On Monday, the European Commission released a proposal that calls for the creation of a framework for cross-border regulatory cooperation in financial services as part of the United States-European Union Transatlantic Trade and Investment Partnership (TTIP). In the paper, the Commission states: “The goal [of the framework] is not to define the substance of international standards, which shall be discussed in the respective fora outside the TTIP negotiations. The goal is to create an institutional framework of EU and U.S. regulators to make sure the EU and U.S. rules work together, which shall contribute toward preventing future crisis.”
To date, U.S. officials have insisted that financial services be excluded from the TTIP negotiations — arguing that issues of financial regulatory consistency are already being addressed by various international entities, such as the Financial Stability Board. Such discussions notwithstanding, excluding financial services from the transatlantic trade talks is misguided. First, excluding a sector as central and important as financial services from talks encompassing every other aspect of the economy undermines the credibility of any eventual agreement. Second, the TTIP framework would provide a formal and high-level context within which to address cross-border financial regulatory inconsistencies as regulators continue to draft and finalize post-crisis regulatory rules. As the EU’s paper correctly observes: “[regulatory] inconsistencies are not only significant barriers to trade and investment but they also undermine the global financial stability that both the U.S. and EU have been seeking to achieve.”
Many important legislative, regulatory, and industry changes have occurred over the past five years to make our financial system safer and more secure. A comprehensive TTIP encompassing all industry sectors, including financial services as outlined in the European Commission’s proposal, will not only preserve America’s leadership position, but will facilitate access to capital, support job creation, and promote continued economic growth here in the U.S. and Europe. We hope these concerns will be taken into consideration as the TTIP negotiations continue.