International Treaties vs. Private Enterprise: Is Alarm Justified?

Robert M. Cutler

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A riptide of resentment haunts America — resentment of the United Nations. Prof. Murray Weidenbaum's recent article in these pages (Jan. 5) is a noteworthy example. His alarms over international attempts to regulate world trade ring loud and echo. His objections deserve close attention.

Such international treaties as the Law of the Sea, he feels, restrict private enterprise. But how? The annual production limits on deep-sea mining were set so high in the treaty as to be impossible to meet, precisely to avoid affecting production.

The number of authorized consortia was restricted, but only to those already formed: this to their advantage. They would be compensated for transferring technology to the international public enterprise they are mandated to help set up. Not only could licensing fees be quite profitable, but also the consortia would have a lead time of years in establishing production operations and in training personnel.

Moreover, the treaty provides exactly what modern corporations want and need for rational business planning: predictability of the business environment. The American refusal to sign the treaty — a refusal that's more the initiative of the Reagan administration than of the international consortia — makes for legal and economic uncertainties that will delay rather than encourage deep-sea mining. One reason, not the only one, is that the consortia themselves are now undecided on whether and how to circumvent the treaty.

Professor Weidenbaum feels that nonbinding international codes of conduct single out multinationals — also called transnational corporations (TNCs) — for special attention. Of course TNCs are involved in much of world trade. But the same provisions that would apply to them would apply also to the international operations of Soviet and East European enterprises.

The codes concerned are being negotiated with the full participation of the developed market-economy countries, under terms that require consensus for adoption. When adopted, the codes are voluntary and acquire the force of law only if a given country incorporates the provisions of the code into its national system of law. So where's the fire?

Well, let's follow the smoke. One of the codes encourages governments "to set 'sociocultural objectives' and [to] require private enterprise to follow the 'cultural patterns' set by government." Is this really, as Professor Weidenbaum claims, "a mechanism used by totalitarian rulers to enforce their power"? After all, federal designation of a National Historic Site infringes on the private enterprise of a real estate developer.

Another code proposes to regulate international commerce in pharmaceuticals. In the United States, strict limits have been imposed on the production of amphetamines and on the sale of lysergic acid (the necessary ingredient for LSD). Perhaps these restrictions are obstacles to trade. But no one argues that they do not have social value.

So are consumer rights the burning issue here? Professor Weidenbaum decries the UN-proposed "right to economic safety from offense of malpractices which deny consumers optimum benefit within their economic resources." Would this include existing American guidelines on unit pricing and fairness in advertising? He seems to think such a right unnecessary: "In market economies, consumers protect their interests by not buying the product." So that is why there is a Consumer Product Safety Commission; that is why automobiles get recalled. More consumer products remain unsold in centrally planned economies!

The heart of the matter ought not be obscured: Opponents of the "regulation" of world trade would deny to consumers in developing countries the rights that consumers in developed countries have claimed as legitimate for themselves.

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DR. ROBERT M. CUTLER was educated at MIT and The University of Michigan, where he earned a Ph.D. in Political Science, and has specialized and consulted in the international affairs of Europe and Eurasia for twenty years. He has held research and teaching positions at major universities in the United States, Canada, France, Switzerland, and Russia, and contributed to leading policy reviews and academic journals as well as the mass media in three languages.

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