House of Commons - The FCO's human rights work in 2011

The FCO's human rights work in 2011 - Foreign Affairs Committee Contents

6 Business and human rights

97. We noted in our report last year on the FCO's human rights work the greater emphasis placed by this Government on the FCO's role in supporting the UK's commercial interests. One of the Department's three "overarching priorities" is "building Britain's prosperity by increasing exports and investment, opening markets, ensuring access to resources, and promoting sustainable global growth".[178] Ambitious targets have been set for boosting trade with emerging markets, and the Department has undertaken to move resources in order to ensure that "we have the staff on the ground to exploit the potential of these high growth markets and to engage with them on global issues including international trade and development, energy and environmental issues".[179]

Promoting responsible business practice

98. There is an unresolved debate about the extent to which vigorous promotion of trading opportunities for the UK can co-exist with the UK's drive to promote its human rights values around the world. The Prime Minister himself acknowledged the strains that can exist, during a speech to the Kuwait National Parliament in February 2011:

For decades, some have argued that stability required highly controlling regimes, and that reform and openness would put that stability at risk. So, the argument went, countries like Britain faced a choice between our interests and values. And to be honest, we should acknowledge that sometimes we have made such calculations in the past.[180]

The FCO maintains that support for business interests and for human rights can be mutually supportive, arguing that "it is in the UK's interests to work towards a world that is prosperous, fair and stable, and our ability to promote human rights effectively rests on our economic strength as a nation". The Department does not deny that the UK trades with countries with "less than perfect" records in terms of human rights; but it takes the view that it is in the UK's national interest—and that of the people of such countries—that the UK should "continue to engage with them at all levels, including through trade and investment links". The FCO manages risk through an export licensing system designed to ensure that goods are not exported if they might be used for internal repression; and it is committed to raising concerns about human rights "wherever and whenever they arise, including with countries with whom we are seeking closer commercial ties".[181]

99. We queried the Department's somewhat optimistic view in our report last year on the FCO's human rights work, concluding that "we are not as confident as the FCO that there is little conflict between its pursuit of both UK commercial interests and improved human rights standards overseas". We invited the Department to provide examples from recent years of "countries of concern" in which a significant UK international commercial relationship or presence was associated with improved human rights standards. The Department declined, in its response, to comment on the performance of specific companies, although it drew attention to the work of the UK National Contact Point in sponsoring conciliation and mediation in relation to complaints against British companies in the Democratic Republic of Congo, Pakistan and Uzbekistan.

100. The FCO, in co-operation with other UK Government departments, offers or promotes a wide range of support structures to encourage responsible business practice, such as:

The OECD Guidelines for Multinational Companies, setting out recommendations for responsible business conduct, for governments of adherent states (not exclusively OECD Member States) to promote amongst firms based in those countries.[182] The Department for Business, Innovation and Skills hosts the UK "National Contact Point", which raises awareness of the Guidelines and is responsible for administering the complaints mechanism;[183]
Voluntary Principles for Security and Human Rights, concluded between the US and UK Governments, to guide companies (chiefly those in the energy and extractive sectors) "in maintaining the safety and security of their operations within an operating framework that ensures respect for human rights and fundamental freedoms";[184]
The FCO's Charter for Business, setting out seven commitments through which the FCO will support UK businesses abroad;[185]
The Overseas Business Risk Service, a joint FCO and UK Trade and Investment (UKTI) website, which provides UK businesses with information on political, economic, and business security-related risks, and advice on markets and issues in relation to those risks;[186]
The Business and Human Rights Toolkit,[187] which aims to give guidance to political, economic, commercial and development officers in UK overseas missions on how to promote good conduct by UK companies operating overseas.

101. The UN has also played a major part in the development of guidance for responsible business practice. In July 2005, the Secretary-General appointed Professor John Ruggie as Special Representative on Business and Human Rights, charged with identifying and clarifying standards of corporate responsibility and accountability with regard to human rights. Professor Ruggie drew up Guiding Principles for the Implementation of the UN "Protect, Respect and Remedy" Framework, which were endorsed at the UN Human Rights Council in June 2011. The three "pillars" of the Framework are the state duty to protect human rights, the corporate responsibility to respect human rights, and access to remedy. The Guiding Principles set out how governments and businesses should act in order to implement the Framework and are designed to "be understood as a coherent whole and … be read, individually and collectively, in terms of their objective of enhancing standards".[188] The FCO states that the UK was a strong supporter of Professor Ruggie in his work,[189] and the Foreign Secretary announced on 30 April this year that implementation of the Guiding Principles would be one of the two particular focuses of an additional £1.5 million funding for human rights programme work in 2012.[190] Bids for project work to support implementation of the Guiding Principles are assessed against a published strategy and specified criteria, including impact, sustainability and value for money.

The FCO's proposed Business and Human Rights Strategy

102. Once the UN Guiding Principles had been endorsed, the FCO announced that it would develop a UK business and human rights strategy, to be launched in mid-2012. The Strategy would "provide clear guidelines to British businesses about the Government's expectations of their behaviour overseas in respect of the human rights of people who contribute to or are affected by their operations". As part of the strategy, the FCO will reinforce training on business and human rights for Government staff, relaunch the Business and Human Rights Toolkit, update the Overseas Business Risk Service, and signpost businesses to other voluntary initiatives, guidance and best practice.[191]

103. Witnesses welcomed the intention to draw up a Business and Human Rights Strategy. UNICEF UK, for instance, believed that the Strategy would have "the potential to provide much-needed clarity across Whitehall departments";[192] but the Catholic Agency for Overseas Development (CAFOD) pointed out that the FCO appeared to be working towards a strategy which was based entirely on guidance, training and other voluntary initiatives, whereas the UN Guiding Principles called for a "smart mix" of measures - policy, soft law and hard law. CAFOD argued that the FCO's approach would be insufficient and would effectively merely re-badge the status quo.[193]

104. Others were more explicit in identifying the limits of the FCO's approach. Amnesty International (and others) said that the UK should accept that the human rights impacts of UK companies' actions abroad engaged the UK's international human rights obligations:

We are in different places here with the Government on this one. We would argue that they have concrete obligations for the way in which British companies function abroad. They would say that they do not and that they only have those obligations within their own territory.[194]

Human Rights Watch made a similar point, arguing that the UK's domestic legislation should ensure that UK companies operating internationally respected human rights standards.[195] The Government, however, maintains that "under international human rights law, states retain the primary responsibility for the protection and promotion of human rights within their jurisdictions".[196]

105. Mr Croft (representing Amnesty International) also suggested that there should be some form of controls or disincentives for companies with a poorer record in respecting human rights abroad, for instance in terms of access to Government procurement opportunities or investment support.[197] Export credit guarantees would also be a possible lever. We note that guidance for applicants published by UK Export Finance[198] makes clear that an assessment will be made of the environmental, social and human rights impacts of any project for which a guarantee is sought; but there is no explicit statement that the human rights impact of recent activity by the business concerned would be taken into account.[199] More stringent forms of accountability were proposed by PLATFORM[200] and by Human Rights Watch, both of which advocate a requirement on UK companies to report on the human rights implications of their work abroad.[201]

Extra-territorial jurisdiction

106. We invited the Government to explain what it saw as the obstacles to making UK firms (or firms contracted by the UK Government) subject to UK law for their actions overseas. The Government replied that

As a general rule the criminal law of England and Wales is territorial in scope … which reflects the principle that crimes are best addressed by the criminal justice system of the state in which they occurred. Conduct that amounts to an offence in the United Kingdom will not amount to an offence if it occurs outside the United Kingdom, unless there is specific statutory provision to the contrary.[202]

However, the Government went on to say that there was now a "growing body of provisions creating exceptions to the general rule", providing extraterritorial jurisdiction in a range of criminal offences, including genocide and torture, homicide, sex offences against children, and bribery. The Government said that

These exceptions stem from the pursuit of domestic policy objectives, and from the United Kingdom's ratification of internationally agreed instruments, reflecting a consensus between nations that certain crimes need to be addressed by a concerted international response that includes the assumption of extraterritorial jurisdiction by participating states.[203]

107. Companies can already, in some circumstances, be held liable under UK law for offences committed outside the United Kingdom. The Bribery Act 2010 is one example. The Government, again, provided useful detail:

An offence is committed by a corporate body when it can be proved that, although the offending conduct may have been undertaken by, for example, an employee of the body, a person who is righty identified as a 'directing mind' of the body was possessed of the necessary state of mind for the offence.[204]

108. The application of extra-territorial jurisdiction has been a significant issue for the Committees on Arms Export Controls, which have called for extra-territorial jurisdiction to apply to a wider range of goods subject to arms export controls.[205] We note that, in 2007, there were twenty-nine types of offence committed overseas for which a British citizen could be prosecuted in the UK.[206] A Home Office Steering Committee undertook a review of extra-territorial jurisdiction in 1996 and drew up criteria to be taken into account when deciding whether extra-territorial jurisdiction should be taken in respect of particular offences. One of these criteria was "Where it appears to be in the interest of the standing and reputation of the UK in the international community". In our view, this might be taken to include actions by businesses based in the UK.

Conclusions on business and human rights

109. We welcome the FCO's intention to develop a Business and Human Rights Strategy, which may give some unity of form to the various initiatives and resources already in place to promote responsible business practice. However, it appears that the Strategy will be couched exclusively in terms of guidance and voluntary initiatives. While these are undoubtedly worthwhile, we believe that they do not on their own meet the spirit of the UN Guiding Principles on Business and Human Rights, which envisage that states will take "appropriate steps to prevent, investigate, punish and redress abuse through effective policies, legislation, regulations and adjudication".

110. One way to give more weight to the Government's promotion of responsible business practice overseas would be to extend extra-territorial jurisdiction to cover, for instance, rights relating to working conditions, or environmental impacts upon living conditions. However, we acknowledge that this would represent a major change, with significant consequences for businesses in terms of compliance. We have not taken enough evidence to come to a fully informed view, but we recommend that the Government should not dismiss out of hand the extension of extra-territorial jurisdiction to cover actions overseas by businesses based in the UK, or by firms operating under contract to the UK Government, which have an impact on human rights. Relying on local administration of justice may not be enough to preserve the international reputation of the UK for upholding high standards of human rights.

111. We recommend that the Government should consider linking provision of Government procurement opportunities, investment support and export credit guarantees to UK businesses' human rights records overseas.

Controlling the supply of goods for potential use in repression

Arms

112. The value of defence and security exports by UK firms in 2011 was £8 billion, representing over 15% of the world defence market, a higher percentage than that achieved by either France or Russia.[207] The operation in 2010-11 of the licensing system designed to mitigate the risk that material supplied by UK firms might be used in internal repression or territorial expansion was examined in detail by the Committees on Arms Export Controls in their First Joint Report of this Session, published in July.[208] That Report dwelt at length on the lessons to be drawn, in the light of the 'Arab Spring' uprisings, from the UK's policy in authorising sales of arms to repressive regimes in the region; and the Committees concluded that there was demonstrable evidence that the initial judgements to approve the applications were flawed.[209]

113. On 6 February 2012, the Department for Business, Innovation and Skills wrote to the Chair of the Committees on Arms Export Controls to inform him of the 18 countries which were to be the priority markets for arms exports.[210] Two of these countries—Libya and Saudi Arabia—are also designated as "countries of concern" in the Foreign and Commonwealth Office's 2011 report on human rights. The Campaign Against Arms Trade was highly critical of this overlap. It pointed out that the value of goods for which licences for export to Saudi Arabia were granted in 2011 was £1.735 billion, greater than the value of licences for export to any other single country. It also described the reinstatement of Libya in the list of priority markets, despite signs of continuing instability in the country, as "amazing".[211]

114. The Rt Hon Vince Cable MP, Secretary of State for Business, Innovation and Skills, told the Committees on Arms Export Controls that the presence of two countries on both lists did not indicate an absence of "joined-up government"; and he said that, in countries where there were human rights issues, the Government applied controls "selectively".[212] However, when we asked Mr Browne, as the then FCO Minister with responsibility for human rights, whether he had personally been consulted on the proposed list of priority markets, he could not recall having had a conversation on the issue. Nor was he able to tell us which countries appeared on both lists.[213] He and his officials did, however, assure us that the FCO would have been consulted on the proposed list of priority markets and that the FCO's human rights department was consulted on all arms exports decisions.[214] Mr Browne also observed that featuring on the two lists was not necessarily incompatible: while a particular country might use some types of arms for internal repression, it might have acceptable purposes in mind for other defence or security material, such as disrupting drug smuggling operations.[215]

115. We accept the FCO's assurances that its human rights department is consulted on all arms export decisions. We are surprised, however, that the FCO Minister responsible for human rights appears not to have been consulted by the Department for Business, Innovation and Skills on the list of priority markets for forthcoming arms exports, and that the overlap between priority market countries and "countries of concern" was not brought to his attention. We believe that it should have been, and we recommend that BIS and FCO officials take steps to prevent such lapses in the sharing of information on arms exports between ministers, and explain how this will be done.

EXPORT OF TELECOMMUNICATIONS TECHNOLOGY

116. Amnesty International drew our attention to "credible allegations" that businesses (not necessarily ones based in the UK) were supplying telecommunications technology to certain countries despite "convincing" reports that it was being used to violate freedom of expression on the internet. It cited Libya, Egypt, China and Iran as examples of countries where this was thought to have occurred.[216]

117. We raised this with the Minister, who agreed that it was "a very good point", although we were surprised to hear him say that the issue had not been discussed in the Secretary of State's Advisory Sub-group on Freedom of Expression on the Internet.[217] He warned that it might be difficult to put in place a framework which would prevent companies from exporting such technology, and that companies from other countries might soon step in to fill any void.[218] We accept that these are difficulties which might arise; but they seem to us to be equally applicable to arms exports, for which the UK has nonetheless acknowledged the need for a licensing system. Similar issues arise in relation to surveillance technology, as the Committees on Arms Export Controls observed in their recent Joint Report.[219] We recommend that the Government, in its response to this Report, set out the scope for controlling the supply by UK nationals, or by companies based in the UK, of telecommunications equipment for which there is a reasonable expectation that it might be used to restrict freedom of expression on the internet.