This time on TISA. I thought Edward Alden of CFR had a good take:
I love Wikileaks. While I recognize that secrecy has its place, I strongly believe that the affairs of the people should, to the greatest extent possible, be conducted with the full knowledge of the people. Secrecy breeds distrust, and feeds claims that governments are only serving narrow corporate interests. Thus I was delighted to see in my inbox this morning that Wikileaks has yet again purloined and published a series of trade negotiating texts, this time for the pending Trade in Services Agreement (TISA).
But here’s the problem. The organizations that work with Wikileaks to publicize the documents too often know nothing about what they actually mean, and have a vested interest in not learning so they can continue making outlandish claims. And so rather than illuminating the public debate, which is the goal of transparency, it ends up more distorted than it was when the documents were still secret.
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The opponents of TISA claim that the deal would make it impossible for countries to regulate in the public interest. Again, the texts are helpful. The regulatory pieces are almost all about two things – transparency and non-discrimination. That means governments need to open up their regulatory process for input, much like U.S. notice-and-comment procedures, and cannot discriminate against foreign-owned companies (though even here many exceptions will be permitted). The text on “domestic regulation” states quite flatly that “Parties recognize the right to regulate, and to introduce new regulations on the supply of services within their territories in order to meet public/national policy objectives.”
Don’t get me wrong – there are real competitive implications in such an agreement, and countries with strong vested interests will resist even non-discriminatory treatment. The texts – which include the identities of countries proposing certain measures and those opposing them – are filled, for example, with objections from China. Many countries will object to this sort of opening because it has the potential to hurt the profits of private monopolists or state-owned companies.
I understand this. What I don’t understand is when organizations claiming to speak for the developing countries and for worker interests in advanced countries go to bat for the monopolists. The CEPR/OWINFS press release, for example, warns that “The leaked telecommunications annex, among others, demonstrate potentially grave impacts for deregulation of state owned enterprises like … national telephone company[ies].” Really? Mexico, for example, has historically had among the highest costs for telephone and internet services in the world. That’s because service is dominated by a monopoly company, American Movil, which is the successor to the government-owned Telmex. The biggest shareholder of American Movil, Carlos Slim, is either the richest or second richest man in the world behind Bill Gates, depending on how their portfolios are doing. The Mexican government, to its credit, has been trying to break up Slim’s monopoly, and the TISA negotiations should help. But the opponents of TISA would rather go to bat for the world’s richest man.
My only substantive comment for now is on the draft financial services chapter, where I wanted to take this opportunity to reiterate my criticism of the language of the prudential exception. The draft uses what is basically the traditional text:
Article X.17: Prudential Measures5
CH: Propose for Article X.17 the title of “Domestic Prudential Regulation”. Considering the title of X.18.
1. Notwithstanding any other provision of the Agreement, a Party shall not be prevented from [CH propose: taking][US/AU/MX/CO/PE/PA/CL/CR/CA/EU/NZ/JP/NO/IS/HK/LI/TR/IL/KR/TW/UY propose: adopting or maintaining] measures for prudential reasons, including for:
(a) the protection of investors, depositors, policy-holders or persons to whom a fiduciary duty is owed by a financial service supplier; or
(b) to ensure the integrity and stability of a Party's financial system.
2. Where such measures do not conform with the provisions of this Agreement, they shall not be used as a means of avoiding the Party’s commitments or obligations under the Agreement.
5 [PE/CR/CL propose; MX consider; EU/AU/CH/JP/NO/IL oppose: It is understood that the term “prudential reasons” includes the maintenance of the safety, soundness, integrity, or financial responsibility of individual financial service suppliers as well as the safety and financial and operational integrity of payment and clearing systems.]
It seems to me the drafters should use TISA to fix the problems with some of the language, making it more like this:
Notwithstanding any other provisions of the agreement, and subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, a Member shall not be prevented from taking measures for prudential reasons, including for the protection of investors, depositors, policy holders or persons to whom a fiduciary duty is owed by a financial service supplier, or to ensure the integrity and stability of the financial system.
