WORLD TRADE  
ORGANIZATION  RESTRICTED 
S/FIN/M/72 
31 May 2012  
 
(12-2900) 
Committee on Trade in Financial Services  
  
 
REPORT OF THE MEETING HELD ON 19 MARCH 2012 
 
Note by the Secretariat
1 
  
1. The Committee on Trade in Financial Services he ld a meeting on 19 March 2012, under the 
chairmanship of Mr Quan ZHAO (China).  The agenda is contained in Airgram WTO/AIR/3905.   
A. A
CCEPTANCE OF THE FIFTH PROTOCOL TO TH E GENERAL AGREEMENT ON TRADE IN SERVICES  
2. The Chairperson recalled that Brazil and Jamaic a had yet to accept the Protocol and invited 
them to provide any update on the status of thei r domestic ratification processes.  In response, the 
representative of Brazil stated that the situation had remained unchanged.   
3. The Chairperson encouraged these delegations  to accelerate the internal procedures and 
accept the Fifth Protocol.  The Committee took note of those statements and decided to revert to this 
agenda item at its next meeting.  
B. RECENT DEVELOPMENTS IN FINANCIAL SERVICES TRADE  
4. The Chairperson said that at the last meeting,  Ecuador had submitted a proposal for furthering 
work on regulatory measures in financial services (S/FIN/W/80).  He also recalled that the main 
objective of that proposal was to better understa nd the practical effects of GATS disciplines and 
commitments on Members' financial policies and regulati ons, in particular in li ght of developments in 
the past few years.  He had noticed on that occasion an interest on the part of many delegations to 
discuss these issues, which would be perfectly w ithin the Committee's mandate.  He added that 
several suggestions had been made in that regard and were contained in the report of the previous 
meeting.  In his view, further consultations s hould be conducted with a view to discussing these 
suggestions, and figuring out a suitable programme  of work for the Committee in this area. 
5. The representative of Ecuador said that at the l ast meeting, several aspects of the proposal had 
been highlighted.  First, the idea of discussing i ssues related to the preservation of policy space for 
financial regulation was supported by many Members, in particular in lig ht of the current international 
context.  Second, given its mandate, this Comm ittee was the appropriate forum for discussing the 
proposal's objective, as well as the GATS disciplines re levant for financial services.  Third, although 
some Members considered that it was not necessary to include a paragraph in that sense in the 
Declaration of the Eighth WTO Ministerial Conferen ce, as originally envisaged by the proposal, those 
Members agreed to continue exchanging informa tion about their experiences, discussing the issues 
raised by the proposal, and reviewing the work ca rried out by other intern ational organizations on 
these matters.  Fourth, Members could exchange information and discuss w ith national financial 
regulators so as to better understand the ways in which specific commitments and financial 
regulations reinforce each other.  Fifth, it would be very useful if the Secretariat prepared a Note on 
                                                      
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/72 
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  the scope of the GATS and gave examples of pr udential measures that Members might adopt.  
Ecuador had paid particular attention to these issu es, as one of the proponents of a new international 
financial architecture.  They had been addressed in fora like the IMF and UNCTAD XIII, and at 
regional level.  Ecuador felt that these issues shoul d also be considered at this Committee, and 
expected to be in a position to make a concrete proposal in the near future.  
6. The representative of Bolivia supported Ecuador's initiative, which in his view fitted within 
the Committee's mandate. 
7. The representative of Turkey said that her delega tion was interested in exploring these issues 
and reminded Members that, as reflected in the report of the previous meeting, she had requested the 
Secretariat to prepare a note. 
8. A representative of the Secretariat referred to the requests by Ecuador and Turkey, with a 
view to clarifying any misperception that requests made by Members were not attended to. In his 
view, no agreement had been reached among Members on whether the Secretariat should draft a Note, and on the issues to be addressed.  
9. The representative of Turkey said that a Note by the Secretariat could describe the measures 
taken by Members since the start of the financial cr isis, and identify those that might be regarded as 
prudential. 
10. The representative of Hong Kong, China said his delegation had no problem with the 
Committee continuing discussing this initiative.  Howe ver, in order to avoid repeating work already 
carried out by the Committee over the last two years, it would be important to identify the new elements that would inform the discussion.  He did not object to further discussions that would lead to 
a better understanding of macro-prudential issues,  but added a note of caution.  Although the 
Committee was mandated to conduct studies on measures by Members and to examine any technical matters affecting trade in this sector, it was not clear  that this mandate extended to examining the need 
for specific measures.  He looked forward to  further contributions by the proponents. 
11. The representative of Ecuador said that it was s till not clear to him how this work could be 
carried out.  His delegation was looking for the best way to move the subject forward.  Two concrete 
proposals in that regard were the exchange of  experience and information among Members, and a 
note by the Secretariat on the scope of the GATS and the prudential exception in the Annex on Financial Services.  He hoped to discuss this with  the Secretariat, and be in a position to present a 
concrete proposal for further work at the next meeting.  
12. The representative of the European Union reminded Members that at past meetings his 
delegation had explained the measure s taken in response to the financial crisis.  Going into further 
details without clearly understanding the objectives of the work proposed by Ecuador would be 
counterproductive.  He asked whether the Secr etariat could clarify the issue at stake.  
13. The representative of the United States agreed  that the Committee had a broad mandate to 
look into issues related to financial services trade.  He also agreed that it was important to preserve 
policy space.  However, in his view, the GATS provided Members with enough policy space to 
accommodate numerous measures adopted to address th e financial crisis.  He was wary of not 
duplicating work already done by the Secretariat in  the past.  His delegation was not persuaded that 
the Secretariat should compile all the measures that might have been taken around the world, and pick 
and choose which were prudential and which we re not.  The Committee should rather wait for 
Ecuador's proposal, and then have cons ultations with a view to figuring out the best course of action.    S/FIN/M/72 
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  14. The representative of Canada said that the GATS had not limited Members' ability to take 
prudential measures with a view to safeguarding financial stability and reforming their domestic 
regimes.  He looked forward to Ec uador's proposal, indicating that he was not convinced by any of the 
other proposals made to date.  
15. The representative of Pakistan said that the Co mmittee should be careful if the intention was 
to define what was prudential and what was not.  It would be better not to rush to premature 
conclusions.  
16. The representative of South Africa said that his delegation was interested in these matters.  He 
suggested that Members waited for Ecuador's proposal.  
17. The representative of Australia said that the Committee had taken an active role since the 
onset of the financial crisis, by monitoring devel opments in other interna tional organizations and by 
looking into the effects of the crisis on trade in fi nancial services and the  implications for the GATS.  
The dedicated discussion on the effects of the financia l crisis on trade in financial services held in 
June 2010 made it clear that the issue was relevant  for this Committee.  In her view, the Committee 
should continue to review the effects of the financia l crisis, including the resulting regulatory reforms.  
She also considered that the GATS and the Anne x on Financial Services afforded Members a high 
level of discretion, while not permitting measures that were purely or primarily protectionist in effect.  
Her delegation was open to the discussion on the basi s of a forthcoming proposal by Ecuador, but saw 
no need for a interpretative legal guide to GATS obligations in financial services.  
18. The representative of the Dominican Republic said that the Committee had a role to play in 
this area, and that it should discuss these issues in depth for the benefit of all Members. 
19. The representative of India said the Committe e had already done work on these issues, but 
that there was scope for more.  He looked forward to Ecuador's proposal.  
20. The representative of Japan said that the GATS e xplicitly allowed Members to take prudential 
measures.  He saw no problem with the current  GATS framework and with the operation of the 
Annex on Financial Services.  There was no urgency to modify or amend the GATS.  However, he 
saw merit in Members exchanging information abou t measures taken in response to the financial 
crisis.  That information would be very helpful as a reference point.  He saw no need to duplicate 
work done elsewhere or before, or in un necessarily overloading the Secretariat. 
21. The representative of Brazil looked forward to Ecuador's proposal.  
22. The representative of Chile said that it was not  clear whether the initiative was focused on 
financial crises, and the measures that might be adop ted in such contexts, or on the meaning and scope 
of prudential measures.  The latter might result in a more specific and complicated debate, with other 
repercussions.  
23. The Chairperson said that Members had a very useful exchange.  Some of them had put 
forward new ideas on how to organize this discussi on.  The issues raised by Ecuador were very 
critical, but also very sensitive to Members.  Th ere were still divergent views on how to proceed.  
Some Members considered that the Committee should avoid duplicating previo us work.  Although no 
Member seemed to object to exchanging informati on and experiences, it was necessary to clarify what 
should be the objective of such a discussion.  Further consultations were required in that regard.  He 
invited Ecuador to put forward more specific and detailed ideas about the objectives and the way to 
proceed and also encouraged his successor to  conduct consultations on this issue.  S/FIN/M/72 
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  24. The Committee took note of the statements made an d decided to revert to this agenda item at 
the next meeting.  
C. TECHNICAL ISSUES (CLASSIFICATION ) 
25. The Chairperson recalled that the Committee had conducted a very interesting discussion on 
classification issues at the previous meeting.  The summary of that discussion, which was held - as 
agreed - in informal mode, was contained in an In formal Note issued under the Chair's responsibility 
(JOB/SERV/92). 
26. The Committee turned to informal  mode to continue the discussion.  An informal summary 
would be circulated after the meeting under the Chair's responsibility.  
27. After the discussion in informal mode, the Comm ittee decided to revert to this agenda item 
at the next meeting. 
D. TRADE IN FINANCIAL SERVICES AND DEVELOPMENT  
28. The Chairperson recalled that the Committee agr eed to organize a workshop on this issue this 
year.  He also recalled that he had undertaken to  hold informal consultations on the organization of 
this workshop, particularly with regard to the par ticipation of experts from international organizations.  
For the sake of transparency, he in formed the Committee that he had discussed this specific issue with 
those delegations that had raised concerns, and was glad to report that these delegations had no 
objection to the participation of intern ational organizations in the workshop. 
29. He would have wanted to hold the workshop togeth er with this meeting, but unfortunately the 
Secretariat's workload had not allowed for an appr opriate preparation.  In any case, prior to this 
meeting, the Secretariat had circulated an informal draft outline for the workshop , proposed to be held 
at the next cluster of services meetings.  He urged those Members wishing to contribute experts to the 
workshop to inform the Secretariat as soon as possibl e, so that a programme could be prepared.  He 
suggested that his successor hold informal consultati ons shortly, so as to speed up the preparation. 
30. The representative of China said that the liberalization of financial services could promote 
trade in the sector.  China had managed the liber alization process in a gradual and progressive 
manner.  For example, the Chinese banking regulat ory authority allowed fo reign banks to provide 
foreign currency services upon accession to the WTO, while the supply of local currency services had been gradually opened a few years after WTO accession.  In order to ensure financial system stability, 
China's financial regulatory authority undertook pr udential regulation while liberalizing financial 
services. 
31. Foreign banks played an important role in China's banking system, complementing the 
services supplied by domestic banks.  Foreign ba nks were operating more than 240 types of 
businesses in China.  China's domestic banks and foreign banks cooperated at multiple levels on a 
mutually beneficial basis.  Given the increasing demand for banking services from many Chinese enterprises which were going global, the interna tionalization of China's banking industry would 
benefit the country's investments in foreign market s.  Governments could have a positive influence on 
the process of liberalization.  Chin a, for example, had encouraged fo reign banks not only to make a 
contribution to the local economy, but also to struct ure their geographic presence in a balanced way.  
In the past ten years, foreign banks' branches had geographically covered the larger parts of China, 
and had gradually pe netrated into the least-developed provi nces and cities in China.  This was 
necessary to balance the over-concentration of forei gn banks in the coastal areas and big cities.  
Encouraged and guided by the regulators, foreign ba nks responded actively to the national strategy of 
regional development which led them to set up plen ty of businesses in the north east, middle and west  S/FIN/M/72 
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  areas of China where financial services were under-d eveloped, thus contributing to the improvement 
of local banking industries, and promoting competition and development.  He also drew attention to 
the importance of sound regulation.  Taking into account their world-wide operations, the Chinese 
regulatory authority had built a specific risk-assessme nt framework that suits the characteristics of 
foreign banks.  He finally made suggestions on the draft outline circulated by the Secretariat. He said 
that the workshop should serve to discuss how to re gulate the import of financial services and how to 
expand developing countries'  export capacity in financial services.  Both dimensions should be taken 
into account.  In addition, he suggested consider ing how to strengthen co-operation between home- 
and host-country regulators in the regulation and supe rvision of foreign financial institutions.  That 
was an international dimension that might u sefully complement the national perspectives. 
32. The representative of South Africa said that his delegation was under the impression that the 
workshop would be held during this cluster of servi ces meetings.  He would have liked that there had 
been consultations on the postponement since th at had affected his delegation's planning.  
33. The Chairperson apologized for the postponement , and said that he should have held wider 
consultations before this meeti ng.  However, since all delegations were busy preparing for the 
Ministerial Conference, he thought that it was not appr opriate to add to the workload of delegates.  In 
addition, the current cluster of services meeti ng had already a heavy agenda of activities.  
34. A representative of the Secretariat also apologized for the postponement and the 
inconvenience this might have caused to delegatio ns.  He explained that the consultations on the 
postponement might have been very brief and limite d, but that in any case there was not much of a 
choice for the Secretariat due to the unexpected workload in relation to on-going disputes, which 
needed to be attended within strict deadlines, the s hortage of time after the Ministerial Conference to 
consult with − and ensure the participation of − other international organizations, and the lack of 
clarity with regard to the concrete issues to be discussed. 
35. The representatives of the European Union, Au stralia, Canada, Brazil, Turkey, Switzerland, 
Hong Kong China, India, Pakistan, Malaysia, Sout h Africa, Indonesia, Chinese Taipei, Nigeria, the 
United States and Japan also supported the workshop .  Some of them made specific suggestions on 
the outline prepared by the Secretariat, and anno unced that they would contribute speakers to the 
workshop. 
36. The representative of Australia saw particular  value in focusing discussions on ways to 
improve regulation, the essential components of the regulatory framework and the relationship 
between liberalization, regulation a nd financial stability.  She recalled that Australia had distributed a 
paper in 2011 on financial services and develo pment, focusing on the country's experience 
(S/FIN/W/77).   
37. The representative of Brazil said that other inte rnational organizations, such as the BIS, the 
FSB, and the IMF, had been looking at the rela tionship between trade in financial services and 
development.  It would be important that the scope  and focus of the workshop be defined in such a 
way as to complement the work of other international organizations.  
38. The representative of India expressed reservati ons about the participation of international 
intergovernmental bodies with no observer status at th e WTO, and requested that that be taken into 
account by the Secretariat in revising the outline. 
39. A representative of the Secretariat took note of India's reservations.  He explained, however, 
that the workshop was not a formal meeting of the Committee, and that Members could gain from 
drawing on broad-ranging expertise.  He also recalled that the BIS and the FSB, which had no S/FIN/M/72 
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  observer status at the WTO, had been invited to sp eak at Committee meetings in the past, for example 
on the occasion of the dedicated discussion on th e financial crisis held in June 2010.  
40. The representatives of the United States said that, while duplication of work with other 
international organizations s hould be avoided, the Committee stood to benefit from these 
organizations' competence and experience.  
41. The representative of Japan also considered that duplication of work with other international 
organizations should be avoided.  
42. The Chairperson noted the point made by some Me mbers not to duplicate work carried out by 
other international organizations.  While the purpose of the workshop was to give a WTO perspective 
to this issue, Members could benefit from the pa rticipation of experts from other international 
organizations, due to their familiarity with aspects of this broad issue.  He invited the Secretariat to 
take note of the comments and suggestions made by Members, in particular on the need to further 
narrow down the topics for discussion.  He suggested that Members came up with their own specific ideas about relevant topics and urged Members wishing to contribute speakers to the workshop to inform the Secretariat and th e Chair as soon as possible.  
43. The Committee took note of the statements made an d decided to revert to this agenda item at 
the next meeting.  
E. APPOINTMENT OF THE NEW CHAIRPERSON FOR THE COMMITTEE  
44. The Committee elected Ms. Micong Klimes, from Germany, as the chairperson of the 
Committee for this year.  
 
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