No to Liberalization/Deregulation at WTO: Letter to G-20 Finance Ministers

Due date: 
13 April, 2011
Delivery date: 
14 April, 2011


April 13, 2011

Dear G-20 Finance Ministers:

As you gather in Washington, D.C. to address pressing issues facing the global economy, we call on you to safeguard governments’ ability to implement policies that will reestablish and maintain financial stability in the wake of the worst financial and economic crisis in decades.

We are concerned that important financial reform policies that both G-20 governments and non-G-20 governments seek to implement in order to prevent future crises are already at risk. Leading trade negotiators, economists, financial experts and trade lawyers have warned that current World Trade Organization (WTO) provisions covering financial services restrict countries’ use of important financial regulatory measures. This includes some policies promoted by the G-20, such as those to avoid rapid inflows and outflows of capital and those designed to limit the risks derivatives trading can pose to commodity price anomalies and financial stability. 

At the heart of the problem is the manner in which some of the key rules of the WTO’s current General Agreement on Trade in Services (GATS) text conflate liberalization and deregulation. When a country commits a financial sector to liberalization under the GATS rules, the country is simultaneously bound to not maintain or establish a list of non-discriminatory regulatory measures relating to management of capital inflows and outflows, bans of especially risky financial products and services, and more. 

And, these WTO rules are strongly enforced, including with the imposition of trade sanctions for countries that fail to conform their domestic policies to the WTO regulatory constraints. In contrast to this system of strongly enforced deregulatory global financial governance, the various G-20 Communiqués’ commitments are not subject to any system of enforcement. Indeed, implementation of G-20 commitments and recommendations by WTO signatory countries in their domestic laws could put them in conflict with their WTO obligations. The very threat of the resulting WTO litigation and prospective sanctions poses a chilling effect on the reregulation supported by the G-20 and governments worldwide.

The United Nations Commission of Experts on International Financial and Monetary Reforms, which included distinguished academics, former finance ministers and central bank heads from around the world and was chaired by Nobel-prize winning economist Joseph Stiglitz, issued the following warning about the WTO financial services rules: 

“Agreements that restrict a country’s ability to revise its regulatory regime—including not only domestic prudential but, crucially, capital account regulations—obviously have to be altered, in light of what has been learned about deficiencies in this crisis. In particular, there is concern that existing agreements under the WTO’s Financial Services Agreement might, were they enforced, impede countries from revising their regulatory structures in ways that would promote growth, equity, and stability.”

The UN Commission’s analysis and concerns have been echoed by an array of trade and financial regulatory scholars and analysts. They have also noted that the existing WTO provision that a country could employ as a defense were its prudential financial regulations challenged does not provide a meaningful safeguard. Last month, Barbados tabled a paper at the WTO which examines numerous ways in which current WTO rules conflict with common financial regulatory policies. The paper suggests that various financial reform measures undertaken by the European Union and the United States are in violation of WTO rules. 

However, despite these warnings, efforts to expand WTO financial services liberalization under the current rules continue in the context of WTO Doha Round as if there had not been a crisis or development of a new global consensus in favor of more robust regulation of the financial sector. Indeed, the Financial Services Collective Request made in 2006 and hundreds of bilateral requests demanding that countries commit additional financial sectors to the current WTO rules remain unchanged. In addition, Doha Round negotiations to establish new, additional constraints on domestic regulation continue. This includes the efforts by the Working Party on Domestic Regulations to establish a new cross-cutting set of regulatory limits and the plan to adopt the 1998 Disciplines on Domestic Regulation in the Accountancy Sector, which would constrain governments’ regulatory polices in that sector. 

Despite the stark conflict between the current Doha Round deregulatory agenda with respect to financial services and the G-20’s call for improved financial regulation, G-20 Communiqués have repeatedly called for a swift conclusion to the WTO Doha Round. 

We ask that you address this risky disconnect. Success on the laudable G-20 goal of ensuring financial stability requires changes to the existing WTO rules covering the financial sector and changes to the Doha Round agenda with respect to financial services. We urge you to include in your forthcoming Communiqué a call for a thorough review and reform of the existing WTO rules to ensure that they provide countries with the policy space needed to implement sound financial reregulation. We also urge you to call for negotiation of a meaningful new WTO safeguard for financial regulation and a suspension of Doha Round-related negotiations that would expand on the existing financial regulatory limits. These steps are necessary so that governments may reregulate their financial systems without threat of WTO penalty. 

As millions of people around the world continue to suffer the severe consequences of the recent global financial crisis, these WTO reforms are essential so that G-20 and non-G-20 countries’ governments alike have the ability to meet their citizens’ demands to safeguard against future crises and stabilize the global economy. 


International and regional networks 

Africa – Europe Faith and Justice Network Belgium, France, Germany, Ireland, Italy, Malta, the Netherlands, Spain, Poland, Portugal, Switzerland, and the United Kingdom; and Zambia, Burkina Faso, Malawi, Uganda, DR Congo, Ghana, Cameroon, and Kenya

Agency for Cooperation and Research in Development (ACORD) Angola, Burundi, Burkina Faso, Central African Republic, Chad, Cameroon, DR Congo, Ethiopia, Guinea, Kenya, Mali, Mauritania, Mozambique, Rwanda, North and South Sudan, Tanzanias and Uganda

Alianza Social Continental/ Hemispheric Social Alliance Argentina, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Cuba, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Paraguay, Peru, USA, and Uruguay

Association for Women’s Rights in Development International network with staff based in 20 countries including Brazil, Canada, Mexico, and South Africa.

Confederación de Trabajadores y Trabajadores del Agua y Medio Ambiente de las Américas (CONTAGUAS) Bolivia, Brazil, Canada, Chile, Colombia, Dominican Republic, El Salvador, Guatemala, Jamaica, Mexico, Nicaragua, Peru, Saint Lucia, USA, Uruguay, and Venezuela

Consejo de Investigaciones para el desarrollo de Centroamérica Guatemala, El Salvador, and Nicaragua

European Network on Debt and Development Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Slovenia, Spain, Sweden, Switzerland, the United Kingdom

International Peoples’ Health Council International network headquartered in Nicaragua

The Pacific Network on Globalisation (PANG) Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Nauru, Niue, Palau, Papua New Guinea, Republic of the Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu

People’s Health Movement Global Australia, Bangladesh Ecuador, Egypt, Greece, India, Palestine, Philippines, Sri Lanka, USA, and Vietnam

Public Services International PSI represents 20 million members in 150 countries

Red de Género y Comercio Mexico, Guatemala, Brazil, Colombia, Uruguay, and Argentina

Southern and Eastern African Trade, Information and Negotiations Institute (SEATINI) Zimbabwe, Uganda, and South Africa

Trade Union Confederation of the Americas/Confederación Sindical de Trabajadores y Trabajadoras de las Américas (TUCA – CSA) Argentina, Aruba, Barbados, Bonaire, Brazil, Canada, Chile, Colombia, Curaçao, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, St. Lucia, Suriname, Trinidad & Tobago, USA, and Venezuela

West African Civil Society Platform on Cotonou Agreement (WACSOP-CA) Benin, Burkina Faso, Cap-Vert, Côte d’Ivoire, Gambia, Ghana, Guinea, Guinea Bissau, Liberia,  Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, Togo


National organizations and sub-national networks 

Africa Development Interchange Network (ADIN) Cameroon

African Peace Network (APNET) Ghana

Alianza Mexicana por la Autodeterminación de los Pueblos (AMAP) Mexico

Alliance of Progressive Labor (APL) Philippines

Americans for Financial Reform (AFR) USA

Alternative Information and Development Center South Africa

Asociación de apoyo a inmigrantes ecuatorianos Spain

Association for the Defense of Collective Interests (ACDIC) Cameroon

Association for the Taxation of financial Transactions and Aid to Citizens (ATTAC) Hungary

Association for the Taxation of financial Transactions and Aid to Citizens (ATTAC)   Japan

Association for the Taxation of financial Transactions and Aid to Citizens (ATTAC)   Norway

Association for the Taxation of financial Transactions and Aid to Citizens (ATTAC)   Spain

Australian Fair Trade & Investment Network (AFTINET) Australia

Bangladesh Krishok Federation Bangladesh

The Berne Declaration Switzerland

Bharatiya Krishak Samaj India

Both Environment and Development Service (Both ENDS) The Netherlands

Brazilian Institute for Consumer Defense Brazil

Brazilian Institute of Social and Economic Analyses (IBASE) Brazil

Campaign for the Reform of the World Bank (CRBM) Italy

Caribbean Congress of Labor Barbados

Center for Media & Democracy USA

Central Unitaria de Trabajadores de Colombia (CUT) Colombia

Centre for Civil Society Economic Justice Project South Africa

Centre for Research on Multinational Corporations (SOMO) The Netherlands

Centre for Trade Policy and Development (CFPD) Zambia

Centro Alexader von Humboldt Nicaragua

Centro de Formación e Investigación Municipal, A.C. (CEFIMAC) Mexico

Chicago Political Economy Group USA

Citizens Trade Campaign (CTC) USA

Civil Education Solution for Poverty and Environmental Management (CESOPE) Tanzania

Colectivo de Mujeres Acción Política por la Equidad (APE) Ecuador

Comisión Nacional de Enlace (CNE) Costa Rica

Confederación Nacional de Unidad Sindical de la Republica Dominicana Dominican Republic

Confederation of Labor and Allied Social Services (CLASS) Philippines

Congregation of Presentation Sisters of Victoria Australia

The Congress of South African Trade Unions (COSATU) South Africa

Consumer Watchdog USA

The Council of Canadians Canada

Desarrollo, Educación, y Cultura Autogestionarios (DECA) Equipo Pueblo, A.C. Mexico

Ecologistas en Acción Spain

Economic Justice Network South Africa

Ecuador Decide Ecuador

Enda Tiers Monde Senegal

Federación Nacional de Trabajadores del agua Potable y Alcantarillado del Perú (FENTAP) Peru

Federation of Independent Trade Unions and NGOs (FITUN) Trinidad and Tobago

Food and Water Watch USA

Foro Ciudadano de Participación por la Justicia y los Derechos Humanos (FOCO) Argentina

Friends of the Earth (FOE) USA

Gender Action USA

Ghana Trade and Livelihoods Coalition Ghana

Global Compliance Research Project Canada

Global South Initiative Nepal

Grail Global Justice Network Australia

Grupo de Estudios sobre América Latina y el Caribe (GEAL) Argentina

Hecho en Bs. As. – empresa social Argentina

IBON Foundation Philippines

Information Group on Latin America Austria

Institute for Agriculture and Trade Policy (IATP) USA

Institute for Development Initiatives Pakistan

Institute for Economic Research on Innovation South Africa

Institute for Global Justice (IGJ) Indonesia

Institute for Policy Studies, Global Economy Project USA

International Brotherhood of Teamsters (IBT) USA

International NGO Forum on Indonesian Development (INFID) Indonesia

International Presentation Association of Presentation Sisters New York USA

Jubilee Debt Campaign The United Kingdom

Justice Peace Integrity of Creation Ireland

Kenya Debt Relief Network (KENDREN) Kenya

Koalisi Anti Utang (KAU)/Anti-Debt Coalition Indonesia

La Marcha Mundial de las Mujeres Peru

La'o Hamutuk/ The Timor-Leste Institute for Development Monitoring and Analysis East Timor

Mercy Justice Office Ireland

Mexican Action Network on Free Trade (RMALC) Mexico

Monitoring Sustainability of Globalisation (MSN) Malaysia

Mujeres por Diálogo Mexico

National Association of Consumer Advocates (NACA) USA

National Association of Nigerian Traders (NANTS) Nigeria

National Family Farm Coalition USA

Navdanya India

Network Movement for Justice & Development (NMJD) Sierra Leone

New Rules for Global Finance USA

Polaris Institute Canada

PowerShift Germany

Presentation Congregation Queensland Australia

Presentation Justice Network Ireland

Public Citizen USA

Red de Acción Ciudadana Frente al Libre Comercio e Inversión El Salvador

Red Nacional Género y Economía Mexico

Rede Brasileira pela Integração dos Povos/Brazilian Network for Peoples' Integration (REBRIP) Brazil

Research Foundation for Science Technology and Ecology India

Resistance and Alternative Mauritius

Roj Women’s Association The United Kingdom

Siembra Mexico

Social Watch Uruguay

Solidarité France

South African Municipal Workers Union (SAMWU) South Africa

Third World Network-Africa (TWN-Af) Ghana

Transnational Institute (TNI) The Netherlands

Transnational Migrant Platform The Netherlands

Tubali for Development Nigeria

United Methodist Church, Board of Church & Society Philippines

United Methodist Church, Migrant Ministry Philippines

Unidad Ecológica Salvadoreña (UNES) El Salvador

Union of Presentation Sisters (Aotearoa Sisters Unit) New Zealand

U.S. Public Interest Research Group (PIRG) USA

Voices for Interactive Choice and Environment (VOICE) Bangladesh

War on Want The United Kingdom

Welfare Association for the Rights of Bangladeshi Emigrants Development Foundation (WARBE) Bangladesh

Women in Development Europe (WIDE) Belgium

World Development Movement The United Kingdom

World Economy, Ecology & Development Association (WEED) Germany

Worldview The Gambia