In 2002, the two NGOs Milieudefensie (Friends of the Earth Netherlands) and Centro Ecoceanos (Chile) filed a complaint concerning the activities of a salmon-fishing company, Marine Harvest Chile S.A. (MH), a subsidiary of a Dutch multinational, Nutreco. The complaint raised three main issues:
1. Labor relations (involving alleged lack of freedom to unionize; restrictions on collective bargaining for existing unions; arbitrary dismissals following the October 2001 strike (after failed negotiations); lack of pressure on MH’s suppliers and subcontractors to fulfill their labor obligations in contravention of the OECD Guidelines).
A period of relatively tense industrial relations led to allegations by the Provincial Workers Federation of the Fishery Industry of Puerto Montt that MH directly, as well as the subcontractors of multinational enterprises in the aquaculture-fisheries sector, were violating Chile’s labor legislation. The issue arose following the renegotiation and modification in December 2002 of the 2001 collective contract between MH and its Processing Plant trade union.
2. Land Use (5-mile reserve off Chile's coast and its relation to MH’s aquaculture concessions):
The NGOs alleged that MH did not respect the 5-mile zone reserved for artisan fisheries (under Chilean legislation) and that it failed to consult the community and other affected stakeholders (in contravention of Chapter II of the OECD Guidelines). They urged the MH to launch a public dialogue with regional organizations of artisan fishermen and with the coastal communities located in the areas of its industrial operations. They also asked the MH to provide the exact location of its +30 Farming Centers.
3. Environmental impact generated by MH’s aquaculture activity:
The NGOs argued that (a) MH aquaculture activities resulting in the proliferation of toxic algae were a violation of the precautionary principle (see OECD Guidelines, V.4) and that (b) MH’s environmental impact assessment (submitted to the Government) was inadequate under the OECD Guidelines, V.3.
Procedure: The NCP undertook the following two phases of analysis:
“Initial Assessment” (consisting of preliminary analysis of the complaint under the Guidelines, taking into account “the experience and seriousness of the accusing party”)
“Further Examination" (consisting of analysis of both Parties’ arguments; advisory or technical reports or verifications by public or private experts; information from foreign NCPs; site visits and field assessment; offer of good offices to facilitate party agreement on controversial issues; NCP Final Report and, as appropriate, recommendations on the implementation of the Guidelines)
Additional Info: Chile, as an OECD Observer country, accepted the Declaration and Decision of the Council of OECD Ministers (June 27, 2000), containing a new revised text of the OECD Guidelines for Multinational Enterprises, the establishment and procedures for National Contact Points and their supervision by the Committee of International Investments and Multinational Enterprises (CIME).
Other NCPs Involved: NCP Canada, NCP Netherlands
The NCP issued a lengthy report as a result of its investigation, which yielded the following findings:
The NCP noted that the parties’ attitude toward renegotiating the collective contracting and overcome the 2001-2 conflicts was “favorable.” It commended several modifications already made and recommended a series of steps to:
1. help consolidate a normal relationship between the Trade Union and the Company (bearing in mind, inter alia, the binding force of the Chilean Labor Code, ILO Agreements, and OECD Guidelines (specifically IV.1 and IV.2); respecting the “permanent and irreplaceable role” of the trade union in defending workers’ rights; recognizing the legal status of "worker groups" created for the unique and limited purpose of collective bargaining, which may also represent those workers not affiliated to the trade union; non-discrimination against union members in case of downsizing; establishing avenues of permanent interaction between the company and the trade union);
2. incentivize MH subcontractors and suppliers to comply with labor regulations (which were found not to be in compliance) by (a) amending MH contracts with its subcontractors to include a peremptory obligation to fully comply with labor laws; (b) asking MH to institute sanctions in case of infringement (e.g. contract termination, suspension, or elimination); (c) asking MH to take proactive steps to respect the principle of subsidiary responsibility in the Chilean Labor Code. The NCP also warned that it would inform Chile’s National Directorate of Labor about the complaint of the Provincial Trade Union Federation in case of repeated non-compliance with labor regulation by subcontractors of multinational companies operating in the aquaculture and fisheries sector.
Concession rights and community relations:
Exact geographic location of cultivation centers: The NCP recommended that MH provide this information in order to meet its transparency obligations under the OECD Guidelines III.3. The company complied.
1. Land Use / 5-mile-area reserved for artisan fishing: The NCP deferred to other governmental entities responsible for the interpretation and enforcement of the concessions and authorizations of aquaculture activity (in this case, the Under-Secretariat of Fisheries and Sernapesca (National Fisheries Service)).
2. Farming centers located in areas that are detrimental to other users: The NCP found that despite ample legal and regulatory safeguards, certain MH Farming Centers were located outside permissible areas; it concluded that persons or associations harmed by MH’s activities had a right of redress before competent authorities. (It did not clarify what specific legal avenues were open to such persons).
3. Non-respect of concession boundaries in the Llanquihue lake: The NCP recommended that any parties harmed by MH’s conduct (MH “lines of protection” against third-parties engaging in fishing were located outside its grant of concession) should consult directly DIRECTEMAR (the enforcing entity, in charge of providing an official measurement of its concessions and granting certificates) and that MH should adopt, in agreement with DIRECTEMAR, the necessary actions to remedy this issue. It also recommended that the location of the protection lines of the farming centers of the aquaculture industry, in general, be raised in the Dialogue Process.
Environmental impacts linked to the aquaculture activity:
The NCP concluded that, in view of the forthcoming developments in Chilean regulatory and legislative framework, the competent entities ought to be given the time to undertake their own evaluation and enforce the laws as appropriate. The NCP said that this process (conducted in the period of several months) would enable a complete assessment of this issue. The NCP relied specifically on a statement made by the Under-Secretariat of Fisheries that:
1. Chile was about to adopt and enforce a more stringent set of environmental regulations, which may make it unnecessary to invoke the precautionary principle in the OECD Guidelines. The NCP noted that Chile’s regulation to mitigate negative environmental impacts of the aquaculture industry will be more demanding than the precautionary principle based on the OECD Guidelines, as Chilean regulation is binding, whereas the Guidelines are only recommendations for the companies.
2. The NCP predicted that, in the coming months, Chile’s enforcing agencies (e.g. SERNAPESCA) would be able to control, measure with precision, individualize specific farming centers, issue judgments, and sanction companies that fail to comply with the new regulation.
3. Sustainable development in this “important industrial sector” will depend on the social responsibility of the companies involved, which implies that the multinationals “must be prone to progressively assimilate headquarters standards with their affiliate companies.” This, in turn, would also depend on Chile’s capacity to implement its regulations (with sufficient financing and resources). On this front, the statement noted the “significant role” of various social, local, and environmental organizations in proposing initiatives and providing alerts about issues affecting the environment.
4. Finally, the statement noted a lack of precision in the NGOs claims (distinguishing between the environmental impact of aquaculture in general as opposed to MH specifically) and lack of evidence in governmental reports concerning MH’s non-compliance with the regulation.
The NCP’s broader proposal:
All stakeholders in the aquaculture industry (as well as representatives of amateur fishermen, aquaculture workers, artisan fishermen, and the tourist sector) should start and institutionalize a two-phase dialogue process:
Phase 1 (to be initiated within 2 months) establishing a formal relationship and addressing the most urgent subjects; and,
Phase 2 (to be initiated immediately after Phase 1) to include all other affected sectors. The NCP commended MH’s preliminary proposal to engage representative institutions, NGOs, suppliers, academics, and scientists in research on environmental issues, inter alia.
The NCP recommended the convening of a Coordinating Committee (consisting of MH, amateur fishing federation, Milieudefensie, Ecocéanos, World Wildlife Fund; Universidad de los Lagos; annd governmental representatives). The National Fisheries Service accepted the NCP’s proposal that the Regional Director of SERNAPESCA would coordinate the two phases of the dialogue. Both parties seemed willing to participate in the dialogue.
OECD Watch case story page: http://oecdwatch.org/cases/Case_25