GLOBALIZATION AND TRADE

» Alternatives To Corporate Globalization

» Democracy, Sovereignty and Federalism

» Deregulation and Access to Services

» Import Safety, Environment and Health

» Jobs, Wages and Economic Outcomes

» NAFTA, WTO, Other Trade Pacts

» Other Issues

Trade Data Center

One-stop shop for searchable trade databases, case lists & more

Eyes on Trade

Global Trade Watch blog on trade & globalization. Subscribe to RSS.

Debunking Trade Myths

To hide the facts about failed trade policies, proponents are changing the data

Connect with GTW

What's New – Global Trade Watch


View 'What's New' Archives

To Address Crisis, World Leaders Must Roll Back Radical WTO Financial Service Deregulation Requirements, Not Push WTO Doha Round’s Further Financial Sector Deregulation

Bush’s Stubborn, Ideological Defense of Market-uber-alles Global Economic Deregulation Model Threatens Summit’s Prospects

Posted: 11/14/2008

WASHINGTON, D.C. – Remedying the financial crisis will require significant changes to existing World Trade Organization (WTO) rules that lock in domestically and export worldwide the extreme financial services deregulatory agenda favored by the world's banking and insurance giants that fostered the crisis, Public Citizen said.

"President Bush's insistence that further deregulation and liberalization is the solution to addressing the financial crisis spawned by radical financial services deregulation is the sort of backwards, ideological approach that could squander the prospects that Saturday's summit produces any remedies for the crisis," said Lori Wallach, director of Public Citizen's Global Trade Watch division.

Calls by many other world leaders for new global financial services regulation have been accompanied by a seeming total lack of awareness that most of the world's countries are bound to expansive WTO financial services deregulation requirements to stay out of the business of regulating financial services. More than 100 countries signed the 1997 WTO Financial Services Agreement.

Despite the pervasive role of the WTO in worldwide financial service deregulation, in the lead up to this Saturday's G-20 Global Financial Crisis Summit in Washington, D.C., the only comments regarding adherence to global trade rules have been 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.

In contrast, in recent weeks, the Bush administration and governments worldwide have taken various measures to counter the crisis. These measures contradict the fundamental precepts of the current globalization model – and in some cases violate the rules implementing this model, such as those of the WTO. Plus, many of the most basic national and international remedies now being proposed to fix the mess and avoid future meltdowns occupy policy space that governments ceded to the WTO a decade ago.

"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.

"Unless the radical financial services deregulation agenda that has been aggressively promoted and entrenched by the WTO, World Bank and International Monetary Fund is understood as a source of the current crisis, reform proposals will not address the crisis' root causes," Wallach said.

For more information about the WTO's role in the crisis, go to see our November 12 reporter's memo (PDF).

Learn More

Copyright © 2016 Public Citizen. Some rights reserved. Non-commercial use of text and images in which Public Citizen holds the copyright is permitted, with attribution, under the terms and conditions of a Creative Commons License. This Web site is shared by Public Citizen Inc. and Public Citizen Foundation. Learn More about the distinction between these two components of Public Citizen.


Public Citizen, Inc. and Public Citizen Foundation

 

You can support the fight for greater government and corporate accountability through a donation to either Public Citizen, Inc., or Public Citizen Foundation, Inc.

Public Citizen lobbies Congress and federal agencies to advance Public Citizen’s mission of advancing government and corporate accountability. When you make a contribution to Public Citizen, you become a member of Public Citizen, showing your support and entitling you to benefits such as Public Citizen News. Contributions to Public Citizen are not tax-deductible.

Public Citizen Foundation focuses on research, public education, and litigation in support of our mission. By law, the Foundation can engage in only very limited lobbying. Contributions to Public Citizen Foundation are tax-deductible.