[Congressional Record Volume 142, Number 138 (Monday, September 30, 1996)]
[Senate]
[Pages S11979-S11980]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SPECTER:
  S. 2165. A bill to require that the President to impose economic 
sanctions against countries that fail to eliminate corrupt business 
practices, and for other purposes; to the Committee on Foreign 
Relations.


                       UNFAIR TRADE PRACTICES ACT

  Mr. SPECTER. Mr. President, today I am introducing the Unfair Trade 
Practices Act to level the playing field for U.S. companies competing 
with foreign firms overseas by imposing sanctions against foreign 
persons and concerns engaging in corrupt trade practices to the 
disadvantage of a U.S. company and against countries that refuse to 
enforce or adopt their own foreign corrupt practices laws similar to 
our Foreign Corrupt Practices Act.
  I am introducing this bill at the end of this session rather than 
waiting to introduce it in the 105th Congress in order to provide 
people an opportunity to review this legislation over the intervening 
months. Earlier introduction of the bill was prevented by the press of 
Senate Intelligence Committee business.
  The Select Committee on Intelligence, which I chair, had a 
particularly heavy agenda this year, including, among many other items, 
the annual Intelligence Authorization Act providing for the first real 
reform of the U.S. intelligence community since 1947, criminalizing 
economic espionage, and directing a thorough study of how the U.S. 
Government is organized to combat the proliferation of weapons of mass 
destruction. In addition, the committee has undertaken significant 
inquiries into CIA activities in Guatemala, the actions of U.S. 
officials regarding the flow of arms from Iran to

[[Page S11980]]

Bosnia, and the bombing of United States facilities in Saudi Arabia.
  Mr. President, this bill directs the President to report to Congress 
regarding foreign persons and concerns that engage in corrupt practices 
and countries that do not have or do not enforce laws similar to our 
Foreign Corrupt Practices Act. Countries that the President determines 
are not engaged in a good faith effort to enact or enforce such laws 
will be sanctioned. Sanctions include a 50-percent reduction in foreign 
aid and USG opposition to the extension of any loan or financial or 
technical assistance by international financial institutions.
  The bill also provides for sanctions against foreign persons and 
concerns engaging in corrupt trade practices to the disadvantage of a 
U.S. company. If the country with primary jurisdiction over the 
offenders fail to take action against them within 90 days, the 
President must, to fullest extent consistent with international 
obligations, ban all U.S. Government contracts with the offenders as 
well as all licenses or other authority allowing the offenders to 
conduct business within the United States.
  In testimony earlier this year before the Select Committee on 
Intelligence, Director of Central Intelligence John Deutch said the 
problems of economic espionage and unfair trade practices were among 
the most serious economic issues facing the country today. Earlier this 
year, Senator Kohl and I introduced legislation to criminalize economic 
espionage, S. 1557, subsequently included in S. 1718, and S. 1557. The 
bill I am introducing today attempts to address the second issue, 
unfair trade practices by foreign concerns.
  The importance of this effort to level the playing field by 
encouraging other countries to criminalize bribery of foreign officials 
throughout the world cannot be overstated. Earlier this year, then-U.S. 
Trade Representative Mickey Kantor noted that ``from April 1994 to May 
1995, the U.S. Government learned of almost 100 cases in which foreign 
bribes undercut U.S. firms' ability to win contracts valued at $45 
billion.''
  A recent poll of 3,000 Asian executives conducted by the ``Far 
Eastern Economic Review'' found that more than a third of the business 
leaders in four major countries preferred to bribe a customer rather 
than lose a big sale. Another index is published annually by an 
institution called Transparency International, created by a group of 
multinational corporations including General Electric and the Boeing 
Corp. This index, which was a compilation of polls of business men and 
women around the world, revealed that corruption is not limited to any 
specific culture or business area but exists worldwide. Nor is it 
limited to less developed countries. In 1994, a year described in ``The 
Financial Times--Dec. 30, 1994, at 4--as ``The Year of Corruption,'' 
complaints of corruption surfaced in some of the wealthier countries, 
including Britain, Canada, France, and Japan.

  Despite the evidence that corruption is still widespread, there are 
indications that the international community may finally be susceptible 
to increased pressure to crack down on these unfair trade practices. 
There is a growing recognition that bribery exacts a cost on the 
foreign country whose officials are corrupted. Studies show corrupt 
procurement practices deter foreign investment while as much as 
doubling the price that emerging countries pay for goods and services.
  We may finally be approaching the point when focused U.S. pressure 
can actually make a difference, just as U.S.-led efforts to combat 
money laundering, including U.S. sanctions, extraterritorial 
enforcement of U.S. laws, and multilateral efforts, finally led 
countries to recognize that the stigma of being a dirty-money haven 
outweighed the benefits of attracting illicit funds.
  Change will not occur without significant U.S. pressure, however. 
When then-Trade Representative Kantor returned this past March from 
discussions with the Organization on Economic Cooperation and 
Development [OECD], he expressed his frustration at the lack of 
progress in trying to get our European allies to adopt laws to stop 
unfair trade practices and suggested U.S. sanctions may be required to 
provide the necessary incentive. While most countries have enacted laws 
to punish the bribing of their officials by their nationals and 
foreigners, no other major nation has laws banning their nationals from 
bribing foreign officials. In fact, in a number of countries--including 
Germany and France--corruption and bribery are so accepted that 
individuals are permitted to deduct the cost of bribes from their 
taxes.
  Sustained U.S. efforts finally led in April of this year to an 
agreement by the members of the OECD that these tax laws should be 
rewritten so that bribes paid to foreign officials, often listed as 
commissions or fees, would no longer be tax deductible. However, this 
agreement is not binding and there is no deadline by which members are 
to have adopted the changes. Moreover, this is still a long way from 
criminalizing bribery of foreign officials.
  There is much more that needs to be done. In addition to pressing the 
OECD members to adopt foreign corrupt practices laws, the USG should 
move promptly to support the treaty negotiated this past April in the 
Organization of American States requiring each signatory to make 
bribery of foreign officials a crime and an extraditable offense. We 
should press for similar commitments in other fora, such as the G-7 
meetings and the World Trade Organization.
  In the meantime, the U.S. should take steps to ensure that U.S. firms 
are not penalized by the failure of other countries to enact laws 
prohibiting foreign bribery. Foreign firms that bribe foreign officials 
to gain an unfair advantage over U.S. competitors are, in effect, 
robbing those U.S. competitors of their right to compete fairly for 
international contracts. Such ``theft'' has adverse effects within the 
United States in terms of lost income and, often, jobs. If countries 
with jurisdiction over these trade thieves will not act to stop them, 
the U.S. should.
                                 ______