Carve-outs for prudential measures and trade in financial services : the GATS and preferential trade agreements
Title: Carve-outs for prudential measures and trade in financial services : the GATS and preferential trade agreements
Author: CANTORE, Carlo Maria
Citation: Florence : European University Institute, 2015
Series/Number: EUI PhD theses; Department of Law
Table of Contents:
Paragraph 2(a) of the GATS Annex on Financial Services is generally known as the Prudential Carve-Out (PCO). Essentially, it allows WTO Members to adopt the measures they deem appropriate for prudential reasons when regulating trade in financial services. The provision has not yet been interpreted in WTO dispute settlement proceedings. However, it is extremely relevant in light of the 2008–2009 financial crisis and the worldwide regulatory developments that ensued. A number of scholars have looked into the issue and it seems to be their common view that, technically, the PCO ought to be classified as an ‘exception’ to the obligations and the commitments contained within the GATS. This classification leads to important interpretative consequences, mostly with regard to the allocation of the burden of proof in the event of a dispute. The main argument of this thesis is that the PCO should rather be classified as a 'provision that excludes the application of other provisions'. This alternative interpretation is more consistent with the negotiating history of the provision, the negotiators’ intention, as well as the underlying economic rationale. Characterising the PCO in this manner also has implications for the allocation of the burden of proof (which under this interpretation would fall on the complainant and not on the defendant) and for the degree of deference that WTO judges should pay to the rights and the prerogatives of the regulators in the domain of financial services. The thesis is structured as follows: Chapter 1 introduces the research question and methodology of the thesis and provides a review of the existing literature. Chapter 2 is devoted to the negotiating history and the economic rationale for the PCO and gives an account of developments in prudential regulation after the entry into force of the GATS as well as of relevant discussions between WTO Members in the Committee on Trade in Financial Services of the GATS. Chapter 3 analyses the PCOs in all Preferential Trade Agreements notified to the WTO Secretariat as of December 2014, highlights the main features and classifies the different categories of PCOs that have emerged. Chapter 4 is dedicated to the new approach advocated by the thesis. The final chapter (Chapter 5) suggests an agenda for a reform of the PCO of the Annex on Financial Services of the GATS, taking into account the developments that have occurred in trade negotiations at the preferential level over the last twenty years.
Defence date: 8 December 2015; Examining Board: Prof. Petros C. Mavroidis, EUI (Supervisor); Prof. Bernard Hoekman, EUI; Mr. Juan A. Marchetti, World Trade Organization; Prof. Jean-François Bellis, Université Libre de Bruxelles.
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