The TPP’s Financial Services Finagle
The agreed TPP text was released in November with an 80-page financial services chapter with standard provisions for national treatment, non-discrimination and market access, and prudential and monetary policy exceptions permitting rule suspension during crises and unstable periods. Cross-border trade between the dozen country signatories is authorized subject to registration, with confidential information to be protected and no senior management local majority ownership or operating requirements. Obligations can be phased in over time but current measures cannot become more restrictive. Insurance supply will be “expedited” under simpler regulation, and activities also include portfolio management and electronic payment. A dedicated dispute settlement mechanism is established for arbitration outside the general state-investor framework, and the US Trade Representative negotiated features to promote “level” competition with postal institutions selling the product range. The office notes that exports globally represent a $70 billion surplus, and that TPP partners account for one-quarter of total services trade and took $15 billion worth in 2013 as the agreement talks entered a final round. It adds that many members have suffered “serious” financial crises in recent decades since the last major multilateral financial services bargaining, and that the systemic contingency clauses can serve to preserve integrity and solvency. As congress reviews the 30 chapters in the entire body, it will not have to change domestic law or practice to conform in this area, according to USTR.
Banking, securities, currency trading, leasing, consumer finance, and derivatives will be covered and insurance includes life, non-life and reinsurance. Service limits and quotas and mandatory joint ventures are prohibited, and new lines beyond existing local offerings must be considered. Regulatory transparency dictates that decisions are published in advance, with time to comment and prepare for the implementation date. Equal access will be provided to self-regulatory and professional associations and the clearing and payment networks. Back-office functions can be performed in-country or offshore without “arbitrary” direction and leading central bank and Finance Ministry officials will coordinate and troubleshoot approaches through a separate standing committee. They will have four months to consider complaints submitted for resolution before a specialist arbitration panel is appointed. Chapter annexes address investment funds, data processing and transfer, and credit and debit cards. Brunei, Chile, Mexico and Peru will fully adopt the arbitration procedure five years after the treaty enters into effect, and Singapore and Vietnam also point out in attachments technical complexities in domestic laws that may differ from TPP language without diluting commitments.
Exchange rate policy is outside the pact’s purview and the Treasury Department, which has never named members as “manipulators” in regular reports, has hailed an understanding to meet and consult periodically on its trade spillover without establishing a formal investigation and enforcement scheme. Labor and corporate opponents, including automaker Ford, seized on the latter’s absence and lawmakers although unable to amend the deal under Trade Promotion Authority may still demand renegotiation to include binding currency regime guidelines. Among the leading 2016 presidential contenders Democrat Clinton has come out against TPP she once called the “gold standard” without mentioning this debate, while Republican Trump labels China and Asian neighbors as clear violators deserving import freeze despite likely financial services chill in response.
