Leaked RCEP documents confirm restrictions on government regulation of financial crises

March 23, 2017: Leaked documents from the December 2016 RCEP negotiations have been published on the KEI website. They show how the RCEP investment and services chapters restrict government regulation of investment flows and financial services.

An extract from the investment chapter sets out rules for governments dealing with balance of payments crises or other financial crisis.

While the investment chapter as a whole says there should be no restrictions on investment flows, the leaked article allows governments to regulate investment flows in the event of a crisis but still places restriction on such regulation.

An extract from the services chapter allows the same exceptions for regulation of financial services in the event of a crisis, but still places restrictions on the scope of regulation.

The leaks show that India, China and the ASEAN countries generally favour less restrictions on government regulation, with Japan and Korea favouring more restrictions.

The text of the competition policy chapter has also been leaked. The chapter is not legally enforceable by the state to state dispute process in the agreement, but commits governments to developing laws to promote competition in markets and forbid anti-competitive activity, and consumer protection laws.

It is not clear whether the chapter has also been exempted from the Investor-State Dispute Settlement process (ISDS), which enables foreign investors to sue governments for compensation if they do not conform to the rules of the agreement in ways which cause harm to investors.