House Democratic Leaders Urge USTR to Allow Capital Controls in TPP Negotiations
WASHINGTON, DC – Leading House Democrats today sent a letter urging United States Trade Representative (USTR) Michael Froman to negotiate provisions in the upcoming Trans-Pacific Partnership (TPP) trade agreement that provide governments the flexibility to help protect and strengthen the stability of their financial systems by implementing measures that would stem flows of speculative capital.
The letter, led by House Ways and Means Committee Ranking Member Sander M. Levin (D-MI) and House Financial Services Committee Ranking Member Maxine Waters (D-CA), was also signed by House Financial Services Monetary Policy and Trade Subcommittee Ranking Member Gwen Moore (D-WI) and House Ways and Means Trade Subcommittee Ranking Member Charles B. Rangel (D-NY).
In their letter, the lawmakers focus on addressing concerns in previous U.S. free trade agreements that have not enabled countries to implement certain policy measures that would help prevent or minimize the impact of financial crises, and provides specific recommendations for such provisions in TPP.
“Policies promoting full and free movement of capital -- without any controls on, for instance, volatile short-term speculative capital -- have contributed to a series of financial crises within countries, with devastating economic and human costs, and major disruptions in the international financial system over the past quarter century,” the Members wrote.
“We strongly urge the Administration to work to adopt a strong, clear Safeguard that will not only give governments the flexibility to impose temporary controls on capital flight to prevent or mitigate a balance-of-payment crisis, but also to use controls to prevent or mitigate massive inflows of short-term speculative capital from flooding into their economy, causing rapid currency appreciation, and pushing their external accounts into deficit, while at the same time contributing to the creation of asset bubbles -- all of which in the past have led to crises in affected economies.”
The full letter can be found here.