Economic growth has highlighted world events over the past quarter century.

This growth and change has affected the social and the political dynamic. One of the major questions raised, that connected state politics with the economy was the regulation of global corporate conduct. This was mainly due to the semi-exponential growth of multinational firms. The past decade did witness a great deal of expansion of multinational firms. These multinationals, needless to say, are of a private or rather a non-state framework or system. The aim of this essay is to discuss the impact of civil regulation of the global corporate conduct, and the rate of its success and efficiency. This paper will begin by discussing the emergence of civil regulation as a method. Following that, the discussion will lead to the impacts of civil regulation to weigh the benefits and the detriments. Moreover, case study examples will be used to measure the efficiency of the system. This paper will thus aim to support that civil regulation of global corporate conduct, even though may be frowned upon, has been more effective than the labour, human rights and environmental regulations of many developing countries. This will be done using aids such as case studies, statistics and graphs that prove the point.

In context: The emergence, framework and working of civil regulation: It is important to understand the term civil regulation before we go forward. Throughout the history of capitalism, business self-regulation has existed in parallel with government regulation. What identifies civil regulation is that its legitimacy, governance and implementation are not rooted in public authority. Civil regulation thus operates alongside the state than through it. It is important to identify this concept early on to

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avoid confusion. Two foremost and crucial points that constitute the framework civil regulation are: 1) they seek to protect interests that are not always directly involved in the market chain, and thus they primarily govern the relationship of firms, and 2) does not privatize business regulation in the sense of removing it from public scrutiny. This operation, being alongside the state rather than against it, ensures that violators not only suffer legal sanctions but also, social and market penalties as well. This gives more of a public role for global non-state actors within international and national economics. It is very important to also note that civil regulation does not replace states but rather embeds the systems of governance in broader global frameworks of social capacity and agency that did not previously exist.

The organisational and institutional sources of civil regulation vary widely and there are important linkages between civil regulations and public policies. Civil regulations, for instance, include commitments by their corporate signatories to obey host country laws. Many of these standards have been even developed by intergovernmental organisations such as OCED, the IFC of the World Bank, and the ILO. Similarly, governments in many countries have developed industry codes of conduct; this also applies to the UN.

There are also important structural similarities between both civil and governmental regulations. On a continuing note, it is important to point out that many civil regulations have been established with the support of governments and/or intergovernmental organisations. Some examples include, but are not limited to the Electronics Industry Code of Conduct, which was mainly established by the United Nations Environmental Programme. Another example is the joint work of American and United Kingdom 29 Nov 2007 El Masry 2

governments to develop Voluntary Principles on Security and Human Rights. On an ever more diverse dimension, market based regulatory mechanisms used by civil regulations, like producer certifications and labelling, are increasingly used by governments as set and compulsory regulations.

These above examples reiterate the important view that civil regulation does not aim to marginalise states or their roles yet improves conduct and has been successful in doing so due to many reasons, which go back to the idea of being a voluntary process. The following case studies will measure the successes of civil regulation. Thus it is important to mention here that civil regulations and government regulations go hand in hand and the former is not a replacement to state practice but rather a factor that enhances regulation of corporate conduct. This is, as a matter of fact a benefit and help to other organisations and states and not an obstacle, threat or replacement. For many European governments, for instance, extending the scope of civil regulations represents a neo-liberal global version of social corporatism or social democracy. It enables the encouragement or even pressure of global firms to behave in a more responsible fashion where formal regulation has been limited and thus not very effective.

One of the most prominent features and advantages of civil regulation as a global regulatory vehicle is that the labeling and certification provisions are not governed by an organization like the WTO or the World Bank, where rules only apply to regulations formally adopted by governments. For instance, eco labels are regarded by the WTO as a potential technical barrier to trade, but private product labels and certifications are not. he

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reliance of civil regulations on private, market-based standards and enforcement thus represent a major void within international trade law, which governments and NGOs chosen to exploit. When the UN is in the focal point, the global compact provides a vehicle for it to address some of the criticisms of the social impact of economic globalization voiced by many activists and some developing countries. It however, is politically impractical for the UN to regulate global firms directly. Civil regulation represents a practical alternative strategy, where the United Nations can work cooperatively with global firms to help promote global economic development and social justice, without hindering the activities of either these firms or the governments that support them.

This brings the section on the structure and framework of civil regulation to a conclusion. Civil regulation is a process that has simplified, facilitated and harmonized corporate conduct with government and state regulations. It is important to re-point out that it is not a system or a process that aims to marginalize states or governments from their primary actor status but rather one that works simultaneously to improve corporate conduct on the global scale. Civil regulation is a rather effective method that has proved to be efficient and successful on many levels; this shall be discussed below.

Impacts: Case studies on civil regulation Two of the most important accomplishments of civil regulation have been to significantly reduce international trade in conflict diamonds and to strengthen labour standards in the textile export sector in Cambodia.

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The Case for Conflict Diamonds: The issue of conflict diamonds emerged during the late 1990s in connection with the civil war in Angola. In 1998, at the request of the UN, Portugal, Russia, and the US, the UN Security Council voted to prohibit dealings in rough diamonds because of their use to support civil wars. In 2000, after attacks by NGOs that the system was flawed, a joint resolution by an association of international diamond retailers declared a zero tolerance policy for trading in conflict diamonds and announced that any firm found to be doing so would be expelled from the World Diamond Council. That same year, the Republic of South Africa launched the Kimberley Process, which established a certification system, which requires that all countries that trade or produce diamonds to issue of certificates of origin that guarantees that the diamonds do not come from a conflict zone. Numerous other countries agreed not to import non-certified diamonds, a trade restriction for which they were granted a waiver by the WTO. Kimberleys Process stands as a positive example of active cooperation between governments, non-governmental organizations and the private sector.

Cambodia: the case for labour practices: Labour relations in Cambodia provided a strong example of relatively effective privatepublic cooperation in addressing a governance deficit. Improving working conditions in factories supplying products for western retailers and manufactures has emerged as a major focus of civil regulation. Between 1994 and 1998, apparel exports from Cambodia grew to more than one half billion dollars from virtually nothing, which led to the U.S

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being interested, yet had to comply with quotas to protect local businesses. The U.S. agreed to increase Cambodias annual textile quota, provided that the Cambodian government was able to ensure substantial compliance with national labour laws and international agreed labour rights by all its apparel factories. The United States and Cambodia turned to the ILO, which agreed to establish a system for monitoring workplaces. The American and Cambodian governments, and western apparel firms provided financial support for the ILO, which agreed to make the results of all its inspections public. The result was a measurable, and cost- effective improvement in labour conditions in one of the worlds poorest countries. By establishing one uniform code for all developing country suppliers and western manufactures and retailers, the Cambodian system significantly improved the efficiency of private corporate governance.

There have as well been negative sides to civil regulations that resulted in failures. However it is important to note that these failures are relative and that the benefits have done more towards conduct than a few flaws that normally exist regardless.

The case for corruption: oil companies and royalties: One of the most critical global governance deficits is associated with the misuse by developing countries of the royalty payments received from extractive industries. These payments are often squandered by corrupt government officials and, as a result, many of the people living in countries with the most abundant deposits of oil, natural gas and minerals are the worlds most impoverished. In 2002, a global coalition of 200 NGOs launched a Publish What You Pay campaign whose purpose was to pressure global

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firms in extractive industries to reveal their royalty payments to host country governments. The results have been disappointing. While seven global oil companies agreed to disclose their payments, to date their disclosures have been limited, largely due to realistic concerns that doing so would anger host country governments. For example, when British Petroleum announced that it would disclose its royalty payments to the government of Angola that government threatened to terminate BPs exploration rights. Most obviously, resource-rich governments that benefit from the misuse of royalty payments can offer concessions to global firms that have less demanding ethical standards.

The challenge faced by energy companies attempting to behave more responsibly in failed states is graphically demonstrated by the experiences of Exxon in Chad. In 1998, an unprecedented agreement reached between the government of Chad, one of the worlds poorest and most corrupts countries, and the World Bank, which helped finance the $4.2 billion investment project, and several NGOs. It provided that all royalty payments would be monitored, with 10 percent held in trust, 80 percent earmarked for education, health and rural development, and 5 percent distributed to the oil producing regions. However, in December 2005, the government of Chad took advantage of increased oil prices by breaking its terms. It took a portion of the funds held in trust for development and allocated them to military spending. The World Bank renegotiated the agreement, increasing the percentage of revenues under control of the Chad government. The Chad case illustrates an important limitation of global civil regulation, namely the difficulty of promoting more responsible corporate practices when the objectives of civil

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regulations are not supported by host country governments, or are taking place in countries that lack a viable civil society.

In conclusion, though civil regulation may have certain flaws such as the issues with royalty payments mentioned above, it has certainly been very effective in regulating major issues within corporate conduct. It has been a major force in the political economic dynamic of many states, corporations and non-governmental actors on the international economic spectrum. Thus, while civil regulation may be frowned upon or not a favourite method, civil regulation is an efficient method in ensuring effective regulation of corporate conduct and this was mainly proved by the issues solved and conducted in a great fashion in both Cambodia as well as the diamond industry. What will civil regulation bring in the future is promising, and it will hopefully regulate issues on a wider scale and develop more dimensions of the economy.

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