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S/FIN/M/79  
 
28 March 2014  
(14-1972)  Page: 1/7  
Committee on Trade in Financial Services    
 
 REPORT OF THE MEETING HELD ON 26 FEBRUARY 2014 
NOTE BY THE SECRETARIAT1 
The Committee on Trade in Financial Services held a meeting on 26 February 2014. The proposed 
agenda is contained in Airgram WTO/AIR/4248. An annotated agenda (JOB/SERV/177) had been 
circulated prior to the meeting. The Chairperson indicated his intention to make a statement under 
Other Business regarding the selection of the new chair for the Committee. The Committee 
adopted the agenda with that addition. 
 
1  ITEM A - ACCEPTANCE OF THE FIFTH PROTOCOL TO THE GENERAL AGREEMENT ON TRADE IN SERVICES 
1.1.  The Chairperson recalled that Brazil was the only Member that had yet to accept the 
Fifth Protocol.  
1.2.  The representative of Brazil said that it was difficult to foresee when the domestic procedures 
for the acceptance of the Protocol would be concluded. All the necessary administrative actions 
were being taken though. He endeavoured to k eep the Committee abreast of any developments. 
1.3.  The Committee took note of that statement an d decided to revert to this agenda item at its 
next meeting. 
2  ITEM B - TRADE IN FINANC IAL SERVICES AND DEVELOPMENT 
2.1.  The Chairperson said that, as became evid ent at the previous meeting, there was general 
agreement that the Committee should address the br oader issue of 'financial inclusion' or 'access 
to financial services', and in that context continue discussing mobile banking or branchless 
banking, which is one way of promoting financial inclusion, among others.  
2.2.  Before turning to the anticipated presentati on by Chinese Taipei, the Chairperson added that, 
as agreed at the informal meeting of the Co mmittee held on 30 January, the Secretariat had 
started preparing a Note on Financial Inclusion an d the GATS. The purpose of such a Note was to 
provide an overview of financial inclusion and the policies used by different Members to promote it, 
and to discuss the role that trade in financial services and the GATS might play in that regard. 
Members wishing to contribute information with regard to national policies were invited to contact the Secretariat. 
2.3.  The representative of Chinese Taipei said that facilitating and expanding access to financial 
services had long been one of the priority policy objectives of the government.  With a view to 
speeding up the development of financial inclusion, the Financial Supervisory Commission (FSC) had been actively promoting financial literacy, facilitating access to financial resources and 
services, and safeguarding the interests of consumers of financial products and services. The 
purpose of this presentation was to share Chinese Taipei's experience with the recent amendments 
to the Regulations Governing Domestic Branches of Financial Institutions, which were specifically 
introduced to improve access to financial services in the domestic market.  
                                               
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. S/FIN/M/79 
 
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  2.4.  She explained that out of the two methods commonly used to measure the availability of 
financial services – the number of financial institutions per square kilometre and the ratio of the number of financial institutions to the number of people – Chinese Taipei preferred the latter. Access to financial services was considered sufficient if the number of commercial bank branches 
per 100,000 adults was not less than four.  
2.5.  On 28 October 2013, the FSC introduced amendments to the Regulations Governing 
Domestic Branches of Financial Institutions, loosening the application requirements for a financial 
institution seeking to establish branches in areas with insufficient supply of financial services. 
Following these amendments, the limitations on the number of branches (two per financial institution per year), the restrictions on the timing for submission of applications (only in May every year) as well as other regulatory requirements, would not be applicable if the location of the 
branch was considered to contribute to the balanced financial development of urban and rural 
areas. In addition, the new Regulations provide that a branch established under the new conditions would not be allowed to relocate for a period of 7 years, unless such relocation could help narrow 
the gap between rural and urban areas.  
2.6.  She also said that two new branches had been established in areas with insufficient financial 
services supply since the entry into force of the amendments, and three new applications were 
awaiting approval. 
2.7.  The representative of Australia asked Chinese Taipei whether foreign financial institutions 
were also allowed to apply for the opening of branches under the same conditions.  2.8.  The representative of Chinese Taipei rep lied that these measures applied to domestic and 
foreign financial service suppliers on a non-discriminatory manner. 
2.9.  The representative of Canada said that th is presentation, together with previous ones by 
China, Norway and Pakistan, showed that trade in financial services could support financial 
inclusion, including through the facilitation and transfer of new banking technologies. He said that 
financial inclusion could also be measured through such indicators as the number of bank accounts and the percentage of people with access to specific services (e.g. insurance). More generally, he 
considered that the discussion on the relationship between trade in financial services and 
development should not be narrowed down to issues related to financial inclusion or access to financial services. Rather, the Committee should maintain a clear link between trade in financial services and development. Future discussions, as well as the Note being prepared by the 
Secretariat, should not only consider the outcome – in terms of access to financial services – but 
also the broader process through which domestic rules and procedures created opportunities and challenges for the operation of cross-border financial service suppliers. He finally encouraged 
Members to use this agenda item more broadly to share experiences with the liberalization of 
trade in financial services. 
2.10.  The representative of China explained that  mobile banking was introduced in China in 2003, 
and had experienced rapid growth since then. A ccording to statistics produced by the China 
Banking Regulatory Commission (CBRC), around  300 million clients are using mobile banking 
facilities provided by banks. Mobile banking transactions were worth US$1.3tn. The most important function of mobile banking was to make  payments and other banking services available 
in areas without financial institutions and to persons that did not have bank accounts. It was a 
solution to the shortage of financial services in ru ral and remote areas, as well as a vehicle to meet 
the financial demands of lower income people.  
2.11.  Mobile banking could help enhance access to financial services and promote economic 
development in an inclusive way. For example, in 2012 the People's Bank of China started a pilot programme of mobile phone payments in rural areas across 20 provinces. The programme 
improved the payment services environment in those areas. By June 2013, 4.6 million clients in 
those rural areas had access to mobile phone paymen t services. In China's view, this issue should 
be further explored by the Committee. He proposed that the Committee organized a seminar or workshop to explore the role of mobile banking in trade and development. 
2.12.  The representative of Brazil said that initiatives to promote financial inclusion, including 
mobile banking, should go hand in hand with financial education with a view to avoiding over S/FIN/M/79 
 
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  indebtedness, among other policy objectives. In addition, the objective of financial inclusion must 
not be to the detriment of payment system security and sound risk management. 
2.13.  The representative of South Africa shared information on the Southern African Development 
Community (SADC) Integrated Regional Electronic Settlement System (SIRESS), which had 
recently come into operation. The project, initiated by the SADC Committee of Central Bank 
Governors to achieve the objectives of the SADC Finance and Investment Protocol, was a public-private partnership, and commercial banks had participated since its inception through the SADC 
Banking Association. The South African Reserve Bank was the lead regulator and oversight was 
undertaken by the SADC Payment System Oversight Committee. 
2.14.  The purpose of SIRESS was to allow commercial banks within SADC to settle regional 
transactions electronically and in real time, as opposed to settling transactions via correspondent 
banking or paper-based Instruments, which were bo th inefficient and, in the case of paper-based 
instruments, significantly riskier. Banks that participated in SIRESS held accounts directly with the South African Reserve Bank which enabled real time settlement. Settlement was made in South 
African Rands, using Reserve Bank money, and theref ore took place instantly. This was in line with 
the Principles for Financial Market Infrastructures published by the Committee on Payment and Settlement Systems, under the auspices of the Ba nk for International Settlements (BIS) and the 
Technical Committee of the International Organi sation of Securities Commissions (IOSCO). 
2.15.  SIRESS came into operation in July 2013 in the Common Monetary Area of South Africa, 
Lesotho, Namibia and Swaziland. By December 2013, transactions valued at 95.4 billion Rands 
(approximately US$ 8,8 billion) had been settled. Although SIRESS was a SADC initiative, the 
Committee of Central Bank Governors decided that the system should first be tested in a small 
number of countries. The countries in the Common Monetary Area were chosen due to the fact that their currencies were on par with the South Africa Rand - which was used as the settlement 
currency. He added that SIRESS would become operational in three additional SADC Member 
states in March 2014. Thereafter, other SADC countries would be able to join.  
2.16.  He said that SIRESS would directly enhance the competitiveness of all participating SADC 
banks, increase the speed of transactions, reduce costs and eliminate settlement risk. As a result, 
SIRESS was expected to increase productivity and trade within the region, and by allowing foreign 
and domestic transactions to flow more easily, improve investment in the region. By enabling greater access to money market instruments it would also facilitate monetary policy. The SADC 
Banking Association was driving projects relating to  low value credit transfers and payments linked 
to bank cards. These projects were likely to have a number of benefits including facilitating the payment of remittances throughout the region. As this was a SADC project, he encouraged other 
SADC members to share their views and experiences in the future. 
2.17.  The representative of India made some preliminary comments on financial inclusion. India 
believed that financial inclusion was about (a) the broadening of financial services to those people 
who do not have access to financial services sector; (b) the deepening of financial services for 
people who have minimal financial services; and (c) greater financial literacy and consumer protection so that those who are offered the products can make appropriate choices. One of India's major challenges for the next decade was to extend banking services to over 50% of the 
population. Poor people needed to be provided with access to financial products at low transaction 
costs. The Reserve Bank of India had made sustaine d efforts to increase the penetration of formal 
financial services in unbanked areas, while continuing with its policy of ensuring adequate but 
viable flow of credit to priority sectors of the economy. India adopted a structured, planned and 
integrated approach towards financial inclusion, by focusing on improving access to financial services and also encouraging demand for financial services through financial literacy initiatives. 
2.18.  The representative of the European Union found the discussion very useful, as it showed 
how trade in financial services could contribute to financial inclusion, economic growth and the 
development of Small-and-Medium-Sized Enterprises (SMEs). He encouraged Members, in particular developing countries, to come up with similar presentations. He supported China's idea 
of a workshop. S/FIN/M/79 
 
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  2.19.  The representative of Australia sought further information from South Africa on (1) the role 
of this SIRESS initiative in underpinning trade in goods and services, and (2) the potential impact 
of the low-value credit card project on the costs of remittances in the region. 
2.20.  The representative of Switzerland said that  the discussion over the last meetings had shown 
the interface between the development of mobile banking and the need to ensure the consumer's 
financial literacy and technical skills. The latter aspect was instrumental to guaranteeing financial stability. Consumer confidence was essential for both electronic commerce (of which mobile 
banking was an aspect) and banking services. The Committee should discuss these issues further. 
He supported China's idea of a workshop.  
2.21.  The representative of Canada wondered whether the other Members that had engaged in 
the discussion today, in particular China and Indi a, could elaborate further on the role of trade 
policy and trade in financial services in dealing with the challenges they had identified. He 
welcomed China's proposal for a workshop. He cons idered however that, in addition to specific 
issues related to financial inclusion, the workshop should address the role of 'trade' in that context. 
2.22.  The representative of South Africa said he would revert to the questions raised by Australia 
at the next meeting. 
2.23.  The representative of the United States said the discussion thus far had shown how trade 
policy might facilitate financial inclusion. He supported China's idea of a workshop. The terms of 
reference and the actual topics to be addressed in such a workshop should be further discussed.  
2.24.  The Chairperson said that the presentation  by Chinese Taipei triggered a very interesting 
discussion. The proposal by China to hold a workshop was generally supported by Members. As 
indicated by members, the topic should be put with in the overall perspective of trade in financial 
services. In particular, future discussion, as well as the workshop, should address how the GATS and trade in financial services could promote financial inclusion. The Note being prepared by the 
Secretariat would take up some of these issues as well. He suggested that the proposal made by 
China be the object of further consultations by the Chair, with a view to adopting a decision at the next meeting.  
2.25.  The Committee took note of the statements ma de and decided to revert to this agenda item 
at the next meeting. 
3  ITEM C - REGULATORY ISSU ES IN FINANCIAL SERVICES 
3.1.  The Chairperson recalled that at the la st meeting the Committee had discussed regulatory 
issues in financial services, on the basis of a Secretariat Note, contained in document 
S/WPDR/W/48. The section on financial services was contained in paragraphs 185 to 195 of the document. In addition, paragraph 20 suggested three general - non-exhaustive - questions for 
discussion. He also recalled that the Committee had agreed to include this item in the agenda of 
today's meeting so as to give Members an additional opportunity to comment on the Note. The purpose of the Note was to provide background in formation on regulatory practices and issues in 
various sectors and modes to inspire discussions at the Working Party on Domestic Regulation 
(WPDR). It was thus envisaged that Members might use this Note to explain their own governments' approaches to specific regulatory issu es raised or to contribute additional issues to 
the discussion. As suggested by the Chair at the last meeting, a report would be subsequently 
provided to the Chairperson of the Working Part y on Domestic Regulation (WPDR), keeping the 
Working Party abreast of the issues discussed at the Committee.  
3.2.  The representative of Brazil said that his delegation had already raised its concerns regarding 
undue constraints on financial regulatory flexibility at the previous meeting. He took this 
opportunity to make detailed comments on the Note by the Secretariat. While paragraph 193 rightly recognized the rationale for the adoption of barriers to entry and other regulations in 
financial services, subsequent paragraphs seemed to contradict the consensus among financial 
regulators on what constituted best regulatory pr actices, especially in the light of the ongoing 
financial and economic crisis. Turning to paragraph 194, he said that it was virtually impossible to establish ex-ante whether a Member's applicable licensing and qualification requirements and 
procedures were too burdensome, and whether they might distort competition.  S/FIN/M/79 
 
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  3.3.  He then turned to the issues raised in pa ragraph 195 of the Note. Item (e) of that paragraph 
mentioned that the lengthy duration for the approval of new products could be a burdensome requirement. In Brazil's view, new financial services and new financial service providers must be fully analysed and subjected to appropriate authorization and prudential regulation. In financial 
services, there was a grey area between new services and new ways of delivering existing 
services. As regards item (j) of paragraph 195, Brazil believed that financial regulators must 
protect consumers by ensuring that accurate information, such as full risk disclosure and 
description of applicable fees and charges, was provided through advertising. Moreover, initiatives 
to promote financial inclusion, including through mobile telephony, should go hand in hand with financial education, especially to avoid over-ind ebtedness. Finally, the objective of financial 
inclusion must not neglect regulatory requirements  to ensure payment systems security and sound 
risk management. 
3.4.  Referring to item (k) of paragraph 195, he  said that existing international standards, 
including those pertaining to levels of minimum registered capital, might not be sufficient to 
guarantee the stability of the financial system. The international response to the financial crisis, 
including the development of the Basel III framewor k, made clear that the previous international 
regulatory architecture was inadequate. Notwithstanding the importance of internationally agreed 
standards, financial regulators needed broad discretion to adopt higher standards when needed in 
view of regulatory goals. The crisis highlighted the disruptive social and economic consequences 
that might arise from an inadequately regulated financial system.  
3.5.  Finally, he turned to the issue of cross-bord er supply of financial services through electronic 
means. New technologies had an impact on the prov ision of financial services and posed significant 
challenges to financial regulators. This was not a new issue and was the object of a communication by Brazil in the past (JOB(05)/103). In Brazil, only registered financial products were allowed to be 
marketed. Yet, financial regulators found themselves in a difficult situation when it came to the 
marketing of products on websites, regardless of  their location. There was no straightforward 
regulatory response to this problem. However, he considered that for purposes of classifying 
transactions, a multilateral definition on whether electronic transactions fell under GATS modes 1 
or 2 would provide comfort to Members when sched uling commitments in financial services. Within 
MERCOSUR, for example, regulators had agreed th at cross-border trade in financial services 
through electronic means would be understood to  be exclusively supplied under mode 1. This 
understanding was the object of a formal decision within MERCOSUR. 
3.6.  The representative of Ecuador said that it would have been desirable if the Note had placed 
greater emphasis on the key role that the financial sector played in ensuring the macroeconomic 
stability of countries, as had been clearly demonstrated in the recent international financial crisis, 
the effects of which had not yet been overcome. Such a discussion would have provided the necessary context for the consideration of regulatory aspects in this sector. Although paragraph 
185 of the Note referred to the unique characteristics of financial services, which motivated a 
special regulatory treatment, the fundamental role that financial services played in underpinning macroeconomic stability went beyond the commercial aspects that could be considered useful in other sectors. This critical aspect had been recognized by Uruguay Round participants when 
agreement was reached to include the so-called 'prudential carve out' in the Annex on Financial 
Services. In his delegation's view however, the sco pe of the carve-out had not been satisfactorily 
defined yet. It was against this background that the regulatory measures cited by the Secretariat 
as burdensome for trade in financial services, particularly those related to the level of registered 
capital, procedures for approval of financial institutions operations and the existence of multiple regulatory authorities, needed to be assessed. Furthermore, as pointed out by the Secretariat 
Note, countries' specific circumstances, as well as their institutional and regulatory capacity, 
should be taken into consideration when passing judgement on the level of restrictiveness of a regulatory measure and on the policy space required by regulators in this area.  
3.7.  The representative of South Africa drew th e Committee's attention to the Note prepared by 
South Africa and circulated the day before at  the WPDR (JOB/SERV/179), which provided an 
overview of the regulatory framework currently governing non-banking financial services. The information contained in this paper was also relevant to the discussion under regulatory issues in 
this Committee. Regardless of such a discussion at the Committee, South Africa maintained its 
position that disciplines on Domestic Regulation should be developed horizontally and within the 
WPDR. As Members might not have had sufficient time to consider the document, South Africa 
looked forward to a discussi on at the next meeting. S/FIN/M/79 
 
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  3.8.  The Chairperson reminded Members that the purpose of the Secretariat Note was to assist 
the Working Party on Domestic Regulation in th e development of disciplines under GATS Article 
VI:4. The Note was not designed to address the whol e range of regulatory issues in each services 
sector. The Note raised therefore regulatory issues that Members might want to consider in the 
context of discussions towards the establishment of disciplines under article VI:4. In terms of 
procedure, he wondered whether Members wanted to keep this specific item in the agenda. This was the third time that the item appeared in the agenda, and it seemed to have served its 
purpose. Unless there was a specific request to keep the item in the agenda, it would not be 
carried over to the next meeting. The Chairperson said that there was no need to take a decision at that stage, but if no Member requested the inclusion of the item in the agenda of the next meeting, it would not be incorporated.  
3.9.  The representative of Canada supported a discussion of South Africa's communication at the 
next meeting of the Committee, but considered that it was not necessary to link this agenda item 
to the Secretariat Note for that purpose. 
3.10.  The Committee took note of the statements made. 
3.11.  The Chairperson then turned to the sugge stion made at the previous meeting to invite 
international standard-setting organizations to brief the Committee on recent developments in 
global financial regulatory reform and to discuss with Members the potential implications for trade 
in financial services. Informal consultations by the Chairperson had revealed that there seemed to be convergence that such a discussion should take  place within the Committee. On that basis, and 
following past practice, the following organizations would be invited to attend the next meeting: 
the Basel Committee on Banking Supervision, the Financial Stability Board, the International 
Association of Insurance Supervisors, the Internat ional Organization of Securities Commissions, 
and the International Monetary Fund. Representatives of each organization would make 
presentations on their relevant areas of competence, and would then interact with Members. It 
was understood that Members wishing to provide an  overview of the domestic implementation of 
recently enacted international standards would be able to do it as part of the discussion, following 
the presentations. Relevant material provided by those organizations would be circulated in 
advance of the meeting. 
3.12.  The representatives of Chile, the United States, Korea, Canada, South Africa, the European 
Union, Japan and Brazil supported the Chair's proposal. Both Canada and Korea suggested that, as 
much as possible, the standard-setting organizations should focus on how the regulatory reforms 
in their areas of competence might affect trade and trade policy in financial services. 
3.13.  The representative of Saudi Arabia suggested that the Islamic Financial Stability Board 
(IFSB) also be invited to the meeting. The repr esentative of Switzerland supported the proposal. 
The representative of Canada said that he would need to consult with his authorities on this 
proposal, but he could agree on an ad-referendum basis.  
3.14.  The Committee decided to proceed as originally suggested by the Chair, and agreed ad-
referendum of Canada to extend an invitation to the IFSB as well.   
4  ITEM D - TECHNICAL ISSUES (CLASSIFICATION ISSUES) 4.1.  The Chairperson recalled that, at the previous meeting, the Committee had continued its 
consideration of classification issues. Since discu ssions had not been very substantive, he had not 
prepared a specific summary.  
4.2.  The discussion was held in informal mode. 
4.3.  After turning back to formal mode, the repres entative of Canada said that the priority of his 
delegation was to preserve the legal certainty of existing commitments. Canada was concerned 
that a Note by the Secretariat on classification issues might affect the interpretation of existing 
commitments. Canada recognized that Members had different views as to the scope of current 
classifications. However, the fact that there were differences of views implied that it would not be 
appropriate for the Secretariat to opine on the correctness of each view, particularly as classification issues in financial services had been raised in dispute settlement. To be clear, Canada S/FIN/M/79 
 
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  was not blocking a discussion of classification issues; on the contrary, it was prepared to 
contribute to a Member-driven discussion. Canada  suggested that any Member who had concerns 
should raise these specific issues or questions for the Committee’s consideration, as directed in past annotated agendas and previous Chairperson’s notes. Despite these repeated suggestions, no 
Member had raised specific issues or concerns for the Committee’s consideration. This lack of 
engagement called into question the utility of continued efforts to try and force a discussion by simply maintaining a standing agenda item. To encourage Members to contribute substantive 
issues for discussion, he suggested that any Member wishing to raise classification issues should 
add a specific item to the agenda. 
4.4.  The Chairperson indicated that he would conduct informal consultations. The Committee took 
note of the statements and decided to revert to this agenda item at the next meeting. 
5  ITEM E - RECENT DEVELOPMENTS  IN FINANCIAL SERVICES TRADE 
5.1.  The Chairman said that, as a standing feat ure of the agenda, this item had been used by 
delegations to either present and discuss recent  developments in individual Members' markets 
or introduce proposals that eventually led to specific dedicated discussions or seminars, 
for example on macro-prudential policy and regula tion, on non-life insurance services, and on the 
impact of technology on regulation and supervision. This focus on recent developments was what 
distinguished this agenda item from others, which focused on technical issues or on the long-term 
impact of financial services trade on development. It was in the interest of all Members, and certainly within the competence of this Committee, to keep abreast of developments in the financial services sector, either at the global or country level.  
5.2.  There were no further interventions.  
5.3.  The Committee took note of the statement ma de by the Chair and decided to revert to this 
agenda item at the next meeting.  
6  ITEM F - OTHER BUSINESS 
6.1.  The Chairperson said that the rules of pr ocedure for meetings of the Council for Trade in 
Services (document S/L/15), which applied to this Committee as well, stipulated that the election 
of the Chairperson should take place at the first me eting of the year and take effect at the end of 
that meeting. As the consultations on the ap pointments of chairpersons to councils and 
committees in the WTO were still under way, the handover of the Chairmanship of this Committee would take place at the beginning of the next meeting. 
6.2.  The Committee took note of that statement. 
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