RESTRICTED  
  
JOB/SERV/ 302 
 
19 November 2020  
(20-8314) Page: 1/6 
Council for Trade in Services  
Special Session  Original: English  
 
COMMUNICATION FROM AUSTRALIA, CANADA, SWITZERLAND  
AND THE UNITED KINGDOM  
EXPLORATORY DISCUSSIONS ON MARKET ACCESS: FINANCIAL SERVICES  
The following communication,  dated 18 November 2020 , is being circulated to Members of the 
Council for Trade in Services in Special Session, at the request of the delegations of Australia, 
Canada, Switzerland and the United Kingdom.  
_______________  
 
 
In JOB/SERV/282, circulated on 13 June 2018, Chile, Mexico , New Zealand and Panama proposed 
that Members exchange views on current areas of interest in relation to market access, against the 
background of relevant trade, policy, and market developments.  
The financial services sector is an area of economic and tr ade importance for the co -sponsors as 
well as for numerous other WTO Members, including in the context of assisting Members to navigate 
and recover from the Covid -19 pandemic. Through this communication, the co -sponsors wish  to 
present their initial ideas on a sector of common interest across all regions and initiate an exchange 
with other delegations. Such exploratory discussions would help to better appreciate the views of 
Members on key issues, and provide valuable information regarding market access asp irations . The 
following is presented without prejudice to potential negotiations.  
1  THE ECONOMIC AND TRADE IMPORTANCE OF FINANCIAL SERVICES  
1.1.  Financial services - which include insurance, banking, payment, securities, asset management 
and financial advisory an d information services - is an important economic sector both as an activity 
in its own right and as a support to other economic sectors. It is actually a key enabler for all 
economic and trade activities around the world.  
1.2.  Financial services are important contributors to overall economies. The financial depth in 
banking, which is measured by “private credit by deposit money banks as a  percent age of GDP”, 
amounted on average to 52.2 % worldwide from 2015 to 2017 (84.4 % for hig h income economies, 
48.8% for upper -middle, 35.1 % for lower -middle and 17.6 % for low income ones). The financial 
depth of capital markets, which is measured by “stock market capitalization as a percentage of GDP”, 
amounted on average  to 72.3 % worldwide for the same period (96.0 % for high income economies, 
54.8% upper -middle, 33.6 % for lower -middle and 0 % for low income ones ).1 
1.3.  According to balance -of-payments statistics, financial services (including insurance) 
represented 11 % of world commercial services exports in 2019. Compared with other sectors, the 
financial services sector ranks in third position after travel services (24 %) and transport services 
(17%) and equally with telecommunications, computer and information services (11 %).2 
1.4.  Because of its enabling nature, the financial services sector also supports growth in other 
economic sectors. Insurers help to reduce uncertainty and protect policy -holders against 
unmanageable risks. Banks contribute to the efficient allocation of resources among the different 
 
1 World Bank 's Global Financial Development Report 2019 -2020. 
2 https://data.wto.org . JOB/SERV /302 
 
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  sectors and players thanks  to the deposits they collect and the subseque nt loans they grant.  They 
are central to mobilising savings. Financial services companies provide essential financing and 
payment solutions, facilitate transactions and offer investment management tools from information 
to monitoring of corporate control a nd through risk management to a wide range of consumers and 
businesses, including other financial companies. They are key in helping economies grow, diversify 
and become better and more competitive exporters of goods and services.  
1.5.  The pandemic crisis is fu rther underscoring the importance of facilitating trade in goods and 
services via online means. Financial services, among others, are playing a key role in facilitating 
merchandise trade and economic growth as observed by the WTO Secretariat in its informa l note of 
28 May 2020 (Trade in Services in the Context of Covid -19) as well as trade in other services sectors. 
The creation of an enabling environment for trade in goods and services to occur online will be key 
to the recovery from the economic slowdown.  
1.6.  FinTech, open banking and e -payment are driving financial inclusion in all regions of the world 
by prompting new ways for financial services to be developed and delivered. This includes alternative 
and more affordable (mobile) payment, money transfer, len ding, fundraising and asset management 
solutions, which are important for financial inclusion, particularly in developing countries, and for 
the participation of SMEs in global trade. These new conditions are modifying the modes of supply 
and the nature of  suppliers by unbundling financial services.  
1.7.  In addition, financial services suppliers have a role in contributing to the achievement of the 
Paris Agreement objectives to combat climate change through sustainable or green finance. For 
instance, asset manag ement companies, collective investment schemes and pension funds may 
intensify their efforts to decarbonise their asset portfolios on their own initiative. Ins urance 
companies may reduce their expos ure to climate risks on both sides of their balance sheet – from 
ownership of fossil -intensive assets  to insured assets.  
1.8.  The financial services sector is thus essential for economic and trade development, including 
sustainable development. A dynamic financial sector is important for all countries and this i s notably 
the case for developing countries where regional financial hubs have emerged. Many have become 
exporters of financial services often to other developing countries and offer services to their 
expatriate communities around the world.  
1.9.  Accordingly, i n the last two decades, most countries underwent important financial services 
reform in an attempt to reduce or eliminate distortions in financial markets, deepen capital markets 
and strengthen financial institutions,  also with the aim of supporting the in ternationalization of 
financial services.  
1.10.   This operates in conjunction  with the increase of technological adoptions that modify the 
organization of financial activities and challenge the dominance of traditional channels. For example, 
the digitalization of  financial services improves the cost efficiency of cross -border financial trade, 
which enables start -ups to more easily finance their projects (e.g. the development of new medical 
devices) and allows more and more people or SMEs in remote areas to have ac cess to essential 
financial services at affordable prices (e.g. the direct selling of agricultural products).  
1.11.   Many countries have also negotiated commitments in preferential trade agreements (PTAs)  
on market access in financial services, which has strength ened the internationalization of the 
financial services sector. They recognized that increasing foreign participation in the financial 
services sector and/or eliminating impediments to foreign suppliers improve the access to 
international capital, foster c ompetition and stimulate innovation through know -how sharing and the 
dissemination of new technologies. There are also risks associated with opening up financial services, 
e.g. potential effects on market conduct and financial crime. However, when managed with the 
appropriate regulatory safeguards, opening up can bring down the cost of financial services, lead to 
higher -quality services and reduce the risks of doing business. Open markets improve the 
competitiveness of domestic financial services suppliers as well as companies in other sectors, which 
are important users of financial services. In conjunction with a sound regulatory framework, 
improved market access commitments can also address development challenges such as unbanked 
populations and financing for SMEs. Commitments (especially under mode 3) could help mobilizing 
domestic resources (e.g. formalize savings and increase lending) in less developed Members.  JOB/SERV /302 
 
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  2  GATS COMMITMENTS IN FINANCIAL  SERVICES  
2.1.  Overall, the number of GATS commitments in financial se rvices compared with other sectors is 
very high. It ranks second after tourism. 111 Members (counting the EU25 as one) undertook specific 
commitments in at least one financial services subsector . The least committed subsector is 
settlement and clearing ser vices and the most  committed  subsectors  are acceptance of deposits and 
lending of all types. Only 43 Members (again counting the EU25 as one) made specific commitments 
on the whole range of banking, insurance and other financial services.  
2.2.  About 30 Members undertook commitments according to the Understanding on Commitments 
in Financial Services (FSU). The FSU is an alternative approach to making specific market access 
and national treatment commitments. It covers per definition the whole range of financial s ervices. 
When endorsing the FSU Members also undertook additional commitments in areas such as new 
financial services, transfer and processing of information, payment and clearing systems and self -
regulatory bodies.  
2.3.  The level of commitments under mode 1 de pends on the subsector. In the case of life insurance 
as well as of almost all banking and other financial services those subsectors are predominantly  
unbound . With regard to  marine, aviation and transportation (MAT, including goods in international 
transit) insurance, reinsurance and financial data processing and transfer the share of full 
commitments is relatively high.  
2.4.  The proportion of full commitments is the highest for m ode 2. However, for life and non -life 
insurance (except MAT insurance) full commitments are very limited in number.  
2.5.  Partial commitments are predominant under mode 3. The most common restrictions relate to 
the type of legal entity (e.g. specific legal types  or restrictions on direct branching) followed by 
limitations on the participation of foreign capital, number of suppliers and value of transactions or 
assets (such as limitations on the share of banking assets allowed to be held by foreign banks).  
2.6.  With re gard to mode 4, full commitments are scarce. Almost all commitments are partial and 
mostly governed by the horizontal commitments.  
2.7.  A quantitative analysis of Doha offers compared with GATS commitments shows that there is 
room for potential improvement at the multilateral level. 36 offers contain improvements to existing 
commitments  and two offers include the addition of a new subsector or various  subsectors.  
3  AREAS OF INTEREST FOR IMPROVING GATS COMMITMENTS IN FINANCIAL  SERVICES  
3.1.  Improved GATS commitments in  financial services can make an important contribution to the 
sector  by providing greater transparency and predictability for suppliers and consumers. This is 
particularly the case in an environment where new technologies make it possible to provide financ ial 
services to a wider clientele and at more affordable prices, and where online delivery is increasingly 
available and important. Open markets accompanied by transparent and fair regulations contribute 
to enhancing the quality and reliability of cross -border payment and money transfer solutions. It 
also leads to a wider choice of financing and investing opportunities as well as a better mitigation of 
risks for operators, investors and savers.  
3.2.  Opening markets does not, however , mean deregulation or undermi ning the right to regulate. 
Commitments in financial services also do not prevent Members from taking measures for prudential 
reasons to protect consumers of financial services and to ensure the integrity and stability of the 
financial system . Indeed, impr oved commitments in financial services will , in many cases, simply 
reflect the pre -existing market and regulatory settings of some Members.  
3.3.  As shown in section 2 , commitments within the financial services sector vary under GATS, and 
there are certain areas where we would have interest in discussing improvements. These preliminary 
views represent the common priorities of the co -sponsors. We also acknowledge  that other Members 
may have interest in improving commitments in different areas of the financial services sector.  JOB/SERV /302 
 
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  3.4.  A comparison between GATS commitments and PTAs confirms the potential of improving some 
key areas. Unlike in GATS, many Members undertook mode 1 commitments in th eir PTAs on asset 
management services (at least portfolio management) and, to a lesser extent, payment services. 
With regard to mode 3, some limitations have been removed. For instance, direct branching has 
been increasingly allowed as well as wholly owned subsidiar ies. 
3.5.  First, with respect to mode 1, GATS commitments could be improved in view of the level of 
openness provided in PTAs or achieved through  autonomous liberalization , and given that Members 
are not prevented from taking measures for prudent ial reasons. In particular, Members could 
undertake or improve cross -border commitments where services are offered to institutional or 
professional (rather than retail) customers. This could  potentially include activities such as MAT 
insurance and reinsura nce which are included in the FSU, and large -risks insurance and portfolio 
management which are included in some PTAs.  
3.6.  Second, improvements in mode 2 commitments in a subsector such as p articipation in issues 
of all kinds of securities, which includes unde rwriting services, could be made. This could be to the 
benefit of emerging country companies wishing to have public issues of stock or debt in foreign 
markets.  
3.7.  Third, there are areas where the actual level of openness in mode 3 could also be better 
reflect ed in Members ' schedules. O ver the last two decades, governments across the world have 
generally eliminated foreign equity limitations and allowed foreign financial companies to choose the 
corporate structure that better fits their business models , subject  to regulatory and supervisory 
requirements.  
3.8.  Finally, commitments to ensure that trade policy in financial services supports innovation and 
new technologies  as framed under section 1, while protecting consumer and business, should be 
explored. Enhancing regulatory cooperation outside the GATS framework is also important in 
supporting innovation in financial services and facilitating market access in general . 
4  QUESTIONS FOR DISCUSSION  
i. How do Members assess the impact of financial services on their  overall economic 
development as well as on their trade opportunities and level of financial inclusion?  
ii. What conditions have to be met in Members ' views with regard to the ability of financial 
supervisory authorities to fulfil their tasks in order for addi tional financial services 
commitments to be made particularly relating to mode 1?  
iii. What further  commitments in financial services do Members consider could help promote 
the development and penetration of new technologies (e.g. FinTech)?  
iv. What are Members ' main areas of interest for improving GATS commitments in financial 
services? Have these evolved since earlier discussions under the DDA?  
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  JOB/SERV /302 
 
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  ANNEX  
LEVEL OF MARKET ACCESS COMMITMENT S (IN %)  BY SUBSECTORS AND MODE OF SUPPLY  
F = Full commitments  
P = Partial commitments  
U = Unbound  
 
Percentage is calculated based on the number of Members that made commitments in the respective 
Subsector.  
 
 
Subsector  Level of 
commitment  Mode 1  Mode 2  Mode 3  Mode 4  
Life insurance   F 14% 32% 28% 1% 
 P 29% 23% 69% 93% 
 U 57% 45% 3% 6% 
  
Non-life insurance   F 13% 27% 24% 1% 
 P 57% 47% 71% 92% 
 U 30% 27% 4% 7% 
Reinsurance and retrocession   F 50% 57% 28% 4% 
 P 38% 28% 63% 85% 
 U 13% 15% 9% 10% 
  
Insurance intermediation   F 20% 43% 31% 0% 
 P 49% 31% 68% 89% 
 U 31% 26% 1% 11% 
Services auxiliary to insurance   F 34% 51% 34% 0% 
 P 42% 28% 64% 93% 
 U 24% 21% 1% 7% 
  
Acceptance of deposits   F 31% 49% 23% 3% 
 P 23% 24% 76% 91% 
 U 46% 27% 1% 6% 
Lending   F 27% 49% 25% 3% 
 P 30% 26% 72% 91% 
 U 43% 25% 3% 6% 
  
Financial leasing   F 30% 57% 22% 5% 
 P 26% 21% 74% 91% 
 U 44% 22% 3% 5% 
Payment and money transfer   F 26% 51% 23% 3% 
 P 27% 23% 76% 90% 
 U 46% 26% 1% 7% 
  
Guarantees and commitments   F 33% 58% 26% 3% 
 P 26% 22% 70% 92% 
 U 41% 20% 3% 5% 
Trading in money market 
instruments   F 28% 54% 24% 4% 
 P 27% 27% 72% 91% 
 U 46% 19% 4% 5% JOB/SERV /302 
 
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  Subsector  Level of 
commitment  Mode 1  Mode 2  Mode 3  Mode 4  
  
Trading in foreign exchange   F 27% 54% 25% 4% 
 P 26% 25% 72% 91% 
 U 47% 21% 4% 5% 
Trading in derivative products   F 28% 62% 26% 3% 
 P 29% 25% 69% 94% 
 U 43% 14% 5% 3% 
  
Trading in exchange and interest 
rates   F 27% 61% 25% 3% 
 P 28% 25% 70% 94% 
 U 45% 13% 4% 3% 
Trading in transferable securities   F 26% 51% 23% 4% 
 P 31% 29% 74% 92% 
 U 43% 20% 4% 5% 
  
Trading in other negotiable 
instruments   F 31% 59% 25% 1% 
 P 26% 25% 71% 93% 
 U 43% 16% 4% 6% 
Participation in securities issues   F 23% 49% 23% 1% 
 P 30% 29% 75% 94% 
 U 48% 23% 3% 5% 
  
Money broking   F 32% 66% 27% 3% 
 P 26% 23% 69% 92% 
 U 42% 11% 3% 5% 
Asset management   F 23% 48% 18% 3% 
 P 34% 34% 81% 92% 
 U 43% 18% 1% 5% 
  
Settlement & clearing   F 22% 56% 19% 3% 
 P 28% 25% 78% 91% 
 U 50% 19% 3% 6% 
Advisory and auxiliary services   F 39% 58% 31% 4% 
 P 37% 25% 66% 89% 
 U 24% 17% 2% 7% 
  
Financial data processing & 
transfer   F 54% 64% 38% 4% 
 P 36% 26% 58% 88% 
 U 11% 9% 4% 8% 
 
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