In what is possibly the strangest and ugliest election cycle in American history, “what if” articles abound.

For those of us working in the field of compliance and good governance, there is concern about what lies ahead for anti-bribery efforts and the hard-fought improvements we’ve seen so far this century.

Is anti-bribery legislation putting American businesses at a disadvantage?

Donald Trump has publicly aired his thoughts on anti-bribery laws. On May 15, 2012, shortly after news of Walmart’s problems in Mexico broke, Trump made three statements as part of a rant during an interview on CNBC:

“Mexico’s a mess and this country [the U.S.] is absolutely crazy. They [the U.S.] prosecute people for going over to China and Mexico and other countries and getting business…”

Every other country is doing it and we’re not allowed to—it puts us at a huge disadvantage.

“Let them clean up their own act, we shouldn’t be cleaning up their act for them.”

No country is free of corruption—just as no country is free of other forms of crime—but it is absurd to suggest that companies in every other country are given a free pass.

It’s true that “we’re not allowed to”, but the United Nations Convention against Corruption requires every member state to criminalize bribery. It therefore isn’t correct to suggest that everyone but the U.S. is engaging in bribery.

According to the TRACE Matrix—a tool that measures business bribery risk in all countries across four separate domains—the U.S. is ranked 10^th out of 197 countries. To clarify, that means there are nine countries, including Canada and Japan, less corrupt than the United States.

Suggesting that the U.S. is alone in combatting bribery is both smug and incorrect. It undermines the leadership role taken on by the U.S. on this important issue.

Trump also indicates that American companies are put at a “huge disadvantage” by the American anti-bribery law, the Foreign Corrupt Practices Act (FCPA). The facts do not bear this out.

Corruption is expensive and bad for business

Eight of the ten most expensive actions pursued by American enforcement authorities were directed at companies from other countries. European companies determined to use bribery as a misguided marketing strategy have more cause for complaint than American companies have.

• Siemens AG (Germany): $800 million
• Alstom SA (France): $772 million
• Kellogg Brown & Root LLC / KBR Inc. / Halliburton Company (U.S.): $579 million
• BAE Systems plc (UK): $400 million
• Total SA (France): $398.2 million
• VimpelCom Limited (Netherlands): $397.6 million
• Alcoa World Alumina LLC (U.S.): $384 million
• Snamprogetti Netherlands B.V. / ENI S.p.A (Netherlands & Italy): $365 million
• Technip SA (France): $338 million
• JGC Corporation (Japan): $218.8 million

Trump appears to equate anti-bribery with anti-business, but most well-governed companies recognize that bribery is a terrible idea. Siemens’ former General Counsel, Peter Solmssen, has said repeatedly that:

If Siemens had spent the same amount on research and development that they spent on bribes, they would have had a viable product.

Not only have these cases not put American companies at a disadvantage with respect to the international business community, but these ten companies alone have added more than $4.6 billion to American coffers.

A prohibition on bribes only places companies who can’t sell by legitimate means at a disadvantage. If the company has a good product available at a competitive price, it doesn’t want to bribe buyers and it doesn’t want competitors doing so.

Marketing without recourse to bribes is more attractive to the business community. Only companies with inferior products or inflated prices need to rely on paying off decision makers.

From a business perspective, transparent dealings are preferable in every way. They are less expensive; bribes cost money which, as illegal payments, can’t be written off as business expenses.

They are more predictable; bribe-tainted contracts are unenforceable, and companies can’t sue corrupt government officials who change the terms of the deal partway through.

And they are less risky; even if the U.S. wasn’t prosecuting bribery internationally, other jurisdictions are, and several of these have the death penalty for bribery.

Private corruption steals public dollars

Even if there were some measurable disadvantages for companies that reject bribery as a way of doing business, most reputable companies recognize that the corrosive nature of corruption runs counter to the image they want to project.

Bribery prevents the citizens of corrupt countries from getting the full benefit of public dollars spent on everything from major infrastructure to routine public services.

A visibly corrupt government undermines confidence in public institutions. Paying off the decision makers to win contracts, regardless of quality or price, is not a strategy that any responsible government condones. Like restrictions on competition, dumping toxins, or using trafficked labor, any short-term financial advantage is outweighed by longstanding principles of good governance.

Trump also mocked the idea that the U.S. should have to clean up other countries, stating that corrupt nations should have to clean themselves up instead.

While this comports with the “it isn’t fair” theme he often returns to, that’s not really the point. When a head of state has his arms in a country’s coffers right up to his elbows, who exactly will be leading the charge to clean that country up?

When the poorest in the kleptocratic nations are unable to meet their basic needs, often in spite of great national natural resource wealth, it is unreasonable to expect them to take on their corrupt leaders, corrupt military, and corrupt police.

For the same reasons that we don’t imagine people living under dictatorial siege should be told to “clean up their own act”, people under financial siege by their leadership shouldn’t be left responsible either.

U.S. leadership in anti-corruption could be a thing of the past

The U.S. and its allies can be a force for good. They aren’t always, certainly, but they can be.

The U.S. has traditionally been willing to take on a leadership role in international anti-bribery initiatives. In 1977, the U.S. Foreign Corrupt Practices Act was signed into law by President Jimmy Carter.

In 2006, President George W. Bush unveiled his “National Strategy to Internationalize Efforts Against Kleptocracy.” Former Secretary of State Hillary Clinton has spoken repeatedly about the importance of anti-corruption efforts.

On International Anticorruption Day in 2011, she made the observation that:

People around the world are showing that they will not accept the corruption that prevents too many from living with dignity and having opportunities to realize their potential.

Her stance reflected President Obama’s own determination to keep global anti-bribery efforts at center stage. As Obama put it during his speech in Ghana on his first trip to Africa, “No person wants to live in a society where the rule of law gives way to the rule of brutality and bribery.”

Bribery is a problem that crosses borders and needs a coordinated global response. Without cooperation, the bribe-takers can shake down multinationals with impunity and play an elaborate shell game with their hoard.

Unfortunately, Trump has shown little interest in international cooperation. He has called NATO “obsolete” and has been almost as dismissive of the United Nations. He appears to place no value at all on the soft power that has been critical to the success of global anti-bribery efforts over the last two decades.

What would a Trump presidency mean for anti-bribery efforts?

We should expect a relaxing of anti-bribery laws under the guise of a defective pro-business message, and for the scrupulously cultivated partnerships that produced the OECD, UN and other anti-bribery conventions to be cast aside flippantly, possibly irreparably.

The post What a Trump presidency would mean for international anti-corruption efforts appeared first on Trade Ready.

The remarkable U.S. presidential primaries have turned all eyes on the candidates, perhaps more than most elections have before.

Among the polarizing issues being brought to the forefront in the media and debates is global trade, particularly trade agreements and import tariffs. There seems to be a monumental shift in the political arena when it comes to free trade.

As outgoing President Barack Obama makes a major push to secure the Trans-Pacific Partnership agreement, the remaining candidates competing for his job have unanimously panned the deal.

As the debates rage on and the U.S. gets ever closer to selecting a new President, it’s time once again to look at the opposing viewpoints on the issue.

The TPP is good for U.S. jobs

Agree!

OBAMA: President Obama boasts that the Pacific deal will provide the best labor protections of any trade deal the United States has ever negotiated.

“This partnership levels the playing field for our farmers, ranchers, and manufacturers by eliminating more than 18,000 taxes that various countries put on our products. It includes the strongest commitments on labor and the environment of any trade agreement in history, and those commitments are enforceable, unlike in past agreements. It’s an agreement that puts American workers first and will help middle-class families get ahead,” he said.

“Unfortunately because people have bad memories of past trade deals and off-shoring and manufacturing declining, and the impact it had on work and families, there’s a tendency to be knee jerk against some of these trade agreements. And I think that’s a mistake.”

If I didn’t think this [TPP] was the right thing to do for working families, I would not be fighting for it.

Disagree!

SANDERS: Senator Bernie Sanders has consistently taken a hard line on free trade deals during his time in politics, from NAFTA to the TPP, citing concerns for fair wages and U.S. job loss to outsourcing.

“I do not believe in unfettered free trade. I believe in fair trade which works for the middle class and working families, not just large multinational corporations. I was on the picket line in opposition to NAFTA. We heard people tell us how many jobs would be created. I didn’t believe that for a second because I understood what the function of NAFTA, CAFTA, PNTR with China, and the TPP is, it’s to say to American workers, hey, you are now competing against people in Vietnam who make 56 cents an hour minimum wage.”

“I think we do not need to send more jobs to low wage countries. I think corporate America has to start investing in this country and create decent paying jobs here.”

TRUMP: Presumptive GOP nominee Donald Trump has made no secret of his distrust of China and multi-nation free trade deals that he believes would take American jobs overseas.

The [Trans-Pacific Partnership] is the biggest betrayal in a long line of betrayals where politicians have sold out U.S. workers.

“I would make individual deals with individual countries and currency manipulation would be a preeminent part of every deal because that’s the chief weapon that other countries—particularly China and Japan—use to take away our businesses and our jobs.”

CLINTON:

Former First Lady, U.S. Senator and Secretary of State Hillary Clinton, the leading Democratic nominee, has now come out against the TPP despite her previous support for the deal.

“I did say, when I was secretary of state, three years ago, that I hoped it would be the gold standard. It was just finally negotiated last week, and in looking at it, it didn’t meet my standards. My standards for more new, good jobs for Americans, for raising wages for Americans. And I want to make sure that I can look into the eyes of any middle-class American and say, ‘this will help raise your wages.’ And I concluded I could not.”

The TPP is good for the U.S. economy

Agree!

OBAMA: President Obama maintains that the TPP will be good for the country’s economy, discounting concerns over competition with confidence in America’s capacity for quality and innovation.

“When you look at the polls, the majority of people still think trade is smart for America. If you’ve got a fair set of rules, folks can’t compete with us. We’ve got the best workers, the most innovative businesses. We’ll do great in a free and fair trading regime. The problem is that some of the past trade deals I think weren’t reciprocal. You had a situation where it was good for the other countries. Not so good for the United States. And people have memories of that. The Trans-Pacific Partnership deal is different.”

“We’re actually having countries that already are exporting a lot to us open up their markets, reduce their tariffs, which are essentially taxes on American goods. We’re making sure that they’re raising their labor standards in unprecedented ways. And their environmental standards in unprecedented ways.”

Disagree!

SANDERS: Senator Sanders has stated unequivocally that he does not think the TPP and other trade agreements are benefitting the U.S. economy. He argues that the true benefits of the TPP go to the large corporations who helped negotiate them, and in fact do little to help 99% of Americans and in turn the U.S. economy.

“I voted against NAFTA, CAFTA, PNTR with China. I think they have been a disaster for the American worker. A lot of corporations that shut down here move abroad. Working people understand that after NAFTA, CAFTA, PNTR with China we have lost millions of decent paying jobs. Since 2001, 60,000 factories in America have been shut down. We’re in a race to the bottom, where our wages are going down. Is all of that attributable to trade? No. Is a lot of it? Yes.

TPP was written by corporate America and the pharmaceutical industry and Wall Street. That’s what this trade agreement is about. I do not want American workers competing against people in Vietnam who make 56 cents an hour for a minimum wage.

TRUMP: Trump has repeatedly attacked the TPP, stating that it’s a “bad deal” for America, and bad for the economy overall.

“The Trans-Pacific Partnership is an attack on America’s business. It does not stop Japan’s currency manipulation. This is a bad deal.”

CLINTON: During a debate in February, Clinton stated: “We have failed to provide the basic safety net support that American workers need in order to be able to compete and win in the global economy.”

The TPP will help balance China

Agree!

OBAMA: In a Yahoo Exclusive, President Obama said:

“The key thing for Americans to understand is somebody’s gonna write the trade rules in the future. It’s either gonna be us or it’s gonna be China. And if you’re concerned and worried about whether China is gonna out-compete us in the future, then you definitely should want to pass this trade legislation that establishes a fair and level playing field for us.”

“China is chomping at the bit to control what is going to be the most populous and ultimately probably the most lucrative market in the world. And what we’ve done is negotiated an agreement to make sure U.S. businesses, U.S. workers are getting a fair shot at competition there,” he told Yahoo Finance. “China’s not party to this deal, but all the countries that are surrounding China are parties in this deal. And if they know that we are committed to trading with them and working with them, they’ll rise to our standards. If we abandon these efforts, then what’s gonna happen is they’re gonna lower themselves down to China’s standards. That will not be good for us.”

Disagree!

SANDERS: Although China is not a member of the TPP, Senator Sanders has stated that he fears that it might be eventually, pointing to Japan’s decision to join last year.

TRUMP: “The TPP is a horrible deal,” Trump said. “It’s a deal that was designed for China to come in, as they always do, through the back door and totally take advantage of everyone.”

CLINTON: Clinton has historically expressed concern over the actions of some Asian economies when it comes to trade, such as currency manipulation.

“China, Japan and other Asian economies kept their goods artificially cheap for years by holding down the value of their currencies.”

She also commented that “we need to crack down on currency manipulation — which can be destructive for American workers.”

In response, she proposed that “we need to expand our toolbox to include effective new remedies such as retaliatory duties or tariffs on imported goods.”

We welcome the interest of any nation willing to meet the 21st century standards of the TPP — including China,

Clinton said when she invited the nation to join the TPP in 2012.

The TPP won’t make the same mistakes as NAFTA

Agree!

OBAMA: President Obama admitted that NAFTA had led to an exodus of manufacturing jobs and “real displacement and real pain”. But he sought to assure labor – and all Americans – that the Pacific deal would be better, that it would make NAFTA’s largely unenforceable labor and environmental provisions “actually enforceable”. Defeating the TPP, he said, would leave NAFTA’s weaker, largely unenforceable provisions in place.

“The lesson is not that we pull up the drawbridge and build a moat around ourselves.”

Disagree!

SANDERS: From Senator Sanders’ perspective, the TPP follows in the footsteps of the previous pro-corporate trade deals. It lacks safeguards to protect American jobs and the environment while giving massive benefits to large multinational corporations.

TRUMP: When asked about the issue, Trump asked:

“Why are we striking trade agreements with countries we already have agreements with? Why is there no effort to make sure we have fair trade instead of ‘free’ trade that isn’t free to Americans? Why do we not have accompanying legislation that will punish countries that manipulate their currencies to seek unfair advantage in trade arrangements? Why has the Congress not addressed prohibitive corporate tax rates and trade agreements that continue to drain dollars and jobs from America’s shores?”

CLINTON: Clinton has had an infamously complicated relationship with trade, specifically with NAFTA and the TPP. She has said alternatively that:

“I think NAFTA is proving its worth.” – March, 1996

“NAFTA was a mistake to the extent that it did not deliver on what we had hoped it would, and that’s why I call for a trade timeout when I am president. I’m going to evaluate every trade agreement.” – November, 2007

“This TPP sets the gold standard in trade agreements to open free, transparent, fair trade, the kind of environment that has the rule of law and a level playing field.” – November, 2012

After the details of the TPP were released in October 2015, Clinton has said that the deal does not live up to her standards.

Who do you think has the most realistic view of the TPP debate? And what do you think that means for the future of the trade deal in the U.S.?

The post FACE OFF: Obama VS Sanders, Trump and Clinton on the TPP appeared first on Trade Ready.