Leaked TISA Financial Services Text:
A glimpse into the future of services liberalization
A GEGI Policy Brief
By Rachel Denae Thrasher
News of the leaked draft text of the financial services annex of the Trade in Services Agreement (TISA) has enlivened critics and given them opportunity to discuss the substantive shortcomings of the agreement. This brief addresses how the leaked text could impact host state regulation of foreign direct investment (FDI). The TISA negotiations are attempting to make progress in services liberalization outside of the stalled WTO proceedings. Proponents recognize potential importance of such an agreement in today’s services-driven economy. However, services liberalization has not resulted in the same consistent growth as liberalizing goods trade did in the mid-20th century.
Here I discuss four key provisions in the leaked draft text that threaten to destabilize the global economy by exceeding the scope and coverage of the existing services liberalization as applied to FDI. First, by extending the “right of establishment” to foreign financial service providers, they would be granted almost automatic entry into any host state that is a party to the agreement. Second, by establishing automatic coverage of any “new financial service, host states may not protect themselves from new, untested financial services in the future. Third, by prohibiting even non-discriminatory measures, foreign financial services providers receive special protection from any regulatory measures that may affect them, even if they affect national providers similarly. Finally, under the guise of “transparency”, this new draft text gives foreign providers political power in the host state to shape future financial services regulation.