RESTRICTED  
  
S/FIN/M/88  
 
 2 September 2016 
(16-4683) Page: 1/6 
Committee on Trade in Financial Services    
 
REPORT OF THE MEETIN G HELD ON 15 JUNE  2016 
NOTE BY THE SECRETAR IAT1 
The Committee on Trade in Financial Services held a meeting on 15 June  2016. The proposed 
agenda was contained in Airgram  WTO/AIR/CTFS/ 5. An annotated agenda by the Chairperson was 
issued prior to the meeting (JOB/SERV/235 ).  
1  ITEM A – APPOINTMENT OF THE C HAIRPERSON FOR THE C OMMITTEE  
1.1.  The Committee elected  Ms Junko Ueno, from Japan, as its new Chairperson.  
2  ITEM B – REGULATORY ISSUES IN  FINANCIAL SERVICES  
2.1.  The Chairperson  recalled that the inv itation to the Global Forum on Transparency and 
Exchange of Information for Tax Purposes  Mayor Gray to speak at a Committee meeting was still 
pending. Unfortunately, due to unavoidable commitments, the Global Forum ha d not been able to 
participate at this meeting.  She added that t he Secretariat would follow up with the Global Forum 
so as to ensure its participation at a future meeting of the Committee.  
2.2.  The Secretariat recently issued a report on recent developments in international standard -
setting  (S/FIN/W /90). 
2.3.  A representative of  the Secretariat  introduced the Note. He said that the purpose of the Note 
was to provide an overview of standard -setting activities by the  Basel Committee on Banking 
Supervision (BCBS), the Financial Stability Board (FSB), the Int ernational Association of Insurance 
Supervisors (IAIS) and the International Organization of Securities Commissions (IOSCO) over the 
last two years. The Note focused on the development of standards included in the compendium 
kept by the FSB.  A total of 25 standards ha d been introduced or revised since May 2014. The Note 
provide d a brief description of all standards developed since then, based on publicly available 
information , and, in addition, wherever relevant, specific trade -related aspects were highligh ted. 
The latter was in keeping with Members' request that any Note by the Secretariat should focus on 
trade aspects and discuss issues from a trade policy perspective.  
2.4.  The representative of the European Union  agree d on the importance of standards. He said  he 
would revert to the Note at the next meeting. He added that the  EU remained interested in hearing 
from the Global Forum at a future meeting.  
2.5.  The representative of Kingdom of Bahrain  asked whether there was any particular reason for 
excluding informatio n on standards developed by the Islamic Financial Services Board from the 
Note, and whether additional information on those standards could be also circulated.  
2.6.  The representative of Australia  thanked the Secretariat for highlighting trade -related aspects , 
and said she would revert to the Note at the next meeting.  
                                                
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/88  
 
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  2.7.  The representative of the Secretariat  referred to the question by Bahrain and said that there 
had been no  deliberate intention to exclude  standards relevant to Islamic finance but that, as a 
first step, the Secretariat had looked into the international standards contained in the FSB 
compendium. He added that an addendum  containing information on recent developments in 
Islamic finance standard -setting would be issued before the next meeting.  
2.8.  The Com mittee took note  of the statement s made  and decided  to revert to this agenda item 
at the next meeting.  
3  ITEM C - TRADE IN FINANCIAL S ERVICES AND DEVELOPM ENT  
3.1.  The Chairperson  said that, f ollowing a request by the Committee, the Secretariat issued a 
Backgrou nd 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).  
3.2.  A representative of the Secretariat  introduced the Note. He recalled tha t the original request 
by Ecuador was to focus on the barriers to financial inclusion, an issue referred to in paragraph 4.1 
of the initial Note on Financial Inclusion. In addition, in discussing the scope of the Note, many 
Members stressed the importance of avoiding duplication of discussions on financial inclusion 
taking place in specialized fora, and of focusing on how trade - and trade p olicy - in financial 
services might  contribute to financial inclusion. Finding an appropriate "trade " perspective on t his 
issue was not an easy task, and took longer  than expected  – something for which the Secretariat 
apologized.  
3.3.  He further explained that the Note consisted of  three sections. The first section was devoted 
to a discussion of the barriers to financial incl usion generally identified by the literature , which 
were very diverse, and arose from demand factors, supply factors, inadequate regulatory 
frameworks, institutional weaknesses,  and deficient infrastructure. The second section, which was 
the result of sign ificant and original research, focu sed on the contribution of trade in services to 
financial inclusion initiatives. This section was based on several case studies prepared by the 
Secre tariat. The third section contain ed some thoughts on the role that trade  policy in services 
might play in advancing financial inclusion.  
3.4.  The representative of Ecuador  thanked the Secretariat for the Note. In his view, the Note 
would allow Members to further discuss the obstacles to financial inclusion and the role that the 
Committee might play with regard to this issue. A preliminary reading showed that the Note 
contained a thorough analysis of the barriers to financial inclusion and showed how trade and 
different business models and regulatory frameworks might help governments  overcome those 
barriers and promote financial inclusion. He said his delegation would make more specific 
comments on the Note at the next meeting.  The issue should be kept in the Committee's agenda.  
3.5.  The representative of Egypt  thanked the Secretariat for the Note and said that his delegation 
would revert to it at the next meeting.  
3.6.  The representative of India offered some preliminary views on the Note. As mentioned in the 
Note, financial inclusion was a complex and multi-dimensional  issue. Financial inclusi on was a 
process of ensuring access to appropriate financial products and services needed by vulnerable 
group s, such as those with low income , at an affordable cost in a fair and transparent manner by 
mainstream institution al players. India ha d for a long time recognized the social and economic 
imperative for broader financial inclusion, and had implemented new  innovative method s to 
empower the po or, including the nationalization of banks, priority sector lending requirements for 
banks, establishment of reg ional rural banks, and initiatives such as the "service area approach ", 
and the "self -help group -bank linkage program". Keeping in view 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.  
3.7.  The im portance of inclusive financial system s was widely recognized in policy circles and ha d 
become a policy priority in many countries. India looked at the Note by the Secretariat from this S/FIN/M/88  
 
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  perspective. It was India's understanding that the Note looked i nto ba rriers to financial inclusion 
from a trade perspective, exploring the role that trade and trade policy in financial services play ed 
in overcoming such barriers. However, trade policy and financial sector liberalization m ight not 
have a direct causal link w ith financial inclusion. Financial policy makers and regulators d id not 
specifically think of trade when designing and implementing fi nancial inclusion polic ies. This was 
also true in the reverse scenario. However, insofar as foreign financial service supp liers 
participate d in these market s and suppl ied services through different modes of supply, financial 
inclusion -related regulation c ould also become trade policy. But this overlap was not a targeted 
objective of central banks . In India's experience, financial inclusion initiative s had been driven 
mainly by the domestic banks, and participation of foreign banks ha d rather been limited and 
shallow. This was not to say that foreign bank s and financial institutions d id not  play a useful role 
in the financial s ector as such  – as mentioned in the Note itself, one important role of foreign bank 
participation was to foster competition. But in India's view  the correlation between financial sector 
liberalization and financial inclusion was at best , weak.  
3.8.   The represe ntative of the European Union  recognized that a significant effort had been made  
by the Secretariat to approach this issue from a trade perspective. The Note contained a lot of 
interesting information.  From the EU perspective, whether financial institution s were foreign -
owned or domestically -owned was not really relevant. In his view, trade in services could indeed 
contribute to financial inclusion.  
3.9.  The representative of South Africa  said that financial inclusion was indeed a core objective  for 
the banking sector in her country. South Africa rec ognize d the importance and relevance of th e 
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 d id not necessarily 
translate into the same success in other markets. A case in point was the discontinuation of 
M-PESA,  the mobile money transfer wallet that was  referenced in the Note. She clarified in that 
regard that e ffective from 30 June this year, M-PESA had been  discontinued in South Africa despite 
achieving pheno menal  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, a nd the  enabling 
environment to entry and competition . In her view, there was no one -size-fits-all approa ch to 
financial inclusion. She finally said that her authorities were still making a technical assessment of 
the Note, which  her delegation would provide at the next meeting.  
3.10.   The representative of Canada  said that his authorities were still reviewing th e Note. At 
previous meetings, his delegation had expressed the desire to retain the trade policy p erspective 
in these notes. Canada appreciated the Secretariat's efforts in that regard. In his view, on a 
preliminary basis, the Note seemed to retain the focus on how trade in financial services m ight 
contribute to financial inclusion . He said his delegation would provide more substantial comments 
at the next meeting.  
3.11.   The representative of Australia  said that it was clear that a lot of work ha d gone into the 
addendum. The Note made clear that this was a complex issue , going well beyond trade policy, 
which was being addressed in a number of other fora. Her delegation appreciate d the addendum's 
focus on the trade policy aspects . In her view, if there were proposals to continue work with 
regard to financial inclusion, then it would make sense to further develop the third part of the 
Secretariat  addendum, i.e. how trade policy could be impr oved to better facilitate financial 
inclusion. The examples in the second part o f the paper provide d useful guidance as to how that 
could look in practice. Finally, in her view, the point made in the initial Secretariat 's Note about 
how financial inclusion c ould be promoted consistently with GATS rules should also be taken into 
accoun t by the Committee as it moved forward.  
3.12.   The representative of Nigeria  said that the Note was bei ng reviewed by his authorities. He 
provided nonetheless some preliminary views. The Note reviewed experiences of other jurisdictions 
in achieving financial incl usion. More importantly, the  various country experiences showed that, 
though financial inclusion m ight have become a general phenomenon, its nature, form and 
challenges differ ed among jurisdictions and as such c ould be addressed by a single product or  one-
size-fits-all approach. Members  should therefore implement initiatives  that take into consideration 
the peculiaritie s of their environments . Although progress had been made in Nigeria, critical 
challenges such as low financial literacy, inadequate  infrastr ucture as well as inadequate and S/FIN/M/88  
 
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  inefficient technology  in financial institutions , had limited further enhancement of financial 
inclusion. In his view, this issue should be kept in the Committee's agenda.  
3.13.   The Chairperson  thanked Members for their support t o the work by the Secretariat. It was 
clear to her that more time was needed to review the Note, and that the Committee would 
therefore need to come back to it at the next meeting.  
3.14.   The Committee took note  of the statement s made  and decided  to revert to thi s agenda item 
at the next meeting.  
4  ITEM D  – RECENT DEVELOPMENTS IN FINANCIAL SERVICE S TRADE  
4.1.  The Chairperson  recalled that at the previous meeting, Jamaica, on behalf of  the Caribbean 
Community ( CARICOM ), made a statement on "de -risking and correspondent b anking", drawing 
the Committee's attention to the impact that measures associated with de -risking were having on 
the provision of correspondent banking services to financial institutions in the region. She then 
offered the floor to Jamaica for an update on  developments pertaining to "de -risking and 
correspondent banking" since the last meeting.  
4.2.  Speaking on behalf of CARICOM, t he representative of  Jamaica  said that since the last 
meeting, the CARICOM region  pursued several courses of action in this area. Fir stly, it raised the 
issue at the Organization of American States' Permanent Council Meeting on Finance and Banking 
Services on 30 March 2016. Discussions on the issue within that forum were still on -going. 
Secondly, CARICOM fully engaged in the recent U nited States -Caribbean Public -Private Dialogue 
on Correspondent Banking. This event was held in Kingston, Jamaica, on 5 April 2016 and was co -
hosted by the US Department of the Treasury and the Bank of Jamaica. Thirdly, CARICOM sought 
to address the issue at the US -CARICOM Trade and Investment Council Meeting in Washington DC 
on 18 May 2016 at which US officials noted the importance that CARICOM attache d to the de -
risking issue . Fourthly, through its mission in Geneva,  Jamaica sought to increase awareness about 
the impact of de -risking on correspondent banking relationships (CBRs) through a presentation 
made to the UNCTAD Multi -Year Expert Meeting on Trade, Services and Development which took 
place in Geneva, from 18 to 20 May 2016.  Finally, CARICOM engaged in a roundtable discussion on 
27 May 2016 under the aegis of the Financial Stability Board (FSB) Regional Consultative Group for 
the Americas which considered experiences in the Americas region with regard to the withdrawal 
of correspondent banking services.  
4.3.  In addition to the aforementioned activities, on 6 -9 June 2016, the Caribbean Financial Action 
Task Force (CFATF) in conjunction with the Government of Jamaica hosted their High -Level Plenary 
and Working Groups Meetings in Montego Bay, Jamaica. The CFATF was one of the 8 bodies in the 
Global Network on Money Laundering (ML) and Financing of Terrorism (FT) around the world and 
was an associate member of the FATF.  
4.4.  She said that t he Caribbean Financial Action Task Force (CFATF) was  comprised of 27 States 
from the Caribbean Basin and Central and South America. All CARICOM Members were members 
of the CFATF. These Members had  prioritised compliance with the FATF Recommendations and 
agreed to implement common countermeasures to address the problem of Money Launderi ng, 
Terrorist Financing and the Financing of the Proliferation of Weapons of Mass Destruction. The 
Caribbean Financial Action Task Force achieve d its objective by way of Mutual Evaluation Reports 
(Peer Reviews). These Reports show ed the status of individua l Members with regard to their 
implementation of the CFAFT and FATF Recommendations at the time of the mutual evaluation. 
The CFATF Plenary Meetings facilitate d discussion of matters of common interest to Members and 
provide d a space for members to review each other's progress in addressing deficiencies identified 
in the Mutual Evaluation Reports.  
4.5.  At the Plenary Meeting in June, Minister of State in the Ministry of Finance and the Public 
Service  of Jamaica, the Honourable Fayval Williams, noted that "[a]s international banks cut off 
Correspondent Banking Relationships, they effectively reduce or cut off access to the currencies 
required to conduct international trade and enable international development. This has a direct 
impact on economic development in t he states where such relations are cut off."  S/FIN/M/88  
 
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  4.6.  The countries and territories of the Caribbean Region continue to be adversely affected by 
the ever increasing threat of de-risking and the potential curtailment or termination of 
international CBRs. Just last m onth one CARICOM Member received an official communication from 
the domestic bank of a major trading partner indicating its intention to sever its current banking 
relationship within 3 months of the notification. This notification was the latest in a serie s of similar 
notifications to other jurisdictions within the Caribbean r egion.  
4.7.  The Caribbean was not the only region being affected. The World Bank reported that while 
the Caribbean seem ed to be the most severely affected region, jurisdictions in Europe, C entral 
Asia and Africa ha d also experienced declines in foreign CBRs. Jamaica would therefore encourage 
other WTO Members that ha d been grappling with this challenge and ha d experienced declines in 
CBRs to share their experiences with this Committee, parti cularly with respect to the challenges 
that de -risking measures pose d for trade and the responses that ha d been taken to address the 
situation. To aid Members in better understanding this phenomenon and kick -start discussions on 
this topic, she proposed t he convening of a workshop or seminar on the matter of de -risking and 
correspondent banking. The International Monetary Fund, the World Bank and the Financial 
Stability Board (FSB) were all looking into the issue. Members could explore the possibility of 
inviting them to share their knowledge of this issue. In fact, the World Bank Group in conjunction 
with the Association of Certified Anti -Money Laundering Specialists (ACAMS) convened a two -day 
Stakeholder Dialogue on De -risking in Washington D.C. to tackle the question of "What will it take 
to safeguard financial inclusion and successfully manage risk?" The WTO could also invite, in 
addition to the FSB, other standard -setting bodies at the international level, such as the Financial 
Action Task Force (FATF) a nd the Committee on Payments and Market Infrastructures (CPMI).  
4.8.  She further recalled that  in May 2014, several international standard -setting organizations, 
namely, the Basel Committee on Banking Supervision, the F inancial Stability Board , the 
Internation al Association of Insurance Supervisors, and the International Organization of Securities 
Commissions, made presentations at th e Committee on recent regulatory developments in the 
financial sector at the international level. The participation of those orga nizations afforded 
Members the opportunity to discuss with the experts the potential implications of the regulations 
and standards being introduced on trade in financial services.  
4.9.  CARICOM remain ed convinced of the importance of ensuring that standard -setting initiatives 
at the international level take into account the needs of the Caribbean and other developing 
countries, particularly in relation to their ability to participate effectively in global trade. Thus, a 
dedicated discussion on de -risking and corr espondent banking could allow:  
a. WTO Members to share their experiences with de -risking and its effects (particularly with 
respect to trade);  
b. the standard -setting bodies to provide an update on the initiatives they are currently 
undertaking. For example:  
i. the FATF was developing guidance in areas of particular relevance to de -risking (such 
as correspondent banking and remittances) in order to ensure that anti -money 
laundering/counter terrorist financing measures were implemented in line with the 
risk-based app roach. This draft was recently circulated for comments;  
ii. the CPMI Working Group on Correspondent Banking was conducting work on 
technical measures that could reduce the costs of compliance with regulatory 
requirements applicable to correspondent banking ser vices;  
iii. the FSB ha d indicated that one of its priorities for 2016  was to address the reduction 
in correspondent banking (as a vulnerability in the financial system);  
c. engagement on how those initiatives can promote trade, financial stabili ty and financial 
inclusion.  
4.10.   The Caribbean Community hoped that this proposal w ould be favourably considered by the 
Committee.  S/FIN/M/88  
 
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  4.11.   The Chairperson  said that the issue raised by CARICOM was very important. While v arious  
international  standard -setting bodies were looking into it, in her view Members ought to explore 
what the Committee might contribute  to the discussion in light of Members' commitments  and 
obligations . 
4.12.   Barbados  and Saint Lucia  (on behalf of the Organization of Eastern Caribbean States) 
associated themselves with the statement made by Jamaica.  
4.13.   The representative of Nigeria  support ed the proposal for a dedicated discussion or a 
workshop  on this issue . However, further details on the proposal should be provided by Jamaica.  
4.14.   The representative of Japan  said that it was important to ensure financial stability and 
integrity through the implement ation of  adequate financial regulation, including the standards 
issued by the FATF. At the same time, it was important to explore how the implementation of 
those standards  might  affect trade in financial services. In this regard, Japan welcome d the 
proposal to convene a workshop  to explore such issues. He requested that Jamaica submit a 
proposal in writing so as to facilitate discussions and consulta tions with capitals. .  
4.15.   The represe ntative of the United States  thanked Jamaica for the update on recent 
developments since the last meeting. He noted that other international fora were already engaged 
in this issue. It was not clear what the WTO value added would be, given that this issue was highly 
technical and was already being discussed in other – more appropriate – fora. He said that the 
United States would need considerable  more information  on the proposal just made  before they 
could pronounce themselves one way or the other.  
4.16.   The repr esentative of Canada  thank ed Jamaica for the update. Canada r ecognize d the 
impact that de-risking  had on Caribbean financial ins titutions. Canada was act ively engaged in on -
going discussions in the FATF and the FSB with a view to better understanding the u nderlying 
causes and determine appropriate responses. He drew Members' attention to the finding that 
neither Canadian banks nor Canadian regulatio ns were exacerbating the situation in the region. He 
said that it would be helpful to  have the proposal in wri ting so as to facilitate discussions and 
consultations with capitals. He further suggested that should Jamaica wish to refine the proposal, 
it should further elaborate on how the work in the WTO could complement the discussions and 
initiatives taking place  in other specialized fora.  
4.17.   The representative of the Kingdom of  Saudi Arabia  said that the issue of de -risking was  very 
important. It would be helpful to have the proposal in writing so as to facilitate discussions and 
consulta tions with capitals.  
4.18.   The rep resentative of the European Union  said that his delegation would need considerable 
more information before he could give an opinion one way or the other . More information was 
needed in particular with regard to the specific contribution that the Committee could make in this 
area. 
4.19.   The Chairperson  said t hat there seem ed to be interest in the issue , but that more 
information was needed. She encouraged Jamaica to submit a written proposal.  
4.20.   The representative of Jamaica  said that CARICOM would submit a more detailed proposal for 
a workshop or seminar  on this topic . She added that the aim at the Committee was  to focus on the 
trade -related aspects raised by this issue. This latter aspect would be further elaborated in the 
written proposal.  
4.21.   The Committee took note  of the statements made  and decided  to revert to this agenda item  
at the next meeting.  
5  ITEM E - OTHER BUSINESS  
5.1.  There were no issues raised under Other Business.  
 
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