I've always been a little confused by the controversy over including financial services in the TTIP. The EU wants it in; the U.S. is resisting. But why is the U.S. resisting? If they want to protect U.S. industry from competition, I don't have much sympathy. On the other hand, if they are worried about TTIP rules undermining domestic regulation, I think that's a valid concern, but one that can probably be dealt with in the drafting.
I don't know the financial services sector well enough to understand all the issues here, but one area critics have cited is the prudential exception. As currently drafted in the GATS and other agreements, it has been alleged, the exception is not sufficient to allow for the use of prudential measures when needed. It seems to me this could be fixed with clearer language.
In this regard, I have a short law journal article which suggests some new wording for the exception, emphasizing non-discrimination as a guiding principle (i.e., making it more like the GATT Article XX chapeau). Here's the conclusion:
The EU has continued to push for liberalization of financial services through the TTIP. There are many complex issues in this regard, but to the extent that the prudential exception raises concerns for the U.S. negotiators and regulators, simple drafting fixes should make it clear that liberalization will not interfere with appropriate prudential regulation. Abuse of the exception can be avoided by requiring that measures be made for well-defined prudential reasons and that they not discriminate against trading partners.
Of course, as I mentioned recently, over in the CETA the drafters have come up with their own fix for the prudential exception. Theirs is definitely a little more complex than ours, but I'm glad trade negotiators now seem willing to move away from the GATS language and try something new.
