Post-TPP Withdrawal: Loss of a Trade-Corruption Milestone?

As promised, President Trump removed the United States from the Trans-Pacific Partnership (TPP) trade agreement soon after he took office in January. The move withdrew the world’s leading economy from the largest regional trade deal ever proposed. It also represented a major step back from what looked like a breakthrough in linking anticorruption and trade. As I discussed in a previous post, the TPP’s anticorruption chapter was an important step towards inclusion of anticorruption commitments in trade deals, making the U.S. withdrawal from the TPP a step backwards for the decades-old movement to incorporate anticorruption provisions in trade agreements.

Yet Trump’s move was not the end of the TPP negotiations. Nor should it be the end of championing an increased role for anticorruption and transparency in trade deals. With the TPP having reached the final stages of negotiation, its Transparency and Anticorruption Chapter can provide an outline for future trade deals that might provide further opportunities for trade-corruption linkage. As outlined in a previous post, the TPP’s chapter on anticorruption made several strides forward, including obligations to join UNCAC and respect other anticorruption instruments. What’s more, the anticorruption provisions were to be made enforceable in trade dispute resolution tribunals (though, as Danielle has previously written, corruption can already support certain actions in trade dispute arbitration). Looking at the strides forward in the draft TPP, there are three key avenues through which the Transparency and Anticorruption Chapter can continue to strengthen international trade deals.

  • First, the remaining associates of the TPP group should retain the anticorruption provisions in any trade deal that does result. In mid-March, the members of the TPP negotiating bloc and other potential signatories, notably including China, met in Chile to discuss possible avenues forward without the United States. Coverage highlighted the particular leadership shown by several smaller economies included in the TPP. Most showed continued willingness to explore some sort of deal, though each offered different takes on whether a deal would be tenable without the U.S. The Chilean Minister of Foreign Affairs published a New York Times Op-Ed touting the resolved commitment to a Pacific trade partnership, including to some of the principles it enshrined, like better labor and environmental commitments. In whatever form it takes, trade negotiators should continue to include provisions that will help combat corruption in signatory nations.
  • Second, the U.S. can and should continue to seek anticorruption obligations in the trade negotiations it does pursue during the Trump Administration. The United States Trade Representative (USTR) has indicated in its 2017 Trade Policy Agenda that it will look more heavily to bilateral trade deal negotiations in the coming year. The Agenda also states USTR’s intention to pursue certain commitments in trade deals, for example, negotiating for heightened labor commitments (as the draft TPP also included). Anticorruption has not yet been mentioned as one of these commitments, but it could and should be. Bilateral trade negotiations, which present relatively easier bargaining than mega-regional trade deals like the TPP, could help set a gold standard for anticorruption inclusion through trade. Insisting on such provisions could be framed as consistent with President Trump’s concern about interest in ensuring that the U.S. doesn’t give free access to U.S. markets to countries that don’t provide free access to their own markets; excessive bribe demands on importers, after all, function as a barrier to market access, one that might especially burden U.S. firms that export to foreign markets.
  • Third, World Trade Organization (WTO) negotiators can and should look at the anticorruption provisions of TPP’s anticorruption chapter at the upcoming Buenos Aires Ministerial conference this December. To be clear, anticorruption in the WTO is unlikely to go anywhere soon. The progress of the Doha Round of negotiations (now ongoing since 2001) has been slow. What’s more, while the initial “Doha Development Agenda” included a commitment to explore transparency in the specific area of government procurement, that area of concern was shelved from negotiations in 2004. However, the Doha Round’s broad objective is to bolster developing economies through the multilateral trade regime, an objective that has and will continue to run into corruption concerns. Those who did care about the government procurement objectives can take note of the TPP’s bold stance on anticorruption and move towards reconsideration of transparency and corruption issues in the WTO negotiations.

To be sure, none of these routes bode particularly well for trade-corruption linkage in the near future. Many of the TPP member nations are also parties to negotiations over the proposed Regional Comprehensive Economic Partnership (RCEP), touted by China as an alternative Asia-Pacific trade deal, which would not include the anticorruption commitments of the TPP. Bilateral deals of priority to the U.S. are most likely to be focused on large trading partners, and many have already signed and implemented significant anticorruption commitments. The WTO’s Doha Round has been repeatedly described as stalled.

Nevertheless, the Transparency and Anticorruption Chapter of the TPP should be retained, honed, and sharpened in future trade deals of all types. In particular, the enforceability of the anticorruption provisions should be highlighted in forthcoming agreements. While it has flaws, investor-state dispute settlement is unlikely to go away in future trade deals. Accordingly, it should come with some possibility to address corrupt governments’ actions in an international forum. The anticorruption provisions proposed in the TPP are nothing like an immediate cure, and trade is unlikely to be a complete answer to corruption for any country. Still, trade deals should be one of the pieces in the vice tightened around those governments who openly and routinely engage in corruption. After all, trade agreements aim to level the playing field, and addressing corruption could help to do just that.

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