Victims of their own success abroad? Why the withdrawal of US transparency rules is hindered by diffusion to the EU and Canada

ABSTRACT

Recent years have seen significant efforts to reduce corruption in the oil, gas and mineral industries. Under the Obama administration, rules were adopted obliging stock-exchange-listed extraction companies to disclose payments to domestic and foreign governments, an initiative which soon spread to the European Union and Canada. Under Trump, however, policy preferences changed, and the disclosure requirements were withdrawn. This article investigates how diffusion of United States (US) disclosure rules has mitigated the effects of the withdrawal process through insights on norm diffusion, market power and rules applicable beyond states’ territorial borders. It is argued that when (1) rules with broad external applicability (2) diffuse to multiple influential jurisdictions and (3) address large multinationals in (4) an internationally interdependent sector, global standards of regulation may emerge. As these conditions are largely (although not entirely) fulfilled, it is likely that most large US multinationals will remain at least partially subject to payment disclosure obligations.

KEYWORDS:

• Diffusion
• extractive industries
• extraterritoriality
• market power
• territorial extension

Acknowledgements

The author would like to thank two anonymous reviewers for their valuable comments, especially regarding norm diffusion and the conditions presented in Section 4. The author would also like to thank the members of the RENFORCE/CLEER External Effects of EU Law project group, in particular discussant Prof. Dr Cedric Ryngaert and organizer Dr Ingrid Koning, for their valuable comments during a seminar on an early draft version of the article.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes on contributor

Bjorn Kleizen, LLM, MSc, is a doctoral student at the University of Antwerp, Faculty of Social Sciences, Department of Political Sciences, Research Group Public Administration & Management. The author is also a contributor to the RENFORCE/CLEER External Effects of EU Law project (Utrecht University/Asser Institute).

Notes

1. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, hereinafter: Dodd-Frank Act

2. Norway adopted similar rules (SEC 2015). However, as these comply with the requirements of the EU’s directives, we focus on the overarching EU regime.

3. United States District Court for the District of Columbia Case 1:12, American Petroleum Institute, et al. v. Securities and Exchange Commission and Oxfam America, Inc. [2013] Civil Action No. 12-1668-JDB.

4. SEC Rule 13q-1.

5. House Joint Resolution 41, 14 February 2017.

6. Respectively Directive 2013/34/EU and Directive 2004/109/EC.

7. Article 3(4) Accounting Directive.

8. Article 41(5) Accounting Directive.

9. Discounting Norwegian and UK laws, which were drafted in accordance with and anticipation of the future EU Directives.

10. Regulation 2017/821.