Discussion On The Compatibility Of Capital Control Measures With GATS

Capital Control is one of a state macro-economy policy which aims to control the capital inflows and outflows in a country's capital account.With the deepening of the world's economic globalization,capital flows become increasingly active.However,every coin has two sides.At the same time of the economic booming and active investment lead by the free movement of the capital,there also exist danger to the stability of a country's financial system,or even will result in global or regional financial crisis,especially to some emerging countries.After the financial crisis happened in 2008,the world's economy suffered from huge damage.In order to maintain the stability of the domestic economy development or to rebuild their financial system,quite a number of countries choose to take capital control measures to restrict the capital inflows and outflows,especially the destabilizing and volatile capital flows.Because of the conflict between the capital controls and the the financial liberalization,the legality of a country's strictly restricting of the foreign capital flows has caused great concern and discussion.Nowadays,there is still no international treaty specialized in capital flows and related capital control measures.However,some of the important world organizations pay more and more attention to this conflict and have published announcements and stipulated rules on the free movement of capital flows and the legitimacy of the capital controls.For instance,the IMF,the WTO and the OECD.There are several articles of GATS has provided on capital flows item.In this paper,based on the provisions of GATS on the free movement of capital,I did research on some countries5 capital control measures and hope to work out the conclusion of these measures9 compatibility with GATS and then to come up with suggestions on China's regulation designing and implementation on the control of capital flows to ensure its compatibility of GATS.This paper could be divided into six parts:The first part is mainly talked about the concept of the capital controls and also give instructions on and other similar concepts.There are also listing some typical capital control measures implemented by countries pre or post the economic and financial crisis.In the second part,I take the case "Argentina-Measures Related to Trade in Goods and Services”as the leading case and mainly studies the measures in issue which is closely related to the restriction of the free movement of capital flows.They are Measure 2,Measure 5,Measure 6,Measure 7 and Measure 8.In the third part,I give a detailed instruction on how GATS regulates the free movement of capitals.I also analyze the relationship between each provision and the free movement of capitals.In the forth part,I combine the provisions and the measures in issue to analyze the compatibility of these measures with GATS,in basis of the panel report established by the DSB.The fifth part is mainly talk about the current situations of China's capital market as well as some control measures.In basis of the reality and some experience concluded from the leading case and as well give some suggestions to Chinese legislation on the capital controls and the free movement of capitals.In addition,I also made discussions on how to balance the national financial supervision and the economy liberalization and as a developing country how to take full use of the rules of GATS to protection our countries' interest and economic independence at the same time of performing the obligations and commitments.In the end of this paper,I made a conclusion on the requirements of the commitment of the free movement of capital under GATS rules and the situations in which the measures comply with GATS properly.I finally looked ahead of the perfection of the financial legislation system.