On 8th May Brazil’s Ambassador to the World Trade Organization (WTO), Roberto Carvalho de Azevedo, was named as the consensus candidate for the post of Director-General of the World Trade Organization (WTO). This appointment brings a glimpse of hope that trade rules in financial services, especially given the 2008 crisis, can be revisited.
Established on 1st January 1995, the WTO is the legal and institutional foundation of the multilateral trading system. It provides the principal contractual obligations that determine the framework for, and implementation of, domestic trade legislation and regulations. To date, it comprises 159 member-states. The WTO, in collaboration with other multilateral institutions including the IMF and the World Bank, facilitate the liberalization of financial services, and economic harmonization and cohesion across and within member-states. As such, it is a key player in global economic governance and its policies significantly affects the realization of human rights.
To date the WTO has failed to take leadership in a deep rethinking of rules on liberalization of financial services. This rethinking is overdue as those rules were negotiated at a time when neo-liberalism ruled supreme, specifically the view – now proved misplaced — that financial markets should “self-regulate.” Interestingly, Mr. Azevedo noted in his presentation to the WTO General Council that, “[w]hat we do in the WTO has a direct impact on the quality of millions of lives around the globe. But remember, what we don’t do, also affects them.”
Mr Azevedo’s home country, Brazil, is an example of a WTO member state that has made few commitments to liberalize its financial and banking sectors. This policy position not only enabled it to weather the financial crisis (for the most part), it also allows Brazil to implement policies that reduce poverty. In fact, this BRICS country is today considered one of the few “engines of growth” that can save the global economy from its gloomy outlook.
Of course, Mr Azevedo stated that as WTO’s chief he would not necessarily toe Brazil’s policy lines, and this is appropriate. Leadership in a global organization must look beyond the interests of any one country. However, as the effects of the financial crisis shows only too well, it is in the world’s interest to regulate the financial sector in the service of human rights. This harmonization should be done on the basis of what we know now about financial markets, not the anachronistic conceptions of the 1990s. And, this would mean relying on Brazil’s experience – not its policy line.
The role of trade liberalization in financial services in Europe and the United States in the recent financial crisis is under explored, and its consequences on human rights are under-reported. Given the multiple effects of austerity measures on both the enjoyment of human rights and governments’ ability to fulfill their human rights obligations, it is critical that we ask: what are the lessons of the crisis and how they can inform domestic regulation and multilateral agreements involving financial services to better facilitate state and corporate accountability? Let us hope Mr Azevedo takes this opportunity.
Savi Bisnath is Associate Director at the Center for Women’s Global Leadership.