[CTC] New Report Spotlights Trade Rules' Conflict with Sound Financial Regulation

[Arthur Stamoulis]

Eyes On Trade: New Report Spotlights Trade Rules' Conflict with Sound  
Financial Regulation
	
New Report Spotlights Trade Rules' Conflict with Sound Financial  
Regulation
Posted: 21 Mar 2013 12:06 PM PDT
The 2008 global financial crisis reaffirmed the need for robust  
regulation to address the increasingly reckless banking and financial  
sector. One of the most important regulatory tools in this post-crisis  
era of reform is the use of capital controls to regulate cross-border  
finance, a policy that even institutions long-opposed to capital  
controls, such as the International Monetary Fund, have now formally  
recognized as beneficial. However, there is growing concern that the  
rules of trade and investment treaties may not provide enough policy  
space for countries to take advantage of these necessary regulatory  
measures.

In response to this concern, a task force convened in June of 2012 in  
Buenos Aires, Argentina to review the rules of the WTO and various  
Free Trade Agreements (FTAs) and Bilateral Investment Treaties (BITs)  
and examine the extent to which global trade rules are compatible with  
the ability to deploy effective capital control regulations. The  
result of this meeting is a comprehensive report released this month  
titled Capital Account Regulations and the Trading System: A  
Compatibility Review, which is comprised of chapters written by  
experts from around the globe (including Todd Tucker, former Research  
Director at Global Trade Watch and former editor-in-chief of Eyes on  
Trade).

The report highlights several alarming areas where trade and  
investment treaties conflict with and impede the ability to use  
important regulatory tools such as capital controls.  It goes on to  
offer several changes that should be made to outdated trade policies  
to ensure that countries have sufficient policy space to take the  
regulatory measures necessary to avoid future financial crises.

Unfortunately, despite concerns expressed by members of civil society,  
economists, policymakers, and various other international experts, the  
current negotiations of the Trans-Pacific Partnership (TPP) are on  
track to lock in the antiquated trade model of extreme deregulation,  
including a prohibition of bans on risky financial products and a  
restriction on now widely-endorsed capital controls.

Click here to check out the full report.
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