G-20 Declaration Calls for Completion of WTO Doha Round that Includes Further Financial Services Deregulation: Ignorance or Cynicism?
G-20 Leaders Fail to Address Existing Radical WTO Financial Service Deregulation Requirements that Conflict with Summit Reform Proposals
WASHINGTON, D.C. - The failure of world leaders today to require significant changes to existing World Trade Organization (WTO) rules that lock in domestically and export worldwide the extreme financial services deregulatory agenda that fostered the global economic crisis seriously threatens proposed solutions, Public Citizen said. The summit statements call for completion of the Doha Round of WTO expansion is maddening, given one of the three core pillars of the agreement is further service sector deregulation and liberalization, including financial services.
"Only ignorance or extreme cynicism can explain why the summit not only failed to address the existing radical WTO financial service deregulation requirements that conflict with many of the most basic remedies to fix the mess and avoid future meltdowns, but called for a new Doha Round WTO expansion agreement a core aspect of which is further financial services deregulation and liberalization," said Lori Wallach, director of Public Citizens Global Trade Watch division.
The G20 call for countries to strengthen their domestic financial service regulations and also work towards regulation of the world's major cross-border financial institutions fails to recognize that 105 of the world's nations have taken binding WTO Financial Service Agreement commitments to stay out of the business of regulating multinational financial service firms.
"Because they don't address the radical financial services deregulation agenda that has been aggressively promoted and entrenched by the WTO, the proposals emerging from this summit will simply NOT solve the problem," Wallach said. "Given president-elect Obama is savvy to the problem of trade agreements undermining domestic regulatory space and the Democratic platform includes resolving the overreach of trade rules that limit non-trade regulatory space, hopefully the next U.S. administration will be able to chart a new course and bring the change we need to the global financial architecture."
Despite the pervasive role of the WTO in worldwide financial service deregulation, the primary comments regarding adherence to global trade rules made by world leaders and commentators before and during the global financial crisis summit were of the red herring variety: panicky warnings about the perils of countries raising tariffs to block imports in response to dire economic conditions - something no country has proposed.
"Altering the WTO financial services rules is critical for creating domestic policy space to address the crisis," Wallach said. "However, even in the face of this crisis, the United States and the European Union are pushing for further financial services liberalization in the ongoing WTO Doha Round, the conclusion of which they are now pushing as a cure to the crisis, even as they find that flaunting the existing WTO terms is the necessary course of action."
As part of its original WTO commitments, the United States agreed to conform a broad array of financial services - including banking, insurance and other financials services - to comply with WTO rules.
For more information about the WTO's role in the crisis, go to see our November 12 reporter's memo (PDF).