Emergency Committee For American Trade - Publications

SECTION III.5: TRANSPARENCY

Transparency, both in the terms of the open flow of information and the accountability of government officials, is a vitally important component in eliminating barriers to trade and investment and promoting economic growth and reducing poverty worldwide. As stated very succinctly, but powerfully, by the Asia Pacific Economic Cooperation (APEC) Leaders in 2004:

Good governance, transparent legal regimes and structures to fight corruption are vital elements to nurture and sustain economic development, growth and transparency.

Opaque government processes, in areas ranging from regulatory rulemaking and certification and approval processes to government procurement, impede competition and lend themselves to corruption and discriminatory practices. Multiple and non-transparent bureaucratic structures also impede full fact-based and efficient decisionmaking, undermining the ability of governments to promote most efficiently and effectively the welfare of its citizens.

With its long history of governmental transparency, the United States has been an important leader on transparency in international organizations and in negotiation of strong transparency principles in recent free trade agreements. This section reviews some of the major transparency initiatives, including in the World Trade Organization, in U.S. free trade agreements, in the APEC forum and within the Organization for Economic Cooperation and Development.

Transparency in the World Trade Organization

While there exists no “agreement on transparency” per se in the World Trade Organization (WTO) or its predecessor entity, the General Agreement on Tariffs and Trade (GATT), the work of these bodies since their creation has promoted a more transparent and accountable trading system. By setting out the rules of trade in a public manner, now subject to binding WTO dispute settlement, where decisions too are made public, these entities have promoted an increased culture of openness. Specific agreements help promote transparency in numerous ways, including agreements on trade-related investment measures, dispute settlement, agriculture, and intellectual property. Perhaps most significantly, the plurilateral WTO Agreement on Government Procurement (GPA) provides not only increased market access to the government procurement markets of the parties to the GPA, but also greater commitments and procedures to ensure the transparency of these procurements.

At the Singapore WTO Ministerial in 1996, the Ministers renewed the WTO’s commitment to “the maximum possible level of transparency.” The Ministerial also created a working group on transparency in government procurement to develop elements that could be included in a future agreement. While negotiations were not launched with respect to transparency in government procurement, this continues to be an issue of great interest for the United States and other countries to include as part of a single undertaking of the WTO in the future.

Subsequent to the Singapore Ministerial, the WTO has continued to take major steps to provide greater transparency as to its own activities by holding numerous forums for non-governmental organizations (NGOs) and including NGOs as registered participants at its Ministerial Conferences. Efforts continue to promote greater participation in the WTO decision-making process by a larger number of WTO member countries and to make the WTO more transparent to the public. The WTO has held meetings with NGO representatives on labor and environment issues, as well as the ministerial agenda. Before a permanent process is created, however, the threshold question of the standing of NGO groups must be addressed. Some NGO organizations have large memberships with elected representatives; others are small organizations that do not represent identifiable constituencies.

At the Doha Ministerial Conference, countries agreed to continue to pursue the goals of greater participation and greater transparency, stating:

“Recognizing the challenges posed by an expanding WTO membership, we confirm our collective responsibility to ensure internal transparency and the effective participation of all Members. While emphasizing the intergovernmental character of the organization, we are committed to making the WTO’s operations more transparent, including through more effective and prompt dissemination of information, and to improve dialogue with the public. We shall therefore at the national and multilateral levels continue to promote a better public understanding of the WTO and to communicate the benefits of a liberal, rules-based multilateral trading system.”

Discussions have continued to focus on proposals made with respect to the reform of the Dispute Settlement Body (DSB).

The United States, in particular, has also proposed a number of changes to WTO procedures to create greater transparency, including earlier release of documents and decisions, improved consultative procedures, the opportunity to file amicus briefs in dispute settlement proceedings, and the opening of panel proceedings to the public. The United States has proposed similar transparency measures in the FTAA negotiations. The United States also initiated a consultation process with NGOs and other interested parties to develop procedures for broadening the opportunity for NGO input in the trade policy advisory process.

Efforts to incorporate concrete transparency principles into the WTO framework would also have important benefits for the global trading system. Incorporating transparency principles, as discussed below with respect to the APEC forum, as a stand-alone agreement, as well ensuring stronger transparency provisions in the ongoing Doha Development Agenda negotiations, should be actively considered.

Transparency Provisions in U.S. Free Trade Agreements

The North American Free Trade Agreement (NAFTA) included the first transparency provisions in Chapter 18 on the publication, notification and administration of laws.

The Trade Promotion Authority (TPA) negotiating objectives set forth in the Trade Act of 2002 included a specific negotiating objective on transparency, as well as a specific objective on anti-corruption and regulatory practices:

Transparency and Anti-Corruption Objectives
in Trade Promotion Authority

(5) TRANSPARENCY- The principal negotiating objective of the United States with respect to transparency is to obtain wider and broader application of the principle of transparency through--

(A) increased and more timely public access to information regarding trade issues and the activities of international trade institutions;
(B) increased openness at the WTO and other international trade fora by increasing public access to appropriate meetings, proceedings, and submissions, including with regard to dispute settlement and investment; and
(C) increased and more timely public access to all notifications and supporting documentation submitted by parties to the WTO.

(6) ANTI-CORRUPTION- The principal negotiating objectives of the United States with respect to the use of money or other things of value to influence acts, decisions, or omissions of foreign governments or officials or to secure any improper advantage in a manner affecting trade are--

(A) to obtain high standards and appropriate domestic enforcement mechanisms applicable to persons from all countries participating in the applicable trade agreement that prohibit such attempts to influence acts, decisions, or omissions of foreign governments; and
(B) to ensure that such standards do not place United States persons at a competitive disadvantage in international trade.

* * *

(8) REGULATORY PRACTICES- The principal negotiating objectives of the United States regarding the use of government regulation or other practices by foreign governments to provide a competitive advantage to their domestic producers, service providers, or investors and thereby reduce market access for United States goods, services, and investments are--

(A) to achieve increased transparency and opportunity for the participation of affected parties in the development of regulations;
(B) to require that proposed regulations be based on sound science, cost-benefit analysis, risk assessment, or other objective evidence; to establish consultative mechanisms among parties to trade agreements to promote increased transparency in developing guidelines, rules, regulations, and laws for government procurement and other regulatory regimes. . . .

Following enactment of TPA in 2002, the United States concluded the Chile and Singapore Free Trade Agreements (FTAs) with broad transparency commitments. Each of the U.S. trade agreements, with Australia, Morocco, Central America and the Dominican Republic, Bahrain, Oman, Peru¸ Colombia, Panama, and Korea, include strong transparency commitments:

Key Transparency Commitments in U.S. Trade Agreements

Contact Points (in some FTAs). Requires designation of contact points to facilitate communications between the Parties.

Publication. Requires prompt publication of laws, regulations, procedures, and administrative rulings of general application regarding any matter covered by the FTA. Requires, to the extent possible, publication in advance of any law, regulation, procedure or administrative ruling the government proposes to adopt and authorization of public comment on such proposals.

Notification and Provision of Information.

Requires, to the maximum extent possible, Party to notify the other Party (or Parties) of any proposed or actual measure that might materially affect the operation of the FTA.
Requires, on request, the prompt provision of information and responses to questions on any proposed or actual measure.

Administrative Agency Processes. Requires each Party to ensure that administrative agencies administering laws, regulations, procedures, and administrative rulings of general application respecting any matter covered by this Agreement:

(a) provide, wherever possible, affected persons of the other Party reasonable notice when the process initiated, including relevant information on the measure;
(b) provide such persons a reasonable opportunity to present facts and arguments in support of their positions prior to any final administrative action, when time, the nature of the process, and the public interest permit; and
(c) follow procedures that are in accordance with its law.

Review and Appeal. Requires each Party to maintain judicial, quasi-judicial, or administrative tribunals or procedures for the purpose of the prompt review and correction of administrative actions. Such tribunals shall be impartial and independent.

Requires that such tribunals provide the parties the right of:

(a) a reasonable opportunity to support or defend their respective positions; and
(b) a decision based on the evidence and submissions of record or, where required by the Party’s law, the record compiled by the administrative authority.
Requires each Party to ensure, subject to appeal, that the tribunal’s decision shall be implemented.

Anti-Corrruption (in some FTAs).

Reaffirms Parties resolve to eliminate corruption.
Requires adoption/maintenance of laws making it a criminal offense to bribe a government official or receive a bribe.
Requires Parties to adopt/maintain penalties to enforce criminal measures.

These commitments represent important advances in the structure of government openness, accountability and information flows that are critically important to trade and investment liberalization and the economic growth and poverty reduction that it supports. These provisions should be included in all future U.S. FTAs.

APEC Transparency and Anticorruption Activities

Important work on transparency and anticorruption has also been done through the APEC forum. In the October, 2001, Shanghai Accord, the APEC Leaders formally adopted the APEC transparency principles. Through subsequent Leaders meetings, APEC has adopted increasingly specific and sector-specific transparency principles that promote:

Publication of laws, regulations, procedures and rulings of general application;
Designation of an official journal where such information is publicized;
Advance publication where possible, including soliciting public input; and
Procedures to ensure the prompt review of administrative rulings.

At the APEC Leaders meeting in Santiago, Chile, in 2004, the APEC Leaders endorsed the Santiago Commitment to Fight Corruption and Ensure Transparency and the APEC Course of Action on Fighting Corruption and Ensuring Transparency (COA). In the Santiago Commitment to Fight Corruption and Ensure Transparency, APEC Leaders agreed to:

Encourage each other to deny safe haven to officials and individuals guilty of public corruption, those who corrupt them, and their assets;
Promote regional cooperation on extradition, mutual legal assistance and the recovery of the return and proceeds of corruption;
Work toward implementation of punitive and preventative anticorruption policies and practices consistent with the United Nations Convention Against Corruption;
Intensify individual and joint actions to fight corruption and ensure transparency;
Develop innovative training, targeted capacity building and results-oriented technical assistance to fight corruption and ensure transparency; and
Implement the APEC Transparency Standards.

Leaders from Australia, Canada, Chile, China, Japan, Korea, and the United States also jointly announced a commitment to provide technical assistance to help APEC developing economies effectively fight corruption through the Anticorruption and Transparency (ACT) Capacity-Building Program.

Antibribery Initiatives

The OECD Convention on Combating Bribery of Foreign Public Officials went into effect in February, 1999, and has now been ratified by all 35 countries (including the United States, which ratified the Convention in December 1998). The Convention was adopted to require OECD member countries to criminalize bribery of public officials related to business transactions. It is based on the U.S. Foreign Corrupt Practices Act that prohibits bribery of foreign public officials and political candidates. The United States would like to expand the coverage of the OECD Convention to include bribery of foreign political parties, party officials, and candidates for political office. It is also important that the United States continue to monitor OECD country implementation of the Convention to ensure that it is effectively enforced.

In September 2000, the United States ratified the Inter-American Convention on Corruption and continues to encourage greater regional anti-corruption efforts. In 2000, the United States also linked benefits under the African Growth and Opportunity Act and the Caribbean Basin Trade Partnership Act (described in section IV.5) to beneficiary countries’ efforts to combat bribery.

The United States is also continuing its anti-corruption efforts by working with the World Bank to improve anti-fraud and anti-corruption efforts in the administration of World Bank contracts.

On May 11, 2006, the OECD adopted the 2006 Action Statement on Bribery and Officially Supported Export Credits, which had been supported by the United States. The Action Statement seeks greater due diligence when an exporter appears on the debarment list of the World Bank or other major multilateral financial institutions or if an exporter or its agent is under charge in a national court or has been convicted for violation of laws against bribery of foreign public officials of any country within the last five years. Where appropriate, such reviews may lead to the suspension of applications, or the denial of support or other penalties. The Action Statement requires notification of law enforcement authorities whenever there is credible evidence of bribery in an export credit transaction.

ECAT Position:ECAT strongly supports ongoing and renewed efforts to promote strong transparency provisions in numerous forums and agreements, including the World Trade Organization, U.S. FTAs, and the APEC Forum, as well as U.S. efforts to ensure that the OECD Convention on Combating Bribery of Foreign Public Officials, the OECD Action Statement on Bribery and Officially Supported Export Credits and the Inter-American Convention on Corruption are effectively implemented.