Labor Violations & Human Rights Abuse in the Southeast Asian Seafood Industry — Part 6: Regulatory & Economic Trends
By Bowin Lee
There is historical precedent for showing how public opinion and conduct codes can influence multinational companies’ considerations, which by extension, influences the practices of governments. US multinationals accused of human rights abuses committed not in their own manufacturing facilities, but abroad, have claimed that they are not responsible for the conduct of their international suppliers. This has been the case as far back as 1996, when Labor Secretary Robert Reich created a Labor Department list of “trendsetter” retailers who committed to upholding US labor laws in their garment factories abroad. Other retail giants followed the Labor Department’s lead and announced their intent to follow the unofficial and voluntary code that Reich established.
Codes of conduct around business ethics and human rights have become a top factor that influences the decision making and behavior of US firms abroad. Reebok and especially Starbucks have attempted to maintain reputations as progressive firms, establishing a code of conduct for their suppliers in all countries, as well as subjecting themselves to third party compliance monitoring. In Myanmar during 1996, worker abuse and low wage practices led to Levi Strauss’s withdrawal from the country, followed by Macy’s and Liz Claiborne. These withdrawals brought visibility to human rights abuses in Myanmar’s textile industry, though currently the country is suffering through civil unrest. Thus, US multinationals bring wider attention through their economic power and the fact that they must face both government and public scrutiny for how they uphold labor standards and conditions in a globalized world.
Beyond the private sector, the federal government of the United States is also introducing more regulation on supply chain traceability, as ESG issues become a hotter topic for regulation. In May 2022, HR 4251, also known as the America COMPETES Act, passed the House and Senate, proposing the expansion of the Seafood Import Monitoring Program (SIMP), which specifically targets IUU and forced labor in fishing, in addition to allocating almost $355 million dollars towards fixing and regulating critical supply chain issues. If officially written into law by President Biden, the SIMP program would expand human rights monitoring and protection from 13 aquatic species and their related variants to all those entering American ports.
This trend of anti-IUU seafood continues in close US ally Japan, which is also one of the biggest markets for seafood worldwide, at around 23.4 kilograms or 51.6 pounds consumed per person in 2020. Globally, it is the third highest in billions of dollars of fish imported, and the largest importer in Asia, above China. As a major seafood importer, Japanese politicians are well aware of the IUU issues within the industry and signed the first international treaty dealing with IUU fishing, the Port State Measures Agreement (PSMA) in 2017. This treaty, administered by the UN FAO, strengthens seafood inspections within ports and allows the refusal of access to ports and their services for vessels that are found to have evidence of using IUU fishing. This binds Japan and major markets such as the US and EU in bringing their port control coordination closer together in a more globally standardized manner. Interestingly, Vietnam has ratified this treaty, alongside 66 nations and the EU. Many markets that have signed the PSMA import the seafood products of the case study countries mentioned in this paper .
Continuing with its mission against IUU fishing, Japanese legislature passed the Domestic Trade of Specific Marine Animals and Plants Act in 2020, covering all species imported. This law was created with input from the Anti-IUU groups, Ngo’s, and many natural conservatories. The law’s passage is seen to bring Japanese law up to standard with the US and EU’s regulations, namely the US SIMP previously mentioned, and EU IUU regulations enacted in 2010. It is a massive step forward for Japan’s initiative to halt IUU fishing, granting it serious recognition as an issue for the government. Those supporting the law recommend three actions for its implementation, which lean heavily on increased data storage, analysis, and sharing across borders for better catch documentation on imports.
Consumer demands for increased transparency and traceability in the supply chain have trended upwards in the last few years, especially for the young adult demographic who care more about human rights and ethics in business. Suppliers have taken notice of this trend worldwide, especially in European countries. The EU has proposed a “Directive on Mandatory Human Rights, Environmental and Good Governance Due Diligence” that will completely change the way companies must consider ESG due diligence in their supply chains. This Directive has been enacted in several major member states, requiring more transparency and traceability in the supply chain. This directive was passed in March 2021, but will be officially adopted in October 2022, with huge implications for international business. Violators who cannot prove that they have conducted human rights, sustainability, and environmental due diligence research into their businesses will be hit with higher import tariffs and become less competitive in European markets.
Informal conduct codes have continued to play an important role in more recent years, the UN Guiding Principles on Business and Human Rights (UNGPs), though criticized for their voluntary commitment aspect, has become an important additional economic piece that affects company ability to obtain capital and factors into shareholder business considerations. The COVID-19 pandemic and the climate crisis have combined to bolster the strength of the UNGPs as a factor in business so far, that businesses have joined with national governments to establish a more formal accountability litigation framework. The EU recently has called upon governments to ensure international standards on ESG due diligence and as mentioned previously, created official guidelines for ESG due diligence in response to increasing attention to human rights and sustainability ethics. Many companies came out in support of the EU’s due diligence obligations, which will be officially adopted in October 2022. Internationally, ESG regulations requiring greater accountability and traceability look as if they will become permanent additions to trade frameworks. Trends for sustainability and human rights protections becoming written into the global supply chain look only to increase as the decade continues towards 2030 and beyond.