The sustainability governance of commodity
value chains in the Global South
Explaining the support of the Colombian state for the RSPO
By Stephania Rivera Tamayo (10792295)
Master Thesis Political Science (International Relations Specialization) Research Project: Transnational Sustainability Governance
Thesis Supervisor: dhr. dr. Philip Schleifer Second reader: dhr. prof. dr. Jonathan Zeitlin
June 2019
Abstract
The governance of global trade has experienced an increasing number of initiatives aimed at promoting sustainability in global value chains (GVCs). Many of these initiatives fall under the umbrella term ‘transnational private governance’. Their aim is to set and implement
standards for global production in the areas of labor rights, human rights, and the environment. The support of state actors has proved to be important for the success of these initiatives, particularly in countries in the Global South. However, not all countries are willing to share their regulatory power with transnational private regimes. In the Global South, state actors are starting to develop their own standard regimes, which are at odds with transnational ones. While in some cases state actors are developing hostile relationships with these initiatives, others are encouraging them. This thesis makes an attempt to shed more light on this puzzle. It looks into the diverging reactions of state actors in the palm oil sector. Here, the leading palm oil producers have developed competitive relationships with the transnational private regime, RPSO. In contrast to this trend, Colombia, the fourth producer of palm oil worldwide, has maintained ‘friendly’ interactions with the same private regime over the years. Through an in-depth case study analysis of the interactions between the Colombian state and the RSPO, this thesis aims to explain why the Colombian case has not followed the same trend of other producer countries in the palm oil value chain. In order to account for this case, this research looks at three factors: economic interdependence, transnational pressure, and complementarity with domestic agendas. After an empirical analysis of these factors, this thesis concludes that a juxtaposition of these conditions accounts for the state’s support for this transnational private regime. Nevertheless, the complementarities with domestic agendas stand out as an important factor to explain the continuous support of the Colombian state for the RSPO between 2005 and 2018.
List of Acronyms and Abbreviations
CAR
CONPES
DNP EU FAO Fedepalma GVC IDEAM IAvH MADS MAVDT MADR NIFT NGO OCED RSPO RSPO P&C SAGARPA Corporaciones Autonomas Regionales / the regional authority for environmental issues El Consejo Nacional de
Política Económica y Social / The National Council on Economic and Social Policy
Centro Nacional de Memoria Histórica / National Center of Historic Memory
Departamento Nacional de Planeación/National Planning Department European Union
Food and Agriculture Organization of the United Nations Federación Nacional de Cultivadores de Palma de Aceite / The National of Oil Palm Growers of Colombia
Global Value Chains
Instituto de Hidrología, Meteorología y Estudios Ambientales / The Institute of Hydrology, Meteorology and Environmental Studies Institute Alexander von Humboldt
Ministerio de Agricultura and Desarrollo Sostenibilidad / Ministry of Environment and Sustainable Development
Ministerio de Ambiente, Vivienda y Desarrollo Territorial / Ministry of Housing, and Territorial Development
Ministerio de Agricultura y Desarrollo Rural/ Ministry of Agriculture and Rural Development
National Interpretation Task Force Non-Governmental Organization
Organization for Economic Cooperation and Development Roundtable on Sustainable Palm Oil
Roundtable on Sustainable Palm Oil Principles and Criteria Secretaría de Agricultura Ganadería, Desarrollo Rural, Pesca y Alimentación
SISPA
Sistema de Información Estadística del Sector Palmero/ Statistics Information System of the Palm Oil Sector
VPA ZIDRES Transnational Private Governance
Voluntary Partnership Agreement
Zonas de Interés de Desarrollo Rural, Económico y Social / Zones of Interest of Economic and Social Development in Rural Areas
Introduction 4
1.1. Background 4
1.2. The puzzle of state’s support to the transnational governance of GVCs 5
1.3. Research questions 6
1.4. Outline of the thesis 8
The emergence of transnational private regimes: do states matter in the governance of
global value chains? 10
2.1. Governing global trade: the rise of private governance regimes 10
2.2. Do states matter in the governance of global trade? 11
2.3. States: an important piece in the puzzle of transnational private governance? 12
Conceptual and methodological framework: when are states likely to support
transnational private regimes? 15
3.1. The relationship between states and private governance: friends or foes? 15 3.2. When are states likely to support private governance? 16
3.3. Research Design 20
3.3.1 Case selection: the interaction between the Colombian state and the RSPO 21
3.4. Notes on data collection 22
3.5. Analytical considerations 25
3.6. Limitations 26
Interactions between the Colombian state and the RSPO in the governance of the palm oil
value chain 29
4.1. Introducing the RSPO to Colombia: the first process of National Interpretation 29
4.2. The second process of NI in Colombia 31
4.3. Beyond the participation of Colombian state actors in the implementation of the RSPO 33
Economic Interdependence: the degree of dependence of Colombia’s palm oil on foreign
markets 36
5.1. The degree of dependence on foreign markets 36
5.2. Export market destinations 39
Transnational Pressure for raising sustainability standards in Colombia’s palm oil sector 41
6.1. The influence of international agreements 41
6.2. Pressure from EU consumer countries 42
6.3. Pressure from Latin American and the Caribbean region 44
6.4. Pressure from transnational actors 45
The complementarity between Colombia’s domestic agenda and the RSPO 48
7.1. Overview of the domestic agenda for palm oil 2002-2010 48 7.2. RSPO: a friend or a foe to the domestic agenda 2002-2010? 51 7.3. Overview of the domestic agenda for palm oil 2010-2018 53
7.4. RSPO: a strategic tool for the national government 57
Discussion 60
8.1. Explaining Colombian state actors’ continuous support for the RSPO: the hypotheses 60 8.2. The interaction between market forces, transnational pressure, and domestic agendas 63
8.3. Understanding the complementarities between the RSPO and the domestic agenda 64
8.4. Beyond the Colombian case: a comparative perspective 65
Conclusion 69
9.1. Contribution 70
9.2. Limitations and suggestions for further research 71
9.3. Implications and policy recommendations 73
Appendix 75
Bibliography 76
Introduction
1.1. Background
A growing interconnectedness of firms, workers, and consumers around the world has become a dominant feature of global trade. This changing structure, which is also referred to as ‘Global Value Chains’ (GVCs), is characterized by having a pattern of production that is both functionally and geographically fragmented (Gereffi 2016). At least 80 percent of global trade is estimated to flow through GVCs (Phillips 2017; Gereffi 2016). Additionally, value chains are expected to account for a large share of global economic growth and employment (Phillips 2017; Gereffi 2016). GVCs are, thus, almost ubiquitous in the current global economy. In fact, value chains have become an indispensable condition for development in many countries in the Global South1.
Despite its enormous value to economic development, value chains have been facing considerable challenges over the last decades. They are frequently held responsible for its negative social and environmental impacts across the world. Although these problems are present in the different activities of GVCs, they are particularly visible in the first segments of these chains (Phillips 2017). And it is precisely here where developing countries are found as they usually focus on the production of raw materials (Gereffi 2016). Deforestation and biodiversity loss in the production of soy in Brazil, human rights violations in the mining industry in Congo, forced displacement linked to the expansion of sugar production in Colombia, child labor in palm oil plantations in Indonesia. These are just a few examples of the daily realities in global production chains.
The urgency to address these issues has led to the emergence of all sorts of initiatives aimed to improve the conditions on the ground. Many of those fall under the umbrella term ‘transnational private governance’ (TPG). This term refers to the initiatives by state and non-state actors aimed at ‘setting and implementing standards for global production in the
1 Dubash and Morgan (2012: 261-263) use the term ‘Global South’ or ‘the South’ to refer to ‘the shared
histories of many countries in relation to colonialism, struggles to address poverty and a predominant policy concern with the process of ‘development’ over the past few decades’. This term is thus not precisely a
‘geographic delimiter’. Additionally, ‘the South’ does not suggest that those countries form a homogenous group. This thesis also employs this term to highlight the specific challenges that states in the Global South experience in tackling environmental and social concerns in GVCs, while at the same time promoting economic development.
areas of labor rights, human rights, and the environment’ (Abbott and Snidal 2008: 44). The emergence of TPG is often attributed to the lack of capacity of states to address the negative impacts of global trade. This is particularly the case in developing countries, which are frequently considered to be ‘areas of limited statehood’ where private governance simply fills a regulatory gap (Hönke and Thauer 2014).
A growing body of research is, however, contesting this argument. Several studies show that developing countries can play a key role in TPG despite their limited regulatory capacities (Pramudya et al. 2018; Schleifer and Sun 2018; Schouten and Bitzer 2015; Wibowo and Giessen 2018; Wibowo et al. 2016). As such, this literature reveals that transnational private governance does not simply ‘navigate around or alter national regimes’ in the Global South (Bartley 2014: 95). In fact, state actors in the South use their regulatory power to frustrate, amplify or reconfigure these initiatives within their borders (Wiwowo et al. 2016; Bartley 2014; Verbruggen 2013).
1.2. The puzzle of state’s support to the transnational governance of GVCs
While in some cases state actors in developing countries can be supportive of transnational private regimes, other cases rather show conflictive interactions between both. These conflictive interactions have received special attention in academic research. In particular, this line of research has followed closely the emergence of ‘Southern Standards’, which refers to the creation of sustainability standards by state actors in the Global South (Schouten and Bitzer 2015). These initiatives can be considered to be an attempt by state actors in developing countries to regain control over the governance of their industries, particularly in the production of commodities that are key to their economic development (ibid.). Not surprisingly, some of those standards are at odds with transnational private regimes (ibid.).
This rocky relationships in the ‘Global South’ have been particularly studied in Indonesia and, to a lesser extent, in the soy sector in Brazil and the palm oil sector in Malaysia (Astari and Lovett 2018; Bartley 2014; Dermawan and Hospes 2018; Hospes 2014; Pramudya et al. 2018; Schouten and Bitzer 2015; Wibowo and Giessen 2018). Although this line of research has shed more light on why these ‘hostile’ reactions from state actors are emerging, there is, nevertheless, a lack of understanding on why we do not observe such interactions in other countries in the Global South.
As there is relatively little research on this topic, this thesis undertakes an attempt to study why some countries have ‘friendly’ interactions with transnational private regimes while others not. It carries out a detailed analysis of the interactions between state actors and the Roundtable on Sustainable Palm Oil (RSPO) in Colombia between 2005 and 2018. The RSPO is one of the leading transnational private regimes in the agricultural sector with the aim of increasing environmental and social standards in the global value chain of palm oil. Colombia is, on the other hand, the largest palm oil producer in Latin America and fourth producer worldwide.
Unlike leading palm oil producers Indonesia and Malaysia, Colombia has not developed competing policy processes, like the establishment of ‘Southern Standards’. As mentioned earlier, the existing research has heavily focused on the antagonistic interactions between state actors and transnational private regimes in Indonesia (Astari and Lovett 2018; Bartley 2014; Dermawan and Hospes 2018; Hospes 2014; Pramudya et al. 2018; Schouten and Bitzer 2015; Wibowo et al. 2015; Wibowo and Giessen 2018). Compared to these Southeast Asian countries, the Colombian case has rather shown a ‘friendly’ relationship with the RSPO over time. This relationship has maintained this way since the entrance of the RSPO in this country in 2005. The Colombia case differs, thus, significantly from what can be observed in other cases in the palm oil sector. As such, the relationship between Colombian state actors and the RSPO approximates an outlier case, which this study aims to explain. Additionally, as most of the research has been biased towards certain cases in Southeast Asia, this thesis explores a new context in which different dynamics in the interactions between state actors and transnational private regimes in the palm oil sector take place. All in all, Colombia forms a case in point of the empirical puzzle described above.
1.3. Research questions
The main objective of this research is to provide more insights into the complex relationship between states actors in the Global South and transnational private regimes, which is embedded in the governance of GVCs. The aim is threefold: (1) this study sheds more light on the conditions under which state actors are more likely to support transnational private regimes in the Global South; (2) this thesis contributes to a further understanding of the role of state actors in developing countries in the governance of GVCs, particularly in relation to transnational private regimes that aim to regulate private sectors actors that would be normally controlled by the state; (3) Lastly, this research provides a comprehensive analysis
of the dilemma’s that developing countries face in tackling environmental and social problems in GVCs, while at the same time generating economic developing through the integration of their economies in GVCs.
Based on these aims and the Colombian case, this thesis addresses the following research question:
‘What are the conditions that explain the continuous support of Colombian state actors for the RSPO in the governance of the palm oil sector between 2005 and 2018?’
In order to provide an answer to this question, the following sub-questions are addressed:
1. What is the interaction between Colombian state actors and the RSPO between 2005 and 2018? (Chapter 4)
2. Can dependence on foreign markets with high standards account for the supportive interactions between state actors and RSPO between 2005 - 2018? (Chapter 5)
3. Can transnational pressure for higher standards in the palm oil sector account for the supportive interactions between state actors and RSPO between 2005 - 2018? (Chapter 6)
4. Can the complementarity between national agenda for palm oil account for the supportive interactions between state actors and RSPO between 2005 - 2018? (Chapter 7)
Based on the empirical evidence, this thesis concludes that the continuous support of Colombian state actors for the RSPO is explained by the high complementarity between the domestic agendas and this transnational private regime. From the perspective of the Colombian state, there is no reason to oppose the intervention of this program in the governance of a key sector of its economy and security. This certification scheme contributed to the domestic objectives in economic as well as environmental areas. This complementarity was presumably possible due to the lack of an ambitious reading by the national interpretation of the RSPO P&C of the problems that Colombia’s palm oil faced on social areas. As such, the implementation of the RSPO did not require challenging institutional actions from state actors, as it was the case in other countries.
This support is, also, motivated by the existence of transnational pressure that has increased the relevance of the RSPO in the eyes of the Colombian state. This pressure is, in turn, possible due to the existence of a degree dependence on foreign markets with high standards. However, this dependence is not high. Market conditions manifest themselves in the ambitions of Colombian state actors in gaining more access to markets in the future. These ambitions are, in turn, formed by the national agendas. These factors combined have facilitated the support for the RSPO.
1.4. Outline of the thesis
This research is divided into 9 chapters, including this introduction. Chapter 2 presents the current state of knowledge in the literature of transnational private governance, particularly in relation to the position of states in the governance of GVCs. On the basis of this review, this chapter points to the lack of understanding of the role of the state in transnational private governance, particularly in the Global South. In relation to this, an empirical puzzle is, finally, introduced in this chapter: why some states support transnational private regimes in the Global South while others not?
Chapter 3 presents the conceptual and methodological framework of this thesis. In order to shed more light on the puzzle described above, this chapter studies more in-depth the theoretical approaches that can shed more light on the interactions between states and transnational private regimes. Particular attention is given to possible explanations to why a state might be more likely to support these initiatives in some cases and not in others. Additionally, this chapter contains the research design and methodology based on the case study method.
Chapter 4,5,6, and 7 address the sub-research questions based on an empirical analysis of the interactions between Colombian state actors and the RSPO between 2005 and 2018 in the governance of palm oil value chain. Chapter 4 develops the Colombian case. This chapter presents a detailed analysis of the supportive interactions in this case.
Chapter 5 explores possible explanations for these supportive from market conditions. It looks particularly at the degree of dependence of the Colombian palm oil sector on foreign
markets with high standards. This chapter shows the limited explanatory power of these conditions in the Colombian case.
Chapter 6 turns its attention to transnational pressure experienced by Colombian state actors to increase standards in the palm oil sector, and henceforth, support the RSPO. This chapter shows the relevance of this explanation but highlights certain weaknesses in finding providing a satisfactory explanation for the Colombian case.
Chapter 7 looks at the domestic-level and explores how interests of the Colombian state interact with the RSPO. It shows to what extent the national objectives are in line with the work of this private regime.
Chapter 8 presents a discussion of the main findings of this study. In order to evaluate the relevance of these results, this chapter draws a comparison with Indonesia, the largest producer of palm oil worldwide. In contrast to Colombia, Indonesia has developed hostile interactions with the RSPO. Are the findings of the study also relevant to this case?
The last chapter presents the conclusions of this thesis based on empirical findings. It summarizes the contributions and several recommendations in light of the results.
The emergence of transnational private regimes: do states matter in the
governance of global value chains?
Introduction
This chapter introduces the emergence of transnational private governance initiatives, which cannot be understood without discussing the social and environmental impacts of global trade. Particular attention is given to the role of the state in relation to transnational private regimes. This section argues that state actors have been understudied in this literature. This is particularly the case for state actors in developing countries. Finally, it shows that it is not clear why some states in the Global South support transnational private regime while others not.
2.1. Governing global trade: the rise of private governance regimes
The structure of the global economy is characterized by the existence of global value chains (GVC). This GVC structure refers to a ‘pattern of global and regional production coordinated and controlled by transnational corporations (TNCs) that is both functionally and geographically fragmented’ (Phillips 2017: 430). Although this model of global production is regarded to play an important role in the economic development of states, GVCs are also held responsible for its negative social and environmental impacts across different sectors worldwide. Some even speak of a regulatory ‘race to the bottom’, particularly in developing countries (Abbott and Snidal 2008: 58). In light of this, recent research has paid attention to under which circumstances GVCs can also lead to more sustainable development (Gereffi 2014).
The role of transnational private governance (TPG) is often highlighted in facilitating sustainability in GVCs (Gereffi and Lee 2016; Lee et al. 2010). This type of governance focuses on ‘setting and implementing standards for global production in the areas of labor rights, human rights, and the environment’ (Abbott and Snidal 2008: 44). GVCs are increasingly characterized by the proliferation of private initiatives (Schouten and Bitzer 2015: 175). The emergence of these regulatory arrangements is often attributed to the lack of capacity of states to regulate the negative impacts of the (global) market. In light of these challenges, private governance arrangements are often considered to be ‘promising transnational regulators’ (Abbott and Snidal 2008: 47).
Private governance initiatives bring together different actors of different types. Although these regulatory systems are characterized by the interaction of states, firms, and NGOs, also referred to as the ‘Governance Triangle’ (idem: 48), a growing body of research argues that states actors play a crucial role in regulating social and environmental standards in GVCs (Alter and Lovett 201; Bartley 2014; Gulbrandsen 2014; Verbruggen 2013; Wibowo and Giessen 2018; Wibowo et al. 2016). This literature puts into question the idea that private governance simply ‘navigates around or alters national regimes’ (Bartley 2014: 95). Parallel to this, it also challenges the focus on firms and social movements as main drivers of change within the GVC literature (Horner 2017). Consequently, scholars argue for a better understanding of the role of states in relation to private regimes (Wibowo et al. 2016).
2.2. Do states matter in the governance of global trade?
Even though state actors are not considered to be fully capable of controlling global trade, they are, nevertheless, expected to play different roles in the governing process of private initiatives that aim to regulate global production. According to Abbott and Snidal (2008), state actors possess different competencies depending on the context they operate. Whereas they have more regulatory power in the domestic context, they have less influence in the transnational arena. In both scenarios, states do not possess all the competencies needed for effective regulation. However, they do play an important role in particular stages of the governance process as they have unique capacities, which other actors, such as firms and NGOs, do not possess. In the domestic context, states have, for example, strong capacity concerning agenda-setting, negotiation, and enforcement of regulatory schemes within their territories. On the other hand, these actors lack more capacity in other areas of transnational private governance, such as the implementation and monitoring phase, where firms and NGOs have stronger competencies to ensure effective regulation.
The idea seems, then, to be that states can add the finishing touch to private regimes’ efforts in lessening the negative impacts of global trade, and vice versa. This is also supported by empirical research on the interaction between TPG and states. Some, for example, highlight the ‘harmonious’ relationship that they can have: ‘one mechanism reinforces the functionality of the other or compensates for its weakness’ (Verbruggen 2013: 523). In a similar vein, Coslovsky and Locke (2013) show how state actors function as the ‘watchdog’ of private standards and ensure the enforcement of those. Another way in which state and non-state
actors complement each other is by sharing knowledge. As state agencies have a limited understanding of the challenges that firms experience in improving social and environmental conditions, this lack of knowledge can be complemented by private actors. This again suggests a conflict-free relationship between the state and private governance.
Transnational private governance cannot, however, always count on a ‘friendly’ response from state actors. Recent research shows that they can take a more competitive position towards this type of governance, reclaiming their traditional authority in governing the ‘market’ (Astari and Lovett 2018; Bartley 2014; Pramudya et al. 2018; Wibowo et al. 2016; Wibowo and Giessen 2018). In the case of forest certification in Indonesia, Wibowo and Giessen (2016) reveal how the Indonesian state developed its own standards that are directly at odds with private ones. This change from ‘governance to government’ is regarded as a way in which states, particularly in the Global South, are claiming for more authority and power as they begin to notice their loss of control within their boundaries (Astari and Lovett 2018). In this way, the state can reduce the space for forms of transnational private governance authority.
This line of research also suggests that states’ behavior towards private governance initiatives is key to their success. Due to their unique capacities, these actors cannot only shape private governance regimes but also weaken them (Bartley 2014: 102). By using their regulatory power, states can frustrate, amplify or reconfigure these initiatives within their borders (Wiwowo et al. 2016; Bartley 2014; Verbruggen 2013). Whereas they can play a ‘watchdog’ role or even ensure the enforcement of private standards, states can limit the power or capacity of those regimes by diminishing their space to operate.
2.3. States: an important piece in the puzzle of transnational private governance?
Although there are different factors that shape transnational private governance and its success, the aforementioned studies suggest that state actors can play a central role in this regard. Concerning the improvement of social and environmental conditions in global trade, recent research points to the importance of domestic conditions, particularly the role of state institutions, when explaining the lack of effectiveness of transnational private regimes (Bartley 2014 and 2018; Mosley 2017; Dauvergne 2017; Schleifer and Sun 2018). This has led to a ‘re-centering’ of the state in the TPG and GVC literature in order to increase the lack
of knowledge on state actors. In this literature, the state’s support for these initiatives has been often highlighted as an important condition for their success (Bartley 2018).
Supportive interactions between state actors and transnational private regimes have been studied in countries in the developed world with the exception of some cases (Espach 2009; Gulbrandsen 2014; Verbruggen 2013). However, recent research is increasingly focusing on the interactions between state actors and transnational private regimes in developing countries. While in some cases state actors in developing countries can be supportive of transnational private regimes, other cases rather show conflictive interactions between both. In particular, this line of research has followed closely the emergence of ‘Southern Standards’, which refers to the creation of sustainability standards by state actors in the Global South (Schouten and Bitzer 2015). These initiatives can be considered to be an attempt by state actors in developing countries to regain control over the governance of their industries.
Most of this research on ‘conflictive interactions’ has been heavily focused on the case of Indonesia (Amengual and Chirot 2016; Astari and Lovett 2018; Dermawan and Hospes 2018; Pacheco et al. 2018; Pramudya et al. 2018; Schouten and Hospes 2018; Wibowo and Giessen 2018). This line of research has shed more light on how state actors in the Global South are reacting in a hostile way against transnational private regimes. However, it is not yet clear why we do not observe such interactions in other countries in the Global South. Take the palm oil sector as an example, it is remarkable to observe that while the largest producer countries, Indonesia and Malaysia, have developed their own ‘Southern Standards’ that are competing with private ones, Colombia, another important producer country, has developed friendly interactions over time with the transnational private regime RSPO (see chapter 4). In light of these recent developments, further research is needed in order to understand why some countries in the Global South are supportive of these initiatives while others not. Simply providing a descriptive analysis is not enough to shed light on this puzzle.
But why is it relevant to look at countries in the Global South? Well, these countries are usually the subject of social and environmental standards because they are considered to be even more helpless than highly developed countries in ‘taming’ the negative impacts of global trade. In fact, they are often referred to as ‘areas of limited statehood’ where private governance simply fills a ‘regulatory gap’ (Bartley 2014: 95; Nesadurai 2018). Nevertheless,
recent findings put this into question and show that developing countries do have the capacity to play a more active role in private governance (Pramudya et al. 2018; Schleifer and Sun 2018; Schouten and Bitzer 2015; Wibowo et al. 2016; Wibowo and Giessen 2018). It is, therefore, important to study why some countries in the Global South support transnational private regimes while others not.
To sum up, transnational private governance forms an attempt to regulate the negative impacts of global trade in the areas of labor, human rights and environment. This new form of governance is considered to fill a regulatory void, resulting from the inability of states to fully control global market pressures on their territories, particularly in developing countries. Despite this, states continue to be important players due to the unique capacities they have. Their support for private governance regimes is key for their likelihood of success. Nevertheless, existing research identifies both supportive and conflictive interactions that can emerge between state actors and transnational private regime. In particular, the emergence of conflictive interactions in the Global South has gained the attention of many scholars. Beyond the description of these interactions, research should also make an attempt to explain why some states support transnational private regimes in the Global South while others not. The next chapter explores the conditions that might explain this puzzle from a theoretical perspective.
Chapter 3
Conceptual and methodological framework: when are states likely to support
transnational private regimes?
Introduction
This chapter discusses more in-depth the relationship between states and transnational private regimes. It has as aim to identify the different conditions that can shed more light on why states are more likely to support private regime initiatives in some cases and not in others. The last section of this chapter outlines the methodological pillars of this research. It develops the Colombian case as an example of the empirical puzzle described above.
3.1. The relationship between states and private governance: friends or foes?
As mentioned earlier, a ‘friendly’ relationship between states and non-state governance is not always the case. As a matter of fact, Eberlein et al. (2014) identify four different types of interactions between them: competition, cooperation, cooptation, and chaos. Because there are different actors within this regime, different types of interactions might simultaneously take place. Also, these interactions are dynamic, and can henceforth, change over time. For example, coordination can result in competition or chaos (idem: 12).
In a similar vein, Pacheco et al. (2018) observe different types of possible relationships between states and private regimes. They identify ‘disconnects, complementarities and antagonisms’ in these interactions (ibid.). Antagonistic interactions could be seen as an equivalent to competitive or opposing policy processes. Complementarities, on the other hand, are more harmonious relationships between state actors and private regimes. Lastly, Pacheco et al. (2018) notice disconnects within private governance regimes. This category refers to the lack of harmony between actions undertaken by state actors and private authorities, which can eventually lead to confusion or chaos.
As discussed in the previous chapter, some countries in the Global South manifest harmonious interactions with certain private regimes, others show rather hostile reactions to the intervention of these regimes in their territories. How can we account for this difference? The next section touches more in detail on the conditions that can explain this.
3.2. When are states likely to support private governance?
Why do state actors react in a hostile manner to transnational private regimes in some cases and not in others? Although the explanations of these different interactions have not been a central focus of research, the private regime literature gives several hints on factors that could shed more light on this matter. In particular, this thesis builds upon the insights of Cashore and Stone (2014) and Bernstein and Cashore (2012) to formulate explanations grounded in theory. These insights are complemented with other contributions from past research. The aim is to make a comprehensive framework that can explain the reactions of developing countries in relation to transnational private regimes.
➔ Economic interdependence. This argument refers to the degree to which economic globalization creates dependence on foreign markets (Bernstein and Cashore 2010). This degree of dependence is often highlighted in the private regime literature, particularly in relation to the uptake of those initiatives. Economic interdependence can, namely, result in two scenarios. First, export to countries with high social and environmental standards could have a positive impact on the regulatory standards in producer countries (Vogel 1997). The argument goes that these political jurisdictions with strict product standards force foreign producers to meet those standards as they will be denied access to those export markets (ibid.). This, in turn, creates an incentive for these producers to encourage the development of institutions that will lead to superior standards in their home markets (ibid.). State actors are, then, motivated to raise the standards in their territories through market forces. This phenomenon is referred to as the ‘California Effect’ by David Vogel (1997).
But dependence on foreign markets could, nevertheless, lead to a ‘race to the bottom’ dynamic. Some, for example, point out to the ‘Shanghai Effect’ (Adolph et al. 2017). This refers to the effects of increasing dependence on export markets in the Global South, particularly the Chinese market. These new export destinations can have a negative impact on social and environmental standards in producer countries (ibid.). Thus, depending on the degree of dependence on foreign markets and where these markets are located, economic interdependence can form an incentive for state actors to raise their standards. In this context, states’ support for transnational private regime
initiatives would, therefore, be more likely to take place as they aim to raise standards in a certain industry.
➔ Transnational and international pressure. Although the presence of interdependence is important for creating support for private regimes, this market force needs to go hand in hand with transnational and international pressure aimed at increasing regulatory standards in international trade. This pressure can take place through international actors, such as states or intergovernmental organizations (Bernstein and Cashore 2010). For example, countries with high standards can use their market power and political influence to raise standards (Keleman and Menon 2007). In line with this argument, others suggest that governments can be encouraged to support private certification for their industries in a particular sector in order to meet this preference for high standards and secure access to those export markets (Gulbrandsen 2014).
This pressure that consumer states can have on producers ones is, for example, illustrated by the global wood market (Overdest and Zeitlin 2014: 41). Here, the prohibition of illegally harvested timber in the United States and the European Union market functioned as an incentive for the Indonesian state to facilitate the work of the private regime Voluntary Partnership Agreement (VPA), which in the past had been obstructed in the same country. In other words, the pressure from states on producer countries can lead to more cooperation from state actors when they are concerned about market access.
Furthermore, international pressure is also relevant when explaining the sustainability of the interactions between private regimes and states over time. As discussed above, these interactions are dynamic and can change over time. Maintaining a ‘cooperative position’ can be stimulated by ‘the rigor with which importing countries enforce their due diligence/ due care requirements’ concerning access to their markets (idem: 42). Put differently, economic incentives, like access to a particular market, can be used in a carrots-and-stick manner to shape a state’s position vis-à-vis voluntary schemes (Cashore and Stone 2014).
Lastly, transnational actors, such as NGOs, could also create pressure on states’ through boycott campaigns that target foreign export markets (Bernstein and Cashore
2010). This is illustrated by the sugarcane sector in Brazil. When Brazil started to export sugarcane ethanol to markets with a preference for high standards (European Union and the United States), transnational advocacy groups targeted these producer countries by making visible the low standards that this industry had (Schleifer 2017). As a result, these groups hindered the access of this industry in those export markets. As producer countries are concerned with access to export markets, this pressure can encourage governments to support private certification for their industries in order to meet the preference for high standards.
➔ Complementarity with domestic policy agenda. In many studies, the state’s autonomy is often highlighted as an important factor that influences the interactions between states and private governance initiatives. These type of interactions are often linked to a (perceived) gain or loss of sovereignty by state actors in relation to these voluntary schemes. This issue has been largely studied in the case of Indonesia, where changing interpretations of sovereignty have been consistent with different positioning of the state vis-à-vis private regimes (Dermawan and Hospes 2018; Pramudya et al. 2018; Schouten and Hospes 2018; Wibowo et al. 2015). In their study of the interactions between the RSPO and the Indonesian state, Schouten and Hospes (2018) describe how coordinative interactions go hand in hand with notions of ‘interdependent sovereignty’, which entails that state actors share their sovereignty over territory and transactions with non-state actors (idem: 2). Additionally, they also link competitive interactions with exclusive notions of sovereignty.
But when is a private regime likely to be perceived as a threat to the sovereign authority of the state? According to Cashore and Stone (2014), this is strongly related to the type of policy changes that private regimes aim to target. They argue that they are more likely to be seen as a threat if these initiatives require changes that affect on the ground policy objectives or mechanisms that help achieve the state’s goals. This appears to suggest that a ‘friendly’ response from the state is likely to occur when private regimes are a tool for domestic policies and priorities, rather than a challenge to them. In fact, Cashore and Stone (2014: 59) argue that ‘some governments might even prefer that TPG (private regimes) interferes in their territory because it enables them to better realize their sovereign authority in creating desirable domestic outcomes’. Thus, when it comes to the issue of sovereignty, an important question is
whether private regimes can serve as a tool for the development of policies of state actors or not. If they contribute to the domestic policy agendas, states’ support for private governance initiatives is more likely to occur.
In short, the literature on transnational private regimes points to certain conditions that might shed more light on when states actors are more likely to support private governance within their territory (see table 3.1):
I. If the degree of dependence on foreign markets with high standards is high. This is logically more relevant for the industry that private regimes aim to target.
II. If economic interdependence goes hand in hand with transnational and international pressure to raise standards.
III. If private regimes contribute to domestic policy agendas rather than creating an obstacle to them.
Table 3.1. Overview of the conditions for state’s support for transnational private regimes.
Level of analysis Focus Description
Transnational level Economic Interdependence States are more likely to support private regimes if they have a high degree of dependency on foreign markets with high standards.
Transnational and international pressure
States are more likely to support private regimes if their industries are target of transnational and international pressure to raise standards.
Domestic level Complementarity with domestic policy agenda
States are more likely to support private regimes if these initiatives contribute to the domestic policy agendas.
In the presence of these conditions, it would be more likely to observe support from state actors in the Global South for transnational private regimes. This research will empirically examine these conditions in more detail in the chapters that follow. For now, this study will turn its attention to the methodology of this thesis.
Methodological pillars of the research
3.3. Research Design
This thesis applies a single case study design. This type of design ‘constructs its observations from a single case or a small number of cases’ (Bryman 2012: 66). The preference of this study goes to a detailed and intensive analysis of a single case, which provides a context that had not yet been studied thoroughly. In this way, this research method allows shedding light on key factors that are at this moment understudied in the current literature on transnational private regimes. Additionally, the study chooses to study a case that goes against the observations that have been studied in this literature, approximating an ‘outlier case’. This will be discussed more in detail in section 3.3.1.
As pointed out in the literature review, there is a lack of understanding of when states are likely to support transnational private regimes. Recent research has described the emergence of competing policy processes in producer countries in the Global South. This particularly refers to states developing their own certification standards (‘Southern Standards’), which are at odds with transnational private regimes (Pacheco et al. 2018). These interactions have been widely studied in the case of Indonesia, where the interactions between the state and different private regimes are categorized as ‘conflictive’ or ‘hostile’ (Amengual and Chirot 2016; Astari and Lovett 2018; Dermawan and Hospes 2018; Pacheco et al. 2018; Pramudya et al. 2018; Schouten and Hospes 2018; Wibowo and Giessen 2018). Although this line of research has shed more light on why these ‘hostile’ relationships are emerging, there is, nevertheless, a lack of understanding on why we do not observe such interactions in other cases in the Global South.
In light of this, this research turns its attention to a context that not been studied thoroughly in this literature: the ‘friendly’ relationships between state and transnational private regimes in the Global South. By focusing on this context, this analysis is able to shed light on the circumstances and conditions that might explain why states do not develop conflictive interactions with transnational private regimes in the Global South.
3.3.1 Case selection: the interaction between the Colombian state and the RSPO
As most of the recent research studying the interactions between states and private regimes are found in the governance of the palm oil sector in Indonesia, this research chooses not to move far away from these empirical observations. In this sector, these empirical observations suggest a trend of competition or conflictive interactions with TPG (Dermawan and Hospes 2018)). However, this trend is not followed by all the producer countries of palm oil. Conflictive or competitive interactions have, for example, not taken place in the fourth largest producer of palm oil, Colombia. In comparison to Malaysia and Indonesia, Colombia has not developed competing policy processes, like Southern Standards (ibid.). The Colombian case has rather shown a ‘friendly’ relationship with the most established transnational private regime for palm oil, the Roundtable on Sustainable Palm Oil (RSPO) (see box 3.2. for more information). This relationship has maintained this way since the entrance of the RSPO in Colombia in 2005. Chapter 4 discusses more in-depth this relationship. All in all, Colombia approximates an outlier case as it differs from the studied observations in other countries. It also forms an explorative case as most of this research on the interactions between state actors in the Global South and TPG has been biased towards countries in Asia. By studying this case, this analysis will be able to provide insights from a new case.
This research is particularly interested in the interactions between the Colombian state and the RSPO between 2005 and 2018, and the possible conditions that are connected to these harmonious relationships. The rationale for looking at this period is because the RSPO made its first entrance to this country in 2005. By studying this relationship over time, the analysis avoids the risk of neglecting changes or factors that shed more light on the research question. As highlighted by Gerring and Cojocaru (2015), longitudinal data should, if possible, always be included in a case-study analysis.
This case is also representative of the population of cases: the interaction of states with transnational private regimes in the developing countries. As discussed in the literature review, state actors in the Global South have not received enough attention in the private regime literature. These countries are usually characterized by pursuing export-oriented strategies focused on raw materials (Gereffi and Fernandez-Stark 2016). Transnational private regimes are considered to be drivers of change of the commodity-driven development by ‘returning extractive political economies to a more genuine developmental path
characterized by productivity gains and technological upgrade’ (Nesadurai 2018: 2). Interactions between developing states and those regimes are, therefore, more prominent in the primary sector. In light of this, the governance of Colombia’s palm oil sector forms a case in point of the complexities related to the interactions between states and private regimes that aim to regulate sectors that are at the heart of national development strategies.
Box 3.2. Brief description of the RSPO
The Roundtable on Sustainable Palm Oil (RSPO) is a transnational private regime created in 2004 by a coalition of private sectors and civil society actors aimed at tackling the negative impacts of the palm oil sector across the world (RSPO 2019a). The RSPO uses a ‘GVC approach’ as it involves the different stakeholders involved in the global trade of this commodity: from palm oil producers to retailers. Environmental and social NGOs also participate in this initiative. The RSPO has a set of environmental and social criteria which companies must comply in order to verify whether they are producing palm oil under sustainable conditions or not. This description is based on information from the RSPO (2019a)
3.4. Notes on data collection
The case presented in this research is largely based on a combination of information gathered by the author. These primary sources are the result of six in-depth interviews with key informants. In addition, this research gathered information from official documents. On the other hand, this analysis is complemented by an extensive review of secondary sources.
Interviews
The aim of the interviews was to understand more in detail the relationship between the Colombian state and the RSPO. Equally important were the interests of state actors vis-à-vis this private regime and the complexities of these interactions embedded in the governance of commodity value chains. To this aim, this research carried out six qualitative interviews. The majority of the interviewees were directly involved in the implementation of the RSPO in Colombia. Others had closely observed the interactions within Colombia’s palm oil sector and the implementation of the RSPO. As such, the interviewees can be categorized as key informants.
The interviews reflect a variety of perspectives. Actors were interviewed from the private sector, NGOs, academia, and the RSPO. Although a great number of organizations were approached for this research, not all of them were willing to participate in an interview. The
most important actors missing are representatives of the states. More information about the interviews can be found in Appendix 1.
Different obstacles influenced the access to the actors I decided to focus on my thesis. First, the physical distance affected the access to certain organizations, particularly the Ministry of Environment and the Ministry of Agriculture and Rural Development. This put me in a disadvantaged position when I was approaching organizations for an interview. Not all of them were open to being approached through e-mail or by phone. In most of the cases, they were not likely to reply to my requests. I, personally, think that there was an issue of trust when establishing contact with Colombian actors. These barriers were namely broken when acquaintances put me in contact with organizations. In this way, the contact with some actors became easier. Another strategy used to overcome these obstacles was ‘snowball sampling’ (Bryman 2012: 424). During some interviews, I asked participants for suggestions on who I could approach for this research. However, both strategies did not have any success with state actors.
Finally, this research opted for qualitative interviewing as this method gives more insights into the interviewee’s point of view. As each informant had a different (power) position in the implementation of the RSPO, the information provided by each interviewee was different. Therefore, a degree of flexibility was needed in order to adjust the emphases in the research as a result of the issues that emerge in the course of interviews.
During the conversations, an interview guide was used with a list of topics to be covered. But, as previously discussed, the degree of flexibility was high. Meaning that questions that were not included in the guide were asked depending on the answers given by the interviewees. These ‘unexpected’ questions were only asked when the information was provided that could be important to understand the relationship between state actors and the RSPO.
Document analysis
As previously mentioned, this research is also based on an analysis of official documents that I collected for this purpose of this study. These documents can be divided into four
categories. The first category is official information from the state. As this study focuses on the interactions between state actors and the RSPO, the state was an important source of information for this research. This source was also relevant as it was not possible to gain access to Colombian state actors. In order to understand the state’s position and interests in relation to the RSPO, this study collected the following information:
➔ The national planning strategies between 2002 and 2018.
➔ Official reports on the agricultural sector and the palm oil sector between 2002 and 2018.
➔ The national strategies for environmental management between 2002 and 2018.
The second category of information is official documents from private sources. This research collected different documents produced by the National Federation for Palm Oil (Fedepalma). The access to this information was open to the public, which facilitated the collection of these documents. I gathered materials of the Fedepalma published in the period of 2002-2018. This information is very diverse and can be divided into the following categories:
➔ Annual reports of the palm oil sector ➔ Press releases
➔ The palm oil magazine
➔ Speeches from state officials targeted at the palm oil sector
➔ Statistical information from the System of Statistical Information on the Palm Oil Sector (SISPA by its Spanish acronym)
As this information comes from a private sector actor that represents certain interests vis-à-vis the palm oil sector and certification schemes, these documents were not regarded as providing objective accounts of the state of affairs. Accordingly, this information was interrogated and examined in the context of data from the state, secondary sources, and interviews.
It is, also, important, to notice that Fedepalma is one of the most important organizations in the palm oil sector in Colombia. There is not a comparable palm oil industry association that represents the interests of the sector at a national level like it is, for instance, the case in Indonesia. The Colombian state even relies on this industry association for information in
order to develop its policies for the palm oil sector (Seeboldt and Salina Abdala 2010). This is, for example, the case of statistical data about this industry (SISPA).
In order to avoid an analytical bias, this research also included reports from different NGOs that are involved in the palm oil sector in Colombia. This belongs to the third category of information used for this study. In addition, information was extracted from the RSPO website in order to grasp a comprehensive understanding of the interactions between state actors and this private regime.
3.5. Analytical considerations
Categories for interactions between states and transnational private regimes
For the analytical purposes of this research, the categories of Pacheco et al. (2018) will be used to describe the interactions between the Colombian state and the RSPO. As discussed in the previous chapter, Pacheco et al (2018) identify three different interactions: complementarities, disconnects, and antagonisms. The differences between these categories are clear enough in order to identify them in empirical observations.
Categories of actors
The central focus of this research is the interactions between the Colombian state and the private regime RSPO. This analysis uses the category of government or state in order to refer to Colombian state actors. For the purpose of this research, this study focuses on the interactions at a national level. This means that state actors would only refer to those on a national level. This does not, however, mean that there are no interactions in other levels of analysis. Analyzing those goes beyond the scope of this research. That said, state actors on a national level are neither a homogeneous group. Although these considerations are taken into account, the category ‘state’ is used to represent the position of this actor vis-à-vis the palm oil sector and private regimes.
This research is also aware that other organizations, like the RSPO or NGOs, consist of different individuals and are, henceforth, not homogenous. These categories are, nevertheless, use for analytical purposes as they represent certain views and positions in the governance of the palm oil sector in Colombia.
3.6. Limitations
Validity
An important criterion in evaluating research is whether there is ‘a good match between the researcher’s observations and the theoretical ideas they develop’ (Bryman 2012: 390). In order to guarantee the validity of the findings, this study makes use of triangulation. Triangulation means ‘using more than one method or source of data in the study of social phenomena’ (idem: 392). As discussed above, this research uses different types of sources in order to check empirical observations.
Reliability
The issue of reliability is particularly challenging for qualitative research, even more, when interviews are employed. Reliability means that if you apply the same procedure for measuring something, you will end up with the same results (Hancké 2009: 90). Qualitative research implies a great deal of interpretation of data sources. Although triangulation contributed to making interpretation biases smaller, semi-structured interviews are also a useful mechanism to guarantee the reliability of the research. In addition, notes of the interviews were made, which can also provide more insights into the way the data was collected.
Replicability
The last criterion to evaluate research findings is the replicability, which means that anyone should be able to replicate and check your results (Hancké 2009: 91). As previously mentioned, notes of the interviews were made. In addition, the data sources used for analysis are open to the public. The analysis is clear on which data is used and how it is used. Lastly, this analysis stays as close as possible to the original sources of the data and to the statements that the interviewees made.
External validity
Last, but not least, there is the issue of ‘external validity’, which refers to ‘the degree to which findings can be generalized across social settings’ (Bryman 2012: 390). As qualitative findings tend to be oriented to the ‘contextual uniqueness’, case study designs are considered
to be restricted in terms of generalization (idem: 392). Although case studies are focused on depth and not on breadth, this research draws comparisons and linkages with similar cases in order to evaluate the relevance of the findings. Here again, the aim is to identify key factors that influence the relationships between state actors and transnational private regimes in the Global South.
Table 3.3. Overview research design
Central Research Question:
‘What are the conditions that explain the continuous support of Colombian state actors for the RSPO in the governance of the palm oil sector between 2005 and 2018?’
Sub-questions Analysis Conceptual Framework Data
What is the interaction between Colombian state actors and the RSPO between 2005 and 2018?
A description of the supportive interaction between Colombian state actors and RSPO between 2005 and 2018. - Complementarities, antagonisms and disconnects - Review of secondary sources - Collection of official documents
- Speeches from state actors
- Interviews with key informants
Can dependence on foreign markets with high standards account for the supportive interactions between state actors and RSPO between 2005 - 2018?
Analysis of how market conditions influence the position that Colombian state actors take vis-à-vis the RSPO between 2005 and 2018. - Economic Interdependence - California effect - Shanghai effect - Review of secondary sources - Statistical information - Interviews with key informants
Can transnational pressure for higher standards in the palm oil sector account for the supportive interactions between state actors and RSPO between 2005 - 2018?
Analysis of how transnational pressure influence the position Colombian state actors take vis-à-vis the RSPO between 2005 and 2018. - International agreements - Pressure from consumer countries - Pressure from transnational activist groups - Review of secondary sources - Collection of official documents
- Interviews with key informants
Can the complementarity between national agenda for palm oil account for the supportive
interactions between state actors and RSPO between 2005 - 2018?
Analysis of the degree of complementarity
between the objectives of Colombian state actors and the RSPO between 2005 and 2018. - Interdependent and or exclusive notions of Sovereignty - Policy agendas - Review of secondary sources - Collection of official documents
- Speeches from state actors
- Interviews with key informants
Chapter 4
Interactions between the Colombian state and the RSPO in the governance of
the palm oil value chain
Introduction
The RSPO made its first entrance into Colombia’s palm oil sector in 2005. By 2007, this country became the first in Latin America in starting the process of National Interpretation (NI) of RSPO Principles and Criteria (P&C). Since this initiative was introduced, the Colombian state has not experienced any ‘antagonistic’ interactions with the RSPO in contrast to the largest palm oil producer countries. The aim of this chapter is to describe the relationship between the Colombian state and this transnational private regime. It concludes that these interactions can be characterized as ‘harmonious’.
4.1. Introducing the RSPO to Colombia: the first process of National Interpretation Since the entrance of the RSPO into Colombia, two NI processes have been completed. Additionally, the third process of interpretation is currently taking place. Compared to other Latin American countries, Colombia has shown strong leadership in promoting sustainability in the palm oil sector (Goretti Esquivel 2018). Although the processes of national interpretation of the RSPO P&C have been led by the private sector, state actors have also participated in this process.
The first process of NI started in 2007 and was led by the national industry association Fedepalma (Fedepalma 2010). The NI is an important part of the implementation of the RSPO as it forms a bridge between the P&C and the national realities. Besides the visible role of Fedepalma in this process, Colombian state actors also participated in different activities before and during the NI. According to Fedepalma, they worked closely with state actors on the socialization of the RSPO P&C and the NI process (Fedepalma 2010). This cooperation is illustrated by different activities organized with the Ministry of Environment, Housing and Territorial Development (MAVDT by its Spanish acronym). An important event that stands out is the organization of the first Latin American Conference on the RSPO in Cartagena, Colombia. This event had as aim to bring companies and entities from this region together in order to generate more awareness of this transnational private regime (ibid.).
State actors also supported the official inauguration of the RSPO in its territory in 2008 (El Palmicultor 2008a). The opening event was held in the headquarter of the MAVDT in Bogotá. Besides the participation and logistical support of the MAVDT, other institutes worked together with Fedepalma to initiate the NI process. In particular, the participation of the Institute Alexander von Humboldt (IAvH) stands out. The IAvH is connected to the MAVDT and acts as its research branch (ibid.). Just as the MAVDT, this institute supported the organization of different activities aimed at promoting RSPO P&C in the national territory.
The first NI process consisted of different activities. Some of these activities were more focused on digital consultation of this process. Here, the MAVDT contributed to these communication strategies by publishing press releases (Fedepalma 2010). Others were mainly concerned with organizing activities with actors that were considered to be key to the NI process. This resulted in the creation of regional workshops and the Establishment of the Coordination and Management Group (ibid.). In the latter, the IAvH was among the members of this group, which had as aim to work together on the initial proposal to implement the NI process in Colombia (ibid.). State actors also participated in the regional workshops, which had as aim to promote the RSPO P&C in the main four palm oil areas of the country. Finally, expert workshops were also organized for this process. Here again, the participation of state actors can be observed (ibid.).
Although the participation of the MAVDT and other environmental agendas stand out, there are other ministries and regional state actors that joined this process (Fedepalma 2010). As can be seen in figure 4.1., 20 percent of all the actors that participated in the first NI process belonged to state institutions. This is the second largest group after the private sector actors. These numbers illustrate that state actors were actively involved in the first NI process of the RSPO in Colombia.
