Here we go.
Since last year, we've been predicting that it was only a matter of time before governments and corporations decided to start invoking trade-law concepts to talk down the ambition in financial re-regulation, but I wouldn't have guessed that entities headed by "Barack Hussein Obama" and the "Labour Party" would be kicking off the kicking.
Reports the WSJ:
The directive would effectively apply to all funds and financial firms, including those based in the U.S., if they want to raise cash or provide services in Europe. This so-called equivalence test may block some U.S. companies from operating in Europe, given that the European directive goes much further than proposed increases in U.S. fund regulation. The U.S government wants hedge funds to register and provide more information but isn't looking at rules such as leverage caps.
The U.S. signaled its position in a little-noticed speech late last month by Mark Sobel, the U.S. Acting Secretary for International Affairs. "In a world of mobile capital...we cannot go our own ways, deviating significantly from international standards," Mr. Sobel told the Federation Bancaire Francaise, a Paris-based banking association. "Nor should we impose standards on one another if we are not identical."...
The U.K., which already regulates hedge-fund managers, believes the European rules go too far and will drive funds out of Europe in what was described as a "weak form of protectionism" by Paul Myners, a U.K. government minister responsible for London's financial center.
What's noteworthy about the EU proposal is that it is non-discriminatory, i.e. would apply to European and U.S. firms alike. But even non-discriminatory regulations conflict with WTO market access terms.
This is the real danger for advocates who wish to postpone or avoid the international re-regulation dimension: if you haven't adequately prepared by calling simultaneously for domestic re-regulation and removal of the WTO and other institutions' regulatory ceiling, you too could end up being called a (gasp) "protectionist." And, it ain't fun, I assure you.