Senators Raise Concerns to USTR About Trans-Pacific Partnership Provisions That Could Make it Harder to Prevent Financial Crises
WASHINGTON, DC - In a letter sent to United States Trade Representative (USTR) Michael Froman on Wednesday, U.S. Senators Elizabeth Warren (D-Mass.), Tammy Baldwin (D-Wis.), and Edward J. Markey (D-Mass.) raised concerns about provisions that may be included in the Trans-Pacific Partnership (TPP) that would make it harder for Congress and regulatory agencies to prevent future financial crises. The senators specifically highlighted concerns about provisions related to the investor-state dispute settlement process, market access rules, and capital controls.
The senators noted that investor-state dispute settlement provisions in past trade deals have allowed foreign firms to use this process to challenge government financial policy decisions, and that the provisions in the TPP could be even broader. The senators wrote, "Including such provisions in the TPP could expose American taxpayers to billions of dollars in losses and dissuade the government from establishing or enforcing financial rules that impact foreign banks. The consequence would be to strip our regulators of the tools they need to prevent the next crisis."
The senators also expressed concern about committing the financial sector to "market access" rules that could be interpreted to prohibit restrictions on risky financial products or limitations on the size or operations of financial firms. "To protect consumers and to address sources of systemic financial risk, Congress must maintain the flexibility to impose restrictions on harmful financial products and on the conduct or structure of financial firms. We would oppose including provisions in the TPP that would limit that flexibility," wrote the senators.
Additionally, the senators said they oppose including provisions in the TPP that could limit the ability of the government to use capital controls to help prevent and mitigate financial crises. If such provisions were included, the senators note, "it could limit Congress' prerogative to enact not only capital controls, but basic reform measures like a financial transactions tax."
The letter asks the USTR to respond with its positions on the inclusion of these three provisions in the TPP, and requests that the USTR provide the senators with all U.S. proposals and bracketed negotiating texts relating to the provisions.
A PDF copy of the senators' letter is available here.