The Global Financial Crisis and Government Support for Banks: What Role for the Gats?

Bart De Meester

Journal of International Economic Law, 2010, vol. 13, issue 1, 27-63

Abstract: This article examines whether the General Agreement on Trade in Services (GATS) is a useful instrument to tackle government support that creates distortions of international competition in the banking sector. The GATS has no specific provisions on subsidies. However, general support schemes 'as such' or 'as applied' may violate Article XVII if they exclude foreign-owned banks with a commercial presence in the territory of the World Trade Organization (WTO) Member that adopts the scheme. This depends on the specific commitments of the WTO Member and the limitations to this commitment. Moreover, it is required that the excluded banks are 'like' the domestic banks. A single application of a general scheme may violate Article VI(1) if solid evidence is available that this application is not reasonable, objective or impartial. Despite these possible violations, the great majority of measures will still be justified under the broad 'prudential carve-out'. Only support measures that are not reasonably able to achieve the prudential goal will not be exempted. Hence, the GATS imposes restraint on government support only in very limited cases. The WTO Members should address the remaining uncertainties with regard to both the obligations and the exception. This would ensure that the GATS is able to prevent that government support distorts competition and would also alleviate concerns that the GATS constitutes a danger to financial stability. Oxford University Press 2010, all rights reserved, Oxford University Press.

Date: 2010
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1093/jiel/jgq004 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:jieclw:v:13:y:2010:i:1:p:27-63

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Journal of International Economic Law is currently edited by Kathleen Claussen, Sergio Puig and Michael Waibel

More articles in Journal of International Economic Law from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().