Wouldn't that only be the case if the TPP parties were silent about what they wanted the relationship to be? It seems from Simon's post that they are specifying a lex specialis that would depart from the VCLT.

Thanks for participating in the debate. Some further thoughts on what you raise here: http://bit.ly/IElZ3E

Rob and Srikar, These are interesting points. On my read, I think the 21.5 compliance panel in the US-Gambling case - rather than US-Shrimp I or EC-Bed Linens is perhaps the best test run of the type of scenario Rob is sketching out in the cloves case. In Rob's hypothetical, as I understand it, it would be the U.S. attempting to argue that its subsequent studies can illustrate a better understanding of prevailing facts (rather than a change to underlying facts or actions themselves) at the time of testing whether the U.S. is in compliance at time of the possible 21.5 proceeding. The U.S. attempted to argue something similar in the Article 21.5 compliance panel on U.S.-Gambling, and the panel was not persuaded. A fuller argument is here: http://bit.ly/IfkxZF

Thanks for this response, Rob. I guess I still have the same question, though. Is there any precedent of an Article 21.3 compliance arbitrator being open to this type of re-litigation of the underlying factual findings?

Rob, setting aside the fact that I believe a "thorough examination" has already been conducted by the competent health policy-makers involved with the FSPTCA, how do you figure that an examination on its own would satisfy an Article 21.3 compliance arbitrator, much less Indonesia? Would a compliance arbitrator be willing/able to revisit a panel's take on the legitimacy of a regulatory distinction? In any case, I see zero possibility of extending a ban to menthols in the current political climate, or the political climate likely to be prevail by July 2013 - which seems like the outer edge of a "reasonable period" under Article 21.3 of the DSU. (There's no amount of data that will change the anti-regulatory stance of the GOP, the peculiar politics of menthols within the Congressional Black Caucus, or U.S. courts' skepticism of more burdensome tobacco regulation. None of this, I should point out, is motivated by trade protectionism, but I think the commentators on IELP are well aware of that.) But maybe you're reading different election forecasts that I am, or know something Etch-a-Sketchy about John Boehner's approach to health regulation. In any case, the Article 21.3 cases I've read indicate that legislative politics would not be a "relevant particular circumstance" for softer compliance requirements.

Yeah, Senate Dems are notoriously bad, and there are some structural reasons for that (outsize influence of agribusiness in rural states, for instance). This analysis is about the House, which is always the real battleground on these trade votes.

good point, ancaeus. shrink or sink the wto and other unfair trade deals, that is the rallying cry.

Good questions. Generally speaking, restraining discrimination clearly lends itself to some sort of international rules. The question is: what do these rules look like? In this instance, there was no de jure discrimination, and I’m pretty sure that Henry Waxman wasn’t motivated by protecting U.S. tobacco companies from Indonesian competition. Moreover, U.S. companies saw their product offerings limited as a result. That’s not discrimination, that’s regulation. The implications of this ruling are huge. I don’t think I’m going out too much on a limb by saying that policymaking has shifted away from the regulatory approach historically favored by many liberal groups (across-the-board prohibitions, industrial policy, etc.), nor that such an approach has not been treated kindly by the GATT/WTO (thinking of dolphin-unsafe tuna ban, for instance). Instead, the U.S. political parties vacillate between no regulation, and a more conservative cost-benefit and incrementalist approach. In designing the tobacco measures, U.S. policymakers conducted a balancing exercise. They appear to have given weight to the desire to reduce teenage smoking, and they gave weight to potential adverse consequences from withdrawing from the legal market cigarettes consumed by large numbers of adults, i.e. cessation costs and the potential increase in black market activity. (You or I may disagree with these factors, or the weighting assigned them, but that does seem to be the approach.) Heck, the panel ruling says that even took into consideration Indonesia's views. There's no evidence that protecting U.S. producers was a motivation, and U.S. producers actually saw their product offerings limited as a result. Restrictions on menthol were envisioned as part of an incremental approach. That kind of balancing act is squarely in line with Chicago-style cost-benefit analysis. What the WTO's proponents might argue is that WTO agreements help countries internalize the costs that their regulatory decisions impose on people outside their borders. If it were as simple as that, there might not be a huge problem. Policymakers would learn to assign a non-zero weight to other countries' interests, just as they assign some non-zero weight to considerations like cessation costs. (In my experience, finding reasons to avoid regulating is something that policymakers are actually pretty good at.) But the WTO panel went further. It assigned an 100% weighting to Indonesia's interests in its Article 2.1 analysis, and a zero weighting to other domestic policy considerations. If the U.S. complies with the ruling by removing menthol, it will have to simply ignore the weighting it gave to cessation costs and other considerations. If the U.S. alternatively chooses to comply by maintaining the restrictions on candy-flavored cigarettes but exempting clove, the entire logic of the carefully targeted measure (focusing on flavored cigarettes that are predominantly starter cigarettes without meaningful adult consumption) begins to unravel. The ruling suggests that any time a regulatory measure has any negative impact on foreign producers, the U.S. will have to carve out that country’s products or producers, or pursue wider measures that might not make sense for a range of reasons. (And of course, those wider measures would themselves be likely to violate other WTO obligations.) It also suggests a willingness to conjure up a likeness analysis and conditions of competition analysis that is most likely to yield a violation finding. Public Citizen has long been used to having our favored regulatory approaches deemed WTO-illegal. This ruling shows that even more conservative or incremental regulatory approaches are also at risk. Policymakers will be left wondering: what type of approach is left? As for rewriting the national treatment provisions, I’m not sure what would suffice. Tightening grounds for findings of de facto discrimination would be a start. Your thoughts on how that could be accomplished?

What I think is particularly noteworthy is that all three of these challenged measures represent very Cass Sunstein / Freakonomics / University of Chicago - esque types of regulation. None of them are New Deal-inspired, command-and-control, across-the-board bans or harsh regulation. Their architects would likely say that all are carefully calibrated to minimize the regulatory burden as much as possible, some public health folks might say to the detriment of their impact on health or consumer information. We've known for a long time that the kinds of "heavy handed" measures that Public Citizen favors in the domestic context might run afoul of WTO rules. Now, we know that very free-market, neoliberal ways of regulating also do. This is unlikely to build the WTO system many new allies...

Due to a technical glitch, the version uploaded on May 10 was an earlier draft. The version now linked is the final version. The main additions are in Section II and Appendix I.

One additional find worth noting. The developed country parties that were the main proponents of the GATS financial services rules circulated a note amongst themselves on June 21, 1991 (liberated by FOIA) that read: "The specific provisions applicable to financial services reflect the special characteristics and requirements of the financial services sector, especially in the regulatory area. The words and phraseology of the provisions of the Annex, as well as the consideration of how and whether particular provisions of the Framework [i.e. main body of GATS] would apply to financial services, were based: a) on the ordinary meaning of the terms, without specific reference to the jurisprudence under the [GATT] and, b) where they have special meanings, on their customary usages in the financial services sector."

Joel, I've put up a postscript over at EOT: http://bit.ly/lJElJu (I'm not sure from your comment, but you do agree that XVI forbids non-discriminatory policies, correct? The Antigua case seems to confirm that, not to mention countless Secretariat papers. I know it's not what many of us would wish, but it does seem to be settled at this point.) I see how an XVI-violative measure can survive XIV scrutiny: tough, but presumably doable under the right circumstances. I don't see how an XVI-violative measure can survive PMD scrutiny (which I think is part of the point of the provision). That doesn't deprive the PMD of "all effect." But it does give effect to the differences between the PMD's second sentence and the XIV chapeau. These two articles are not the same, and shouldn't be treated the same. The notion of viewing the PMD as an alternative to Article VI (and not covering XVI-violative measures) would give the PMD effect. And the idea comes from the Secretariat in working paper S/C/W/72(so I can't claim full credit): "Chapter II of WTO (1997) discussed four types of government intervention or involvement that could have an impact on the financial services sector, which were (i) macroeconomic policy management, (ii) prudential regulations, (iii) non-prudential regulation to pursue various public policy objectives other than that falling under (iv), and (iv) trade restrictions concerning market access or national treatment. Under the GATS, item (ii) is dealt with by paragraph 2 of the Annex on Financial Services, and (iii) by Article VI. Item (iv) is dealt with by Articles XVI and XVII."

Joel, in your first comment, you said: "Second, the measure "cannot be used" as a means for avoiding liberalization obligations. This is a limitation on the scope of the first sentence, and I think it is comparable to the last clause of Article III:1 of GATT: "should not be applied to imported or domestic products so as to afford protection to domestic production." A bit delphic as to whether it addresses aim or effects or both, but the word "used" causes me to lean towards aim." An XVI-violative measure would be the "means" of avoiding XVI commitments, because XVI prohibits a set of "means". In order for an XVI-violative policy to pass my understanding of what you see as the role of the PMD's second sentence, policymakers would have to have been unaware that a size cap violated the GATS. Or policymakers would have to somehow signal that, even though they're aware that a size cap violates the GATS, the policy is not "aimed" at violating the GATS, but rather "aimed" at limiting the size of banks. At that point, why even even services trade disciplines? Most violations of XVI commitments aren't happening because countries "aim" to violate the GATS, they're happening because countries place other "aims" above the "aim" of GATS compliance. In contrast, with anti-discrimination clauses in GATT and GATS (as you note), the kind of aims-effect exercise you are describing has meaning. To recap, Interpretation 1 gives no weight to the first sentence. Interpretation 2 or 3 of the PMD gives primary or exclusive weight to the first sentence of the PMD (the "Notwithstanding" clause that you cite), while not being able to explain the implications of the PMD's second sentence for policy-means-prohibiting provisions like XVI. What I suggest over at EOT is a way of giving meaning to both the first and the second sentence of the PMD, in the context of the fact that XVI prohibits certain policy "means". It may not be the only interpretation that does that, and one probably doesn't have to accept all the planks of the argument to note that XVI poses special challenges for thinking about the second sentence of the PMD.

Interesting. I understand how anti-abuse analysis could be in theory applied to claimed violations of Article XVII. Less so for XVI. After all, what is being described in XVI is not a set of policy objectives, but a set of means/measures to achieve policy objectives, largely non-discriminatory. In an article XVI analysis, the means of achieving your prudential objective is also the means of avoiding / violating your GATS XVI commitments. If a country could get out of XVI commitments by simply imposing a size limit in a non-discriminatory or good faith fashion, what meaning would XVI have? FWIW, as I go through in my post, it's fairly clear that negotiators see XVI violative (and XI) violative measures as definitionally non-prudential. But I don't think you even have to accept that postulate to think that the PMD's second sentence poses a special problem for the commitment to refrain from specified non-discriminatory measures in Art XVI. Of course panelists wouldn't have to give the negotiating history much weight, but given the unusual nature of the PMD, I'd be surprised if they gave it no weight either. I imagine they would look to anything they could get their hands on to try to sort out why obvious exception standards like reasonableness, necessity, etc. were not incorporated. If they consult that history, they'll find that the exclusion of these terms was intentional.

I will be out of the office until Tuesday, April 24. I will respond to your inquiry when I return. Please contact Kate Titus if you need immediate assistance at ktitus@citizen.org and 202-454-5190.

Joel, as to your second point, do you figure that "prudential" in the PMD context essentially means "non-XVI violative", or do you read the PMD as allowing XVI-violative policies? Put differently, could an XVI violative policy (say a regulatory ban or size limit) ever be prudential, or are such policies/measures definitionally non-prudential?

Glad you found the database useful. The reality is that the U.S. would have lost the U.S. v. Loewen case under NAFTA on the merits, before being spared on technical grounds. At issue in that case was a very non-trade related question: the conduct of U.S. judges and juries in a purely U.S. domestic dispute over funeral homes in Mississippi. Moreover, the U.S. has to spend millions in legal fees to defend against the investor-state cases. Finally, the text of U.S. FTAs and the investor-state rulings under them (and dicta and interpretations under these) are among the most cited documents in investor-state arbitration globally. So getting the precedent here in the U.S. right matters a lot for the future of the relationship between multinational corporations and judicial systems around the world.

See also here: http://www.ecipe.org/blog/naked-misbegotten-germany/?searchterm=prudential

The original post included an incorrect link to the German securities issue raised by the European think tank. The link is now corrected: http://www.reuters.com/article/idUSLDE64J25920100520

I’ve posted Simon’s full comment onto my blog, so the readers can decide for themselves whether I’ve characterized his arguments fairly or not. To me, I still feel that the key point of the ambiguity (at best) of the language stands. Also, I’ve resent Public Citizen’s March memo on the Secretariat paper to Senate Finance staffers. (Funny, I don’t think Public Citizen has ever been accused of not sending enough information before (our freshmen member briefing binder could cripple a large bull.)) Mark, you’re not responding to the substance of what I’ve raised in the two memos. As in your first round of comments, you’re quibbling with adjective choice, and worrying about whether I am sufficiently duplicating my own work on blogs and memos. You're not alone in not responding to the points, which is the reason why we sprung into action generally last year and again earlier this year on these recent memos. Here are the questions before us: Is the WTO study adequate or not, and should the secretariat, Congress, a government agency, or a thorough researcher conduct a new study that answers the questions the Stiglitz Commission and others have raised? Or to flip that around, what's the argument against addressing these questions, suggesting possible reform of the GATS rules, and getting a roadblock out of the way for a successful conclusion of the Doha Round? If I were in Congress, I’d want to be sure (taken from our March memo): 1. That GATS rules only require that foreign firms be treated like domestic firms, and that a WTO panel would never rule against a non-discriminatory domestic regulation. 2. That WTO panels have already established that countries are free to adopt non-discriminatory financial services regulations without risking GATS challenges. 3. That any policy that is ruled kosher by the so-called “international financial regulatory bodies” (like the Basel Committee for Banking Supervision, the International Monetary Fund (IMF), etc.) is automatically allowable under the GATS, and that the WTO just imports the definitions and disciplines of these more knowledgeable bodies. 4. That countries that fear that past governments overcommitted domestic financial service sectors to GATS rules at the height of the deregulation craze can withdraw those sectors without having to pay out compensation to other WTO members. 5. That anytime a country adopts a financial services policy for prudential reasons, then there is no way that this policy can be challenged at / ruled against by a WTO panel. 6. That the GATS has been determined by a WTO panel to not restrict countries from adopting firewalls between commercial and investment banks (as the United States did under the Glass-Steagall Act and later amendments). 7. That the GATS has been determined by a WTO panel to not apply to policies limiting the size of individual firms. 8. That countries can ban financial services they fear are toxic, even if past governments signed up these sectors (perhaps inadvertently) to the GATS. 9. That GATS contains no disciplines for capital controls that many developing countries are now seeking to use, and that countries now desiring to restrict capital flows (through financial transaction taxes or other means) can simply add these as limitations to their schedule in the Doha Round negotiations. 10. That the Doha Round does not entail deeper financial services commitments. 11. That the bank bailouts of the last two years present no GATS conflicts. 12. That the Standstill provision in the Understanding on Commitments on Financial Services does not amount to a lock in of the regulatory status quo in place in the 1990s. 13. That policies of the Treasury Department or Federal Reserve are not subject to GATS disciplines. But there’s nothing in the WTO memo that claims any of this. So there’s a problem, and not just a legal one. The political impact of the GATS disciplines on watering down the ambition on re-regulation is something real that we’re experiencing right now, on Capitol Hill, in the financial services bill. (See here: http://citizen.typepad.com/eyesontrade/2010/05/oni-debate-heats-upin-bermuda.html) Congressional overseers would also want to be sure that such a new study's sourcing strategies were sound. As I go through in my March memo, the WTO Secretariat paper was highly selective in its sourcing of even the Leroux, Von Bogdandy, Windsor and Key papers you mention. And, of course the experience of the GATS Antigua case is the background for a lot of our suggestions to provide more clarity on textual obligations, so that panels don’t “read in” obligations countries didn’t intend to make. Many academics, as you know, are also worried about the panel and appellate body rulings in that case. Just a few: Joost Pauwelyn, “Rien ne Va Plus? Distinguishing Domestic Regulation from Market Access in GATT and GATS,” World Trade Review, 4, (2005), at 131-170. See also: Federico Ortino, “Treaty Interpretation and the WTO Appellate Body Report in US-Gambling: A Critique,” Journal of International Economic Law, January 2006; Panagiotis Delimatsis, “Don't gamble with GATS - The interaction between Articles VI, XVI, XVII, and XVIII GATS in the light of the US - 'Gambling' case,” Journal of World Trade Law, December 2006. You suggest that U.S. agencies would not want to lay out a roadmap for litigation. That you are worried that a challenge could arise against a non-discriminatory financial services regulation confirms my point: let's eliminate this possibility by establishing better rules that more directly ferret out discriminatory policies with no public interest justification. Again, I don't see the counterargument, unless one actually wishes to see these cases brought, with all their attendant political disruptions and the general problems they will pose for public support of trade expansion. FWIW, both the Congressional Oversight Panel (http://cop.senate.gov/documents/cop-012909-report-regulatoryreform.pdf) and G-20 (http://www.pittsburghsummit.gov/mediacenter/129639.htm) have also suggested that legislation that tackles tax and regulatory havens is related to financial services reregulation. And of course, Sandra Day O’Connor and various state and local government groups have suggested that domestic legislatures should be wary of outsourcing interpretation of domestic regulatory obligations to international tribunals. (See quotes and citations in: http://www.citizen.org/documents/StatesGuide.pdf)

Over at IELP, Mark criticizes me for not posting in all of Simon's comment. I thought the linking technology would allow the reader to see Simon's post and make up their own mind. But in case you're allergic to following a link, I post in Simon's entire comment here. I think my point still stands: The fact that even highly informed readers like Simon have to make several analytical leaps to settle on an interpretation of Annex Article 2(a)that is sufficiently deferential to domestic regulation suggests that there is room for refining the language. ++ Simon's full post: "Global Trade Watch on the Prudential Carve Out In this recent memo, Global Trade Watch expresses concern about the GATS "prudential carve out" in the area of financial services regulation. The carve out is in Article 2(a) of the GATS Annex on Financial Services and reads as follows: 2. Domestic Regulation (a) Notwithstanding any other provisions of the Agreement, 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. Where such measures do not conform with the provisions of the Agreement, they shall not be used as a means of avoiding the Member’s commitments or obligations under the Agreement. Global Trade Watch puts its specific concern this way: As the second sentence makes clear, prudential measures are only allowed under GATS rules if they don’t violate any of the GATS rules, which are very expansive. I'm not sure that's quite right. Let me run through this provision briefly. The first sentence suggests that Members can take measures for "prudential reasons," even if these measures would otherwise violate other GATS provisions. So, let's say you have a measure that violates GATS Article XVI (Market Access). If that measure is taken "for prudential reasons," including the ones listed, it is permitted despite the Article XVI violation. (Presumably there must be some objective determination as to whether the measure is actually "for prudential reasons," such as a means-ends test applied to the measure and the stated policy goal, rather than just accepting the Member's declaration of the purpose without further scrutiny.) This part looks like a pretty typical WTO "exception." The second sentence narrows the scope of this "exception" to some extent. (In a sense, the debate here is over how much it has been narrowed). In this regard, the second sentence states that if the measures at issue do violate other GATS provisions, they are not completely off the hook when they are found to be "for prudential reasons" under the carve out, as there is a legal obligation that still applies: "[the measures] shall not be used as a means of avoiding the Member’s commitments or obligations under the Agreement." This language seems a bit like the GATT Article XX chapeau trying to root out "disguised restrictions." In particular, the requirement that such measures not be used as a "means of avoiding ... commitments or obligations" has a similar feel. "Avoiding" is not quite as strong as "disguised," but it's along the same lines. Basically, both the second sentence here and the Article XX chapeau indicate that the non-protectionist purposes offered to justify the measure must be authentic. The problem is, the second sentence of the prudential carve out is worded a little more confusingly than the chapeau. The sentence starts with "[w]here such measures do not conform with the provisions of the Agreement." This language is somewhat duplicative of the "[n]otwithstanding any other provisions of the Agreement" language from the first sentence. Implicit in the "notwithstanding" language is that there was a violation of the other provisions. Restating this point in the second sentence as "[w]here such measures do not conform" makes it seem like this is an additional obligation not to violate the GATS which applies subsequent to the application of the first sentence. I think that's why Global Trade Watch takes such a broad view of the meaning of the second sentence: "prudential measures are only allowed under GATS rules if they don’t violate any of the GATS rules." I see how they get to that conclusion by focusing on the first clause of the second sentence, but I'm not sure that's right. Rather, as noted above, I think the better interpretation is that the second sentence corresponds to the chapeau, emphasizing that any measures taken for the stated policy reasons not be disguised trade restrictions (or here, measures taken to avoid commitments or obligations). The "[w]here such measures do not conform with the provisions of the Agreement" language just recalls the violation implicit in the "notwithstanding" language in the first sentence. To be more clear about it, the first part of the second sentence could have been written as "[w]here prudential measures that do not conform with other provisions of the Agreement have been used," or something along those lines. That's what the "such measures" refers to, in my view. It just doesn't do it very clearly. Having offered that interpretation, I must admit that I do think the language is a bit vague and hard to pin down, and could be construed otherwise than I've suggested. It would be nice to have it stated more clearly. Along these lines, here's what Global Trade Watch suggests as a replacement provision: 2. Domestic Regulation (a) Notwithstanding any other provisions of the Agreement, a Member shall not be prevented from adopting or maintaining measures relating to financial services it employs for prudential reasons, including for the protection of consumers, investors, depositors, policy holders, or persons to whom a fiduciary duty is owed by a financial services supplier, or to ensure the integrity and stability of the financial system. For greater certainty, if a Party invokes this provision in the context of consultations or an arbitral proceeding initiated under the Dispute Settlement Understanding, the exception shall apply unless the Party initiating a dispute can demonstrate that the measure is not intended to protect consumers, investors, depositors, policy holders, or persons to whom a fiduciary duty is owed by a financial services supplier, or is not intended to ensure the integrity and stability of the financial system. As I see it, this is the same basic idea, just stated a little more clearly, and also the burden is placed on the complainant to demonstrate that the measure is not being used for the policy purposes the respondent says it is about."

I put up a full response over at Eyes on Trade, with links: http://citizen.typepad.com/eyesontrade/2010/06/simon-lester-has-written-some-reactions-to-our-recent-memo-to-the-senate-finance-committee-on-the-conflict-between-financial.html#more A few things worth pointing out here: So I'd like to focus on some of the comments that Simon's post sparked from others, primarily from Mark Kantor. Mark starts off by citing the first sentence of this paragraph from our memo to Senate Finance: "To our knowledge, neither the USTR, Treasury Department, or the WTO Secretariat have ever released a formal, comprehensive legal analysis of the GATS prudential measures defense (GATS Annex 2(a)) language on which such airy dismissals of this problem rely. When theses entities are confronted with questions about the conflict between GATS and financial regulation or the prudential provision’s scope, they “reassure” or “cite” unofficial sources as suggesting there is nothing to be worried about." I could make the inside joke that GATS defenders seem to suffer from second-sentence-deletion syndrome (since they do the same when discussing the prudential measures language in GATS Annex 2(a)). But that would be cheap. However, if Mark had quoted the full paragraph, it would have been clearer to IELP readers that we believe that private, off-the-record reassurances to "don't worry, be happy" about the GATS conflict with reregulation are not enough. So a private, off-the-record shrug of the shoulders from Mark’s anonymous friends at Treasury, USTR, the Fed and beyond is exactly what we hope to get beyond. Mark then makes a deal of the fact that our memo only contains a single citation of the February 2010 WTO Secretariat “report” on financial services. We actually gave this “report” a very extensive treatment in a memorandum sent to the Hill and beyond on March 15. It’s title says it all: “That’s All They’ve Got?”: What Latest WTO Secretariat Paper on Financial Crisis Does and Does Not Say About GATS Disciplines on Financial Regulation." In fact, maybe we should have stated more clearly in our recent memo that it was precisely the inadequacy of the February 2010 WTO report that prompted us into action. In that earlier memo, we go through the Secretariat’s “non-response” in considerable detail. In sum, the Secretariat does not address the 13 substantive concerns raised in the Stiglitz Commission report, in our work and by others. Instead, the Secretariat confirms many of our concerns. It also employs exactly the kind of partial and misleading sourcing strategies that we criticize in our memos. Mark even quotes two of the more objectionable paragraphs in the whole report in his comment (paragraphs 30-31), where the Secretariat ducks out of pronouncing on key questions by citing a series of non-official sources. Mark then mentions that he participated in the Advisory Subcommittee on the Model BIT, and seems to suggest that Public Citizen did as well. Mark mentions that Treasury reassured him in these meetings that there’s nothing to be worried about. For the record, Public Citizen was not invited and did not participate in that Committee (beyond public testimony along with dozens of others). And, from Mark’s characterization of what was said in those supposedly confidential meetings, our concerns would not have been addressed. In the colloquy with Miles Teg, Mark argues that some advocacy groups have gone overboard by suggesting the WTO Secretariat’s report was “secret.” I don’t know who Mark is referencing, but no one in Public Citizen made that claim, to my knowledge. Mark then references that no WTO case has been filed on financial services issues, and that the investor-state record has been (slightly) more favorable to states. Well, financial re-regulation is only just now being attempted, and it is starting to bring out any number of WTO threats, notably from tax-haven nations like Panama, who would have little to lose in such a case. Of course, it will take years for any of these cases to go through the entire dispute settlement process, and they may never go through. The point Public Citizen is making here is that it is irresponsible policymaking to outsource these considerations to foreign dispute and arbitral tribunals. This is particularly true since the threat of WTO cases shape the domestic political debate on nearly every topic under the sun, with concerns constantly being raised about the WTO legality of domestic regulatory measures. In the BITS, this problem is especially worrisome, since there is not even a so-called “diplomatic screen” before a foreign hedge fund could launch a case. This gets to anon99’s cute point about wondering whether Public Citizen understands the Appellate Body mechanism’s role at the WTO. As we argue in all of our work on the GATS and financial services, there is an overriding public interest in having clear rules of the road when it comes to financial services regulation, and that pacts like the WTO should not undermine – either legally or politically – the prospect of strong reregulation. So, yes, anon99, the WTO can claim that it does not pronounce on members’ obligations outside of dispute settlement, and USTR can claim that it is looking out for U.S. offensive interests, and the Treasury Department can guard its institutional turf, and so on and so on. Meanwhile, those of us actually working to improve financial regulation are left with complete uncertainty about a critical public policy area. Rather than coming up with reasons to keep everyone in the dark, let’s someone… anyone… shine some meaningful light on this important topic.

As it happens, this is also included in the bipartisan TRADE Act (HR 3012), supported by a majority of House Democrats, committee chairs, subcommittee chairs, and vast chunks of the Blue Dogs, New Democrats, Black Caucus, Hispanic Caucus, and Progressive Caucus. (2) HUMAN RIGHTS STANDARDS- The human rights provisions shall-- (A) be included in the core text of the trade agreement; (B) require each country that is a party to the trade agreement to recognize the United Nations Universal Declaration of Human Rights as a common standard of achievement for all peoples and all nations; (C) prohibit each country that is a party to the trade agreement from waiving or otherwise derogating from its laws and regulations relating to fundamental human rights; (D) provide that failures to meet the fundamental human rights required by the trade agreement shall be subject to effective dispute resolution and enforcement mechanisms and penalties that are included in the core text of the trade agreement and that are at least as effective as the mechanisms and penalties that apply to the commercial provisions of the trade agreement; (E) strengthen the capacity of each country that is a party to the trade agreement to promote and enforce fundamental human rights; (F) provide for the establishment of a commission composed of representatives specializing in international and comparative human rights, including representatives of independent human rights organizations of countries who are parties to the trade agreement and academic researchers, to receive, investigate, review, and participate in the adjudication of any complaint filed under the human rights provisions of the trade agreement, and vest the commission with the authority to establish objective indicators to determine compliance with the obligations set forth in subparagraphs (B), (C), and (D); and (G) require any other country that is a party to the trade agreement to cooperate fully with investigations by the commission required under subparagraph (F).

Simon, the confusion may stem from a conflation of "free trade" theory and the blanket term "neoliberalism." A free market would be free of any government distortions - something that never exists in the real world, and which never accurately characterizes any actually-existing national trade policy. Neoliberalism, by contrast, can refer to inequitable trade and economic policies, whether they are free or not. In fact, actually-existing neoliberalism usually couples protections for certain special interests (in the U.S., think agribusiness and pharmaceuticals) with removal of protections for other interests (often manufacturing industries that support good working-class jobs in the U.S., or small-scale farmers in places like Haiti.) Thus, while Clinton may not have been practicing "free trade," (note he did not use that term in the article) he was certainly practicing neoliberalism, as the term is used in popular writing.

Daniel - some good points here, and especially on highlighting what the notion of "promoting deregulation" means in everyday usage. Not to sound too post-modern, but I question you usage of "members," countries and "victims" here. When we discuss "who" makes WTO specific commitments, we're not talking about rational individuals whose preferences are consistent throughout time. We are talking rather about old ruling cliques (some elected, some not), who had such an attachment to deregulation that they locked it in via the GATS in the 1990s. By contrast, most countries have elected leaders since 1997 that are substantially committed to re-regulation: one need only look at countries like Ecuador and Argentina to see that this is true. (Not surprisingly, these are members that are raising a lot of questions about these issues, and ones that had neoliberal goverments in the 1990s that made deep GATS financial services commitments.) Also, you say "the GATS completely exclude financial services supplied under government authority (e.g., central bank activities, exchange rates, government guarantees)." I think this is misleading. As Bart de Meester concluded in a recent paper (http://www.ghum.kuleuven.be/ggs/nieuw/publications/working%20papers/new_series/wp32.pdf): “The Annex excludes the following activities from the scope of the GATS: (i) activities conducted by a central bank or monetary authority or by any other public entity in pursuit of monetary or exchange rate policies; (ii) activities forming part of a statutory system of social security or public retirement plan and (iii) other activities conducted by a public entity for the account or with the guarantee or using the financial resources of the Government. Importantly, this does not mean that the measures taken by a central bank or monetary authority or other public entity are outside the scope of the GATS. Activities conducted by a central bank, monetary authority or any other public entity in pursuit of monetary or exchange rate policies are not considered ‘services’ within the scope of the GATS. Hence, if a government adopts a measure that affects such activities, this measure cannot be scrutinised under the GATS. However, if a central bank or monetary authority elaborates an assistance programme, this does not mean that such assistance programme is outside the scope of the GATS (provided it affects trade in services).” In other words, any measures taken by the Central Bank can still affect trade in services that are covered (like lending, securities, etc.) and thus be disciplined by the GATS. Put differently, a Panamanian firm couldn’t press for a WTO challenge against the U.S. Fed for its monopoly over open market operations, but it could press its government to launch a challenge alleging that Fed policies harmed Panamanian banks’ interests in the U.S. market. I think the points you raise about the prudential measures language in Annex 2(a) have been addressed elsewhere. Suffice it to say, prudential measures cannot be used if they conflict with general obligations and specific commitments. Fixing this provision should be a top reform priority.