Financial stability and the Trans-Pacific Partnership:
lessons from Chile and Malaysia
Gallagher, Kevin P.; Ffrench-Davis, Ricardo; Lim, Mah-Hui; Soverel, Katherine
There is growing recognition that nations may need to deploy cross-border financial regulations
to prevent and mitigate financial crises. Indeed, in December of 2012 the International Monetary
Fund (IMF) agreed on a new ‘institutional view’ that notes how the IMF will begin to recommend
that nations deploy cross-border financial regulations going forward. However, many nations
have become party to global, regional, and bi-lateral trade and investment treaties that may
restrict their ability to effectively deploy such regulations.
This paper examines the cases of two countries currently in negotiations for a Trans-Pacific
Partnership Agreement (TPP): Chile and Malaysia. The paper examines the extent to which each
nation has deployed cross-border financial regulations in the past, and the extent to which they
have negotiated the policy space for such regulations in its previous trade and investment treaties.
Finally, it analyzes the extent to which such measures would be permitted if the TPP’s investment
provisions looked like the model bi-lateral investment treaty of the United States.
We find that, with some important exceptions, both countries have successfully deployed crossborder
financial regulations and have carved out the ability to do so under a sample of
representative trading commitments. However, such policy space would be jeopardized if the
TPP conformed to the US model rather than arrangements that each country has been able to
broker in other arenas.
This repository item contains a working paper from the Boston University Global Economic Governance Initiative. The Global Economic Governance Initiative (GEGI) is a research program of the Center for Finance, Law & Policy, the Frederick S. Pardee Center for the Study of the Longer-Range Future, and the Frederick S. Pardee School of Global Studies. It was founded in 2008 to advance policy-relevant knowledge about governance for financial stability, human development, and the environment.
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