Eugene Grygo, Chief Content Editor, FTF News
Financial services trade association and lobbyist SIFMA and similar groups in Europe have weighed in on the Transatlantic Trade and Investment Partnership (T-TIP) deal between the U.S. and E.U., and they want better regulatory cooperation to avoid any further market fragmentation.
The T-TIP has not gotten the same amount of attention as the controversial Trans-Pacific Partnership (TPP) deal for 12 Pacific Rim countries has, but the T-TIP effort will have an impact, according to SIFMA and EU trade associations and representative bodies.
The T-TIP deal is described as “an ambitious, comprehensive, and high-standard trade and investment agreement being negotiated between the United States and the European Union (EU),” according to the Office of the United States Trade Representative (USTR), an agency of the executive office of the U.S. president that focuses on trade issues.
The T-TIP agreement is intended to help “unlock opportunity” for U.S. workers, businesses, farmers and ranchers via greater access to European markets for American-made goods and services. “This will help to promote U.S. international competitiveness, jobs and growth,” say USTR officials.
The statement from SIFMA and other trade associations has been timed for the 12th round of negotiations T-TIP underway in Brussels during the week of February 22, officials say.
“In order for T-TIP to realize its full potential, we believe any agreement should treat financial services like every other sector in the negotiations and be dealt with in a comprehensive manner, primarily by including a framework for financial services regulatory cooperation but also through solutions to outstanding market access issues,” according to the joint statement.
“Financial services are extremely important to economies on both sides of the Atlantic. In the U.S., this industry directly accounts for over 7 per cent of GDP and 6 million jobs. In the EU, banks alone provide nearly 3 million jobs while the financial sector accounts for over 5 per cent of GDP,” SIFMA and others say.
“The most pressing impediments to cross border finance between U.S. and EU capital markets are the result of insufficient regulatory cooperation. In addition, there are citizenship or residency requirements for managers or similar kinds of barriers in some EU countries or U.S. states which are outdated hurdles that should be removed,” according to the statement.
The statement also points out that “discrepancies between the two regimes often inhibit market participants from complying with both simultaneously.”
The result is “increasing market fragmentation between the E.U. and U.S. markets but this at a time when leaders through the G20 and other fora have recognized the premium that should be attached to effective regulatory coordination.”
The E.U.-U.S. financial markets regulatory dialogue and G20 processes have not stopped “growing divergences and the associated economic costs. Something new is urgently needed.”
The signatories are endorsing “a robust regulatory dialogue between the U.S. and EU, carried out under clear requirements agreed within T-TIP … would reduce conflict and complexity and improve the efficiency of cross border regulations to the benefit of market participants and, as important, their customers and regulators,” according to the statement.
The signatories want the regulatory dialogue to have three characteristics:
- “A focus on discussion at an early stage in the policymaking process — it is important for effective cross-border policy solutions that an avenue exists at the beginning of the process to work through the effects on market stability and institutions operating in both jurisdictions. A framework within TTIP could provide assurances that cross-border issues would be considered before, not after, they become problems;
- “A focus exclusively on future policymaking — we are not seeking changes in existing regulations via a TTIP agreement. However, as cross-border capital flows continue to grow, the transatlantic policy landscape will not stand still: rather, new rules and regulations affecting the financial services industry will continue to be devised as the industry and the world around it evolves.”
- And “retention of the prudential exemption — financial services are covered in trade agreements but have long been subject to the so called prudential exception under which a financial regulator may impose regulation that is inconsistent with an FTA [free trade agreement] obligation for legitimate prudential reasons. This would continue with a new TTIP based framework. Policy on financial services regulation would, as now, remain entirely the preserve of financial regulators.”
As the talks get underway in Brussels, SIFMA is underscoring that it stands “ready to work with [the governments involved] to help ensure that TTIP meets these goals.”
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