RESTRICTEDWORLD TRADE
ORGANIZATIONS/FIN/M/36
26 September 2002
(02-5181)
Committee on Trade in Financial Services
REPORT OF THE MEETING HELD ON 22 JULY 2002
Note by the Secretariat1
1. The Committee on Trade in Financial Services held a meeting on 22 July 2002, under the
Chairmanship of Mr. Habib Ahmed (Pakistan).  The agenda is contained in airgram WTO/AIR/1863.
A. ACCEPTANCE OF THE FIFTH PROTOCOL TO THE GENERAL AGREEMENT ON TRADE IN
SERVICES EMBODYING THE RESULTS OF THE FINANCIAL SERVICES NEGOTIATIONS
2. The Chairman recalled that seven WTO Members had not yet ratified the Fifth Protocol,
namely Bolivia, Brazil, Dominican Republic, Jamaica, the Philippines, Poland, and Uruguay.
3. The representative of Poland informed that the Minister of Finance had already prepared the
motion for the ratification of the Fifth Protocol.  The document would be submitted to the Minister of
Foreign Affairs who is responsible for further steps in the ratification procedure.  He hoped that the
acceptance of the Protocol by Poland would be formalized in the near future.  He added that the
content of schedule submitted by Poland under the Fifth Protocol had been fully incorporated in the
Polish legislation since 2000.
4. The representative of Uruguay said that he had no news to add to what had been informed at
the previous meeting.
5. The representative of the European Communities thanked those delegations for the
information provided and stressed the importance att ached by its delegation to the ratification of the
commitments under the Fifth Protocol.
6. The representative of the United States said that, according to his own sources of information,
Bolivia had submitted the instrument of ratification to the Lower House of Parliament.  He wondered
whether the Bolivian representative could confirm that.
7. The representative of Bolivia said that having overcome some internal difficulties regarding
the commitments made under the Fifth Protocol, the Government had submitted the said Protocol to
the Legislative Authority so that the ratification procedure could start.  The procedure had not yet
started but it remained a priority.
8. Before closing the discussion on this item, the Chairman reminded delegations of the
importance Members attach to the acceptance of the Fifth Protocol by all participants concerned, and
encouraged those seven Members to accelerate th eir internal procedures for the acceptance of the
Protocol.
9. The Committee took note of the statements made and decided to revert to this agenda item at
the next meeting.
                                                     
1 This document has been prepared under the Secretariat's own responsibility and without prejudice to
the positions of Members and to their rights and obligations under the WTO.S/FIN/M/36
Page 2
B. TECHNICAL ISSUES
10. The Chairman said that at the last meeting, the Committee had had an interesting exchange of
views on the basis of questions posed by Thailand with regard to the classification issues raised in
Canada's and Switzerland's negotiating proposals to the Special Session of the Council for Trade in
Services.  He also recalled that, at the request of Thailand, he had confirmed that this agenda item wasbroad enough to allow for the discussion of any technical issues that Members might want to raise.
This included issues arising in the requests that Members were supposed to submitted bilaterally by
30 June - such as, for example, issues relating to the classification of financial services, or the
scheduling of specific commitments on financial services.
11. The representative of Thailand agreed that this agenda item was broad enough to address
issues related to classification or scheduling matters in financial services.  She added that Thailand
had had the intention of raising some technical issues under this agenda item, but due to the fact thatthe bilateral meetings had just started, it was still ear ly to raise issues that might turn up in those
bilateral contacts.  She said, however, that many requests contained interesting technical questions.
She finally added that her country might raise some of those issues at the next meeting.
12. The Committee took note of the statements made, and decided
 to revert to this agenda item at
the next meeting.
C. RECENT DEVELOPMENTS IN FINANCIAL SERVICES TRADE
13. The Chairman recalled that at the last meeting, delegations had a brief exchange of views on
the basis of an informal paper submitted by the United States on regulatory transparency
(Job(01)/161).  He also reminded Members that the delegations of Canada, Chinese Taipei and
Mexico had expressed their willingness to provide information on the application of transparencyprovisions in the financial services regulatory framework.
14. The representative of Chinese Taipei, Mr. Gary Tseng (Director-General, Bureau of Monetary
Affairs, Ministry of Finance) made a presentation on Chinese Taipei’s recent financial reforms and
the legislative process.  He focused on three aspects:  Chinese Taipei’s compliance with the GATS;
the substance of the reforms;  and the legislative process.
15. Regarding the liberalization of financial markets under the GATS, he said that financial
liberalization and internationalization had been Chinese Taipei's policy since the 1980s.  It had
significantly enhanced the competitiveness and efficiency of the financial market.  In addition, during
the negotiation for WTO accession, the regulatory regime on financial market was further liberalized
to ensure the observance of the principles of Market Access, Most-Favored-Nation Treatment, and
National Treatment.
16. Regarding Market Access, local branches of foreign banks were accorded MFN and National
Treatment to compete on an equal footing with domestic  banks.  In fact, there were thirty-six foreign
banks from fifteen countries operating sixty-se ven branches.  In addition, there were sixteen
representative offices set up by foreign banks.  Local branches of foreign banks were all granted full
licenses without being classified and could operate as full-function offices in Chinese Taipei.  The
business' scope of foreign banks was the same as that of domestic banks.  To be more specific, localbranches of foreign banks were authorized to undertake both retail and wholesale banking, including
deposits, loans, trust, bills finance, credit cards, derivatives, e-banking businesses, etc.
17. Pursuant to the Banking Law, Financial Institutions Merger Law and Financial Holding
Company Law, a foreign institution may invest in a domestic bank up to a 100% stake.S/FIN/M/36
Page 3
18. Chinese Taipei’s financial reforms were aimed at enhancing the synergies of financial
institutions and establishing a well-designed legal infrastructure.  Reforms were based on the
principles of retaining prudential supervision, maintaining financial stability, improving the self-
discipline mechanism of financial institutions, and strengthening the transparency of the supervisory
and legislative processes.  Chinese Taipei had endeavoured to be in line with the principles oftransparency, progressive liberalization, MFN and National Treatment under the GATS.
19. The major financial reform laws introduced since 2000 were the following:
• The Trust Enterprise Act, promulgated on 19 July 2000, for the purposes of improving the
management and development of trust enterprises and protecting the rights and benefits ofbeneficiaries
• The Amendment to the Banking Law, promulgated on 1 November 2000, in order to
institute prompt corrective actions, expand banks’ business scope, and reinforce corporate
governance.
• The Financial Institutions Merger Law, promulgated on 13 December 2000, to enhance the
operating efficiency and competitiveness of financial institutions.
• The Financial Holding Company Law, promulgated on 9 July 2001, and aimed at taking
advantage of the efficiency of operating financial institutions on an integrated basis, and
strengthening the consolidation and management of cross-industry financial institutions.
• The Law Governing Bills Finance Businesses, promulgated on 9 July 2001, to strengthen the
supervision and management of bills finance business and promote sound development of the
money market.
• The Statute for the Establishment and Administration of the Financial Restructuring Fund,
promulgated on 9 July 2001, with the objective of overhauling the problem financial
institutions and stabilizing the financial market.
• The Financial Assets Securitization Law, passed by the Legislative Yuan (the Congress) on
20 June 2002, in order to improve the liquidity of financial assets, and promote asset-backedsecuritization.
20. Some of the outcomes to be highlighted included the following:
• Fifty-eight banks (including local branches of foreign banks) were authorized to operate trust
business.
• Four financial institutions completed the process of merger and acquisition.
• Five assets management companies were set up and started to deal with the non-performing
assets of financial institutions.
• Thirteen financial holding companies had been approved by the Ministry of Finance.
• The Financial Restructuring Fund Mechanism was initiated on 10 August 2001 and dealt with
thirty-six financially-distressed community financial institutions.  In addition, the Fund wascurrently taking over another ten troubled financial institutions.S/FIN/M/36
Page 4
21. Regarding the legislative process, Chinese Taipei had been endeavouring to follow a fair,
transparent, objective and democratic process in the adoption of financial regulatory measures, which
would ensure the rule of law, the enhancement of administrative efficiency and accountability, and an
increase in public trust on financial institutions.  This policy was enforced by the enactment of the
Administrative Procedure Law.  The law, pr omulgated on 3 February 1999 and implemented on
1 January 2001, required full compliance with the principle of transparency under the GATS.
22. Chinese Taipei’s administrative law system was composed of two instruments:  laws and
regulations.  Laws regulated people’s rights and obligations,  and regulations were authorized by laws.
The legislative process could be described as having five steps.
• Studies of a proposed law:  while conducting studies of a proposed law, the competent
authority should seek the views of relevant governmental agencies, academics and marketparticipants.
• Public Hearings:  when drafting a new law, it was a general practice to hold public hearings to
solicit pros and cons from different policy stakeholders.
• Review and proposal by the Executive Yuan:  after the approval of the Minister is obtained, a
proposed bill would be submitted to the Executive Yuan (the Cabinet) for review.  After theadoption of a newly proposed bill by the Executive Yuan, the bill would then be sent to the
Legislative Yuan for final approval.
• Review by the Legislative Yuan:  a new bill should be reviewed according to congressional
rules of procedure.  It was a general practice to hold public hearings.  Legislators would then
make amendments to the bill based on the public’s views.
• Promulgation by the President:  after the legislative process, a law should be submitted to the
President for promulgation.
23. According to the Administrative Procedure Law, regulations should be authorized by laws.  In
general, the rulemaking procedures for the enactmen t regulations were modelled after the legislative
process of laws, i.e.  there should be consultation with industrial representatives, experts, academics,
government agencies and the general public, and opportunity for public comments.  The processconsisted of studies of new regulations, public hearings, pre-notification to solicit public comments,
and inter-agency review.  After their approval, regulations were promulgated and published by the
competent Ministry in the governmental gazette and in  newspapers.
24. To illustrate the process, Mr.  Tseng described the promulgation of the Financial Holding
Company Law.
25. On 9 July 2001, President Chen, Shui-Bian promulgated the Financial Holding Company
Law (FHC Law) , which became effective on 1 November 2001.  The Law was expected to enhance
the economies of scope and scale of financial institutions, to satisfy customers’ demand for one-stop-
shopping for financial services, and to follow the global trend towards the integration of banking,
securities and insurance industries.  The implementation of the FHC Law, together with variousregulations, provided an ideal case to demonstrate that Chinese Taipei followed transparent and
accountable procedures to enact financial services legislation.  The process could be described in six
steps:  (1) drafting the FHC Law;  (2) reviewing the FHC Draft;  (3) submitting the FHC Draft to the
Legislative Yuan and Holding public hearings;  (4) promoting the FHC Law;  (5)  Drafting of
regulations;  and (6) publishing Draft Regulations for comment.
26. Before drafting the FHC Law, the MOF had set up a task force to study the Financial Holding
Company Acts and practices adopted in other major countries, such as U.S., U.K., Japan andS/FIN/M/36
Page 5
Germany.  In an attempt to make the enactment of the FHC Law adequately adhere to the on-going
development of the domestic financial environment,  the MOF together with the Bankers Association
and professional institutions, prepared a first draft - the FHC Draft - in July 2000.  In the following
two months, fourteen seminars were conducted to discuss the draft.  These seminars were well
attended by representatives from government agencies, the Bankers Association, and the financialindustry.  During the drafting process, the American Chamber of Commerce, as well as the European
Council of Commerce and Trade in Chinese Taipei, had been of remarkable assistance in providing
the MOF with valuable recommendations.
27. The MOF then took the step of making amendments to the FHC Draft by carefully
considering opinions from the public.  On 21 March 2001, the amended FHC Draft was submitted to
the Executive Yuan.  After reviewing it, the Executive Yuan sent the final FHC Draft to the
Legislative Yuan for approval.
28. After being submitted to the Legislative Yuan, the FHC Draft was screened in detail, article
by article, by the Financial and Economic Committee, involving much debate.  During the period of
deliberating the FHC Draft in the Legislative Yuan, a relevant public hearing was held on
17 May 2001.  As a result, a total of 105 comments were received.  The Legislative Yuan amended to
some articles of the FHC Draft based on the evaluation of those comments.  The FHC Draft waseventually passed by the Legislative Yuan on 27 June 2001, transforming the Draft into the final
Financial Holding Company Law.  Under the FHC Law, foreign financial holding companies and
foreign financial institutions running cross-industry businesses in their home countries may be
exempted from establishing a new financial holding company in Chinese Taipei.
29. In the wake of the approval of the FHC Law, a series of symposiums and lectures on the law
were held by Chinese Taipei’s Ministry of Finance.  With a desire to improve the understanding of
market participants in the financial services indus try, the MOF invited several foreign banks such as
Citibank, Hong Kong and Shanghai Banking Corp., and ABN AMRO Bank to share their experiences
in management and integration of a financial holding company.  Domestic banks and related
associations were invited to participate in these discussions.
30. In the wake of the approval of the FHC Law, the drafting of twelve authorized regulations
were actively planned by the MOF.  During the re gulations drafting process, the MOF consulted with
related agencies and associations, and received comments from financial institutions as well.  In
addition, more than sixty symposiums were held to ensure full participation of market participants in
the financial services industry.  After much discussion and communication, the proposed draft
regulations were finalized within six months.
31. In accordance with the Administrative Procedure Law, the MOF followed the normal practice
of issuing proposed draft regulations, receiving comments from the public, and making revisions.  All
of these regulations were published in communiqués, newspapers, press releases, and on the web-site
of the Bureau of Monetary Affairs, inviting further suggestions before they were finalized on
1 December 2001.
32. In concluding, Mr. Tseng said that as a new WTO Member,  Chinese Taipei was committed
to provide a sound and efficient environment for all market players.  The policy to grant foreign banks
full licenses exemplified the determination to comply with GATS principles.
33. Moreover, the financial reforms conformed to the international standards and codes and were
in line with international financial supervisory tren ds.  In addition, he emphasized that Chinese Taipei
would continue to open its financial market, enco uraging the inflow of foreign funds and financial
expertise.  Past experiences proved that the implementation of the transparency principle enabled the
public to participate in and familiarize with legislation, which was conducive to promoting the quality
and efficiency of legislation and reducing the compliance cost.S/FIN/M/36
Page 6
34. The representative of Mexico, Mr.  Carlos Provencio (Deputy Director-General for
International Affairs, Ministry of Finance and Public Credit) made a presentation on recent reforms
carried out in the financial sector.  As a background, he said that in June last year, the Congress
passed several bills to reform practically every aspect of the financial legislation.  The aim of this
reform was first of all to promote domestic savings, and to establish a more transparent and efficientlegal framework.
35. The main objectives of this reform were to establish a legal framework that would strengthen
the controls on related credit; to introduce prompt corrective actions providing a better protection to
bank depositors; to delegate financial supervisory responsibilities on external auditors; to increase the
quantity of domestic savings through the financial system; and to promote credit schemes for all
sectors.
36. With those objectives in mind, the new laws sought to promote competition amongst
institutions; and to strengthen corporate governance in financial institutions and public issuers.
37. The reform also focused on the structure of banking and brokerage institutions, as well as
financial groups.  The structure of the boards of directors was in particular considered.  A new system
was set up, according to which at least 25% of a board's membership should be composed of
independent members.
38. Among the actions taken to promote better corporate governance practices, emphasis was
given to improving access to the information necessary to take decisions at shareholdings meetings.  It
was also decided that the main CEO and leaders of these institutions be selected amongst people with
recognised integrity and sufficient technical knowledge of financial matters.  This financial sector
reform covered all financial institutions, including commercial and development banks, securitieshouses, and insurance companies.  In terms of supervision, surveillance and regulation, the new
legislation that entered into force in June 2001 introduced certain measures aiming at avoiding future
bank failures.  The new legislation made allowance for the incorporation of investment management
companies as part of holding companies; allowe d both national and foreign controlling entities to
have more than one intermediary of the same type.  In other words, holding companies could havemore than on insurance company or bank with in the group, and would therefore be subject to
consolidated supervision.  The legislation also defined some requisites for mergers and acquisitions.
39. In the case of development banks, the Congress passed several amendments to the Banking
Law and the organic laws of many of these banks.  The reform sought to modernize and increase
development banks management practices.  In order to reduce the moral hazard associated with the
use of fiscal resources to cover up obligations with implicit or explicit government guarantees, these
banks were forced to contribute, on a risk basis, to a fund designed to support the compliance withtheir liability agreements.  The fund would also increase these institutions' capitalization level.
40. In May 2000, new regulations were introduced in order to strengthen the guarantee schemes
and the process of collection in case of payment default.  Two new schemes were set up:  the
guarantee trust and the pledge with no transmission of property.  The main characteristics of these two
schemes were: i)  that the debtor would keep the assets that were put up as collateral, and would beable to use, transform or even deposit them, withou t loosing their condition of source of payment; and
ii) that in case of default, the creditor might not require the execution of the guarantee at a level below
the value of the guaranteed assets.  Some aspects of these mechanisms caused ambiguity and
confusion, resulting in non-use by market participants.  The Ministry of Finance set up a Working
Group, along with the private sector, in order to assess the amendments to be introduced.  The textswere currently being examined in Parliament.
41. The representative of Canada presented a room document entitled:  "Transparency in
Financial Services Regulation – Canadian Federal Experience."  It was a contribution to the emergingS/FIN/M/36
Page 7
discussion of regulatory transparency in the Committ ee.  This was an issue of interest to Canada in
these negotiations.
42. The document had two parts.  The first briefly described the general approach to regulation in
Canada's Federal Government and explained the general obligations and requirements under which
the Federal Government must operate in drawing regulations pursuant to legislation.  It described thevarious publications, as well as the general timelines, that applied to the regulatory process.
43. The second part of the document then turned to a specific case study:  the preparation of
regulations pursuant to the financial sector reform bill passed in the Canadian Federal Parliament just
over a year ago.  The intent was to stress the importance of a transparent regulatory process for
effective and sound domestic policy-making.  This served the purpose of international trade relations
by making domestic procedures and requirements more generally known, since information was made
available to all market participants and all foreign governments through federal web-sites andgovernment publications.
44. The representative of the United States thanked Chinese Taipei, Mexico and Canada for their
presentations.  She found it interesting that three Members at different levels of development had
identified transparency in financial services regu lation as an issue of importance for the stability of
financial sectors, and that can also contribute to the trade agenda.
45. One issue of special interest to the United States was how Members at different levels of
development put in place procedures for allowing public comment on draft regulations and draft laws.
She noted that Chinese Taipei had included some information that would seem to be of great interest
to other countries who might be putting in place similar systems or might be improving upon their
existing systems, in order to allow all interested persons to comment on draft regulations.  It was then
up to those countries to decide as appropriate whether to modify any drafts in the process towards the
enactment of final regulations.  The United States  would be reviewing these three presentations with
great interest and would provide more detailed comments at the next meeting.  She also added that the
United States was working on a document to provide information on how the US promoted
transparent procedures for the development and application of regulations in the insurance sector.
46. The representative of Mexico commented on some of the transparency in his country, both at
the executive branch and the legislative branch of Government.  Beginning with the executive branch,
in 1997, Congress established the "Better Regulation Commission", in charge of providing comments
about the administrative process to be followed in order to submit draft legislation and regulation for
public consideration, before these projects were either presented formally to Congress or published in
the official Gazette.  This measure was applauded by both the public and private sectors.  On the other
hand, law initiatives presented by legislators at th e Congress were published in the Congress' Official
gazette, once it had been decided that they were due to discussion in the Congress' Commission.
Through this process, both the public sector, and the private sector, could be aware of any proposed
modification to any law or any new law project that would be discussed in Congress.  Both processes
– at the executive branch and at Congress – were definitely contributing to a better standardization of
our legislation.
47. The representative of Thailand pointed out that the delegations that made presentations were
at a higher level of development.  Mexico was a Member of the OECD, Canada was one of the Quad
Members, and Chinese Taipei was a developing country with a very high per capita  income.  It came
to no surprise that these Members had been able to install such a transparent legislative process.  The
point was that in many developing countries, in cluding Thailand, such a system, although desirable,
would be harder to set up.  The implementation and enforcement of transparency, and a good sound
regulatory framework, was very difficult for deve loping countries.  She said in that regard that
perhaps the particular concerns and needs of developing countries should be properly addressed in the
future when considering the issue of transparency in financial services.S/FIN/M/36
Page 8
48. The representative of Chinese Taipei added that transparency was a very lengthy process and
could be a very big burden for government agencies.  However, what used to happen in the real life
was whenever the opinion from the industry or professional associations was not duly considered,
then these parties could still go to Parliament;  making the process more cumbersome.
49. The representative of Mexico stated that the intention of Mr. Provencio's presentation was to
share information and experiences on regulatory reforms in the financial sector over the last few
years.  However, this information did not prejudge in any way the position of Mexico with regard to
transparency in the context of negotiations.
50. The Chairman said that the presentations had been very informative and comprehensive.  This
highlighted the importance of using this agenda item to discuss this type of issues.  These discussions
were of extreme relevance for the negotiations si nce they gave an idea of the context in which
financial services trade took place.  He encouraged other Members to come up with similarpresentations.
51. The Committee took note of the statements made and decided
 to revert to this item at the next
meeting.
D. PREPARATIONS IN CONNECTION WITH PARAGRAPH 18 OF THE PROTOCOL ON THE ACCESSION
OF THE PEOPLE 'S REPUBLIC OF CHINA
52. The Chairperson recalled that Section 18 of the Accession Protocol of the People's Republic
of China provided for an annual review of the implementation by China of the WTO Agreement and
of the related provisions of China's Accession Protocol.  As indicated in Section 18, the Committee on
Trade in Financial Services was one of the bodies in which this review had to be conducted.  The
results of the Committee's review would be report ed to the Council for Trade in Services, which
would subsequently report to the General Council.
53. He also recalled that Committee Members had had a first exchange of views on the
preparations of this review at the previous meeting, on the basis of a proposal by the United States.  In
the absence of an agreement among Members at that time, the Chairman was requested to conduct
some consultations on this matter.
54. In addition, the Chairman had recently received a letter from the Chairman of the General
Council, Ambassador Sergio Marchi, informing him about his intention to schedule the review by the
General Council at the last meeting of this year, which would be held on 10 and 11 December.  In the
letter, Ambassador Marchi also underscored that it would be important for the General Council to
receive the results of preceding reviews sufficiently ahead of its meeting to permit useful discussion.
This issue had also been discussed at the last meeting of the Council for Trade in Services.  He added
that in light of the discussion held at the Counc il, and taking into account his own consultations, he
was not in a position to make a specific proposal re garding the timing and other organizational aspects
of this review.
55. The representative of China started by reading out paragraph 1 of Section 18 of China's
Accession Protocol, which states as follows:
"Those subsidiary bodies of the WTO which have a mandate covering China's commitments
under the WTO Agreement or this Protocol shall, within one year after accession and in
accordance with paragraph 4 below, review, as appropriate to their mandate, the
implementation by China of the WTO Agreement and of the related provisions of this
Protocol.  China shall provide relevant information, including information specified in
Annex 1A, to each subsidiary body in advance of the review.  China can also raise issues
relating to any reservations under Section 17 or to any other specific commitments made byS/FIN/M/36
Page 9
other Members in this Protocol, in those subsidiary bodies which have a relevant mandate.
Each subsidiary body shall report the results of such review promptly to the relevant Council
established by paragraph 5 of Article IV of the WTO Agreement, if applicable, which shall in
turn report promptly to the General Council.".
56. She then stated that it was not China's in tention to renegotiate its commitments.  This
transitional review mechanism was unique.  Nothing similar could be found in any other WTO
Agreements, in GATT or WTO history.  China wanted to see a successful conclusion of this review,
ensuring that both China and the Committee on Trade in Financial Services fulfilled their obligations
in accordance with Section 18 requirements.  Section 18 provided that "China shall provide relevant
information, including information specified in Annex 1.A, to each subsidiary body in advance of the
review.".  She said that China would provide such information in advance of the review.  Section 18also provided that: "Each subsidiary body shall repo rt the results of such review promptly to the
relevant Council established by paragraph 5 of Article IV of the WTO Agreement, if applicable,
which shall in turn report promptly to the General Council.".  She added that the key word here was
"promptly".
57. Having said that, she proposed that the review take place in December.  Being aware that
some Members would rather have this review in October, she suggested that the Chairman consult
with those Members.
58. The representative of the United States said that her country was not seeking to renegotiate
China's commitments in regard to the transitional  review mechanism.  The United States was merely
seeking for China to fulfill its obligations.  She said that Annex 1.B to that Protocol clearly stated,  inregard to the meeting of the WTO General Council, that "China shall submit any information and the
documentation relating to the review no later than 30 da ys prior to the date of the review."  Therefore,
since the General Council was scheduled to meet around 10 December, China must provide relevant
information to that General Council no later than 10 November.  It was the United States' view that in
order to be meaningful, the review by this Committee, must take place during the October 2002meeting. To facilitate the work, an appropriate preparation needed to be ensured.  Clearly China
would need to provide all relevant information to the Committee well in advance of the October 2002
meeting.  Equally, interested Members would also need to provide China with questions early enough
so that China could provide answers to them prior to the October meeting.  Finally she urged the
Chairman to consult with China and other Members to facilitate a positive and cooperative outcome.
59. The representative of Canada said that the issue at stake was one of process and timing.  He
urged the Chairman to conduct consultations.
60. The representative of the European Communities associated himself with the views expressed
by the US and Canada.  Members had an interest in having a substantive review.  Therefore, it was
necessary for the review in this Committee to be held in October, and not in December.  Otherwise,
the Committee would not be able to prepare the report for the Council for Trade in Services, which
would then have to report to the General Council within a few days.  He supported that the Chairmanconduct consultations with China.
61. The representative of China, in response to the statement made by the United States, read out
both paragraph 2 of Section 18 and Annex 1.B.  She then said that her country was required to submit
information to the General Council no later than 30 days prior to the date of the review.  Annex 1.B
did not say that China should provide information to the subsidiary bodies mentioned in paragraph18.1, no later than 30 days prior to the date of the review.  It did not say that China should submit this
Committee's report of the review to the General Council not later than 30 days before the review.
Secondly, she said that the information to be submitted by China to the subsidiary bodies was
specified in Annex 1.B, and, accordin g to that Annex, China was only required to provide information
to the Council for Trade in Services, not to this Committee.S/FIN/M/36
Page 10
62. The representative of the United States did not share China's interpretation of  Annex 1.B.
The United States believed that the reference to the General Council and the timeframe for the
General Council, applied to all the issues listed in Annex 1.B.  The United States did not share either
China's interpretation of Section 18 and Annex 1.A.  Section 18 clearly said that China must provide
relevant information to each subsidiary body.  A footnote at the bottom of the page spelled out whatthose subsidiary bodies were and it clearly included the Committee on Trade in Financial Services.
Therefore, the US believed that information should be provided to the Committee on Trade in
Financial Services and should be discussed by that Committee.
63. The representative of Canada said that the Protocol made it clear that the General Council's
review had to follow the review of this Committee.  In addition, Section 18 made it fairly clear that
the information specified in annex 1.A was not the on ly information that needed to be provided.  What
these two provisions did not specify was the timeframe, and that was up to Members to decide.  Headded that it was particularly important for this Committee to have capital-based experts, both from
China and other Members, who could speak to these issues.  In that regard, he said that it was
important that representatives from the three regulatory agencies responsible for policy
implementation and regulation in China be present at the review.
64. The Chairman suggested that the Committee take note of all the statements made.  It was
clear that there was no agreement on the dates, the pr ocess, and to a certain extent on the substance of
the review.  Keeping in view the situation, he suggested that the Committee allowed him to carry on
consultations on this matter.  Members would be immediately informed of any decision that might be
reached regarding the organization of this review, in order to allow for the best possible preparation.
The Committee so decided.
E. DATE OF THE NEXT MEETING
65. There were no interventions made under this agenda item.
F. OTHER BUSINESS
66. The representative of Canada drew Members' attention to the extensive research programme
carried out by the World Bank on financial sector liberalization and growth.  That research had
resulted in a dedicated publication on Finance for Growth and another chapter in a publication dealing
with globalization, growth and poverty.  Both piece s contained useful information for this Committee.
He suggested inviting the World Bank to make a presentation on the results of that research.
67. The Committee took note of this statement and decided to revert to this issue at the next
meeting.
__________