Anti-corruption measures in the TPP agreement

By David Garduno, GTM Governance, Mexico

The Trans-Pacific Partnership (TPP) Agreement was signed on February 4th, 2016 after a number of years of negotiations. The twelve countries making up the TPP are: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. While the agreement still has to be ratified before it comes into force, this article provides insight into the anti-corruption principles within the text of the agreement.

The TPP’s anti-corruption measures

International trade relies on trust between self-governing nations. Confidence in the rule of law is critical for trade and investment to flourish. Corruption, in particular, is an insidious impairment to effective commercial activity and cannot be tolerated as a cost of doing business.

Several prominent measures have been enacted in the past to address international corruption. Among them are the 1977 U.S. Foreign Corrupt Practices Act (FCPA)[1], the 1999 Organization for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials[2], and the 2003 United Nations (UN) Convention Against Corruption[3].

The TPP’s Chapter 26: Transparency and Anti-Corruption[4] is a continuance of anti-corruption goals. The overall scope of the Chapter is limited to measures to eliminate bribery and corruption. It specifies such things as: requiring the publication of laws, regulations, procedures and administrative rulings; guaranteeing due process; and promoting rules against conflicts of interest. Enforcement of these clauses is critical.

Article 26.7 (3) of the Agreement declares that; “Each Party shall adopt or maintain measures as may be necessary, consistent with its legal principles, to establish liability of legal persons for offences…”. In Article 26.6, the Parties affirm their adherence to the Asia-Pacific Economic Community (APEC) Conduct Principles for Public Officials[5]. This encourages and supports the observance of the APEC Code of Conduct for Business: Business Integrity and Transparency Principles for the Private Sector[6]. However, many opponents of TPP are concerned about how, or whether, this provision will be followed by each Party. For example, footnote 8 to Article 26.9 reads; “…individual cases or specific discretionary decisions related to the enforcement of anti-corruption laws are subject to each Party’s own domestic laws and legal procedures”. So, is Chapter 26 merely a declaration of principles, or will it carry out the hoped-for opposition to corruption? A big concern is that no TPP provision covers corporate criminal liability and due process. Without actual enforcement, TPP will surely fail.

Possible solutions: Tribunals or commission?

Granting that each Party maintains it sovereignty under the TPP and that corruption is to be prosecuted and punished in accordance with each Party’s law, what can be done to compel each of the member Parties to enact and then enforce meaningful anti-corruption and bribery laws? It is going to take the resolve of the members to follow-up with each other, to ensure that the required actions have taken place? If this is the case, the expulsion of non-compliant Parties from the TPP may then be required.

Each Party is to establish or maintain judicial, quasi-judicial or administrative tribunals or procedures for the purpose of the prompt review and, if warranted, correction with respect to any matter covered by the agreement. The tribunals shall be impartial and independent of the office or authority entrusted with administrative enforcement and shall not have any substantial interest in the outcome of the matter. This works – if it is carried out.

An alternative solution suggested by some is to establish an anti-bribery commission within the TPP Dispute Settlement process defined in Chapter 28, with the power to investigate, treat, judge, decide, and punish. The Commission’s jurisdiction would need to be accepted by the signatory TPP Parties, who have to decide whether such a provision is in alignment with their sovereignty expectations.

In any event, the framework for anti-corruption is already in place within TPP. When ratified and enacted, it will be up to the Parties to eliminate corruption as a trade barrier.