US-UK trade statements show push toward anti-graft considerations in accords

11 Mar 2020 12:00 am by Robert Thomason

Any US-UK trade agreement should include provisions aimed at fighting corruption, representatives of both governments have said. That sentiment, although absent from a recent US-China trade deal, reflects a growing international movement toward considering corruption a trade issue.

The UK Department for International Trade said an objective of any trade negotiations with the US should be to "secure provisions that address the trade-distorting effects of corruption on global trade." The UK trade agency said it found support for such provisions when it surveyed business leaders about their priorities for a UK-US deal.

"Several respondents mentioned anti-corruption, stating that the UK has led the way in tackling corruption through the UK Bribery Act and that a UK-US trade agreement should create a level playing field by expanding access in public procurement while setting new requirements for transparency and anti-corruption," the UK trade department said last week in a report on its goals for a UK-US free trade agreement.

The US Trade Representative, about a year ago, also called for anti-corruption provisions in a report on "US-UK Negotiations: Summary of Specific Negotiating Objectives."

The USTR specifically said a trade deal should "require the adoption or maintenance of requirements for companies to maintain accurate books and records, which facilitate the detection and tracing of corrupt payments." This recommendation tracks the language of the US Foreign Corrupt Practices Act, which has both criminal and civil penalties for defendants whose books and records hide bribes.

Multilateral agreements

For example, an entire chapter in the US-Mexico-Canada Agreement is fully dedicated to anti-corruption requirements. That chapter calls for all three trading partners to pass and enforce anti-corruption laws within their countries and to cooperate with each other in investigating corruption.

The Mercosur-EU trade agreement, signed between four South American countries and the European trading bloc in June, only made brief mention of corruption, but was clear that it is a prohibited practice. The agreement contains a provision calling for government procurement procedures to prevent "corruptive practices."

"Additionally, the Parties shall establish or maintain sanctions against such corruptive practices according to their domestic legislation," the article said.

US-Brazil

Even as governments gear up to start negotiations, anti-corruption provisions find support from different stakeholders.

Last week, US Congressman Darin LaHood, a Republican from Illinois, said corruption should be addressed in US-Brazil bilateral trade negotiations. LaHood, as a member of the House Ways and Means Committee, would participate in US congressional hearings on any such trade agreement. He made his statements at a presentation in Washington, DC, on the prospects and pending issues of US-Brazil trade talks.

Brazil's ambassador to the US, Nestor Forster, speaking at the same panel, made a more oblique reference by endorsing recommendations made in a report released by the Atlantic Council, a DC-based think tank, and the Brazilian Trade and Investment Promotion Agency, a public-private group.

That report said an anti-corruption chapter could be negotiated by the US and Brazil in the short term. It also said "continued progress in the area of anti-corruption would likely contribute to greater investments from the United States into Brazil."

The US and Brazil have scheduled several events in the next months that a Commerce Department official, Joe Semsar, said would lay the groundwork for trade negotiations between the countries. Brazil was one of the four Latin American countries that signed the Mercosur-EU trade deal.

US-China

One trade negotiation in which anti-corruption concerns are absent, at least in terms of public statements, is the US-China trade negotiation.

In the Phase One trade deal signed between the US and China Jan. 15, no mention was made of corruption or bribery prevention.

In a report to Congress last week on China's World Trade Organization compliance, the USTR admitted the Phase One agreement didn't cover all the US concerns about trade with China. But when it described its goals for a "Phase Two" negotiation, the anti-corruption measures still weren't on the agenda.

In the same report to Congress, however, the USTR stated repeatedly that corruption is a serious problem in China.

"While WTO membership has increased China’s exposure to international best practices and resulted in some overall improvements in transparency, corruption remains prevalent," the USTR said in the section that ended the report. "Chinese officials admit that corruption is one of the most serious problems the country faces, stating that corruption poses a threat to the survival of the Communist Party and the state."

The USTR report said government procurement practices in China are rife with corruption. "US companies complain that the widespread existence of unfair bidding practices in China puts them at a competitive disadvantage," the USTR report said.

The USTR did note that China has passed a law criminalizing the bribery of foreign officials, but has provided little information about how the law has been enforced or even how it is to be interpreted.

"Accordingly, the United States has continued to review China’s anti-corruption efforts and to encourage China to vigorously enforce its laws in a transparent manner," the USTR said.

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