Image: Report Veblen Institut and Finance Watch

The New Trade Deals threaten financial stability


Trade agreements currently being negotiated or already approved introduce numerous restrictions over the right of states to regulate, especially in the field of financial regulation, and limits over their capacity to react to ensure financial stability. The report draws this conclusion after analysing bilateral agreements already negotiated such as CETA and JEFTA, those still under negotiations or suspended (TTIP), as well as the plurilateral Trade in Services Agreement (TiSA).

The very idea of including financial services in these trade agreements, with the specific objective to increase production and exchange volumes in this sector, goes against lessons learned from the last global financial crisis. This inclusion could lead to increased financial risk-taking and facilitate the propagation of future crises, while at the same time reducing the political space for States to respond to a crisis. In addition, investors will be able to contest financial regulations through the mechanism for regulatory arbitrage between States and investors, and this could stop measures deemed as necessary to maintain financial stability in the future.

The report is available in English and French.

Veblen Institute has been a grantee of Schöpflin Stiftung in the program area »Economy & Democracy« since 2017.