The GATS and Financial Regulation: Time to Clear-House?

In the aftermath of the 2008 global financial crisis, European Union regulators introduced the mechanism of ‘third-country equivalence’ for non-European financial institutions to access the EU internal market. This article evaluates for the first time the GATS-consistency of the European rules on th...

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Bibliographic Details
Published inWorld trade review Vol. 19; no. 3; pp. 379 - 401
Main Author Papaconstantinou, George A.
Format Journal Article
LanguageEnglish
Published Cambridge, UK Cambridge University Press 01.07.2020
Subjects
Clearinghouses
Competitive advantage
Conformity
Derivatives
Economic crisis
Economics
Finance
Financial institutions
Financial services
GATS
General Agreement on Trade in Services (1994 April 15)
International finance
International trade
Law and legislation
Over the counter trading
Regulation of financial institutions
Securities markets
Trade regulation
Transnationalism
World Trade Organization
United States > US
Europe
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Summary:In the aftermath of the 2008 global financial crisis, European Union regulators introduced the mechanism of ‘third-country equivalence’ for non-European financial institutions to access the EU internal market. This article evaluates for the first time the GATS-consistency of the European rules on third-country clearinghouses. Through this exercise, the article sheds light on the tension between financial regulation and WTO law, exploring how these two different disciplines can be reconciled. Building on the international economic law principles of non-discrimination and transparency, the analysis reveals that the European financial regulation could negatively impact the access of smaller countries to the EU market. The regulation in question is assessed under the GATS Article VI (Domestic Regulation), Article II (MFN), Article VII (Recognition), and the Annex on Financial Services prudential carve-out. The findings of the European case study indicate that the vast flexibility that trade law has delegated to national regulators possibly has adverse effects on the liberalization of financial services. The article concludes that if WTO Members do not derogate from their GATS obligations and commitments, the stability of the financial system would not be jeopardized, while the prospect of international integration would be increased.
Bibliography:WORLD TRADE REVIEW, Vol. 19, No. 3, Jul 2020, 379-401
Informit, Melbourne (Vic)
ISSN:1474-7456
1475-3138
DOI:10.1017/S1474745619000181