. /.WORLD TRADE
ORGANIZATIONS/CSS/W/66
28 March 2001
(01-1529)
Council for Trade in Services
Special SessionOriginal:  English
COMMUNICATION FROM AUSTRALIA
Negotiating Proposal for Financial Services
The following communication has been received from the delegation of Australia with the
request that it be circulated to the Members of the Council for Trade in Services.
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1. The following paper sets out an Australian negotiating proposal for the financial services
sector, pursuant to paragraph 2(b) of the "Roadmap" adopted by the Council of Trade in Services on
26 May 2000. Australia reserves the right to submit more detailed proposals on this sector at a later
date. Australia also reserves the right to modify this proposal at any time.  This proposal does notprejudge Australia's position on other services sectors, nor any possible future offer on this or other
sectors.
I. IMPORTANCE OF TRADE LIBERALISATION IN THE FINANCIAL SERVICES
SECTOR
2. Globalisation, technological innovation and greate r competition has had, and will continue to
have, significant implications for trade in financial services.
3. Foreign financial service providers, attracted by lower market access barriers, are an
important source of competition for a country’s domestic market, and are also a source of innovation.
This competition and innovation promotes lower transaction costs and provides increased expertise
and greater choice of products and services for corporations and consumers.  In addition, foreign firms
provide further channels for valuable investment funds.
4. Liberalising trade in financial services allows member countries to become more integrated
into international capital markets and to more effec tively access investment capital.  This generates
improved efficiency and allows low-cost funds to be channelled towards those firms and sectors that
are better placed to use them, further improving economic growth and investment.  A competitive,
dynamic, efficient, as well as stable and secure financial system is therefore critical to the efficient
functioning and growth of a country’s economy.
II. NEGOTIATIONS FRAMEWORK
5. Our objective is to build further on the progress already achieved in liberalisation in the
financial services industry.  The General Agreem ent on Trade and Services (GATS) and its Fifth
Protocol provide a framework for identifying, classi fying and removing barriers to trade in financial
services.  Through these negotiations we hope to obtain commitments that facilitate reducedS/CSS/W/66
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restrictions on national treatment and market access, consistent with the Most Favoured Nation
(MFN) principle.
6. Australia, as a medium-sized trading nation, is a strong supporter of these principles and the
Understanding on Commitments in Financial Services .  In this context, we would encourage the
removal of barriers which place potential new entran ts at a disadvantage with respect to incumbent
foreign service providers.
7. The GATS Annex on Financial Services also recognises the importance of prudential
measures for ensuring the integrity and stability of the financial system and, accordingly, the right of
Members to regulate in pursuance of this policy objective. In this context, Australia encourages
prudential regulations which are both transparent and effective.
III. IMPEDIMENTS TO FURTHER LIBERALISATION
8. Australia’s schedule of commitments includes very few GATS-restrictive measures,
reflecting the openness of the Australian market.  Previous reforms by Australia were guided by the
principle that less intrusive regulation would make our financial system more efficient and
internationally competitive and, most importantly, would deliver improved choice and quality of
financial services for consumers.
9. Australia has identified, inter alia, a number of market access priorities which we hope will be
addressed during the financial services negotiations.  These include:
• greater opportunity for foreign equity participation, including through a greater number of
operating licences and more transparent licensing criteria;
• greater flexibility on required forms of commercial establishment, particularly by liberalising
the requirement to operate through joint ventures;
• improved ability to sell products to locals or provide services from offshore;
• greater flexibility in the number and types of products which can be offered;
• relaxed government-directed lending or operational control;
• greater freedom for transfer and employment of company personnel;
• recognition of qualifications obtained overseas.
IV. PROPOSALS
10. Australia proposes that members review restrictions on all modes of supply of financial
services, focusing particularly on the priorities mentioned above.
11. Australia presents this proposal for the consideration of member countries.
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