Details Leak On How Secret Global Treaty Will Force Countries To Further Deregulate Financial Sector

from the yet-another-ratchet dept

WikiLeaks has been rather quiet recently -- probably something to do with Julian Assange being stuck in the Ecuadorian Embassy in London for the last two years. But today, we saw a flash of the old, dangerous WikiLeaks, with its publication of a major leak concerning the Trade In Services Agreement (TISA). Although Techdirt wrote about this in April, for many this is the first time they have heard about this secretive deal, which has probably come as something of a shock given the global scale of its ambitions and its likely impact. Here's how WikiLeaks describes its latest release: Today, WikiLeaks released the secret draft text for the Trade in Services Agreement (TISA) Financial Services Annex, which covers 50 countries and 68.2%1 of world trade in services. The US and the EU are the main proponents of the agreement, and the authors of most joint changes, which also covers cross-border data flow. In a significant anti-transparency manoeuvre by the parties, the draft has been classified to keep it secret not just during the negotiations but for five years after the TISA enters into force.



Despite the failures in financial regulation evident during the 2007-2008 Global Financial Crisis and calls for improvement of relevant regulatory structures, proponents of TISA aim to further deregulate global financial services markets. The draft Financial Services Annex sets rules which would assist the expansion of financial multi-nationals -- mainly headquartered in New York, London, Paris and Frankfurt -- into other nations by preventing regulatory barriers. The leaked draft also shows that the US is particularly keen on boosting cross-border data flow, which would allow uninhibited exchange of personal and financial data. The leaked document itself is pretty dry and inscrutable, so wisely WikiLeaks has asked an expert in the field, Professor Jane Kelsey of the Faculty of Law, University of Auckland, New Zealand, to provide a detailed commentary, and this is the best place to start when coming to grips with the leak. Here's her chilling summary: The secrecy of negotiating documents exceeds even the Trans-Pacific Partnership Agreement (TPPA) and runs counter to moves in the WTO towards greater openness.



The TISA is being promoted by the same governments that installed the failed model of financial (de)regulation in the WTO and which has been blamed for helping to fuel the Global Financial Crisis (GFC).



The same states shut down moves by other WTO Members to critically debate these rules following the GFC with a view to reform.



They want to expand and deepen the existing regime through TISA, bypassing the stalled Doha round at the WTO and creating a new template for future free trade agreements and ultimately for the WTO.



TISA is designed for and in close consultation with the global finance industry, whose greed and recklessness has been blamed for successive crises and who continue to capture rulemaking in global institutions.



A sample of provisions from this leaked text show that governments signing on to TISA will: be expected to lock in and extend their current levels of financial deregulation and liberalisation; lose the right to require data to be held onshore; face pressure to authorise potentially toxic insurance products; and risk a legal challenge if they adopt measures to prevent or respond to another crisis. One of the most worrying features of the TISA proposals is the following: The crucial provision is Art X.4, which would apply a standstill to a country's existing financial measures that are inconsistent with the rules. That means governments must bind their existing levels of liberalization for foreign direct investment on financial services, cross-border provision of financial services and transfers of personnel. The current rules will be the most restrictive of financial services that a government would be allowed to use. They would be encouraged to bind in new liberalization beyond their status quo. This is the familiar "ratchet" that we see in copyright law. Here, it means that restrictions on the financial industry can only be reduced, never increased, no matter how badly they screw up the global economy (again). Doubtless proponents of TISA will claim that signatories to the agreement will -- of course -- retain their sovereignty and ability to take "prudential measures" for the good of their people, just as they have said regarding corporate sovereignty in TPP and TAFTA/TTIP. But as Kelsey points, part of the leaked document shows that is simply not true: the article is comprised of two sentences that contradict each other. If a government takes a prudential measure that is inconsistent with the agreement, it cannot do so as a means to avoid its commitments under the agreement! So any prudential measures must be consistent with the other provisions in the agreement. Put another way, governments will have total freedom to legislate in any way they please provided it is compatible with TISA -- which means that it must be in favor of the financial industry, not the public. Another section that is written entirely for the benefit of the financial companies, not the public, concerns the protection of personal data: nothing shall be construed to require a Party to disclose information regarding the affairs and accounts of individual consumers. That means TISA does not affect states' ability to require disclosure of information, presumably to the government, about individuals. It is not concerned with protecting personal privacy or preventing those who hold the personal data from abusing it for commercial or political purposes. Given the sensitivity of data protection issues in Europe, this is likely to become a major stumbling block to the ratification of TISA by the European Parliament, assuming it gets that far. Indeed, it's significant that one of the leading German newspapers, the Süddeutsche Zeitung, used the headline "U.S. grab account data of European citizens" when reporting on the leak (original in German.) That underlines the fact that alongside the new information that the WikiLeaks document reveals about the secret negotiations, another important aspect of the leak is that the mainstream media in Europe are finally aware of TISA, and are likely now to start exploring critically its effect on key areas like privacy and public services.

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Filed Under: deregulation, financial sector, regulations, secrecy, tisa, trade agreements