Financial Instability, Financial Services and Investment in the P4
One of the major areas announced for negotiation in the P4 is Financial Services. This Briefing Paper, written by a Canadian expert Ellen Gould, is about the implications for financial instability in the Financial Services aspects of the current negotiations in the WTO (under the General Agreement on Trade in Services – GATS).
It was written in July 2008 so is written with the current financial crisis in mind. Though this was before the US$700 billion bailout, its prescience is evident.
Most of its warnings will also apply to the P4 negotiations – and perhaps with greater intensity. That is because while the negotiations in the WTO are held back by countries worried about their own financial stability and their control of their own financial systems, it has been the US that has been the main country demanding the changes this Briefing Paper describes. It will certainly take the opportunity in the P4 negotiations to advance demands that it is unable to get away with in the WTO. Many of the arguments apply to both Financial Services and to Investment provisions to be negotiated in the P4.
Note that in 1998 the then New Zealand Government signed New Zealand up to the WTO “Understanding on Commitments in Financial Services” mentioned in this paper. The New Zealand government is therefore limited in its options in protecting New Zealand’s economy during the current financial crisis. The proposals in the current WTO negotiations and the likely US demands in the P4 negotiations are likely to make this position worse.
Aside from financial stability, another effect of these negotiations could be to remove the sole provider status of the Accident Compensation Corporation. This is currently protected with a reservation to the WTO Financial Services agreement. However the National Party has promised to remove this status if elected, to allow partial privatisation through private competition. If in power, it could cement in this status by removing the current reservation for ACC in the WTO agreement and/or the P4. If that was done, future governments could not go back to ACC being a publicly provided service.
The paper is published by the Canadian Centre for Policy Alternatives:
see http://www.policyalternatives.ca/Reports/2008/07/ReportsStudies1930/
