About CEO


elcome to this issue of the Corporate Europe Observer, which starts with the lead article 'Ending Corporate Secrecy'. The article - based on corespondence with over 50 major European TNCs - concludes that these corporations are unwilling to disclose information about their political activities. The article also addresses the lack of regulation of corporate lobbying within EU institutions and suggests a number of ways to counter this lack of transparency and accountability. Most of these secretive corporations are actively involved in the European Roundtable of Industrialists (ERT).

In this issue  we bring you two articles on recent ERT ambitions and strategies. The first focuses on the around the EU's eastwards enlargement, the second introducing the ERT's latest buzzword: 'innovation'. This newsletter also introduces another corporate heavyweight on the Brussels lobbying scene: the EU Committee of American Chambers of Commerce (AmCham), which represents the interests of large US-based corporations. Our update on EU transport policies zooms in on the corporate lobbying around the EU's Auto-Oil Programme. Following articles on the increasing corporate cooptation of the United Nations in previous issues, we now bring you the story of the most controversial joint UN-TNC project hitherto, the Global Sustainable Development Facility, which is linked to the UN's Development Programme (UNDP). Under the heading 'The EPC Strikes Back' you can find the correspondence between CEO and the European Policy Centre, a Brussels-based think-tank sponsored by large corporations. At the very end of this newsletter we present the latest news on our quest to get access to documents from the European Commission's archives on contacts between corporate lobby groups and Commissioners.

Contents of this issue

Ending Corporate Secrecy

'Win-Win'? The ERT and EU Enlargement

Innovation: Corporate Restructuring of Europe

AmCham Chimes in with the Brussels Corporate Choir

The Two Faces of EU Transport Policies

UNDP and TNCs: Integrating Two Billion People into the Global Economy?

The EPC Strikes Back

Update to Access to Information

Coming soon: special WTO issue!

In June CEO will also publish a special issue of the Corporate Europe Observer on corporate power over the World Trade Organisation (WTO). The special issue will feature articles on corporate lobby group influence over various WTO Agreements, on industry's increasingly efficient (ab)use of the WTO dispute settlement system to dismantle consumer protection and other important legislation, and on the European Commission's close partnership with large corporations, aimed to promote common interests in the WTO, including the proposed new round of trade and investment liberalisation to start in the year 2000 (the socalled Millennium Round). For news on the campaigns against the proposed Millennium Round, contact CEO or go to the WTO section of our website: http://www.xs4all.nl/~ceo/wto/index.html
This issue of Corporate Europe Observer was brought to you by Belen Balanya, Ann Doherty, Olivier Hoedeman, Adam Ma'anit and Erik Wesselius. 

Corporate Europe Observatory is a research and campaign group targeting the threats to democracy, equity, social justice and the environment posed by the economic and political power of corporations and their lobby groups. 

Corporate Europe Observatory ? Prinseneiland 329 ? 1013 LP Amsterdam ? Netherlands  tel/fax: +31-30-236-4422 ? e-mail: <ceo@xs4all.nl> ? Website: <http://www.xs4all.nl/~ceo>

Ending Corporate Secrecy

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The corporations active within political groupings like the European Roundtable of Industrialists (ERT) and the International Chamber of Commerce (ICC) are almost without exception unwilling to inform the public about their lobbying operations. This is the indisputable conclusion of a study by Corporate Europe Observatory based on corporate annual reports, websites and other publicly available information as well as extensive correspondence with over 50 European TNCs. Many well-known corporations refuse to disclose any information about their political activities, and many others divulge only very limited information. Some acknowledge their membership in 'business associations' but not lobby groups, while others claim that involvement in corporate lobby groups does not constitute a political activity.

Shell and Unilever, for example, failed to give anything but very general information when questioned about their membership in multiple lobbies, referring all questions to the secretariats of the corporate groups. Bayer, Bosch and Hoechst admitted their involvement in lobby groups, but explicitly refused to elaborate any further. The same goes for Nestle, Siemens, Petrofina, Societe Generale de Belgique and others which denied that their work in business associations constitutes a political activity. ABB, Carlsberg, Krupp, Pilkington and others refused to provide any information whatsoever.

Corporations in Politics

ransnational corporations, efficiently organized in a complex web of national, regional and global groupings, harbour enormous political ambitions, including the rewriting of laws, increased control over public institutions, the transformation of public perception, and the setting of rules for the globalizing economy. Clearly there has been a sharp increase during the '90s both in the magnitude and efficiency of corporate political activities directed towards international institutions like the European Union, the World Trade Organisation and the UN. Corporate Europe Observatory argues that the combination of the economic and political power of megacorporations is an issue of serious concern that deserves a central place in the political debate.

Corporate Secrecy

Whether or not corporate political activities are legitimate, there is no doubt that the secrecy of the involved corporations is illegitimate. TNCs that find it appropriate to dedicate vast financial resources towards influencing political processes should live up to basic standards of transparency and accountability. They should voluntarily publicise information about their political positions and activities in their annual reports and on their websites, and should respond openly and conclusively to queries. This would make it possible for citizens to hold corporations accountable for environmentally and socially harmful political lobbying, for instance by boycotting products until a change in behaviour has been implemented. Unfortunately, the results of a survey carried out by CEO suggest that corporations are by no means prone to voluntarily agreeing to even a basic level of transparency. The secrecy obviously stems from the fact that the public would not appreciate the current extent of political activities of the corporate sector if this was exposed. A debate might emerge about whether corporations should in fact be involved in politics to the extent that is currently taking place, if at all. The following pages provide a brief summary of the company replies. We encourage readers to contact us for more information on how individual corporations responded. We are in contact with citizens groups in different countries which will start putting pressure on individual corporations to improve transparency. We would very much like to hear from others who would like to try to do the same.
The last years have brought an encouraging upsurge in citizen's campaigns against corporate misbehaviour and for corporate accountability. Campaigns on the political activities of corporations are also on the rise. An example is the increasingly successful campaigns to pressure corporations to leave the controversial Global Climate Coalition (GCC), a business grouping lobbying against government action to combat climate change. BP and Shell left the GCC in 1997 and 1998 and pressure is now building up to make corporations like EXXON do the same. CEO strongly encourages campaigns to make corporations withdraw from controversial political lobbying and we are ready to give practical support to anybody who has plans in this respect.

The Missing Link

Reference to political activities and lobby group membership is largely absent in the annual reports and on the websites of European-based TNCs. A number of companies use their annual reports to proudly announce their membership of the World Business Council for Sustainable Development (WBCSD) and their participation in CEFIC's Responsible Care programme or the ICC's Charter for Sustainable Development [1]. But why only mention the "green" business initiatives and not the company's involvement in corporate lobby groups with more controversial political agenda's? In the summer and autumn of 1998 Corporate Europe Observatory wrote letters asking that question to over 50 large European corporations which are active in the European Roundtable of Industrialists (ERT), the International Chamber of Commerce and other international lobby organisations, in other words corporations which are in involved in political lobbying. [2]. Not one company came even close to providing the information asked for in the letters sent out by CEO. 18 companies did not respond at all, despite one or more reminders. [3]

Shifting the Blame

Shell and Unilever were among those that did reply. They admitted to be active members of corporate lobby groups, but referred us to the secretariats of these groupings for more information. [4] The German holding VEBA at first did not seem to have any problem providing an overview of the company's "political activities on national and international level" [5] and mentioned its membership of the ERT, ICC and many other corporate lobbies. The transparency had its limits however: VEBA never replied to our second letter, in which we asked for an overview of the substance of VEBA's lobby group activities. Both Renault and Ericsson responded with a list of the business lobby groups they are part of, but remained silent about which activities they are involved in. [6] Philips first expressed no hesitance in providing information on the political activities of the company, but demanded a more specific question, "for instance the political activities of one Product Division". "Considering the activity spread in our portfolio", the Philips representative explained, "it is simply not doable to answer your question Philips wide". [7] Philips then never responded to our second letter, which narrowed the question down to "political activities of Philips in relation with European Union policies".

Tobacco producer BAT replied by mentioning that the company in its annual report lists its financial contributions to political parties in the UK. [8] The letter did not mention lobby group membership or other political activities and BAT did not respond to our reminders. Bayer, Bosch and Hoechst - all with headquarters in Germany - replied with incomplete lists of their business lobby group membership and never responded to our following letters, asking about their involvement in the European Roundtable of Industrialists (ERT) and other groupings. [9] Hoechst stated not to  "see any business or communicative benefit in documenting contacts" with political decision makers. [10] Norwegian based Norsk Hydro, replied that "information from our company's annual report is what we release concerning this matter. We regret to not being able to go further into details". [11] Norsk Hydro's annual report however does not mention any lobby group membership at all. As a reaction to our second letter, appealing this lack of transparency, the company explained that "the information is not secret, but Norsk Hydro is a large company and a member of many lobby organisations". [12]

No political activities

Nestle, whose leadership is heavily engaged in both the ERT and the ICC, categorically refused to have any political activities: "as a world-wide multinational company it is our policy not to interfere with politics in our host countries. We have therefore no political activities". [13] "On the other hand", Nestle's Mark Rubin continued, "we - and our operating companies - are members of the professional associations / organisations relating to our fields of activities. As a decentralised company we do not, from our headquarters, follow all the activities of these associations / organisations and we do not report on our activities in this field". In response to our second letter in which we challenged the claim that Nestle has no political activities, Rubin admitted that Nestle is a member of the ERT, ICC and other "professional bodies". [14] The correspondence ended there as Rubin stated that Nestle does "not publish any information about activities undertaken by our Company within these organisations." Nestle did not reply to further letters from CEO.

Many other active members of the ERT claimed not to be politically active nor part of  lobby groups. The Spanish based oil company Repsol and German electronics giant Siemens, for instance, but also Societe Generale de Belgique which responded categorically that the company "has no political activity" and continued its letter mentioning its membership of the ERT and other "professional organisations". [15] In response to our appeal, the company asked us to contact the ERT and AMUE directly to obtain their publications, as "we insist that they do not reflect any positions or opinions particular to our company". [16] Belgian based oil company Petrofina explained that its annual report "does not, and is not destined to contain anything on political activities", as "we are not performing political activities as such" [17]. Its membership of "different organisations representing the profession", said Petrofina, "is not a significant reported information". Gevaert replied that it "has no political activities whatsoever. We have no knowledge of political activities by individual representatives of our company". [18] Airbus Industrie (France/England/Germany) replied with a standard letter stating "We are sorry to say that we do not have any relevant documentation on the subject of political lobbying". [19]

Corporate Secrecy

Apart from the many companies which denied to have any political activities, there were also a substantial number that in a more straightforward manner refused to disclose information on this issue. Beer brewer Carlsberg for instance replied that "the information you ask for is (?) of a confidential nature and we do not feel is in the interest of the company to tell which organisations Carlsberg is a member of". [20] David Pavey, Assistant Company Secretary of GKN (UK) was equally clear: "I'm afraid that it is GKN's policy not to divulge information of the nature you have requested", a message that was repeated in a second letter. [21] ABB, Krupp and Pilkington answered with similarly blunt statements and did not respond to further letters. [22]. As a response to a second letter, appealing Pilkington's secrecy, the company sent us their "Statement on the Standards of Business Conduct", which says that "individual employees may engage in political activities only if these are conducted in the employee's own name and without reference to the Group's or Group Company's business". [23] Pilkington never replied to our question if not its Chairman Nigel Rudd's active involvement in the European Roundtable of Industrialists was in contradiction with the company's "Statement on the Standards of Business Conduct". [24]

Binding Rules

An obvious step in fighting corporate secrecy would be the introduction of binding rules for information disclosure on corporate political activities, including measures such as reporting obligations for the political activities of corporations, corporate lobbyist registration systems, mandatory transparency about financial donations to political parties and so forth. Corporate lobbying on the European and international levels however remains seriously under-regulated. The laxity of rules and regulations for Brussels lobbyists encourages practices which would be considered underhanded and unacceptable in the US and in most European capitals. For example, PR agencies are not required to record the identity of their clients when on official business in the Commission or Parliament, and thus can wear a different corporate hat each day if they so choose. "In Brussels, a public affairs consultancy can very easily say we lobby," according to Laurentien Brinkhorst of public affairs agency Edelman Europe. "There's no dirty feeling about it." [25]

The European Parliament is gradually strengthening provisions in this field, but the progress is painfully slow and the results insufficient. In 1997, the Parliament introduced the obligatory registration of lobbyists attempting to influence MEPs as well as some minimal rules for regulating the behaviour of lobbyists. The rules were made somewhat stricter in March 1999; in particular, MEPs are now obliged to submit annual reports on extracurricular employment as well as on financial and other support received from outsiders, including from corporate sources. [26] How much transparency will be improved remains to be seen, but it was obvious that tightened rules were desperately needed. A peek at the register between the years of 1996 and 1998 reveals that a substantial number of MEPs submitted nothing, and those who used the register often failed to declare everything. [27] The lobbyist register - only accessible for those visiting the EP building in Strasbourg - is largely a list of names, and contains no details about whom the lobbyists represent and what their business in the Parliament entails. [28]

The European Parliament's rules are much less stringent than the US Lobbying Disclosure Act, which forces corporations and lobby groups to report on their lobbying-related expenses every six months. Although this has reduced neither the level of lobbying nor the influence of lobbyists, it has significantly increased transparency in the political realm. Based on the information disclosed in the US register, the media and citizen's groups are able to obtain a far more precise picture of corporate lobbying than is possible in the European Union. The Washington-based Centre for Responsive Politics, for instance, publishes excellent overviews of corporate lobbying directed at the Congress, with details about individual sectors, corporations and lobby groups. [29]

European Commission Proposes "Self-regulation"

Though weak, the Parliament regulations are still better than those governing the European Commission and the Council of Ministers. Within these institutions, the only real possibility to monitor corporate lobbying is through the 'Access to Information' rules. These rules may look fine on paper but they are disappointing in practice. Corporate Europe Observatory's repeated requests for information have met with unpredictable and often unreliable response from the Commission (see also the article elsewhere in this issue of the Corporate Europe Observer). This reality is offputting for citizens, and will likely deter most people from further pursuing information.

There is no enthusiasm to be found in the European Commission for a system of binding rules for information disclosure on corporate lobbying. In January 1999, MEP Glyn Ford asked the EC if they would consider introducing this kind of regulations, referring to the stricter rules in the US. In his reply Commission President Santer claimed that "the Commission's approach (?) is based on openness to all interest groups and guarantees them equal treatment while recommending that they apply a system of self-regulation. This being so, the Commission has no plans to adopt measures which would require a radical change of policy." [30] The contrast between Santer's words and the reality of privileged access for corporate heavyweights is distressing. Indeed Santer's reply is symptomatic for the European Commission's arrogant detachment of which some examples finally made their way into the mass media earlier this year, forcing the European Parliament to distance itself and the Commission to resign. It remains to be seen whether a new Commission will make more than symbolic changes.

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1: See for instance the annual reports of Roche 1997, Shell 1997, Solvay 1996, Hoechst 1997, Rhone-Poulenc 1997, but also the special annual reports on environment, health, safety and social issues of ABB 1997, UPM-Kymmene 1997, Norsk Hydro 1997, Unilever 1996 and Solvay 1997. For more information on the WBCSD, see "Europe, Inc." (CEO 1997), p. 38 - 39. The ICC's Charter for Sustainable Development are non-binding principles for corporate environmental behaviour, defined in 1991.| Back to Text |

2: All these 50 corporations are or have in the last two years been members of the European Roundtable of Industrialists (ERT): ABB, Airbus Industrie, Air Liquide, Alcatel-Alsthom, Amorim, BAT, Bayer, Bertelsmann, BP, BT, Carlsberg, Cofide-Cir, Daimler-Benz, Danone, Delta Dairy, Ericsson, Fiat, Fried. Krupp, GE, Gevaert, GKN, Hoechst, Hoffmann-La Roche, Iberdola, ICI, Investor, Jefferson Smurfit, Lafarge, Lyonnaisse des Eaux, Marzotto, Nestle, Norsk Hydro, OMV, Petrofina, Philips, Pilkington, Pirelli, Profilo, Renault, Repsol, Rhone-Poulenc, Robert Bosch, Saint Gobain, Shell, Siemens, Solvay, Statoil, Ste Generale de Belgique, Suez Lyonnaise, Thyssen, Titan Cement, Total, Unilever, UPM-Kymmene and Veba.| Back to Text |

3: Amorim, Bertelsmann, BT, Cofide-Cir, Danone, Delta Dairy, GE, Hoffmann-La Roche, Iberdola, ICI, Investor, Jefferson Smurfit, Profilo, Rhone-Poulenc, Saint Gobain, Suez Lyonnaise, Total and UPM-Kymmene.| Back to Text |

4: Letters December 21st 1998 and January 7th 1999 from Robin Amram, Head of External Relations, Shell international Ltd. Letters July 17th 1998 from Mrs. R. Emmelot, Corporate Relations, Unilever Rotterdam, and October 2nd 1998 from H.K. van Egmond.| Back to Text |

5: Letter August 3 1998 from Dr. Walter Hohlefelder, VEBA.| Back to Text |

6: Letter December 30th 1998 from Jean-Marc Lepeu (Renault) and letter September 7th 1998 from Olle Wikstrom (Ericsson).| Back to Text |

7: Letter August 4 1998 from Angelique Paulussen-Hoogakker, General Manager, Philips Media Relations.| Back to Text |

8: Letter 22 July 1998 from Simon Millson, Government Affairs Manager GKN.
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9: Letters 14/9 1998 from Gerd Hauth (LeiterInternationale Wirtschaftsbeziehungen Bayer). Letter 18 September 1998 from BVP Baumann (ROBERT BOSCH GMBH Associations Department). Letter 23 July 1998 from Joseph Meran (Public & Governmental Affairs Hoechst).| Back to Text |

10: Letter 23 July 1998 from Joseph Meran (Public & Governmental Affairs Hoechst).
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11: Letter from Norsk Hydro July 16th 1998 and phone conversation with Mrs. Thjomoe of Investor Relations on September 9th 1998.| Back to Text |

12: Idem| Back to Text |

13: Letter July 17th 1998 from Marcel Rubin, Deputy to the Secretary General of Nestle.
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14: Letter September 14th, 1998 from Marcel Rubin, Assistant Vice President Nestle.
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15: Letter July 21st 1998 from Ivan Cieker Deputy Manager, International Relations Repsol. Letter December 23, 1998 from M. Gross, Siemens. Letter July 30th 1998 from C. Pirard, Assistant Secretary Societe Generale de Belgique.| Back to Text |

16: Letter 28 September 1998 from Georges Neve, Societe Generale de Belgique.
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17: Letter July 28th 1998 from Francois Fierens, Head Public Affairs Petrofina.
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18: Letter 9 September 1998 from Marc Francken, Vice Chairman, Managing Director Gevaert.| Back to Text |

19: Letter July 15th 1998 from Airbus Industrie Press Department.| Back to Text |

20: Letter 3 February 1997 - dated wrongly, received in August 1998 - from Henrik Molstrom, Corporate Communications Manager Carlsberg.| Back to Text |

21: Letters 3rd August and 29th September 1998 from David Pavey, Assistant Company Secretary GKN.| Back to Text |

22: Letter 14 September 1998 from Bjorn Edlund, Head of Corporate Communications ABB. Letter July 20 1998 from Dr. Juergen Claasen, Director, Corporate Division Communication and Central Bureau, Krupp. Letter 24/7 1998 from Chris Moore, Corporate Affairs Manager, Pilkington.| Back to Text |

23: Pilkington "Statement on the Standards of Business Conduct", paragraph on "Political Activity", page 11.| Back to Text |

24: "I refer you to my earlier response and regret that we are unable to offer you further assistance", letter 9/10 1998, Chris Moore, Corporate Affairs Manager, Pilkington.
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25: Personal interview with Laurentien Brinkhorst, Edelman Europe, Brussels,  February 1999.| Back to Text |

26: The Parliament Magazine number 65 (March 22th 1999). In March 1999 the European Parliament tightened the rules concerning the declaration of interests. MEPs participating in a debate now have to announce if they have a direct financial interest in the issue at stake. Filling in the written declaration of interests is now a condition for MEPs to run for any of the EP's internal positions. The EP now also has the possibility to take disciplinary action against MEPs who refuse to fill in the declaration. MEPs have to declare any external income or gifts worth over 100 Euro.| Back to Text |

27: "Parliament's Register of Shame", European Voice, 2-8 April 1998.| Back to Text |

28: Erik Wesselius of CEO visited the Register of Financial Interests of MEPs in March 1999. Here follows some impressions:

After filling in two forms (one for the Register of Financial Interests and one for the Register of Lobbyists) I could inspect the twenty-some binders full of handwritten forms filled in by the MEPs, who almost without exception have nothing to declare. Even persons whom we know to have advisory functions with corporations (like Erika Mann) do not declare anything. Elmar Brok declares his function as "Europabeauftragter der firma Bertelsmann A.G in Gütersloh", and some Greeks seem to be quite active besides their job as MEP, but they write in Greek and the data they submit are not translated. This system of registration is really a bad joke. One may expect MEPs not to write down activities which might be controversial, especially as there seems to be no independent auditing of these ridiculous declarations of interest.

The lobbyist register is a similar disgrace. It is nothing more than a set of binders containing the original forms that lobbyists have to fill in to get a permanent (one year) pass for the EP buildings. They only have to indicate their own organization or company, not the companies they represent. E.g. a professional lobbyist like Laurentien Brinkhorst is only registered as Edelman Europe. No indication as to which firms she is representing, although the code of conduct for lobbyists at the EP states that lobbyists always should declare whom they are representing when having contact with Parliamentarians. The data is available to the public -- you can come and leaf through the thousands of entries -- but it is a very half-hearted form of access: you're not allowed to make photocopies, and in general no effort is being made to enable quick and efficient scrutiny of the data."

In early 1999 some MEPs proposed that the register should be published on the internet. UK Labour MEP Glyn Ford, for instance, supported such a move: "It is absurd that people should have to travel to a foreign country to find out what financial interests their Euro MP might have.? Agence Europe, February 15/16th 1999.
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29: For instance "Influence Inc.", Centre for Responsive Politics, Washington D.C., 1998.
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30: E-0440/99EN Answer given by Mr Santer on behalf of the Commission (1 April 1999):

The obligation for American companies to declare their lobbying activities, including the amount they spend on such activities, derives from the registration system which applies to all organisations lobbying US federal bodies. This registration system is not compatible with the Commission's approach, which is based on openness to all interest groups and guarantees them equal treatment while recommending that they apply a system of self-regulation. This being so, the Commission has no plans to adopt measures which would require a radical change of policy.
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'Win-Win'? The ERT and EU Enlargement

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While the European Roundtable of Industrialists (ERT) can hardly be unsatisfied with the EU's current model of eastward expansion, it has recently intensified its lobbying efforts to ensure that enlargement happens fast and in the most business-friendly manner possible. The ERT's lobbying efforts are both aimed at the European Commission and the Central and Eastern European (CEE) governments which the ERT advises in so-called Business Enlargement Councils. A new ERT report claims TNC investments in the region to be purely "win-win" experiences.

he Central and Eastern European countries lining up for EU membership are subjected to a rigorous ordeal, as the complete adoption of the EU's free trade model of economic development is a necessary prerequisite. Requirements involve the rapid restructuring of economies and expansion of transport infrastructure, the adoption of the complete body of EU legislation, a reduction in the role of the state, and an increased dependence upon foreign direct investment. Although the desirability of this model, with its inevitable economic dominance by Western TNCs, is increasingly a subject of debate in CEE countries, the negotiations with the EU leave no room for alternatives. This is no doubt a sobering experience for the many in these societies, who harboured dreams of developing a more democratic, just and sustainable economy following the fall of the iron curtain.

For the ERT, the current enlargement process is like a dream come true. It allows the ERT corporations unfettered access to new markets, but also the opportunity for trouble-free relocations to neighbouring low-wage countries from where Western European markets can be supplied (see also "Europe, Inc."). Since the collapse of Central and Eastern European communist regimes, the ERT has vigorously promoted the expeditious integration of these newly emerging market-oriented economies into the European Union.

In 1997, the ERT stepped up its activities in this field by creating a special working group on enlargement, chaired by ERT veteran Percy Barnevik of the Swedish company, Investor AB. In December of that year, the ERT presented its enlargement action plan to the EU Summit in Luxembourg, inciting leaders to quickly "integrate all the candidate countries into a larger, more competitive and reinvigorated European Union." [1] ERT demands included "radical economic transformation within the candidate countries"; to facilitate this, it announced that its member companies would "cooperate directly with the Commission and in Business Advisory Councils which are being set up within the candidate countries". [2]

In February 1999, the ERT's enlargement working group published The East-West Win-Win Business Experience. In confident ERT-speak, the report aims at "fostering integration" and inspiring actions to strengthen economic relations between East and West. A number of so-called "win-win" case studies, drawn from the experiences of ERT companies in Central and Eastern European (CEE) countries, are provided to support the thesis that investment by Western companies will bring only benefits for both the EU and host countries. [3]

However, this rosy presentation is based on flawed case studies, and declines to mention the negative impacts on employment and environment that dependency on foreign investments have already had in CEE societies. [4] In Hungary, for instance, TNCs currently account for up to 30 percent of Gross Domestic Product (GDP). Local companies throughout the region struggle - often unsuccessfully - to compete with large corporations, which benefit from enormous advantages of scale, access to cheaper capital, superior technology and massive advertising budgets. That TNCs are able to produce greater quantities at less expense and with fewer employees gives them a distinct advantage, but creates the legacy of increased unemployment.

Unilever and Procter & Gamble are two examples of western companies that have profited from the unequal playing field in Europe. They have basically divided the CEE market for personal care products markets between them, shutting down a number of  national companies in the process. While it is true that TNCs often use cleaner technology in their western operations, they do not automatically introduce the best available technology in their operations in CEE or elsewhere. There are numerous examples of TNCs using dirtier technology and lower production standards in Central and Eastern Europe than in Western Europe.

In general, the negative environmental impacts of TNC investments are often substantial, as lower emissions per product unit are often cancelled out by hugely increased production volumes. Western investments in CEE countries are currently multiplying rapidly, with current annual foreign direct investment flows to the region totalling nine billion Euro. [5] ERT companies have been particularly active, also with exports to the region totalling 70 million euro in 1996. [6]

Business Enlargement Councils

ERT Business Enlargement Councils (BECs) have already been established in Hungary, Romania and Bulgaria under the leadership of Shell, Lyonnaise des Eaux and Solvay respectively. More of these bodies, which bring together business leaders from multinational and local companies and senior government officials, are soon to follow. Member companies "of course have a certain commercial interest in doing it," according to ERT Secretary-General Wim Philippa. Beyond this, however, "It's an education process, where with the close involvement and support of national governments we are guiding, training and leading the national industries in a quick way to a situation where they can enter the European Union." [7]

The BECs will spread the ERT's competitiveness message, focusing on the need for structural adjustment in CEE countries in order to attract foreign investment. The ERT's cherished recipe includes market liberalisation in the energy, transport and telecommunications sectors and increased public investment in transport infrastructure. "Assessing how Spain, Portugal and Ireland used similar funds would be a good start for candidates unsure of how to target spending," explains Asea Brown Boveri President Eberhard von Koerber. "And input from the business community can ensure that funds are targeted towards priority needs", says Koerber [8] The approach basically mirrors the model prescribed by the EU for countries awaiting membership, as well as the way EU funding has been channelled through the controversial PHARE programme. This EU programme has been heavily criticized for benefiting Western European corporations and consultants more than its recipient countries in Central and Eastern Europe. [9]

Although the ERT admits that the drastic restructuring of societies will cause problems, these are downplayed as facts of life in a globalising world. "Structural change inevitably means changes in employment patterns; jobs are destroyed in some areas but protected and created in others. Any adverse short-term effects within the EU and the CEE are likely to be similar to those resulting from recent restructuring of industry, as a consequence of changes in technology and globalisation." [10] At any rate, enlargement woes are of no concern to the ERT, as Keith Richardson explains: "Our job is to say that the potential gains are much more important ..." [11] From the perspective of citizen's groups things look very different. A recent report on the impacts of economic globalisation written by a coalition of Central and Eastern European environmental citizen's groups warns against "the globalisation of the patterns of wasteful consumption and hazardous production". [12] "The marginalization of the sustainable development options", the report concludes, "will in the long run prove detrimental to economic, social and environmental security in these countries".

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1. ERT Warning to European Council Over Enlargement, European Report, December 10 1997, III, p. 3.| Back to Text |

2. Idem.| Back to Text |

3. The ERT report gives 17 case studies of win-win situations, each of which links an ERT company with a CEE host country. The companies involved are the following: B.A.T., Lyonnaise des Eaux, Philips and Shell in Hungary; Bertelsmann, BP, GKN and Saint-Gobain in Poland; Krupp and Unilever in Romania; Lafarge, Lyonnaise des Eaux and Shell in Czech Republic; Profilo Group in Lithuania; Renault in Slovenia; Siemens in the Slovak Republic; Solvay in Bulgaria and Veba in Latvia.| Back to Text |

4. "Report on the Impacts of Economic Globalisation and Changes in Consumption and Production Patterns", CEECAP 1998, p. 32 - 37.| Back to Text |

5. And cumulative investment since 1989 of over 50 billion Euro. Source: European Bank for Research and Development, Transition Report Update, April 1998.| Back to Text |

6. ERT, EU Enlargement: Message to all 15 EU Heads of State and Government, 1 December 1997.| Back to Text |

7. Personal interview with Wim Philippa, Brussels, 16 December 1998.| Back to Text |

8. Eberhard von Koerber, The Voice of Experience, in Business Central Europe 1997/98, p. 19. Koerber is the current President of Asea Brown Boveri, (ABB). ABB was an ERT member company for many years under the Presidency of Percy Barnevik. Barnevik, now President of Investor AB, is still an ERT member.| Back to Text |

9. For more on the PHARE programme see Jo Brew's chapter in Europe, Inc., Corporate Europe Observatory, Amsterdam 1997, pp 62- 56.| Back to Text |

10. ERT, The East-West Win-Win Situation, Brussels, February 1999, p. 25.| Back to Text |

11. Personal interview with Keith Richardson, Brussels, 21 February 1997.| Back to Text |

12. CEECAP 1998 "Report on the Impacts of Economic Globalisation and Changes in Consumption and Production Patterns", p. 39.| Back to Text |

Innovation: Corporate Restructuring of Europe

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In late 1998 the European Roundtable of Industrialists (ERT) launched a new report on 'innovation', the latest buzzword in its continued crusade for giving corporations free reigns to reshape society in their interests. 'Destructive creation' - the ERT argues - is a small price to pay for the 'progress' brought by industry.

ecision-makers at both the European and national levels have been very receptive to the corporate mantra that international competitiveness is the true path to job creation. And the ERT now claims to have found the fastest path to employment nirvana through the concept of 'innovation'. In November 1998, the ERT's working group on competitiveness, chaired by Solvay's Baron Janssen, produced a new report entitled Job Creation and Competitiveness through Innovation. The report portrays the world economy as being in turmoil, with an "irresistible flow of newer, better or cheaper goods or services that is constantly making older products uneconomic or obsolete - along with the jobs attached to them." [1] According to the ERT, adaptation to this process of "creative destruction" must take place at every level of society, within companies of every size, within governments, and within individuals. "Fighting against restructuring," it says, "is simply to obstruct change and job creation." [2]

Adapt or die

The report drones on with the predictable ERT demands for the creation of the perfect business climate through deregulation, flexibilisation of the labour market and educational reforms. The ERT has historically stressed the need to leave education in the hands of industry, instead of with people "who appear to have no dialogue with, nor understanding of, industry and the path of progress". [3] The new report again stresses that Europeans should be subjected to "life-long learning" in order to stay employed amidst the constant changes and restructuring required by ever- fiercer global competition. [4] Decision-makers should stimulate and speed up the process of change, and foster innovation by providing finance, education, research and development and business-friendly regulatory conditions. ERT companies have already completely adapted their strategies to this profitable process, and present their disruptive prescriptions as incontestable.

The innovation report also calls for financial and regulatory measures to support small and medium-sized companies (SMEs). Yet the ERT deems only those SMEs that can withstand the constant changes in global economic conditions worthy of support. Small, innovative high-tech industries such as those found in the biotechnology sector (in the ERT's vision, "one of the key technologies of the new Millennium" [5]) are also considered deserving of special financial treatment by the EU. This unusual display of generosity by the ERT is explained by the trend that large corporations, busy focusing on the most lucrative core ventures, outsource more and more activities to small and medium sized subcontracting companies.

Creative Destruction

In the ERT's limited worldview, policies which are in the immediate interest of the largest transnational corporations are by extension also for the common good. ERT Secretary-General Philippa claims that ERT members "basically forget about their own company-specific desires, and think macro-economically. What is good for Europe and for European industry, small, medium-sized, big?" [6] Yet the ERT, despite its perpetual babble about employment creation, consistently ignores the fact that large companies are responsible for massive job losses. The centralisation of production and distribution catalysed by the Single Market and the Single Currency has allowed corporations to cut costs by significantly reducing their workforces. For example, the Dutch electronics company Philips cut 22 percent of its staff - some 68,000 jobs - over a five-year period beginning in 1989. [7] Market liberalisation also allowed British Telecom to boast of a reduction in employees from 235,000 to 125,000 between 1985 and 1996. [8]

In the late 1990s, a new boom of mergers, acquisitions and corporate restructuring has resulted in both record profits and major job cuts. Swedish ERT member company Ericsson, for example, announced plans in early 1999 to destroy 11,000 jobs, some 10 percent of its global workforce. Pilkington, the UK-based glass products giant and an ERT member, cut 9,000 jobs in 1998 and eventually plans to employ less than half as many workers as it did in 1990. When announcing the cuts, company CEO Paolo Scaroni explained that the measure was part of a continuing process of 'restructuring' to drive down costs and increase profits. At the same time, he proudly told the press that Pilkington was pocketing a minimum of 20 percent profit on its capital investments and 12 percent on sales.

Such figures have become standard as corporations increasingly focus on short-term profits and high shareholder returns. After he reorganised his new company, Daimler-Chrysler boss Juergen Schremp was nicknamed 'Neutron Juergen'. (This was a flattering reference to General Electric's 'Neutron Jack' Welch, who is infamous for his talent for destroying jobs while leaving buildings intact.) Although Schremp is currently one of the hottest names in European business and Daimler-Chrysler shares are booming, this glory comes at the expense of huge numbers of jobs. The ERT, however, callously views this as part of the process of change to which European society must adapt.

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1. ERT, Job Creation and Competitiveness through Innovation, Brussels, November 1998.
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2. Ibid| Back to Text |

3. Ibid, p. 18| Back to Text |

4. The concept of life-long learning and other educational reforms were introduced in two earlier ERT reports, Education for Europeans (1995) and Investing in Knowledge (1997).
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5. ERT, Innovation, 1998, p. 29.| Back to Text |

6. Personal interview with Wim Philippa, Brussels, December 16 1998.| Back to Text |

7. Nicholas Hildyard, Colin Hines and Tim Lang, Who Competes? Changing Landscapes of Corporate Control, The Ecologist, Vol. 26, No. 4, July/August 1996, p. 131.| Back to Text |

8. Competitiveness Advisory Group, Capital Market for Competitiveness: Report to the President of the European Commission, the Prime Ministers and Heads of State, June 1998.
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Strange as it may seem, one of the most important corporate players on the Brussels political scene - and the first to introduce the US style of corporate lobbying to Brussels - is a lobby group representing US-based corporations. AmCham, or the EU Committee of American Chambers of Commerce, established an initially somewhat sleepy presence in the European capital in the 1970s. In the early 1980s, it underwent a major renaissance and became one of the first industry lobby groups to systematically monitor and influence European Commission policy making.

Although national corporate identities are increasingly blurred by transatlantic mergers and globalisation, AmCham's membership remains predominantly restricted to "European companies of American parentage or those with control ultimately resting in the US". [1] Boeing, DuPont, Exxon, General Motors, McDonald's, Monsanto and Procter & Gamble are among the 145 plus industrial giants gathered under the lobby group's umbrella. Although large US corporations such as these have enjoyed a steady influx into European markets since the 1960s, the advent of the Single Market and the Euro have encouraged new waves of US corporate expansion in Europe. In total, AmCham companies currently have approximately three million employees and US$350 billion worth of investment in Europe. [2]

The Corporate Choir

mCham works closely with the two of the most influential 'European' corporate groupings, the employers' confederation UNICE and the European Roundtable of Industrialists (ERT). As AmCham's Manager for European Affairs John Russell explains: "We exchange a lot of information, have joint meetings and even publish joint papers." [3] These three corporate buddies use what Russell calls "the choir approach", strategically reinforcing and supplementing each others' positions. [4] He explains: "It is normally more effective not to say everything together, but to have different people telling the institutions more or less the same thing." [5]

AmCham, as well as the other corporate choir members, tends to warble on about the urgency of adjusting European societies to be more internationally competitive in the globalising economy. To avoid relocations and create jobs, the EU should strive for "flexible workforces" and "further liberalisation and a competitive regulatory environment", according to AmCham Chairman Keith Chapple. [6] "Europe will feel the squeeze if it lags behind in making itself a truly competitive place to do business", [7] says Chapple, who is also marketing director of semi-conductor giant Intel, a company which has moved substantial parts of its US production to low-wage countries like Indonesia and China. He warns: "Europe will increasingly be in competition with developing countries which can offer attractive alternative bases for business ... To be competitive in this shrinking world, Europe has to be flexible, drive out unnecessary costs and be open in its trading relationships." [8] In fact, AmCham rarely passes up the opportunity to stress the threat of corporate relocation in its European lobbying on various issues of interest to its members.

A Lobbying Machine

AmCham offers its members a superbly refined lobbying strategy, and its techniques have been a major source of inspiration for UNICE and other corporate lobby groups in Brussels. In the late 1980s, AmCham established itself as the main clearing house for business requiring EU policy information. [9] The group's mandate, according to Russell, includes monitoring EU policies and processes, furnishing relevant information to members, and providing "a constructive input into the legislative process, or, one could say, lobbying". [10]

After identifying juicy EU legislation, AmCham contacts the relevant Commission officials and begins to churn out position papers and specific amendments. In 1998, AmCham produced around 60 policy papers and 10 books, and had "about 350 meetings with the Commission and the Parliament", [11] according to Russell. AmCham also has access to another powerful political actor in Brussels: the Committee of Permanent Representatives (COREPER), the group of member state 'ambassadors' to the EU which prepares decisions for the Council of Ministers. In addition to regular hobnobs with the Committee, AmCham enjoys special biannual sessions with COREPER representatives from the country holding the EU presidency. [12]

AmCham's secretariat, which has doubled in size since 1990 and currently houses 20 staff members, works closely with the more than 650 individuals from AmCham member companies. Business is conducted mainly through twelve subcommittees which focus on weighty issues like trade, consumer affairs, fiscal initiatives and competition policy, and the details are filled in by some 40 specialised working groups. The environment subcommittee, for example, is constituted by about 100 companies, and they are split into ten working groups and task forces on specific issues like packaging, liability, waste and eco-taxes. These groups are engaged in an ongoing attempt to modify or destroy EU legislation that might harm the interests of AmCham's corporate membership. In the spring of 1999, for instance, AmCham lobbied strenuously to change EU waste management proposals which prioritised recycling over incineration. It cynically urged the EU to "move away from a rigid interpretation of the hierarchy" and to recategorise incineration as environmentally-friendly. [13]

AmCham is viewed as one of the most powerful lobby groups in Brussels, and the organisation is proud of the remarkable access and close working relations it has forged with EU institutions. "I never say 'the EU Committee did this and we influenced that and those amendments were ours'", says Russell modestly. "But if the Commission contacts you or wants to have a meeting with you, or when you contact them and they are more than happy to meet with you, then that is useful." The EU's regulations on electronic commerce are only some of the many policies on which AmCham fingerprints can be discerned; thanks to energetic lobbying, the group successfully discouraged business-unfriendly taxation and other government regulation. The multinational nature of AmCham facilitates the rigorous comparison of rules and regulations in the various countries in which its member companies operate. Russell explains admiringly that the multinational club of industries can "bring their expertise, from a global perspective, on what's happening in other areas. ... It is almost a benchmarking of what is good in other regimes." [14]

Pro Globalisation, Pro EU

Economic globalisation explains the phenomenon that AmCham and European corporate groupings like the ERT and UNICE speak in unison to Brussels decision makers. According to Russell, the AmCham constituency "tends to be those that are in the mainstream of globalisation". Thus, European TNCs "tend to be very much our natural allies", whereas those "parts of European industry that are tied very much to the local economies" are disegarded. Like its European sister groupings, AmCham is an avid fan of European unification. "We may disagree with the Commission or the Parliament on certain issues," says Russell. "But this strategic direction of where Europe is going - as far as greater integration and companies preferring to deal with Brussels rather than with fifteen member state administrations and political systems - is quite straightforward". [15]

For US corporations, which generally lack political access in the EU member states, the growing powers of the disconnected European Commission in the 1980s provided a golden opportunity for political influence. Their efforts have primarily been channelled through AmCham, [16] and thus it is not surprising that the lobby group vociferously supports a strong, centralised European Union. According to Russell, AmCham is continuously "calling for more power to Brussels - even more probably than European industry, because they are tied more to the vested interests of particular member states". [17]

Nonetheless, representing the interests of US-based corporations, AmCham does face certain limitations in what it can say and how it operates. "We are extremely careful of the boundaries," explains Russell. "There is still the foreign label, there is a sensitivity." [18] Indeed, high profile Commission initiatives are more likely launched in collaboration with a representative of the ERT than with an AmCham CEO. Furthermore, membership in high-level working groups like the Competitiveness Advisory Group is not feasible for so-called 'European firms of American parentage'. There is no doubt, however, that in the less visible, day-to-day operations of the Brussels political machine, AmCham is a real heavyweight.

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1: Interview with John Russell, EU Committee of American Chambers of Commerce, 16 December 1998. The exceptions include Northern Telecom, Smith-Kline Beecham and Rh"ne-Poulenc, corporations that are normally regarded as Canadian, British or French. As AmCham spokesperson John Russell explains, "It is a matter of globalisation of industry and mergers, so obviously we have to adapt".| Back to Text |

2: AmCham website http://www.eucommittee.be/Pages/prof1.htm| Back to Text |

3: Interview with John Russell, EU Committee of American Chambers of Commerce, 16 December 1998.| Back to Text |

4. Idem.| Back to Text |

5. Idem.| Back to Text |

6: Keith Chapple, Chairman of the EU Committee of American Chambers of Commerce in Belgium, in the European Voice 30/4 - 6/5 1998.| Back to Text |

7. Ibid.| Back to Text |

8: Ibid.| Back to Text |

9: An example is its 1988 publication "Countdown 1992" which gave a complete overview of the legislative process for all 282 original Single Market directives and over 500 other pieces of single market legislation.| Back to Text |

10: Interview with John Russell, EU Committee, 16 December 1998.| Back to Text |

11: Ibid.| Back to Text |

12: Maria Green Cowles, "The EU Committee of AmCham: the Powerful voice of American Firms in Brussels", Journal of European Public Policy, 3:3 September 1996: 339-58.
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13: "EU recycling support plan worries US firms" ENDS Daily March 1st 1999.
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14: Interview with John Russell, EU Committee, 16-12-1998.| Back to Text |

15: Ibid.| Back to Text |

16: Maria Green Cowles: "The EU Committee of AmCham: the Powerful voice of American Firms in Brussels", Journal of European Public Policy, 3:3 September 1996: 339-58.
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17: Interview with John Russell, EU Committee, 16-12-1998.| Back to Text |

18: Ibid.| Back to Text |

The Two Faces of EU Transport Policies

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The widely celebrated Auto-Oil Programme, which sets stricter fuel standards for cars, is only one aspect of EU transport policies. Simultaneously, the booming transport volumes in Europe are fueled by the massive EU-supported construction of new transport infrastructure, including towards Central and Eastern Europe (see 'TENs on Track'). Efficient policies to reduce freight transport by road are not on the EU's agenda, as the Swiss experienced when they were forced to reduce road tolls and open the borders wide for heavy trucks.

"The Alpine Barrier"

ust how sacred the free movement of goods is for the EU became clear in the conflict with non-member state Switzerland about lorry transit from EU countries. In a 1994 national referendum "on the protection of the Alpine area against transit traffic", the Swiss voted that all freight crossing the country must go by rail beginning in the year 2004. To achieve this goal, the government planned to impose high levies on freight trucks wishing to pass through Switzerland. These policies were supported by the outcome of another referendum in the autumn of 1998.

The EU strongly objected to these restrictions upon freight transit. It put the Swiss government under heavy pressure to review its policies, for example by threatening to block six trade agreements between the EU and Switzerland that were then under negotiation. Dutch Transport Minister Annemarie Jorritsma even threatened to withhold landing rights for Swiss Air if the Swiss stuck to their position. In December of 1998 the Swiss government finally caved in, increasing the number of heavy lorries from EU countries allowed to cross the country (from 250,000 in 2000 to 400,000 by 2003), granting unlimited access for lighter lorries beginning in 2001, and charging a maximum toll of 200 ECU per trip, far below the planned 350 ECU. However, Swiss environmental groups strongly objected to this deal, and the final agreement may still be rejected by the Swiss population in a new referendum.

A recent European Commission study predicts that freight transport across the Alps will increase by 75 percent between 1992 and 2010. Public resentment and anger is also growing within EU member states in the ecologically vulnerable Alpine region with the upsurge in trucks passing through narrow valleys and the building of new infrastructure to accommodate the traffic. In June of 1998, protesters peacefully blocked the Brenner motorway through the Austrian Tirol region. A month later, the Mont Blanc tunnel in Chamonix, France was blocked by local groups. [1]

The Auto-Oil Programme

Instead of addressing the relentless growth in transport volumes, the EU has set its hopes on repairing some of the damage with technological improvements. The Auto-Oil Programme, for instance, aims to reduce air pollution by setting tougher standards for automobiles and fuels. In fact, the programme was created in collaboration with industry, and attempts to make it more stringent were partly repelled by massive industry lobbying.

Work on the Auto-Oil Programme began in 1993 with three years of consultations between the European Commission and the auto and oil industries to agree on 'the most cost-effective' measures of pollution reduction. Member state governments and NGOs criticised this approach as well as the resulting proposal of June 1996, which was clearly biased towards the interests of the oil industry in particular. NGOs pointed out that the calculations of "cost- effectiveness" were not reliable, as the cost estimates were supplied by the oil and car industries themselves. According to the Commission proposal, substantial levels of sulphur, benzene and other pollutants would still be allowed in petrol and diesel until 2005, and reductions were to begin only in 2010.

Both the Council of Ministers and the European Parliament rejected the Commission's proposal as too weak, much to the surprise of the oil industry which immediately started a massive lobbying offensive to prevent the tightening of the minimum standards for fuel. The assault was led by EUROPIA, a lobby group representing 29 oil companies operating in Europe, and its dramatic warnings that the proposed standards would mean the end of oil refining in Europe had an impact on several national governments. [2]

In the first half of 1998, the Commission presented a revised version of the Auto-Oil Programme to the Council and Parliament. This time, the UK government, which at that time held the presidency of the EU, received special attention from EUROPIA. The oil industry claimed that the revised proposal would be far too expensive, and threatened to close all refineries in the UK. Although these threats were later shown to have been invented solely for the purpose of manipulation, they did incite Labour MPs from constituencies with refineries (for instance the area surrounding the Elf refinery in South Wales) to lobby the Blair government to accept the original Commission proposal. [3] In the end, the Council accepted a quite weak, industry-friendly Auto Oil Programme.

The European Parliament, which had veto power on this issue [4], was less impressed by EUROPIA's lobbying campaign. In a report drawn up by MEP Heidi Hautala, the Parliament accused the oil industry of greatly exaggerating the costs of introducing cleaner technology. The Parliament's calls for much tougher standards led to a conflict with the Council of Ministers, and a compromise was reached only after a three month conciliation procedure. The 2005 deadline for improved fuel standards was made obligatory rather than merely indicative, but the Parliament ultimately accepted the less stringent standards proposed by the Council of Ministers. [5] The Auto-Oil Programme, which also bans leaded petrol in most EU countries beginning in 2000, could in the most optimistic scenario halve automobile air pollution per kilometre. But if nothing is done to prevent the anticipated doubling of traffic volumes within the next 15 to 20 years, air quality will still be a dire problem in the next century.

Dealing with CO2

The Auto-Oil Programme includes no standards for CO2 emissions from cars. Instead, in the summer of 1998, the European Commission made a voluntary agreement with European car industry representatives gathered under the umbrella of ACEA (the European Automobile Manufacturers Association) to reduce average CO2 emissions for new cars. Whereas Commissioner for Environment Ritt Bjerregaard claimed to be "very pleased with this agreement" [6], environmental NGOs called it "a setback for efforts to combat global warming". [7] Critics pointed out that pressure from the car industry had forced the Commission to lower the CO2 emissions reduction target, and that the agreement between the Commission and ACEA was not binding for the individual car-producing companies. The watery agreement means that there will be no new legislation in this field until 2008, even if the car industry fails to live up to the agreed targets.

The deal with ACEA is a major pillar in the Commission's promise to halve the expected growth of CO2 emissions from transport by 2010. Other elements are the promotion of intermodal transport systems and "fair and efficient pricing", which sounds like ecological taxes but will likely entail the funding of future infrastructure expansion through road tolls. [8] Finally, reducing CO2 emissions by increasing freight transport by rail [9] is used by the Commission as an argument for the further privatisation of railway companies and the introduction of Europe-wide competition - "completing the internal market in rail transport" - a policy which has met with opposition in many EU member states. [10]

With the Amsterdam Treaty, the EU committed to integrating environmental concerns into all Union policies. It remains to be seen whether EU transport ministers dare to take on the taboo of curbing the growth in transport volumes. Instead, they may simply continue to facilitate the transport boom, only partially compensating for the growing damage through cleaner technology. Unfortunately, recent history shows that the influence of vested corporate interests upon both the Commission and the Council of Ministers will make a revolution in EU transport policies highly unlikely.

TENs on Track

A permanent feature of EU politics is Transport Commissioner Kinnock's tireless campaign to solicit more funding, government and private, for the Trans-European Networks (TENs). When launched in the early 90ies, this largest plan for transport infrastructure in European history - over 150 projects and an estimated budget of 400 billion Euro - looked financially unrealistic. However, according to the most recent Commission figures the TENs plans are in fact largely on track. The tight budgetary policies necessitated by the EMU project have only marginally delayed the construction of TENs projects. In 1996-97 alone total investment in the TENs was a stunning 38,4 billion Euro, of which one third came from various EU funds and the European Investment Bank, the rest from national governments. [11] Although Transport Commissioner Kinnock insists that the TENs are largely about rail, roughly the same percentage went into roads and rail (respectively 38% and 39%), while 15% was spent on building new airports. Almost two-thirds of the rail investment was spent on hugely expensive, energy guzzling high-speed train links. Of Kinnock's own budget line around 60% went to rail, against 15% on roads. Total spending on new TENs roads was 14,6 billion Euro in 1996-97, a substantial share of the total 81,9 billion estimated to be needed to complete the Trans-European Road Network (TERN)..

Going East

In the last few years, the expansion of the TENs to Central and Eastern Europe has become a major priority for the EU. To facilitate the predicted four or fivefold increase in freight transport on international East-West routes, it has reserved some 15 billion Euro from various EU funds for the construction of new transport infrastructure in CEE in the period between 2000 and 2006. [12] According to Commissioner Kinnock "nothing symbolises or serves the integration of Europe better than the physical linking of transport systems and nothing is more important for the development of applicant countries than the achievement of efficient infrastructures." [13] The EU has indicated that it would like to see no less than 90 billion Euro invested in road and rail infrastructure in the region. [15] Referring to a study from the Centre for European Policy Studies, a Brussels-based corporate think-tank, Kinnock argued that "total transport infrastructure investment in these countries needs to rise sharply from its current level of just over 1%, to 2% of GDP annually". [16] The EU's approach towards the Central and Eastern European countries disturbingly mirrors its regional development policies in the four poorest EU countries (Spain, Portugal, Greece and Ireland), in which the construction of transport infrastructure is a dominant feature. 75% of EU regional aid has been spent on road building.[17]

The construction of Trans-European Networks (TENs) of transport infrastructure takes place on a background of traffic - and particularly road traffic - growing far beyond ecologically sustainable  limits in all countries of the European Union. From 1985 to 1995 the CO2 generated from road transport grew by over one third. CO2 emissions from transport are predicted to increase to rise from the current 26 to almost 40 per cent of overall emissions in the EU by 2010. [18]

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1. Transport & Environment Bulletin, October 1998.| Back to Text |

2. EUROPIA, established in 1989, in its own words "informs the European Commission, the Council of Ministers, the European Parliament and other European institutions and the general public on matters of interest to the European downstream industry." The president of Europia is Francois Cornelis, CEO of Petrofina and active ERT member. Source: EUROPIA website <http://www.europia.com/>.| Back to Text |

3. On 6 July 1998, only a few days after the Auto-Oil Programme was finally passed, Elf announced that it would that same autumn start supplying its service stations in the UK with diesel produced according to the 2005 standards of the Auto-Oil programme, with 90 percent less sulphur content. Source: Interview with Frazer Goodwin, Communications Manager, Transport & Environment, 17 February 1999.| Back to Text |

4. Decision making on the Auto-Oil Programme followed the so- called co-decision procedure.| Back to Text |

5. Interview with Annette Hauer, assistant to the Green group at the European Environment Bureau, 26 January 1999.| Back to Text |

6. Transport & Environment Bulletin, August/September 1998.| Back to Text |

7. Ibid.| Back to Text |

8. "Commission Outlines Measures to Reduce Carbon Dioxide Emissions from Transport", Brussels, 31 March 1998. Source: Commission website <http://europa.eu.int>.| Back to Text |

9. Currently only 14 percent of freight is transported by rail in the EU, down from 30 percent in 1970.| Back to Text |

10. Chris Johnston, "No Smooth Ride for Transport Sector", European Voice, 24 January 1999.| Back to Text |

11. "1998 Report on the Implementation of the Guidelines and Priorities for the Future", European Commission.| Back to Text |

12. Brussels, 3 June 1998, "Trans-European Transport Network projects now on track: three due for completion by 2000", European Commission DG7 website.| Back to Text |

13. Transport Commissioner Kinnock, at the conference "Bridging Gaps in Financing Infrastructure", Amsterdam, 31 March 1998.| Back to Text |

14. From various pre-accession funds as well as the EU's structural and cohesion funds. T & E Bulletin, May 1998.| Back to Text |

15. European Voice 24/1 1999.| Back to Text |

16. Idem.| Back to Text |

17. European Voice 24/1 1999.| Back to Text |

18. Eurostat figures quoted in T & E Bulletin, October 1996.| Back to Text |

Corporate Cooptation of the UN Continues

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The increasing corporate cooptation of the United Nations is a disturbing development. Historically, the UN system has been a relatively democratic forum which has provided southern governments and citizens' organisations with greater access and influence than in other international bodies. Corporate control over the UN constitutes a serious threat to those groups and interests losing out in the globalisation process, whether they be workers, communities, indigenous peoples, women or the environment.

UNDP AND TNCs: Integrating Two Billion People into the Global Economy?

n March 1999, a coalition of citizens' groups challenged what is probably the most ambitious joint project between the UN and business until now: the Global Sustainable Development Facility project (GSDF). According to leaked documents, the proposed project, set up by the United Nations Development Programme (UNDP), aims to "eradicate poverty, create sustainable economic growth and allow the private sector to prosper through the inclusion of two billion new people in the global market economy" by the year 2020. [1] The GSDF involves 20 well-known corporations, including many with seriously flawed social and environmental records such as ABB, British Petroleum, Novartis, Rio Tinto, Shell and Statoil. [2] Each of the corporate project partners is charged a participation fee of US$50,000. Among the six senior advisors to the GSDF are ICC Secretary-General Maria Livanos Cattaui and Bjorn Stigson of the World Business Council for Sustainable Development.

Privileged Access

The companies involved in the GSDF will be granted access to UNDP offices in over 135 countries. Through their collaboration with the UN body, "corporations will gain valuable insights into local conditions, key priorities and issues in developing countries, which will help them shape corporate strategies and products for these emerging markets". The UNDP boasts that the project will provide TNCs with "worldwide recognition for their cooperation with the UN/UNDP", and that a special GSDF logo will allow business to highlight this relationship. The project will be kicked off with a feasibility phase of up to ten pilot projects jointly funded by UNDP and the corporations involved, and followed by an official launch. Regarding the projects themselves, which should "contribute to the overall strategy of creating opportunities for poor people to become active participants in the global economic system", the UNDP proposal is quite vague. Examples include "rural telephony and electrification", "developing products and services adapted to 'emerging markets' of the poor", "access to technology" and "connecting the microfinance industry with the global financial markets". [3]

Corporate Greenwashing

On behalf of citizen's campaign groups from around the world, the US-based Transnational Action and Resource Centre (TRAC) wrote an open letter to UNDP Executive Director James Gustave Speth, urging him to cancel the GSDF project. Speth defended the GSDF, stating that the UNDP's goal is "to ensure that at least some of these investments occur in ways that are pro-poor, pro-environment, pro-jobs and pro-women". [4] Despite these soothing words, TRAC Executive Director Joshua Karliner feels that the GSDF should be halted. "We fear that these global corporations care more about 'greenwashing' their own tarnished public images than about meeting the pressing needs of the world's poor," he said. "The UN should not be building collaborative projects with corporations which are the architects of a system that is usurping the UN's authority, and which are the perpetrators of human rights and environmental problems which so hinder sustainable human development". [5] The UNDP's alternative vision, however, is that "in the long term, a strong relationship exists between sustainable human development and the growth of shareholder value". [6]

Today, close to half of the world's population survives outside of the global market economy. It is hardly surprising that large corporations with an unlimited need to expand their market shares would be happy to have these people added to the global pool of consumers and producers. But although this enormous group, which includes traditional farmers, self-sufficient communities and indigenous peoples, is poor judged by neoliberal economic standards, they do not necessarily want to become active participants in the global economic system as UNDP claims. In fact, there are many who categorically do not want this, including the indigenous peoples around the world whose traditional lifestyles are incompatible with the 'global market economy' and the farmers' movements in India and Latin America which have identified economic globalisation as the main threat to their livelihoods.

For more information, see the study "A Perilous Partnership - The United Nations Development Programme's Flirtation with Corporate Collaboration" (TRAC, March 1999) on the Corporate Watch website: http://www.corpwatch.org/

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1. All quotes from UNDP internal document referred to in footnote 3.| Back to Text |

2. "A Perilous Partnership - The United Nations Development Programme's Flirtation with Corporate Collaboration", TRAC, March 1999.| Back to Text |

3. Examples from UNDP, internal documents on the Global Sustainable Development Facility project, July 1998. In the preparatory phase of the GSDF project, the partners involved discussed questions such as: "What will the result be if an additional two billion join the market economy and double or triple their income? How could these developments change corporate balance sheets? What products and services are needed? What would happen if the two billion people remain excluded from the market?" "Preliminary guidelines for GSDF Pilot Projects".| Back to Text |

4. Thalif Deen, InterPress Service, 22 April 1999.| Back to Text |

5. "A Perilous Partnership - The United Nations Development Programme's Flirtation with Corporate Collaboration", TRAC, March 1999.| Back to Text |

6. UNDP, internal document on the Global Sustainable Development Facility project, July 1998.| Back to Text |

"European Think-Tanks" series  --  Part Two

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The last issue of the Corporate Europe Observer featured a short profile of the Brussels- based think-tank, the European Policy Centre (EPC). In the article, we argued that seemingly neutral think-tanks like the EPC, generously funded by large companies, play a dubious role by promoting corporate visions on European unification and specific EU policies to policy-makers, the media and the public. Brussels, with its complex, untransparent and often undemocratic decision-making process provides fertile ground for these corporate front groups.

Stanley Crossick, one of the three founders of the EPC, responded to our article on his brainchild, defending the independent character and broad constituency of the EPC. We bring you his letter (dated March 3rd 1999) and our reply.

"We are flattered that you chose us as the first European Policy Centre to profile.

We invite you to visit our new web-site at http://www.TheEPC.be from which you will observe that, in addition to our 26 corporate, 8 consultancy members and 36 professional and business associations:

* We have 40 country members.  * We have recently opened subscriptions to NGOs and regional bodies.

Of the three founders of The EPC only I come from a business career.

Max Kohnstamm was former Vice President of the Jean Monnet Action Committee; former President of the European University Institute, Florence and John Palmer was European Editor of The Guardian and neither of them associated with industry.

We do indeed emphasise the government-business interface  (but define business as including both social partners). We are now promoting interfaces involving the NGOs and Regional Bodies.

In examining our team, you should also note our Special Advisors who include a number of specialists from non-industry backgrounds.

You mentioned our DG III sponsored study. We also did a DG V sponsored study on "job creation through the third sector: the role of the corporate sector."

We jealously guard our independence from any one interest.

Yours sincerely

Stanley Crossick"

CEO Responds

"Dear Mr. Crossick:

In response to your letter of March 3rd, 1999, our visit to the new website has not made us change our mind about the EPC. Contrary to the image of neutral observer of the European Union, which the EPC has successfully cultivated, your institute has a clear bias towards the interests of large corporations. This is not changed by the fact that the Centre has recently opened subscriptions (not membership) to NGOs and regional bodies. Five NGO subscribers obviously does not balance the 38 business organisations (including the European Roundtable of Industrialists and the European employer's federation UNICE) and 36 corporate members of the EPC.

Moreover, apart from these numbers, there is a qualitative difference in what you offer business respectively NGOs. Whereas 'civil society' is offered "insight about strategic developments in Europe" and "informal contacts with the business community", business enjoys far more interesting benefits such as "an opportunity to influence policy-making", "contacts with Commissioners, Directors-General, MEPs, Permanent Representatives, other politicians and officials, journalists and NGOs". Other services provided to business include "identifying EU policies which need to be encouraged" and "interpreting the effect of EU policies". In addition, the forums and conferences organised by the EPC are business-focused and attended in mass by industrialists. Is it a mere coincidence that the EPC web page features the two latest reports on enlargement published by the ERT and AmCham respectively, two major corporate lobby groups based in Brussels?

The five NGOs subscribed to the EPC represent only a tiny fragment of civil society in Europe and their participation can certainly not be used to argue for civil society acceptance for the policies promoted by the EPC on behalf of its corporate funders. In fact we find it rather disturbing that these Brussels-based NGOs contribute to the undeserved objective image of the EPC. We suspect they are not fully aware of the EPC's corporate connections and will contact them to ask if they consider it appropriate to legitimise the EPC and its policies.

The non-industry background of the other two EPC funders and some members of the advisory board was acknowledged in our article. The EPC advisory board is strongly dominated by industry, composed of businessmen, industry lobby groups and media representatives, as well as former directors of the European Commission and academics. The presence of representatives of the press in the EPC advisory board is disturbing and raises questions about the objectivity of parts of the Brussels-based press. We regret that our last article did not mention the EPC study on "job creation through the third sector: the role of the corporate sector", sponsored by the Commission's DG V.

We remain deeply concerned about the fact that corporate sponsored think tanks like the EPC continue to exploit the absence of a public opinion or debate on the European Union level to orchestrate virtual, decidedly non-democratic debates in order to promote their political agenda.

Yours sincerely,

Corporate Europe Observatory

Explanatory note to the readers: NGOs subscribed to the EPC are the consumer coalition BEUC, the Euro Citizen Action Service (ECAS), an unknown NGO called IDEA, Platform of European Social NGOs and the World Wildlife Fund (WWF). The Commission's DG III (Industry) has sponsored an EPC study on the effect of product and labour market regulations on employment. The EPC web page can be found at http://www.TheEPC.be


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As described in the last issue, Corporate Europe Observatory has engaged in a systematic effort to get access to documents regarding the contacts between the European Commission and corporate lobby groups such as the European Roundtable of Industrialists (ERT). [1] According to the EU's official 'Access to Information' rules, established in 1994, correspondence and minutes from meetings should be available to the public. This test case for what the Commission's promises of transparency are worth in practice has until now been rather disillusioning.

he first round of our quest started on May 20th 1998, when Corporate Europe Observatory formally requested access to all correspondence and minutes of meetings held between representatives of the ERT and current EC President Santer, former EC President Delors, and former Commissioners Davignon and Ortoli. Although requests should be responded to within one month, this has proved to be a long-term project. Over a year later and after numerous appeals and reminders, the Commission has only responded twice on the Davignon and Ortoli cases, claiming that they do not have any relevant documents. This is rather peculiar given that the ERT has itself publicly acknowledged the enthusiastic support of both Commissioners during the early days of the lobby group's existence. [2] These connections are also extensively documented in academic literature. [3]

Private Encounters?

With regards to former Commission President Delors, we received the very direct reply that "In view of the fact that the archives of the President, Commissioners, former Presidents and former Commissioners are regarded as being of private nature, Mr. Delors has informed us of his wish not to grant you access to his documents regarding the ERT". [4] Privacy was also used as an excuse for refusing access to documents on the contacts between the ERT and Santer. It is hardly acceptable that meetings between the ERT and the President of the Commission are considered personal matters. The general rule is that access should be available to all internal Commission documents, "including preparatory documents regarding Commission decisions and policy initiatives [...] and other kinds of information which form the background of Commission decisions and policy measures". [5]

In the light of these facts, we appealed the Commission's responses on all three cases. The appeal in the Delors case was the first one to be answered. The Commission sent us  a small number of fairly uninteresting documents,  [6] which made the reply look like an evasive tactic. Santer's case took longer: more than 6 months after sending the appeal letter we received eight letters from Santer to respectively the then ERT President Jerome Monod, to Solvay's Daniel Janssen and to former ERT Secretary-General Keith Richardson. Spread over a period of three years, this seems like a meager harvest for what were quite close contacts. The various letters are full of affectionate wording and Santer encouraging the ERT to continue collaborating with the Commission. He acknowledges the valuable input that ERT reports have provided on policies areas like competitiveness, benchmarking, employment, international investment, climate and information society. It is worth noticing that the Commission does not only react to ERT proposals, it also actively invites the Roundtable to suggest direction for Commission policies. In one letter, for example, Santer asks Jerome Monod for advice on "policies or initiatives" to improve the financial situation of small and medium sized companies, as a contribution to a report that the Commission was preparing for the 1995 Madrid EU Summit. [7]

Knowing that there should be much more correspondence with the ERT in the Commission archives, not to speak of minutes from meetings, we appealed both cases again. As those who have read the CEO report "Europe, Inc." know, the ERT had a decisive role in promoting the Internal Market and the TENs (Trans-European Networks of transport, energy and telecommunications infrastructure) during Delor's presidency of the Commission, and the cosy contacts continued during Santer's tenure, resulting for instance in the creation of the Competitiveness Advisory Group (CAG) and the institutionalisation of public policy benchmarking. But the Commission still bluntly refuses to make documents on its contacts with the ERT public: the appeal in Santer's case has only been answered with a request for more time, and concerning Delors we have only obtained one rather uninteresting letter from 1988 addressed to then ERT President Wise Dekker (on the European Company Statute proposal). [8] There should be many other relevant documents held by the Commission on its contacts with the ERT. If the Commission on the other hand has not kept record of these contacts, this would mean an unacceptable lack of accountability.

In July 1998 we broadened the scope of our requests asking "to get access to all documents produced by Trade Commissioner Sir Leon Brittan and DGI (External Economic Relations) relevant for the support and development of the Multilateral Agreement on Investment, MAI, negotiated at the OECD". A new wave of requests were submitted on 24 November 1998, this time asking for correspondence between transport Commissioner Neil Kinnock and the ERT's transport offspring ECIS, (the European Centre for Infrastructure Studies) and between Single Market Commissioner Mario Monti and the three main biotechnology lobby groups EuropaBio, the SAGB (Senior Advisory Group on Biotechnology) and the FEBC (Forum for European Bioindustry Coordination). The most recent request aims to get further insight into the contacts between the Commission and the Trans-Atlantic Business Dialogue (TABD). The transport and biotech requests have not yet been answered, despite several reminders.

Business and the MAI

The MAI documents are a different story. Four months a fter the first request we received seven Commission documents relating to the MAI. By this time, it was clear that the MAI, at least in the OECD, was dead. One cannot avoid thinking that the three extra months that the Commission took to reply after the official one month deadline had passed were politically very convenient for them, as some of these documents could have been very efficiently used in the campaigns against the MAI. None of the documents however had any mention to business lobby groups, so we appealed right away specifying that our 'Access to Information' request included correspondence with corporate groupings such as the Business Advisory Council to the OECD (BIAC), the International Chamber of Commerce (ICC) and the ERT. Subsequently, in March 1999, again four months after the request, we received a new supply of Commission documents. Most interesting were the ones referring to the Investment Network, a process of consultation on international investment policies between the EC and over 50 large European TNCs. The documents revealed that the Commission was playing double towards the civil society groups that were involved in the official dialogue process around the EU position for the next Ministerial Conference of the World Trade Organisation (WTO). The NGOs had not been informed about the parallel consultation process with industry. After continued pressure, EC has now put the minutes of two meetings of the Investment Network on its website. [9] More information on the EC's investment ambitions in the WTO and the cooperation with industry in the upcoming special WTO issue of the Corporate Europe Observer.

CEO will continue to work to get access to documents on corporate involvement in the Commission's decision making. The experience until now, including rejections on weak grounds, plain silence, long delays and the drop-by-drop release of documents, does not correspond well with the EC's selfproclaimed transparency.

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1.  Access to information rules are based in the Commission decision of 8 February 1994 on Public Access to Commission Documents (94/90/ECSC/EC/Euratom).| Back to Text |

2.  After their time in the Commission, Davignon and Ortoli  joined the ERT as CEOs of Societe Generale de Belgique  and Total respectively.| Back to Text |

3. See for instance Green, M., "The Politics of Big Business in the Single Market Program", May 1993| Back to Text |

4. Letter from David Wright, Office of the President, European Commission, 15 June 1998.
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5.  "Access to Commission Documents. A Citizens' Guide".| Back to Text |

6.  There were only two documents, referring to a letter and a meeting of Delors and the ?Group of 12", the European Information Technology Industry Round Table.
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7.  Letter sent by Jacques Santer to Jerome Monod, dated 5 July 1995| Back to Text |

8. Letter sent by Jacques Delors to Wise Dekker, dated 6 December 1988.| Back to Text |

9. The minutes can be accessed through the following internet addresses: http://europa.eu.int/comm/dg01/1meeinne.htm http://europa.eu.int/comm/dg01/2meeinne.htm
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Paulus Potterstraat 20 1071 DA Amsterdam Netherlands tel/fax: +31-20-6127023 e-mail: <ceo@xs4all.nl>