Transparency International just updated its Exporting Corruption Evaluation for 2018, the first update since 2015.
It assesses enforcement of the OECD Anti-Bribery Convention by reviewing the 44 countries that are signatories of the convention and account for 65 percent of world exports, and more than 75 percent of total foreign direct investment outflows.
Countries are classified in four categories:
Active Enforcement, includes seven countries representing 27 percent of world exports
Moderate Enforcement, includes four countries with 3.8 percent of world exports
Limited Enforcement, includes 11 countries with 12.3 percent of world exports, and
Little or No Enforcement, includes 22 countries with 39.6 percent of world exports.
The results highlight the work needed in the area of international trade and fighting corruption.
Hence it’s no surprise that recent free trade agreements (FTAs) are focused on removing corruption in trade. This is true for new FTAs entered between the EU block and various countries, for the draft of the now defunct Transatlantic Trade and Investment Partnership (TTIP) FTA, and most recently for the FTA that is slowly taking shape among the United States, Canada, and Mexico to replace NAFTA, and which will include anticorruption provisions.
This focus on removing corruption from trade was not always the case given the complexity and frailty of the political process involved in negotiating FTA’s, but we can safely say that this is a trend that is here to stay and given that many countries are aiming for greater transparency and seeking to reduce corruption in this area. Therefore new TPA’s will continue to include anticorruption provisions.
The agreement in principle reached earlier this month between Mexico and the United Sates contains an anticorruption chapter. This chapter was one of the first ones to be completed in the trilateral negotiations and no discrepancies exist on this topic among the three countries. The content of the agreement is not public yet but the participants in the negotiations have stated the closeness in terms to that of TTIP.
The three trade partners have contrasting positions, according to TI’s Exporting Corruption Evaluation: Mexico is ranked in the Little or No Enforcement bracket. Canada marginally fares better and is ranked in the Limited Enforcement category. The United States is in the top-tier Active Enforcement bracket. Clearly the asymmetry in this respect of the three partners needs to be addressed somehow in their FTA.
An anticorruption standard for North America would be a landmark achievement, and would show that anticorruption legislation and enforcement are a top priority and here to stay. Mexico’s private sector leadership participating in the FTA negotiations was a key promoter of this chapter, and the business leaders advocate the need to discuss and promote the fight against corruption.
Mexico still lags behind other countries, even within Latin America, in its efforts to investigate and prosecute corruption cases. Brazil, Chile, and Argentina have moved up in the past three years on TI’s scale, from Little of No Enforcement to Limited or Moderate Enforcement, creating even more contrast with Mexico.
Let’s hope any new FTA among the United States, Canada, and Mexico will provide a boost to North America’s anticorruption efforts, and in particular provide the push and pull Mexico apparently needs to improve its own compliance and enforcement efforts.
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Luis Dantón Martínez Corres, pictured above, is a partner leading the corporate governance and compliance practice of the Mexico-based law firm, Ritch Mueller. He previously served as head of legal and trustee services of Nacional Financiera, S.N.C., a leading Mexican development bank. He’s also admitted to practice in New York. He can be contacted here.
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