16. rule making in the wto - lessons from the case of bribery and corruption - k. abbott

Electronic copy available at: http://ssrn.com/abstract=1402964

Journal of International Economic Law (2001) 275–296 Oxford University Press

- :

Kenneth W. Abbott*

During the 1990s, the OECD and numerous other international organiza-tions adopted conventions and other instruments designed to control briberyand corruption in international business. The WTO, however, took no suchaction, and a related initiative on transparency in government procurementhas not yet produced any results. This article examines what one can learnabout rule-making in the WTO from its failure to act in this case. Much ofthe explanation for the inaction lay outside the organization, in the politicalincentives facing major actors. Yet structural characteristics of the WTO, itsapproach to legalization, and its negotiating processes also played significantroles. These factors should be addressed if the organization is to deal effec-tively with the controversial issues now on its agenda.

Bribery and corruption became international issues in the mid-1970s, as aresult of the scandals involving payoffs to foreign government officials byLockheed and other US companies. In response to those scandals, Congressenacted the Foreign Corrupt Practices Act (FCPA) in 1977, making it a crim-inal offense to bribe foreign government officials in order to obtain business,

* Elizabeth Froehling Horner Professor of Law and Commerce, Northwestern University School ofLaw, 357 East Chicago Ave, Chicago, IL 60611, USA. Email: [email protected] article grows out of a larger research project on the politics of international legal action to

combat bribery and corruption, focusing especially on the 1997 OECD Convention, that I am con-ducting jointly with Professor Duncan Snidal of the University of Chicago. Professor Snidal particip-ated in the interviews and much of the other research that underlies this article and has been instru-mental in shaping the ideas and arguments set out here. Whatever value the article may have is duein large part to his contributions. Errors or other deficiencies are my responsibility alone.A version of this article was presented at the Conference on the Political Economy of International

Trade Law held in honor of Professor Robert Hudec on the occasion of his retirement from theUniversity of Minnesota Law School, 15–16 September 2000. A revised version of that presentation,co-authored with Duncan Snidal, will appear in an edited volume tentatively entitled The PoliticalEconomy of International Trade Law: Essays in Honor of Robert E. Hudec, Daniel L. M. Kennedy andJames D. Southwick (eds), forthcoming 2001. Thanks to Amy Porges, Gregory Shaffer, and otherparticipants in that conference for valuable comments, and to Professor Hudec for his kind permis-sion to publish this version of my conference paper.

Electronic copy available at: http://ssrn.com/abstract=1402964

276 Kenneth W. Abbott

and imposing related accounting requirements on many US firms.1 US busi-ness and government officials, fearing the enactment would create a competit-ive disadvantage in markets affected by corruption, immediately began topress for parallel legislation abroad, both bilaterally and in internationalforums including the UN and the OECD. For more than a decade and a half,however, they achieved little success.The situation changed markedly in 1993. Over the next five years, the

world witnessed a remarkable flowering of international rule-making aimedat bribery and corruption, especially in the context of transnational economicactivity.2

� The OECD, whose member countries are home to a large proportionof the world’s exporters and foreign investors, took the most importantactions. Under pressure from the US, the OECD Council issued threemajor recommendations aimed at transnational bribery in 1994, 1996,and 1997.3 Then, in December 1997, the members of the OECD (aswell as five non-member countries) signed a legally binding Conventionrequiring the governments of ratifying states to introduce and supportdomestic legislation making foreign bribery in pursuit of business acrime, and to provide international legal assistance to prosecutions.The Convention has since entered into force.4

� The European Union adopted treaties prohibiting bribery of EU offi-cials and government officials of other Member States, first in situations

1 Pub L. No 95–213, 91 Stat. 1494, codified as amended in scattered sections of 15 U.S.C. §78. Fora summary of the background, provisions and application of the Act, see C. F. Corr and J. Lawler,‘Damned If You Do, Damned If You Don’t? The OECD Convention and the Globalization ofAnti-Bribery Measures’, 32 Vand J Transnat’l L 1249 (1999), at 1255–95. The Act has been criti-cized both by business representatives and by scholars. See, e.g., S. R. Salbu, ‘Bribery in the GlobalMarket: A Critical Analysis of the Foreign Corrupt Practices Act’, 54 Wash & Lee L Rev 229 (1997).

2 The US Department of Commerce maintains on its website an extensive summary of actions againstbribery and corruption taken by agencies of the US government and by international organizations.See Office of the Chief Counsel for International Commerce, The Anti-Corruption Review,www.ita.doc.gov/legal/master.html (hereinafter Anti-Corruption Review), visited 3 February 2001.

3 The most recent recommendation supersedes the 1994 instrument. It provides the framework forimplementing the actions of the OECD on transnational bribery and corruption and for furthernegotiations in this field. It also urges the prompt implementation of the 1996 recommendation,which addresses tax deductions for foreign bribes. See Revised Recommendation of the Council onCombating Bribery in International Business Transactions, OECD/C(97)123/FINAL (23 May1997)), 36 ILM 1016 (1997).

4 Convention on Combating Bribery of Foreign Public Officials in International Business Transactions(hereinafter OECD Convention), OECD/DAFFE/IME/BR(97)16/FINAL (18 December 1997), 37ILM 1. The OECD Convention entered into force on 15 February 1999, after five of the ten membernations with the largest export shares had deposited their instruments of ratification. The Conventionhas been signed by all 29 member states of the OECD and by five non-members: Argentina, Brazil,Bulgaria, Chile and the Slovak Republic. As of January 2001, 29 of the 34 signatories had ratifiedthe OECD Convention. See Anti-Corruption Review, above n 2, at Section IV:OECD. For ananalysis of the provisions and implementation of the Convention, see Corr and Lawler, above n 1,at 1295–1323.

Rule-making in the WTO 277

where the financial interests of the EU are at stake5 and later in addi-tional contexts.6

� The OAS adopted a far-reaching convention that even addressesdomestic corruption and private-to-private bribery.7

� The Council of Europe adopted a similarly broad treaty primarilyaimed at creating a common body of anti-corruption law for EasternEurope.8

� The IMF,9 World Bank10 and other international financial institutionsadopted policies and programs designed to combat corruption, both intheir own programs and within borrower nations.

� The General Assembly adopted a series of resolutions supporting thefight against transnational corruption.11

5 Convention on the Protection of the European Communities’ Financial Interests, adopted by theCouncil on 26 July 1995, OJ No C916, 27 November 1995, and the First Protocol to the Conven-tion, adopted by the Council on 27 September 1996, OJ No C313, 23 October 1996, which wouldmake active or passive corruption involving either an EU official or an official of a member state acriminal offense in every member state if the corruption would affect the financial interests of theEU. Neither the Convention nor the Protocol has been ratified by a sufficient number of memberstates to enter into force. See Anti-Corruption Review, above n 2, at Section III: European Union.

6 Convention on the Fight Against Corruption Involving Officials of the European Communities orOfficials of the Member States of the European Union, adopted by the Council on 26 May 1997,OJ No C195, 25 June 1997. This treaty has also not yet received sufficient ratifications to enter intoforce. However, the OECD Convention applies to many of the situations covered by this agreement,and the EU has formally supported adherence to the OECD instrument.

7 Inter-American Convention Against Corruption, OEA/Ser.K/XXXIV.1, CICOR/doc.14/96 rev. 2(29 March 1996), 35 ILM 724. The OAS Convention entered into force 6 March 1997. As ofFebruary 2001, the Convention has been signed by 26 and ratified by 20 of the 35 members of theOAS.

8 Council of Europe Criminal Law Convention, opened for signature 27 January 1999. Among otherthings, the Convention calls on parties to criminalize the paying of bribes to domestic, foreign andinternational officials as well as to private parties in commercial transactions. As of February 2001,only eight countries had ratified the Convention. See http://conventions.coe.int/treaty/EN/cadreprin-cipal.htm, visited 3 February 2001.

9 In 1997 the IMF Executive Board adopted guidelines outlining an increased role for the organizationin addressing governance problems in borrower countries – including policies and administrativesystems that encourage corruption and rent seeking – when those problems threaten macroeconomicstability and growth. See IMF News Brief No 97/15, 4 August 1997, http://www.imf.org/external/np/sec/nb/1997/nb9715.htm, visited 3 February 2001.

10 In 1997, the Bank adopted a comprehensive policy for addressing corruption as an internationaldevelopment issue. The policy calls for policing fraud and corruption in Bank-financed projects,providing assistance in combating corruption to borrower governments that request it, and takingcorruption into account in other Bank programs. See World Bank, ‘Helping Countries CombatCorruption, The Role of the World Bank (1997)’, www1.worldbank.org/publicsector/anticorrupt,visited 25 October 2000; Anti-Corruption Review, above n 2, at Section VI: World Bank.

11 United Nations Declaration Against Corruption and Bribery in International Commercial Transac-tions, G.A. Res. 51/191, UN GAOR, 51st Sess, Agenda Item 12, Annex, UN Doc A/RES/51/191(1996); International Cooperation Against Corruption and Bribery in International CommercialTransactions, G.A. Res. 52/87, UN GAOR, 52d Sess, 70th Meeting, Agenda Item 103, UNDoc A/RES/52/87 (1997); Action Against Corruption and Bribery in International Commercial


� Biennial International Anti-Corruption Conferences began to drawlarge numbers of interested persons from international organizations,national governments, and civil society groups, led by the non-governmental organization Transparency International (TI).12

The rapid and widespread adoption of anti-bribery and anti-corruption prin-ciples by this diverse set of institutions can aptly be described as a ‘normcascade’.13

Yet one international organization is conspicuously absent from the list.The WTO has taken no action explicitly aimed at bribery and corruption,even though the organization came into being, set its early institutionalagenda and began planning what was expected to be a major round of multi-lateral trade negotiations at the height of the anti-corruption movement.14

The only initiative that has come close is the Working Group on Transpar-ency in Government Procurement (TGP) set up after the 1996 SingaporeMinisterial.15 But while transparency rules would undoubtedly have a positiveimpact on corruption in this important sector, the TGP Working Group hasalmost completely avoided frank discussions of bribery and corruption, andit failed to produce any concrete results by the time of the Seattle Ministerialin November 1999. Since that debacle, discussions of TGP – like many otherongoing negotiations in the WTO – have been in limbo.Most scholarship on international trade law examines GATT or WTO

Transactions, G.A. Res. 53/176, UN GAOR, 53d Sess, 91st Meeting, Agenda Item 92, UN Doc A/RES/53/176 (1998).

12 For information on recent conferences, see www.transparency.org/iacc/index.html, visited 25October 2000.

13 The term ‘norm cascade’ refers to a process of broad and rapid international acceptance of newnorms. For an analysis of the phenomenon from the perspective of political science, see M. Finne-more and K. Sikkink, ‘International Norm Dynamics and Political Change’, 52 Int’l Org 887–917(1998).

14 The WTO website notes that the trade law system ‘encourages good government’, by restrictingquotas and other measures that ‘provide opportunities for corruption’ and by requiring transparency.See WTO Secretariat, ‘10 Benefits of the WTO Trading System’, http://www.wto.org/english/thewto e/whatis e/10ben e/10b10 e.htm, visited 25 October 2000. A recent study by the OECDTrade Committee confirms that many WTO principles and rules may have beneficial incidentalimpacts on corruption. Potential Anti-Corruption Effects of WTO Disciplines, TD/TC(2000)3/REV3, 28 June 2000. Yet this study also notes that no WTO agreement specifically addresses briberyor corruption, and that most WTO rules were drafted without specific consideration of these issues,making it difficult to apply them by interpretation. Given both these facts, the study concludesthat it would be extremely difficult to bring a legal proceeding in the WTO based on bribery orcorruption.

15 At the Singapore meeting, WTO trade ministers agreed to establish a working group to study trans-parency in government procurement, ‘taking into account national policies’, and on the basis ofthis study to ‘develop elements for inclusion in an appropriate agreement’. Singapore MinisterialDeclaration, WT/MIN(96)/DEC, 18 December 1996, para 21. The Working Group on Transpar-ency in Government Procurement began meeting in May 1997. It has submitted three annual reportsto the WTO General Council: WT/WGTGP/1, 19 November 1997; WT/WGTGP/2, 17 November1998; and WT/WGTGP/3, 12 October 1999. All three reports are available at http://www.wto.org/english/tratop e/gproc e/gptran e.htm, visited 25 October 2000.


agreements, dispute settlement panel or Appellate Body decisions, or othermanifestations of political and institutional success in addressing particularissues.16 That approach is reasonable enough, but it risks a form of selectionbias: looking only at instances of successful action may produce a skewedpicture of the system. This article, in contrast, asks what insights into theWTO as a legal and political institution – and especially into its rule-makingprocesses – can be extracted from the organization’s failure to act on briberyand corruption at a time when most other international institutions werejumping (with varying degrees of enthusiasm and effectiveness) on the anti-corruption bandwagon. My concern here is not whether the WTO shouldaddress these issues,17 but rather why it has not done so.To focus the inquiry, I will draw specific comparisons between the political

and institutional processes at work in the consideration of corruption andTGP at the WTO and those that produced the OECD Convention. Thisanalysis is based largely on over 30 interviews that Professor Duncan Snidalof the University of Chicago and I conducted in 1999–2000 with a range ofparticipants in both processes, as part of a larger research project on thedynamics of international legalization.18 (A list of relevant interviews isattached to this article as Annex I. I have refrained from citing particularindividuals in support of specific statements because many of the personsinterviewed requested this degree of confidentiality.)I will also briefly compare the quite different political processes that pro-

duced the WTO Agreement on Trade-Related Aspects of Intellectual Prop-erty Rights, or TRIPS. The politics of this rule-making exercise have beenanalyzed by Susan Sell.19 The comparison with TRIPS is especially relevantbecause intellectual property, like bribery and corruption, falls outside thetraditional subject matter of international trade law, providing ammunitionfor opponents of action by trade institutions. The very different treatment of

16 By using the term ‘success’ I do not mean to imply that every GATT/WTO agreement or decisionnecessarily embodies wise or beneficial policies, or that every such action is effective in modifyingundesirable behavior by states or private actors. I merely mean that such actions are the result ofpolitical and institutional strategies and processes that have successfully overcome the many impedi-ments to collective action at the international level.

17 A number of scholarly articles address the normative question whether any legal action againstbribery and corruption, and specifically action by the WTO, is appropriate. See, e.g., S. R. Salbu,‘Extraterritorial Restriction of Bribery: A Premature Evocation of the Normative Global Village’, 24Yale J Int’l L 223–56 (1999); P. M. Nichols, ‘Regulating Transnational Bribery in Times of Globaliz-ation and Fragmentation’, ibid at 257; P. M. Nichols, ‘Outlawing Transnational Bribery Throughthe World Trade Organization’, 28 Law & Pol’y Int’l Bus 305–81 (1997).

18 For an early version of our analysis of the OECD process, see K. W. Abbott and D. Snidal, ‘Valuesand Interests in the Legalization of the OECD Anti-Bribery Convention’ (paper presented at theProgram on International Politics, Economics and Security, University of Chicago, February 2000,on file with the authors).

19 See S. K. Sell, ‘Multinational Corporations as Agents of Change: The Globalization of IntellectualProperty Rights’ in A. C. Cutler, V. Haufler and A. Porter, eds., Private Authority and InternationalAffairs (Albany: State University of New York Press 1999) 169–197.


the two sets of issues in GATT and the WTO suggests that the characterof the issue under consideration is far from determinative of the results oftrade-related rule-making. I will conclude with some broader thoughts aboutthe WTO as a legal institution based on the limited but suggestive evidenceof the corruption case.

I.

A. The OECD process

The US initiated serious negotiations on bribery and corruption in the OECDsoon after the Clinton Administration took office in 1993. Congress had man-dated renewed resort to the OECD in 1988, but efforts there had faltered inthe face of European resistance. With a new administration in place, US busi-ness renewed its demands for forceful negotiations with its major competitorsin the OECD. At the same time, the founders of TI (which was just beingorganized) argued the importance of multilateral anti-corruption rules forglobal development, the spread of democracy, and political stability. Thisappealing combination of material interests and broader, even altruisticvalues – manifested in support from both business firms and civil societygroups – led the US Department of State to adopt the issue as a high priority.When the State Department first raised the issue at the OECD in Paris it

received a hostile reaction from European governments, largely reflecting theviews of European business. Over the next year, officials at the State Depart-ment developed a complex strategy to overcome this resistance. Because ofthe political difficulties, these officials adopted a gradualist approach to nego-tiations in the OECD. While a legally binding treaty was their ultimate object-ive, they accepted the need to begin with some form of ‘soft law’ – such asan OECD recommendation – and work up to a harder legal instrument overtime.20 The Department hoped that a combination of ongoing dialogue, polit-ical pressure, and technical work inside the organization might slowly over-come European resistance.High-level officials from several US government departments – notably

Secretaries of State Christopher and Albright, Commerce Secretary Brown,and Treasury Secretary Rubin – maintained diplomatic pressure on govern-ments in Europe and Japan through private conversations and public remarksin numerous forums. This multifaceted diplomatic offensive was possiblebecause of the unusual unity of the US government on the corruption issue;the interested departments coordinated their efforts through an inter-agencycommittee chaired by the State Department (and including the United StatesTrade Representative, hereinafter USTR). As corruption scandals brokeacross Europe, representatives of the State Department skilfully utilized the

20 For a recent discussion of soft and hard legalization as political strategies, see K. W. Abbott and D.Snidal, ‘Hard and Soft Law in International Governance’, 54 Int’l Org 421 (2000).


press and other avenues of public diplomacy there, fomenting domestic polit-ical pressures in European countries around the moral aspects of corruption.These ‘outside’ political strategies allowed discussions inside the OECD(centered in a Working Group on Bribery and Corruption made up ofnational government experts) to focus on the technical legal aspects of issueslike criminalization, tax policy, and legal assistance: delegates were clearlyaware of the moral appeal of the issue and the political dangers this posed.In 1994, just as the WTO was being formed, the US realized the first,

limited fruits of its strategy: an OECD Recommendation calling on membergovernments to ‘take effective measures’ against transnational bribery.21

Though vague and not legally binding, this document gave the issue newstatus within the organization and raised the institutional standing of theWorking Group. Together, the Secretariat and the chair of the WorkingGroup organized a symposium on corruption, where they formed an informalnetwork of public and private organizations (not including the WTO) to rein-force the soft law process. In 1996, the year of the first WTO Ministerial inSingapore, the OECD approved a second Recommendation calling onMember States to deny tax deductions for foreign bribes.22

By 1997, governments in Europe and Japan were demanding that any fur-ther OECD action be in the form of a treaty, so that exporters in all membercountries would be subjected to the same level of legal restrictions at the sametime. The US, however, feared that this demand was merely a delaying tactic.In May 1997, the two sides reached a compromise, contained in a third, moreelaborate Recommendation: they would attempt to negotiate a treaty by theend of the year; but even if these discussions failed they would attempt toimplement domestic bans on foreign bribery during 1998 pursuant to theterms of the Recommendation.23 Technical discussions in the Working Grouphad already produced agreement on key legal elements that should beincluded in national criminal legislation, whether adopted pursuant to a treatyor a recommendation; these were annexed to the May 1997 Recommenda-tion. With this template in hand, there was little to impede negotiations atthe political level, and the OECD Convention was completed and signedwithin little more than six months, in December 1997.

B. Moving forces: the demand for action in the WTO and OECD

The complexities of organizing the WTO and the heavy early workload ofthe organization would have complicated any effort to address bribery and

21 Recommendation of the Council on Bribery in International Business Transactions, 27 May 1994,OECD Doc No C(94)75/Final, 33 ILM 1389 (1994).

22 Recommendation of the Council on the Tax Deductibility of Bribes to Foreign Public Officials, 11April 1996, OECD Doc No C(96)271/Final, 35 ILM 1311 (1996).

23 See Revised Recommendation of the Council on Combating Bribery in International BusinessTransactions, above n 3, at Section III.


corruption during the 1990s. There was, however, a significant window ofopportunity lasting several years after the formation of the WTO. Bribery andcorruption had high political salience around the world throughout thatperiod, due to a string of highly publicized scandals and the efforts of USbusiness and TI. OECD action was by no means assured until the end of1997, and was in any case limited to transnational bribery. Action in otherfora was not yet far advanced. Why were bribery and corruption not given amore prominent place on the WTO agenda?One significant problem was political rather than institutional: the lack of

a true ‘demandeur’, an influential private or public actor (or group of actors)willing to initiate and wage a sustained campaign for new international rules.Some of the actors involved in the debate over bribery and corruption pre-ferred action in a different forum; others preferred no action at all. But actionin the WTO was not a high priority for any of them. In marked contrast,powerful and aggressive demandeurs backed both the OECD Conventionand TRIPS. Indeed, a major lesson of these three cases is that the successor failure of international rule-making depends crucially on the power andcommitment of the public and private actors supporting the proposed action,whatever its substantive merits. This is consistent with a modified realist viewof international cooperation: realist in its emphasis on the power of the relev-ant actors, modified in its recognition that private individuals, firms andorganizations, rather than states, may be the most influential actors, and thatsome of those actors may be motivated by normative values rather than self-interest.24

In the OECD case, US business firms and associations – and governmentagencies representing their interests – pressed relentlessly for internationalcontrols to level the playing field, from the enactment of the FCPA in 1977until the entry into force of the OECD Convention in 1998. These actorsreceived support (though generally for different reasons) from civil societyorganizations like TI; the voice of civil society proved especially valuable inEuropean domestic politics. In the TRIPS case,25 high-level business leadersfrom the US, Europe, and Japan created a transnational alliance that was ablefirst to frame the protection of intellectual property rights as a trade issue,then to persuade the Quad governments jointly to demand action on the issuein the WTO rather than the World Intellectual Property Organization. DuringWTO negotiations, this private alliance provided government negotiatorswith valuable information and expertise on the highly technical subjectmatter, even drafting a joint proposal that the final intergovernmental agree-ment tracked closely. Although many developing countries resisted the

24 For an application of state-centric realist approaches to rule-making in the WTO and other economicorganizations, see R. H. Steinberg, ‘Trade-Environment Negotiations in the EU, NAFTA, andWTO: Regional Trajectories of Rule Development’, 91 Am J Int’l L 231 (1997).

25 See Sell, above n 19.


TRIPS initiative, the Quad governments prevailed through a combination ofpromises and threats.A variety of political incentives prevented the emergence of equivalent sup-

port for WTO rules on bribery and corruption. Consider first what is knownas the ‘supply side’ of the corruption issue, active bribery. USTR officialsrecognized the trade implications of transnational bribery and spoke in favorof WTO action during the run-up to Singapore.26 They did not, however,pursue the kinds of sustained political strategies that brought Europe andJapan to the table in the OECD. In this they were largely mirroring the prior-ities of the private sector. US business had defined its goal on bribery andcorruption as multilateralizing the FCPA among its leading competitors inEurope and Japan. It therefore focused its energies on the OECD, and theUS government followed suit. Bureaucratic considerations were also relevant.The State Department chairs the US delegation to OECD, while the USTRcontrols WTO affairs. Not surprisingly the two agencies engaged in someconflict over turf. The State Department also found the blustery public styleof the USTR – whatever its value in trade negotiations – less than helpful tothe gradualist strategy being pursued in the OECD. Since State was alreadydeeply engaged in the OECD negotiations (and since these reflected businesspriorities), it prevailed in this bureaucratic conflict. Once the OECD Conven-tion was signed, exporters outside the organization did not pose a sufficientthreat to justify further costly political activity.Business organizations and governments in other OECD countries did not

press for WTO action on transnational bribery either. That they failed to doso before the OECD Convention was signed is not surprising: at that pointEuropean business organizations and governments were resisting any interna-tional action outside the EU. That they still failed to support action after theConvention was signed is more surprising; after all, at that point OECDexport interests were in the same position vis-a-vis the rest of the world asthe US had been originally vis-a-vis Europe and Japan. The explanation,though, is probably the same as for the US: extending the rules of theConvention to smaller non-OECD competitors was not a sufficiently highpriority.Finally, exporters and governments outside the OECD provided no sup-

port at all for WTO action, even though they might well have benefited fromrules that would credibly protect them from paying costly bribes. Before theOECD Convention, this can be attributed in large part to the severe collectiveaction problems facing firms, business organizations, and even governmentsin diverse, far-flung nations. Once the Convention came into force, of course,

26 See, e.g., J. Zaracostas, ‘Trade Superpowers Debate Top Issues for WTO Summit’, J Comm (14December 1995), at 3A (quoting deputy US Trade Representative Jeff Lang); ‘US Pushes WTO onBribery, Labor Standards Issues’, J Comm (19 March 1996) (quoting Andrew Stoler, deputy of USmission to WTO).


it created strong additional incentives for free-riding by non-participatingstates.Consider next the ‘demand side’ of the issue, solicitation of bribes and

other forms of corruption. Politically, these issues are analogous to intellectualproperty rights: Northern business firms and governments are the naturaldemandeurs, while the burden of making costly changes tends to fall mainlyon the South and on transitional economies. Yet unlike the TRIPS negoti-ations, where business leaders from the Quad countries joined together in apowerful alliance to demand WTO rules, none of the relevant actors devotedserious resources to obtaining action on demand-side corruption in the WTO.Transnational business groups like the OECD Business and Industry

Advisory Committee and the International Chamber of Commerce didattempt throughout the OECD process to persuade negotiators there to con-sider the issue of solicitation or ‘extortion’27 of bribes.28 But this unity did notcarry over to the WTO. US business remained focused on multilateralizingrules against transnational bribery; it demonstrated relatively little interest inrules on corruption or solicitation. European business expressed somewhatgreater concern, but it too devoted most of its attention to the OECD negoti-ations. These remained intense until late in 1997, whereas in the WTO it hadbecome clear by 1996 that discussions would be limited to TGP. Europeanefforts to place solicitation and corruption on the OECD agenda might alsohave been, at least in part, a bargaining tactic designed to complicate andslow negotiations on transnational bribery. Whatever the case, the signing ofthe OECD Convention relieved much of the pressure for action on thedemand side by providing OECD-based firms with a credible defense againstsolicitation.On the other side of the coin, it might seem that Southern and transitional

governments would have every incentive to support measures designed toconstrain domestic corruption, independent of external pressures. Whilenational governments can in principle adopt anti-corruption measures unilat-erally,29 honest or reformist governments facing opposition from corruptofficials or firms might welcome international rules and the support of

27 This characterization appears in the title of International Chamber of Commerce, Rules of Conductto Combat Extortion and Bribery in International Business Transactions (1996). See http://www.iccwbo.org/home/statements rules/rules/1999/briberydoc99.asp (visited 2 February 2001).The original version of these rules was adopted in 1977. See Extortion and Bribery in BusinessTransactions, Report Adopted by the 131st Session of the Council of the International Chamber ofCommerce, 29 November 1977, 17 ILM 417 (1978).

28 See, e.g., OECD Business and Industry Advisory Committee, Assistance Against Solicitation ofBribes: A Possible Answer to the Problem of Extortion in International Business Transactions(1998).

29 Measures to combat transnational bribery, in contrast, must typically be adopted by governments ina coordinated fashion, since unilateral measures would create competitive disadvantages forexporting firms and thus generate strong political resistance. The US did adopt the FCPA unilater-ally, but no other government followed suit until coordinated action was possible through the OECD.


international institutions to reinforce domestic initiatives, divert resentmentto international bodies, and bind their successors in office. It is at least inpart this calculus that led reformist Latin American governments to supportcorruption negotiations in the OAS and to some extent even in the WTO.30

Different incentives prevail, of course, where policy-making officials arecorrupt. For example, one of the leading voices against WTO action on cor-ruption at the time of the Singapore Ministerial was President Suharto ofIndonesia.31 Yet as this is written, Suharto himself and members of his familyare embroiled in criminal proceedings on charges of massive corruption.Even absent high-level corruption, however, developing countries may have

significant incentives to resist international involvement.32 The fundamentalproblem is what Snidal and I have called ‘sovereignty costs’: governmentssystematically resist international actions that limit their autonomy unless theperceived benefits clearly outweigh the costs.33 Seeing threats to autonomy as‘costs’ points up that their magnitude (and their relation to potential benefits)can vary significantly depending on the nature of the issue, the characteristicsof particular states, and the political setting. International action on corrup-tion threatens sovereignty costs that are significant, if uncertain, because itwould further the extension of international rules and institutions ‘behind theborder’ into the internal operations of national governments. Governmentsthat are politically unstable or insecure, as in many developing countries,would view these costs as especially high. When more threatening behind-the-border measures like international labor standards are under active considera-tion, moreover – as they have been in the WTO since 1996 – the perceivedsovereignty costs of action on corruption are increased even further, sincesuch action would set an influential precedent.34

C. Initiation of the WTO process

Although the political incentives constraining the demand for action wereundoubtedly important, the institutional character of the WTO has alsoplayed a significant role in the organization’s failure to act on bribery andcorruption. The nature of the WTO rule-making process influenced decisionsas early as the Singapore Ministerial in 1996, when WTO members decided

30 The most direct attempt to focus discussions in the TGP Working Group on issues of corruptionwas a ‘non-paper’ submitted by Venezuela in February 1999. For a description of this document seeWT/WGTGP/3, above n 15, at para 3.

31 See C. Hwa Loon, ‘WTO Should Focus on Concrete Trade Issues, Says Suharto’, The Straits Times(13 September 1996) 1.

32 Even governments like Hong Kong, China that have successfully controlled corruption at home haveresisted discussion of the issue at the WTO.

33 See Abbott and Snidal, ‘Hard and Soft Law’, above n 20, at 436–41.34 For a reflection of this position in the opinion of an influential Southeast Asian journal, see Com-ment, ‘Don’t Distract WTO from Its Job’, The Straits Times (27 April 1996) 34.


to create a Working Group on TGP rather than initiating a more sweepingdiscussion of bribery and corruption.US trade officials clearly recognized that bribery and corruption can block

and distort international economic transactions. As the Singapore meetingapproached, however, USTR made the determination to focus its efforts onissues that promised more immediate economic payoffs, relegating briberyand corruption to a subsidiary position. That decision reflected the longstand-ing structure of international trade negotiations. In trade, a USTR officialtold us, ‘you get what you pay for’, and only what you pay for. Whateverthe economic and political benefits of an agreement to control bribery andcorruption, in other words, discussion of those issues at the WTO could pro-ceed only on the basis of reciprocal concessions, not mutual interests.35 Andno one in USTR or its business constituencies was willing to trade off con-crete, near-term market access for specific goods and services in exchange forthe uncertain future benefits of rules on transnational bribery and corruption.During the run-up to Singapore, then, the US approached the EU (and

subsequently the other Quad governments) with a proposal to initiate negoti-ations on TGP. One interpretation of this initiative views it as a device to‘smuggle’ anti-corruption measures into the WTO – even though TGP is arelatively poor vehicle for such a strategy, since it encompasses only thedemand side of the issue and then only partially and in a single class of trans-actions. By framing the issue as one of transparency in procurement, thisinterpretation runs, the US could cast it as a trade issue – thus avoiding theargument that corruption was outside the scope of the WTO’s mandate –and even link it to an existing trade measure, the plurilateral Agreement onGovernment Procurement (GPA).36 The better view, however, seems to bethat TGP was primarily a market access initiative, with constraints on corrup-tion as beneficial but largely incidental by-products.37

That was undoubtedly the position of the EU, whose member governmentsremained ambivalent about multilateral action on bribery and corruption. Inresponse to the US proposals on TGP, the Europeans argued that WTOnegotiations would only be meaningful if they promised increased concreteopportunities to participate in foreign procurement projects by broadening

35 The USTR may have reinforced this tradition by its public statements casting corruption as a non-tariff barrier to trade, rather than as an issue of mutual interest. See statements cited above n 26.

36 Uruguay Round Trade Agreements, Texts of Agreements, Implementing Bill, Statement of Adminis-trative Action, and Required Supporting Statements: Message from the President of the UnitedStates, House Doc 103–316, vol 1, 103d Cong, 2d Sess (Washington: US Government PrintingOffice 1994), 1735. For a thorough introduction to the GPA, see B. M. Hoekman and P. C. Mavro-idis (eds), Law and Policy in Public Purchasing (Ann Arbor: University of Michigan Press 1997).

37 For an academic analysis of the TGP process which assumes that the goal of such an agreement,like that of the GPA, is (and should be) to facilitate market access, see S. Arrowsmith, ‘Towards aMultilateral Agreement on Transparency in Government Procurement’, 47 Int’l & Comp. LQ 793(1998).


the GPA and enlarging its substantive coverage. The US shared these goals,but saw them as politically unattainable in the near term. The USTR there-fore argued that it would be more effective to create a new multilateral agree-ment covering only transparency in procurement, then try to add marketaccess commitments over time. The eventual US–EU joint proposal followedthis line, focusing almost exclusively on transparency; it dealt with EU con-cerns in a single sentence suggesting the possibility of future market accessnegotiations. Although the US and EU thus succeeded in hammering out acommon position by the time of the Singapore Ministerial, their disagreementover market access prevented the kind of unity that had proven so significantin the TRIPS negotiations.Developing country reaction to even this modest proposal was negative and

harsh, especially among the nations of South and Southeast Asia.38 To theextent the proposal was seen as a stalking horse for expansion of the GPA, itevoked resistance to additional market access commitments so soon after theend of the Uruguay Round.39 To the extent it was seen as a stalking horse forbroader WTO action on corruption, it evoked sovereignty cost concerns.These were greatly heightened by the contemporaneous proposals fromadvanced industrial countries for WTO consideration of labor standards,environmental regulation, investment measures, and competition policy – allareas in which international rules would intrude on domestic decision-making. In addition, the inherent demand side emphasis of the TGP initiativeappeared to put the onus of corruption exclusively on the South. Developingcountry representatives sharply criticized the US–EU proposal for failing tomention either active bribery or other arguably ‘corrupt’ practices, such asprivate contributions to political campaigns, that are common in the North.The two sides compromised at Singapore by creating a Working Group on

TGP. The mandate of the Group was narrow: ‘to conduct a study on [TGP]practices, taking into account national policies, and, based on this study, todevelop elements for inclusion in an appropriate agreement’. The Ministers’decision made no mention either of market access or of formal negotiationson TGP.

D. The OECD and WTO processes compared

Although the political settings and mandates of the OECD Working Groupon Bribery and Corruption and the TGP Working Group were similar, their

38 India, like the Southeast Asian nations in ASEAN, has been a consistent opponent of behind-the-border measures in GATT and the WTO. See S. Ostry, ‘The Uruguay Round North-South GrandBargain: Implications for Future Negotiations’, paper prepared for Conference on the Political Eco-nomy of International Trade Law, University of Minnesota, 15–16 September 2000, forthcoming inThe Political Economy of International Trade Law, above n *.

39 Indeed, developing countries had already begun to argue that the results of the Uruguay Roundshould be rebalanced and problems of implementation dealt with before any new WTO negotiationswere initiated. Ibid.


procedures stand in illuminating contrast. Four differences in process are par-ticularly significant.(1) Although both groups were specialized, expert bodies, the TGP process

was much more highly technical and opaque. While the OECD Groupdebated compelling issues like the appropriateness of criminal versus civilpenalties for transnational bribery, the vast majority of the TGP Group’sdeliberations concerned mundane procurement matters like publication ofnational regulations, open versus limited tendering, drafting of specificationsand bidder qualifications, time periods, record-keeping, and the like.40 Theseare important issues, especially in a negotiation whose sub-text is marketaccess. But the technical TGP approach stripped out of the discussion mostof the normative values associated with bribery and corruption. It therebyreduced the interest and ability of the general public – and of civil societygroups like TI – to understand and participate in the process. In fact, civilsociety seemed barely aware of the talks; it would have been difficult for theUS to mount a campaign of public diplomacy on TGP even if it had wantedto. The technical approach of the TGP Working Group probably discouragedeven some government agencies that were actively involved in the OECDnegotiations – for example ministries concerned with justice, internationalrelations, and development – from following its discussions.The primary reason why the Working Group’s discussions excluded norm-

ative values is that the Group carefully avoided almost any explicit considera-tion of bribery and corruption. The Chair’s summary of the Group’s workcontains only a brief section on the subject, near the end of the document.This reveals that, although one or more delegations sought at least to link thestudy of TGP to the problem of corruption, several others (identified to usas including India, Pakistan, Malaysia, and Egypt) opposed any such link,arguing that corruption was simply outside the mandate of the WorkingGroup and the WTO. In February 1999, Venezuela circulated a ‘non-paper’that summarized the contributions the WTO could make to the fight againstcorruption and called for a forthright discussion of the subject.41 But thisproposal was dead on arrival – even Venezuela did not press the WorkingGroup to debate its proposals.(2) The leadership of the TGP Working Group and the Secretariat officials

who supported it were much less ambitious than their counterparts in theOECD. The Chair of the OECD Working Group utilized subtle forms ofleadership that moved the anti-corruption agenda forward without ever losingthe support of the governments resisting action. In addition to guiding thegroup’s negotiations toward eventual consensus, the Chair opened its discus-sions (if only a crack) to well-chosen outside influences. He brought in pro-secutors to describe their difficulties in prosecuting corruption cases. He

40 See List of the Issues Raised and Points Made, Informal Note by the Chair, Sixth Revision, 12November 1999, JOB(99)/6782.

41 See above n 30.


arranged for the Group to hear presentations by the World Bank and otherconcerned intergovernmental organizations, business organizations, and evenTI. Together with the Secretariat, he organized public symposia and aninformal network of organizations that shared information and reinforcedeach other’s work.The Chairs of the TGP Working Group and the WTO Secretariat, in con-

trast, exercised little entrepreneurial leadership, feeling tightly constrained bynational representatives. Their passive role is captured in the title of the docu-ment they prepared to summarize discussions in the Group: ‘List of the IssuesRaised and Points Made’. The Group’s studies – limited to materials such asnational procurement laws and international instruments that explicitlyaddress procurement – exposed it almost exclusively to technical procurementissues. Discussions appear to have consisted largely of the recitation of oppos-ing positions. While the Group granted observer status to the IMF, WorldBank, UNCITRAL, and UNCTAD, they allowed these organizations noactive participatory role. Remarkably, the OECD was not an observer, in spiteof (because of?) its work on corruption; the organization requested observerstatus, but the Group had not granted it by the time of Seattle. Business andcivil society groups concerned with corruption were certainly not brought intothe Group’s deliberations. The TGP Group and the WTO Secretariat evenavoided participation in the OECD’s network and symposia, and participatedonly in a limited way in International Anti-Corruption Conferences. TheChairs and Secretariat officials associated with other GATT and WTO nego-tiations have of course been more aggressive and effective. For whateverreason, though, effective leadership was not provided – or allowed to be pro-vided – to the negotiations on TGP.(3) Discussions in the OECD and WTO were based on very different con-

ceptions of the process of legalization. In the OECD, the US pursued a ‘trans-formational’ soft law strategy that over five years – 1993 to 1997 – produceda legally binding Convention. The US undoubtedly adopted a gradualiststrategy in this case because an immediate move to hard law seemed politic-ally infeasible, but the approach was highly congenial to the OECD, whichacts through a variety of soft (recommendations)42 and hard (decisions,43

42 Perhaps the best-known example is the OECD Declaration on International Investment and Multi-national Enterprises, which recommends to multinational enterprises operating in or from the territ-ory of member states that they observe the annexed Guidelines for Multinational Enterprises. TheGuidelines were thoroughly revised in 2000. The Declaration is supplemented by legally bindingDecisions setting forth procedures for implementation. The OECD Declaration and Decisions onInternational Investment and Multinational Enterprises: Basic Texts, 8 November 2000, OECDDoc No DAFFE/IME(2000)20. For an example of a Recommendation addressed to governments,see Revised Recommendation of the Council Concerning Co-Operation Between Member Countrieson Anticompetitive Practices Affecting International Trade, 27–28 July 1995, OECD Doc NoC(95)130/Final, 35 ILM 1313 (1995).

43 An important example is the Code of Liberalization of Capital Movements, which has the status ofa legally binding decision. First adopted in 1961, the Code has been expanded several times; sincethe 1989 amendment it covers virtually all capital movements, short- and long-term. See OECD,Code of Liberalization of Capital Movements (Paris: OECD 1997). The text of the Code is also avail-


conventions44) legal instruments. Combined with a growing consensus ontechnical legal issues within the Working Group and the inside-outside polit-ical tactics of the US, American business, and TI, the soft law approachenmeshed the governments of Europe and Japan in a set of commitmentsthey could not realistically escape. Once the Convention was completed,moreover, the OECD initiated an implementation process, administered bythe Working Group on Bribery and Corruption, that relied on peer reviewand public pressure rather than litigation.45

In the WTO, in contrast, negotiators from the US and other developedcountry governments, at least, perceived only two possible outcomes: a hard,legally binding multilateral agreement (whether on corruption, market accessor TGP) or no action at all. The US, EU and other supporters gave noconsideration to moving through a series of way-stations that were multilat-eral but legally soft, as in the OECD.46 Nor did they consider an alternativegradualist strategy: beginning with strong plurilateral obligations, then relyingon market forces or political pressure to expand the group of participants.47

The whole aim of the exercise, from the US and EU perspectives, was tomultilateralize the GPA.48

The focus on hard law was not simply a matter of tactics on this particularissue. It reflected a deep-seated understanding of how the WTO operates andshould operate. The conviction that the WTO is an organization that dealsonly in hard law was most clearly revealed in debates over the applicability ofthe WTO dispute settlement mechanism to TGP, one of the major issues stilloutstanding at the time of Seattle.49 A few developing countries argued – with

able on the OECD website at http://www.oecd.org/daf/investment/legal-instruments/clcmart.htm(visited 7 February 2001). A companion document, the Code of Liberalization of Current InvisibleOperations, has the same legal status.

44 See, e.g., OECD, Model Tax Convention on Income and on Capital (Paris: OECD 2000). The articlesof the Model Convention are also available on the OECD website at http://www.oecd.org/daf/fa/treaties/articles.pdf (visited 7 February 2001). The proposed OECD Multilateral Agreement onInvestment (MAI) was intended to be a legally binding treaty with effective dispute resolution pro-cedures, open to non-members of the OECD. Negotiations on the MAI were suspended in 1998.See Ministerial Statement on the Multilateral Agreement on Investment (MAI), 28 April 1998,http://www.oecd.org/media/release/nw98–50a.htm (visited 8 February 2001).

45 See OECD Convention, above n 4, Art 12; 1997 OECD Recommendation, above n 3, Section VIII.46 The Singapore Ministerial Declaration and discussions in the TGP Working Group were of courselegally ‘soft’, but the former did little more than create the Group, and the latter never passed beyonddiscussion to the formulation of commitments.

47 For a critique of these alternate strategies, see G. W. Downs, K. W. Danish, and P. N. Barsoom,‘The Transformational Model of International Regime Design: Triumph of Hope or Experience?’,38 Colum J Transnat’l L 465 (2000).

48 One could say that the TGP negotiations reflected a gradualist strategy in terms of substantive scope:by beginning with commitments limited to transparency, the US and EU hoped to enlarge the scopeof the agreement over time to include commitments on market access.

49 This paper follows K. W. Abbott, R. O. Keohane et al., ‘The Concept of Legalization’, 54 Int’l Org401 (2000), in envisioning the ‘hardness’ or ‘softness’ of international legal commitments as turningnot solely on the existence of a binding legal commitment, but on three elements – legal obligation,


an eye toward negotiations on labor standards – that they should not be askedto accept binding legal decisions on TGP, which might lead to cross-retaliation against product exports, when they had made no substantivemarket access commitments under GPA. Representatives of the US and otherdeveloped countries, however, insisted that all WTO agreements, includingTGP, must be legally binding and subject to WTO dispute settlement. Theyargued vigorously that individual agreements would be meaningless if theywere not subject to full-fledged dispute settlement and that softness on dis-pute settlement in individual agreements would threaten the entire WTOlegal system.The US sought to defuse this controversy by assuring opponents that, even

under a hard agreement, it would not initiate dispute settlement proceedingsover anything less than systematic national violations of transparency require-ments, but these assurances proved insufficient. The Working Group discus-sed several compromise solutions. All would subject TGP commitments tothe dispute settlement mechanism but would soften its procedures in someway: for example, by adding a political pre-screening stage like that found incertain Tokyo Round codes, by explicitly limiting dispute settlement to gen-eral national policies rather than procurement practices in specific projects,or by specifying a restrictive standard of review like that contained in theUruguay Round anti-dumping agreement. By the collapse of negotiations atSeattle, neither side had accepted any of these solutions.(4) A final deep-seated problem held back progress on TGP. The govern-

ments of those nations that transparency commitments would most signific-antly affect – developing and transitional economy countries – refused toagree even to formal negotiations without the promise of some quid pro quo,either in the context of a new round of negotiations or as part of a Northernresponse to the South’s ‘implementation agenda’.50 They took this positioneven though greater transparency (and broader anti-corruption measures)should benefit their countries both economically and politically. This is thesame thinking that led the US government to narrow its WTO initiative toTGP in the first place: USTR believed that it could not obtain a broaderanti-corruption agreement (or a deeper market access agreement) withoutoffering concessions that were politically unacceptable at home. To someextent, these positions are simply negotiating tactics. But they also reflect themanner in which GATT–WTO negotiations have been conducted over thepast fifty years.

precision of commitments, and delegation to third-party institutions – each of which can be variedindependently. Under this formulation, a decision to exempt commitments from WTO dispute set-tlement procedures would constitute a soft law strategy.

50 The US argues that it should not be necessary to offer concessions in exchange for commitments ontransparency so long as these are divorced from explicit commitments on market access. Based onthis position the US pressed at Seattle for a free-standing TGP agreement, or at least a commitmentto negotiate such an agreement by the next Ministerial as an ‘early harvest’.


E. Seattle and beyond

With the Working Group at an impasse and the Seattle Ministerial drawingnear, the US transferred its efforts to a loosely organized group of statesdubbed the ‘Friends of TGP’. This group considered four draft legal texts;one was submitted by the US along with Chile and Hungary, another by theEU. Political activity in support of these drafts was intense as the Ministerialapproached. Although differences over issues such as domestic review proced-ures and WTO dispute settlement hampered coordination on a single text,51

the Friends of TGP made considerable progress.US representatives believe that, had the Ministerial been successful in

launching a new round, they would have obtained a commitment to negoti-ations on TGP, with a checklist of issues based on the Chair’s compilationand perhaps even an accelerated timetable looking toward an ‘early harvest’.Some governments supported this outcome privately, even while continuingto oppose action in their public statements. By one account, only Indiarefused to join the consensus on TGP at Seattle.52

Consistent with the quid pro quo conception of rule-making in interna-tional trade, however, much of the support for TGP negotiations was contin-gent on a satisfactory resolution of the other issues under consideration atSeattle. Prominent among these for many developing countries was the res-olution of concerns about the implementation of the Uruguay Round agree-ments. Hopes for immediate progress on TGP were therefore dashed withthe collapse of the Seattle Ministerial.53

After Seattle, discussions of TGP stalled completely. The modest aims ofthis initiative became embroiled in larger and more intense disputes overimplementation, confidence-building, internal transparency, labor rights, andthe like. By all accounts, WTO discussions took on the divisive tone of North–South disputes in the UN, where the first international negotiations onbribery and corruption collapsed in the 1970s. Even the Chair of the WorkingGroup’s plan to submit a non-paper summarizing outstanding issues on TGPas a way to restart discussions was met with resentment and charges that hewas exceeding his mandate. As a result, there remains no international forumwhere one can effectively raise the issues of bribery and corruption, or eventhe narrow issue of TGP, with the governments of India, Malaysia, Egypt,and other nations outside the OECD.54

51 The inability of member governments to narrow their differences on numerous issues in advance ofthe Ministerial contributed significantly to the collapse at Seattle. See J. S. Odell, ‘The SeattleImpasse and Its Implications for the World Trade Organization’, paper prepared for Conference onthe Political Economy of International Trade Law, 15–16 September 2000, forthcoming in ThePolitical Economy of International Trade Law, above note *.

52 Ibid., citing World Trade Agenda, December 1999, at p 8.53 For a detailed analysis of the collapse, see ibid.54 The final communique of the 2000 G8 meeting in Okinawa speaks of preparing for negotiations ona new instrument against corruption within the UN, but few concrete steps appear to have been


What, then, does the failure of the WTO to act on bribery and corruption –or even on TGP – to date reveal about the nature of that organization as alegal and political entity? In this section I suggest several broad implicationsgrowing out of the foregoing analysis. I do not put these forward as definitiveconclusions, for they are based on an extremely narrow empirical base.Rather, I intend them as speculations designed to stimulate considerationof institutional issues often neglected in analyses of the international traderegime.First, the long history of bartering reciprocal concessions in the GATT

and WTO has rendered the organization less than wholly satisfactory as arule-making body. It remains mired in the obsessive quid pro quo thinkingthat has always dominated tariff negotiations, even when asked to addressissues – like bribery and corruption or TGP – on which international rulescould produce significant mutual benefits. The USTR cannot initiate discus-sions of corruption in the WTO unless it is prepared to offer concrete marketaccess tradeoffs; Congress and business constituencies monitor USTR closelyto ensure it makes no such offer. Developing countries will not even considernegotiating on TGP, in spite of its obvious benefits, without the promise ofconcrete concessions on implementation or market access. Since all issues aretreated in this fashion, little if any action can be taken outside a round – onlyone country opposed TGP negotiations as such by the end of the SeattleMinisterial, but no government would even discuss them once the meetinghad collapsed. Because current trade issues increasingly require complexinternational rule-making, however, rounds are more difficult to launch.Second, the success of the WTO legal system has raised the bar for new

international agreements to a height that may in some cases be counterpro-ductive. It is now widely accepted, at least among the most powerful membersof the organization, that no new WTO agreement should be made unless itis legally binding and subject to the dispute settlement system and the wholeapparatus of compensation and retaliation. As a result, WTO rule-makingprocedures offer few if any established soft law ‘pathways,’ like the series ofincreasingly stringent recommendations that led to the OECD Convention,55

and precious few soft law endpoints either.56

taken. See G8 Communique, Okinawa, 23 July 2000, para. 47, text available at http://www.g8kyu-shu-okinawa.go.jp/e/documents/commu.html, visited 25 October 2000.

55 Some soft law pathways do exist in the WTO – member governments can address new issues inministerial declarations, for example – but they are less well developed than in OECD practice.

56 Some provisions of GATT 1994 – notably those dealing with developing countries – although tech-nically legally binding, contain hortatory language that softens the obligations considerably. Thisrepresents a form of soft law that could be duplicated in other contexts, though most of the UruguayRound agreements were intentionally drafted in more rigid terms. Another possible form of actionthat stops short of the multilateral, hard law rule-making characteristic of the WTO is the conclusionof additional plurilateral agreements under the Marrakesh Agreement Establishing the World TradeOrganization, reprinted in GATT Secretariat, The Results of the Uruguay Round of Multilateral Trade


The US, at least, appears ready to support this state of affairs to the fullest –except when constituency pressures are irresistible, as they were at the end ofthe Uruguay Round when the US demanded and obtained a restrictive stand-ard of review in anti-dumping cases. It is in large part the hard law of thedispute settlement system – or more accurately the assumption that thesystem must always be used – that leads political actors to try to introduce somany new issues into WTO. But that system, and the assumption that it mustbe used, also lead opponents of these proposals to resist them all the morestrongly – or to demand greater concessions. Even desirable agreementsbecome harder to reach.Third, the GATT–WTO system has achieved results on many issues by

treating them in a technical fashion that allows economic effects to be quanti-fied and tradeoffs calibrated. This approach has for the most part kept theemotional heat of international trade negotiations below the boil. But manyof the issues on the current trade agenda – including corruption, labor rights,environmental protection, and consumer issues like genetically modifiedfood – have strong normative components that are difficult to keep undercontrol. If the rule-making process is structured to strip out the normativeaspects, as in the discussions of TGP, public interest and understanding willbe compromised. The WTO will be seen as a technocratic organization out oftouch with public sentiment. If the normative aspects are allowed in, however,traditional methods of operation will be insufficient, not least because theyenvision no role for concerned actors in civil society. If the current backlashagainst the effects of globalization and the related criticism of internationalinstitutions persists, this problem will require prompt attention.Fourth, the WTO has restricted transparency and participation by civil

society more than many other international organizations. Even now,although considerable strides have been made on issues of external transpar-ency, WTO processes remain largely closed to civil society input. One lessonof the corruption/TGP case, however, is that even limited participation byresponsible groups in civil society – including for this purpose business organ-izations as well as other NGOs like TI – can facilitate the rule-making process,and presumably other legal and political processes as well, in directions thatincrease member state welfare. The OECD Convention, for example, mightnot have been achieved without input from TI and responsible transnationalbusiness groups like the International Chamber of Commerce. In the TGPprocess, in contrast, the WTO excluded those groups. The problem goes wellbeyond corruption. As we were told, the WTO has so alienated many areasof civil society that groups which should be supporting its market openinginitiatives – consumer groups, for instance – are unwilling to associate them-selves with the organization.

Negotiations, the Legal Texts (Geneva 1994) 6. Article X:9 of the WTO Agreement, though, imposessome procedural barriers even to this approach.


Finally, the WTO is a ‘member-driven organization’, and proud of it. TheUS would not have it any other way, and other member governments watchover the shoulders of the Secretariat, working group chairs and other organ-ization officials with equal fervor. To a considerable extent this is as it shouldbe, and certainly as it is likely to remain. But the deep reluctance to affordsupranational officials any independent role57 is in part an artifact of the quidpro quo mentality. In the TGP case, this approach has hindered progresstoward mutually beneficial goals. Ironically, given the growing concern overthe undemocratic nature of supranational organizations, the WTO might nowbe in better favor with the world’s publics had the US and its other membergovernments afforded a bit more latitude to their supranational agents.

1

Clark, Peter: Deputy Director, Fraud Section, Criminal Division, US Depart-ment of Justice, Washington, DC, July 1999.

Eigen, Peter: Chairman, Transparency International, Berlin, Germany, Sep-tember 1999.

Ellis, John: Office of US Trade Representative, Washington, DC, September2000.

Ervin, Carolyn: Deputy Head of the Private Office of the Secretary-General,OECD, Paris, September 1999.

Hirsch, Mathias: Policy Manager, Standing Committee on Extortion andBribery, International Chamber of Commerce, Paris, May 2000.

Kampf, Roger: First Secretary, Permanent Delegation of the European Com-mission to the International Organizations in Geneva, Geneva, May 2000.

Larson, Alan P.: Under Secretary of State for Economic, Business and Agri-cultural Affairs, US Department of State, Washington, DC, September2000.

Lewis, Eleanor Roberts: Chief Counsel for International Commerce, USDepartment of Commerce, Washington, DC, July 1999.

Linscott, Mark: Office of USTR, Delegation to the WTO, Geneva, May2000.

Mak, Dick K. Y.: Assistant Representative of the Hong Kong Special Admin-istrative Region of China to the WTO, Geneva, May 2000.

Otten, Adrian: Director, Intellectual Property Division, Secretariat of theWTO, Geneva, May 2000.

Pieth, Mark: Professor of Criminal Law and Criminology, University ofBasel; Chair, OECD Working Group on Bribery and Corruption, Basel,September 1999, May 2000.

57 For a discussion of the value of independence in international organizations, see K. W. Abbott andD. Snidal, ‘Why States Use Formal International Organizations’, 42 J Conflict Res 3 (1998).


Quilter, Peter: Advisor to the Secretary General, Organization of AmericanStates, Washington, DC, July 1999.

Saborio Soto, Ronald: Ambassador and Permanent Representative, Perman-ent Mission of Costa Rica to the WTO; Chair, WTO Working Group onTransparency in Government Procurement, Geneva, May 2000.

Small, David: Director of Legal Affairs, OECD, Paris, September 1999.Tarullo, Daniel: Professor, Georgetown University Law Center; formerlyUnder Secretary of State for Economic, Business and Agricultural Affairs,US Department of State, Washington, DC, July 1999.

16. rule making in the wto - lessons from the case of bribery and corruption - k. abbott

Documents

international business

international issues

professor hudec

professor duncan snidal

university of chicago

international organizations

briberyand corruption

professor snidal participated