, Larry Catá Backer, Cuban Corporate Governance at the Crossroads: Cuban Marxism, Private Economic Collectives and Free Market Globalism. Transnational Law & Contemporary Problems, Vol. 14, No. 1, 2005. 

With respect to the second point, Martin first faces the power of economic globalization. He suggests, perhaps rightly, that it is impossible for one small state to build socialism
Esto muestra, no de forma teórica, sino en el frio lenguaje de la economía, la imposibilidad de construir el socialismo en un solo país. Esto no fue posible en la Unión Soviética, que, después de todo, era un país que se extendía sobre un continente completo y con recursos naturales enormes. Esto es incluso menos posible en una pequeña isla a 90 millas de país imperialista más poderoso de la tierra. Jorge Martin, Kaos en la Red: ¿A dónde va Cuba? ¿Hacia el Capitalismo o al Socialismo? (Sept. 20, 2010). 
Yet Martin fails to remember that Cuba is tightly bound into just such a multi-state network in ALBA.  See, e.g., Larry Catá Backer, and Molina, Augusto, Cuba and the Construction of Alternative Global Trade Systems: ALBA and Free Trade in the Americas (May 20, 2009). University of Pennsylvania Journal of International Economic Law, Vol. 31, No. 3, 2010. And again, the fear of a Chinese model creeps into the analysis. Because China is big enough, it can use globalization to its benefit, even if it means turning toward a capitalist socialism. For Cuba, that path would mark a return to a subordinate status as a colony, not merely of more powerful states, but of globally powerful corporations.
Multinacionales de España, Canadá, Brasil, México y otras, que ya se encuentran operando en Cuba, esperan listas por este proceso, para el cual ya están posicionadas. ¿Qué es lo que realmente buscan? Materia prima, mano de obra barata y el clima de la isla, es decir, buscan la recolonización de Cuba.

Sectores importantes de la clase dominante en Estados Unidos están cuestionando actualmente si el bloqueo es la política más inteligente para socavar a la Revolución Cubana, o si más bien, están perdiendo oportunidades de inversión contra otras multinacionales de otros países. La restauración del capitalismo en Cuba arrojaría a la isla de vuelta a los 30’s, dominada por el capital extranjero, convertida en patio de recreo para turistas de los países avanzados. Pero esta no es una conclusión definitiva. Jorge Martin, Kaos en la Red: ¿A dónde va Cuba? ¿Hacia el Capitalismo o al Socialismo? (Sept. 20, 2010).
And thus a sense of desperation--a grim determination to turn backward to move forward. Yet that might well position the Cuban traditional left as the new right. "Para avanzar, ¡primero necesitamos regresar al programa de Lenin!" Id.  Yet, one wonders whether Deng Xiaoping had it right when he criticized this sort of thinking as a failure to understand the systemic and ideological basis  of the normnative framework within which the Cuban state is founded.  "Mao Zedong Thought is an ideological system. Comrade Luo Ronghuan and I struggled against Lin Biao, criticizing him for vulgarizing Mao Zedong Thought instead of viewing it as a system. When we say we should hold high the banner of Mao Zedong Thought, we mean precisely that we should study and apply Mao Zedong Thought as an ideological system." Deng Xiaoping, The Two Whatevers Do Not Accord With Marxism (May 24, 1977).  And ironically this suggests that Cuba now is very near the same point in its development that China reached in the late 1970s. 

Yet for all the ideological fireworks, the proposals, as system, might serve more as a gesture than as a workable system.  Pavel Vidal Alejandro and Omar Everleny Pérez Villanueva remind us of some substantial limitations on what appears to be a plan to open the economy.
Sin embargo, a primera vista se aprecian un número de obstáculos para el logro de dichos objetivos de los cuales pueden surgir nuevas propuestas:
1. Una gran parte de la población y especialistas coincide que la lista publicada en Granma de 178 actividades es aún demasiado precaria y reducida para poder asimilar el medio millón de desempleados estatales. Son necesarias nuevas categorías y agilizar la creación de las cooperativas no agrícolas.
2. Las categorías son demasiado específicas y ello frena la iniciativa individual. Sería preferible una lista de categorías generales que le dieran espacio a los cuentapropistas y microempresarios para proponer y perfilar una oferta de bienes y servicios diversa. Esta tiene que ser lo suficientemente flexible como para poder adecuarse a una demanda cambiante en el tiempo y heterogénea en lo local, y que es indescifrable para cualquiera que se lo proponga centralmente.
3. Las actividades permitidas son poco intensivas en conocimiento y no permiten aprovechar la inversión en educación que ha hecho el país por décadas. Muchos de los desempleados estatales serán graduados universitarios que necesitarán una opción acorde con su calificación.
4. Se permite el crédito bancario, pero el sistema financiero tiene problemas de liquidez, y habría que ver cuánto del ahorro todavía está comprometido en los créditos que se dieron para la sustitución de equipos electrodomésticos dentro de la llamada Revolución Energética. Como alternativa, se requiere agilizar y promover la colaboración internacional en el tema del microcrédito.
5. No se va a crear un mercado mayorista de insumos para las PYME´s. Hoy los mercados de insumos para las empresas estatales sufren de desabastecimiento como consecuencia de los problemas económicos y financieros del país. Por tanto, es muy difícil pensar por ahora en un apoyo estatal en este aspecto. Pero si se promueve el microcrédito con colaboración internacional, ello significaría una entrada de divisas al país que posibilitarían abrir la importación para los cuentapropistas, microempresarios y cooperativistas. En Cuba operan suficientes proveedores extranjeros que podrían abastecer un mercado de insumos para las PYME´s. Los mismos mercados mayoristas que hoy existen para las empresas estatales podrían darle entrada a las PYME´s. La doble moneda no es un problema para las PYME´s pues tiene abierta la convertibilidad del peso cubano y el peso convertible en las casas de cambio (CADECA).
6. La medida considera pocos incentivos a la legalidad. Algunas actividades, por su naturaleza, son más visibles y tendrán por obligación que legalizarse y pagar impuestos. Pero hay otras que tienen como único incentivo la incorporación a la Seguridad Social. Evidentemente, para los que ya reciben una jubilación, este no tiene ningún efecto. El microcrédito y el mercado de insumos, precisamente serían incentivos a la legalidad, pues se necesitaría estar registrado y pagar impuestos para acceder a ellos. Las PYME´s internacionalmente son apoyadas tributaria e institucionalmente. La asesoría legal, económica, informativa y otras ayudas promoverían la legalidad y el desarrollo de las mismas.
7. Falta acompañar estos cambios con leyes que creen confianza para la inversión de esfuerzos y dinero en emprendimientos privados, y que garanticen, tanto al Estado como a los ciudadanos, el cumplimiento de derechos y deberes.
8. El estancamiento económico que vive el país es otro de los obstáculos para la creación de nuevas PYME´s. La oferta de bienes y servicios de los cuentapropistas, las microempresas y las cooperativas necesita de una demanda. Con estancamiento económico y aumento del desempleo es muy difícil pensar en una demanda suficiente desde las familias o desde las empresas estatales. Una gran parte de la demanda ya hoy está cubierta con una oferta desde la ilegalidad. Pavel Vidal Alejandro and Omar Everleny Pérez Villanueva, Entre el ajuste fiscal y los cambios estructurales: Se extiende el cuentapropismo en Cuba, Supplemento Digital, Espacio Laical, Arquidiócesis de la Habana, October2010, No. 112.
Their points are well taken.  The list of 178 permitted occupations is hardly enough to employ the number of people to be released from state employment, the actual categories of permitted occupations are are too inflexible to permit entrepreneurial activity,  they are lower level occupations that do not effectively exploit the educational attainments of the population, the program does little to provide for any necessary start up financing of even the most modest individual efforts,  the contemplated activities may be difficult to produce sustainable markets much less necessary wholesale markets, it is not clear that the system will reduce corruption, the new system lacks an adequately developed legal basis (corporate, commercial, contract and tort law), and the current state of economic near collapse makes any sort of new economic enterprise risky.  It suggests both the emergency conditions that produced the economic opening in the first place, and the considerable opposition to the plan within the body of the Cuban Communist elite.  Both the lack of planning and the position of Mr. Martin discussed above suggest that the greatest danger for Cuba now is the internal dissension within the ruling elite.  Until the differences between the Fidelistas and Raulistas are resolved, and with a strong hand considering the patterns of Cuban governance, the only thing that will appear from the Island will be gesture laden half measures and little progress toward any sort of fundamental change.

Virtual Student Communities and Legal Education

One of the most interesting changes in the landscape of education  is technology driven.  I do not refer to the use of sophisticated techniques for conveying knowledge, or even changes in pedagogy (however ideologically driven).  Rather, the greatest change has been in the reduction of isolation for law students.  The rise of blogging, and other forms of virtual communities has made it much harder for students to remain isolated, either within their school, or even their country.  Students can now speak to each other and share experiences and concerns--and more importantly work toward the development of common cultures, across territorial, class, language, social and other divides.

And those who serve law students have become sensitive to the rise of these new expressions of virtual solidarity.  One site, the Criminal Justice Degrees Guide (link removed at request of the site July 2013), has produced a very useful list of ten useful blog sites for prospective or current students.  Their rationale is insightful:
Law school can be one of the toughest and most dedicated times of your life. While it can seem a bit overwhelming and prove to be a tough transition, it is important to remember that plenty of people have achieved law school before you, and plenty are also going through the same ordeals and transitions you are. Sometimes, it helps to know what to expect and to collect from former law school students some pointers for time management and advice that can help you along the way. The following blogs are dedicated to helping people get through law school.  Criminal Justice Degrees Guide, 10 Blogs to Help You Through Law School
These sorts of efforts, and the resulting communities formed through modern communications methods, has produced an interesting effect. 

On the one hand, it is now much more possible to find virtual communities of students with whom one shares an affinity or a particular sort of angst with whom one can, in solidarity, communicate and perhaps even change one's way of thinking or doing. This was evidenced by the list offered by the Criminal Justice Degrees Guide (removed after July 2013): What I Learned in Law School; Legally Challenged; Law Student; Exhibit L- A Blog on Life, Law, Learning, Laughter, Love & Leisure; 1 (year in) L: A First Year Law Student Blog; 0L to 3L: My Journey to & through Law School; Life of a Law Student; Legal Geekery; Beyond the Underground; and Vermont Law School- JD Students Law Blog.

On the other hand, it suggests that the ability of a particular law school to acculturate its students--that it to mild them into a product or type distinctive to it, is now a far harder proposition.  Law schools no longer have the sort of control over the environment or even the cultural borders within which students can be molded and assimilated into one to another sets of behaviors or attitudes.  Students are now much more the product of a shared virtual environment than of the distinctive "culture" or "ambiance" that some schools take great pride in advertising.  Indeed, one might suggest that, in the face of virtual communities, and their powerful mechanics of acculturation, schools have lost a certain amount of distinctiveness.  The recall of that distinctiveness acquires a certain element of nostalgia.  It suggests an anachronism that may be dear to the institution but whcih is understood as a charade by its students.  

But this poses a problem.  If the distinctiveness of the culture and education of a particular place was a hallmark of its status and reputation, and if that distinctiveness now is lost within larger systems of virtual communities over which an individual institution has little control, then what is left of the connection between  distinction, status, and the consequential hierarchy of "value" of a particular institution's educational offerings? The answers are, to some extent exogenous to the student experience.  To some extent they might bethought of as satisfying the need for hierarchies among academics, governments, institutions and the like as a method of controlling the size and quality of an individual institution's market share.  The quality of faculty, measured increasingly by factors that have little connection to teaching or students, retains a value for institutional status that only indirectly suggests a connection to students.  Other indicators may go to issues of comfort (the institution provides luxurious accommodation) or  influence (important officials recognize the institution), or reputation among peers (within our self referencing community my institution is held in especially high regard).

And yet, for all of its  disconnection and anachronism, distinctiveness, however measured remains a critical tool for the institution within the markets for the absorption of its students.  Employers,  judges, donors, governments, civil society actors, publishers, alumni, and other stakeholders need a relatively quick and easy measure of status.  These measures serve as sorting devices for the maximizing behavior of these other stakeholders within their own communities.  Law firm status, for example is self referentially based in part on the perceived status of its hires, and that status must be easily measured to be useful--whatever the "real" value of the measure, the acceptance of the measure is what counts.  Organizations like the Criminal Justice Degree Guide and similar organizations, then, serve an important purpose as they both provide students and other stakeholders with a listing of institutional hierarchies, and at the same time provide the student with the virtual student communities that  substantially undercut the real effect of any distinctiveness on which those hierarchies are maintained.

But all of this is well known.  Still, while institutions and their stakeholders construct their own orders of realities based on their measures, the evolving cultures of students will continue to subvert those systems, even as students continue to conform and conform their behavior to the expectations of reward and status built into the current system of measuring educational value.  It will be interesting to see how the development of these virtual communities of students continues to shape the power and effect of law schools and other institutions to actually shape and acculturate the students they teach.

Saturday, October 16, 2010

The Power of Soft Law in Japan: Voluntary Codes, The Power of Non-State Based Authority and the Regulation of Business Behavior in Japan

 I have written about the evolution of corporate social responsibility in Japan.  See, Larry Catá Backer,  Japanese Approaches to Corporate Social Responsibility (企業の社会的責任) and Global Human Rights--Between the Law-State and Corporate Culture, Law at the End of the Day, September 14, 2010.  I have suggested that while the Japanese domestic legal order tends to avoid governance understood to embrace corporate social responsibility issues, corporations have increasingly adopted autonomous regulatory  frameworks that comport with substantive notions of expected conduct among major stakeholders in corporate activities.  My research Assistant Shing Kit Wong (Penn State  School of International Affairs Masters candidate '11) recently summarized it as follows:
Corporate Law (会社法 ) in Japan is established under the Commercial Laws ( 商法). The Corporate Law classifies four types of corporations: Corporation, General Partnership Company, Limited Partnership, and Limited Liability Company. It also establishes the duties of each type of corporation and to ensure proper operations.
Companies Law Enforcement Ordinance (会社法施行規則) is one of the regulations under the Corporate Law in Japan. The objective of the ordinance matters as assigned by the Companies Law and matters for execution of the Law when necessary. It consists of seven books: the definition of terms in the Corporate Law, information provided in the document and each member company, bonds, reorganization, merger, demerger, transfer of shares and share exchange, regulations for foreign company, and miscellaneous such as litigation, and registration. There is a large portion of the ordinance regarding share transfers and bond administrator, and the procedures for new establishment for different type of stock companies.
However, the content of corporate social responsibilities such as corporate philanthropy, product excellence, human rights are not mentioned in the Ordinance nor in any of the Corporate Laws. Such content is only in the Charter of Corporate Behavior ( 企業行動憲章) established by the Japanese Business Federation ( 日本経済団体連合会).
会社法施行規則 (Company Law Enforcement)
In Japan, the Japan Business Federation Charter of Corporate Behavior is influential. My Research Assistant Shing Kit Wong has provided a very nice summary of that "soft law" framework in Shing Kit Wong, "Japanese Charter of Corporate Behavior" (Sept. 2010) reproduced here:
The Charter of Corporate Behavior ( ) is established by the Japanese Business Federation ( ). The objective of the federation is to accelerate the growth of both Japanese and global economy and to strengthen the corporations in order to transform the Japanese economy into a system that is sustainable. In order to achieve such society, corporations are essential to recognize their social responsibility beyond legal compliance, and actively working to resolve various issues. The charter has conducted a review of guidance regarding corporate social responsibility. The main idea of the charter states that the existing purpose of corporations is contributive to the society through fair competition, responsible economic and social development with creation of employment. Corporations should operate base on respecting human rights, laws and regulations, while compliance with the international rules for the creation of a sustainable society, and keeping high ethical standards fulfilling responsibilities. There are ten principles in the Charter of Corporate Behavior, focusing on the following area: customer satisfaction, moral operational behavior, environmental protection and social contrition, human rights, and implementation of the charter.
In September 2010, the federation revised and published a new version of the charter. Compare to the last version, the new charter emphasizes on various revised legal systems, the environmental changes over the domestic and international corporations, and most significantly, globalization of corporate activities with respect to the international standard ISO 26000 corporate social responsibility, which will be released by the International Organization for Standardization (ISO) in the same year. ISO 26000 will add value to existing initiatives for social responsibility by providing harmonized, globally relevant guidance based on international consensus among expert representatives of the main stakeholder groups and so encourage the implementation of best practice in social responsibility worldwide. Such idea is emphasized in the eighth principle of the revised charter, which will be discussed later on.

The first three principles focus on earning the confidence of customers and consumers by providing safe and beneficial goods to the society in additional with the development and provision in a safe and responsible manner. Meanwhile, Corporations must promote fair, transparent, and free competition, as well as develop a system necessary to ensure compliance with export control laws and regulations on security. They must also ensure proper relationships and contacts with government agencies and political bodies. On the other hand, corporations shall engage in communication with the society as well as to their shareholders including active and fair disclosure of corporate information while taking necessary measures to protect personal data and customer related information.

The fourth principle states that corporations must respect diversity, individuality and differences of their employees, and to promote safe and comfortable workplaces, plus ensuring the mental and physical well-being of their employees. Employers must comply with labor laws and regulation in labor negotiations with sincere response. Employees, on the other hand, have the right to freely choose their representatives or bargain. Moreover, child labor and forced labor is strictly disallowed.

The fifth principles of the charter focus on environmental issues. It emphasizes that environmental problems is a common issue for all people, and it is an essential requirement for corporations to act voluntarily. The charter urges to build a global low carbon and recycling oriented society. It also gives emphasis to promote conservation and sustainable use of biodiversity. The fifth principle is revised in order to increase the awareness of environmental issues, and position corporate commitment to those issues as an essential requirement.

On the other hand, the sixth principle of the Charter focuses on social contribution. Corporations shall actively engage in philanthropic activities and other activities of social benefit. It is essential to clarify the basic principles of social action to establish a corporate structure and then taking into account of the corporate management philosophy while identifying philanthropic activities as priority issues and maximizing resources on such activities. In the same contrast, the seventh principle ensures the social stability and emphasizes that corporations must thoroughly cut off any relationship and oppose with organizations that involved illegal activities or unacceptable standards of responsible social behavior, or any anti-social forces and organizations that threaten civil order and safety. The revision of the seventh principle is in response to the changes in the tactics of anti-social subject, and urges to enforce relevant blockage to anti-social forces.

As mentioned earlier, the eighth principle of the charter has the most revision in order to emphasize globalization in business activities. It urges corporations to comply with local laws of each nation as the corporate own international standards. Corporations must also observe and respect all international codes of conduct and regulation including human rights, as well as respecting the cultures and customs of each country and region-based activities in order to promote mutual trust with stakeholders, and that corporations must operate with the consideration in the interest of the stakeholders. In addition, corporations ought to promote localization of management and strive to improve the working environment that is appropriate to the environment and cultures of each country or region while having an interest in social responsibility initiatives in partner nations and regions to provide assistance for improvement if necessary. Furthermore, it strongly restricts corporations to receive gifts or commission for the purpose of illicit gain. The revision of this principle is to distinguish between domestic and international in response to globalization of business activities with respect to the ISO 26000 corporate social responsibilities including respect for human rights, a growing interest in international issues.

The ninth and tenth principles focus on the implementation of the charter, and the consequences and actions corporations must take if the charter is violated. Top management of the corporations shall take all necessary action in order to raise awareness in their corporation and inform their group companies and business partners of their responsibility, as well as heeding the voice of all their stakeholders, and promote the development and implementation of systems that will contribute to the achievement of business ethics. In addition, top management shall maximize leadership to ensure the corporate management philosophy with a clear code of conduct and promote corporate social responsibilities. If any of the principles in the charter is violated, top management must investigate the cause of the violation and develop reforms to prevent recurrence. Such information of actions for reform shall be made publicly available. Afterward, the prompt public disclosure of information regarding the incident, responsibility for the event, and its effects shall be clarified, and disciplinary action shall be taken. The revision emphasizes the corporate social responsibilities and business ethics being the promotion of work as a group of companies, with the encouragement to business partners including the supply chain.

The Charter of Corporate Behavior in Japan is very much resemblance to the United National Global Compact. The UN Global Compact poses corporations to embrace, support and enact a set of core values in the areas of human rights, labor standards, the environment and anticorruption.

For instance, the fourth principle of the Charter emphasizes on human rights. Such principle is reference to the United National Global Compact’s human rights and labor standard, in which businesses should support and respect the protection of internationally proclaimed human rights and make sure they are not complicit in human rights abuses. In addition, according to the labor standard principle, business shall uphold the freedom of association and the effective recognition of the right to collective bargaining eliminate all forms of forced and compulsory labor as well as discrimination in respect of employment and child labor. Both the charter and Global Compact have strong emphasis on corporations consisting important roles in supporting and respecting human rights, and that they should also support the enjoyment of human rights while advancing in the business.

The Global Compact's principles regarding the environment can also be found in the fifth principle of the Charter, in which businesses should support a precautionary approach to environmental challenges, undertake initiatives to promote greater environmental responsibility, and encourage the development and diffusion of environmentally friendly technologies. Similar to the charter, the Global Compact urges the development of sustainability targets and economic, environmental, social indicators, as well as establishes a sustainable production and consumption program to take the corporations beyond compliance in the long-term, plus incorporating sustainability principles into business practices.

The anti-corruption principle in the Global Compact promotes businesses shall work against corruption in all its forms, including extortion and bribery, and that corporations shall introduce anti-corruption policies and programs within their organizations and their business operations. When corruption occurs, it is essential to report the work against corruption in the annual Communication on Progress, and share experiences through the submission of examples and case stories. In contrast, the Charter of Corporate Behavior urges corporations to promote fair, transparent, and free competition. In such, business activities have to be ensured fair and transparent domestically or internationally. It is restricted that customers, suppliers, business partners and other donors transfer gifts or money for the purpose of maintaining unfair advantage or preferential treatment. The principle also applies to Japanese transnational corporations abroad, even if no laws or guidelines are set forth by the foreign governments.

In sum, corporate social responsibility is conducted in the Charter of Corporate Behavior established by the Japanese Business Federation. The charter was revised in September 2010 in response to the international standard ISO 26000 corporate social responsibilities, putting a detailed emphasis on business activities in globalization. All the principles in the United Nations Global Compact including human right, labor, environmental issues, and anti- corruption are widely covered in the charter as well.


企業行動憲章 実行の手引き(第6版) 9.14.2010

企業行動憲章」 新旧対照表 9.14.2010

企業行動憲章 改定のポイント 9.14.2010


International Organization for Standardization, Guide of development ISO 26000, 9.5.2008

International Organization for Standardization, ISO and social responsibility, 2008
United Nation Global Impact

I have also suggested the way in which both public and private investment has become more politically charged, and increasingly able to affect corporate behavior through their participation in markets. See, Backer, Larry Catá, Sovereign Wealth Funds as Regulatory Chameleons: The Norwegian Sovereign Wealth Funds and Public Global Governance Through Private Global Investment (May 4, 2009). Georgetown Journal of International Law, Vol. 41, No. 2, 2009. Investors, like consumers and other stakeholders, have increasingly looke

d beyond the state for a normative framework within which non-state based forms of corporate governance regimes can be created, and enforced through the market based decisions of these stakeholders. Cf. Backer, Larry Catá, From Moral Obligation to International Law: Disclosure Systems, Markets and the Regulation of Multinational Corporations. Georgetown Journal of International Law, Vol. 39, 2008. James Brumm recently put this notion well in the Japanese context:
In Japan, in contrast, it is my impression that CSR and corporate governance are dealt with as two aspects of the same issue – how do corporations behave responsibly to society and the various stakeholders. In Japan, the recent emphasis on corporate governance has been on compliance systems development and on internal audit. Perhaps in some ways this is due to the fact that boards of directors are largely staffed by inside directors and corporate governance is carried out by executive officers. If and when boards become more independent, corporate governance may be handled in a different way. Still I think it will continue to be looked at as part of CSR, i.e. how does a company deal with its external stakeholders and how does it build and protect its reputation. James Brumm, "The Japanese Perspective," in Corporate social responsibility: the corporate governance of the 21st century 337-346 (Ramon Mullerat, Daniel Brennan, eds., Kluwer Law International 2005), at 345-46.
Brumm notes that CSR is very hot now in Japan, and perhaps more importantly, has becomean object of serious press coverage. " CSR has been given wide coverage by the press and the Nikkei Shimbun (the Japanese equivalent of the Wall Street Journal or the Financial Times) has organized conferences on CSR and has established a CSR Project. " Id.

What brings all of those forces together is an organizing framework through which a regulatory framework autonomous of any domestic legal order is developed to suit the governance standards of critical stakeholders in corporate activity.  One such organizing framework is the system for corporate behavior rules developed by the Organization for Economic Cooperation and Development.  The OECD's Guidelines for Multinational Corporations  provides a soft law substantive framework that can be invoked against Japanese companies through National Contact Points established as part of Japan's obligations as an OECD member.  See, OECD多国籍企業行動指針.  In 2008 Japan "established a consultative body comprised of representatives from the Japanese business and labour communities." OECD, Investment Division, Directorate for Financial and Enterprise Affairs, 2009 Annual Meeting of the National Contact Points, Report by the Chair, 16-17 July 2009, at 16.  In addition "With a view to promoting corporate responsibility and the OECD Guidelines, the Japanese NCP established the co-operation with the local office of UN Global Compact, the local office of ILO in Tokyo and an NGO engaging in the promotion of Global Reporting Initiative (GRI). As a result, in March 2008, the Japanese NCP made a presentation to Japanese CSR business representatives at a seminar organised by the local office of UN Global Compact. The presentation covered NCP activities as well as the Guidelines."  Id., at 20.  But the Japanese NCP has not proven to be particularly aggressive in embracing its mandate.  See, e.g., OECD Watch, Protest Toyota Campaign vs. Toyota, 4 arch 2004 (action involving labor issues in the Philippines, Japanese NCP refused to proceed during pendancy of related legal action in a complaint that has extended almost a decade).

Another that is likely to become a powerful focus of these governance systems is the Protect-Respect-Remedy framework developed  by John Ruggie in his role as United Nations Special Representative to the Secretary General for Business and Human Rights.  
[The framework] is based on three complementary and interdependent pillars: the state duty to protect against human rights abuses by third parties, including business; the corporate responsibility to respect human rights; and the need for greater access by victims to effective remedy, judicial and non-judicial. The Human Rights Council was unanimous in welcoming the framework, and extended my mandate by three years with the task of operationalizing it (A/HRC/RES/8/7). This marked the first time the Council or its predecessor, the Commission, had taken a policy position on business and human rights. John Ruggie, Introduction by the Special Representative, July 2009.
"The Business & Human Rights Resource Centre created a portal at John Ruggie’s request, to facilitate communication and sharing of materials related to the mandate. All materials . . . .  are now available on the portal."  Business and Human Rights, U.N. Special Representative on Business and Human Rights.  The Portal Site includes all materials published by the Special Representative and his team, as well as submissions to his mandate and commentaries on his work and is made possible by a grant from the Swiss Federal Department of Foreign Affairs. 

When all of these forces converge, it is possible to discern the effectiveness of governance of business behavior beyond the state.  That is, it is possible to begin to sketch the normative parameters and mechanics of governance systems that bind business without direct resort to the law of any state.  A recent example suggests the direction of these movements:

Investor Pressure Moves Toyota Affiliate to Divest from Joint Venture with Burmese Regime
Adam M. Kanzer, Esq.
Managing Director & General Counsel
Domini Social Investments LLC

Toyota states that it shares investor concerns about the human rights situation in Burma

In a letter to a group of investors, Toyota Motor North America confirmed that its major trading partner Toyota Tsusho (TTC) has divested its ownership stake in Myanmar Suzuki Motor. TTC jointly controlled the vehicle assembly plant with the Burmese military regime and Suzuki Motor Corp. Toyota’s announcement followed three years of dialogue with a coalition of investors, including Trillium Asset Management Corporation (“Trillium”), Domini Social Investments (“Domini”), Boston Common Asset Management and the Interfaith Center on Corporate Responsibility.

In December 2006, research by Domini Social Investments uncovered an equity partnership between Toyota Tsusho and the Burmese military regime. Investors delivered a letter shortly thereafter to Toyota Motor’s Chairman, Fujio Cho, raising concerns about the company’s business ties to the repressive regime. Toyota Motor responded by confirming it had asked Toyota Tsusho to reconsider its business activities out of concern for the current environment in Burma.

In an August 12, 2010 letter to the investors, Group Vice President James Wiseman of Toyota Motor North America wrote, “[W]e are pleased to report to you that as of June 2010, TTC had sold all of its shares in its Myanmar Suzuki joint venture… TTC is now fully divested from its joint venture operations in Burma.”

Holding over 20 percent of Toyota Tsusho’s shares, Toyota Motor is Toyota Tsusho’s largest shareholder. Toyota Tsusho partnered with the Burmese government to sell motorcycles, light trucks and cars. The Burmese government, which stands accused of systematic violations of human rights and crimes against humanity, tightly restricts the domestic market for these vehicles to its wealthiest citizens and those with military connections. Burma ranks among the poorest countries in the world, with the majority of the Burmese population living in poverty.

“We commend Toyota and the role it played in persuading its affiliate to reconsider its ties to the Burmese military rulers. As long as human suffering persists in Burma at the hands of the junta, companies cannot ignore their responsibility to insure their or their affiliate operations do not aid the regime’s offenses,” commented Susan Baker, a research analyst at Trillium who studies the impact of environmental, social and governance (ESG) factors upon investment performance.  “Any link to building vehicles to aid the military government’s misrule and brutal suppression of its own people raises moral and reputational issues that present risks to the long term value of the Toyota brand,”she continued.

“Toyota Motor has taken an important step to acknowledge and address human rights concerns within its sphere of influence,” said Shin Furuya, Lead Research Analyst, Global, for Domini. Although Toyota Tsusho has ended its only known direct joint venture with the Burmese government, it continues involvement in other operations in Burma including agricultural and apparel production, which could have significant human rights impacts.

“Toyota Motor and its group needs to continue to address these concerns whether the particular operations have direct business ties with the military regime or not. All companies operating in Burma need to review their relationships with their trading partners and carefully consider whether their company’s operations could directly or indirectly contribute to human rights violations,” he continued. Domini has consistently excluded Toyota Motor from its mutual fund portfolios, partially due to its involvement in Burma.

“The corporate responsibility to respect human rights is becoming the international norm,” commented Rev. David M. Schilling, director of human rights, Interfaith Center on Corporate Responsibility. “The UN Human Rights Council adopted recommendations of the UN Special Representative for Business and Human Rights in June 2008, including the commitment that companies need to demonstrate respect for human rights, not just adopt statements. Toyota’s action to influence its affiliate to divest from Myanmar Suzuki Motor is a good example of its human rights commitment.”

Toyota’s formal acknowledgment of divestment came a day before the Burmese government announced its first elections in 20 years. News of the election drew widespread criticism as it imposes many restrictions, including barring Aung San Suu Kyi, imprisoned leader of the National League for Democracy and winner of the 1990 elections, from participating.

The investor group will continue to encourage Toyota Motor to address these issues and to develop human rights risk and impact assessment tools, particularly in countries considered to have substantial human rights risks such as Burma and Sudan.

Trillium Asset Management Corporation is a Boston-based, independent investment management firm devoted exclusively to sustainable and responsible investing.

Domini Social Investments is a New York City-based investment firm specializing exclusively in socially responsible investing. Domini manages funds for individual and institutional investors who wish to integrate social and environmental standards into their investment decisions.

Interfaith Center for Corporate Responsibility (ICCR) has been a leader of the corporate social responsibility movement for nearly 40 years. ICCR's membership is an association of 275 faith-based institutional investors, including national denominations, religious communities, pension funds, foundations, hospital corporations, economic development funds, asset management companies, colleges, and unions. Each year ICCR-member religious institutional investors sponsor over 200 shareholder resolutions on major social and environmental issues.

This again points to the reality of what John Ruggie suggested as the basic governance polycentricity inherent in global economic activity conducted within a framework of territorially limited states and freely moving capital, operations and investment activity in which corporations, investors, and civil society elements can interact  in ways that can produce harmonized approaches to behavior  over the whole of their operations and across any number of states.   Though the state remains a critically important actor in developing basic normative structures for business conduct, the state is not the only or perhaps the greatest agent, of harmonizing  emerging transnational standards of corporate behavior about which consensus is emerging.