Workshop "Anti-corruption provisions in EU free trade and investment agreements: Delivering on clean trade"

28-03-2018

International trade agreements have the potential to help breaking the vicious circle of corruption in economies based on privileged connections rather than fair competition. They increase competition in the removal of tariffs and so diminish the power of rentier companies which influence domestic regulation in their favour. They also contribute to a fairer business environment through their transparency provisions. Trade openness, red tape reduction and fiscal transparency, especially transparency of procurement, play positive roles in widening control of corruption. They can be more easily influenced by external actors than the other important control of corruption factors: judicial independence, freedom of the press or the demand from civil society for good governance. This study ordered by the INTA Committee argues that indirect good governance policies which increase competition and subvert power and economic monopolies or quasi monopolies are far more effective than direct anticorruption policies, which in relying on domestic implementation tend to fall into the vicious circle again. The study presents options characterised as an ‘economist’s approach’ with an apparently more modest but effective good governance package, a ‘lawyer’s’ approach’ with firm anticorruption language but unenforceable provisions even in EU countries (on bribery, for instance), and a ‘holistic’ approach where the EU would coordinate across international trade, promotion of norms and development aid. The three options may be used alternatively, depending on the degree of development and quality of governance of the trading partner. The study was presented at a workshop of the INTA committee on 24 January 2018.

International trade agreements have the potential to help breaking the vicious circle of corruption in economies based on privileged connections rather than fair competition. They increase competition in the removal of tariffs and so diminish the power of rentier companies which influence domestic regulation in their favour. They also contribute to a fairer business environment through their transparency provisions. Trade openness, red tape reduction and fiscal transparency, especially transparency of procurement, play positive roles in widening control of corruption. They can be more easily influenced by external actors than the other important control of corruption factors: judicial independence, freedom of the press or the demand from civil society for good governance. This study ordered by the INTA Committee argues that indirect good governance policies which increase competition and subvert power and economic monopolies or quasi monopolies are far more effective than direct anticorruption policies, which in relying on domestic implementation tend to fall into the vicious circle again. The study presents options characterised as an ‘economist’s approach’ with an apparently more modest but effective good governance package, a ‘lawyer’s’ approach’ with firm anticorruption language but unenforceable provisions even in EU countries (on bribery, for instance), and a ‘holistic’ approach where the EU would coordinate across international trade, promotion of norms and development aid. The three options may be used alternatively, depending on the degree of development and quality of governance of the trading partner. The study was presented at a workshop of the INTA committee on 24 January 2018.