Recent experience with international capital markets suggests that it is not an appropriate time to negotiate a new commercial agreement which would limit signatory countries’ abilities to regulate the flow of capital across international boundaries.
But if the investment rules that emerge from negotiations on the Free Trade Area of the Americas (FTAA) are based on investment rules in the North American Free Trade Agreement (NAFTA) and the Multilateral Agreement on Investment (MAI) – as it now appears that they will be – the FTAA would do just that. Provisions in NAFTA and the MAI on definition of investment, transfers, and national treatment would severely restrain the ability of governments to regulate even short-term speculative capital flows, in order to prevent or manage a financial crisis.