The Issues Of Jurisdictional And Sovereignty In States And The Inter State

The Issues of Jurisdictional and Sovereignty in States and the Inter-State
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Table of Contents TOC \o "1-3" \h \z \u 1.0 Introduction PAGEREF _Toc497296849 \h 32.0 Definition of Sovereignty PAGEREF _Toc497296850 \h 33.0 Commercial Liberalism PAGEREF _Toc497296851 \h 44.0 Corporate States PAGEREF _Toc497296852 \h 65.0 Problems Relating to MNEs PAGEREF _Toc497296853 \h 86.0 Sovereignty and Autonomy PAGEREF _Toc497296854 \h 97.0 International Trade PAGEREF _Toc497296855 \h 118.0 Opposing Arguments Regarding Sovereignty PAGEREF _Toc497296856 \h 139.0 Conclusion PAGEREF _Toc497296857 \h 1410. Reference List PAGEREF _Toc497296858 \h 15
The Issues of Jurisdictional and Sovereignty in States and the Inter-State
1.0 Introduction
In his article, Sovereignty@bay: Globalization, multinational enterprise and the international political system, Stephen Kobrinis of the opinion that there has been increased conflict between multinational enterprises (MNEs/MNCs) and the nation state.Whilst globalization is still in its initial years, it is expected that with time, the process will quicken thanks to the increase in MNEs operations. Despite this expectation, regulation, law, politics and society are mainly national, only slowly rising from the boundaries imposed by the westphalian states or modern states system. There exists a governance gap as politics stays behind markets which go beyond the accomplishment of the nation-state. According to Kobrin the process of globalization has created a demand for the right to go beyond the nation-state which if actualized would transform it. This paper seeks to support Kobrin’s opinion that the process of globalization as characterized by a high number of MNEs has eroded the power and by extension the sovereignty of the state.[Kobrin, S. (2006, p. 2, first paragraph)] [Kobrin, S. (2006, p. 2, second paragraph)]
2.0 Definition of Sovereignty
Sovereignty is defined as the full right of the ultimate overseer or the government to retain power over itself without interference from external sources or bodies. In reference to the nation-state, sovereignty is the ability of the state to oversee its political, economic and social systems without interference from foreign players. Notably, the process of globalization has uprooted sovereignty from its traditional jetty in ordinary English and converted it into a prisoner of numerous academic concepts. The significance of the doctrine of sovereignty need not be overrated. It is a formidable instrument in the hand of lawyers and politicians and a decisive factor in the formation of territorial institutions or what is known as the nation-state. It is important to note that whilst sovereignty has over the years proved to be stable and long lasting, it is not unchanging or fixed. On the contrary, it has over the years evolved and assumed different personas. In this context, sovereignty has been reformulated time and again to fit the exigencies and demands of different historical episodes or periods. The modern period of increased globalization is a classic example of how sovereignty has been formulated over the years. Today, sovereignty of the nation-state has been eroded through the increased growth of multinational corporations, forcing governments to alter and reformulate their laws and regulations.[Jackson, R. (2007, p. 5)] [Jackson, R. (2007, p. 5 first paragraph)] [Davis, Kathleen. Periodization and Sovereignty: How Ideas of Feudalism and Secularization Govern the Politics of Time. (Philadelphia: University of Pennsylvania Press, 2008), pp. 18]
3.0 Commercial Liberalism
The concept of commercial liberalism postulates that corporations which operates beyond national borders – multinational enterprises – helps in eroding the bounds of the nation-state through the process of economic globalization. MNEs are organizations that control production activities in more than one country. This relationship reveals more that trading activities and is actually a direct ownership of production activities and resource extraction activities in more than one country. MNEs go beyond the sovereignty of the nation state (host country) which implies that whilst commercial liberals view them as beneficial, other tend to view them as threats or functions of large nation-states exploitative economic hegemony. In this context, MNEs are seen as political actors with the power of influencing sovereignty. This is in line with Kobrin observation that the problem of distributing the costs and benefits that arise from MNEs is particularly crucial, especially in the context of the North-South. Some MNEs such as Wal-Mart and General Motors are huge and maintain fields of economic influence that were traditionally domains of states. Such MNEs have gross sales that surpass those of some governments across the world. The state operations and the MNE’s operations are almost similar in the nature as the main aim of the MNEs is to create more profits and accelerate growth, whereas the government’s aim is to promote the general welfare of its citizens,. The only difference, however, is the fact that MNEs operate on an international platform whereas the governments operate locally.[Kay, S (2006, p. 66)] [Brinkman, Richard “ Corporate Pharaohs: A vicious circle of globalization” (Bloomington, Xlibris, 2013), pp. 45] [Chandler, Alfred Dupont, and Bruce Mazlish. Leviathans: Multinational Corporations and the New Global History. (Cambridge [Angleterre]: Cambridge University Press, 2005), pp. 10] [Kobrin, S. (2006, p.6 second paragraph)] [Campbell, Patricia J., Aran S. MacKinnon, and Christy Stevens “An Introduction to Global Studies” (Chichester, West Sussex, U.K.: Wiley-Blackwell, 2010), pp. 41 .] [AdewumiSarumi, ‘The impact of FDI on growth in developing countries: An African Experience’ (Jonkoping International Business School, September 2006) Accessed 8 October, 2017.] [Kurtishi-Kastrari Selma, ‘The effects of foreign Direct Investments for host country’s economy. ’European Journal of Interdisciplinary Studies, vol.5, no.1, pp.26-38]
Commercial liberals maintain that there exists an intrinsic idealism in the growth of MNEs’ foreign direct investment. Such liberals hold that the benefits of FDI are divided between the host countries and the MNEs. The latter helps in construction and maintenance of infrastructure which may help boost productivity and the ability of the host country to sustain the welfare of its people. Advocates MNEs view them as the principal agents of technology and knowledge transfer which is essential for the globalization process. It should however be noted that MNEs are not always the benign actors in erosion of nation-state sovereignty. On the contrary, some nation-states have gone to the extent of undermining the sovereignty of other states in order to protect their home-based MNEs. For example, the United States has been accused of using covert means to destabilize governments seen as hostile to the country economic interests in the host country. Case examples are those of Chile in 1972 and Guatemala in 1954. In addition to such incidences, MNEs pose the threat of attracting labor force outside of the host countries particularly in the case of underdeveloped countries.[Shemirani, Manda “Sovereign wealth funds and international political economy” (London, Routledge, 2016), pp. 78] [Kay, S (2006, p. 66)] [Ibid]
4.0 Corporate States
Arguably, the blunt consequence of increase in the number of MNEs is the growth of corporate states. MNEs are not answerable to any form of authority that matches with their own scope or that which portrays the aggregate interest of all states where they operate. The over reliance on MNEs by national governments for foreign direct investment explains in part why the multinationals have gained increased power. As noted above, MNEs have great influence on the international economic/political system. While national governments power de jure in the system and locally, MNEs exercise power de facto globally and in individual states. MNEs have stripped governments the power and the instruments they traditionally used to regulate foreign investment. Further, it can be noted that MNEs are increasingly dictating the decisions of their assigned overseers in host governments besides gaining increased control over society domains ones they gain a strong foothold in the host country. The latter necessarily undermines the power and purpose of the nation-state as social standards are left to the mercy of market forces. In essence, governments are forced to bid for the favor of MNEs implying that citizens lack the ability to define their destinies. It has been noted that MNEs-induced globalization encroaches on the ability of the nation-state to gain control over commercial activities via democratically elected laws. MNEs in this case eliminate democratic decision making as well as accountability in relation to issues such as those relating to food security, mineral extraction, and conservation, among others.[Kapfer, S. (2006, p. 6)] [Sebastian, N. “Economic globalization, governance and state sovereignty” (New Delhi, Educreation Publishing, 2017), pp. 20] [Negandhi, Anant R. Functioning of the Multinational Corporation: A Global Comparative Study. 1980. ] [Cohen, Stephen D. Multinational Corporations and Foreign Direct Investment: Avoiding Simplicity, Embracing Complexity. Oxford: Oxford University Press, 2007, pp. 239 .]
The state operations and the MNE’s operations are almost similar in the nature as the main aim of the MNEs is to create more profits and accelerate growth, whereas the government’s aim is to promote the general welfare of its citizens,. The only difference, however, is the fact that MNEs operate on an international platform whereas the governments operate locally. Judging from this point, it is almost obvious that the interests of the governments and those of MNEs are bound to clash at some point due to the various differences that exist between them. Therefore, the interdependence between the government and the private sector is expected to bring a balance as the emergence of MNEs has led to the creation of conflicting interests between the state and the private sector. The nature of MNEs has generally reduced the huge control the governments had over the economy and the different economic factors that govern a particular country. It, therefore, presents the MNEs with power over governments due to the scope of their operations. They are more likely to gain an advantage over the government in ensuring that the concerns of the citizens are always dealt with and the economic factors and economic policies are constantly kept in check. In so doing, an economic balance will be created.[AdewumiSarumi, ‘The impact of FDI on growth in developing countries: An African Experience’ (Jonkoping International Business School, September 2006) Accessed 8 October, 2017.] [Kurtishi-Kastrari Selma, ‘The effects of foreign Direct Investments for host country’s economy. ’European Journal of Interdisciplinary Studies, vol.5, no.1, pp.26-38] [Lynch, Katherine “The Forces of Economic Globalization: Challenges to the Regime of International Commercial Arbitration”(The Hague [u.a.]: Kluwer Law Internat, 2003), pp. 44]
5.0 Problems Relating to MNEs
Problems relating to technology, location of production, jobs and managerial expertise have created conflict of interests between MNEs and state government. In this context, the goals of MNEs can and in most cases conflict with those of the host government. At the beginning of the twentieth century, some aspects of global economic interdependence and more specifically, capital flows, remained high. Modern technological development has further complicated state control in some areas as multinational corporations no longer have to rely on physical movement to secure resources such as labor. For instant, through the internet, MNEs can be able to secure labor from parts of the world where they do not have physical presence via telecommuting. Understandably, the nation-state remains the only universal means of organizing political life. However, the nation-state has lost some of its sovereignty more so in regard to autonomy. For instant, in 2001, the EU commission vetoed a merger between two United States companies – Honeywell and General Electric despite a prior approval by the home government. In making this decision, the EU commission argued that the combined market strengths of the two companies would violate EU leading position in the aerospace industry.
There exists a symbiotic relationship between nation-states and MNEs, a relationship that is characterized by unique dimensions. Each of the two entities has something that the other requires to succeed. On its part, the nation state offers legitimacy while MNEs provides employment opportunities, tax revenues and exports. Despite this, the relationship between the two entities is as competing as they are cooperative. Development strategies also create tensions with MNEs. Such strategies relate to the use of profits, technology and other investments as well as hiring of locals. MNEs are not answerable to any form of authority that matches with their own scope or that whic...