U.S. to Crack Down on Foreign Trade Bribery

Saying U.S. companies lost $45 billion in contracts last year as a result of foreign corruption, the White House began an international campaign Wednesday to counteract bribery as a hidden barrier to American business growth overseas.

“We want to turn up the heat,” U.S. Trade Representative Mickey Kantor said, raising the possibility of using U.S. trade laws--which include punishing tariffs and quotas--as a last resort.

Kantor unveiled his plans in a speech to the Emergency Committee on American Trade, a business committee that focuses on trade issues, and in an interview with a small group of reporters.

He singled out France and Germany for their failure to crack down on such corruption.

For example, a State Department official said, if a German company competes with a U.S. firm for a contract in Italy and wins that contract after paying a bribe, the bribe is not only legal under German law but would be considered a legitimate business expense deductible on corporate tax returns. If the U.S. company paid such a bribe, it would be liable for prosecution under the Foreign Corrupt Practices Act.

“Make no mistake, this is a barrier to trade,” Kantor said in his speech. “At a time when American companies are more competitive than ever, increasingly they face new problems in selling their goods or services abroad.

“In meeting after meeting, U.S. businesses cite bribery [and] corruption . . . as among the most difficult barriers they confront in the real world,” he said.

Later in the day, Kantor met with members of the House Ways and Means Committee to look for ways to expand the U.S. attack on such practices. He did not provide specifics on how the antibribery campaign might work.

With GOP presidential candidate Patrick J. Buchanan using criticism of the Clinton administration’s trade policies as a focal point in his campaign, the bribery issue gives Kantor a new vehicle to try to shift the debate from lost U.S. jobs to unfair practices by other nations.

But the issue involves more than just seeking to clean up unsavory ways of doing business in foreign countries.

Exports are increasingly central to the United States’ economic growth. In 1970, trade represented 13% of the nation’s gross domestic product; last year it was 30%. And, with the U.S. population nearly stable in terms of total numbers, the country must look to foreign purchases for expanded markets, economists generally believe.

Bribery and corruption, Kantor said, stand in the way of American companies trying to reach these foreign purchasers.

“It’s prevalent, it’s pernicious and it’s unacceptable,” he said.

Another administration official said he regularly fields complaints about the difficulty that defense and construction companies face in gaining foreign contracts because competitors are bribing government officials, particularly in the Middle East.

But “there’s never a smoking gun,” he said.

Among the nations of the 18-member Organization for Economic Cooperation and Development, a group of the major industrial nations, the State Department said that to one degree or another, bribes are considered tax-deductible in Austria, Australia, Belgium, Canada, Denmark, France, Germany, Greece, Ireland, Luxembourg, the Netherlands, New Zealand, Norway, Spain and Switzerland.

One U.S. businessman, whose company does millions of dollars in construction and consulting work overseas each year, said his foreign suppliers constantly complain about the need to pay bribes to obtain contracts.

The executive, speaking on condition that neither his name nor his company be revealed, said that in the telecommunications industry, for example, “there’s no question that America has the best equipment” for sale overseas but that “bribery is tipping the scale” toward others.

“On big-ticket items, it is a constant threat. It is a constant problem because so much money is involved,” he said.

And, according to Kantor, it’s a growing problem.

In 1995, he said, the $45 billion that was lost to U.S. companies involved roughly 100 contracts.

“As trade becomes more globalized, these nontariff barriers become more and more important. They are having an adverse effect on U.S. workers and U.S. businesses,” the administration’s senior trade official said. “We are going to make this a major concern.”