G8 announcement could lead to removal of regulations on banks
At the G8 summit in Lough Erne, the EU and US have announced that they will enter negotiations on a free trade agreement.
Reacting to the announcement, Tim Jones, Policy Officer at Jubilee Debt Campaign, said:
“This trade deal is about further deregulating the economy. Hiding behind the name of ‘trade’ are a raft of measures which will make it harder to prevent banks being reckless. At the same time as failing to deal with the current financial crisis, G8 leaders are sowing the seeds of the next.”
One of the main areas for negotiation will be financial services, setting rules which will prevent the EU and US from introducing various regulations on banks. These rules will give banks the ability to sue the US and European governments for introducing regulations.
Tim Jones continued:
“An EU-US trade deal would make it even harder to introduce the kinds of capital account regulations which helped to regulate the movement of money across the world in the 1950s and 1960s, a period with very few banking and financial crises. At a time when banks and the debt they’ve created have plunged the EU and US into a huge crisis, it is incredible that governments are trying to make them freer.”[1]
Ruth Bergan, Coordinator of the Trade Justice Movement, said:
“This deal is all about EU and US leaders bowing to the demands of powerful lobbying interests in their countries. The deal threatens to lock in privatisation in public services and open the door to genetically modified crops in the EU. It will also set a precedent that means developing countries find it even more difficult to make trade work for their benefit.”
For more information and interviews, contact Tim Jones on +44 20 7324 4722
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[1] For the situation in the 1950s and 1960s, see Bush, O., Farrant, K. and Wright, M. (2011). Reform of the international monetary and financial system. Bank of England Financial Stability Paper No. 13. December 2011.
“The current system has coexisted, on average, with: slower, more volatile, global growth; more frequent economic downturns; higher inflation and inflation volatility, larger current account imbalances; and more frequent banking crises, currency crises and external defaults [than the Bretton Woods System which existed from 1948 to 1972].”