Wednesday, February 5, 2014

Without Financial Services, the TTIP could be made to look a Monkey



The home of Senatorial inquiries for over fifty years was the site of TheCityUK’s first presentation on Capitol Hill.  Unlike the venue of last month’s TheCityUK evidence session at the House of Lords, United States Senate Room SD-562 was one of the first purpose-built, press and TV-friendly, hearing rooms of its kind in the world. 

A standing-room only audience of policymakers, businesses, academics and diplomats gathered together to try to answer the question of how to achieve greater coherence in transatlantic financial services regulation.

Gary Campkin, TheCityUK’s Director of International Strategy, welcomed a distinguished set of speakers and two panels of experts who took the Atlantic Council’s report, co-sponsored by TheCityUK and Thomson Reuters, The Danger of Divergence: Transatlantic Financial Reform & the G20 Agenda, as the core text.

His statements set the agenda:
  • The current system of transatlantic co-operation is not working as effectively as it could;
  • There needs to be a new generation of agreements based on formal commitment to co-operation; and 
  • The Transatlantic Trade & Investment Partnership’s (TTIP – pronounced ‘tee-tip’) proposed arrangements for regulatory coherence, which will likely cover a wide range of both EU and US measures affecting trade in goods and services, should extend to financial services regulation.  
Senator Chris Murphy (D-CT) agreed that future sources of financial instability would not sit on the sidelines waiting for Europe and the United States to set aside their differences.  On matters of national pride and regulatory independence, he reminded regulators and his fellow legislators that coordination was not the same as capitulation.

The Ambassador of the European Union to the United States followed him with the newly released text of the European Commission on the topic.  This reflected so closely the approach of TheCityUK that a bystander would have thought it came straight out of our brochure on TTIP.

“The EU aims at establishing a framework for regulatory cooperation on financial services in the TTIP. The goal is not to define the substance of international standards, which shall be discussed in the respective fora outside the TTIP negotiations. The goal is to create an institutional framework of EU and US regulators to make sure that the EU and US rules work together, which shall contribute towards preventing future crisis.”

It was helpful for the Ambassador that TheCityUK had already made it clear what TTIP was not about:“We do not want to take the regulatory dialogue out of the hands of regulators (the only people capable of conducting it); we don’t want to put it in the hands of trade negotiators; we do not seek to curb US regulators’ much-prized independence; and we are not looking to undermine Dodd-Frank.”

In an unintended use of a Margaret Thatcher phrase, a later EU delegation speaker replied, “No, No, No,” when it came to the question of whether the EU would want to undermine Dodd-Frank.

Several panellists took the point that excluding financial services from TTIP would be perverse, especially when so many other controversial issues – literally dealing with life and death  - remained within the scope of the partnership.

There was also the widely held view that high level, sustained political engagement was needed; irregular summits did not get the job done and deals brokered at 11.59 to avoid market fractures were no substitute for coherent and planned initiatives.

However, there were defenders of the status quo.

There is no denying that coordination through the G20, the Financial Stability Board, Basel and elsewhere is greater than before the 2008 crisis.

It was said with a straight face that Europe and the United States already agree on 95% of the issues.  It was noted, with almost a straight face, that we humans share at least 95% of our genomes with chimps.

Without financial services, TTIP could be made to look a monkey.

The report will be presented next in Brussels (12 February) and London (14 February) before the political ‘stock-take’ by the EU and the US on 17-18 February.

Published in Regulation and trade on 05 February 2014

"TTIP?  I was busy writing Shakespeare."