Transparency International USA
The coalition to curb corruption in international business transactions.
1615 L Street, N.W., Suite 700
Washington D.C. 20036
email: [email protected]
Tel (202) 682-7048 Fax (202) 682-7086

BACKGROUND

TI has long maintained that government procurement can be a major source of grand corruption where the lack of transparency permits non-competitive decision-making. This places honest business at a disadvantage; it directly and indirectly harms the most vulnerable sectors of society, diverting scarce resources from important social needs; and, it undermines development assistance objectives.

TI chapters have promoted measures to improve transparency in government procurement, including promoting the Islands of Integrity concept. TI also successfully encouraged the World Bank and regional development banks to adopt anti-corruption procurement guidelines.

However, progress is needed on transparency in the large amount of government procurement not related to Bank-financed projects. The WTO is clearly the ultimate forum. for such an agreement. There is a GATT Procurement Agreement which contains transparency disciplines, but it has not achieved widespread acceptance because it also has strict market access requirements.

The alternative that has been pursued for the past few years is to secure agreements only on the transparency disciplines, and to leave the market access issue for separate treatment. Working groups at the WTO, FTAA and APEC have been laying the groundwork to secure this objective.

At the, 1994 Miami Summit, leaders called for the creation of a Free Trade Area of the Americas (FTAA or ACLA) by the year 2005 and at the 1998 Santiago Summit, they created a negotiating group on government procurement which will hold its first meeting in September. The business community, meeting annually at the Americas Business Forums, recommended to the trade ministers that the working group conclude an agreement and provided a list of the basic elements of transparency in procurement. (See attached.)

On the issue of timing, the FTAA is to go into effect in 2005 as a "single undertaking," meaning that no one agreement goes into effect before all are concluded. However, leaders committed to achieving "concrete progress" by the year 2000 and the Trade Negotiating Committee will decide by September which issues will constitute "concrete progress."

PROPOSAL

TI chapters in the Americas should agree to promote the implementation of a regional agreement on transparency in procurement by 2000.

Action Items:

• TI chapters would recommend that their governments request that the Trade Negotiating Committee make this a priority "concrete progress" measure for the FTAA negotiations. ( A draft letter that TI-USA plans to submit to its government is attached for background only.)

To be most effective, such recommendations should be submitted as soon as possible to the appropriate officials. (A partial list is attached.)

• TI chapters should share information on costs of failures of transparency or examples of best practices. (TI Brazil )

• TI chapters should share information on the willingness of their government to support this position.

• TI chapters should seek to build broad-based support by raising the issue in other fora, including at business and professional meetings and at the OAS/IDB conferences to promote the OAS Anticorruption Convention. The Convention refers to the need to strengthen procurement in Article III on Preventive Measures.

• Consider use of press.