International Ethics Standards for Business: NAFTA, CAUX Principles and Corporate Codes of Ethics

By Carlson, Patricia; Blodgett, Mark S. | Review of Business, Spring 1997 | Go to article overview

International Ethics Standards for Business: NAFTA, CAUX Principles and Corporate Codes of Ethics


Carlson, Patricia, Blodgett, Mark S., Review of Business


Introduction

Practical application of business ethics should be the focus of corporate ethics codes. Since many U.S. companies do business internationally and the number is growing every year, their ethics codes should address international ethics standards. A guide for such ethics is the Caux Roundtable Principles for Business, "the first international ethics code for business."

The goal of the Caux Roundtable Principles is to set "a world standard against which business behavior can be measured," a yardstick which individual companies can use to write their own codes.

Thirty-one codes of ethics are compared with the Caux International Ethics Code using content analysis techniques. Each of the codes of ethics is examined for representative words and phrases taken from the recommended Caux Ethics code. The data comparing corporate codes of ethics with the Caux International Ethics Code are presented in Exhibit 1.

The North American Free Trade Agreement (NAFTA) provides guidance for the analysis of international trade issues, because it addresses new issues concerning employment, intellectual property and trade. While these provisions are included in NAFTA for their trade implications, they in [TABULAR DATA FOR EXHIBIT 1 OMITTED] effect encompass ethical concerns that belong in corporate codes of ethics. Extending the analysis, we identify three major ethical issues in NAFTA and compare them to the Caux Principles and 29 corporate codes of ethics. The comparison is presented in Exhibit 2. Conclusions are drawn from the analyses, and practical recommendations are made to help finns update their codes of ethics to include both the spirit and the letter of the new emphasis on international business ethics.

Exhibit 2. Data Set                       Number of Codes of Ethics

Economic and Social Impact of Business               15
Respect for Rules                                     8
Support for Multilateral Trade                       11
Respect for Environment                               4
Avoidance of Illicit Operations                      31

North American Free Trade Agreement

The multilateral agreement was executed on January 1, 1994. Some of the main provisions of this unparalleled agreement deal with the elimination of tariff and non-tariff barriers and the facilitation of multinational corporate business operations. Also, central to the agreement is a strong position on environmental protection [5]. The agreement states that each party is to implement the provisions of the agreement so that "there will be a progressive elimination of all tariffs on goods qualifying as North American." It also calls for protection of intellectual property rights [3:242]. NAFTA's ample employment protections are particularly important since Mexico does not enforce the liberal labor guarantees of its constitution that otherwise bear many similarities to U.S. and Canadian labor laws [1].

NAFTA's provisions deal with some of the most timely issues within the global environment. Do these issues reflect the concerns of businesses as players in a global ethical context? One indication of multinational concern is found in the Caux Round Table Principles of Business Ethics.

CAUX Principles

Simultaneous with the implementation of the multilateral NAFTA agreement among the U.S., Canada and Mexico to promote flee trade by eliminating tariff and non-tariff barriers was the creation of the Caux Principles. Considered to be the first international code of ethics for business, the Caux Roundtable Principles originated at a meeting of international business leaders in Caux, Switzerland. These business people represented the U.S., Europe and Japan. The Caux Principles are based on the Minnesota Principles, which originated from the Minnesota Center for Corporate Responsibility (MCCR) affiliated with the University of St. Thomas in the Twin Cities, Minnesota [4]. …

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