./.RESTRICTEDWORLD TRADE
ORGANIZATIONS/FIN/M/23
4 June 1999
(99-2260)
Committee on Trade in Financial Services
REPORT OF THE MEETING HELD ON 7 MAY 1999
Note by the Secretariat
1. The twenty-fourth meeting of the Committee on Trade in Financial Services was chaired by
Mr. Jean Le Cocguic of France.  The discussion followed the agenda contained in airgram
WTO/AIR/1075.  The United States announced that it would make a statement under Other Businessconcerning a Member's Schedule on financial services under the Fifth Protocol to the GATS.
2. The Committee first discussed the status of acceptances of the Fifth Protocol to the GATS.
The Chairman reported that the Protocol had entered into force on 1 March for the 53 Members that
had accepted it by that date, but that there were still 16 Members1 which had not yet accepted it by the
date of the meeting.  Australia announced that it had accepted the Protocol on 3 May.  Slovenia  stated
it was in the final stages of ratification.  Costa Rica hoped to complete its ratification procedure as
soon as possible.  Brazil stated that the Protocol was still being examined in two Committees of its
Senate.  The European Communities stated that Luxemburg , which was the only Member State which
had not yet accepted the Protocol, would be able to complete its procedures for acceptance in abouttwo weeks' time, i.e. in time for the deadline of 15 June.
3. Delegations which had accepted the Protocol expressed their thanks for the information
provided by those Members which had not yet accepted, and for the progress being made in their
acceptance procedures.  However, concern was expressed as to the delay and the lack of information
causing the delay.  The political difficulties were understandable, but nonetheless, those Members
were urged to accept as soon as possible.  Clarification was sought on the legal consequences of a
failure of a Member to accept the Protocol by the agreed deadline.  The Secretariat explained that
short of a decision by the Council for Trade in Services to further extend the deadline or to reopen theProtocol for acceptance, the Member would no longer be able to accept the Protocol.  However, it
would still be possible to submit the Schedule for certification and have it enter into force.
Nonetheless, there could be political value in being a signatory to the Protocol, and there were
examples in the past of Protocols having been reopened for acceptance by certain Members after the
deadline was passed.
4. It was suggested that the Chairman write a letter to those Members which had not yet
accepted the Protocol asking for information on the status of their acceptances and on the required
procedures.  The Chairman agreed to do this as soon as possible before the deadline of 15 June.  He
emphasized that it was important for the credibility of the multilateral trading system and the stabilityof the financial markets to encourage the Members to accept the Protocol before the deadline.  Hestrongly encouraged the delegations concerned to accept as soon as possible.
5. No delegation spoke under the agenda item, "Recent Developments in Financial Services
Trade".  The Chairman nevertheless encouraged delegations to provide information under this agenda
item in the next future meeting of the Committee.
                                                     
1 Bolivia, Brazil, Costa Rica, Dominican Republic, El Salvador, Ghana, Honduras, Jamaica, Kenya,
Luxemburg, Nicaragua, Nigeria, Philippines, Poland, Slovenia and Uruguay.S/FIN/M/23
Page 2
6. On the organization of future work, the Chairman started by saying that the Committee should
consider the ways in which it could contribute to the preparation of the new round of negotiations due
to start from the end of the year.  For example, he cited a document circulated in February 1996,
S/FIN/W/5, in which such issues as the distincti on between modes 1 and 2, the sectoral classification
of financial services, and other technical issues such as the use of columns and headnotes or footnoteswere listed.  The examples were meant to be only indicative.  In past discussions, the Committee had
taken note of the results of informal consultations conducted in 1997, a report of which was issued in
July 1997 as an informal note by the Secretariat (Job. no.3706).  One of the suggestions was to
consider using headnotes in Members' Schedules to clarify the distinction between modes 1 and 2.
The discussion could not go much further at th at time, however, and it had been suggested that
delegations come back to this issue at a later stage.  There had also been a debate as to whether this
issue should be discussed in the Committee on Specific Commitments, in this Committee, or both.The Chairman also quoted other issues proposed for discussion, such as to explore ways to improve
technical verification of Schedules, how to clarify the scope of prudential measures, ways to improve
the clarity and legal consistency of Schedules and MFN Exemption Lists.
7. A suggestion was made by a delegation to circulate a short checklist of issues which could be
discussed.   Several delegations found it useful to discuss the distinction between modes 1 and 2 andthe sectoral classification of financial services in this Committee.  Although the Committee on
Specific Commitments would be discussing these issues, it might be necessary for this Committee to
discuss these issues in parallel in order to better  understand the commitments in financial services or
to arrive at a common nomenclature in financial services based on the list in the Annex on Financial
Services of the GATS.  It would also be useful to tap on the expertise of financial services experts onthose issues.  On the other hand, it was suggested that general issues of scheduling such as the use of
columns and headnotes or footnotes would be more appropriately discussed in the context of financial
services even though the same subject might be discussed in other bodies.
8. The Chairman suggested that in light of th e comments made the Committee should establish
priority areas for discussion where it could prov ide value-added, while maintaining coherence with
the work of other bodies.  The distinction between modes 1 and 2 and the sectoral classification of
financial services would be such priority areas.  An indicative checklist of issues for discussion would
be circulated ahead of the next meeting, along with informal notes distributed in June-July 1997 on
the issue of the distinction between modes 1 and 2.  Other documents issued for the Council for Trade
in Services and other bodies, such as the sectoral background note on financial services (S/C/W/72)
and the note on recent developments in services trade – overview and assessment (S/C/W/94), might
also be useful.  The Chairman would discuss with the Secretariat whether there were other notes orstatistics useful for discussion in the Committee.
9. The United States made a statement indicating that it was in consultation with the Republic of
Korea on the latter Member's proposed changes to its Schedule in financial services circulated for
certification on 20 January 1999.  Those changes were announced by Korea with the purpose of
improving its commitments to make them consiste nt with the Member's commitments upon entry into
the OECD.  The United States was consulting on some  points in the proposal which it thought did not
fully comply with Korea's commitments at the OECD .  Korea responded by stating that it needed to
consult with its authorities on the question.  The authorities were also considering some questions
raised by the European Communities on the same proposed Schedule.  The Committee took note of
those statements.
10. It was decided that the date of next meeting would be just before the deadline of 15 June for
acceptance of the Fifth Protocol.  The exact date would be communicated later.
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