Trade, Ethics and Communications

By: Louis X. (Kip) Cheroutes Issue: Global Trade Section: Jewel Of Collaboration

Public Relations Can Help Raise the Bar

Trade Ethics

Trade between people of different cultures began approximately 67,000 years ago, archeologists guess. That puts it somewhere between the time man fished with a spear and man fished with a pole. No doubt those earliest traders had to overcome communications obstacles to gain mutual trust for trade to occur. In the end, both sides were rewarded accordingly.

The internet may have replaced sign language but interpersonal and institutional trust still remains a big part of trade. This trust is based on ethics law and trade practice facilitated by communication. And the global communication profession can help foster ethical trade, using its own codes, by facilitating only ethical communications.

What drives ethical communications now? What can be a next driver?

Ethical Communications Based in Law

Most, not all, economists agree that the world has benefited from free trade agreements. These enforceable agreements drive transparency, open records and legitimize conflict resolution. What set the modern stage was the U.S. Foreign Corrupt Practices Act (FCPA), passed in 1977 in response to a Securities and Exchange Commission investigation. Four hundred U.S. companies admitted making questionable or illegal payments to foreign government officials or political parties to secure business. Congress reacted with shock.

Congress reacted with shock yes but not clarity. The new law was a cauldron of uncertainty, questionable implementation and loose definitions. Aside from bribes for business, what of normal business activity, where a so-called “grease payment” gets your phones installed faster? What of differing local laws? What of companies in other countries without similar laws?

Twenty years later the Paris-based Organisation for Economic Cooperation and Development (OECD) leveled the playing field. It convened among member countries a convention on bribery of foreign public officials. The U.S. amended the FCPA to harmonize with OECD convention documents and Canada followed suit in passing its’ own Corruption of Foreign Public Officials Act.

The body of law called bi-lateral or multi-lateral free trade agreements also build trust, promote trade and promote higher ethical communication standards.

Most, not all, economists agree that the world has benefited from free trade agreements. These enforceable agreements drive transparency, open records and legitimize conflict resolution. They keep people talking, build trust and raise the ethics bar even further. Without future agreements, the global marketplace loses opportunities to advance ethics and advance business.

Another body of law authorizes educational and cultural exchange programs, trade’s next door neighbor. In the U.S. it’s the Department of State’s Bureau of Educational and Cultural Affairs that administers the Fulbright scholarship and more. Under the Obama administration this soft diplomacy is one way to start fresh with friend and foe alike. Exchanges here result in sustainable communications built on trust.

Ethical Communications by NGO Seal of Approval

Aside from law are accepted standards for international business practices. Drafted and codified by NGOs, these standards seek to mitigate against health and environmental risks, prevent deceptive practices, and provide common definition for quality, worker rights and safety, authenticity, good practices, and sustainability.

But many worry about the overabundance of standards and standard-making organizations. Which seal of approval does a company seek? Used discriminately or arbitrarily, they can be used as tools for protectionism. And compliance costs may marginalize small countries, small enterprises and small scale farmers.

The answer may be prioritized standards but definitely is the ability for business and non-profits to meet the highest possible standards. The World Bank, for example, recognized these concerns and now gears programs to increase country capacity, diversification and marketing communications (marcom) support programs.

The Next Driver: Ethical Communications Based on Professional Code

Exporters export and legislatures legislate. Meanwhile there is a global cadre of public relations professionals to help both exporters and governments succeed. Facilitating ethical communications, using a growing number of methods, helps clients comply with law and positions them competitively in the marketplace. But one must guide oneself first.

The Public Relations Society of America (PRSA), a prominent professional association, has had a code of ethics for over 30 years. This early code, though, was a self policing tool, full of warning of what not to do. Lack of enforcement made it largely irrelevant.

In 2000, PRSA created a new code on what ethical communication should look like. It’s a guide for a wide range of client services. That guide, though, can apply as well to a larger global market of trading partners, stakeholders, consumers, and media - in short anyone who talks to each other.

Jeff Julin, President of MGA Communications and immediate past chairman of PRSA calls the new code of ethics a statement about ethical values and principles that defines ethical business behavior. It is based on values that respect differing cultures and that upholds freedom in all forms of business and personal communications. “The PRSA code can embrace all ideas and opinions and promotes transparency as a guide for the world’s marketplace,” Julin said.

PRSA Code of Ethics

The preamble emphasizes honesty, expertise, loyalty and fairness. Expertise is included to recognize the role of professional development, research and education.

Code provisions include:

The free flow of information stands first. Protecting and advancing the accurate and truthful information, it says, is essential to serving the public interest and contributing to informed decision making in a democratic society.

The provision’s intent is to maintain the integrity of relationships with the media, government officials and the public. PRSA members pledge to be honest, act properly, investigate truthfulness, disclose financial interest and avoid deception.

Competition. Promoting healthy and fair competition preserves an ethical climate while fostering a robust business environment. The intent is to promote respect. Members pledge to follow ethical hiring practices and preserve intellectual property rights.

Preserving, much less recognizing, intellectual property rights are tough to do. Part of the solution is the ability for an indigenous economy to develop its own intellectual property, when suddenly the notion of property rights takes hold.

The Socialist Republic of Vietnam is a good example. Vietnam, like other Asian cultures, has a long history of economic progress benefiting the group, not the individual. Now comes individuals like Vietnam’s own jazz sax recording star Tran Manh Tuan and suddenly the concept of music piracy hits home.

Disclosure of information. Open communications, the code says, fosters informed decision making in a democratic society. The intent is to build trust with the public by revealing all information needed for responsible decision making. Members pledge to be honest, act promptly, investigate truthfulness, reveal sponsors, and disclose financial information.

The recent episode of tainted milk products from China and earlier episodes of mad cow disease should easily convince exporters about the need for disclosure.

Safeguarding confidence. Client trust requires appropriate protection of information. The intent here is to protect the privacy rights of clients, organizations, and individuals by safeguarding confidential information. PRSA members pledge to safeguard confidences, protect privileged information and immediately notify clients if breaches are discovered. Conflicts of interest. Avoiding real or perceived conflicts of interest, the code concludes, builds trust by clients, employers and the public. The intent is to earn trust by avoiding or ending situations that puts personal or professional interests in conflict with society’s interests. Members pledge to act in the best interest of the client, to avoid actions or circumstances that appear to compromise good business judgment and to encourage clients and customers to do the same.

Not Just for Democracies

But what of markets where democratic society is a relative term? Some markets are emerging democracies, some receding. Can lofty principles in a public relations code of ethics stand a chance of succeeding? They’re starting to.

Vietnam is a transitional global economy but not widely seen as a democratic society. Detractors point to recent arrest of journalist with scorn. But Vietnam is becoming a global trading partner and, as such, is adopting ethical principles and the ways to communicate them.

In 2001 the U.S. and Vietnam Free Trade Agreement took effect. In exchange for lower or no import duties, Vietnam revamped their body of law in trade, banking, uniform commercial code, IPP and more. Those ethical reforms are taking irretrievable hold. And what of communications?

Tran Ngoc Chau is editor of the Saigon Times and director of the Finance and Business News Channel. He has his Ph.D. in Journalism and Mass Communications. He points to the clash between Confucius-based codes of ethics and modern time and says conferences on ethical business practices appear frequently but only to expose bad behavior internally and externally - like the early PRSA code.

What’s needed next, Chau says, is the way to make it prescriptive. “In order to have a code of business ethics first, government and business associations must sit down together to reach an agreement and then use it to educate everyone.”

Collaborations Are Key

There is a seemingly endless network of collaborations that push ethical dialogue forward. Scientists, academicians, schools, researchers, engineers, doctors, diplomats and yes, even joint military training all strengthen dialogue and the global trade glue.

The public relations profession has its own global collaborations. For example, the 40-year old Public Relations Organisation International (PROI) is a European born network of firms that represent indigenous business cultures in over 90 cities and cross fertilizes cultural and ethical business practices on behalf of global clients.

Professional collaborations are good but personal, active collaborations are best. It’s one thing for thought leaders to understand the integrations of economies, cultures, ethnic tribes, religious beliefs and national boundaries. It’s another thing to help guide and shape those collaborations for mutual benefit.

Why now? The world economy has experienced a seismic shift, a shift with damage caused in part by the lack of ethical communications and behavior. The U.S. takes some blame here. But how quickly global markets rebuild depends on confidence based on a higher level of ethical behavior, by law or practice. Julin sees a communication-based global code of ethics leading the way. “How well the world does business in all cultures depends on a better set of principles. A PRSA code can be an extremely helpful guide of how we act as people, in trade and in diplomacy.”

Louis X. (Kip) Cheroutes serves on the U.S. Department of Commerce District Export Council, a trade advisory group. He is Vice President of Public Affairs for MGA Communications, a Denver Colorado-based communications and public relations firm. Cheroutes can be reached at kcheroutes@mgacommunications.com. Trade Ethics