WORLD TRADE  
ORGANIZATION  RESTRICTED 
S/FIN/M/75 
21 December 2012 
 (12-7014) 
Committee on Trade in Financial Services  
  
 
 
REPORT OF THE MEETING HELD ON 5 DECEMBER 2012 
 
Note by the Secretariat
1 
 
 
1. The Committee on Trade in Financial Services he ld a meeting on 5 December 2012, under the 
chairmanship of Ms Micong Klimes (Germany).  The agenda is contained in Airgram WTO/AIR/4054.  An annotated agenda (JOB/SERV/122) had been circulated prior to the meeting.  
2. The representatives of Panama requested the inclusion under Ot her Business of a point of 
information concerning certain measures taken by Arge ntina that affect trade in financial services.  
3. The representative of Argentina said that  his understanding was that discussions on 
substantive issues should be avoided under Other Busi ness.  However, since Panama indicated that 
the intention was to include a point of inform ation, Argentina could agree on that basis. 
4. The Committee adopted the agenda accordingly. 
A. ADOPTION OF THE ANNUAL REPORT TO THE COUNCIL FOR TRADE IN SERVICES  
5. The Committee adopted the annual report as contained in document S/FIN/W/85. 
B. RECENT DEVELOPMENTS IN FINANCIAL SERVICES TRADE  
6. The Chairperson said that, at the previous  meeting, the Committee had continued its 
consideration of the proposal by Ecuador to  hold a dedicated discussion on macroprudential 
regulation (S/FIN/W/84).  Many Members had indicat ed their willingness to share their experiences 
of macroprudential regulation.  However, positi ons diverged on the proposed preparation of 
a Background Note by the Secretariat and the participation of experts from international 
organizations.  As suggested by some Members at that meeting, Ecuador had undertaken to submit a 
more concise document focusing on the organization of the dedicated discussion and taking into 
account the comments received.  On 15 November  2012, Ecuador had submitted a room document 
(RD/SERV/80), describing a framework for a dedicated discussion on the experience of Members in 
the implementation of macroprudential policy and regulations.  She added that it had not been 
possible to hold informal consultations prior to  this meeting, as envisaged by the Committee in 
October. 
7. The representative of Ecuador said that the ne w document took into account the suggestions 
made by Members at previous meetings.  The propo sal sought to provide clarity on an issue of a 
systemic nature, namely, reassuring Members about their capacity to apply macroprudential measures 
in order to safeguard the stability of their financ ial systems, on the basis of a clear understanding of 
                                                      
1  This document has been prepared  under the Secretariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. S/FIN/M/75 
Page 2  
 
  the relationship between those measures and the GAT S framework of rules.  The proposed discussion 
would allow Members, particularly developing countries,  to learn about best practices in the field of 
macroprudential policy and regulation.   To this end, in their presentations Members could explain 
how they understood macroprudential policy, taking into consideration the most recent developments 
in this area.  Members could thus put forward the type of measures they had implemented in recent 
years, including capital flow management measures,  and could also make observations or comments 
on how, in their view, these measures related to the GATS. 
8. The parameters for this dedicated discussion woul d be the following.  First, it would not lead 
to an interpretation of GATS Rules.  Rather, it s hould serve to corroborate the flexibilities enshrined 
in the current framework for the adoption of this type of measures.  Second, the discussion should not 
seek to identify or list measures that would be cons idered to fit within the GATS framework.  Rather, 
it should seek to preserve the breadth of GATS Rules.   Third, the experiences shared by Members 
would only serve as examples of relevant practices.  Accordingly, the debate would be of a technical 
and informative nature, but would not seek to  prescribe macroprudential policies that should 
necessarily be followed.  Nor would the debate be used to prejudge the specific measures taken by 
Members.  In his view, on this basis, the Committee could adopt the proposal. 
9. Before opening the floor for discussion, the Ch airperson said that the Committee had come 
a long way since the submission of the original prop osal by Ecuador.  What was proposed was simply 
a Member-driven discussion on macroprudential regulation.  That discussion, as many Members put it, could allow for an interesting and enrichi ng exchange of experiences and perspectives on 
macroprudential regulation.  In her view, time was ripe for such a decision.   If so agreed, an item 
could be included on the agenda for the next meeting of the Comm ittee, foreseen for the week of 
18 March 2013. 
10. The representative of Cuba supported the proposal and the inclusion of an agenda item at the 
March meeting.  He said that, over the last years,  a consensus had emerged that financial regulation 
and supervision prior to th e financial crisis was not based on a sufficiently global view of the system.  
The challenge was to minimize systemic risk.  Whil e this issue was not new, the new approach put 
more emphasis on the concept of systemic risk in relation to two essential elements, namely, the 
regulation of large financial institutions and the achievement of financial stability.  The 
macroprudential measures recently adopted in Latin America included, inter alia , minimum capital 
requirements, liquidity requirements, dynamic pr ovisioning, foreign exchange risk management 
instruments, and limits to foreign exchange expos ure.  Developed countri es applied macroprudential 
stress tests with a view to assessi ng the resilience of their financial systems in case of adverse 
developments, and had introduced reforms intended to reduce systemic risk.  However, no major 
changes had been introduced, particularly to sp eculative financial sectors and activities, which were 
the real culprits of the financial crisis.  His dele gation recommended, therefore, that an agreement be 
reached at the WTO allowing its Members to take measures to protect their financial systems and 
their economies in general from spec ulative capital flows.  He expect ed to contribute to the discussion 
showing Cuba's experience in this field. 
11. The representative of Hong Kong, China said th at the room document had a much clearer 
focus than the initial proposal.  He was reassured by Ecuador's statement that the discussion should 
not seek to interpret relevant GATS provisions.  On that basis, he supported the proposal of having 
a dedicated discussion at the meeting foreseen in March,  and expected to contribute to the discussion. 
12. The representative of China was also reassured by Ecuador's statement that the discussion 
should not seek to interpret relevant GATS provisions.  He was also in favour of having a dedicated 
discussion at the next meeting, and exp ected to contribute China's experience.  S/FIN/M/75 
 Page 3 
 
 
  13. The representative of Brazil said that th e room document accommodated all lingering 
concerns expressed by Members since late 2011.  It laid out clear parameters for the debate, while 
removing value judgements and providing extensive saf eguards to ensure legal certainty.  He hoped 
the Committee could agree to have the discussion.  
14. The representative of Bolivia noted that a dedicated discussion of a technical nature, as 
outlined by Ecuador, would allow for a better unde rstanding of how Members conceived and applied 
macroprudential policy and regulations.  
15. The representative of the European Un ion acknowledged that the room document 
accommodated the concerns raised at previous mee tings, adding that her delegation was ready to 
participate in the technical discussion as proposed by Ecuador in the room document. 
16. The representative of the United States also acknowledged the flexibility shown by Ecuador 
to address the concerns raised by Members.  The new proposal had a better focus and could stimulate 
a technical discussion in which Members could share their domestic experiences with macroprudential regulation.  He also agreed that  the debate should not be used to undermine the 
GATS legal framework, nor should it be used to pr ejudge the type of measures taken by Members.  
The discussion could be scheduled for the meeting in March.  
17. The representatives of Chile, Singapore, Swit zerland and Venezuela also supported the 
dedicated discussion as proposed by Ecuador in its room document.  
18. The representative of Turkey, endorsing the prop osal, expressed readiness to contribute to the 
discussion by sharing her country's experience.  
19. In a similar vein, the representative of South Africa voiced support and the intention to 
contribute to the debate.  
20. The representative of Canada said that the current, significantly improved, proposal by 
Ecuador responded to Members concerns by, for ex ample, removing the request for a Secretariat 
paper as well as references to controversial or pol emic views.  As he had expressed at previous 
meetings, Canada remained open to a discussion where Members could share their experiences with 
GATS commitments and financial sector reform.  In his view, the prudential carve-out had provided a 
good balance between liberalizing fina ncial services and ensuring that regulators had the authority to 
take prudential measures.  It had functioned well during the financial crisis, providing Members with 
the flexibility to undertake a wide range of pruden tial measures to safeguard their financial systems 
and implement significant reforms to their domestic re gulatory regimes.  His delegation hoped to hear 
more from Members regarding their experience in adopting prudential measures, including 
macroprudential regulation.  He supported the idea to  have a discussion at the meeting foreseen in 
March 2013.  
21. The representative of Japan also expressed support.   He added that in order to avoid legal 
interpretations of the existing GATS Rules, Member s should avoid questioning the prudential nature 
or rationale of specific measures taken by other Members.  His delegation remained open to the 
participation of other internati onal organizations, which could e xplain their understanding of the 
rationales for macroprudential regulation.  
22. The representative of the Republic of Korea al so favoured a dedicated discussion, Member-
driven, which should not lead to a legal interpretati on of GATS Rules.  It shoul d be held in March and 
his delegation intended to participate. S/FIN/M/75 
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  23. The representative of the Philippines concurred th at a dedicated discussion should be held at 
the next meeting in March.  It should be govern ed by the mandate of the Committee to keep under 
continuous review and surveillance the application of the GATS with respect to the financial sector.  
No attempts should be made to legally interpret the prudential carve-out.  His delegation intended to 
share its views on this topic. 
24. The representative of Mexico, while supportin g the proposal, understood that the discussion 
would not be used to modify the provisions of  the GATS or to make value judgements.  Her 
delegation was ready to participate. 
25. The representative of Australia appreciated the clarification provided by Ecuador that it 
would be up to Members to decide what to in clude in their presentations, and that the discussion 
would not seek a legal interpretation of GATS Rules.   She supported the suggestion to have this 
discussion in March 2013.  
26. The representatives of Argentina, India, Indon esia, Malaysia and Thailand also looked 
forward to a constructive debate.  
27. The representative of Ecuador thanked dele gations for their support. Ecuador would 
participate actively in the forthcoming discussion.  
28. The Chairperson said there was consensus to  hold a dedicated discussion on macroprudential 
regulation at the next meeting, foreseen in March 2 013.  Members had made clear that the discussion 
should be Member-driven and technical in nature, that no legal interpretation of GATS Rules would 
be sought, and no exhaustive list of  measures considered to fall within the GATS framework would be 
developed.  In addition, one Member  had considered that the prudential nature or rationale of specific 
measures should not be questioned.   
29. The Committee took note of the statements made, and decided to have a dedicated discussion 
on macroprudential regulation at the next  meeting, foreseen in March 2013.  
C. TRADE IN FINANCIAL SERVICES AND DEVELOPMENT  
30. The Chairperson recalled that a Workshop on Tr ade in Financial Services and Development 
had been held on 26 June under the auspices of the Committee.  An informal summary of the 
Workshop, prepared by the Secretariat, was contained in document JOB/SERV/116.  The only 
purpose of this summary was to keep  some record of the issues raised  during the Workshop for future 
reference. 
31. Discussions at the last meeting showed that Memb ers were interested in further exploring the 
relationship between trade in financial services and development, breaking it down into specific 
aspects.  With a view to moving discussions forw ard, at the last meeting she had suggested a 
Member-driven process, whereby delegations would id entify specific topics of interest.  Once topics 
were identified, the Secretariat could prepare a short Note to inform and support discussions.  The 
Committee could address one topic per meeting so as to have enough time to prepare.  In her view, 
there seemed to be agreement on this approach.  In addition, one delega tion had suggested that 
Members, in particular small developing countries and LDCs, could relate their experiences with trade 
in financial services and access to finance more generally.  
32. In seemed to her, therefore, that two comp lementary and not mutually exclusive avenues 
existed to continue expl oring the relationship betw een financials services trade and development.  
One was to have presentations and discussions on Members' experiences with trade in financial  S/FIN/M/75 
 Page 5 
 
 
  services and access to finance, and the other was to identify topics of interest so as to enable an 
exchange along the lines she had described.   
33. The representative of China tha nked the Secretariat for the good summary of the issues raised 
at the Workshop.  He took the opportunity to intr oduce China's microcredit project, which was a clear 
example of how financial services could support po verty reduction.  The microcredit project was 
introduced in 1989 by the China Women Federati on to support household-based production activities 
of poor women.  At the beginning it was implemented on a priority basis only in some provinces, relying on the funding provided by the UN Childre n's Defence Fund and the Chinese government.  
The project proved to be quite successful.  Based  on this positive experience, in 1994 the Chinese 
central government decided to expand it nation-wide .  Financial institutions, such as the Central Bank 
of China, the China Development Bank, China Ag riculture Bank, China Postal Savings Bank, and 
other provincial commercial banks a nd rural credit cooperatives were inv ited to participate.  The full 
engagement of financial instituti ons effectively expanded the microcredit project.  It was further 
advanced to assist SMEs, start-ups, and women farm ers and workers in both rural and urban areas.   
34. The microcredit project directly provided funds for poor people to start up production 
activities, thus creating a favourable environment for poverty reduction.  It also generated technical 
services and training opportunities for the poor to increase their production kn owledge and skills.  The 
project had turned out to be quite successful thus far.  Firstly, it provides poor households with wide 
access to credit.  About 98% of the credit was used to help poor families.  Secondly, the project had a 
high success ratio.  Over 90% of the micro credit reci pients benefited from the support.  Thirdly, it 
had a high ratio of loan recovery.  Nearly 95% of  the loans had been recovered, except in cases of 
natural disasters or catastrophic events.  According to  the relevant statistics, from July 2009 to end-
2011, Chinese financial institutions had provided ap proximate RMB56 billion to poor women in rural 
and urban areas, thus directly s upporting more than 1.3 million wome n to get a job and creating four 
million additional employment opportunities.   
35. There had not been much foreign participation in such activities.  His Government hoped that 
the foreign financial institutions, while expanding their business in ri ch and highly pr ofitable regions 
and segments of the market, could also participate in development-related activities.  He encouraged 
other Members to make contributi ons under this agenda item.  
36. The representative of Canada said that the Ch inese microcredit project was an example of 
how financial services, and access to finance in pa rticular, can help achieve realistic development 
goals.  Canada supported further discussions under this  agenda item as well as the Chair's proposal 
that Members brought up specific topics.  In that re gard, he suggested that Members could share their 
experiences on how financial sector libera lization influenced development.   
37. The Chairperson said that two topics had been suggested for further discussion:  microcredit; 
and the impact of financial sector liberalization on development.  She su ggested holding informal 
consultations so as to decide how to organize th e discussions on these and other topics that Members 
might raise in the meantime.   
38. The Committee took note of the statements made an d decided to revert to this agenda item at 
the next meeting. 
D. TECHNICAL ISSUES (CLASSIFICATION ) 
39. The Chairperson recalled that at the previ ous meeting, the Committee had continued its 
consideration of classification issues.  Since discu ssions had not been very substantive, she had not 
prepared a specific summary.  Howe ver, the main elements were c ontained in the annotated agenda 
for this meeting.  S/FIN/M/75 
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  40. The Committee turned to informal mode to continue the discussion. 
41. After the discussion in informal mode, the Comm ittee decided to revert to this agenda item 
at the next meeting. 
E. ACCEPTANCE OF THE FIFTH PROTOCOL TO THE GENERAL AGREEMENT ON TRADE IN 
SERVICES EMBODYING THE RESULTS OF THE FINANCIAL SERVICES NEGOTIATIONS  
42. The Chairperson recalled that Jamaica and the Philippines had recently accepted the Fifth 
Protocol, and that Brazil was the only Member that had yet to accept it. 
43. The representative of Brazil stated that the inte rnal procedures had not been concluded yet. 
44. The representative of the European Union invite d Brazil to elaborate further on whether the 
problems encountered were of procedural or substantive nature.  
45. The representative of Canada said that more than  13 years after the original deadline for the 
acceptance of the protocol, Brazil had not only faile d to complete its domestic procedures to adopt 
these important outcomes, but also to provide the Committee with a substantive update or timeline for 
the implementation of domestic reforms needed to  accept the Fifth Protocol.  Canada encouraged 
Brazil to accelerate its domestic procedures to accept the protocol.  
46. The representative of Brazil took note of the re quests made by Canada and the European 
Union and endeavoured to provide more subs tantive comments at the next meeting.  
47. The Committee took note of those statements and de cided to revert to this agenda item at its 
next meeting. 
F. OTHER BUSINESS  
48. The representative of Panama recalled that at the previous meeting her delegation had voiced 
its concern with Argentina's trade policy in fina ncial services.  She info rmed the Committee that 
Panama had held a bilateral mee ting with Argentina in November 2012.  However, as had been the 
case for the last ten years, Panama did not notice an y intention on the part of Argentina to introduce 
conceptual or practical changes so as to elim inate the adverse effects on service suppliers from 
Panama and other countries considered by Argentin a as low- or no-tax jurisdictions.  Panama was 
considering this issue very carefully and reserved its right to follow up on it in every relevant WTO 
forum. 
49. The representative of Argentina said that the i ssue was being dealt bilaterally.  Argentina's 
predisposition to deal with tax matters bilatera lly had been reiterated on numerous occasions.  A 
bilateral meeting between Argentina and Panama ha d finally been held on 22 November 2012 in 
Buenos Aires, on whose occasion several alternatives had been analysed to deal with this matter.  The 
Preamble to the GATS recognized the right of Memb ers to regulate, and to introduce new regulations, 
on the supply of services within their territories in or der to meet national policy objectives.  In that 
sense, the GATS allowed Members to regulate the s upply of services so as to attain legitimate policy 
objectives, like the fight against tax evasion.  
50. The Committee took note of the statements made. 
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