The full text of the Trans-Pacific Partnership (TPP), released earlier this month, is already generating plenty of discussion. One of the proposed agreement’s most striking features is the full chapter on transparency and anticorruption, Chapter 26. The U.S. Trade Representative (USTR) had earlier stated that its objectives in negotiating the TPP included addressing transparency, accountability, and corruption; at the time I thought this was simply a negotiating ploy or marketing strategy, but it looks like I was wrong. As USTR’s summary of the “good governance” steps of Chapter 26 correctly notes, the TPP “includes the strongest anti-corruption and transparency standards of any trade agreement.” Indeed, Chapter 26–which appears to modeled in part on draft language that Transparency International had proposed for inclusion in a different trade deal, the Transatlantic Trade and Investment Partnership–could mark an important and unprecedented step towards using trade agreements to promoting and harmonize international anticorruption efforts.
Here are a few points that are or could be particularly important features of Chapter 26:
- First, Article 26.7 requires TPP signatories to maintain legislation to punish bribes and other advantage given to public officials, similar to the behaviors punished under legislation like the US Foreign Corrupt Practices Act (FCPA) or the UK Bribery Act. This mandate sweeps broadly. For example, it could require countries to amend their laws to provide for corporate criminal liability, at least for covered bribery offenses. The TPP definition of “public official” is also broad, including unpaid and temporary government workers, any “person who performs a public function,” and any other person defined as a public official in the country’s domestic law. (By contrast, the FCPA defines public officials as those who are government “officer[s] or employee[s]” or acting “in an official capacity for or on behalf of” a government.) Article 26.7 also requires countries to have measures protecting whistleblowers and prohibiting corruption through bookkeeping and accounting.
- Second, Article 26.6 requires accession to UNCAC for all TPP members. (While all of the negotiation parties to the TPP are UNCAC signatories, Japan and New Zealand have not yet ratified UNCAC; they would need to do so in order to join the TPP if the text as drafted is approved.) Chapter 26 also “encourage[s] observance” of the APEC Anti-Corruption Code of Conduct for Business, which prohibits bribery of officials and asks corporations to implement programs to combat bribery. In addition, Chapter 26 recognizes and explicitly states that it does not conflict with several existing anticorruption regimes, including UNCAC and the Inter-American Convention Against Corruption. (Somewhat surprisingly, though, the TPP does not mention the OECD Anti-Bribery Convention, even though a majority of prospective TPP signatories are members of that Convention, and there appears to be substantial overlap between the legislation mandated by Chapter 26 of the TPP and the OECD Convention. This may lead to questions about whether the OECD Convention’s nuanced multi-stage monitoring system will take a back seat to the TPP, or vice versa, or whether they will work in tandem.)
- Third, and perhaps most importantly, most of Chapter 26’s obligations are covered by the TPP’s dispute settlement system, which can be invoked to enforce the commitments of the Chapter when a party has “failed to carry out an obligation” or acted in a way “inconsistent with an obligation.” In theory, this could be used, for example, to challenge a country’s failure to adopt mandated anticorruption and anti-bribery legislation or to join UNCAC. (Parties can also choose to address problems through the less formal TPP consultation process, which appears to be similar to the WTO consultation system.) There are some limits: Parties cannot use the dispute settlement process to challenge another party’s alleged inadequate enforcement of its anticorruption laws; as long as a country has adequate laws on the books, it cannot be taken to arbitration for failing to prosecute or convict under those laws. Additionally, nearly all of Article 26’s measures are limited to those matters “affecting trade or investment”–though the reach of that category could be interpreted broadly. (An interesting question would be posed if, for instance, a domestic corporation were given a public procurement contract instead of a foreign investor through bribery of a public official. Would that be “affecting trade or investment”?)
Of course, notwithstanding the text, whether Chapter 26 will become a significant anticorruption instrument depends on the extent to which its measures are used. And it is far from clear whether investors or states parties with have the incentive to bringing claim when other countries fail to live up to their anticorruption commitments. While less bribery would benefit the trade bloc as a whole, it may not be a salient issue for any individual investor or state. With that caveat, the TPP text may signal a trend towards incorporating robust anticorruption commitments in international trade agreements, a trend further suggested by the EU’s recent pledge to include “ambitious” measures on transparency and corruption in all its future trade deals. This trend could conceivably lead to more global action, especially if the WTO were ever to adopt anticorruption provisions, enforceable through the WTO Dispute Settlement Body. Though not everyone would welcome this development, the WTO’s strong enforcement mechanisms would certainly offer even more bite to anticorruption commitments. More generally, the inclusion of anticorruption in trade deals lends weight and legitimacy to international anticorruption efforts. For all of those reasons, the inclusion of Chapter 26 in the TPP is a major development in the global struggle against corruption.