TTIP to be used as a key tool
“According to a leaked document, the EU is bent on using the TTIP negotiations with the US to get an agreement on financial regulation that, according to this analysis by Kenneth Haar of Corporate Europe Observatory (CEO) and Myriam Vander Stichele of The Centre for Research on Multinational Corporations (SOMO) will weaken reform and control of the financial sector.”
“In the document, the EU suggests a number of mechanisms that will both scale back existing regulation, and prevent future regulation that might contradict the interests of financial corporations from both sides of the Atlantic. The leak follows news that EU negotiators have increased political pressure on the US to accept negotiations on 'financial regulatory cooperation', which the US negotiators have so far refused.”
“The document shows that the EU is prioritising the protection of the EU’s banking sector over strict financial regulation and supervision: these so-called 'regulatory cooperation' proposals would guarantee that the financial sector is not harmed by measures taken by regulators, would allow EU banks to operate in the US on the EU's (generally laxer) rules, and in general that financial corporations on one side of the Atlantic do not have to abide by host country’s laws but only by home country laws on the other side of the Atlantic. The implications for decision-making on financial reforms and control over the financial sector are serious.”
“The most famous example is probably the attempt of Deutsche Bank’s subsidiary in the US to avoid coming under US rules on capital reserves (which require companies to keep aside a proportion of capital available to avoid risk of collapse or bailout), an avoidance attempt which had been successful until recently when the US authorities closed a loophole used by many foreign banks operating there. Considering that Deutsche Bank was one of the biggest recipients of bailout money from the US authorities in the aftermath of the collapse of Lehman Brothers and the insurance giant AIG, a demand that it abides by US rules on capital requirements seems entirely legitimate. But this is resented by the European Commission and financial corporations, as are other US rules to which EU banks in the US are subject.”
“... the US financial sector fully supports the EU proposal for regulatory cooperation because it also fiercely objects to extra-territorial controls. Disturbingly, the EU's negotiating position is in line with the biggest corporations in the EU and US' financial industries.”
“... the US banks see the EU initiative as another welcome opportunity to attack domestic regulation, and has teamed up with its European counterparts to pressure the US administration. Also, the financial sectors on both sides of the Atlantic want to eliminate differences in regulations which they claim are a ‘cost’ that makes them less profitable, 'forcing' them to search for ways to escape the strictest rules by moving operations to the jurisdiction with the least costly – read weakest – rules.”
"The European Commission's leaked proposal of March 2014 envisions several tools to keep ambitions for strict regulations of the financial sector at bay. If agreed, they would apply on both sides of the Atlantic: the TTIP principles of regulatory cooperation would be binding on both the EU – they would need to be followed when developing and implementing rules or regulations – and the US."
"The key principle is this line in the document: 'The Parties avoid introducing rules affecting market operators and the jurisdiction of the other Party, unless there are overriding prudential reasons to introduce such rules, in conformity with Art. 52 (prudential carve-out) – ie. that measures taken to safeguard systemic financial stability.' In this way, the interests of 'market operators' are the highest priority, along with a stop to measures of an 'extra-territorial nature' - measures which one Party considers an interference into the way financial markets are governed locally. But if all kinds of regulation that can be deemed 'extra territorial' is stopped, it could undermine rules that protect citizens, attempts to tax financial transactions (FTT) to reduce speculative trading, and put a stop to global efforts to control the risky global derivatives markets."
"Whenever rules are stricter in one jurisdiction but foreign banks are allowed to operate according to the less strict regime, this will increase pressure on regulators to accept the lowest common denominator since TTIP will provide more arguments for the financial industry that stricter regulations will result in loss of competitiveness to financial corporations from the other side of the Atlantic."
"To drive this process of 'mutual recognition', a body is to be set up: the 'Joint EU/US Regulatory Forum', and this will have tremendous power in the area. For instance, the 'test' to be used when it is to be established whether two sets of rules are equivalent, is going to be developed only at a later stage by this forum. In other words, these standards will even not be revealed when a final TTIP agreement is to be endorsed."
"The EC proposal clearly states that 'stakeholders' can count on 'transparency', which in the terminology used so far in TTIP negotiations and other trade agreements has meant that industry is deeply involved at all stages. Such regulatory cooperation would give industry 'stakeholders' multiple opportunities to see regulations in draft form and to lobby policymakers against their enactment. It is possible that other 'stakeholders' will be invited to comment on a smaller scale, but considering the size and lobby power of the financial industry and the privileged access the EU will be prone to grant to Big Finance 'stakeholders', it will be dominated by the same European and US banks that have proven their resolve – and success – in chilling and weakening the re-regulation of finance in the EU and United States. Unsurprisingly, the financial 'stakeholders' are lobbying hard for a TTIP 'regulatory cooperation' mechanism which in the end will become a tool to weaken EU and US regulation."