Wednesday, March 30, 2011

The "Five Coordinations" (五个统筹) As Party Line and State Policy in China

It is common in the West to dismiss the development of ideological positions of the Chinese Communist Party.  It has been easy to treat the Party Line as both transitory and mere ideology.  The West, more comfortable with the seeming greater solidity of the governmental apparatus, tends to look for policy elsewhere.  But this tends to reduce the ability of the West to understand Chinese political activity and state policy, while serving as a reflection of the self absorption of Western analysts and the construction of their own inward looking analytical universe.  

 (From “五个统筹”即统筹城乡发展、统筹区域发展、统筹经济社会发展、统筹人与自然和谐发展、统筹国内发展和对外开放2007-01-12 13:39) (另一方面,我们要积极参与国际经济贸易规则的订立、修订和完善进程,努力争取使它们符合我国发展的利益。("on the other hand, we should actively participate in setting international economic and trade rules, revise and improve the process, striving to make them consistent with the interests of our country's development")).

Randy Peerenboom has nicely described the difficulties of ignoring ideology in Chinese constitutional discourse:
While most commentators portray political ideology as the main obstacle to establishing rule of law in China, the biggest obstacles at present are systemic in nature and involve the lack of institutional capacity. In the future, economic factors, the interests of key institutional and social actors, and ultimately political ideology (if China remains a single-party socialist state) are likely to exert the most influence on legal reforms and their likelihood of success.
Randall Peerenboom, "What Have We Learned About Law and Development? Describing, Predicting, and Assessing Legal Reforms in China," 27 MICH. J. INT'L L. 823, 864-65 (2006). This tendency has important ramifications.  "On the one hand, it takes the ideological campaigns of the CCP too literally. As a consequence, the analysis tends to minimize the importance of this theorization. . . . On the other hand, Western style analysts do not take CCP ideology literally enough, but as invariably little more than the politics of individual power by other means. It follows from either of these stances that ideology serves merely to mask the arbitrariness of the CCP’s culture of exercising personal power without limits." Larry Catá Backer, The Rule of Law, the Chinese Communist Party, and Ideological Campaigns: Sange Daibiao (the 'Three Represents'), Socialist Rule of Law, and Modern Chinese Constitutionalism. Journal of Transnational Law and Contemporary Problems, Vol. 16, No. 1, 2006.(SSRN version at 126-127).

One of the more important developments of the Party line has generally gone little noticed in the West.  The so-called "five coordinations" suggests a basis for understanding the approaches of the Chinese government to both internal and external development policy.  The five coordinations seeks to express the five critical aspects of state policy toward development: that is, urban and rural development, regional development, economic and social development, the harmonious development between man and nature, domestic development and opening-up. ("五個統籌"與中國特色信息化道路" Five-overall-planning" and the Road of Informatization with Chinese Characteristics, 姜奇平    汪向東).  The five coordinations is especially useful for understanding the strong element of harmonization and complementarity in Chinese development policy, both as a matter of internal development and as a basis for determining the quality and direction of Chinese participation abroad and in the development of international norms.  "统筹就是兼顾,兼顾就是协调。努力做到“五个统筹”,兼顾到改革发展稳定的各个方面,兼顾到中国特色社会主义事业发展的各个领域,兼顾到全面建设小康社会的整体目标和目的,其结果就是全面、协调和可持续发展,以及社会的安定与和谐、人的全面发展。"  (Ordinance means taking all into caring, which is coordination. Striving to achieve "Five Coordination", taking all aspects of reform, development and stability into account; taking development of socialist society with Chinese characteristics in all aspects into account; taking the account of building a moderately prosperous society with the overall goals and objectives. The result will be a comprehensive, coordinated and sustainable, along with development of social stability and harmony , and total civil development") (From “五个统筹”即统筹城乡发展、统筹区域发展、统筹经济社会发展、统筹人与自然和谐发展、统筹国内发展和对外开放2007-01-12 13:39) To understand the normative framework within which Chinese policy is expressed, constructed and implemented, it is important ot understand the framework from which it arises.  That framework is not identical to the one used in the West.  Though the functional results may often be the same, the differences can best be understood as arising from a difference in normative perspective.

My research assistant Shing Kit Wong (SIA MIA -12) recently wrote a short essay on the 五个统筹. We were particularly interested in the importance of Five Coordinations for corporate social responsibility on China.  I have posted it here.

The Five Coordinations (五个统筹)
Shin Kit Wong

Origins of “Five Coordination”

The 16th Chinese Communist Party Central Committee Third Plenary Assembly was held in Beijing for three days on October 11, 2003. The President of China, Hu Jintao, passed the “CPC Central Committee Decision on Perfecting a Number of Issues in Socialist Market Economic System”, “CPC Central Committee Decision on Revising Part of the Recommendations of the Constitution”, and “Decision to the Tenth National People's Congress Standing Committee”. The Assembly agreed that the congress must take implementation of the Deng Xiaoping Theory and his “Three Represents” as guidance while maintaining the continuity and stability of the party’s governance, and actively create a reform and opening up with socialist modernization construction. Furthermore, the Assembly urges the congress to determine goals of socialist market economic system in China with improvement and contribute to the progressive change in establishing urban-rural dual economic structure. The dominant position of state-owned economy ought to play a leading role in actively promoting a variety of effective forms of public ownership, accelerate the adjustment of the layout and structure of the economy. In terms of rural management, improvement of long-term stability and the basis of household contract management need to be continued. In order to accelerate the construction of a unified national market, the government ought to promote free movement throughout the country and full competition. The Assembly also urges transformation of government functions and deepening reform of administrative examination and approved system. In economic and social development, better market regulation and government policy are needed to promote employment and improve business and employment environment that encourages companies to create more jobs. On the other hand, the Assembly stressed to deepen the culture of science and technology education and health system reform and urged the whole party to fully understand the historical responsibility to its shoulder.

The People’s Republic of China Constitution is the fundamental law and general statute that maintain national unification, ethnic unity, economic development, social progress and long-term stability of the legal basis. The current constitution consists with the good condition of China in the national economic, political, cultural and social life, and plays an extremely important role to protect China's reform and socialist modernization. However, the Assembly pointed out the constitution must uphold the “Four Cardinal Principles” based on the national conditions, give full democracy and listen to opinions, strictly comply with law, and ensure to strengthen and improve the party's leadership. This will help the superiority of the socialist system and is conducive to safeguarding national unification, ethnic unity and social stability, and promoting economic development and social progress.

Finally, the Assembly restated that the congress must implement Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory and “Three Represents” to forge ahead and constantly promote the socialist material civilization, political and spiritual civilization coordinated development in order to build a perfect socialist market economic system and achieve a comprehensive grand goal of building a moderately prosperous. The content of the Assembly was summarized in five areas of development known as ‘‘Five Coordination (五个统筹)’’ in order to be coordinated or balanced the social disparities found in present day China: rural versus urban, coastal versus central and western, economic versus social, human versus nature, and domestic development versus openness to the world. This scientific development concept emphasizes a more balanced approach to China’s development.

What is “Five Coordination”?

The fundamental concept of scientific development approach is holistic. As mentioned earlier, it mainly refers to the “urban and rural development”, “regional development”, “economic and social development”, “balancing development of man and nature”, and “domestic development and opening up”. This coordination is to solve some of the most prominent issues and institutional barriers to the deepest level of conflict. In accordance with this coordination, the modification will reflect social and comprehensive human developments that are embodied in the socialist market economy along with understanding of the law.

The CPC believes that progress of any society is originated from economic, political, and cultural development, where economy is the base; politics is esurience; and culture is the pilot. Economic growth is an important foundation for the development, but it is not simply equated to it. In building a moderately prosperous society, the CPC establishes the comprehensive development of ideas and constantly promote more economic development, democracy, science and technology, more prosperous culture, and greater social harmonious. The “Five Coordination” focuses the overall objective to promote a profound answer to building a moderately prosperous society in order to promote Deng’s “Three Represents”.

Harmonization of economic and social nature is the path of development. Economic, social and natural coordinated progress includes the development of science and technology, education, culture, medical care, natural resource conservation and ecological environment construction. The developments of human society, the realization of economic, social and natural development are significant features of building a moderately prosperous society that must uphold the right direction. Although, China's rapid economic developments in meeting the people’s material life have made ​​great progress, it is still at a low level, incomplete and unbalanced stage. Moreover, water shortage, land desertification, flooding of rivers, pollution, and many other problems have become serious issues that accompany today’s development. Natural resources and social development have become increasingly prominent, and people's increasing material and cultural needs and the backward social production of social conflict are still the main contradiction. In order to strike a balance and maximize the result, the CPC establishes a comprehensive concept of development to accelerate economic growth, and vigorously develop science and technology, education, culture, medical care and other social undertakings to further strengthen environmental protection and ecological construction.

In the process of promoting the coordinated development, the coordination focuses on dealing with urban and rural, regional, domestic and foreign relations. For instance, in handling the relations between urban and rural areas, the key is to bring out the strengths in both areas and use it to benefit each other. While the rural countryside can promote resources and market to urban area, they can also receive talent and technology from urban development and solve various rural issues. It is one of the goals in “Five Coordinate” to fundamentally eliminate the urban-rural dual structure and created a linkage to achieve overall development. Furthermore, coordinated development of the social system and the natural systems are included to mutual promotion and common development of the state, economic, political, cultural, mutual cooperation, inter-regional population, resources and environment complement. They are all influenced by each other to form a rational structure and effective form of a balanced social development.

Another important objective is to solve the problem of uneven development between regions. Deng once proposed development in some regions in a faster phase and some regions develop slower, and thus the more developed regions can influence the slowly developing region and achieve ultimately common prosperity. This implementation of the non-equilibrium model of development has geographic advantage to support the eastern region resulted in uneven development between regions, causing a huge gap with the western region and economic problem and political problem. The new balance is to achieve coordinated regional development of the necessary requirement and gradually solve the problem of uneven regional development. Priority will be given to potential regions with good foundation but consist of limited human, material and financial resources. When high economic growth achieve to a certain stage, it would spread and distribute productive forces to equalization. Different regions of a country's economic development would transfer resources and factors of production from high to low and create a balanced development of economic structure. Regional economic development would transfer through the eastern regions to the central and western regions of China. Such transfer will diffuse resources and industries from all the economic zones. The implementation of coordinated development of the east and west maintain the relative balance between the ratios between the developments of a major move. The achievement of the areas of common development and prosperity will ensure all regions simultaneously entered a well-off society.

Sustainable development as a new scientific development concept deepens reform and plays an important supporting role. Due to the traditional extensive economic growth mode of binding of high consumption and low efficiency, many issues raised in China's economic development. Environmental pollution, ecological damage, industrial waste, air pollution, water pollution, soil erosion and land desertification, grassland desertification and other phenomena have become an increasingly serious matter. Meanwhile, China is a populous country with less resource per capita. The coordination ought to change the way that economic growth can be achieved in sustainable development. Therefore, it is necessary develop technological progress and strengthening management, and create an enabling economic operation mechanism and management system, which will gradually change the way of economic growth and promote a sustained, rapid and healthy development and society.

Another important aspect in the “Five Coordination” is to take a new path to industrialization. The CPC concluded on the basis of practical experience to make a major decision in following the tide of economic development from the world that science and technology being a natural choice that is fully considering the basic national conditions of China. In order to take a new path to industrialization, technological progress must be accelerated, and the application of information technology must improve the investment output ratio. It also need to optimize resources and reduce production costs, improve energy and raw materials use efficiency and reduce resource consumption and implement clean production. The development of green industries and environmental protection industries are essential in which will enhance the environmental and ecological protection, the progressive realization of sustained economic development, social progress, and sustainable use of resources. Thus the environment will continue to improve and achieve the goal of ecological virtuous circle. Overall harmonious development between man and nature reflects the essence of sustainable development and is the fundamental requirement “Five Coordination”. Former President of China, Jiang Zemin, once pointed out that economic development, environment, and resources management are not only arrangements to the current generations, but also for the sake of future generations to create better conditions.

The coordination adheres to “People First”, coordinated and sustainable development, and promotes the overall economic, social and human development. This is the Marxist theory of the overall development of human inheritance, wealth and development, as well as the essential requirement of “Five Coordination”. “People First” is to people as a social subject and center in social development to meet human needs, improve human quality, and to achieve the ultimate goal of human development. It requires improvement to the structure, deepening reform, and acceleration of development that the practices considers people as the center and propose as the primary focus of all development. CPC subjects to the majority of the people’s interests as the highest value to the comprehensive development of human as the supreme values ​​and ideals. To achieve the idea of “People First”, the party ought to improve the understanding of people, reflect their will, and value their resources of decision-making mechanism. The party also needs to promote decision-making more scientific and democratic, and make the principles and policies better reflect the people's fundamental interests. On the other hand, to serve the people with the value of orientation, it must be right of the people and benefits for the people.

The last focus of “Five Coordination” is coordinating domestic development and foreign strategy. It requires the plan for development, good use of the global strategic vision to capture the opportunities, and strive to external opportunities to continuously improve the participation in international competition and cooperation skills. The formulation of policies ought to base on the internal development needs, but also needs take full account of international influence, and promote common development in conducting macro-control. Coordinate domestic development with opening up the essence is to make good use of international and domestic markets and resources as well as their relative effectiveness. The government should promote foreign trade and attract foreign investment growth mode from extensive to intensive. Moreover, the government need to accelerate the integration of domestic and foreign trade management system, strengthen management of foreign affairs, always put national sovereignty and security, and ensure the country's political security, economic security, cultural security and information security.

Why is “Five Coordinate” important?

The “Five Coordinate” is the idea of CPC Central Committee on perfecting the socialist market economic system, and maximizes greater play to market forces in allocating resources to the basic role and enhance their vitality and competitiveness, and improve the government's social management and public service functions for building a well to provide strong institutional protection. It is the ideology of what the society should be like and the basis of development and law making which can achieve such society. In March 14, 2006, National People's Congress adopted the fourth meeting of the State Council's “National Economic and Social Development Five-Year Plan Outline”. The meeting agreed that the NPC Financial and Economic Committee's review report on the results and decided to approve this planning framework. The meeting proposed fully implement of the “Eleventh National Economy and Social Development Five-Year Plan Proposal”, shortened as “Eleventh Five-Year”. The plan outlines the goal of guiding principles and development on building a moderately prosperous society and fully implements the scientific concept of development. On the other hand, it delineates the idea of building a new socialist countryside by developing modern agriculture and increasing farmers’ income. Training modernized farmers and increase agricultural and rural investment are also the keys to reform the countryside. Regarding industrial structure optimization, development of high-tech industry needs to accelerate; the development of the energy industry needs to be optimized and revitalizes the equipment manufacturing industry. The plan also urges to speed up the development of services and expand of producer services. Reformation of consumer services and policies to promote development of service industry is a key in the plan. Coordinated development of the overall strategy for regional improvement is the one of the cores in the “Five Coordination”. It focuses on the formation of the main functional areas and promotes health development of urbanization in order to create a resource-saving and environment-friendly society. In terms of national security, the plan outlines the need to accelerate scientific and technological innovation and give priority to education in those areas. The plan also stresses administrative reform and improves the economic system including the financial and tax reform. In contract, improving the modern market system requires implementation of mutually beneficial and win-win strategy of opening up. It also requires accelerating the transformation foreign trade growth mode and improves the quality of using foreign capital. This will bring Chinese economy in active engage in international economic cooperation. In the same line of “Five Coordination”, the Eleventh Five-Year” also urges a socialist harmonious society construction to improve people's living standards including improvement of the medical care and the improvement of a better the social management system. Furthermore, the plan describes how to strengthen socialist democracy and the socialist cultural construction, and to strengthen national defense with implementation mechanism to establish and improve the national strategic system.

“Five Coordination” and Corporate Social Responsibility in China

As a legal entity that is created under the laws of state, corporation, as an instrument of the nation, ought to ensure its active compliance with the national laws and goals, ethical standards, and international norms. Corporate social responsibility in China is based on the “Five Coordination” and corporations act as the executor of the social reform and developments. In order to build a harmonious and orderly society, Chinese believes that it requires maximization of mobilizing all labor, knowledge, management, capital and technology, energy, and exploration the source of all social wealth. Corporate have the advantages in resources from the all sizes of business organizations. Thus, in the process of building a harmonious society, they have a unique and unmatched status. In the developing economy, one of the main Chinese corporate social responsibilities is to help solving the employment problem. The standard specifies mainly address the labor problems and stress that the corporate need to ensure clean and sanitary working environment of workers, eliminate safety hazards, not using child labor, and effectively protect the vital interests of the workers.

To achieve such objective, corporate should fulfill its financial responsibility for the great wealth of the people's material life, the rapid and stable development of the national economy. The most direct way is to maximize profit, which can be achieve by increasing sales, reducing costs, and the right decisions to ensure the legitimate interests of stakeholders. Moreover, corporate ought to comply with all laws and regulations, including environmental law, consumer law and labor protection laws, completion of all contractual obligations, leading credit management, legal operations, and acceptance of the warranty promise. Additionally, corporate should enhance its employees and business communities in such idea in which creating a legal-bidding society. The ethical responsibility to society is also expectations from all kinds of corporations. Businesses should strive to make their own community not suffering from operational activities, the negative impact of products and services. Corporate should also accelerate the upgrading of industrial technology and industrial structure optimization, developing green technology, increasing its ability to absorb employment, environmental protection and social stability due diligence. Lastly, corporate is the responsible for social philanthropy. It is an important task for corporate to develop social service, education, health care, and social security that is directly related to the development of people's most immediate interests, thus achieving social stability and harmony. Capital corporate ought to maximize their advantages for the development of social undertakings in order to become a good corporate citizen. In addition, corporate should support community education, health, humanities, culture and art, the development of urban construction projects, helping communities to improve the public environment through voluntary community work.

On the other hand, a clear corporate social responsibility is to help protect resources and the environment and achieve sustainable development. As corporate citizen with great influence in social resource, it is an important corporate social responsibility to reduce all aspects of production activities may cause pollution to the environment through technical innovation and the reduction energy consumption and resources along with reduction of production costs and thus making products more prices competitive. Corporate should also build public good of environmental protection and community facilities to purify the environment, and protect the interests of the community and other citizens. This will help the city economic development and ease serious environmental pollution, particularly in industrial corporate concentrated area, and people living contradiction between environmental degradation. Corporate social responsibility in China also aims to help alleviate the gap and eliminate the hidden dangers of social instability. Corporate ought to focus on capital advantages, management strengths and human resources to the development of resources in poor areas via expansion of their operations access to new growth to make up for the lack of funding in poor areas and help local poverty. Such duty, in addition to sponsorship of cultural, educational, and other social welfare, also includes in the responsibility to the community. This framework of CSR in China derived heavily from the “Five Coordination”.



KIN-MAN CHAN, Harmonious Society,









发挥人大政治优势 依法推进科学发展, 解读十六届三中全会文件:五个统筹是一种新的发展观,

Monday, March 28, 2011

Onthe Autonomous Regulatory Authority of Corporations in Global Private Markets: Governance Between Corporation and State

On February 26, 2011, the Washington Post provided another illustration of the growing autonomy and regulatory power of corporations within systems of economic globalization. Lyndsey Layton, Wal-Mart bypasses federal regulators to ban controversial flame retardant, Washington Post, Feb. 26, 2011.
In perhaps the boldest example yet of "retail regulation," Wal-Mart is stepping ahead of federal regulators and using its muscle as the world's largest retailer to move away from a class of chemicals researchers say endanger human health and the environment.

"This really shows the market being able to move more decisively than the government," said Andy Igrejas, national campaign director of Safer Chemicals, Healthy Families, a coalition of environmental and public health groups pushing for tougher federal chemical laws.

Increasingly, retailers are barring specific chemicals from products in their stores in response to concerns from consumers and advocacy groups. In 2006, for example, Whole Foods became the first national retailer to ban bisphenol A, or BPA, from baby bottles and children's cups. Health advocates had raised questions about the safety of BPA, a widely used component in plastic that has been linked to reproductive problems, cancer and other health disorders in laboratory animals. (Id.).

What the media has only now been catching up on is the decade old move by corporations to bypass the slow and un-harmonized national programs of regulation in favor of harmonizing operations globally through their own supply chain networks augmented by recognition of harmonization among similarly situated large corporate groups.  See, e.g., Backer, Larry Catá, Multinational Corporations as Objects and Sources of Transnational Regulation. ILSA Journal of International & Comparative Law, Vol. 14, No. 2, 2008. Backer, Larry Catá, Economic Globalization and the Rise of Efficient Systems of Global Private Lawmaking: Wal-Mart as Global Legislator. University of Connecticut Law Review, Vol. 39, No. 4, 2007. 
The method is simple--a substitution of regulatory contract for public regulation.  The scope of governance is also well established--the supply chain of the large multinational.  "A spokesman for Wal-Mart said the company quietly made the decision to ban PBDEs from some products "several years ago" but just recently reminded suppliers that it would begin verification testing in June. Spokesman Lorenzo Lopez said Wal-Mart was motivated to act after a handful of states began banning PBDEs. " ( Lyndsey Layton, Wal-Mart bypasses federal regulators to ban controversial flame retardant, Washington Post, Feb. 26, 2011).  The object of these supply chain regulatory contracts is also well understood--consumer markets.  Customers and investors now serve as the new focus of accountability for corporate action.  The stage on which that accountability plays out are the world wide operations of the enterprise, without regard to the legal relationships between the various elements of this supply chain.  
In the absence of federal action, state legislatures have been enacting bans on controversial chemicals, creating a patchwork of restrictions and a regulatory challenge for companies.
Several members of Congress have been pushing to reform chemical laws to make it significantly easier for the EPA to restrict or ban chemicals that are known hazards.
But retail regulation may prove a faster route, observers say.
"This will have both direct and indirect ripple effects," said Richard Denison, senior scientist at the Environmental Defense Fund. "The companies producing for Wal-Mart are not going to make a special line for them and another line with those chemicals for everyone else. And this is going to make it easier for other retailers to follow suit."(Id.).
The state becomes a segmented supporting actor.  Its law may be effective within its territory, but there will be moments when even those efforts to produce a domestic legal order that binds will be irrelevant to the setting of global behavior norms.  Global investors, consumers and entities will develop their own systems in parallel.

This is the heart of the governance context in which business and human rights regulatory frameworks are emerging. At its core is the understanding that corporate regulatory systems are emerging autonomous of the domestic legal orders of states.  Backer, Larry Catá, Governance Without Government: An Overview and Application of Interactions Between Law-State and Governance-Corporate Systems (March 1, 2010). Penn State Legal Studies Research 10-2010. Autonomy does not mean resistance to emerging global consensus about corporate conduct, especially that which touches on what the West understands as human rights articulated in a variety of soft law instruments and in the international instruments. The new U.N. "Protect, Respect and Remedy" framework for business and human rights is grounded on an acceptance of both the idea of an autonomous sphere of corporate regulation and of the communication (and convergence) of traditional governance centered on the state and of corporate governance.  Larry Catá Backer, On Challenges to Operationalizing a Transnational Framework for Business and Human Rights--the View From Geneva,  Law at the End of the Day, Oct.18, 2009. The future will see more recognition of the regulatory effects of the operations of multinational corporations-- a law of corporate behavior autonomous of the law systems of states--and efforts at the international level to coordinate governance regimes of states and those of economic enterprises.  See Larry Catá Backer, Inter-Systemic Regulatory Coherence: GRI and the Operationalization of the OECD's Guidelines for Multinational Enterprises Framing Governance for Business and Human Rights, Law at the End of the Day, March 18, 2011.

Saturday, March 26, 2011

Sherry Roush on Tommaso Campanella's Philosophical Poems

My colleague, Sherry Roush, Associate Professor of Italian at Pennsylvania State University, specializes in Medieval and Renaissance Italian literature and culture. She is the author of Hermes’ Lyre: Italian Poetic Self-Commentary from Dante to Tommaso Campanella (University of Toronto Press, 2002) and co-editor of The Medieval Marriage Scene: Prudence, Passion, Policy (Arizona State University Press, 2005). 

She has just published a superb translation and study of some of the more important work of the vastly under appreciated Italian philosopher and poet Tommaso Campanella, Sherry Roush, Selected Philosophical Poems of Tommaso Campanella:  A Bilingual Edition (Chicago: University of Chicago Press, 2011). Professor Roush's translation is magnificent.  These infuse the poems with new life, especially for non-Italian readers. That alone is worth reading through the philosophical poetry.  Professor Roush is masterful in conveying Campanella's "poetic voice, which modulated from gratingly raw to almost transcendentally polished, at times rustic in its Calabrian allusions and at times urbanely finished in legalistic Latin."  (Roush, supra, at 26). 

Beyond its poetics, the volume is worth a careful read by students of law, and philosophy. Roush reminds us of the immense influence of Campanella. Campanella spent most of his life proceeding from one prison to the next. He started life in Calabria, one of the poorest parts of South Italy and ended up in Paris. He is most well known in the English speaking world for his utopian text, The City of the Sun, and for the writing of a defense of Galileo, one that the object of which appears that Galileo rebuffed.  (Roush, supra 1, n. 2). 

Scholars have cited Campanella's influence in religious and political realms. . . . For instance, Giorgio Spini has traced the promulgation of Campanella's religious ideals, not only to France and Germany, but even to American colonies, particularly to the Labadists of Northern Maryland and the to the Appalachian Shakers.  Like the political thought of Noccolò Machiavelli--whom Campanella bitterly denounced--Campanella's work would come to be read and understood in ways that he could never have foreseen.  Most notoriously, Campanella's writings purportedly inspired Vladimir Lenin's "Plan of Monumental Propaganda" (May 27, 1918).  (Roush, supra, 2).
Campanella, thus, was among those influential theorists of what in later centuries would be the intimate connection between law and culture--between the signs of social behavior and the legal constraints that describe the structures of the management of individual and collective behavior (and the construction of the reality under which they operate). Lenin's "Plan of Monumental Propaganda" merely described a tendency as old as the destruction of pagan temples upon the ascendancy of Christianity as the state religion of Rome, of the destruction of religious images by Byzantines during the Iconoclast controversy, and later by Protestants in the early Reformation, to the destruction of the monuments to the glory of the Tsar, the destruction of artifacts during the Chinese Cultural Revolution,  to the toppling of the statues of Saddam Hussein in the aftermath of the American invasion of the Iraq.

Campanella lived in the aftermath of a particularly energetic period of iconoclasm in which reality, symbol, signifier and signified all were dynamically intertwined.  Iconoclasm has been described as "a means of proving the “falsehood” of Roman Catholicism, and of desacralizing its symbolic structure. In a positive sense, iconoclasm was also a means of affirming change and of calling for a thorough reform of religion and society."  (From "The Meaning of Iconoclasm," The Encyclopedia of Protestantism, Vol. 2).   But it is much more complicated--for Iconoclasm substitutes as much as it removes.  To focus on the destruction of the representations of the past is to miss the manner of the construction of their substitute.  That is an insight Lenin understood better than most, at least since the days of the Christianification of the Roman world.  Roush suggests both the semiotic turn and its contextualization within the frameworks of then contemporary notions of philosophy and religion. 

The summary materials from the University of Chicago Press describe the book this way:
A contemporary of Giordano Bruno and Galileo, Tommaso Campanella (1568–1639) was a controversial philosopher, theologian, astrologer, and poet who was persecuted during the Inquisition and spent much of his adult life imprisoned because of his heterodox views. He is best known today for two works: The City of the Sun, a dialogue inspired by Plato’s Republic, in which he prophesies a vision of a unified, peaceful world governed by a theocratic monarchy; and his well-meaning Defense of Galileo, which may have done Galileo more harm than good because of Campanella’s previous conviction for heresy.
But Campanella’s philosophical poems are where his most forceful and undiluted ideas reside. His poetry is where his faith in observable and experimental sciences, his astrological and occult wisdom, his ideas about deism, his anti-Aristotelianism, and his calls for religious and secular reform most put him at odds with both civil and church authorities. For this volume, Sherry Roush has selected Campanella’s best and most idiosyncratic poems, which are masterpieces of sixteenth-century Italian lyrics, displaying a questing mind of great, if unorthodox, brilliance, and showing Campanella’s passionate belief in the intrinsic harmony between the sacred and secular. (Roush, supra, book jacket).

Yet there is more to Campanella's philosophical poetry than this. "By 'philosophical poetry,' Campanella understood a particular kind of verse that is not merely beautiful but also useful, instructional or 'architectonic.'According to what he writes in his Poetics (particularly in chapter 4 of the Latin version), poetry offers a unique medium for knowledge, capable of allowing readers to retain more of what they read than prose can because arduous concepts are presented in a more lovely manner in poetry, and this rhythmic form can be a mnemonic device."  (Roush, supra, at 191). (Annotations). Interestingly, Campanella published this collection of philosophical poetry under a pseudonym (Roush, supra, 13). Roush has hypothesized "that Campanella's own explanations of his pseudonym and consideration of his prophetic mission suggest that he may have wanted to cast his poetic voice in the role of the seventh apocalyptic angel."  (Roush, supra, 14).

And this brings me back to the intimation, earlier above, of a rough semiotics to Campanella's philosophy--one that resonates in law.  But this is semiotics in which the signification process becomes organic--not an external but an internal relation among sign, signifier and signified.  Roush quotes John Headley for the connection between Campanella's philosophy to pansensism, the doctrine that posits that all things in nature are endowed with sense.  "'In the pansensist universe language operates differently:  words have a conjunctive power, identifying signifier and signified, being and thought, nature and perception; they operate as charms, possessing an incantational capacity when properly charged.'" (Roush, supra, at 21, citing John M. Headley, Campanella and the Transformation, 162).  This comes close to an understanding of the power of the language of law, where words become both incantation and shape the ability of people to frame reality. Consider for example the fetish quality of the invocations necessary to commence an action to disregard the legal personality of a corporation and reach the assets of shareholders under U.S. law--See Franklin A. Gervurtz, "Piercing Piercing:  An Attempt to Lift the Veil of Confusion Surrounding the Doctrine of Piercing the Corporate Veil," 76 Oregon Law Review 853, 854-58 (1997). A better, and perhaps more powerful example, was a recent NBC Newscast (March 20, 2011) in which Lester Holt talks with NBC News military analyst retired Gen. Barry McCaffrey about the then recent set of substantial U.S. military strikes against Libyan military targets under authority of a U.N. Security Council resolution permitting the establishment of a "no-fly" zone within Libyan airspace to "protect civilians."  Mr. Holt asked retired General McCaffrey whether the United States was effectively at war with the Libyan government in the wake of these substantial air strikes.  The General did not pause before explaining that the United States could not be at war--not because of the events on the ground in Libya, but because we couldn't be at war with Libya otherwise the War Powers Act of 1973 would have been invoked!  Because the law had not been invoked, the United States was not at war.  Incantation, words, law symbol now constrain the reality of events that though they occur before our eyes do not exist.  This is the magic invoked by Campanella. 

Campanella's life is itself a symbolic representation of the incantational semiotics that form the foundation of his philosophy, though not of course, its politics.  See, Joseph Scalzo, "Campanella, Foucault and Madness in Sixteenth Century Italy," The Sixteenth Century Journal 21(3):359-372 (1990). Professor Roush describes the culminating months in 1600 when, with condemnation likely after a torture induced confession,
Campanella set fire to the straw mattress in his prison cell and pursued a plan to simulate a raving delirium. . . . Campanella spent one month raving, muttering or otherwise outwardly demonstrating an utter loss of reason to any official who saw him.  Meanwhile he conversed rationally with a prisoner friend. . . .  For months Campanella somehow managed his posture of simulated madness through tortures, surprise visits and surreptitious observations. . . .   On June 4 and 5, Campanella underwent the veglia (wake).  By Campanella's time, the wake was a relatively rare form of torture, deemed sufficiently cruel that it was universally recognized as intolerable enough to provoke confession even from the most recalcitrant of subjects. . . .  After thirty-six continuous hours of torture without sleep, the exactors of punishment cut loose his ropes and declared him insane.  As soon as Campanella heard these words, he was said to have turned to one of his torturers, Giacomo Ferraro, and hissed in his ear: "Che si pensavano che io era coglione, che volvera parlare? (What did you think, that I was a dumbass, that I wanted to talk?).  (Roush, supra, 6-8, link added).
Scalzo describes this in his abstract:  " Campanella's heresy case suggests that both the concept of the "discourse of madness" and that of the "animality of madness" were evident in the Inquisition's judicial procedure. However, the issue of animality seems to have played a greater role in the outcome of Campanella's case, since such a definition was incorporated in the judicial torture which the Inquisition commonly used in cases in which the mental state of the accused was uncertain. In Campanella's case, in particular, such judicial torture was embodied in the Inquisition's veglia torture, meant to act as a final legal test for insanity. Campanella seems to have exploited this legally-defined view of insanity to his advantage, thereby saving himself from almost certain death. "(Scalzo, supra).

Roush reminds us that "'The true poet,' Campanella summarized in the tenth chapter of his Poetics, 'is the one who teaches and says very great and prophetic things for the good of the readers.'".  (Roush, supra, at 15). What are these great and prophetic things?  Campanella means to instruct in religion, philosophy, magic, and politics, all aspects of the same reality, its invocation and articulation.  Campanella understood words in their semiotic sense and with a sensibility that would be developed later by Foucault and Nietzsche.  What he calls the magic of words, their power on utterance, reflects a view of representational reality in which the representation becomes more powerful than the thing itself in ordering the perception of those affected by them.  Thus in Poem 44 On the Same [Against Sophists, Hypocrites, Heretics, and False Miracle Workers] Campanella sings: "Nessun ti verrà a dire: 'Io son sofista'; ma di perfidie la scuola più fina larve e bugie sottil dà per dottrina, e vuol esser tenuta evangelista. . . . onde serran le bocche altrui, e si spolglia ognor il libro, e veste di menzogna, citato in tesatimon contro lo voglia." (Roush, supra, at 120-123 ("No one will come to you saying: 'I am a sphist"; but the finest school of treachery passes shadows and subtle lies for doctrine and wants to be esteemed an evangelist. . . .whence they seal the mouths of others, yet spoil the book by wrapping it in a veil of lies cited in testimony against their will."")).

I will end by focusing very briefly here on Campanella's politics, in their semiotic and incantational sense to suggest that the power of the pronouncement (the verse) is meant to activate the conception and give rise to the reality to be conveyed, and by that conveyance, planted into the mind of the recipient.

True to the spirit of the times. Campanella both sought to liberate himself and in the process managed to replicate, dominant forms and patterns of thinking.  That is the substance of Poem No. 3, which mimics the "Credo" and which Roush describes as both fundamental to the understanding of the philosophy and tedious (supra at 19).    The Campanella credo is Platonic and grounded in a hierarchy of reality in which value and position are intertwined. It suggests the perverseness of existence--where the power to sin is the  signature of the lack of power, of impotence ("poter pecare è impotenza vera", supra, 46) and power is derivative, grounded in the framing element of reality (Vero potrere eminenza è dell'ente, id.). Yet it also suggests that belief and personal action, rather than allegiance to an institutional structure overseen by a priestly (or other sort of managerial) class are the measure of conformity to "right" ("Talché, barbare genti [ed idolatre], se operaste giustizia naturale, non siete esenti dalle sanrte squandre," id., 48 lines 58-60). But also present is the connection with the forms of institutional power that have shaped Campanella's reality--in this case the late medieval Church just then dealing with the realities of the substantial loss of spiritual and temporal power through Reformation. Consider the supplication:  Deh, Signor, io vaneggio; aita, aita! pria che del senno il tempio divenga di stoltizia una meschita" (Poem 73 Madrigal 1 "Orazioni tre in salmondia mertafisicale congiunte insieme", supra, 140 ("Oh Lord, I rave deliriously.  Help, Help! before the temple of my intellect becomes a mosque of foolishness.") the entire Madrigal is worth reading for its irony and depth).

Thus, the institution is acknowledged, and the objectives becomes, as in every institutional framework since (whether temporal, ecclesiastical or otherwise), the fight against "sofisti, ipocriti e tiranni" (id., line 67). but the system survives (id., lines 94-96). Nietzsche hovers in the background, though centuries off. Thus, for example, Poem No. 6 ("The Way to Philosophize") speaks to go back to the original to avoid the error of what centuries later would become  Nietzsche's "priestly type."  Thus the admonition at the end of Poem 20 ("To Christ Our Lord", supra 70-73): "If you return to earth, comer armed, Lord, because enemies are preparing other crosses--not Turks, not Jews--but those of your own kingdom. (Id., lines 12-14 "Se torna in terra, armato vien', Signore, ch'altre croci apparécchianti i nemici, non Turchi, non Giudei: que' del tuo regno.").

I leave you with Poem 35 to ponder (Roush, supra, 110-113):

Che 'l principe tristo non è mente della Repubblica sua

 Mentola al comun corpo è quel, non mente,
che da noi, membra, a sé tutte raccoglie
sostanze e guadi, e non fatiche e doglie:
ch'esausti n'ha, come cicale spente.

Almen, come Cupido, dolcemente
ci burlasse, che 'n grembo della moglie
getta il sangue e 'l vigor,vche da noi toglie,
struggendo noi, per far novella gente.

Ma, con inganno spiacevole, in vaso
li sparge o in terra, onde non puoi sperare
alcuna ricompensa al mortal caso.

Corpo meschin, cui mente ha da guidare
piccola in capo piccolin, ch'ha naso,
ma non occhi, né orecchie, né parlare.
This poem suggests inversion--of the mind and body, of the head and the tail,  of gesture and action of pleasure and profit, of cause and effect. The binaries build on the foundation of the physical and political body, and of the pleasures of onanism and the obligations of fecundity.  Nietzsche again hovers in the background, though many centuries off.  That inversion goes to the heart of the philosophy of Campanella.  Roush's translation is superb; so is her analysis.  For her commentary on the translation see Roush, supra 29-34).


Monday, March 21, 2011

China’s Multinational Enterprises in Latin America and Norway’s Sovereign Wealth Fund—Public Power and Private Markets in the Global South

One of the most interesting consequences of economic globalization is the way in which it tends to collision of distinct governance and economic projects that might not appear to have much to do with each other. For this essay I highlight one of those collisions, between China’s Go Global policies and its accelerated investment in developing countries, especially in extractive industries, and the responsible investment framework of the Norwegian Sovereign Wealth Fund with its emphasis on the use of private market investment to influence the behavior of private entities (even state controlled enterprises).

I have suggested that China’s Go Global policy would put Chinese enterprises in a potentially uncomfortable position, one once occupied by the European and the United States in the exploitation of resources and markets in smaller and more dependent states. Larry Catá Backer, Courting Africa--21st Century China Africa Investment and Cooperation Forum, Law at the End of the Day, Aug. 7, 2010; Larry Catá Backer, China and Neo-Colonialism in Africa: A Warning from South Africa, Law at the End of the Day, Dec. 15, 2006 (  I have also suggested that the combination of projections of state power to such areas in the form of aid and private power in the form of state directed investment, could raise issues of subordination and compliance with international obligations. More specifically, I argued that in the absence of substantial care in the management of its Go Global policies, the Chinese might en counter growing resistance, and public embarrassment, as it effectively turns its investments in these areas, and those states, into a system of global plantations for the benefit of the Chinese homeland. While these issues have been most visibly raise din connection with China’s recent efforts to develop a coherent and comprehensive investment strategy in Africa, it is also an issue in other parts of the world.

More importantly, the Go Global policy (走出去战略), and aggressive moves by Chinese companies into the developing world, will also tend to expose Chinese enterprises to the sort of scrutiny, and the behavior standards, long applied to companies from developed states.  Global civil society has little interest in the ideological base or the nationality of large multinational corporations.  They will tend to  engage with those companies as they have with those from Europe and the United States.  Tot he extent that Chinese enterprises are unprepared for this sort of scrutiny, and more importantly, unprepared for effectively responding in accordance with emerging global standards, they will encounter a substantial amount of problems that may eventually have significant financial effects. For Chinese companies unused to dealing in the global environment, and unfamiliar with the patterns and strategies of non governmental organizations, media elements and global consumers and investor communities, the lessons will come hard.  More importantly, perhaps, they will also produce an engagement by Chinese companies with other public actors who are also pursuing public goals through engagements in private markets.  Principal among these may be sovereign wealth funds from developed states or such funds sensitive to the sensibilities of investors in the West.

On March 4, 2011, the China Economic Review posted a “News Brief” entitled “Zijin Accused of Violence, Breaching Environmental Laws in Peru.” China Economic Review, March 4, 2011, 2011. The news brief noted that 
China’s largest gold producer, Zijin Mining Group (2899.HK) has been accused of failing to disclose pollution problems, and of violence and deaths at its Peruvian copper mines, the South China Morning Post reported. Four environmental organizations—the Lima based CopperAcción and Ecumenical Foundation for Peace and Development, as well as Friends of the Earth in the US and Belgium’s Catapa—sent a letter to the Hong Kong Stock Exchange on Thursday urging it to ensure that Zijin discloses recent events. It alleges that Zijin not only breached environmental laws, but also failed to obtain approval from local communities and did not fully disclose incidents of torture and the killing of community leaders before the company bought the mine. (Id.).
Zijin is no stranger to environmental issues. The same report also noted that “Last year, Zijin—which also mines copper, zinc and iron—was fined US $4.5 million for hazardous waste leaks in Fujian province.” (Id.).

As a consequence, Zijin had already come to the attention of global civil society.  Among them is Friends of the Earth.  According to Javier Jahncke of Peru’s Ecumenical Foundation for Peace and Development (Fedepaz), who works with the communities, “Polluting this area could bring about an environmental disaster for the entire region.”
Zijin has already been fined for violating local environmental laws and recent clashes with community members have brought about casualties on both sides.  Adding to Zijin’s woes, the Rio Blanco Mine was never authorized by local communities, as required by Peruvian law,and the mine’s previous owner, UK-based Montericco Metals, which Zijin acquired in 2007, is on trial in the UK for the torture and killings of local community members in 2005.
Despite its conflict with communities in northern Peru, in July 2010 Chinese media reported that Zijin would seek to increase its investment in the Rio Blanco Mine.  Controversy seems to be defining Zijin’s attempts of late to expand abroad.  Also in 2010, the company was seeking to invest in the Tampakan Gold and Copper Mine in the Philippines and a mine in the Democratic Republic of the Congo, both of which are fraught with social and political opposition.  Ultimately, these deals did not go through, but expanding Rio Blanco remains on the table.  (From FOE and Peruvian allies call on Zijin mining company to come clean, ).
The actual factual context of the latest accusations sugegst both environmentalk issues as well as issues relatring to violaitons of human rights generally and of the rights of indigenous people specidfically.

Rio Blanco mine in Peru
The Rio Blanco Mine, which Zijin acquired in 2007 from UK-based Montericco Metals, poses a particularly high level of political, economic, and cultural risk. Many serious environmental and social issues existed with this project before Zijin bought the interest, and those issues have continued under Zijin’s poor management. Below we describe how the company has 1) failed to obtain proper authorization from local communities prior to commencement of operations on community land; 2) breached environmental laws; and 3) been associated with torture and killing of local people.
Failure to obtain community authorization. Under Peruvian law, mining companies must obtain the two-thirds approval of local community assemblies before entering community land to do exploration or other activities.1 Zijin Mining Group Co. Ltd via its local subsidiary Mineria Majaz S.A. failed to obtain this legal authorization when it entered the Rio Blanco project area in 2003. Further, a legal referendum held in September 2007 clearly displayed community members’ strong opposition to the project, with 97% of voters from the districts in which the project would be developed voting against the project. Thus its presence in the area does not comport with existing legal requirements, a point that has been sustained by Peru’s national Public Defender’s office and by the Peruvian Congress.
The illegality of the company’s presence in the project area is contributing to suspicion and resentment toward the company amongst the local population. The company has not taken action to address this issue despite repeated efforts by local stakeholders to raise this concern with company and government officials.
Breaches of environmental law. In February 2008, the Peruvian government fined Zijin
US$100,000 for noncompliance with the Environmental Evaluation Study approved by the government for the initial phase of exploration.22 Among the issues cited by the government in assessing the fine were:
• Carrying out a greater number of drilling perforations than had been approved in the EA
(129 vs. 60).
• Modifying its exploration project without having the necessary environmental studies required by the Ministry of Energy and Mines.
• Exceeding limits for liquid metallurgic effluents in its exploration activities, including copper, zinc and acidity.
• Improper disposal of waste material.
• Inadequate implementation of remediation measures, including erosion control and closing off of access roads no longer in use.
Torture and killings of local people. The Rio Blanco project has been the site of a number of violent incidents, including the killing of four community leaders and three company personnel, since 2004. In August 2005, 28 people were detained after protests at the project site and brought by security forces to the mining camp where the individuals were tortured. According to Peru’s National Human Rights Coordinator and Peruvian human rights organization FEDEPAZ, members of the company’s security force, private security contractors, and the Peruvian National Police (PNP) were involved in the torture.
Evidence of the torture was made public in early 2009 when photographs taken of the incident were released by a journalist who had also been tortured. These incidents could amount to a violation of the victims' rights to personal security and to not be subjected to torture as established in the UN Universal Declaration of Human Rights and the UN Convention Against Torture, both of which Peru has ratified. Violations of these rights by contractors or police working directly for or at the behest of the company could implicate the company in the violations. In 2009, the UK High Court froze GBP 5 million in assets of Monterrico Metals, a subsidiary of Zijin, in response to torture allegations brought against the company by victims of the 2005 incidents.
Although Zijin was not involved in the Rio Blanco project when violent conflicts initially broke out in 2004, the company has not taken the appropriate steps to rectify complaints made by the communities and violence has continued. In November 2009, three company workers were killed in an attack on the project site by unidentified assailants. In December, two more people were killed and eight injured in a conflict with local police as police tried to arrest a suspect in the November attack. In September 2008, members of a local civil association that had made false accusations of terrorism against 35 people, including local authorities, community leaders and environmental and human rights activists, stated to government prosecutors that they had received financing by Rio Blanco Copper for their activities.
Despite these unresolved social conflicts and environmental violations, Chinese media
announced in July 2010 that Zijin will seek to increase its investment in the Rio Blanco Mine.3
1 Article 89, paragraph 2 of the Peruvian Constitution;  Law 24656 on Native and Peasant Communities; Law 26505 on Private Investment in EconomicDevelopment.
2 Resolucion de Gerencia General Organismo Supervisor de la Inversion en Energia y Mineria OSINIGERMIN, No.444-2008-1-OS/GFM. February 7, 2008.
3 “紫金矿业:考虑追加秘鲁白河铜钼矿投资预算,”Capital Week, July 6, 2010.
(From Letter to Christine Kan, Hong Kong Stock Exchange, March 2, 2011).
Rather than pursue strictly legal avenues of redress--action in local courts, the civil society actors pressing the matter chose a soft law approach--relying on an obligation to disclose in the markets in which Zijin securities are traded, for the purpose of affecting Zijin's relations with its investors, and the markets in which Zijin trades.   For a discussion of the effectiveness of this strategy, see, e.g., Larry Catá Backer, From Moral Obligation to International Law: Disclosure Systems, Markets and the Regulation of Multinational Corporations. Georgetown Journal of International Law, Vol. 39(4):591-653, 2008.

In this case, though, it is not clear how effective the tactic will be.
A Hong Kong-based analyst covering the stock said Zijin had communicated to investors that its Peru mine may face many delays due to conflicts mentioned in the letter. He has not included the project in his earnings forecast.

Until it makes a major acquisition, Zijin is not subject to specific disclosure requirements on environmental, social and safety issues under listing rules for mining firms that came into effect last year. But Zijin is required to disclose information necessary for "the public to appraise the position" of the firm under rules that cover all listed firms.
Zijin's supervisory committee said in its 2009 annual report that its overseas investments face challenges including "social and environmental protection in local society, higher political, economic and cultural risk for overseas investments". It did not give further details. (From Eric Ng, Global green groups attack mainland miner, South China Morning Post, March 4, 2011)

Friends of the Earth Understood these limits.  "Although Zijin, as a listed company, does not need to comply with these IPO regulations, the Exchange clearly recognizes that environmental and social information can be material, especially for mining companies operating in foreign jurisdictions. Companies should continue to disclose such risks in annual and periodic filings." (From Letter to Christine Kan, Hong Kong Stock Exchange, March 2, 2011, citing to Article 18.05(6) of the “Amendments to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited”).  However, FOE argued that general disclosure rules (Art. 13.09(1), applied.  "Companies should continue to disclose such risks in annual and periodic filings. The Exchange broadly recognizes the importance of information disclosure through its general rules for listed companies" (Id.).

The objectives are clear of a strategy grounded in disclosure.  If Zijin is forced to disclose then that disclosure might affect share price.  Such an effect might force the company to change its behavior.  Alternatively, disclosure might serve to provide the authoritative evidence that local people might require to invoke the dispute resolution processes of Peru and commence legal action in the host state. Failure to disclose might also hurt share priuce (and thus pressure Zijin).  Alternatively, failure to disclose may interfere with Zijin's relationship with the Exchange and potentially affect the ability fo the company to trade it shares.  The attendant publicity of any of these responses will cast a strong light on the company and the charges.  That, in turn might affect the willingness of other companies to deal with Zijin (to avoid being tainted by association).  That may be particularly important for companies with strong consumer markets in jurisdictions where media publicity could substantially affect consumer demand. 

Beyond this action, are there any other soft law regimes that could be invoked to pressure Zijin, that is to invoke sanctions for violations of other affected regulatory regimes?; or, as Friends of the Earth asks: So what will compel Zijin to improve its governance of existing and potential projects? ((From FOE and Peruvian allies call on Zijin mining company to come clean).  The answer might come in the form of a collision between the Norwegian Sovereign Wealth Fund's responsible investment program and the activities of Zijin.

The Norwegian Sovereign Wealth Fund, the Government Pension Fund Global (NSWF) is a peculiar commercial creature of state. It's object is to project the Norwegian state's commercial power abroad, that is to participate in private securities markets in a manner similar to that undertaken by private investment firms, but to do so in conformity with the public policy of the Norwegian state. That public policy is memorialized in statute and regulation, and implemented by its fund managers and those governmental entities charged with the management of the NSWF.  The Norwegian Sovereign Wealth Fund (NSWF) investment program is overseen by the Ministry of Finance, which manages the work of the fund manager, the Norges Bank and its operational department, Norges Bank Investment  Management (NBIM).  The management charge from the Finance Ministry consists of two parts:  first, the obligation to achieve the highest possible return  and second, the requirement that investment decisions be made independently of the Ministry. The substantive or values based regulatory framework of fund management is grounded in the application of a set of Ethical Guidelines--Guidelines for the observation and exclusion of companies from the Government Pension Fund Global’s investment universe -- adopted by the Norwegian Legislature, and through a policy of active shareholding and ethical behavior norms.  Active shareholding is undertaken through the funds manager, the Norges Bank NBIM. Voting at annual general meetings, Shareholder proposals, Dialogue with companies, Legal steps, Contact with regulatory authorities, [and] Collaboration between investors."  Ministry of Finance, Government Pension Fund Global:  Responsible Investment (Brochure) at 22).  Currently, Norges Bank focuses  on issues of equal treatment of shareholders, shareholder influence and board accountability, standards for well functioning and efficient markets, children's rights,climate change and water management.,  (Id., at 24).    

An Ethics Council charged with determining whether a company should be excluded from investment by the NSWF.  The Council investigates individual companies and makes  recommendations for exclusion to the Mionsitry of Finance.  The Council’s mandate is to recommend exclusion of companies whose activates are in conflict with section 4 of the Fund’s Ethical Guidelines. The Fund’s ability to influence company tends to play a secondary role for the Council, if at all, after the paramount concern for the application of the Guidelines to individual cases.  Political considerations tend to be undertaken at the Ministry level.  Consider in that context  The work of the Ethics Council has produced the beginnings of a coherent jurisprudence of ethics for corporate investment.  That jurisprudence may contribute significantly to the development of transnational social norm standards,  to the incorporation of international soft law standards into domestic law, shape the character of shareholder engagement with corporate governance, and indirectly influence both formal and informal corporate governance norms.   For a discussion, see, e.g., Larry Catá Backer, Part I: Developing a Coherent Transnational Jurisprudence of Ethical Investing: The Norwegian Sovereign Wealth Fund Ethics Council Model, Law at the End of the Day, Feb. 1-28, 2011; 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.

In addition, the Norwegian Fund has been used to extend Norway's influence of corporate conduct touching on environmental issues.
The NOK3trn (€385bn) Norwegian Government Pension Fund says it now has more than NOK25bn (€3.2bn) in environmental assets under management – up from NOK7bn a year ago. . . . Three of the nine mandates were for investments in water management, another three relate to environmental technology while three were for investments in clean energy.
NBIM has awarded environmental mandates to internal and external managers since 2009, stressing that they are “subject to the same profitability requirements” as its other investments.
“They also tie in well with the fund’s role as a responsible investor, which includes safeguarding long-term financial returns through sustainable economic, environmental and social development,” NBIM states. (From Daniel Brooksbank, Norwegian Global Fund’s environmental assets exceed €3bn: Giant investor now has nine environmental mandates, Responsible, March 18, 2011).

None of this is of particular concern to Zijin except that the Norwegian Sovereign Wealth Fund has invested in the company.  As of the most recent report, Global Pension Fund Global Holdings of Equities at 31 December 2010, the Fund had a holding of 139,250,621 shares equating to a .17% voting stake and a .17% ownership stake. Assuming that the Norway Fund's stake remains unchanged, then the actions of Zijin become a matter of regulatory concern for the Norwegian state through the governance regimes of the Sovereign Wealth Fund.

The issues raised in the FOE letter fall squarely within the framework within which an Ethics Council investigation might be warranted--and may be likely.  A prior determination of the Ethics Council may prove a useful guide here:  Recommendation of November 20, 2006, on exclusion of the company Monsanto Co , [09.09.2008]. In addition, the environmental determinations of the Ethics Council suggests that exclusion is a possibility if the allegations made in the FOE letter are determined to have a sufficient basis.  See discussion in Larry Catá Backer, Part XII: Developing a Coherent Transnational Jurisprudence of Ethical Investing: The Norwegian Sovereign Wealth Fund Ethics Council Model, Law at the End of the Day, Feb. 12, 2011.
In virtually all the determinations the companies were found to have violated the law of the host state in some way.  The Council makes the point clear that while many of these companies were in direct violation of domestic law, the host state country did nothing to stop the violation of its own law and at timers supported the companies in their work.  In this context, the Ethics Council applied a standard grounded in the law of the home state as well as international consensus standards, rather than ground its determinations on the law as applied of the host state.  The theories were either one of the need for projections of international norms in "weak governance zones" or that of extraterritorial application of Norwegian law (appropriately internationalized as required by the Ethics Guidelines and the responsible investment strategy at the heart of the regulations). (Id.).
As a consequence, Norway, through the Ethics Council, would be effectively mediating governance norms among Peru, China, Norway, private regulatory regimes (the Hong Kong Stock Exchange), and international normative standards.  In a sense, this is precisely what the FOE Letter to the Hing Kong Stock Exchange was also supposed to trigger, but perhaps on a more modest scale.  Application of the Ethics Guidelines in this context could advance the development of inter-systemic harmonization and multi-regime governance.  To that extent it represents a move forward in constructing the governance environment that is emerging in this century.

But it also be be a case in which the SWF's active shareholder principles may lead to result in which the Ethics Council could determine that Zijin's activities are sufficiently grave breaches of the Ethics Guidelines to warrant exclusion from the investment universe of the Fund, but in which the Ministry of Finance determines that Norway ought instead to seek to change behavior through shareholder intervention in Zijin's internal governance, which requires not exclusion but the placing of the company under observation. See, Siemens AG: Ministry of Finance Press release 24/2009; The recommendation from the Council on Ethics; The letter from the Council on Ethics   But the connection of Zijin to the Chinese state would pose a certain interesting set of issues for the SWF.  Unlike Monsanto, the relationship between Norway and the company would implicate political relations between China and Norway.  The Chinese might take the position that Norway is seeking to interfere indirectly in government policy through its efforts to manage the behavior of Zijin.  The private market and internal corporate governance stage of the conflict serves to mask the state to state actions undertaken through private market actors.  The resolution of those disputes and the pattern of conduct that emerges could have a significant effect on the direction of governance in blended (public private) situations.In any case, the Fund's stake in Zijin, like that of its stake in most Chinese companies tends to be quite small, often around 2%.  This is hardly a large enough stake to directly influence internal corporate behavior.  But the Fund's ability to generate publicity that might affect investor markets may significantly leverage the effects of even modest holdings.  Irrespective of the potential leverage, it is possible to make a strong argument that the small size of the Fund's holdings coupled with the political issues make the exclusion mechanism even more relevant, especially if it is determined that the main purpose of this action is not to influence Zijin's behavior, but rather to avoid the Fund’s participation in grave violations of norms.

Still, the fruits of these efforts will remain both soft and modest.  Zijin may be removed from the Norwegian SWF investment universe (or may be subject to shareholder lobbying by the Norwegian state as owner). The soft effects may be more profound but harder to gauge--embarrassment, some effects on global reputation, an increased quantum of monitoring by civil society and greater interest in its activities by the global press.  These may produce collateral effects--from effects on Zijin's risk profile for lenders, to value determinations by investors, to a reluctance of supply chain participants to continue to do business (especially if such business effects downstream consumer demand).  Yet these may provide precisely the sort of pressure that Zijin may not ignore.  Lastly, for Zijin, and assuming that the charges are unfounded, these actions suggest the value of the human rights due diligence framework of the proposed "Protect, Respect, and Remedy Guiding Principles or the reporting regimes developed for the private sector by the Global Reporting Initiative.  See, Larry Catá Backer, Inter-Systemic Regulatory Coherence: GRI and the Operationalization of the OECD's Guidelines for Multinational Enterprises Framing Governance for Business and Human Rights, Law at the End of the Day, March 18, 2011.