IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Movement of Capital and Trade in Services: Distinguishing Myth from Reality Regarding the GATS and the Liberalization of the Capital Account

Listed author(s):
  • Federico Lupo Pasini
Registered author(s):

    This article will analyze the interplay between capital movements and trade in services as structured in World Trade Organization (WTO) law, and it will assess the implications of the capital account liberalization for the freedom of WTO Members to pursue their economic policies. Although the movement of capital is largely confined to the domain of international financial or monetary policy, it is regulated by WTO law due to its role in the process of financial services liberalization, which generally requires liberalized capital flows. From a legal perspective, the interplay between capital movements and trade in services requires striking a delicate balance between the right of market access and the parallel right of economic stability. Indeed, a liberalized regime for capital movements could pose serious stability problems during times of crisis. For this reason, it is necessary that Members are able to derogate from their obligations and adopt emergency measures. Regulating the movement of capital in the General Agreement on Trade in Services (GATS) requires stretching the regulatory oversight of WTO law over different aspects of international economic policy. Indeed, capital movements are a fundamental component of the balance of payments and have a major role in shaping monetary, fiscal, and financial policies. This article will analyze how the discipline provided by the GATS on capital movements will affect not only trade in services, but also the Members' policy space on monetary and fiscal policy. The article will conclude that while the GATS offers enough policy space for the maintenance of financial stability, it does not fully take into consideration the need of Members to control capital movements in order to conduct monetary policies. The Author 2012. Published by Oxford University Press. All rights reserved., Oxford University Press.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Oxford University Press in its journal Journal of International Economic Law.

    Volume (Year): 15 (2012)
    Issue (Month): 2 (June)
    Pages: 581-619

    in new window

    Handle: RePEc:oup:jieclw:v:15:y:2012:i:2:p:581-619
    Contact details of provider: Postal:
    Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK

    Fax: 01865 267 985
    Web page:

    Order Information: Web:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:oup:jieclw:v:15:y:2012:i:2:p:581-619. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)

    or (Christopher F. Baum)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.