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3. Is lobbying a legitimate practice? Discuss, using examples
The objective of this essay is to discuss the legitimacy of lobbying. I will start off by giving a brief overview of lobbying and its features. Next, I will use popular lobby cases: Cigars being threatened with regulations, Royal Dutch Shell Niger Delta case and Wal-Mart in India to show that lobbying are being practiced, but not accepted by all.
Lobbying, originated from the term ‘lobby’ as a physical location. The term is often associated with public affairs management, interests and political activities. Lobbying is firmly rooted in the Anglo-Saxon political world and is regarded as suspicious in other languages and cultures (Wagner, 2011). The primary point of the activity is to make one’s voice heard and known, hence to influence the targeted public administration. Oregon Government (1998) states that “lobbying is defined as influencing, or attempting to influence, legislative action through oral or written communication with legislative officials, solicitation of others to influence or attempt to influence legislative action or attempting to obtain the good will of legislative officials”.
Why do firms lobby?
Lobbying is the exchange of information and communication and the exchange on in-depth knowledge and competencies, which provide a firm with the opportunity to benefit from the communication at the policy level (Suder, 2011). The formulation and implementation of public policy affects consumer’s welfare and is typically controlled by the government. Hence it is important to maintain a strong network with the necessary government bodies and institutions. A political opportunity structure can be defined as the degree to which people or groups are able to gain access to power and to manipulate the political system (Suder, 2011 cited in McAdam, 1996).
Secondly, business interests are at stake. The term business interests received lots of attention by state side respondents, which includes the impact of legislation towards business operations and hence the desire to influence the legislation to protect business.
Thirdly, business would want to see predictability and fairness in government policies, reducing uncertainty to benefit their business. Likewise, the planning purposes and the creation of an equal playing field were brought up by all sides of the societal triangle but more to the market side.
Fourthly, firms would more than likely to lobby for the interest if their business is at stake. Defensive motivators in this context means to avoid, weaken or postponing the legislation to prevent the worst from happening.
Lastly, although positive motivators played a less significant role for the state and market side respondents, it is still slightly more emphasized by the market side.
Who lobbies? Who is lobbied?
Most often pressure groups that lobbies can be classified into many categories. Businesses like small and medium sized enterprise (SMEs) and multinational enterprise (MNEs), trade unions, professions, public representatives, ad hoc coalitions, single issue groups and the lobbying consultancy firms. Even though pressure groups started very early, its awareness of the importance of lobbying only really started in the 1970s (Suder, 2011). In the case of European Union (EU), interest groups starts to come in slowly as the European integration occurs. Interest groups starts to invest resources to lobbying activities after it became widespread that the EU-wide regulations influenced a large range of business and societal interests either in the general environment or specific cases.
Lobbying for different levels of policy making means that lobbyist has to target the appropriate authorities to be effective. In United States, lobbyist are concentrated in Washington for the specific legislation in decision-making bodies like the United States Congress. Where EU lobbying are concerned, it is often concentrated in Brussels at the European Commission (EC) and the European Parliament (EP) for committee meetings and additional sessions, EP in Strasbourg for monthly conference, at the administrative office in Luxembourg where Member of the European Parliament (MEPs) are located (Schreuder, 2011).
Are lobbying widely accepted?
In general, democratic society deemed lobbying as a legal activity and it is to be governed by federal and provincial acts. The lobbying process actually meant to encourage and foster open access to the government. It allows the public to provide information and input to the government, especially when the legislation affects every individuals. It does not has an official term, but what lobbyist are doing are engaging, communicating and sharing information to those that ask, so they can make up their mind and make informed decisions. After all, final decisions are made by the officials and what lobbyist are advocating may or may not have an impact on the verdict.
The term lobbying are often correlated with bribery. It is a matter of fine line where lobbying becomes bribery. A bribery occurs when the person offers or gives something of value for the purpose of influencing the action of an official to his advantage. Bribery are considered illegal, while lobbying are not. As is it legal, lobbyists in the US that are paid to perform their duty are required to register with the secretary of the Senate and the Clerk of the House (Sahajwani, 2012). Lobbying are kept transparent as compared to bribery. For example, actions made by lobbyist in Canada can be searched by the public in the federal and Alberta’s registry (Canadian Energy Pipeline Association, 2012).
On the other hand, bribery will transform the established social order and its hierarchy, by which the values and principles are twisted. Bribery gives an unfair advantage to the bribe giver. However if bribery are rampant and persists over a long time, the economic foundation of the country will only erode and hurt the most vulnerable members of the society (Sahajwani, 2012).
Till date lobbying may not be widespread accepted as it is always complicated with moral and ethics issues. To a certain extent, it is true that powerful organizations are using lobbying to influence political opinion to suit their organization interest at all costs. Bribery on the contrary has no morally redeeming features at all, it is a direct sale of power for individual gain (Sahajwani, 2012).
Cigars threatened with regulations
The United States Food and Drug Regulations (FDA) started to regulate cigar products for the first time in 2013. FDA had said that in its regulatory agenda in 2013 that it would propose rules in April to expand the federal oversight of tobacco products under the Family Smoking Prevention and Tobacco Control Act. This had caused an uproar towards the Cigar makers and businesses, more than a dozen of small companies in the cigar industry had come together to stub out the proposed tobacco regulations and taxes in Washington D.C.
The attempt to expand the 2009 tobacco control act to include cigars had concerned many business as their profits are at stake. Cigar companies had said that the move would hurt cigar sales as the regulation disallows them from keeping the cigar from display shelves where customers will be able to check out the products. Executive director of Cigar Rights of America had condemn the FDA’s move as “a classic case of going beyond congressional intent” (Bogardus & Hattem, 2013). The latter had further mentioned that when the congress passed the original Tobacco act, it was to address two issues, youth access to tobacco and chemical addiction. Likewise, this brings to the next point where premium cigar does not meet that criteria. Industry leaders had also argued that cigars does not pose the same danger as tobacco products, since they are generally only sold in stores that requires entrants to be at least 18 years or older. Furthermore, Bill Spann, CEO of the International Premium Cigar & Pipe Retailers Association had also criticize that the FDA meddling could have a devastating impact on cigar shops (Bogardus & Hattem, 2013).
The fight against FDA rules had drew attention from overseas. Letters from ambassadors of tobacco-growing nations have written letters to show their displeasure towards the FDA and warns that the new regulation would threatens thousands of jobs and have political and economic consequences (Bogardus & Hattem, 2013). Hence the businesses had form the Small Business Cigar Coalition, an informal association of 15 makers of cigars and related product. The latter had enlisted Alston & Bird to lobby for them on tax and U.S FDA matters concerning cigars as they filed with congress on 22 November 2013 (Ramonas, 2013).
Following the rather successful lobbying by the Small Business Cigar Coalition, the FDA had proposed two options for the scope of the rule. The new deeming regulations are seen as potential exemption for premium cigars.
On the contrary, leading health groups which consist of 24 groups and 560,000 healthcare and public professionals and millions of volunteers urges FDA to finalize the rule regulating all tobacco products by April 2015 and renounce the exemption for premium cigars (American Lung Association, 2013).
Shell - Niger Delta Case
The Royal Dutch Shell Oil Company were certainly not new to the term corporate lobbying. As of 2014, Shell Co had 36 lobbyists representing the firm for many issues like energy & nuclear power, fuel, gas, natural resources, clean air & water, taxes and many others. Shell Company had spent $6.85 million on lobbying reportedly, for the year.
The Niger Delta case had been brought against the Oil giant company by four farmers from the Niger Delta, who accused the Oil giant company of polluting the environment and having their livelihoods destroyed by the oil spills (Smith, 2012). The four farmers are backed by lobby group, Friends of the Earth, and had filed the case first in 2008 (The Sydney Morning Herald, 2013). Dutch court had found in favor of one plaintiff that, Shell Nigeria had breached its duty of care in that case by failing to take appropriate actions to prevent third parties from tampering the well and causing oil spills (Gaughran, 2013).However, Shells’ public relation had argued that spills are highly caused by sabotage and potential theft cases (Donovan, 2014). Even though the Dutch court had condemn the Shell Company for its action and pointed out that they could no longer point to sabotage as the company itself has no responsibility for the problem (Africa Journalism, 2013).
Despite all that, all of the 4 plaintiffs are not able to prove their case. Whether it is really due to operation failure from Shells or sabotage, the farmers could not do much but to rely on Shell’s own oil spill investigation reports. While this creates an obvious conflict of interest, there is really nothing much the farmers or community could do except to accept the companies assessment. Community members may be part of the investigation process, but in reality, if they do disagree with Shell company assessment, the latter would just overwrite them (Gaughran, 2013). The Nigerian communities are helpless in the sense that they have no access to independent assessments of the real cause of the oil spill or the associated environmental damage.
Moreover, United Kingdom (UK) government had backed the oil giant Shell in the US supreme court after being lobbied for support. According to Frankental (2014) in Amnesty International UK “In these David versus Goliath encounters, the UK has effectively shielded the interest of the powerful companies at the expense of their alleged victims.” Lastly, it is said that in the past Shell had successfully lobbied both the UK and US governments to increase military aid to Nigeria to secure its oilfields (Arts Activism Education Reasearch, 2013).This case had shown that environmental NGO Friends of the Earth and UK government had been lobbied for support on their respective side.
Wal-Mart in India
Global giant retail Wal-Mart had been waiting for years to enter the highly lucrative Indian market, the latter had since then lobbying with US lawmakers to facilitate its entry. Wal-Mart revealed it had spent more than $25 million since it started in 2008 to lobby for “better market access for investment in India” (Ramanna & Muthuram, 2013). Wal-Mart lobbied for its case with the US senate, US House of representatives, US trade Representatives (USTR), and US Department of State (The Times of India, 2013). The lobbying had caused a huge political outcry in India after the Indian government made a controversial decision to allow FDI in the country’s multi-brand sector. The sensation was because lobbying is illegal in India, and is a dirty word and the opposition are probing who got the money, even though the disclosure filing only referred to lobbying activities in the US (Hindustan Times, 2013).
The notion of Wal-Mart entering India had always been denied by the political opposition. However it was not until parliament motion against the decision was defeated in both Lok Sabha and Rajya Sabha. Corresponding to the crucial parliament backing that won the retail decision, lawmaker from the opposition party Ravi Shankar Prasad also argued that “Lobbying is nothing more than a benign form of bribery” (Lakshimi, 2012).
It was then, September 2012 that the India government opened up the retail market and allows FDI to own as much as 51% of the local ventures that has multi-brand. It is highly speculated that the India government had received bribes, hence probing investigations from the political parties. Wal-Mart had lost several senior executives and went through an internal bribery investigation. India’s Congress-led government has also give in to the opposition pressure and appointed a retired judge to thoroughly investigate the lobbying activities of Wal-Mart, before they enter the India market (Kazmin, 2012). However, it is prominent that it is not possible to conclude as there is no material evidence to show that Wal-Mart had indulged in any lobbying bribery.
In conclusion, it can be seen that lobbying are far more accepted in places that is democratic. The above cases are able to give a clear picture of lobbying and shows the importance of it and how it can be applied. Interest groups like NGOs or coalitions will lobby for their personal interests. It is further shown in the Wal-Mart in India case that large business tend to have the advantage as lobbying tend to be costly and can go up to millions per year. Lastly, MNEs are able to lobby for help when their business interests is at stake, they would minimize through defensive motivator’s means as shown in Niger Delta scenario.
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