RESTRICTEDWORLD TRADE
ORGANIZATIONS/FIN/W/29
4 August 2003
(03-4105)
Committee on Trade in Financial Services Original:  English
COMMUNICATION FROM ANTIGUA AND BARBUDA, BELIZE, FIJI ISLANDS,
 GUYANA, PAPUA NEW GUINEA, THE MALDIVES, SOLOMON ISLANDS
AND ST KITTS AND NEVIS
GATS & Annex on Financial Services
International Regulations and Financial Services
The attached communication has been received from the delegations of Antigua and Barbuda
on behalf of Belize, Fiji Islands, Guyana, Papua New Guinea, the Maldives, Solomon Islands and St
Kitts and Nevis with the request that it be circulated to the Committee on Trade in Financial Services.
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This paper sets out some proposals to address certain specific concerns of Small Vulnerable
Economies as it relates to the GATS and Annex on Financial Services, International Regulations and
Financial Services.  The multilateral trading system needs to identify and im plement responses to the
issues identified in this submission to overcome the inherent economic disadvantages faced by small
vulnerable economies.
I. THE PROBLEM
The sponsors of this proposal are small developing economies with limited administrative,
financial and human resource capacity to participate in the formulation and implementation of the
international standards relating to financing of activities that result in acts of terror, money laundering,
capital adequacy requirements and harmful tax competition that are emerging from plurilateral fora
such as the Financial Action Task Force (FATF), Basel Committee and the OECD. These standardsand codes do not comply with the WTO definition of standards created by relevant international
organisations. They are invariably formulated by developed WTO members and sometimes include
several large developing countries that usually have adequate administrative capacity to implement
such norms and standards. Once determined, these plurilateral codes and standards either become a
condition of trade in the relevant sector or are imposed through threats of sanctions and coercion on
small developing states. Yet the participation of small developing countries, which are frequently
financial services suppliers and exporters, is required for a legitimate and effective internationalregime to emerge in any of these areas.
The specific elements of the problem facing small developing countries in relation to
standards emerging from these fora are threefold:
1. The process of formulation of international financial standards
The interests of developing countries are not being considered in the formulation of these
standards which are created in international organisations which are not multilateral in nature. Small
developing members of the standard setting body. The compatibility of certain of these economicS/FIN/W/29
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sanctions with the GATS commitments of WTO Members may be questioned, but even beyond this
there is a serious concern that relates to the further marginalization of small vulnerable developing
countries from meaningful participation in the construction of the international trading system.
II. RELEVANT WTO PROVISIONS:
1. General Agreement on Trade in Services
- Article VI , paragraph 1
- footnote 3
- Article VI, paragraph 5
- Article XIV, paragraph (c)(i)
- Article XIV, paragraph (d)
- Article XXV
2. Annex on Financial Services
- paragraph 2
III. SPECIFIC PROPOSALS TO ADDRESS THE PROBLEM1
1. GATS
(i) Article VI, paragraph 1
- Existing Article VI paragraph reads:
In sectors where specific commitments are undertaken, each Member shall ensure that all measures of
general application affecting trade in services are administered in a
reasonable, objective and impartial manner.
- New Article VI paragraph shall read:
In sectors where specific commitments are undertaken, each Member shall ensure that all
measures of general application affecting trade in services are administered in a reasonable,
objective and impartial manner. Members may delegate any aspect of the administration ofmeasures of general application to an appropriate regional body.
(ii) Footnote 3 of Article VI(5)(b)
- Existing footnote 3 reads:
The term "relevant international organizations" re fers to international bodies whose membership is
open to the relevant bodies of at least all Members of the WTO.
                                                     
1 Proposed wording appears in italics and bold.S/FIN/W/29
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- New footnote 3 shall read:
The term "relevant international organisations" refers to international bodies whose membership
is open to the relevant bodies of at least all Members of the WTO. International bodies shall be
deemed to be open to at least all Members of the WTO if:
(a) the terms of accession to that body are not dependent in fact or law on the level of
development of the applicant and,
(b) the international body provides a programme of technical assistance to assure the
full participation of all effected developing countries in the standard setting body.
(iii) Article VI  paragraph 5
- Insert new paragraph 5(c) to read:
(c) In determining whether a Member is in conformity with the obligations under paragraph
5(a) and where a standard is created by Membe rs or a limited group of WTO Members in a manner
not in conformity with obligations under paragraph 5(b), account shall be taken of whetherappropriate consultation and notification* (insert new footnote 4) with other WTO members can be
deemed to have occurred.
- Insert new footnote 4:
4 Appropriate Consultation and Notification of  standards pursuant of Article VI, paragraph
5(c) shall be deemed to have occurred when a WT O member or group of members establishing a
standard:
(A) publishes a work programme containing its na me and address, the standards it is currently
preparing and the standards which it has adopted in the preceding period. A standard is
under preparation from the moment a decision has been taken to develop a standard untilthat standard has been adopted. A notice of the existence of the work programme shall be
published in a national or, as the case ma y be, regional or international publications
pertaining to such activities, and a copy of the Work Programme shall be transmitted to the
WTO Committee on Financial Services within 30 days from the publication of the notice.
(B) allows a period:
1 of at least 60 days for the submission of a written expression of interest to
participate in the drafting of the standard, and,
2 another 120 days thereafter, for the submis sion of comments on the draft standard
by interested parties within the territory of a Member of the WTO.
This period may, however, be shortened in cases where urgent problems of national security arise.
No later than at the start of the comment period, the WTO member or group of members shallnotify the WTO Committee on Financial Services announcing the period for commenting in the
publication referred to in paragraph A. Such notification shall include, where relevant, a
description whether the draft standard deviates from existing international standards. The WTO
Committee on Financial Services shall ensure the dissemination of the notification to all WTO
Members.S/FIN/W/29
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(C) provides, or arrange to provide, a copy of a draft standard which it has submitted for
comments free of charge, with the exception of the real cost of delivery, to WTO developing
country Members.
(D) take into account and reflect, in the furt her development of the standard, the comments
received during the period for commenting.
Appropriate Consultation and Notification of standards pursuant of Article VI, paragraph 5(c)
shall not be deemed to have occurred when a WT O member or group of members establishing a
standard:
(a) applies sanctions or measures or threatens to apply sanctions or measures against a
WTO member where that member is unable to apply the standard or measure due to a lack
of technical capacity
(iv) Article XIV, paragraph (c)(i)
- Insert new footnote at end of existing sub-paragraph (c) (i):
Subject to the requirement that such measures are not applied in a manner which would constitute a
means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or
a disguised restriction on trade in services, nothing in this Agreement shall be construed to prevent the
adoption or enforcement by any Member of measures:
(a) necessary to protect public morals or to maintain public order;
(b) necessary to protect human, animal or plant life or health;
(c) necessary to secure compliance with laws or regulations which are not consistent with
the provisions of this Agreement including those relating to:
 (i) the prevention of deceptive and fraudulent practices or to deal with the effects
of a default or services contracts* (insert new footnote) ;
*New footnote Measures invoked pursuant to this provision shall be applied in a manner consistent
with the definition of appropriate consultation and notification in Article VI(5)(c)
Measures invoked pursuant to this provision shall be applied in a manner consistent with the
definition of Appropriate Consultation and Notification in Article VI (5)(c).
(v) Article XIV, paragraph (d)
- Existing Article XIV paragraph (d):
(d) inconsistent with Article XVII, provided that the difference in treatment is aimed at ensuring
the equitable or effective imposition or collection of direct taxes in respect of services or service
suppliers of other Members.S/FIN/W/29
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- New Article XIV, paragraph (d) will read:
(d) inconsistent with Article XVII, provided that the difference in treatment is aimed at ensuring
the equitable or effective imposition or collection of direct taxes in respect of services or servicesuppliers of other Members.  Measures invoked pursuant to this provision shall be applied in a
manner consistent with the definition of Appropriate Consultation and Notification in Article VI
(5)(c).
(vi) Article XXV
- Insert new paragraph 3, to read:
3. Where standards are developed pursuant to Article VI(5) technical assistance on a bilateral
or multilateral level shall be provided to developing countries to implement the resulting standards
or measures of general application within their economies.
2. Annex on Financial Services
(i) Article 2
- Insert new paragraph 2(c)
(c)  When undertaking measures and introducing  domestic regulations for prudential reasons
pursuant to this Agreement a Member shall apply these measures and regulations in a manner
consistent with the definition of Appropriate Consultation and Notification in Article VI(5) of the
GATS.
IV. FINAL REMARK
This proposal is without prejudice to, individual country positions, and to the rights of small
economies to submit additional proposals in future Dedicated Sessions or, otherwise, in other WTO
Bodies on any issues contained in this Paper and/or on any other issues not included here.
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