U.S. Trade Officials Defy Post-Crisis Consensus Backing Capital Controls
By Public Citizen's Global Trade Watch
Congressional leaders, prominent economists and the International Monetary Fund (IMF) all agree: capital controls – regulations to stem destabilizing flows of speculative “hot money” into or out of a country – are legitimate, common-sense policy tools for preventing or mitigating financial crises. Though the lessons of the 2007-2008 global financial crisis have spurred this emergent consensus of support for capital controls, U.S. trade officials are moving in precisely the opposite direction. Clinging to a pre-crisis position endorsed by Wall Street, the Office of the U.S. Trade Representative (USTR) continues to push binding “trade” deals that ban the use of capital controls. U.S. negotiators have proposed this anachronistic ban in the Trans-Pacific Partnership (TPP), the controversial pact that President Obama wants to sign this year with 11 Pacific Rim nations.