Economists Call for TPP Deal to Allow Capital Controls

Press Release – The Institute of Policy Studies More than 100 Economists Call for Trans-Pacific Trade Deal to Allow Capital Controls to Prevent CrisesMore than 100 Economists Call for Trans-Pacific Trade Deal to Allow Capital Controls to Prevent Crises Click here for the full statement and list of endorsers. In advance of Trans-Pacific trade talks, over 100 economists are sending a letter today urging negotiators to promote global financial stability by allowing the use of capital controls. Signatories include prominent scholars from six of the nine countries currently involved in the Trans-Pacific talks: Australia, Chile, Malaysia, Peru, New Zealand, and the United States. The other participating countries are Brunei, Singapore, and Vietnam. Trade officials will meet March 1-9 in Melbourne, Australia for the 11th round of negotiations. The economist statement reflects growing consensus that capital controls are legitimate policy tools. It notes, however, that nearly all U.S. trade agreements “strictly limit the ability of trading partners to deploy capital controls – with no safeguards for times of crisis.” They recommend that the Trans-Pacific Partnership agreement “permit governments to deploy capital controls without being subject to investor lawsuits, as part of a broader menu of policy options to prevent and mitigate financial crises.” Among the endorsers: • Several economists who are generally supportive of free trade but are critical of the provisions that restrict capital controls (e.g., Jagdish Bhagwati of...

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