Why we need anti-corruption provisions in U.S. free-trade agreements

Over the past two decades, trade and investment agreements between countries have increasingly ventured beyond traditional technical issues to touch upon such matters as labor conditions, environmental safeguards and corruption.

On the eve of its fifth round of negotiations, the U.S.-EU Transatlantic Trade and Investment Partnership (TTIP) provides an important opportunity to set the standard for anti-corruption provisions in international trade and investment agreements.

Anti-corruption provisions in the context of trade and investment agreements can take different forms. They range from a clause obligating parties to adopt global anti-corruption conventions, to a more specific provision depriving trade transactions or investments tainted by corruption of the standard protections offered by the agreement.

It is U.S. government policy to include anti-corruption provisions in free-trade agreements (FTAs) it negotiates, although the content of those provisions has evolved over time. 

The most recent FTAs require trading partners to criminalize both “active bribery” — offering a bribe to a public official domestically or trans-nationally — and “passive bribery” — the solicitation of a bribe by a domestic official.

While corruption may not seem like a critical issue in negotiations with the EU as opposed to other developing-country trading partners, it should nonetheless be a priority in the TTIP. 

The U.S. as well as the EU have identified greater access to procurement as a major objective of their trading relationship, one that could be undermined by corruption in the EU’s historically nationalist market. 

Jean Heilman Grier, former Senior Procurement Negotiator for the U.S. Trade Representative, proposes that the TTIP go beyond the typical provisions for U.S. FTAs to include measures specifically tailored to the types of corrupt practices identified in the EU Anti-corruption Report, issued in March.

Grier advocates for heightened anti-corruption language in the TTIP for procurement in particular, in light of the report’s findings.

Joining Grier, Transparency International calls for the TTIP to raise the standard for anti-corruption provisions in FTAs, and has suggested text for a transparency and anti-corruption chapter. Strong anti-corruption measures in the agreement between the two trading giants could send a powerful message for FTAs of the future.

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Nadine Tushe recently served as a legal analyst in the World Bank’s Independent Evaluation Group and now writes about international trade, arbitration and procurement issues.