US business defends capital controls in trade pacts
WASHINGTON Feb 8 (Reuters) - A coalition of leading business groups has urged the Obama administration to reject a call to give U.S. free trade partners more freedom to control the flow of capital in and out of their countries.
Loosening rules on capital controls in future free trade agreements and bilateral investment treaties would be both "counterproductive and unjustified," the U.S. Chamber of Commerce, American Petroleum Institute and 15 other groups said in a letter on Monday to top U.S. officials.
It "would undermine the very policies the president is actively promoting: expanding U.S. exports; supporting and generating good-paying American jobs; and advancing broader national economic, foreign policy, and national security objectives, such as the rule of law, anti-corruption disciplines, poverty reduction and political stability," they said.
The letter was sent to U.S. Secretary of State Hillary Clinton, Treasury Secretary Timothy Geithner, U.S. Trade Representative Ron Kirk and other top officials in President Barack Obama's administration.
The debate erupted as the Obama administration pushes to substantially complete talks on a regional trade pact with eight countries in the Asia Pacific region by November.
The proposed TransPacific Partnership pact would include Australia, Peru, Chile, Singapore, which already have free trade agreements with the United States, as well as Vietnam, Malaysia, New Zealand and Brunei, which do not.
More than 250 economists in a letter to Clinton, Geither and Kirk called last week for more lenient capital controls rules than Washington had negotiated in previous free trade pacts.
The economists, who included Nobel laureate Joseph Stiglitz, said new research by the International Monetary Fund and others found restricting the inflow of short-term capital can help developing nations "stem the development of dangerous asset bubbles and currency appreciations and generally grant nations more autonomy in monetary policy-making."
Many U.S. free trade pacts and investment treaties strictly limit the use of capital controls and give private foreign investors "the power to effectively sue governments in international tribunals over alleged violations of these provisions," the economists said.
Some recent pacts required a "cooling off" period before an investor could sue and also limited the amount of compensation they could win. "However these minor reforms do not go far enough to ensure that governments have the authority to use such legitimate policy tools," the economists said. (Reporting by Doug Palmer; Editing by Paul Simao)
- Tweet this
- Share this
- Digg this
- Pro-independence Scots narrow gap to victory ahead of vote - poll
- Polls say Scotland will spurn independence, but are they right?
- Ukraine accuses Russia of 'undisguised aggression' as rebels advance |
- Blind joins while Manchester United wait on Falcao
- Golf-U.S. PGA Tour Deutsche Bank Championship scores