The financial crisis should be recognized as a very clear example of how the free trade and free market theory has failed, why the WTO should turn around away from this neo-liberal model and allow for all services and trade to be at the service of people and the planet, not of corporate profits.
The controversial General Agreement on Trade in Services (GATS) of the World Trade Organisation has generated major social concern about the implications for the equitable provision of basic public services.
An exciting development in recent years is the number of new South-South inter-governmental alliances that are emerging to defend their interests and challenge the bias of the current global trade and investment regime.
The United Kingdom is home to a particularly influential services industry lobby, which operates through an organisation called International Financial Services, London (IFSL). Two IFSL working groups, the Liberalisation of Trade in Services (LOTIS) Committee and the High-Level LOTIS Group, constitute a veritable corporate-state alliance.
South Africa is playing a significant role in supporting and extending the power of the World Trade Organisation, a new system of global government. This not only entails South Africa surrendering its own policy-making rights and space, but also means bargaining away the South African peoples’ democratic rights to determine their country’s internal economic, environmental, social and cultural policies.
The international free trade and investment policies and the related WTO agreements played a major role in undermining so many developing countries' economies. The proponents of tese policies, including the EU, are now urging the govenrments of the world to end their resistance to such policies within the WTO.
The WTO's General Agreement on Trade in Services (the "GATS") has very much underpinned expansion without regulation and supervision, so the financial corporations had the guarantee that their expansion would be underpinned. But financial services are not the same as other services – they need special supervisory structures.
Today, just as faith in deregulated markets has evaporated in the nightmare on Wall Street, so too is the long reign of market fundamentalism (or neoliberalism) ending in the development arena. And, a debate over the best route to development has returned.
As the world is still assessing one of the most violent shocks in international financial markets ever, and measures to avoid future financial crises are still not in place, developing countries should be cautious of dangers associated with further liberalisation of their financial sectors.