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Two leading international trade economists, Under Secretary of the Treasury John Taylor and Jagdish Bhagwati of Columbia University, debate the pros and cons of including capital control requirements in trade agreements. Capital controls are restrictions on the flow of money and investments between countries.
To safeguard the free flow of capital and financial assets across borders, the United States has demanded, in recent free trade agreements, provisions forbidding controls and restrictions on the purchases and sale of financial assets, except during emergencies for very short periods of time. The agreements also provide compensation for foreign investors injured by controls. These new U.S. demands have provoked dissent and division within the trade policy community and among economists.
