RESTRICTED  
  
S/FIN/M/81  
 
11 July 2014  
(14-4003)  Page: 1/4  
Committee on Trade in Financial Services    
 
REPORT OF THE MEETING HELD ON 19 JUNE 2014 
NOTE BY THE SECRETARIAT1 
The Committee on Trade in Financial Services held a meeting on 19 June 2014 under the 
Chairpersonship of Ms Caroline McCarthy (Austr alia). The proposed agenda is contained in 
Airgram WTO/AIR/4317. The Committee adopted the agenda. 
 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 there had been no developments concerning the 
internal procedures for the acceptance of the Fifth Protocol since the last meeting.  
1.3.  The Chairperson encouraged Brazil to speed up the acceptance process. 
1.4.  The Committee took note of those statements and decided to revert to this agenda item at its 
next meeting. 2  ITEM B - REGULATORY ISSU ES IN FINANCIAL SERVICES  
2.1.  The Chairperson recalled that at the last meeting, the four international standard-setting 
bodies, namely the Basel Committee on Banking Supervision, the Financial Stability Board (FSB), 
the International Association of Insurance Supervisors (IAIS), and the International Organization 
of Securities Commissions (IOSCO) made very interesting presentations on recent regulatory developments in the financial sector at the international level. Those presentations showed the wide range of regulations and standards being intr oduced in the banking, insurance and securities 
sectors. The session also provided Members with a good opportunity to discuss with those experts 
on the potential implications of those regulations and standards on trade in financial services.  
2.2.  She further said that, as suggested by many  delegations, there was a need to keep regular 
contacts and exchanges with these organizations, be it through periodic presentations such as the 
ones made at the last meeting or through the circulation of reports and other documentation by those organizations. She indicated in that regard that the Chair and the Secretariat would make 
sure that these regular contacts and information exchanges are maintained. She also explained 
that the Secretariat was trying to ensure the participation of the IMF and the Islamic Financial Services Board at a future meeting of the Committ ee. These two organizations had been originally 
invited to the last meeting but were unable to attend.  
2.3.  Since there were no follow-up comments or statements on the presentations made by the 
four standard-setting organizations at the last meeting, the Chairperson turned to the Communication from South Africa on the regulation of non-banking financial services 
(JOB/SERV/179) to allow South Africa to reply to specific questions posed by some Members at the 
last meeting. 
                                               
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/81 
 
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  2.4.  The representative of South Africa said that a full reply to the question posed by Canada 
concerning the liability of credit rating agencies  (CRAs) had been circulated in a room document 
(RD/SERV/106). He recalled that CRAs bore their shar e of responsibility in the build-up of risk that 
led to the latest global financial crisis. For that reason, steps had been taken to improve the 
regulation of CRAs. The relevant legislation (C redit Rating Services Act 24 of 2012) had been 
enacted in the context of a broader financial sector reform, whose main elements were contained in a policy document issued in 2011 under the title "A safer financial sector to serve South Africa 
better".
2  
2.5.  He explained that Section 19(1) of the Credit Rating Services Act (CRSA) envisaged the 
possibility of delictual liability accruing to a CRA, but did not in itself create such liability. The question was therefore to determine when such delictual liability would arise. South African 
legislation provided that the following elements must be present for delictual liability to arise: 
loss/harm; conduct; wrongfulness; fault; and causation. All these elements were further explained in the room document. In conclusion, the liability provisions of the CRSA broadly followed 
international best practice and simply entrenched South African common law, neither raising nor 
lowering the liability standard. Given the substantial case law, there was adequate legal certainty for both investors and CRAs as to the tests to be applied. 
2.6.  The representative of Canada thanked Sout h Africa for the detailed reply. Noting that the 
new legislation on CRAs was part of a broader financial review exercise, he said it was important 
that Members conduct this type of review in orde r to take care of new developments and ensure 
that the regulatory frameworks remained consistent  with sound regulatory pr actices. In Canada for 
example, the financial services legislation contained a sunset provision requiring the competent 
authority to make the necessary changes every five years so as to ensure that the financial services framework remained up-to-date.   
2.7.  The representative of the Russian Federation  said that he would submit further questions to 
South Africa in writing. In the meantime, he  asked South Africa (1) whether the measures 
described in document JOB/SERV/179 were non–discriminatory and whether they were subject to 
requirements such as Economic Needs Tests; (2) whether the competent authority had conducted 
a regulatory impact analysis before issuing the measures to assess, in particular, how the measures could affect the supply of those services; and (3) how South Africa distinguished between modes 1 and 2, in particular in the case  of insurance services. He also announced his 
country's intention to make a presentation at the next meeting on the recently established mega 
financial regulator in the Russian Federation. 
2.8.  The representative of South Africa said that he would provide formal replies to the questions 
once his delegation had received them in writing. In a preliminary manner though, he said that the 
measures were non-discriminatory and were applied equally to both local and foreign suppliers. Turning to the issue of regulatory impact analysis, he said that the introduction of financial 
regulations followed a very thorough and rigorous process characterized by constant dialogue and 
feedback between the financial regulators (Ministry of Finance, Financial Services Board and Central Bank) and the industry. Finally, he said that his delegation had not experienced any major problem distinguishing between modes 1 and 2. Fu rther information on the regulation of cross-
border supply of insurance services was contained in document JOB/SERV/179. 
2.9.  The Chairperson thanked South Africa fo r the document and additional feedback. This 
exchange showed that the Committee was an appropriate forum for the exchange of information 
on these regulatory aspects. He encouraged Members to follow South Africa's example and make 
similar presentations or submit similar document s. She also welcomed the Russian Federation's 
announcement of its intention to make a presentation on its financial regulatory framework at the 
next meeting. 
2.10.  The Committee took note of the statements ma de and decided to revert to this agenda item 
at the next meeting. 
                                               
2 The document is available at: 
http://www.treasury.gov.za/documents/national% 20budget/2011/A%20safer%20fin ancial%20sector%20to%2
0serve%20South%20Africa%20better.pdf . 
 S/FIN/M/81 
 
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  3  ITEM C - TRADE IN FINANC IAL SERVICES AND DEVELOPMENT 
3.1.  The Chairperson recalled that at the last meet ing, South Africa replied to questions raised by 
Australia and Canada on the SADC Integrated Regi onal Electronic Settlement System (SIRESS). 
Also under this agenda item, at the last meeting, China followed up on its proposal to have a 
seminar on mobile banking and provided Members with some preliminary ideas on the content and 
structure of such a seminar. It was her understanding that China was still reflecting on this so as to present a more concrete framework – for that reason she had not conducted extensive 
consultations on this issue prior to this meeting. 
3.2.  The representative of China said that his delegation was working on a programme for the 
workshop on mobile banking. China would present a written proposal once internal consultations 
had been concluded. In the meantime, he shared some preliminary ideas with Members. The 
purposes of the workshop were the following: 1) to increase Members' knowledge and 
understanding of mobile banking; 2) to discuss the different business models adopted for the supply of mobile banking services; 3) to discuss the benefits and challenges raised by mobile 
banking, in particular the link with development and the regulatory challenges involved; and 4) to 
further discuss 'trade' issues raised by mobile banking and the role that trade policy in financial services may play in that regard.  
3.3.  The programme could be structured around four segments:  
a. First, presentations by scholars and internatio nal organizations with experience in this 
area. International organizations which had done research in this area could provide the necessary overview and background on mobile banking developments around the world.  
b. Second, presentations from private sector representatives active in the supply of mobile 
banking services, particularly in developing countries. They could illustrate and share their experiences with the development of mobile banking projects. This session could 
further discuss issues such as business models, regulatory issues and challenges faced in 
developing mobile banking and the resu lts achieved in different contexts.  
c. Third, presentations by national regulators. Members might wish to present their 
experiences with mobile banking, with a focus on the results achieved, the risks raised 
by mobile banking, and the regulation of mobile banking services. 
d. Finally, a discussion on trade policy issues, with the participation of Members and the 
Secretariat. This session would allow for further exploration of the trade issues raised by 
mobile banking, and the role played by trade policy.  
3.4.  If the Committee agreed, this could be a one-day event, to be held in November 2014. 3.5.  The representatives of the United States, Japan, the European Union, Canada, Switzerland, 
Chinese Taipei, South Africa, the Russian Federati on, Korea, Brazil, and Turkey, in that order, 
welcomed the initiative and looked forward to receiving the written proposal by China. The 
European Union added that mobile banking was an effective way of promoting access to financial 
services in remote areas with few bank branches. For that reason, it was important to ensure an 
open and non-discriminatory regulatory environment that would also contain the necessary safeguards to prevent money laundering, payment risks, etc. Japan considered that it was also important to discuss the issue of consumer protection in cross-border transactions. South Africa 
considered that much could be learnt from Afri ca's experience, where mobile banking had had a 
transformational impact, improving access to fi nancial services. Canada also welcomed the 
Chinese suggestion to focus on trade and related policies that support mobile banking, which in his 
view included issues such as national treatment,  access to payment systems, the cross-border flow 
of information, and the protection of privacy. Brazil said that the workshop should address 
regulatory issues, in particular the measures to avoid over-indebtedness and ensure the integrity 
and stability of payment systems, as well as th e initiatives to promote consumers' education.  
3.6.  The Chairperson welcomed the Chinese pr oposal, which received extensive support by 
Members. She indicated that she would hold consultations on the Chinese proposal once it had 
been submitted.  S/FIN/M/81 
 
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  3.7.  The Committee took note of the statements ma de and decided to revert to this agenda item 
at the next meeting. 
4  ITEM D - TECHNICAL ISSUES (CLASSIFICATION ISSUES) 4.1.  The Chairperson recalled that, as requested by the Committee, the Secretariat had prepared 
a note on new financial services, containing a compilation of discussions on – and relevant 
references to – "new financial services", so as to provide sufficient background to inform and inspire further discussions on this issue. The note had been circulated as document JOB/SERV/187.  
4.2.  As agreed in the past, the discussion under this item was held in informal mode. An informal 
summary would be circulated after the m eeting under the Chair's responsibility. 
4.3.  After the discussion, the Committee 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 at the last meeting Ecuador suggested that the Committee 
should further discuss the issue of regional pa yments and compensation systems, which were 
critical for trade in goods and services. He mentioned as an example the Reciprocal Payments and 
Credit Convention under the Latin American Integration Association (LAIA). She also recalled that some Members requested further elaboration from Ecuador on this idea. 
5.2.  The representative of Ecuador explained that the suggestion had been inspired by the 
discussions following the presentation by South Afri ca of the SADC Integrated Regional Electronic 
Settlement System (SIRESS). Mindful of the existence of other regional payments and 
compensation systems, his delegation consider ed that Members would benefit from a better 
understanding of the functioning of these systems as well as their role in financial services trade. 
5.3.  The Chairperson said that she would hold info rmal consultations on this issue before the next 
meeting with a view to deciding how to proceed.  
5.4.  The Committee took note of the statements ma de and decided to revert to this agenda item 
at the next meeting.  
6  ITEM F – OTHER BUSINESS 
6.1.  No issues were raised under this agenda item. 
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