Center of Concern | Wed, Mar 18, 2009
From Pascal Lamy, General Director of the World Trade Organization (WTO) to the finance ministers of the G 20 nations who met this past weekend outside London in preparation for a G20 summit in early April to address the global financial and economic crisis, we hear one message: “It is essential to complete the Doha Round of trade negotiations.” Free traders are so mesmerized by their ideology of trade liberalization they fail to recognize that financial trade liberalization as enshrined in the WTO and bilateral/regional Free Trade agreements (FTAs) has fostered the very financial and economic meltdown we are currently experiencing.
For example, after signing on to the WTO and the Uruguay Round of agreements, to become WTO compliant, the U.S. had to negate parts of the 1933 depression-era Glass-Steagall Act which set up a fire-wall between commercial banks, investment firms and insurance companies to protect customers. In 1999 Glass-Steagall was replaced by the Gramm-Leach-Bliley Act which destroyed that fire-wall and led to the growth of such “too-big-to-fail” financial conglomerates as CITI Group, Bank of America and the now infamous AIG (American Insurance Group). Along the way, Gramm-Leach-Bliley also refused to regulate derivatives, those esoteric financial instruments that no one seems to know how to unravel.
Furthermore, the WTO Financial Services Agreement of 1997 advanced an extreme deregulatory agenda favored by the world’s banking and insurance giants. These agreements specifically restrict countries from regulating financial services. By WTO definition “other financial services” include trading in foreign exchange, derivatives and all kinds of securities, securities underwriting, asset management, etc. This agreement not only accelerated the contagion-effect of the current crises through the world, it also limits the ability of countries to develop a regulatory framework that would avoid such a global melt-down in the future.
So why would we want to rush the Doha negotiations which are seeking to expand financial trade liberalization and deregulation through the General Agreement on Trade in Services (GATS)?
We need to listen to the wisdom of Albert Einstein: “No problem can be solved from the same consciousness that created it. We must learn to see the world anew.”
Unfortunately, it seems the G20 negotiators would rather listen to Wall Street lobbyists than Einstein and have yet to see the world anew.