Double Standards for Banks and Builders

The Treasury Department released details of its new Public-Private Investment Program, which will give a massive subsidy to investors to partner with the government to buy up toxic assets.

You too can participate! All you need to pre-qualify is "demonstrated capacity to raise at least $500 million of private capital; demonstrated experience investing in Eligible Assets, including through performance track records, a minimum of $10 billion (market value) of Eligible Assets currently under management; demonstrated operational capacity to manage the Funds in a manner consistent with Treasury’s stated Investment Objective while also protecting taxpayers."

Oh, and you must have "Headquarters in the United States."

But in the WTO's Financial Services Agreement, the United States took on the commitment to treat foreign banks as well as we treat U.S. banks. As we say in a forthcoming paper:

A requirement to provide foreign corporations National Treatment with regard to subsidies is unquestionably part of these obligations. The Guidelines for Scheduling GATS Commitments, adopted by WTO Members in 2001, states:

“Article XVII [National Treatment] applies to subsidies in the same way that it applies to all other measures. ... any subsidy which is a discriminatory measure within the meaning of Article XVII would have to be either scheduled as a limitation on National Treatment or brought into conformity with that Article. Subsidies are also not excluded from the scope of Article II (MFN). In line with the paragraph above, a binding under Article XVII with respect to the granting of a subsidy does not require a Member to offer such a subsidy to a services supplier located in the territory of another Member.”

As Dean Baker points out, it is an outrage that folks in Washington would make such a stink about making sure Buy America is compliant with draconian WTO requirements, but we violate them willy nilly when it comes to subsidizing someone's rich friends on Wall Street.