Regulating global corporate capitalism

601 Pages·2011·2.875 MB·English

by  Sol Picciotto

REGULATING GLOBAL
CORPORATE CAPITALISM
This analysis of how multilevel networked governance has superseded
theliberalsystemofinterdependentstatesfocusesontheroleoflawin
mediatingpowerandshowshowlawyershaveshapedthemainfeatures
ofcapitalism,especiallythetransnationalcorporation.Itcoversthemain
institutions regulating the world economy, including the World Bank,
the IMF, the WTO and a myriad of other bodies. The book introduces
the reader to key regulatory arenas: corporate governance; competition
policy;investmentprotection;anti-corruptionrules;corporatecodesand
corporateliability;internationaltaxation,taxavoidance–evasionandthe
campaign to combat them; the offshore finance system; international
financial regulation and its contribution to the financial crisis; trade
rulesandtheirinteractionwithstandards,especiallyforfoodsafetyand
environmentalprotection;theregulationofkeyservices(telecommunica-
tionsandfinance);intellectualproperty;andthetensionsbetweenexclu-
siveprivaterightsandemergentformsofcommonandcollectiveproperty
inknowledge.
solpicciottoisEmeritusProfessorofLawatLancasterUniversityLaw
School.
international corporate law and
financial market regulation
Corporatelawandfinancialmarketregulationmatter.TheGlobalFinancial
Crisishaschallengedmanyofthefundamentalconceptsunderlyingcorporate
lawandfinancialregulation;butcrisisandreformhaslongbeenafeatureof
thesefields.Aburgeoningandsophisticatedscholarshipnowchallengesand
contextualizesthecontestedrelationshipbetweenlaw,marketsandcompanies,
domesticallyandinternationally.ThisSeriesinformsandleadsthescholarly
andpolicydebatebypublishingcutting-edge,timelyandcriticalexaminations
ofthemostpressingandimportantquestionsinthefield.
SeriesEditors
ProfessorEilisFerran,UniversityofCambridge.
ProfessorNiamhMoloney,LondonSchoolofEconomicsandPoliticalScience.
ProfessorHowellJackson,HarvardLawSchool.
EditorialBoard
ProfessorMarcoBecht,ProfessorofFinanceandEconomicsatUniversite´Libre
deBruxellesandExecutiveDirectoroftheEuropeanCorporateGovernance
Institute(ECGI).
ProfessorBrianCheffins,S.J.BerwinProfessorofCorporateLawattheFaculty
ofLaw,UniversityofCambridge.
ProfessorPaulDavies,Allen&OveryProfessorofCorporateLawand
ProfessorialFellowofJesusCollege,UniversityofOxford.
ProfessorLucaEnriques,ProfessorofBusinessLawintheFacultyofLawatthe
UniversityofBologna.
ProfessorGuidoFerrarini,ProfessorofBusinessLawattheUniversityofGenoa
andFellowoftheEuropeanCorporateGovernanceInstitute(ECGI).
ProfessorJenniferHill,ProfessorofCorporateLawatSydneyLawSchool.
ProfessorKlausJ.Hopt,DirectoroftheMaxPlanckInstituteofComparative
andInternationalPrivateLaw,Hamburg,Germany.
ProfessorHidekiKanda,ProfessorofLawattheUniversityofTokyo.
ProfessorColinMayer,PeterMooresProfessorofManagementStudiesatthe
Sa¨ıdBusinessSchoolandDirectoroftheOxfordFinancialResearchCentre.
JamesPalmer,PartnerofHerbertSmith,London.
ProfessorMichelTison,ProfessorattheFinancialLawInstituteofthe
UniversityofGhent,Belgium.
AndrewWhittaker,GeneralCounseltotheBoardattheUKFinancialServices
Authority.
ProfessorEddyWymeersch,formerChairmanoftheCommitteeofEuropean
SecuritiesRegulators(CESR);formerchairmanoftheIOSCOEuropean
RegionalCommittee,andProfessorofCommercialLaw,UniversityofGhent,
Belgium.
REGULATING GLOBAL
CORPORATE CAPITALISM
SOL PICCIOTTO
cambridgeuniversitypress
Cambridge,NewYork,Melbourne,Madrid,CapeTown,
Singapore,Sa˜oPaulo,Delhi,Tokyo,MexicoCity
CambridgeUniversityPress
TheEdinburghBuilding,CambridgeCB28RU,UK
PublishedintheUnitedStatesofAmericabyCambridgeUniversityPress,NewYork
www.cambridge.org
Informationonthistitle:www.cambridge.org/9780521181969
(cid:1)C SolPicciotto2011
Thispublicationisincopyright.Subjecttostatutoryexceptionand
totheprovisionsofrelevantcollectivelicensingagreements,
noreproductionofanypartmaytakeplacewithout
thewrittenpermissionofCambridgeUniversityPress.
Firstpublished2011
PrintedintheUnitedKingdomattheUniversityPress,Cambridge
AcataloguerecordforthispublicationisavailablefromtheBritishLibrary
LibraryofCongressCataloguinginPublicationdata
Picciotto,Sol.
Regulatingglobalcorporatecapitalism/SolPicciotto.
p. cm.–(Internationalcorporatelawandfinancialmarketregulation)
Includesbibliographicalreferencesandindex.
ISBN978-1-107-00501-3–ISBN978-0-521-18196-9(pbk.)
1.Internationaleconomicrelations. 2.Internationalbusinessenterprises. 3.Globalization.
4.Corporategovernance. 5.Capitalism. I.Title. II.Series.
HF1359.P534 2011
337–dc22 2011008367
ISBN978-1-107-00501-3Hardback
ISBN978-0-521-18196-9Paperback
CambridgeUniversityPresshasnoresponsibilityforthepersistenceor
accuracyofURLsforexternalorthird-partyinternetwebsitesreferredto
inthispublication,anddoesnotguaranteethatanycontentonsuch
websitesis,orwillremain,accurateorappropriate.
CONTENTS
Preface pagexi
Acknowledgements xv
Tableofcases xix
Listofabbreviationsandacronyms xxv
1 Transformationsofglobalgovernance 1
1.1 Globalization,regulation,legalization 1
1.1.1 Globalizationoreconomicimperialism? 1
1.1.2 Theshifttopost-industrialcapitalism 5
1.2 Theemergenceofmultilevelgovernance 9
1.2.1 Changingpublic–privateformsandrelations 10
1.2.2 Statetransformations 12
1.3 Characteristicsofnetworkedgovernance 17
1.3.1 Thedestabilizationofnormativehierarchy 17
1.3.2 Theblurringofdistinctionsbetweennormativeforms 20
1.3.3 Functionalfragmentation,technicizationand
legitimacy 22
2 Liberalinternationalism:strengthsandlimits 25
2.1. Classicalliberalinternationalism 26
2.1.1 Statesovereigntyandinterdependence 26
2.1.2 Internationallawandorganization 30
2.2 Re-embeddingclassicalliberalism 34
2.2.1 Territorialityandjurisdiction 34
2.2.2 Jurisdictionalcoordinationandconflicts 39
2.2.3 Extensionandlimits 46
2.3 Newlegalforms 50
2.3.1 Supranationalandtransnationallaw 50
v
vi contents
2.3.2 Softlaw:codesandguidelines 53
2.3.3 Towardsworldlaw? 56
3 Frominterdependencetofragmentation 61
3.1 Thefirm,thestateandregulation 61
3.1.1 Thepublicandtheprivate 62
3.1.2 Economicliberalizationandglobalcorporate
integration 64
3.1.3 Theoriesofstate,marketandglobalization 71
3.1.4 Fromnegativeintegrationtoregulatory
interaction 79
3.2 Managingregulatoryinteractions 84
3.2.1 Competitionandcoordination 84
3.2.2 Regulatoryarbitrageandforum-shopping 89
3.2.3 Regulatoryavoidanceandhavens 91
3.2.4 ‘Offshore’:sovereigntyforsale 94
3.2.5 Formalandinformalregulatorycooperation 99
3.2.6 Regulatorynetworks 105
4 Corporationsandcompetition 108
4.1 Thepowerofcorporatecapitalism 109
4.1.1 Riseanddevelopmentofthecorporation 111
4.1.1.1 Origins 111
4.1.1.2 Combinations,cartelsandincorporation 113
4.1.1.3 Theoriesofthefirmandfinancialization 116
4.1.2 Ownershipandcontrol,governanceand
accountability 121
4.2 Transnationalcorporations,groups
andnetworks 127
4.2.1 Classificationandquantification 127
4.2.2 Controlformsandtechniques 129
4.2.3 TransformationsoftheTNC 133
4.2.4 Globalcorporatenetworks 137
4.3 Corporatismandtheregulationofcompetition 141
4.3.1 Fromcartelizationtoregulatedcompetition 141
4.3.2 Competitiveinteractionsincompetitionregulation 146
4.3.3 Formalandinformalcoordination 150
4.3.4 Regulatorycoordinationbyexpertcommunity 153
contents vii
5 Corporaterightsandresponsibilities 155
5.1 Liberalization,investmentprotectionand
nationalregulation 156
5.1.1 Liberalizationandinvestmentprotection 156
5.1.1.1 Protectionofforeign-ownedproperty 157
5.1.1.2 ThenewModelBITs 159
5.1.2 Host-stateregulationofforeign-ownedbusiness 161
5.1.3 Transnationalizationofhome-stateregulation 164
5.1.3.1 Internationalcorruption 165
5.1.3.2 Transnationalcorporateliability 171
5.2 Hyper-liberalizationandglobalizedregulation 177
5.2.1 Legalizationofinvestmentregulation 178
5.2.1.1 Regionalagreements 178
5.2.1.2 TheNAFTAandthenew-waveIIAs 180
5.2.1.3 Businesslitigationagainststates 183
5.2.1.4 ThefailureoftheMAI 190
5.2.2 Corporateresponsibilityandcodes 193
5.2.2.1 Socialresponsibilitycampaignsandcodes 193
5.2.2.2 Interactionsofsoftandhardlaw 200
6 Internationaltaxation 207
6.1 Taxationandgovernance 207
6.1.1 Fairnessandincometaxation 208
6.1.2 Taxreformanddemocracy 214
6.2 Theinternationalizationofbusinesstaxation 216
6.2.1 Problemsoftaxjurisdiction 216
6.2.2 Buildingtheinternationaltaxframework 219
6.2.3 The‘flawedmiracle’ofthetaxtreatysystem 223
6.3 Internationaltaxavoidanceandevasion 226
6.3.1 Thegreyareasanddarksidesoftaxavoidance 226
6.3.2 Thesystematizationofinternationalavoidance 228
6.3.3 Anti-avoidancemeasuresandtheirlimits 230
6.3.4 Thetransfer-pricingproblem 233
6.3.5 Taxhavensandthe‘offshore’financesystem 237
6.4 Internationaltaxreform 244
6.4.1 Thecrisisofincometaxation 244
6.4.2 Reforminginternationaltaxcoordination 248
6.4.2.1 Initiativesagainstharmfultaxcompetition 248
6.4.3 Towardsanewapproach 252
viii contents
7 Regulationofinternationalfinance 258
7.1 Transformationsofinternationalfinance 258
7.1.1 Frombankingtofinancialcapitalism 258
7.1.2 Liberalizationandfinancialization 263
7.2 Internationalre-regulation 266
7.2.1 TheBaselCommitteeandthecapitaladequacyregime 267
7.2.2 Public–privateregulatorynetworks 269
7.2.3 Financialinnovationandregulatoryarbitrage 276
7.3 Thecrashanditslessons 281
7.3.1 Responsesoftheregulatorstotheunfoldingcrisis 282
7.3.2 Anewapproachtofinancialregulation? 288
7.3.2.1 Effectivecoordination 290
7.3.2.2 Systemicrisksandstructuralreform 292
7.3.3 Rebalancingtheworldeconomy 297
8 TheWTOasanodeofglobalgovernance 299
8.1 Fromtradeagreementtogovernancenode 300
8.1.1 GATT:broadprinciplesandexceptions 301
8.1.2 WTO:beyondtrade 308
8.1.3 ThepowerandweaknessoftheWTO 313
8.2 Theroleoflawandtheproblemofdemocracy 320
8.2.1 Deregulationandre-regulation:productstandards 322
8.2.2 WTOandinternationalregulatorynetworking 329
8.2.2.1 Thepoliticsandscienceofglobalstandards 329
8.2.2.2 Regulatoryinteractions:environmental
protection 332
8.2.3 Servicesliberalizationandre-regulation 335
8.2.3.1 GATSandtherighttoregulate 336
8.2.3.2 Regulatoryinteractions:finance 341
8.2.3.3 Regulatoryinteractions:telecoms 342
8.3 TheconstitutionoftheWTO 347
8.3.1 Administrativelegalization 349
8.3.2 Adjudication 351
8.3.2.1 Emergenceofadjudication 355
8.3.2.2 Independence,accountabilityandformalism 361
8.3.3 Constitutionalizationandhumanrights 367
8.3.3.1 WTOandthecoherenceofinternationallaw 368
8.3.3.2 Formalizingarights-basedconstitution? 371
8.3.3.3 Grandvisionsandtechnicaldetails 379
contents ix
9 Intellectualpropertyrights 382
9.1 InternationaldevelopmentofIPRs 384
9.1.1 Birthofthemoderninternationalframework 385
9.1.2 Post-colonialconflicts 387
9.1.3 TRIPsandbeyond 389
9.2 Patents,scienceandbusinessstrategies 393
9.2.1 Conditionsandscopeofpatentprotection 393
9.2.2 Internationalpatentprotection 395
9.2.3 Extendingappropriation:isolationfromnature 397
9.2.4 Biotechnologybattles 401
9.2.5 Contestingcommodification,propertyrights
andaccess 404
9.2.5.1 Bioprospectingandbiopiracy 404
9.2.5.2 Controllingaccessandbenefitsharing 407
9.2.6 Thepublicdomain,commonsandprivateproperty 411
9.2.6.1 Plantbreeders,farmersandbiodiversity 412
9.2.6.2 Geographicalindicationsandethicalor
culturalbrands 418
9.3 Copyright,creativityandcommunication 420
9.3.1 Natureandscopeofprotection 420
9.3.1.1 Extensionsofprivaterights 421
9.3.1.2 Exceptionsandthepublicdomain 423
9.3.2 Collectivelicensingandthesocializationofproperty
rights 424
9.3.3 Digitaldilemmas 428
9.3.3.1 Defendingexclusivity 429
9.3.3.2 Marketsandcommons:opensource 433
9.3.3.3 Openaccesstotheworld’sknowledge? 436
9.4 Fromexclusivitytoremunerationrights 438
10 Lawandlegitimacyinnetworkedgovernance 441
10.1 Globalizationandlegalization 442
10.1.1 Perspectivesontheroleoflaw 442
10.1.1.1 Lawinheterarchy 444
10.1.1.2 Lawyeringpractices 447
10.1.2 Lawandpower,propertyandthestate 450
10.1.3 Fromtransnationalcorporatismtonetworked
governance 453
x contents
10.2 Constructingglobalgovernance 456
10.2.1 Legalcreativity,interpretationsandinteractions 456
10.2.2 Legallegitimacyanditslimits 459
10.2.3 Technocraticgovernanceanddemocraticdilemmas 463
Bibliography 469
Index 544