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10 ILSA J. Int'l & Comp. L. 297 (2003-2004)
Using Free Trade Agreements to Control Capital Account Restrictions: Summary of Remarks on the Relationship to the Mandate of the IMF

handle is hein.journals/ilsaic10 and id is 319 raw text is: USING FREE TRADE AGREEMENTS TO CONTROL CAPITAL ACCOUNT RESTRICTIONS: SUMMARY OF REMARKS ON THE RELATIONSHIP TO THE MANDATE OF THE IMF Deborah E. Siegel* I. INTRODUCTION ........................................... 297 1I. INCREASED PROMINENCE OF INVESTMENT AGREEMENTS ........ 298 I. IMF MANDATE ON RELATED MATTERS ....................... 298 IV. PROBLEMS WITH INCONSISTENT APPROACHES .................. 301 V. CONCLUSIONS ............................................ 303 I. INTRODUCTION The United States recently signed separate Free Trade Agreements (FTA' s) with Singapore and Chile. The agreements contain similar chapters on invest- ment rules. These chapters seek to increase investment between the signatories through the articulation of strong disciplines, including by providing for free transfers of funds related to covered investments. This is a laudable goal insofar as increased trade and investment flows can be beneficial and clear rules on transfers prevent arbitrary administration of exchange transactions. Nonethe- less, the FTA's blanket prohibitions on capital restrictions, even in the context of an economic and financial crisis, raises concerns about the ability of signatories to manage macroeconomic imbalances and consistency with the work of the International Monetary Fund (IMF). Furthermore, the cooling off provisions of the dispute resolution provisions-while innovative-are not a substitute for clear legal rules on a balance of payments safeguard and consistency within the IMF Articles of Agreement. This note discusses how the rules of these investment chapters overlap with the law and work of the IMF, particularly in the context of managing economic and financial crises that affect its membership and the international community writ large.' * Deborah E. Siegel holds the position of Senior Counsel, Legal Department International Monetary Fund. This article expresses the personal views of the author and does not necessarily represent the views of the institution. It does take into account, however, discussion of related issues in the IMF's Executive Board and other work by the IMF staff. 1. Much of the analysis herein is drawn from an article by Mr. Sean Hagan, Deputy General Counsel, Legal Department, IMF, published in U.N. CONF. ON TRADE AND DEV., TRANSFER OF FUNDS, U.N. Doc. UNCTAD/ITE/IT/23, U.N. Sales No. E.00.ILD.38 (2000).

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