The Evolving Prudential Exceptions in Regional Trade Agreements

Asian Journal of WTO & International Health Law and Policy, Vol. 13, No. 2, pp. 395-441, September 2018.

47 Pages Posted: 23 Oct 2018

See all articles by Alex Yueh-Ping Yang

Alex Yueh-Ping Yang

National Taiwan University - College of Law

Date Written: September 28, 2018

Abstract

Paragraph 2(a) of the Annex on Financial Services of the General Agreement on Trade in Services (GATS), known as the “GATS Prudential Exception”, plays a crucial role in connecting international trade laws and international financial laws. Commentators, however, are less satisfied with it. To explore other possible prudential exceptions, in this paper, I investigate the regional trade agreements reported to the World Trade Organization that contain a prudential exception. I compare the different nexus requirements, control mechanisms, and other special variations contained therein and find that Europe, Latin America, and China are the three major promoters of changes. Based on these findings, I map out the trend of the evolving prudential exceptions in bilateral settings. I identify a general trend toward a more restrictive use of the prudential exception, which moves slightly toward more financial liberalization. I also identify some progressive ways toward financial liberalization for policymakers to consider, including strengthening the nexus requirement, clarifying rather than strengthening the control mechanism, and starting from some specific prudential measures. This investigation suggests the importance of pacing when developing the prudential exception.

Keywords: prudential exception, anti-avoidance clause, for prudential reasons, Argentina — financial services, regional trade agreement, financial liberalization, prudential regulation, international finance

Suggested Citation

Yang, Alex Yueh-Ping, The Evolving Prudential Exceptions in Regional Trade Agreements (September 28, 2018). Asian Journal of WTO & International Health Law and Policy, Vol. 13, No. 2, pp. 395-441, September 2018., Available at SSRN: https://ssrn.com/abstract=3256731

Alex Yueh-Ping Yang (Contact Author)

National Taiwan University - College of Law ( email )

No.1, Sec.4, Roosevelt Road
Taipei, 10617
Taiwan

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