RESTRICTED  
  
S/FIN/M/89  
 
 17 November 2016  
(16-6331) Page: 1/9 
Committee on Trade in Financial Services    
 
REPORT OF THE MEETIN G HELD ON 5 OCTOBER  2016 
NOTE BY THE SECRETAR IAT1 
The Committee on Trade in Financial Services held a meeting on 5 October 2016, under the 
chairmanship of Ms Junko Ueno (Japan) . The agenda is contained in Airgram  WTO/AIR/CTFS/ 6. An 
annotated agenda by the Chairperson was issued p rior to the meeting (JOB/SERV/242 ).  
1  ITEM A – REGULATORY ISSUES IN  FINANCIAL SERVICES  
1.1.  The Chairperson  recalled that  in the context of the Committee’s review of recent 
developments in global financial regulatory r eform s and their implications for trade in financial 
services, the Global Forum on Transparency and Exchange of Information for Tax Purposes  (the 
Global Forum)  had kindly agreed to make a presentation before the Committee on the objectives 
and purposes of the organization, as well as on the latest developments in its areas of 
competence.  
1.2.  She introduced Mr. Andrew Auerbach,  Head of the Peer Review Unit at the Global  Forum  and 
informed the Committee that Mr. Auerbach's presentation had been circulated as a ro om document 
(RD/SERV/134) . 
1.3.  The representative of the Global Forum  said that the latter  had formed  the multilateral 
framework for the  work in the area of transparency and exchange of information  that had been 
carried out by both OECD and non -OECD economies since 2000.  The Global Forum had 136 
member jurisdictions  participating on an equal footing, together with 15 international organisations 
participating as observers . He explained that the Global Forum had three bodies: the Steering 
Group, which guided the work of the Forum ; the Peer Review Group,  which was in charge of 
reviewing  jurisdictions’ legal and regulatory framework s for transparency and exchange of 
information in tax matters as well as  the implementation of the standards in practice ; and the 
Automa tic Exchange of Information  (AEOI)  Group, which carried out the work in relation to the 
implementation of the new standard on AEOI.  
1.4.  He further explained that there were two internationally agreed standards on exchange of 
information for tax purposes . Thes e were the Exchange of Information on Request (EOIR) and the 
Automatic Exchange of Information (AEOI). The Global Forum ensure d that these standards of 
transparency and exchange of information for tax purposes were in place around the world 
through its mon itoring and peer review activities. In order to ensure worldwide participation in the 
benefits of increased tax transparency and international co -operation and that developing 
countries benefit ted from the new tax transparent environment, the Global Forum also had a 
technical assistance programme for its members.  
1.5.  The standard on EOIR provided for the exchange of tax information , upon request, with 
safeguards to protect tax payers’ rights and confidentiality. The Global Forum Terms of Reference 
broke down t he standard in to ten essential elements, divided into three main parts: availability of 
information ; access to  information ; and exchange of information. The basic premise s behind the 
review , therefore , were that tax information must be available, th at tax authorities must have 
                                                
1 This document has been prepared under the Secretariat's own responsibility and is without prejudice 
to the positions of Members or to their rights and obligations under the WTO.  S/FIN/M/89  
 
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  access to that information, and that there must be a basis for exchange. If any of these elements 
were missing, information exchange would not be effective.  
1.6.  In accordance with the peer review methodology, reviews t ook place in two ph ases. Phase 1 
reviews examine d whether the ten elements were in place, while p hase 2 reviews look ed into the 
implementation of this framework in practice. All members of the Global Forum, as well as 
jurisdictions identified by the Global Forum as relevant to its work, were subject to review. The 
draft peer review reports were discussed and approved by the Peer Review Group, and were finally 
adopted by all Global Forum members. In case s where  areas of weakness had been identified 
during the reviews, the repo rt included recommendations  clearly  identifying the  improvements to 
be implemented by the jurisdiction concerned.  The jurisdiction could not move to a phase 2 review 
until it ha d acted on the recommendations made by the Peer Review Group report. Peer revie ws 
had started in 2010. As of September 2016, 235 reviews had been carried out.  After completion of 
both phases of the review process, each jurisdiction receive d an overall rating  on a 4 -tier scale: 
non-compliant ; partially compliant ; largely compliant ; and compliant. As of September 2016, the 
Global Forum had finalised phase 1 reviews of 123 jurisdictions and assigned compliance ratings 
for a total of 101 jurisdictions , after completion of their phase 2 reviews. The overall ratings 
showed th at 22 jurisdict ions ware rated "compliant ", 67 jurisdictions "largely compliant ", and 12 
"partially compliant ". 
1.7.  A new  round of reviews had started in mid -2016. The objective was to review each 
jurisdiction in the Global Forum over the next 5 years. This new round of revi ews was based on 
new Terms of Reference, which introduced the requirement that beneficial ownership information 
be available for EOIR purposes in respect  of legal persons and legal arrangements (e.g.  trusts). 
The new Terms of Reference also introduced a re ference to the 2012 version of Article 26 of the 
Model Tax Convention and Commentary, which  clarifie d that requests concerning  a group of 
taxpayers not individually  identified ( the so -called "group requests ") were covered under Article 26 
of the Model Tax  Convention, so long as the foreseeable relevance was sufficiently demonstrated.  
Other improvements to the Terms of Reference included the assessment of the completeness and 
quality of EOI requests and responses.  The Global Forum’s peer reviews ha d been a s uccess, 
having led to i mproved  transparency and exchange of information, a s well as  increased tax 
revenues.  
1.8.  By adopting the standard on Automatic Exchange of Information (AEOI), the Global Forum 
had taken  a decisive step towards tax transparency. The AEOI  was the final outcome of a long 
process that  had evolved over the years. Since the adoption of the EU Savings Directive in 2003 , 
the first multinational automatic exchange of information programme, a lot of progress ha d been 
made in terms of increasing in ternational co -operation in tax matters and global tax transparency.  
With the adoption of the Foreign Account Tax Compliance Act (FATCA) by the United States in 
2010, and against the background of the global financial crisis, significant political momentum  
developed  for the putting in place of a global automatic exchange standard. In 2012 , the five 
major European countries (France,  Germany , Italy,  Spain  and the United Kingdom ) agreed with 
the United States on a reciprocal exchange of FATCA information under  Intergovernmental 
Agreements (IGAs) concluded between the United States and each of the five countries. At the 
same time,  the international community, led by the  G20, showed an increased interest in putting 
in place a global AEOI standard , which led to a formal request to the OECD to develop a common 
reporting standard  (CRS) . In February 2014, the OECD agreed on the text of the  CRS, which was 
followed by a commitment of 44 "early adopter " jurisdictions to implement the CRS, as well as a 
Ministerial Declara tion by OECD members and 14 other jurisdictions to the same end.  The CRS was 
subsequently endorsed by the G20 in September 2014.  As of the date of the presentation, 
101 Global Forum members were committed to implementing the CRS by 2017 or 2018 . 
1.9.  In additio n to translating the CRS into domestic law, a key element of its successful 
implementation was the introduction  of an international framework allowing t he automatic 
exchange of CRS information b etween jurisdictions. E xchange of information between jurisdic tions 
was typically based on the Multilateral Convention on Mutual Administrative Assistance in Tax 
Matters (the "Multilateral Convention"), to which 103 jurisdictions were parties, and the CRS 
Multilateral Competent Authority Agreement ( MCAA ), which opera tionalized the automatic 
exchange of information under the CRS on the basis of the Multilateral Convention . Eighty four  
jurisdictions had signed the MCAA as of the date of the presentation.  S/FIN/M/89  
 
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  1.10.   The Global Forum representative further explained that the impleme ntation of the AEOI 
standard  implied the exchange of significant amounts of data, and might have a great impact on 
the work of tax authorities. For this reason,  the Global Forum’s push for increased transparency 
and international data exchange was accompan ied by technical assistance. The main pillars of the 
Global Forum’s support were the following: 1) technical assistance and training, aimed at creating 
awareness of the importance of exchange of information for domestic resource mobilization, 
helping membe rs prepare for peer reviews, providing advise on implementing an effective 
framework for exchange of information, and building capacity for information exchange and its 
use; and 2) competent authority meetings, so as to facilitate communication, build rela tionships 
and improve cooperation.  
1.11.   In concluding his presentation, the Global Forum representative said that transparency had 
come a long way in recent years. An increasing number of jurisdictions (currently over 100) had 
committed to the automatic exchang e of tax information . He said that this would change the 
arithmetic of international  tax evasion forever, as the difficulty and costs of concealing money 
offshore w ould increase enormously.  All these changes led to  the enlargement of the Global Forum 
Secre tariat,  currently consisting of about 30 staff, and to  the intensification of peer reviews, 
technical assistance missions, and meetings. Over the last few years, a significant number of 
jurisdictions had moved up in the peer review rating scale, demonstrat ing the power of the peer 
review process and the  determination of the jurisdictions concerned to act swiftly to address 
deficiencies in their laws and  practices.  Developing countries (which constitute d more than half of 
the Global Forum’s membership)  must be fully engaged in this work if exchange of tax information 
was to have worldwide reach.  Avoiding tax base erosion was fundamental for the smooth operation 
of governments and for overall economic development.  
1.12.   The Chairperson  thanked Mr. Auerbach for an i nteresting and informative presentation. She 
was impressed by the significant progress made over the years to implement the standards on 
exchange of tax information, currently involving more than 100 jurisdictions.  
1.13.   The representative  of the Kingdom of Saudi Arabia  asked Mr Auerbach if he could elaborate 
more on the use of defensive measures against non -compliant jurisdictions.  
1.14.   The representative  of the United States  asked about the implications of non-compliance with 
the standards. Specifically, he asked how enforcement was ensured and what mechanisms were 
used to ensure compliance.  
1.15.   The representative of the Global Forum  said, in reply to both questions, that the Global 
Forum was a consensus -based body, charged  with monitoring the implementation of the sta ndard. 
Jurisdictions were rated after completion of both phases of the review process. As he had 
explained, 12 jurisdictions were partially compliant and 7 had not yet been rated because they 
could not move to phase 2 of the review. About 17 additional rev iews had been completed and 
were ready  for approval at the next meeting of the Global Forum. The Global Forum worked hard 
with partially -compliant and non -compliant jurisdictions to help them put in place the  necessary  
elements to comply with the standard.  Some jurisdictions had been stuck in phase 1 of the review 
process, and were thus unable to move to phase 2, as the essential elements to implement the 
standard had not been put  in place  – e.g. account ownership  information was not available  to tax 
author ities; bearer shares were allowed to be issued without appropriate mechanisms to identify 
the owners of such shares ; or agreements for the exchange of information were inexistent. The 
peer review assessment had proven to be a success . Over the last few yea rs, about 25 
jurisdictions had moved  from being "non-compliant " to "largely compliant ".  
1.16.   The Global Forum was not an enforcement body , nor did it apply sanctions. The standard 
itself was soft -law. However, the Multilateral Convention did impose obligations  on its signatories, 
hence providing  the basis for the information exchange. It was worth keeping in mind, in his view, 
that the context had changed over the last decade. While jurisdictions might have tried to gain 
competitive advantage by allow ing for ba nk secrecy  in the past , being non -compliant or partially 
compliant was no  longer  perceived as an appropriate way to attract business.  
1.17.   He then addressed the issue of non -compliance and "so called" defensive measures. 
Although these  measures had been taken by individual jurisdictions , a coordinated approach to 
defensive measures had not yet been agreed. The latest G20 Leaders ' communiqué had asked the S/FIN/M/89  
 
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  OECD to prepare a list by the July  2017 G20 Leaders' Summit , of those jurisdictions that ha d not 
yet suffici ently progressed toward a satisfactory level of implementation of the agreed 
international standards on tax transparency , and indicated that defensive  measures w ould be 
considered against listed jurisdictions.  
1.18.   The representative of the Global Forum said  it was quite common for  countries to impose 
defensive measures. Many had established lists of jurisdictions  fulfilling specific criteria, such as 
the availability of information exchange  mechanisms . Non-compliance with  those criteria would 
determine the tax consequences of a particular transaction. For example, the absence of an 
information exchange relationship might lead to higher reporting requirements imposed on the tax 
payer in order to benefit from specific deductions, or the imposition of a withholding  tax that 
otherwise would not apply, or the treatment of some source of income as non -exempt , where 
otherwise it would be.  
1.19.   The Chairperson  asked for Mr. Auerbach’s views on the key elements and the major  
challenges faced in conducting effective and effici ent technical assistance in this area.  
1.20.   The representative of the Global Forum  replied  that perhaps the biggest challenge was the 
lack of human capital. The Global Forum dealt with a lot of small jurisdictions, with small tax 
administrations. The re was gre at pressure on those jurisdictions, who had to respond to specific 
requests for information exchange, prepare for automatic exchange of information, and fill in l ong 
questionnaires as part of the Global Forum’s monitoring of implementation with the standar d. 
Finding the personnel to carry out these onerous tasks was quite difficult. Training staff and 
ensuring a stable work force was indeed a challenge  for tax administrations. As part of its technical 
assistance in this area, a secondment programme had been  established, allowing staff from 
developing countries to work for a period of time at the Global Forum Secretariat. The programme 
provided these developing country professionals with a good opportunity to learn the standard and 
take that knowledge and exp erience back to their governments. Another challenge was secur ing 
political buy -in from governments and, in particular, national Parliaments, who were responsible 
for developing and passing legislation.  
1.21.   The delegation of the European Union  sought Mr Auerb ach’s views on the relationship 
between trade in financial services and the standards promoted by the Global Forum. The 
European Union put a lot of value on standards, and  trade agreements signed by the EU made 
reference to the implementation and applicati on of international  standards , including those related 
to exchange of information on tax matters.  The reference to international standards  was part of 
the template for financial services negotiations used by the European Union.  The European Union 
had been promoting  this approach  in other fora and negotiations. Promoting the use of 
international standards did not only facilitate trade liberalization but also ensure d a level playing 
field. He asked Mr Auerbach for his views on how standards fit into trade pol icy in financial 
services.   
1.22.   The representative of the Global Forum  agreed that the implementation of international 
standards and trade liberalization should go hand -in-hand. Standards benefited the jurisdiction 
that implemented them : they were an element of a good commercial environment ; contributed to 
a stable tax base ; helped ensure the tax system's transparency ; and constituted a positive aspect 
of government policy. The automatic exchange of information for tax purposes brought financial 
services suppl iers into the core  of tax administration . While getting bank information was 
sometimes difficult a decade ago, more recently  the expectation was that such information would 
flow automatically. Banks should be able to put the necessary mechanisms in place. That would be 
essential for assess ing a jurisdiction's compliance with the international standard.  
1.23.   The representative of Turkey  said that the Global Forum was an important initiative in the 
fight against tax evasion. He asked whether the exchange of banki ng information was restricted to 
international operations or whether it should also include persons having  no international 
operations.   
1.24.   The representative of the Global Forum  replied that  the standard did not require tax 
administrations to exchange infor mation on all clients of their local banks. Under the standard, 
jurisdictions obtained information on non -resident bank account holders from their financial 
institutions and automatically exchanged that information with other jurisdictions on an annual S/FIN/M/89  
 
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  basis. Reportable accounts included those  held by individuals and entities ( including  trusts and 
foundations). The standard contained extensive rules on the types of account subject to reporting 
(based for example on de minimis  thresholds), as well as on how to deal with bank accounts held 
through legal entities. The actual beneficial owners of the account must be identified . 
1.25.   The representative of Argentina  asked whether the Judicial Powers  of the different 
jurisdictions were involved in this exchange of infor mation, or whether the exchange of information 
was only among tax authorities.   
1.26.   The representative of the  Global Forum  said that the competent authorities involved in the 
exchange of information were the national tax administrations.  
1.27.   In concluding this di scussion, the Chairperson  thanked Mr. Auerbach, and through h im, the 
Global Forum Secretariat, for participating in th is meeting of the Committee. Mr Auerbach’s 
presentation was very informative, and sti mulated  an interesting discussion. It was not her 
intention to provide a full summary of the discussion. All views would be reflected in the report of 
the meeting. She nonetheless considered that the presentation , and the subsequent discussion , 
helped Members better understand how these standards fit within the overall context, how they 
related to trade policy in financial services, and how important international  cooperation  was for 
the successful implementation of international standards.  
1.28.   The Chairperson  then t urned to another  standards -related  matter . She  recalled that shortly 
before the previous meeting, the Secretariat issued a report on recent developments in 
international standard -setting  (document S/FIN/W/90 ). The purpose of the Note was to provide an 
overview of standard -setting activities by the Bas el Committee  on Banking Supervision (BCBS) , 
the Financial Stability Board  (FSB) , the International Association of Insurance Supervisors  (IAIS) , 
and the International Organization of Securities Commissions (IOSCO) over the last two years. 
That Note focus ed on the development of standards by these four standards -setting agencies 
included in the compendium kept by the Financial Stability Board. It update d the information 
provided by representatives of these four international standard -setting bodies at the mee ting of 
the Committee on 6 May 2014. In addition, as requested at the last meeting, an addendum was 
issued to cover standard -setting activity by the Islamic Financial Services Board since the 
presentation made by this agency last year  (document S/FIN/W/90/ Add.1) . Both the Note and its 
addendum provide d a brief description of the standards based on publicly available information, 
and, when relevant, highlight ed specific trade -related aspects.  
1.29.   She also drew Members' attention to the agenda item on future wor k and timing of the next 
meeting. Her intention, as explained in the annotated agenda, was to discuss any future work that  
Members might wish to undertake under each agenda item.  In that regard, s he suggested that, in 
commenting on the Notes by the Secreta riat, delegations also provide d their views on how to take 
the work on regulatory issues forward. In her view, the Notes by the Secretariat would help 
Members  focus on relevant trade -related aspects . Different options for future work under this 
agenda item  were available. One option would be to  invite the standard -setting bodies  mentioned 
in the Notes to make presentations to the Committee. Another option would be to extend the 
analysis to other standard -setting bodies whose work was also relevant for this Committee, such 
as the Committee on Payments and Market Infrastructures (CPMI) and the Committee on the 
Global Financial System (CGFS). Additionally, of course, the Committee could address specific 
regulatory issues raised by any Member. These potential av enues for future work were not 
mutually exclusive.  
1.30.   The representative  of the Kingdom of Bahrain  thank ed the Secretariat for its efforts in 
preparing the Notes. The inclusion of the work carried out lately by th e Islamic Financial Service s 
Board  provided a more comprehensive view of recent developments in international standard -
setting.  
1.31.   The representative  of Chinese Taipei  also thanked the Secretariat for the Note s on recent 
developments in international standard -setting . She then shared information on Chine se Taipei's 
initiatives to harmonize its regulation s with international standards . Chinese Taipei adopted some 
of the guidelines issued by the BCBS  that were  mentioned in the Note by the Secretariat , such as 
the Revised Pillar 3 Disclosure Requirements (Ja nuary 2015), the revisions to the securitization  
framework (December 2014), Basel III  net stable funding ratio (October 2014), and the net st able S/FIN/M/89  
 
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  funding ratio dis closure standards (June 2015). She said the government was planning  to follow 
the timeline for implementation suggested by the BCBS . Chinese Taipei was also an original 
member of the IAIS, and always referred to the IAIS guidelines and principles  when reviewing or 
drafting regulations . The survey conducted by the IAIS on compliance with the Insura nce Core 
Principles  gave quite a good rating to Chinese Taipei. Chinese Taipei was also a member of IOSCO, 
and of its s ubsidiary committees, including  the Committee on Issuer Accounting, Auditing and 
Disclosure and  the Committee on Credit Rating Agencies. Chinese Taipei had close cooperation 
with IOSCO . Such cooperation ha d strengthened Chinese Taipei's supervision o f cross-border 
transactions and ha d facilitated the exchange of information.  Regarding future work by the 
Committee, she welcome d the proposal made by the Chairperson to continue with the practice of 
inviting experts  from international standard -setting bodies to share information on developments 
in their respective areas of competence.   
1.32.   The representative of Canada  thanked the Secretariat for kee ping the Committee apprise d 
of relevant developments in international standard setting, including the focus on trade -related 
aspects. Canada ha d long been a supporter of better coherence between the WTO and other 
international institutions and standard set ters such as the IMF and the World Bank , as long as the 
mandate and decision -making processes of these institutions were respected. In terms of  future  
updates to the Committee, Canada said that perhaps it would be useful to hear about work being 
undertaken  with international institutions and standard -setting bodies  that was relevant to the 
WTO and , more specifically , to this Committee. Canada would  therefore be supportive of receiving 
regular updates from the Secretariat regarding its cooperation and collab oration with other 
international institutions and standard -setting bodies  as it relate d to trade in financial services. 
This could include , for example , updates about any joint papers or projects to which the 
Secretariat contribute d, as well as meetings an d activities of other international institutions and 
standard sett ing bodies  in which the Secretariat participate d. 
1.33.   The Committee  took note  of the statements made and decided  to revert to this agenda item 
at the next meeting.   
2  ITEM B - TRADE IN FINANCIAL S ERVICES AND DEVELOPM ENT 
2.1.  The Chairperson  recalled that  shortly before the previous meeting, the Secretariat issued a 
Background Note on Barriers to Financial Inclusion and Trade in Services (S/FIN/W/88/Add.1). The 
Note was an addendum to the Background Note  on Financial Inclusion and the GATS 
(S/FIN/W/88). The addendum discusse d the barriers to financial inclusion, and the role that trade 
and trade policy in financial services m ight play in overcoming them. Before opening the floor for 
discussion, she offere d the floor to the Secretariat to elaborate on the contents of the Note.  
2.2.  A representative of the Secretariat  said that the Note consist ed of three sections. The first 
section was devoted to a discussion of the barriers to financial inclusion generally iden tified by the 
literature. These barriers were of a very diverse nature, and arose from demand factors, supply 
factors, inadequate regulatory frameworks, institutional weaknesses, and deficient infrastructure. 
The second section  focuse d on the role that tra de in services might play in overcoming those 
barriers and advancing financial inclusion. He highlighted three aspects.  Firstly, financial inclusion 
was not just about  access to  credit , but also about access to many other financial services, such as 
deposi t-taking, payment and money transmission, and insurance. Second ly, financial inclusion 
required the interplay of many other services and service suppliers, such as mobile network 
operators, payment aggregators, credit bureaus,  and collateral registries . In fact, the 
advancement of financial inclusion require d the development of an "ecosystem", that is, a 
community of multiple providers of services interacting through different business models with the 
fundamental objective of bringing necessary financial se rvices to the financially excluded.  Thirdly, 
this "ecosystem" provide d an opportunity for the expansion of trade in many different services, 
such as deposit -taking, lending, payment and money transmission, credit reference and analysis, 
financial intermedi ation and advice, insurance, telecommunications and ICT -related services. At 
the same time, in allowing the deployment of these "ecosystems" not only within national 
boundaries but also across borders, trade in services m ight significantly contribute to fi nancial 
inclusion and development. The third section of the Not e looked into the role played by  trade 
policy in services in complementing, and contributing to, financial inclusion initiatives. Trade policy 
in services was about reducing barriers to entry a nd competition, ensuring a level playing field 
among market participants, guaranteeing transparency of regulations and policies, and fostering 
diversity of products and services. The discussion on financial inclusion was closely related to two S/FIN/M/89  
 
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  other issues  of increasing interest among Members, namely e -commerce and the situation of 
Small - and Medium -Sized Enterprises (SMEs). Indeed, most of the successful financial inclusion 
initiatives had been based on digital solutions and various forms of digital trade.  Financial inclusion 
was also about ensuring SMEs' access to financial services. These aspects were illustrated by the 
case studies contained in the Note , which discussed inter alia  branchless banking in Pakistan and 
Senegal, mobile payments in Rwanda and South Africa, payment banks in India, mobile financial 
services in Africa and the Middle -East, and mobile cross -border remittance services in Africa.   
2.3.  Before opening the floor for discussion,  the Chairperson  suggested that in  commenting on the 
Note, delega tions also provided their views  on how to take this issue forward. In her view, and as 
highlighted by the Secretariat, the issue of financial inclusion was closely related to two other 
issues of increasing interest among Members, namely the situation of SM Es and e -commerce. The 
Notes by the Secretariat ha d already discussed national financial inclusion  strategies and policies 
pursue d, the main barriers to financial inclusion, and the most frequent policies and regulations 
adopted by governments with a view to promoting financial inclusion (including in particular 
branchless and mobile banking models). The Notes ha d also discussed the compatibility  of 
different policies and regulations with GATS provisions, providing some guidance as to how 
financial inclusio n might be promoted in a GATS -consistent manner. Finally, the addendum ha d 
shown, through various case studies, how trade in services m ight contribute to furthering financial 
inclusion. In her view, on e option for future work would be to build on these Not es, in particular on 
section 4 of the Addendum, and further consider ho w trade policy and regulation m ight be 
improved so as to better contribute to financial inclusion.  
2.4.  The representative of Ecuador  said that the Note  present ed a very accurate description  of the 
barriers faced by users in  accessing an account in a financial institution , of the obstacles that 
affect ed the supply and demand of financial services, and of the impediments arising from 
regulatory frameworks.  He took the opportunity to report on recent initiatives  adopted by 
competent authorities  in Ecuador . As one of its functions, the Monetary and Financial Policy and 
Regulation  Board provided incentives to financial institutions with a view to promot ing the creation 
of products geared towards facilitating the financial inclusion of priority groups, such as people 
with disabilities, young people, single mothers, and segments of the low -income population facing 
barriers in accessing financial service s.  
2.5.  Ecuador's Monetary and Financial Code empowe red the Central Bank  to promote financial 
inclusion . In 2014 , Ecuador introduced  a new electronic payment system, commonly known as 
digital money. Electronic or digital money did not replace the use of the United States dollar, which 
was the currency of le gal tender in Ecuador. Rather, it was a payment system no different from 
the electronic wallet system used in other countries. No new money  was created  – it was , in fact , a 
cheaper method of storing and transferring already existing money. The electronic p ayment 
system was governed by the Monetary and Financial Code, which require d that digital money be 
100% backed by liquid assets . In other words,  for each digital dollar created there must be a 
physical US dollar deposited in the Central Bank . The money us ed in the new electronic payment 
system would be transferable through ATMs, text messages, appl ications, tablets and websites. He 
noted , in that regard , that 40% of Ecuadorians lack ed banking services, while 90% of the 
population ha d a cellular phone or el ectronic device compatible  with the digital money system.  This 
initiative allowed  all citizens, irrespective of their economic and social condition, to open  a digital 
money account and have access to  financial services.   
2.6.  The representative of South Africa  reiterated the statement she  made at the previous 
meeting . She said that financial inclusion was indeed a core objective for the banking sector in her 
country. South Africa recognized the importance and relevance of the Note prepared by the 
Secretariat to the work in the WTO. South Africa duly recognized that trade policy might contribute 
to financial inclusion in a number of ways. However, it was equally important to recognize the fact 
that the success of one model in some markets did not necessarily trans late into the same success 
in other markets. A case in point was the discontinuation  in South Africa  of M-PESA, the mobile 
money transfer wallet that was referenced in the Note. She clarified , in that regard , that effective 
from 30 June this year, M -PESA h ad been discontinued despite achieving phenomenal success in 
many African countries and beyond, amassing several millions of users. M -PESA proved to be an 
unsustainable model in South Africa , despite the relative well -developed regulatory environment, 
the substantially liberalized economy, and the enabling environment to entry and competition. In 
her view, there was no one -size-fits-all approach to financial inclusion. She finally said that her S/FIN/M/89  
 
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  authorities were still making a technical assessment of the Not e, which her delegation would 
provide at the next meeting.  
2.7.  The representative of Canada  reminded Members that he had offered some preliminary views 
at the previous meeting . He thanked the Secretariat for the N ote and for retaining the trade policy 
perspect ive. Going forward , he considered that the Note  remained a useful reference for both 
trade negotiators and domestic policy makers  looking to inform their financial inclusion and 
development policies. While trade in services was no panacea for financial exclusion , governments 
must ensure that appropriate  regulatory frameworks and financial infrastructure s were in place . In 
his delegation's view, the Note made it clear that tr ade policy could  contribute to financial 
inclusion .  
2.8.  The representative of India reiterated the statement she made at the previous meeting. A s 
mentioned in the Note, financial inclusion was a complex and multi -dimensional issue. Financial 
inclusion was a process of ensuring access to appropriate financial products and services needed 
by vulnerable groups, such as those with low income, at an affordable cost in a fair and 
transparent manner by mainstream institutional players. India had , for a long time , recognized the 
social and economic imperative for broader financial inclusion, and had implemented new 
innovative methods to empower the poor, including the nationalization of banks, priority sector -
lending requirements for banks, establishment of regional rural banks, and initiatives such as the 
"service area approach", and the "self -help g roup-bank linkage program".  In view of the financial 
infrastructure available in India, the government adopted a bank -led model for financial inclusion 
whereby, leveraging on technology, banking services were provided using hand -held devices such 
as point -of-sale machines, mobile phones, etc. Other players, such as mobile companies, were 
allowed to partner with banks in offering services collaboratively.  
2.9.  The importance of inclusive financial systems was widely recognized in policy circles and had 
become a policy priority in many countries. India looked at the Note by the Secretariat from this 
perspective. It was India's understanding that the Note looked into barriers to financial inclusion 
from a trade perspective, exploring the role that trade and trade p olicy in financial services played 
in overcoming such barriers. However, trade policy and financial sector liberalization might not 
have a direct causal link with financial inclusion. Financial policy makers and regulators did not 
specifically think of tra de when designing and implementing financial inclusion policies. This was 
also true in the reverse scenario. However, insofar as foreign financial service suppliers 
participated in these markets and supplied services through different modes of supply, fina ncial 
inclusion -related regulation could also become trade policy. However,  this overlap was not a 
targeted objective of central banks. In India's experience, financial inclusion initiatives had been 
driven mainly by the domestic banks, and participation o f foreign banks had rather been limited 
and shallow. This was not to say that foreign banks and financial institutions did not play a useful 
role in the financial sector , as such . As mentioned in the Note itself, one important role of foreign 
bank particip ation was to foster competition. But in India's view the correlation between financial 
sector liberalization and financial inclusion was , at best, weak.  
2.10.   The representative  of the Philippines  said that financial inclusion was under the purview of 
the Centra l Bank ( Bangko Sentral ng Pilipinas , BSP). The National Baseline Survey for  Financial 
Inclusion  (NBSFI)  conducted by the BSP  in 2015  showed the existence  of barriers to  financial 
inclusion , both f rom the demand -side and the supply -side. Only 33% of Filipin o adults with savings 
had bank accounts. With reference to demand -side barriers, a bout 65% of respondents to the 
survey cited the lack of money and the lack of knowledge to open and maintain a bank account as  
among the top reasons for not having a bank acc ount. Other reasons cited include d distance to the 
financial institution, high minimum balance require ments , too low interest rate on deposits, lack of  
identification card, and mistrust of  financial institution s. Almost 50%  of those who never borrowed 
mone y cited the lack of need  as the main reason,  while 16% did not have access to credit due to 
the unavailability  of collateral. Other barriers hampering access to credit included  high interest 
rates, burdensome  documentary requirements , and personal and reli gious reasons.  The main 
supply -side barriers  were the lack of proper understanding of client needs, socioeconomic and  
cultural factors  and obstacles  posed by geography. Other  contributing factors were the inadequate 
physical infrastructure (such as ineffic ient transportation  and shipping facilities)  and inefficient 
and/or prohibitively priced telecommunications services.  
2.11.   These reasons led the Philippines  to launch the N ational Strategy for Financial Inclusion  
(NSFI). The NSFI was a comprehensive  strategy  developed through a broad -based consultative S/FIN/M/89  
 
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  process with private and public  stakeholders involved in financial sector development . Recent 
empirical evidence showed  that access to financial products and  services made  a substantial 
difference in people 's lives and  carried the potential of improving the well -being of unserved 
sections of society . A growing  body of literature also suggest ed that greater financial inclusion 
contribute d to financial stability and  economic development.  Among the programs under the NSFI 
was the promotion of a  safe, reliable and efficient  national retail payment system. In that respect, 
taking account of the experience in other jurisdictions , which showed that the uptake in electronic 
payments had contributed to financial inclusion, o ne of NSFI's  objectives was to accelerate the 
shift to wards  electroni c payments in the Philippines . 
2.12.   The Committee took note  of the statements made and decided  to revert to this agenda item 
at the next meeting.  
3  ITEM C – RECENT DEVELOPMENTS IN FINANCIAL SERV ICES TRADE  
3.1.  The Chairperson  recalled that at the previous meeting, Jamaica, on behalf of the Caribbean 
Community (CARICOM), provided an update on recent developments regarding "de -risking and 
correspondent banking", and suggested that the Committee should h old a dedicated discussion or 
workshop on this issue. While there seemed to be interest in the issue, Members requested that 
Jamaica provide d further details in writing, so as to facilitate consideration of the proposal.  
3.2.  The representative of  Jamaica , speaking on behalf of the Caribbean Community (CARICOM), 
said that , at the last meeting of the Committee, WTO Members of the Caribbean Community 
proposed the convening of a workshop or seminar on the matter of de -risking and correspondent 
banking , and sketche d a possible, but basic, framework for the suggested workshop.  In response 
to Members ' request for a proposal in writing, the Caribbean Community was still working on the 
core elements of a draft programme for the seminar with a view to tabling it at the n ext meeting 
of the Committee.  
3.3.  The delegation of the European Union  said that his delegation was one of those asking for 
more details on the intention behind the proposal for a workshop . His delegation was certainly 
willing to consider any such proposal. H owever, the discussion was not yet ripe to consider the 
details of a programme for the workshop . Members should first discuss the purpose and the issues 
to be addressed in the proposed workshop.  
3.4.  The Committee took note  of the statements made and decided  to revert to this agenda item 
at the next meeting.  
4  ITEM D  – FUTURE WORK AND TIMI NG OF THE NEXT MEETI NG 
4.1.  The Chairperson  said that suggestions for further work had been discussed under the 
previous agenda items, and the Committee had decided accordingly. In her view, there was 
sufficient substance to justify another meeting before the end of the year. She suggested therefore 
that the Committee meet again before the end o f the year. The Committee so decided . 
5  ITEM E – OTHER  BUSINESS  
5.1.  There  were no issues raised u nder Other Business . 
 
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