Capital Account Regulations and the Trading System: A Compatibility Review
Task Force on Regulating Global Capital Flows for Long-Run Development
Download the full report from the Pardee Center
(Available in Spanish and Portuguese)
This report is the product of the Task Force on Regulating Capital Flows for Long-Run Development co-sponsored by GDAE and Boston University's Frederick S. Pardee Center for the Study of the Longer-Range Future. The report builds on the Task Force's first report published in March 2012.
The Task Force was convened initially in September 2011 as consensus was emerging that the global financial crisis has re-confirmed the need to regulate cross-border finance. The March 2012 report argues that international financial institutions – and in particular the International Monetary Fund – need to support measures that would allow capital account regulations (CARs) to become a standard and effective part of the macroeconomic policy toolkit. Yet some policymakers and academics expressed concern that many nations — and especially developing countries — may not have the flexibility to adequately deploy such regulations because of trade and investment treaties they are party to.
In June 2012, GDAE, the Pardee Center, and the Center for the Study of State and Society (CEDES) in Argentina convened a second Task Force workshop in Buenos Aires specifically to review agreements at the WTO and various Free Trade Agreements (FTAs) and Bilateral Investment Treaties (BITs) for the extent to which the trading regime is compatible with the ability to deploy effective capital account regulations.
This report presents the findings of that review, and highlights a number of potential incompatibilities found between the trade and investment treaties and the ability to deploy CARs. It also highlights an alarming lack of policy space to use CARs under a variety of FTAs and BITs—especially those involving the United States. Like the first report, it was written by an international group of experts whose goal is to help inform discussions and decisions by policymakers at the IMF and elsewhere that will have implications for the economic health and development trajectories for countries around the world.
The June 2012 workshop was co-chaired by GDAE Senior Researcher Kevin P. Gallagher and Leonardo E. Stanley. The pair co-authored a Pardee Center Issues in Brief in September 2012.
Download the full Task Force report from the Pardee Center.
(Also available in Spanish and Portuguese)
Read more on GDAE’s work on capital flows, including the first Task Force report.
The Global Development and Environment Institute’s Globalization and Sustainable Development Program examines the economic, social and environmental impacts of economic integration in developing countries, with a particular emphasis on the WTO and NAFTA's lessons for trade and development policy. The goal of the program is to identify policies and international agreements that foster sustainable development.