RESTRICTED
WORLD TRADE S/FIN/M/6
7July1995
ORGANIZATION
(95-1885)
Committee onTrade inFinancial Services
REPORT OFTHE MEETING HELD ON30JUNE 1995
Note bytheSecretariat
1. Thesixthmeeting oftheCommittee onTrade inFinancial Services waschaired byMr.Frank
Swedlove ofCanada. Theagenda forthemeeting consisted ofthree items; procedural issues, status
ofthenegotiations, andother business.
2. Onprocedural issues, theSecretariat hadprepared aninformal notewhich wasintheform
ofadraftDecision ontheApplication oftheSecond Annex onFinancial Services bytheCouncil for
Trade inServices toextend theperiod inwhich countries were allowed tomake changes totheir
schedules andMFN exemption lists,following informal consultations earlier intheday.Upon request
from theChairman, theSecretariat explained thattheDecision extended until28Julythepowers
conferred toMembers bytheSecond Annex onFinancial Services tochange theschedules of
commitments andMFN exemption listsnotwithstanding theprovisions ofArticle XXIoftheGATS
andtheAnnex onArticle IIExemptions. Thiswasdonepursuant toparagraph 3.oftheSecond Annex
which gavetheCouncil forTrade inServices thepower toestablish anyprocedures necessary forthe
application oftheprovisions oftheAnnex.
3. Intheabsence ofcomments tothedraftDecision, theCommittee agreed torecommend that
theCouncil forTrade inServices adopt thisDecision.
4. Onthestatus ofthenegotiations, theChairman invited delegates toreport onrecent
developments. Brazil reported onreform measures taken overthepastfewyears thatprogressively
liberalized itsmarkets andreduced tariffs andnon-tariff barriers. Structural changes oftheeconomy
were being undertaken, such astheabolition ofthestate monopoly intheoilindustry andin
telecommunications. Infinancial services, despite theconstitutional constraints thatlimited access
toitsfinancial markets, Brazil hadincluded initsschedule commitments covering alarge variety of
financial services. Thedraftrevised schedule of15Junecontained newcommitments inbanking and
other financial services thatguaranteed national treatment toforeign financial institutions established
inthecountry byeliminating allthelimitations onnational treatment contained intheDecember 1993
schedule. Furthermore, Brazil guaranteed thatpublic sector financial institutions included inthe
privatization program would notbesubject torestrictions onmarket access existing inother
circumstances. Brazil hadalsoentered additional commitments which indicated thatwithin twoyears
aftertheadoption ofrelevant legislation, participation offoreign capital intheinsurance andreinsurance
markets, aswellasinother financial institutions, would bepermitted. Thenewcommitments included
intheoffer represented astrong political effort inthecourse ofthepresent negotiations. Brazil
reaffirmed itsinterest andpolitical willtocollaborate withallparticipants inattaining asatisfactory
conclusion ofthese negotiations withresults which would contribute tothestrengthening oftheWTO
asamultilateral trade organization supported byallitsMembers.S/FIN/M/6
Page2
5. Indonesia noted thatalldelegations hadmade great effort tooffer what theycould toopen
theirmarkets sothatthemultilateral system could bestrengthened. Indonesia 'srevised offerbound
foreign equity ownership atthelevelofexisting lawsandregulations. Indonesia believed thatithad
madeasubstantialcontributionintheoffer,althoughitsserviceprovidershadnotyetbecomecompetitive
enough tobesignificant exporters. Thisdelegation hadcome tothenegotiations ingood faith, with
theexpectationthatthosewhobenefitmostfromtheopeningofitsmarketswouldexercisestatesmanship,
would berealistic about whatwasachievable atthisstage ofnegotiations, andwould totakesteps to
preserve theprinciples ofmultilateral trade, notleastofwhich wastheprinciple ofnon-discrimination.
Thisdelegation called onothers nottoundermine what hadbeen achieved because ofunrealistic
expectations, andtobuildonwhatwasthere. Statesmanship andwisdom wererequired ofallcountries.
Itwasimportant thattrustandthefaithinthemultilateral system werenotweakened. Indonesia would
continue tobepositive andwould takeanactive partinorder tocome toasuccessful conclusion of
thenegotiations.
6. TheEuropean Community expressed satisfaction withthedecision taken atthismeeting and
thedecisions tobetaken inthefollowing meeting oftheCouncil forTrade inServices innotonly
addressing thedifficulties created inthelasthours butalsoincreating newopportunities inthepresent
negotiations. Thisdelegation wasready toexplore thesecond stepofpossible ideas toseehowfar
onecould workinthedirection ofstrengthening themultilateral system inservices trade. Thedelegation
wasencouraged bytheimprovement ofoffers inthelastseveral daysandverymuch hoped thatthis
would goonsothatfinancial services would stayinthemultilateral regime without anyoutsiders or
free-riders.
7. Australia stressed theimportance ofcontributing tothesecond partoftheexercise inreaching
asuccessful outcome soon. Itwould indeed beagreat irony iftheargument offree-ridership were
tobereversed, andthedelegation soconcerned about thefree-rider aspect ended upbeing afree-rider.
Thisdelegation hoped thatsuchathing would nothappen. Canada alsoexpressed strong support for
attempts toachieve anMFN-based agreement. Thisdelegation particularly welcomed adecision which
allowed more timefordelegations tocatch upandbefullyuptodateontheschedules ofothers. It
looked forward tohaveanopportunity toseealloftheoffers inwriting. Morocco thanked those who
hadworked tomake theextension oftheprocess possible. However, thisdelegation noted thatsuch
alast-minute situation should never happen again, andappealed toallparticipants thatby28Julyall
should beinaposition topreserve theachievements ofthenegotiations andtogoevenfurther. New
Zealand alsowelcomed theprocedural move taken, andhoped thatallparticipants would beableto
reflect inapositive direction ontheirpositions andhavethenecessary determination tocontinue the
common pushtowards multilateral liberalization inservices. Japan hadbeenmaking anutmost effort
withother delegations inpursuing thecommon goalofanMFN-based agreement infinancial services.
Though oneofJapan'smostimportant trading partners appeared nottoshare thisgoal, efforts should
bemade tosalvage asmuch aspossible whathadbeenaccumulated overnineyears ofnegotiations.
Thisdelegation wasverymuch encouraged tohearanoverwhelming majority ofdelegations expressing
theirinterest inupholding thisprinciple, andhoped thatintheendthisprinciple would beapplied by
allparticipants. Switzerland echoed earlier speakers inexpressing itswilltocontribute toacommon
effort toreach anMFN-based agreement withahighlevelofbound commitments.
8. TheUnited States appreciated theefforts ofalldelegations andtheChairman aswellasthe
Secretariat inreaching thispoint, andnoted thatitmaintained itshighambitions fortrade inservices
andwould work withother delegations inthefuture toachieve those ambitions.S/FIN/M/6
Page3
9. SpeakingonbehalfofthedelegationsofASEANcountries,thedelegatefromIndonesiaexpressed
deepdisappointment thatthegoalofthese negotiations infinancial services hadnotbeenachieved.
Asdeveloping countries, theASEAN countries hadmade great efforts inorder tocontribute toa
successful agreement, given theirlevel ofdevelopment. Itwould beregrettable toreject what had
beenachieved bysetting unrealistic goals. Moreover, itwould behighly unfair toinsist thatcountries
make commitments which werebeyond whatcould beundertaken atpresent. Themultilateral trading
system would beplaced ingreat jeopardy ifimportant trading partners which weregreatbeneficiaries
ofliberalization inservices insisted onmajor exemptions from oneofitsimportant principles. The
ASEAN countries therefore wished toappeal forstatesmanship, wisdom andrestraint bythose who
weretempted totakeapathwhich would undermine multilateral principles. Venezuela supported earlier
speakers ontheproposal toavoid negative results from thenegotiations. Itwould beverydifficult
toexplain howonecould doawaywiththeimprovements introduced bysuchalargenumber ofcountries
including thiscountry. Venezuela waswilling tomaintain itssubstantially improved offerandinvited
other participants todolikewise withaview tocontinue improving thelevel ofcommitments and
strengthening thecredibility ofthemultilateral trading system.
10. Itwasagreed thattheCommittee would needtomeetinthelastweek ofJuly. Thedateof
thenextmeeting would becommunicated todelegations later. TheChairman expressed hishopethat
thenegotiations would come toasuccessful conclusion.