The Gats "prudential Carve-out" Clause And Its Implications For China,

The"Prudential Carve-Out"is the core clause of the"Annex on Financial Service''under the GATS. It is the clause that coordinates the contradiction between the financial services trade liberalization and the financial supervision while being contributed to the final agreement among the members of the GATS. Then the multilateral framework of laws and regulations about the financial services was built. The content of the"Prudential Carve-Out"clause is not defined very clearly, so that it is very difficulty to cite the clause in practice. This article analyses and discusses the problem above form the legal angle and further discusses the clause applicable to China.This article mainly uses three kinds of studying methods: method of qualitative analysis, method of comparative study and method of case analysis.The main body of this paper is divided into four parts: The first part is the introduction of the multilateral framework of laws and regulations about the financial services and the"Prudential Carve-Out"clause. Firstly, it introduces he multilateral framework of laws and regulations about the financial services, mainly including the substantive regulation, the procedural regulation and the selective regulation. Secondly, it derives three existing ideas of the"Prudential Carve-Out"clause by reviewing the process of the Uruguay round negotiations and expounding the relations between the financial services trade liberalization and the financial supervision. Thirdly, it introduces the content of the clause and preliminary reading briefly.The second part is the key section of this paper by analyzing some legal issues related how to applying to the"Prudential Carve-Out"clause. This part including the"prudential measures"standard definition, the admit mechanism of the prudential measures", the relation between the"Prudential Carve-Out"clause and the GATS, and the relation between the"prudential measures"and trade protectionism. Further, some conclusions are derived. Firstly, the common sense about the"prudential measures" standard definitions are standards of purpose legitimacy, independent cognizance, benefit to the developing countries and accepting judicial review. Secondly, although the GATS designed a set of"prudential measures"recognition mechanism, it exists certain difficulties while in practice. Thirdly, the"Prudential Carve-Out"clause does not have absolute precedence. Fourthly, the "Prudential measures" could lead to financial services trade barriers and become the means of trade protectionism.The third part mainly introduces the relevant legislation and practice about the prudential supervision from international levels and makes a transverse comparison with the"Prudential Carve-Out"clause under the GATS. Three representative comparative objects are selected. They are the NAFTA, the European Union and the Basle Committee.The fourth part is the purpose of this paper by analyzing the enlightenment about application of the"Prudential Carve-Out"clause in China. This part introduces a case on"China-Measures Affecting Financial Information Services and Foreign Financial Information Suppliers"and makes two enlightenments about application of the"Prudential Carve-Out"clause in China. One of the enlightenments is establishing prudential supervision legal system about financial services trade; the other one is defusing the financial risks by use the"Prudential Carve-Out"clause correctly. At the end, we China should actively participate in multilateral negotiations and to speak our minds when makes the"Prudential Carve-Out"clause explicitly defined. We should maximum promote our financial services trade development and maintain the integrity and stability of the financial system.