RESTRICTED  
  
S/FIN/M/86  
 
 29 January 2016  
(16-0674)  Page: 1/9  
Committee on Trade in Financial Services    
 
REPORT OF THE MEETING HELD ON 14 OCTOBER 2015 
NOTE BY THE SECRETARIAT1 
The Committee on Trade in Financial Services held a meeting on 14 October 2015 under the 
Chairmanship of Ms Maha Gabbani (Kingdom of Saudi Arabia). The proposed agenda was 
contained in Airgram WTO/AIR/CTFS/3. An annotated agenda by the Chairperson had been issued 
prior to the meeting (JOB/SERV/219). The Committee adopted the agenda. 
1  ITEM A – ADOPTION OF THE ANNUAL REPORT 
1.1.  The Committee adopted the annual report as contained in document S/FIN/W/89. 
2  ITEM B - REGULATORY ISSU ES IN FINANCIAL SERVICES  
2.1.  The Chairperson recalled that as part of th e Committee's review of recent developments in 
global financial regulatory reform and its implications for trade in financial services, the Financial 
Action Task Force made a presentation at the la st meeting. Unfortunately, the Global Forum on 
Transparency and Exchange of Information for Ta x Purposes, which had also been invited, was 
unable to attend. The Secretariat would follow up with the Global Forum so as to ensure their 
participation at a future meeting of the Committee.  
2.2.  The Chairperson also said that, as indica ted at the previous meeting, the International 
Monetary Fund (IMF) and the Islamic Financial Services Board (IFSB) kindly agreed to present at 
this meeting. Both presentations had been circulated to Members prior to the meeting. She then 
turned to the first speaker, Mr Jaseem  Ahmed, Secretary-General of the IFSB. 
2.3.  The IFSB representative said that the Islamic Financial Services Board (IFSB) was an 
international standard-setting organization for the Islamic financial services industry (broadly 
defined to include banking, capital markets an d insurance). The IFSB, based in Malaysia, was 
officially inaugurated on 3 November 2002 and began its operations on 10 March 2003. He explained that the main objectives of the IFSB we re the following: to develop prudential standards 
and guiding principles; to provide guidance on effective supervision and regulation, and develop 
risk management and disclosure criteria; to cooperate with other international standard-setting bodies; to encourage cooperation among member countries; to facilitate capacity-building; to 
undertake research; and to establish relevant databases. The work of the IFSB complemented that 
of the other main international standard-setting bodies, namely the Basel Committee on Banking Supervision (BCBS), the International Association of Insurance Supervisors (IAIS) and the International Organization of Insurance Commission s (IOSCO). As of April 2015, the IFSB had 188 
members from more than 45 countries (30 full members, 28 associate members and 130 
observers).  
2.4.  The Islamic financial services industry ex perienced rapid growth in the aftermath of the 
global financial crisis. The Islamic banking sector, the largest segment of the global Islamic 
financial industry, expanded at an average annua l rate of 16% over the period 2008-2014. The 
Islamic capital market was the fastest growing segment of the global Islamic financial sector, even 
                                               
1 This document has been prepared under the Secret ariat's own responsibility and is without prejudice 
to the positions of Members or to thei r rights and obligations under the WTO. S/FIN/M/86 
 
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  though it only started in the mid-1990s. To illustrate the progress made by Islamic capital 
markets, Mr Ahmed said that Suk ūk issuances and global outstanding volume expanded at an 
average annual rate of 33.9% and 19.2%, resp ectively, between 2008 and 2014. Annual issuances 
averaged US$100 billion over the last four years. The global Tak āful (or Islamic insurance) 
industry also experienced remarkable growth rates in recent years with the global gross Tak āful 
contributions amounting to an estimated US$21.4 billion as at first half of 2014, representing a year-on-year growth of more than 15% over the period 2008-2014.  
2.5.  The global industry's assets were estimated to be worth US$1.87 trillion as at first half 2014. 
Overall, Islamic financial assets were heavily co ncentrated in the Middle East and Asia, although 
the number of new markets was expanding. The GCC region accounted for the largest proportion of global Islamic financial assets (37.6%), followed by the Middle East and North Africa (MENA, 
excluding GCC), with a share of 34.4%, and Asia, with a share of 22.4%. 
2.6.  The Islamic financial services industry was gaining ground in key traditional markets, mainly 
concentrated in the GCC and selected countries in Asia. Apart from Iran and Sudan, which 
operated fully Shar īah-compliant banking systems, in some  other markets Islamic finance already 
reached systemic importance. Indeed, in Bangladesh, Brunei, Kuwait, Malaysia, Qatar, Saudi Arabia, the United Arab Emirates (UAE) and Yemen, the Islamic financial sector coexisted with a 
conventional financial sector, and already represented 15% of total banking assets and/or more 
than 5% of the total global Islamic banking assets. 
2.7.  Islamic finance was drawing increasing interest, as evidenced by recent developments. Suk ūk 
issuances took place in new jurisdictions, such as Hong Kong China, Luxembourg, South Africa, 
and the United Kingdom. The United Kingdom established a Global Islamic Finance and Investment 
Group, of which the IFSB was a member, and th e IMF established an Interdepartmental Working 
Group on Islamic Finance (which issued a Staff Discussion Note) and an External Advisory Group 
(EAG) on Islamic Finance, of which the IFSB was also a member. 
2.8.  The Suk ūk market had been increasingly tapped by sovereign and government-related entity 
issuers. Since 2009, sovereign and quasi-sovereign Suk ūk issuances had accounted for 80% of the 
total annual volume issued. In addition, the Suk ūk market was rapidly gaining traction across 
diverse geographical regions and economic sectors, which were increasingly turning to this market to raise liquidity. Infrastructure sectors and the so-called 'social' and 'green' Suk ūk were cases in 
point.  
2.9.  The IFSB responded to the challenges raised  by the rapid growth of the industry by issuing 
new standards with a view to supporting the orderly development of Islamic finance at the national level, implementing harmonised or common set of prudential standards for resilient cross-border 
growth, facilitating Islamic finance's integration into the global economy, and participating in the 
global financial stability surveillance framework.  
2.10.  In addition, the IFSB aligned Islamic financ e with the post-crisis regulatory framework. To 
date, the IFSB issued 17 prudential standards, 6 guidance notes and one technical note. The latest 
standard (IFSB-17), issued in April 2015, contained the landmark Core Principles for Islamic Finance Regulation (Banking Segment). Mr Ahmed further explained that the IFSB standards were benchmarked against those of the other internatio nal standard-setting organizations (BCBS, IAIS, 
and IOSCO), with whom the IFSB worked closely.  Additional standards and documents were being 
prepared on stress testing, ReTakāful undertakings, disclosure requirements for Islamic capital 
markets, and regulation and supervision of  MicroTakaful (joint IFSB-IAIS project). 
2.11.  The IFSB strengthened collaboration with its global partners over the last several years. In 
fact, the IFSB was a member of the Basel Consultative Group, to which it had submitted a note on the impact of liquidity reform, while the BCBS participated in IFSB working groups (e.g. Special 
Issues in Capital Adequacy (2008-2009), Core Principles for Islamic Finance Regulation (2013-
2015)). The IFSB also cooperated closely with the IAIS, with whom it issued a joint paper on Insurance Core Principles and the Tak āful Sector (2006), and launched a joint research project on 
Takāful in April 2014, which was to be completed in November 2015. Collaboration with IOSCO on 
transparency and disclosure in Islamic capital markets resulted in a joint publication in 2012.  S/FIN/M/86 
 
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  2.12.  The IFSB also worked together with the In ternational Federation of Accountants (IFAC) to 
raise awareness on Islamic finance. In that context, the IFSB was a member of the Consultative Advisory Group of the International Auditing an d Assurance Standards Board (IAASB), and of the 
Advisory Group on Shari’ah Compliance Instruments and Transactions of the International 
Accounting Standards Board (IASB). The IFSB also had close collaboration with the Asian 
Development Bank, the Islamic Development Bank, the World Bank and the IMF. 
2.13.  Mr Ahmed concluded his presentation by stressing the need for legal and regulatory reform 
in countries with Islamic financial sectors. The diversity and differing levels of development of the 
IFSB members and the countries in which Islamic finance was prevalent made progress in this area all the more important. In his view, legal and regulatory reform was inherent to overall development. 
2.14.  The Chairperson thanked Mr Ahmed for his presentation and opened the floor for comments 
and questions.  
2.15.  The representative of Switzerland sought Mr Ahmed’s view on the contention that, although 
in terms of growth Islamic banks had outperformed  conventional banks over recent years, their 
profitability was lower than that of conventional banks. Some argued that low profitability was due 
to lack of standardisation. He also asked whether, in Mr Ahmed’s view, the GATS rules and 
disciplines constituted an impediment for setting standards in the area of Islamic finance.  
2.16.  The IFSB representative said that Islamic finance could only be sustainable if it was 
profitable. From that perspective, profitability was a key issue for both the regulators and the 
private sector. He was aware of observers and studies arguing that the sector had low profitability, 
but he contested their findings. The Islamic Financ ial Services Industry Stability Report, prepared 
by the IFSB annually, found that overall profitability of the sector was in fact quite high, but had been affected in some jurisdictions by specific local circumstances. In his view, an industry did not 
grow at a rate of 17% per year for 8-9 years on the basis of low profitability. The Islamic financial 
services industry was growing because, on the wh ole, it was a highly profitable undertaking. On 
the GATS-related question, he said that although he had not conducted any detailed analysis, he 
had no reason to believe that there was any incompatibility between the Agreement and the IFSB 
standard-setting activities.  
2.17.  The representative of the European Union sought Mr Ahmed’s views on the main reasons 
behind the growth of Islamic banking. Was it  due to government policies promoting the 
development of Islamic banking or to the expansion of global trade and consumers' interest in this 
type of financial products? He also asked whether there were specific barriers to cross-border supply and establishment hindering further growth of the industry. 
2.18.  The IFSB representative said that the driver s of growth of the Islamic financial sector varied 
from country to country. In some countries, there was a very strong policy stance in support of 
Islamic finance. Malaysia was a clear example of a strong public policy stance, where long term 
development plans had systematically incorporated the development of Islamic finance. In other 
countries, although there was public support, th e emergence of Islamic finance was more of a 
supply-side – market-driven – phenomenon. In all cases, however, unmet demand was the common feature that prompted the emergence of Is lamic finance. In any case, there was growing 
recognition of the need for the public sector to play an active role in the development of Islamic 
finance, by identifying specific policies and developing the necessary legal and regulatory frameworks. Shariah governance was critical in order to instil confidence in customers that the 
financial products meet their own requirements for legitimacy and authenticity.  
2.19.  Turning to the second question raised by the European Union, he said that the IFSB was 
working hard towards addressing the challenges raised by cross-border issues. The IFSB was 
monitoring international developments, in part icular the establishment and enforcement of 
requirements for systemically important financial institutions. Even though there were some domestically significant Islamic financial institutions in a few countries, none of them was globally significant.  
2.20.  The representative of India noted that in most of the countries identified as having Islamic 
banking, the latter coexisted with conventional bank ing. That raised in her view several questions. S/FIN/M/86 
 
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  For example, in terms of the regulatory infrastructure, how is coordination ensured between both 
segments of banking? Are both segments regulate d by the same regulator? How do regulators get 
represented at the IFSB? How are standards fo r these two forms of banking coordinated? 
2.21.  The IFSB representative said that different countries had different approaches towards 
governing legislation. This had a bearing on Shariah compliance. In some countries with dual 
financial systems, Shariah compliance was not an issue because all the laws must be Shariah-compliant in the first place. However, this was not the case in a country like the United Kingdom or 
India, where laws were secular. In any case, in his view, this was not an insurmountable challenge 
to the integration or adoption of Islamic financ e. Experience showed that laws and regulatory 
approaches had been shaped by countries' historical experience. Some countries had separate laws for Islamic finance, while others did not. Other countries decided to dispense with specific 
laws entirely and to issue directives from the Central Bank instead. Regulatory structures also 
differed. While some countries entrusted regulati ons and supervision for both segments of the 
financial sector (i.e. Islamic and conventional) to a single agency or department, others had two 
different departments, but sometimes working unde r the financial stability supervisor. Capacity 
building, both within Ministries of Finance and Central Banks, was crucial. 
2.22.  The representative of Turkey said that the regulation and supervision of all banks in Turkey 
(conventional and Islamic) was the responsibility of only one governmental body – the Banking 
Regulatory and Supervisory Agency. In Turkey, financial institutions that adopted the Islamic banking model were called "Participation Banks". 
2.23.  The representative of Egypt said that in his country the same regulations applied to 
traditional and Islamic banks. 
2.24.  The IFSB representative said that Egypt an d Turkey were clear examples of the diversity of 
approaches adopted by different countries to deal with Islamic banking. 
2.25.  The representative of Canada said that, while the discussion was interesting, Members 
should remain mindful that this was the Committee on Trade in Financial Services and not the 
Committee on Financial Services. In other words, Members of this Committee should always 
approach issues from a trade policy perspective. The discussion on the different national 
approaches adopted to deal with Islamic banking helped Members realize the challenges faced by 
financial services providers operating on a cross-bord er basis. From that perspective, he said that 
it would be interesting to know the IFSB’s asse ssment of the impact of standard-setting and 
financial regulatory reforms on banks’ cross-border activities. 
2.26.  The IFSB representative said that experience showed that growth of the Islamic financial 
services industry had always been hesitant in the absence of clear regulatory frameworks. The 
introduction of standards and guiding principles was therefore a stimulus – not a constraint – to 
the development of the industry. Clear and robust standards helped boost confidence in the sector. 
In his view, the real problem was the insufficient ad option of standards due to limited institutional 
and human capacity. The adoption of international standards sometimes raised specific challenges. 
The experience with Basel III was a case in point. The Islamic financial services industry expressed concerns at the time that the Basel III liquidity requirements would curtail the industry’s growth. The IFSB took up this issue with the BCBS, explaining that the Islamic financial services industry 
was highly liquid because of market underdevelopment and the absence of investment 
opportunities. At the same time, policies needed  to be implemented to develop capital markets 
and expand the availability of adequate financial instruments, so that liquidity could be channelled 
towards highly liquid and Shariah-compliant financial instruments. In his view, the Basel III 
liquidity coverage ratio (LCR) could be addressed by IFSB jurisdictions with some flexibility, 
without affecting the longer term viability of Islamic finance. 
2.27.  The representative of the Kingdom of Bahr ain noted that some conventional banks ventured 
into the Islamic banking business through the setting up of Islamic "windows" within the overall 
bank’s structure. He asked, in that regard, how these "windows" were regulated and supervised, and how Islamic standards were applied in those cases.  
2.28.  The representative of Australia said that her country had a dynamic and growing Islamic 
banking sector. Given the potential for portfolio ma nagement in the Asia Pacific region, she sought S/FIN/M/86 
 
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  Mr Ahmed’s views on what would be the best ways for portfolio or fund management firms to 
demonstrate their ability to uphold standards and cultural practices in this sector, while providing certainty and confidence to potential consumers.  
2.29.  The representative of Hong Kong, China sa id that Hong Kong, China took a very positive 
and open stance towards Islamic finance. In July 2013, tax laws were amended in order to provide 
Sukūk and conventional bonds with a comparable taxation framework. In 2014, the government 
successfully offered its first Suk ūk. In March 2015, the world’s first US$ denominated Suk ūk was 
issued by a AAA-rated government – an important milestone in the development of the Islamic 
capital market in Hong Kong, China.  
2.30.  The IFSB representative said that Hong Kong, China was a clear example of how a level 
playing field on taxation, together with consumers’ confidence in the impartiality and effectives of 
the Judiciary, could help develop Islamic finance. Turning to the question raised by Australia, he 
said that legal structures were extremely important in order to ensure Sharia compliance – an essential element in the eye of consumers of Islamic financial services. Turning to Bahrain’s 
question, he said that most countries still allowed banks to maintain Islamic "windows", as well as 
the option of establishing fully stand-alone Islamic subsidiaries. The IFSB did not favour one regulatory arrangement over the other one. The IF SB standards and guiding principles explicitly 
applied to Islamic "windows" as well. The basic requirement for those "windows" was the 
segregation of funds, so as to ensure Shariah compliance. At the same time, the parent institution must set aside funds to back up the Islamic "window". 
2.31.  The Chairperson thanked Mr Ahmed for his participation at the meeting, and introduced the 
next speaker, Mr Udaibir Das, Assistant Director and Division Chief at the IMF Monetary and 
Capital Markets Department. 
2.32.  The IMF representative said that the IMF wa s not standard-setting body. Rather, it took the 
work by the standard-setting organizations and inte grated it into its surveillance and monitoring 
activities. In his view, there were some key ta keaways for Members of the Committee: the need 
for financial policy upgrade; the positive contribution of international standards to financial 
stability; the significance of the IMF Financia l Sector Assessment Program (FSAP); the increasing 
focus on systemic risk after the global financial crisis; less reliance on a compliance-based approach, and more focus on an approach based on consistency and outcomes (i.e. quality of implementation); and the emerging role of standard setters. 
2.33.  He said that the landscape was changing. Major changes were taking place in the economic 
and financial environment (e.g. the crisis legacy, exceptional monetary conditions, broad regulatory changes at the international and national levels), with implications for the supply of 
financial services. In that context, the IMF had a unique role to play, ensuring close policy dialogue 
with its membership, keeping a macro-financial perspective, and continuing with its surveillance functions through, for example, the FSAP and th e Global Financial Stability Reports (GFSR). The 
latest GFSR, issued in October 2015, put the emphasis on financial policy upgrade as a collective 
effort. That effort should encompass three main elements: enhanced policy confidence; financial sector resilience; and the wise use of policy buffers. 
2.34.  The latest global financial crisis led to a re vision of existing standards and the filling of gaps 
with new guidance. Internationally adopted standa rds and codes were classified in three broad 
categories: policy transparency (data availability, fiscal transparency, monetary and financial policy transparency); financial sector regulation and supervision (banking, securities, insurance, 
payments and securities settlement systems, an ti-money laundering and combating the financing 
of terrorism); and market integrity (corporate go vernance, accounting, auditing, and insolvency 
creditor rights). 
2.35.  A massive effort had been made over the last 15 years to evaluate standards and codes 
implementation. Over 2'000 ROSCs (reports on country's observance of standards and codes) were carried out by the IMF and the World Bank. Ov er the last 15 years, more than 300 FSAP 
assessments (covering 170 jurisdictions) and over  700 full assessments of international standards 
had been conducted.  S/FIN/M/86 
 
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  2.36.  Among the various objectives of the FSAP, two were particularly relevant for the work of 
this Committee: strengthening financial systems, and mitigating risks of cross-border contagion. 
2.37.  There were many definitions of financial stability. The IMF preferred to focus on the main 
elements that should be in place to make a financial system stable: risk assessment and stress 
tests; a safety net framework; and a framework for micro and macro prudential regulation and 
supervision.  
2.38.  The latest financial crisis showed the need  to focus on regulatory arbitrage, international 
coordination, macroprudential risk, information availability, crisis resolution mechanisms, and the 
coverage of systemic risks in regulatory framewor ks. The FSAP had been transformed over the last 
few years, largely in response to the global financial crisis. "Macrofinancial relevance" became the organizing principle for prioritizing FSAP findings and recommendations, and several initiatives 
were being taken to better integrate supervisory issues with the IMF surveillance and financial 
stability risk analysis. The new focus on systemically important financial systems led to changes in the FSAP assessment cycle. Financial stability assessments under the FSAP became mandatory 
every five years for 29 jurisdictions deemed to be systemically important. For all other 
jurisdictions, FSAP participation continued to be voluntary. 
2.39.  In concluding his presentation, Mr Das said that stable systems supported financial flows to 
productive uses and facilitated competitive financial markets. International coordination remained 
crucial to avoid fragmentation, spillovers and risk migration. Public confidence was vital for cross-
border financial services. 
2.40.  The Chairperson thanked Mr Das for his presentation, which showed to what extent the 
global financial crisis had led to a reassessment of policies, regulations and surveillance 
mechanisms. She then opened the floor for discussion.  
2.41.  The representative of the Republic of Ko rea said that the regulatory framework surrounding 
the financial industry had changed significantly after the global financial crisis. He asked Mr Das 
whether he could elaborate on the implications of these changes for the negotiations on trade in financial services. 
2.42.  The representative of Canada said that the most recent Financial Sector Stability 
Assessment carried out by the IMF found that Ca nada’s regulatory and supervisory framework 
demonstrated strong compliance with international standards and was well coordinated across the federal oversight bodies. Canada's traditionally st rong prudential supervision and regulation, along 
with conservative financial sector policies and business models with banks, underpinned its long- 
standing financial stability and soundness. In addition, for eight consecutive years, the World Economic Forum ranked Canada's banking system as  the soundest in the world. It also credited 
Canada' open financial services trade regime with the strong performance and health of the 
country’s financial sector. In order to allow private sector firms to compete on a level playing field, it was important that governments implemented post-crisis reforms in a non-discriminatory 
manner. It was this non-discriminatory element that trade negotiators should always keep in mind. 
With reference to the adequacy of existing standa rds, he asked the IMF representative if he could 
further elaborate on the remaining gaps in cross-border issues. He also wondered whether the financial sector assessments conducted by the IMF provided any evidence on the effect of recent 
international regulatory reform efforts on trade in financial services. 
2.43.  The IMF representative said that government s should all fully acknowledge that the financial 
services landscape was going through fundamental changes. He was not in a position to suggest 
what should be done on the trade front in response to the changing financial landscape. This was 
an issue that this Committee should look into as well. Once the business models of large banks and fund managers changed, so would asset allocation and the flow of finance. It was not possible 
at this stage to conclude whether – and to what extent – finance was driving trade or trade was 
driving finance. He concurred with the Canadian re presentative that post-crisis financial regulatory 
reforms should be implemented on a non-discriminatory basis. Gaps still remained in three important areas: information exchange between regulatory authorities; cooperation between 
home- and host-country regulators; and cross-border resolution.  S/FIN/M/86 
 
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  2.44.  The representative of Peru asked the IMF representative what the most effective public 
policies to promote financial development were.  
2.45.  The representative of India said that it became apparent from the presentation and the 
replies to some of the questions that the regulatory reform was not progressing as it should in the 
area of cross-border finance. At the same time, the promotion of financial liberalization and 
integration was important for this Committee. Against that backdrop, she asked the IMF representative what should be the focus of the Committee’s discussion. In particular, should the 
Committee adopt and approach of ‘wait and see’? Should Members be more cautious in terms of 
any kind of discussion or prescription related to financial liberalization at this stage? 
2.46.  The IMF representative said that Peru and India had raised probing questions. If he had to 
give one piece of advice to governments, it would be to ensure that banks (either big or small) 
function as well as possible. Banks were the centre-piece of any financial system, especially in 
small markets. Policy makers should not lose sight of the centrality of banks, and their role as a 
transmission channel for monetary policy. On India’s question, he said he would certainly not 
advise to go for a policy of "wait and see", especi ally for an economy like India's. Policy should 
show some activism. At a time when the financial landscape was changing and new models were emerging, liberalization should continue. The IMF ha d always argued that cross-border capital flow 
liberalization should come along with precondi tions. Those preconditions applied to both the 
country of origin and the country of destination of those flows. Unfortunately, both the Asian crisis in the 1990s and the most recent financial crisis sh owed that much of those institutional, legal and 
oversight prerequisites were not in place.  
2.47.  The Chairperson thanked Mr Das again for his presentation and for a very interesting 
debate. She suggested that, as agreed in the ca se of the other international standard-setting 
organizations, the Secretariat keep regular contacts with the IMF so as to keep the Committee 
informed of developments in its area of competen ce. The first such report would be presented at 
the next meeting. It would consist of either a succinct report by the Secretariat or the circulation of reports submitted by the international standard-setting bodies. 
2.48.  The Committee took note of the statements ma de and decided to revert to this agenda item 
at the next meeting. 
3  ITEM C – ACCEPTANCE OF THE FIFTH PROTOCOL TO THE GATS 3.1.  The Chairperson recalled that Brazil was the only Member that had yet to accept the 
Fifth Protocol.  3.2.  The representative of Brazil said that there had been no developments. 
3.3.  The Chairperson encouraged Brazil to give formal acceptance to the Fifth Protocol. That 
would allow the WTO to definitely conclude what was one of the most successful and challenging 
negotiations at the WTO. 
3.4.  The Committee took note of those statements and decided to revert to this agenda item at 
the next meeting. 
4  ITEM D – TRADE IN FINANC IAL SERVICES AN D DEVELOPMENT 
4.1.  The Chairperson recalled that at the previous meeting, Ecuador suggested that the 
Secretariat prepare an addendum to the Backgro und Note on Financial Inclusion and the GATS 
(S/FIN/W/88). Several delegations supported the idea and no objection was raised. However, it 
was agreed that the Secretariat would consult interested delegations so as to clarify the topic to be addressed by the addendum. As a result of those consultations, the Secretariat started drafting an 
addendum that would address the issue of 'obstacles to financial inclusion', building on – and 
developing the issues raised in – paragraph 4.1 of document S/FIN/W/88. Such addendum would be circulated before the next meeting. 
4.2.  The representative of China said that his delegation had continuously lent its support to the 
current discussion, which had enhanced Members’ understanding of the contribution of the S/FIN/M/86 
 
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  financial sector to development. The Secretariat had an important role to play in assisting the 
discussion.  
4.3.  The representative of Canada recalled that the purpose of the initial note on financial 
inclusion prepared by the Secretariat was not to  replicate the growing literature on financial 
inclusion, but rather, to discuss the issue from a trade policy perspective, addressing also the role 
of the GATS. Examining the barriers to financial inclusion would be very helpful in terms of informing domestic policies to enhance financial inclusion; however he stressed the importance of 
linking this discussion to trade in financial se rvices. In that regard, he suggested that the 
addendum could include a discussion on the contribution of liberal trade regimes to financial inclusion. 
4.4.  The representative of Ecuador thanked the Secretariat for having conducted informal 
consultations. In his view, the addendum discussing the major obstacles to financial inclusion 
would further the work of the Committee in this area. 
4.5.  The representative of the United States supported the statement by Canada. While his 
delegation was supportive of the Secretariat's efforts to expand its examination of obstacles to 
financial inclusion, such an examination should remain factual and must include issues related to the WTO and this Committee’s mandate. Therefor e, the addendum should discuss how trade in 
financial services, including opening markets and removing barriers to trade, could help address 
the issue of financial inclusion.  
4.6.  The representatives of Australia and the Eu ropean Union supported the statement by Canada. 
4.7.  The representative of India supported Ecuador’s suggestion to ask the Secretariat to prepare 
a note on the barriers or obstacles to financial incl usion. Although she agreed that the focus should 
be on how trade could promote financial inclusion, in her view there was no cause-effect relationship between trade openness and financial inclusion. Trade openness might be one of the 
factors affecting financial inclusion, but it should be studied like any other factors. The Secretariat 
should avoid making subjective value judgments in that regard. 
4.8.  The representative of Pakistan echoed the statement by India. 
4.9.  The Chairperson said that there was wide support for the suggestion that the Secretariat 
prepared an addendum to the Note on financial inclusion. She added that the Secretariat took note 
of the comments made by various delegations, and would act accordingly.  
4.10.  The Committee took note of the statements ma de and decided to revert to this agenda item 
at the next meeting.  
5  ITEM E – RECENT DEVELOPMENTS  IN FINANCIAL SERVICES TRADE 
5.1.  The Chairperson recalled that as a standing fe ature of the agenda, this item had been used in 
the past to either present and discuss recent de velopments in individual Members' markets or 
introduce proposals that eventually led to specific dedicated discussions or seminars (e.g. on macro-prudential policy and regulation, on non-life insurance services, on the impact of technology 
on regulation, supervision and compliance). This focus on recent developments affecting a market, 
or indeed the industry, was what distinguished this agenda item from the others, which focused on the long-term impact of financial services trade on development and on specific regulatory issues.  
5.2.  Apart from developments at the national le vel, or developments affecting the industry, the 
Committee might wish to discuss, for example, de velopments at the regional level. Various 
financial integration initiatives were being pursued by Members in different parts of the world, and all Members of the Committee stood to benefit from a better understanding of those agreements 
and their effects on trade in financial services. It  was indeed in the interest of all Members, and 
certainly within the competence of this Committ ee, to keep abreast of all these developments 
affecting trade in financial services, not only in individual Members, but also at the bilateral, 
regional or global level. 
5.3.  No Member took the floor under this agenda item. S/FIN/M/86 
 
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  5.4.  The Committee took note of the Chairperson's statement and decided to revert to this 
agenda item at the next meeting.  
6  ITEM F - OTHER BUSINESS 6.1.  There were no issues raised under Other Business.  
  
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