TWN Preliminary Note on Financial Crisis and Trade and Investment Treaties
Online Publication Date: 15 March 2009
Executive Summary
North-South free trade agreements (FTAs), bilateral
investment treaties (BITs) and World Trade Organization (WTO) commitments often
contain a number of provisions that can increase the likelihood of a financial
crisis and make it more difficult to take the necessary measures to deal with
one once it occurs.This note briefly highlights the main
provisions in these agreements that can hamper the effective implementation of
recommendations to deal with the current crisis.
In particular, it examines the effect of these
provisions on the ability to effectively:
- Regulate the operation of financial
institutions/instruments
- Regulate capital
flows
- Carry out bailouts
- Implement stimulus
packages
It finds that some areas covered in these agreements can make
it difficult to effectively carry out the measures above.Whilst
most barriers are likely to come from the services and investment chapters, the
competition, goods and government procurement chapters in North-South FTAs can
also have an effect.
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