TTIP
to be used as a key tool
“According
to a leaked document, the EU is bent on using the TTIP negotiations
with the US to get an agreement on financial regulation that,
according to this analysis by Kenneth Haar of Corporate Europe
Observatory (CEO) and Myriam Vander Stichele of The Centre for
Research on Multinational Corporations (SOMO) will weaken reform and
control of the financial sector.”
“In the
document, the EU suggests a number of mechanisms that will both
scale back existing regulation, and prevent future regulation that
might contradict the interests of financial corporations from both
sides of the Atlantic. The leak follows news that EU negotiators have
increased political pressure on the US to accept negotiations on
'financial regulatory cooperation', which the US negotiators have so
far refused.”
“The
document shows that the EU is prioritising the protection of the EU’s
banking sector over strict financial regulation and supervision:
these so-called 'regulatory cooperation' proposals would guarantee
that the financial sector is not harmed by measures taken by
regulators, would allow EU banks to operate in the US on the EU's
(generally laxer) rules, and in general that financial corporations
on one side of the Atlantic do not have to abide by host country’s
laws but only by home country laws on the other side of the Atlantic.
The implications for decision-making on financial reforms and control
over the financial sector are serious.”
“The
most famous example is probably the attempt of Deutsche Bank’s
subsidiary in the US to avoid coming under US rules on capital
reserves (which require companies to keep aside a proportion of
capital available to avoid risk of collapse or bailout), an avoidance
attempt which had been successful until recently when the US
authorities closed a loophole used by many foreign banks operating
there. Considering that Deutsche Bank was one of the biggest
recipients of bailout money from the US authorities in the aftermath
of the collapse of Lehman Brothers and the insurance giant AIG, a
demand that it abides by US rules on capital requirements seems
entirely legitimate. But this is resented by the European Commission
and financial corporations, as are other US rules to which EU banks
in the US are subject.”
“...
the US financial sector fully supports the EU proposal for regulatory
cooperation because it also fiercely objects to extra-territorial
controls. Disturbingly, the EU's negotiating position is in line with
the biggest corporations in the EU and US' financial industries.”
“...
the US banks see the EU initiative as another welcome opportunity
to attack domestic regulation, and has teamed up with its European
counterparts to pressure the US administration. Also, the
financial sectors on both sides of the Atlantic want to eliminate
differences in regulations which they claim are a ‘cost’ that
makes them less profitable, 'forcing' them to search for ways to
escape the strictest rules by moving operations to the jurisdiction
with the least costly – read weakest – rules.”
"The
European Commission's leaked proposal of March 2014 envisions several
tools to keep ambitions for strict regulations of the financial
sector at bay. If agreed, they would apply on both sides of the
Atlantic: the TTIP principles of regulatory cooperation would be
binding on both the EU – they would need to be followed when
developing and implementing rules or regulations – and the US."
"The
key principle is this line in the document: 'The Parties avoid
introducing rules affecting market operators and the jurisdiction of
the other Party, unless there are overriding prudential reasons to
introduce such rules, in conformity with Art. 52 (prudential
carve-out) – ie. that measures taken to safeguard systemic
financial stability.' In this way, the interests of 'market
operators' are the highest priority, along with a stop to measures of
an 'extra-territorial nature' - measures which one Party considers
an interference into the way financial markets are governed locally.
But if all kinds of regulation that can be deemed 'extra
territorial' is stopped, it could undermine rules that protect
citizens, attempts to tax financial transactions (FTT) to reduce
speculative trading, and put a stop to global efforts to control the
risky global derivatives markets."
"Whenever
rules are stricter in one jurisdiction but foreign banks are allowed
to operate according to the less strict regime, this will increase
pressure on regulators to accept the lowest common denominator since
TTIP will provide more arguments for the financial industry that
stricter regulations will result in loss of competitiveness to
financial corporations from the other side of the Atlantic."
"To
drive this process of 'mutual recognition', a body is to be set up:
the 'Joint EU/US Regulatory Forum', and this will have tremendous
power in the area. For instance, the 'test' to be used when it is to
be established whether two sets of rules are equivalent, is going to
be developed only at a later stage by this forum. In other words,
these standards will even not be revealed when a final TTIP agreement
is to be endorsed."
"The
EC proposal clearly states that 'stakeholders' can count on
'transparency', which in the terminology used so far in TTIP
negotiations and other trade agreements has meant that industry is
deeply involved at all stages. Such regulatory cooperation would give
industry 'stakeholders' multiple opportunities to see regulations in
draft form and to lobby policymakers against their enactment. It is
possible that other 'stakeholders' will be invited to comment on a
smaller scale, but considering the size and lobby power of the
financial industry and the privileged access the EU will be prone to
grant to Big Finance 'stakeholders', it will be dominated by the same
European and US banks that have proven their resolve – and success
– in chilling and weakening the re-regulation of finance in the EU
and United States. Unsurprisingly, the financial 'stakeholders' are
lobbying hard for a TTIP 'regulatory cooperation' mechanism which in
the end will become a tool to weaken EU and US regulation."
Leaked
document:
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