Financial services workers' union takes concerns over international Trade in Services Agreement to RBNZ, FMA and cabinet ministers

By Gareth Vaughan

First Union, which represents about 4,000 financial services sector workers, has written to the Reserve Bank Governor, Financial Markets Authority CEO, and two cabinet ministers raising concerns about an international Trade in Services Agreement (TISA).

The letters follow a WikiLeaks leak of the draft text of the TISA Financial Services Annex. First Union issued a press release last week raising concerns about the draft text released through WikiLeaks, but has now stepped up its opposition through the letters.

In letters to Reserve Bank Governor Graeme Wheeler, FMA boss Rob Everett, Finance Minister Bill English and Commerce Minister Craig Foss, First Union general secretary Robert Reid says the union has studied legal analysis of the leaked text and is "extremely concerned" it would impose a standstill to financial measures established by a country that are inconsistent with its rules.

"This, we believe, would mean that current financial regulations will be the most restrictive of financial services that a government would be allowed to employ, and that states would be encouraged to bind in new liberalisation beyond their status quo," Reid wrote.

"It is our view that this agreement is designed to lock in the light-handed regulatory approach that brought us the global financial crisis. We are concerned the agreement could hamstring the ability of the FMA, the Reserve Bank and Parliament itself in ensuring adequate regulatory control over our financial system. A lack of effective regulatory sovereignty over our financial system could threaten NZ investors’ security, not to mention the jobs of our 4,000 members working in the financial sector," wrote Reid.

Individually to Wheeler he added; "The TISA agreement would undermine the Reserve Bank’s core function of promoting a sound and efficient financial system. Please inform us whether you have had any involvement or briefing from the Ministry of Foreign Affairs and Trade (or any other government agency) on the TISA negotiations. Please also inform us of the Reserve Bank’s position on this agreement."

To Everett he said; "As the regulator of financial markets you have committed to creating a ‘risk-based’ approach, however as stated the TISA agreement would undermine this commitment. Please inform us whether the FMA has had any involvement or briefing from the Ministry of Foreign Affairs and Trade (or any other government agency) on the TISA negotiations. Also, please inform us of the FMA’s position on this agreement."

To Foss he wrote; "As the Minister in charge of the regulator of financial markets you have committed to creating a ‘risk-based’ approach, however as stated the TISA agreement would undermine this commitment. Please inform us whether as Minister responsible for the FMA you have had any involvement or briefing from the Ministry of Foreign Affairs and Trade (or any other government agency) on the TISA negotiations. Please also inform us of the FMA’s position on this agreement."

And to English he said; "Please inform us whether you have had any involvement or briefing from the Ministry of Foreign Affairs and Trade (or any other government agency) on the TISA negotiations. Please also inform us of your position on this agreement."

Reid told interest.co.nz he expects to hear back from the four within a couple of weeks.

'Finance industry has captured global rule making'

Green Party co-leader Russel Norman has also taken aim at the TISA, saying the text shows the United States pushing for a freeze of financial regulation at existing levels, which would severely limit the ability of sovereign governments to deal with another global financial crisis.

Jane Kelsey of the University of Auckland's Faculty of Law, released an analysis of the leaked text suggesting the finance industry has captured global rule making.

"The development of global finance rules under the guise of ‘trade’ was the brainchild of senior executives of AIG, American Express, Citicorp and Merrill Lynch in the late 1970s. Their role, and subsequently a broader lobby called the Financial Leaders Group, is well documented. The former director of the WTO’s services division himself acknowledged in 1997 that: ‘Without the enormous pressure generated by the American financial services sector, particularly companies like American Express and Citicorp, there would have been no services agreement’," says Kelsey.

"As the lobby evolved it was still led from Wall Street, but expanded to include the major insurance and banking institutions, investment banks and auxiliary financial services providers, from funds managers to credit-rating agencies and even the news agency Reuters. They were later joined by the e-finance and electronic payments industry, which includes credit, stored value and loyalty cards, ATM management, and payment systems operators like PayPal."

"The industry lobbyists have also set the demands for financial services in TISA. The Chairman of the Board of the US Coalition of Service Industries is the Vice Chairman of the Institutional Clients Group at Citi. When the industry’s demands, as expressed in the consultation on TISA conducted by the US Trade Representative in 2013, are matched against the leaked text it becomes clear that they stand to get most of what they asked for," Kelsey says.

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