Friday, February 26, 2021
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Articles
    • See All Articles
    • NEW: COVID-Related
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Leadership and Career
  • Vendor News
  • Jobs
    • Compliance & Risk
    • Information Security
  • Events
    • Webinars & Events
    • Submit an Event
  • Downloads
    • eBooks
    • Whitepapers
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Articles
    • See All Articles
    • NEW: COVID-Related
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Leadership and Career
  • Vendor News
  • Jobs
    • Compliance & Risk
    • Information Security
  • Events
    • Webinars & Events
    • Submit an Event
  • Downloads
    • eBooks
    • Whitepapers
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights
Home Compliance

The Trans-Pacific Partnership Agreement: A Breakthrough in Global Anti-Corruption Efforts

by Wendy Wysong
November 30, 2015
in Compliance, Featured
The Trans-Pacific Partnership Agreement: A Breakthrough in Global Anti-Corruption Efforts

with contributing author Montse Ferrer

On November 5, 2015, the text of the Trans-Pacific Partnership Agreement (TPP), agreed to by 12 countries – Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States and Vietnam – was disclosed to the public. Hailed as a landmark agreement setting a new standard for global trade, the TPP includes the strongest anti-corruption standards of any multilateral (and bilateral) trade agreement in history. These provisions, if implemented and enforced, could level the playing field for compliant companies operating in Asia-Pacific – and make it harder for those unwilling to up their game.

Corruption in Trade

Corruption acts as a significant trade barrier. Bribes distort free-market pricing, increase the cost of capital investment and deter foreign investment. When operating in countries with corruption, companies are faced with a difficult choice: pay the bribes (which can increase the cost of doing business) or not pay them (which may mean the loss of a business opportunity). Inevitably, those companies that comply with anti-corruption laws, in particular the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act (UKBA), and choose not to bribe, are significantly disadvantaged, despite the fact that trade agreements are meant to decrease economic barriers to trade.

In fact, the two core principles of trade regulations underpinning the world trade system in the last 50 years have been non-discrimination and transparency. This is evident in various World Trade Organization (WTO) agreements, which have always been aimed at limiting obstacles in world trade, especially in the areas of customs operations and public procurement. Anti-corruption provisions, however, have not played a significant role in assisting the WTO and other trade regimes to achieve non-discrimination and transparency – at least not until recently.

Anti-Corruption Provisions

Increasingly, bilateral trade agreements have included anti-corruption provisions. These types of provisions vary by agreement but will generally take one of the following forms:

  • requiring the country trade agreement parties to combat corruption within their borders by adopting global anti-corruption conventions and increasing transparency in government procurement processes or
  • depriving a trade transaction or investment tainted by corruption of the standard protections offered by the particular trade or investment agreement.

The United States has spearheaded the push for such provisions, due to its recognition of the  disadvantage U.S. companies suffer in countries where bribery is rampant and enforcement of anti-corruption laws limited (or, at times, nonexistent) – especially given the harsh penalties imposed for violations of the FCPA.

Multilateral Trade Agreements

While there are a number of examples of bilateral trade agreements with anti-corruption provisions (most of them U.S. free-trade agreements), multilateral agreements have lagged behind. Of the multilateral trade agreements currently in force in Asia-Pacific (or countries within this region), only the Trans-Pacific Strategic Economic Partnership (involving Brunei Darussalam, Chile, Singapore and New Zealand) has an anti-corruption provision, which focuses on corruption in government procurement alone. However, progress has been made in part as a result of the United States’ aggressive stance on anti-corruption as well as a consensus that elimination of corruption in trade requires a global effort. The TPP is a major result of this effort.

TPP’s Anti-Corruption Provisions

Article 26 of the TPP, covering Transparency and Corruption, requires member parties to have and enforce anti-bribery laws and to accede to and ratify the United Nations Convention against Corruption (UNCAC) (which Japan and New Zealand have yet to ratify). Set forth below are interesting aspects of Article 26:

Defining Bribery

Article 26.7(1) requires that member states adopt or maintain laws criminalizing the offer to or solicitation of an undue advantage by a public official, in order that the official act or refrain from acting in relation to the performance or the exercise of his or her official duties.

The use of the term “undue advantage” departs from other anti-corruption provisions in bilateral trade agreements and instead tracks language used by European legislative acts, including the Criminal Law Convention on Corruption of the Council of Europe. Arguably, undue advantage is broader than – and therefore includes – “anything of value” (from the FCPA) and “financial or other advantage” (from the UKBA). TPP member states currently comply with this provision as they all have anti-corruption laws, although the laws vary across jurisdictions.

Public Official

Article 26 defines public official as any person holding a legislative, executive, administrative or judicial office and any other person who performs a public function for a member state.

The language in this section appears to track Article 1 of the Organization for Economic Cooperation and Development (OECD) Convention. Although Article 26 does not define “public function,” the term does not seem to encompass employees of state-owned or state-controlled entities (unlike the FCPA).

Books and Records

Article 26.7(5) requires that member states adopt or maintain measures regarding the maintenance of books and records, financial statement disclosures and accounting and auditing standards to prevent false accounting, including off-the-books expenses, nonexistent expenditures and the entry of incorrectly identified liabilities.

This language tracks Article 12(3) of the UNCAC, which essentially replicates the books and records provisions of the FCPA and the OECD Convention.

Private Sector and Civil Society

Article 26.10 includes a section that is a first for trade treaties: it commits member states to take appropriate measures to promote the active participation of individuals and groups outside the public sector, including enterprises, civil society, NGOs and community-based organizations in the prevention of and the fight against corruption in matters affecting international trade or investment.

This provision does not appear to track the language of any existing anti-corruption law, the OECD Convention or the UNCAC, although the United States and Transparency International have suggested that the TPP include an obligation to involve civil society and the private sector.

Enforcement

Article 26.9 requires that member states effectively enforce their anti-corruption laws adopted or maintained to comply with Article 26. This is arguably the most important section of the anti-corruption provision, as laws are only effective if they are enforced. Yet, the section does not define “effective” enforcement and falls short of mentioning due process, judicial fairness or efficiency.

Enforcing the TPP

If the United States seeks to aggressively enforce the TPP as it does the FCPA, it may aim to define “effective enforcement” (Article 26.9) via the dispute settlement mechanism under Article 28. The United States has made clear that the TPP is aimed at leveling the playing field for U.S. companies operating in Asia-Pacific. Countries and their respective nationals will need to be prepared for this if they want to get in the game.


Previous Post

5 Cloud Compliance Misfires (and How to Avoid Them)

Next Post

Data Security and the “Low-Hanging Fruit”

Wendy Wysong

Wendy L. Wysong is a partner at Steptoe & Johnson. She served previously as a litigation partner with Clifford Chance, offering clients advice and representation on compliance and enforcement under the Foreign Corrupt Practices Act, the Arms Export Control Act, International Traffic in Arms Regulations, Export Administration Regulations, and OFAC Economic Sanctions. She was appointed by the State Department as the ITAR Special Compliance Official for Xe Services (formerly Blackwater) in 2010. Wendy combines her experience as a former federal prosecutor with the United States Attorney for the District of Columbia for 16 years with her regulatory background as the former Deputy Assistant Secretary for Export Enforcement at the Bureau of Industry and Security, U.S. Department of Commerce. She managed its enforcement program and was involved in the development and implementation of foreign policy through export controls across the administration, including the Departments of Justice, State, Treasury and Homeland Security, as well as the intelligence community. Wendy received her law degree in 1984 from the University of Virginia School of Law, where she was a member of the University of Virginia Law Review.

Related Posts

woman looking at horizon from mountain top

What’s on the Horizon for Anti-Corruption Enforcement?

February 25, 2021
cannabis leaf on $100 bill

The Intersection of EDD and Banking Cannabis

February 24, 2021
gold cup award on red background with stars

Ethisphere Announces the 2021 World’s Most Ethical Companies

February 23, 2021
illustration of hand holding flashlight illuminating hidden stairs

The Corporate Transparency Act: Pulling Back the Veil

February 23, 2021
Next Post
Data Security and the “Low-Hanging Fruit”

Data Security and the “Low-Hanging Fruit”

Access realtime data
Addressing systemic racism in the workplace SAI Global
Dynamic Risk Assessments with Workiva
Top 10 Risk and Compliance Trends

Special Coverage

Special COVID page graphic

Jump to a Topic:

anti-corruption anti-money laundering/AML Artificial Intelligence/A.I. automation banks board of directors board risk oversight bribery CCPA/California Consumer Privacy Act Cloud Compliance communications management Coronavirus/COVID-19 corporate culture crisis management cyber crime cyber risk data analytics data breach data governance decision-making diversity DOJ due diligence fcpa enforcement actions financial crime GDPR GRC HIPAA information security KYC/know your customer machine learning monitoring ransomware regtech reputation risk risk assessment Sanctions SEC social media risk supply chain technology third party risk management tone at the top training whistleblowing
No Result
View All Result

Privacy Policy

Follow Us

  • Facebook
  • Twitter
  • LinkedIn
  • RSS Feed

Category

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Whitepapers

© 2019 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
  • Articles
  • Vendor News
  • Podcasts
  • Videos
  • Whitepapers
  • eBooks
  • Events
  • Jobs
  • Subscribe

© 2019 Corporate Compliance Insights