Statement in Support of the GATS

Financial Services Negotiations

Preamble

In April 1997, negotiators re-launched the talks in the World Trade Organization (WTO) for a more liberal, transparent regime for trade and investment in financial services. The Pacific Basin Economic Council fully supports the resumption of these negotiations and we urge all WTO members to work together towards a full MFN financial services agreement in the WTO with significantly improved market access and national treatment commitments.

PBEC believes that liberalization of trade and investment in financial services will help broaden and deepen capital markets, particularly those in developing countries where the demand for capital is enormous. It will provide depth and liquidity to local markets, help promote domestic savings, enable global financial institutions to complement the efforts of local banks in large financing and credit risk diversification, and expand the range and quality of risk management products and services to meet development goals and bolster competitiveness.

Liberalization of financial markets will also serve to facilitate foreign direct investment and lower the cost of funds and financial services to borrowers, resulting ultimately in greater efficiency in the use of capital and lower prices. However, areas not presently covered by the GATS Financial Services negotiations, including regulatory issues, other non-tariff barriers and the participation by government enterprises can similarly distort financial services markets and should be considered in the next round of services negotiations scheduled to begin the year 2000.

Position

As both providers and consumers of financial services, members of PBEC believe that certain objectives should be achieved in the current WTO GATS financial services negotiations scheduled for completion in December 1997. In order to create international rules that will guarantee a more liberal, transparent regime for trade and investment in financial services these negotiations need to ensure that as many countries as possible present offers incorporating the following principles:

• The right to establish and operate competitively, including the right to majority ownership
• The right of national treatment and equal competitive opportunity
• Regulatory, administrative, and legal transparency
• Elimination of restrictions on cross border services
• Grandfathering of existing investments and acquired rights
• Freedom to introduce new products and compete on pricing and value-added services
• Assured access to international reinsurance markets
• Phasing out of barriers to the posting of key personnel
• No new restrictions or new bindings that are any less liberal than current policy
• Progressive liberalization of remaining barriers within a relatively brief time frame and by a specified date

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Approved by the Board of Directors, November 21, 1997
PBEC Mid-term Steering Committee Meeting
Whistler, B.C. Canada

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