According to Public Citizen (www.citizen.org), the agreements we entered into with the Word Trade Organization (WTO) have locked in the financial services deregulation which are the root cause of the financial meltdown. [This information is available from many other sources, as the trade agreements are a matter of public record and are simply a matter of fact, not guesswork.] “The Financial Services Agreement part of the WTO obligates the US to provide market access to foreign financial service firms without limits on how they are structured.” The removal of the Glass-Steagall Act, which separated commercial banking from investment banking and which prevented a problem in one financial sector from infecting the entire system, allowed the meltdown of the whole global economy as the shield between the different types of banking and financial institutions was gone.
The WTO agreement “means that US taxpayers may have to bail out foreign banks, too.” Our obligation under the WTO ensure that funds from the TARP must be made available for foreign banks operating in the US. This is why some of the taxpayer funds given to the bail-out of AIG were immediately sent offshore to entities such as France’s Societe Generale, Germany’s Deutsche Bank, Switzerland’s UBS and the Royal Bank of Scotland.
The WTO “obligates the US to a ‘standstill provision’ which prevents us from undoing many of our crazy deregulation policies with respect to the…financial services we submitted to WTO jurisdiction.” This means, in a nutshell, that while Congress is talking about re-regulation, the WTO rules we agreed to say we cannot create new regulations. Surely, Congress is aware of this. The Congressional lip-service must be to placate the public, which seems aware that without re-regulation the economy will not ever recover, but will go through endlessly repeated cycles of bust and bailout. And certainly Tim Geithner knows about our WTO strictures; he led the effort to use the WTO to impose the deregulated, Glass-Steagall Act-free model on the world during the Clinton administration. For him to talk about re-regulation is the height of irony and sham.
Further, other WTO rules will undermine our recovery efforts, as well. The WTO “forbids most uses of Buy American or Buy Local programs. This undercuts the effectiveness of the stimulus bill. The $20 billion for data-entry workers to put medical records into electronic format likely will go offshore rather than employing workers here…” The WTO rules limit how much border food inspection we can require; a serious flaw, considering that since the WTO’s establishment, we have become a net food importer. Current rules force us to depend on the food-safety systems of the countries from which we import.
Obama pledged during his campaign to fix our trade and globalization policies so they serve our workers and consumers; I hope this promise does not go by the wayside, although things are not looking too promising as yet. While Obama was in Europe for the G-20 summit, he joined the other governments represented there in “calling for the conclusion of a WTO expansion, called the ‘Doha Round’ which could lead to further financial service deregulation.”