Nothing learned from the crisis?

The new working paper "Nothing learned from the crisis?" reveals the following contradiction: On the one hand, experts and heads of state agree that the financial markets need to be re-regulated. On the other hand, the EU is also pushing for further liberalization of financial services in new trade agreements.

Firstly, the working paper highlights existing obligations in trade in financial services under GATS (the WTO services agreement). These include access to foreign markets, national treatment, most-favored-nation treatment and restrictions on the control of payment and capital movements. However, the majority of the rights laid down in the GATS only apply to those financial services that the host country has explicitly listed in a legally binding annex to the GATS. A look is then taken at the current state of liberalization in the various countries with which the EU has negotiated free trade agreements. The EU's negotiating objectives for the current bilateral free trade negotiations are also analyzed. The result: the financial ­services ­demands even go beyond the commitments in the GATS. In conclusion, the working paper identifies contradictions between the EU's liberalization demands and the necessary re-regulation of the financial markets: restriction of capital controls, weak banking and capital market supervision; restriction of the possibility of banning certain speculative transactions, restriction of bank regulation, restriction of lending requirements. As a functioning financial system is of central importance for the stability of an economy, civil society forces from North and South are calling for a halt to the liberalization of financial services within the framework of free trade agreements.