June 7 — U.S. opposition to language on financial services regulatory cooperation in the pending trans-Atlantic trade deal could be challenged by a new coalition of 14 European and U.S. industry and business associations.
The coalition's creation signals the U.S. financial services industry's intention to redouble its efforts to override Treasury Department resistance to including financial regulatory coherence language in the talks.
U.S. officials have argued that discussions on financial services regulatory cooperation should take place in other international fora apart from the Transatlantic Trade and Investment Partnership (TTIP).
The Transatlantic Financial Regulatory Coherence Coalition, whose formation was announced June 7, said it wants to improve regulatory coherence and market access for U.S. and EU financial services companies. The TTIP is the best vehicle to achieve those goals, according to the coalition.
While U.S. financial companies and European negotiators generally want to insert language concerning financial regulatory coherence and market access into the agreement, the Obama administration opposes the move, sources said.
That disagreement could complicate TTIP negotiations. If U.S. negotiators insist on carving out financial regulatory coherence from the agreement, European negotiators may then quash U.S. negotiators' push for greater market access in Europe for U.S. financial companies, which could hurt those such as JPMorgan Chase & Co. and American Express Co.
A key difference in the negotiations involving financial services is whether a discrete section of the agreement—perhaps a separate chapter—should be devoted to financial regulatory coherence and market access.
While the U.S. financial industry and European negotiators generally favor including regulatory cohesion in the agreement, U.S. negotiators generally oppose the inclusion with respect to financial services, Garrett Workman, U.S. Chamber of Commerce director of European Affairs, told Bloomberg BNA.
Some Treasury Department officials are likely skeptical about whether trade agreements are the right forum to tackle the issue of regulatory harmonization, Mark Wu, an assistant professor at Harvard Law School who specializes in international trade and international economic law, told Bloomberg BNA.
Workman and others emphasized that as envisioned, the TTIP financial services text would not make regulatory decisions for either side. Instead, it would create a framework to allow EU and U.S. regulators to work toward sets of rules that will not impair cross-border economic activity.
“It means the rules that apply in the EU and the rules that apply in the United States are consistent enough that they do not negatively impact cross-border transatlantic business. So if you're operating in the European Union in the financial services industry, you're still able to operate in the United States without having a completely different business model or operations,” Peter Matheson, managing director at the Securities Industry and Financial Markets Association, a coalition member, told Bloomberg BNA.
The Obama administration should view this as an opportunity, not a threat to support and enhance existing regulatory cooperation discussions between financial regulators, Workman said.
A Treasury Department spokesman did not immediately respond to a request for comment.
The next formal round of TTIP negotiations is scheduled to occur in Europe during July, though intercessional meetings are occurring with increasing frequency.
“This is a very important time. And we think this issue is as vitally important as we did in 2013,” when TTIP negotiations began, Matheson said. “So we thought it would be useful to bring ourselves together in a slightly more formal way to be in a position to more efficiently and effectively have that discussion,” he said.
To overcome existing impediments to transboundary financial activity, the coalition will push for TTIP language to ensure early-stage discussions on policy matters, facilitate discussion concerning future policymaking and regulatory developments and generally advocate for greater accountability and transparency.
“As negotiations move into the next critical stage, we felt it important to pool our resources through this Coalition to educate on the benefits of a comprehensive approach to financial services within TTIP,” Matthew Ekberg, Institute of International Finance senior policy advisor for regulatory affairs, said in a June 7 e-mail sent to Bloomberg BNA.
“All aspects of the negotiations are still in discussion and regulatory coherence and market access are critical for a complete agreement. As such, we believe the time is right to continue actively engaging policy makers on both sides of the Atlantic on these important issues,” Ekberg, whose organization is a coalition member, said in his statement.
Coalition members include the Association for Financial Markets in Europe, American Chamber of Commerce to the European Union, the London and New York units of BritishAmerican Business, Federal Association of (German) Securities Trading Firms, European Banking Federation, European Services Forum, Financial Services Forum, Financial Services Roundtable, Institute of International Bankers, Institute of International Finance, Securities Industry and Financial Markets Association, TheCityUK, Trans-Atlantic Business Council and the U.S. Chamber of Commerce.
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The coalition's statement is available at http://src.bna.com/fFQ.
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