In the midst of the financial meltdown, one man, apparently, stands alone calling for more deregulation. While anti-government George Bush buys up banks and insurance companies, former Fed chair Alan Greenspan admits he was "partially wrong" in his hands-off approach towards the banking industry, and the crisis has caused right-wing French President Sarkozy to virtually denounce capitalism.
Yet, while everyone else is demanding the rogue financial industry be brought to heel, B.C. Premier Gordon Campbell is actually pushing for even more financial deregulation right across the country.
That would seem to be the only logical interpretation of his call at the premiers' meeting in Montreal to get every province signed on to his pet project, the Trade, Investment and Labour Mobility Agreement, or TILMA. Campbell claimed this would help counter the economic slowdown. But what TILMA does is make a broad range of government regulations vulnerable to challenge, including regulations over the financial sector.
How TILMA ties regulators' hands
Among other things, TILMA has a standstill clause so that any new regulations on financial services that got in the way of investment would be a violation, potentially subject to a $5 million penalty. Article 5(3) of TILMA states: "Parties shall not establish new standards or regulations that operate to restrict or impair trade, investment or labour mobility."
Existing financial regulations will also be open to challenges under TILMA if they restrict investment. And unlike other trade agreements, there is nothing in TILMA to exempt regulations designed to ensure the stability of the financial system. In stark contrast to other agreements, TILMA has no safeguards to protect prudential regulations from challenges by investors.
TILMA does allow governments to do things that are inconsistent with the agreement if they are pursuing objectives the agreement defines as legitimate. But nowhere on TILMA's list of "legitimate objectives" is anything about safeguarding the soundness of financial institutions.
Right now, just Alberta and B.C. are TILMA signatories. The Yukon recently said no, as have all other provinces either by act or omission. Most seem to have decided the agreement is too radical — an ideological solution looking for a problem. But despite repeated rejections, Campbell continues to push his fellow premiers to join. It makes him the most determined deregulation advocate among the premiers.
Anyone not blinded by laissez faire theology can see the agreement for what it is: the most radical investment agreement in existence. Article 3, "No Obstacles," states unequivocally: "Each Party shall ensure that its measures do not operate to restrict or impair trade between or through the territory of the Parties, or investment or labour mobility between the Parties." Period. You cannot put up obstacles to investment, which is arguably what every government regulation does by definition.
Learn from Quebec's narrow escape
So what would happen if other provinces accepted Campbell's sales pitch and signed on? Take for example Quebec, and its recent moves to regulate the financial sector. In July, Quebec gave royal assent to Bill 77, the Derivatives Act, which establishes a broad legal framework specifically aimed at regulating derivatives traded in QuÃ©bec. QuÃ©bec is the first province to take on the regulation of these investments, the most toxic of any of the financial "innovations" unleashed on the world over the past 10 years. Warren Buffett refers to derivatives as "financial weapons of mass destruction."
But Quebec's laudable efforts to get some control over these risky financial products would have been impossible if the province had signed TILMA. Its regulatory initiative on derivatives would have broken TILMA's rules: that governments cannot introduce new regulations that restrict investment; that they have to reconcile their regulations with those of other parties to the agreement; that they cannot create obstacles to investment.
As of April 1, 2009, all existing B.C. and Alberta regulations over financial institutions and products will be challengeable under TILMA — never mind these provinces ever trying to introduce new financial reforms. What about other provinces that might hopefully follow Quebec's lead in strengthening financial regulation? If they sign TILMA, they might as well forget it, as they would in effect be setting their own regulations up for a legal challenge.
Who says the Washington Consensus is dead? It is being defended by deregulation's last crusader, Premier Gordon Campbell.
Thank you for reading this story…
More people are reading rabble.ca than ever and unlike many news organizations, we have never put up a paywall – at rabble we’ve always believed in making our reporting and analysis free to all, while striving to make it sustainable as well. Media isn’t free to produce. rabble’s total budget is likely less than what big corporate media spend on photocopying (we kid you not!) and we do not have any major foundation, sponsor or angel investor. Our main supporters are people and organizations -- like you. This is why we need your help. You are what keep us sustainable.
rabble.ca has staked its existence on you. We live or die on community support -- your support! We get hundreds of thousands of visitors and we believe in them. We believe in you. We believe people will put in what they can for the greater good. We call that sustainable.
So what is the easy answer for us? Depend on a community of visitors who care passionately about media that amplifies the voices of people struggling for change and justice. It really is that simple. When the people who visit rabble care enough to contribute a bit then it works for everyone.
And so we’re asking you if you could make a donation, right now, to help us carry forward on our mission. Make a donation today.