RESTRICTED  WORLD TRADE  
ORGANIZATION  S/FIN/M/59 
3 September 2009 
 
 (09-4127) 
Committee on Trade in Financial Services  
  
 
REPORT OF THE MEETING HELD ON 24 JUNE 2009 
 
Note by the Secretariat
1 
  
1. The Committee on Trade in Financial Services held a meeting on 24 J une 2009, under the 
chairmanship of Mr. Sudhir Sooklal (South Africa).  The agenda is contained in Airgram WTO/AIR/3383.   
A. A
CCEPTANCE OF THE FIFTH PROTOCOL TO THE GENERAL AGREEMENT ON TRADE IN SERVICES 
EMBODYING THE RESULTS OF THE FINANCIAL SERVICES NEGOTIATIONS  
2. The Chairperson  recalled that three WTO Members had yet to accept the Fifth Protocol:  
Brazil, Jamaica, and the Philippines.  At the prev ious meeting, these three delegations informed the 
Committee that they had not been able to make pr ogress on this issue.  He invited them to provide 
further information on the status of their domestic processes, and give some indication as to when they might be able to accept the Protocol.  
3. The representative of Brazil
 said that the domestic procedures had not been concluded yet, 
and that it was not possible to indicate a precise frame work for their completion.  He would keep the 
Committee informed of any further development. 
4. The representative of the Philippines  said that the domestic procedures had not been 
concluded yet.  However, he added that once C ongress had returned from its annual adjournment in 
July this year, the Executive Branch would request  the Senate of the Philippines to declare the 
ratification of the Protocol a high priority measure,  something that would allow the Senate to skip 
some of the procedural hurdles and shor ten the usual timelines in these cases. 
5. The Chairman  thanked these delegations for their updates, called upon Jamaica to provide 
further information at the next meting, and enc ouraged the three Members concerned to accelerate 
their internal procedures for the acceptance of the Protocol.   
6. The Committee took note  of the statements made and decided  to revert to this agenda item at 
the next meeting. 
B. TECHNICAL ISSUES  
7. The Chairperson  recalled that at the previous meeting Members had a rich discussion under 
both this agenda item and the following one, keepin g the momentum generated by the workshop to 
commemorate the entry into force of the Fifth Prot ocol to the GATS.  Many interesting suggestions 
for future work were made, including work on th e monitoring of measures currently being taken on 
financial services, and on the effects of the crisis on trade in financial services.  
                                                      
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/59 
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  8. He explained that as he had promised in taki ng over the chairmanship, he conducted a series 
of informal consultations to discuss future work.  He  held some bilateral cons ultations with interested 
Members in the week of 12 May, and then conve ned an open-ended informal meeting on 3 June.  
Here again, some interesting ideas were raised by  delegations.  However, most of the suggestions 
made were very general.  It would be difficult to  have a focused discussion on the basis of such broad 
ideas.  In his opinion, the ideas should be more specifi c and focused;  and they should be more clearly 
formulated, if possible in writing. 
9. One of the suggestions made at the informal me eting of 3 June caught the attention of some 
delegations:  the idea, originally put forward by China, to hold a sort of workshop or dedicated 
discussion on Islamic finance.  Noting some support fo r that idea, the chairperson had some additional 
consultations with delegations that expressed an inte rest in the topic.  It became clear after those 
consultations that Members were willing to continue  exploring the issue of Islamic finance, building 
on the work initiated last year.  However, the di scussions should be focused, and geared towards 
identifying, discussing – and if possible making sugges tions on – relevant trade-related aspects of 
Islamic finance, such as classification and scheduling issues.  In his view, the best way to do that 
would be to hold a "dedicated discussion" at a futu re Committee meeting, under this agenda item.  By 
making it clear that there will be a "dedicated discu ssion" on a specific topic, and that the discussion 
would focus on issues relevant to the GATS, capita l-based experts might find an additional incentive 
to come to Geneva and attend the meeting.  Th e discussion could include specific presentations by 
national regulators, and even Gene va-based practitioners, in order to provide a suitable background on 
specific technical issues and thus have a be tter foundation for Members' deliberations.   
10. The representatives of China
, Pakistan,  Australia , and Indonesia supported the Chairperson's 
suggestion on Islamic finance.  
11. The representative of Ecuador  supported the idea but expressed his interest in holding a 
similar discussion on microfinance, an issue to which his delegation attached a lot of importance.  The 
questions raised in the informal note on microf inance (Job(09)/8) should be taken into account in 
preparing the program for such a dedicated session.  
12. The representative of Malaysia  also supported the idea of having a workshop or dedicated 
session on Islamic finance.  She also said her de legation was open to discuss other proposals for 
further work.  
13. The representative of the United States  supported further work on Islamic finance and 
microfinance.  
14. The representative of the Republic of Korea  also supported the idea of holding a workshop on 
Islamic finance.  
15. The representatives of India  and Bangladesh  also supported the suggestions to deepen 
discussions on Islamic finance and microfinance.  
16. The representative of China  said that she had originally thought of holding a workshop to 
discuss these issues.  However, after listening to the chairperson's introductory remarks, she said that 
a dedicated session or discussion at the Committee,  under the agenda item on Technical Issues might 
be the best way to proceed.  She added that Chin a was interested in learning more about market 
developments in, and regulatory and institu tional arrangements for, Islamic finance. 
17. The representatives of El Salvador  and Guatemala  also supported the suggestion made by 
Ecuador.   S/FIN/M/59 
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  18. The representative of Japan  supported the idea of discussing Islamic finance, either in a 
workshop or through any other format.  
19. The representative of India  considered that it was best  to discuss these issues under the 
agenda item on Technical Issues, instead of organi zing events that involve additional costs for the 
Organization. 
20.  The representative of Mexico  supported the suggestions to discuss both Islamic finance and 
microfinance. 
21. Regarding the format of the proposed discussions, the Chairperson  clarified that the idea was 
to have a dedicated discussion on Islamic financ e and microfinance during the course of a normal 
Committee meeting.  This would be more convenient from a logistical point of view.  He added that, 
as he did in the case of Islamic finance, he woul d conduct further consultations with those Members 
that have raised the issue of microfinance.  Th e aim was to conduct these dedicated sessions during 
the upcoming clusters of services meetings.  De pending on the availability of experts and other 
factors, these discussions would be held either at the next meeting or at the subsequent one.  He 
promised to keep Members informed of any devel opment in that regard.  He called upon Members to 
approach the Secretariat or the Chair with a view to identifying relevant nati onal experts who could be 
available to make presentations on any of these issues.  
22. He then turned to the room document subm itted by the Untied States, which contained a 
proposal to  exchange information on tr ade in non-life insurance services.   
23. The representative of the United States  said her delegation had sev eral ideas for technical 
discussion at the Committee.  One of  those ideas was to look into the non-life insurance sector, with a 
view to better understanding the issues affecting glob al trade in non-life insurance services, and the 
potential for additional growth and market access in this important sector.  The United States was then 
proposing to carry out an information exchange pr ogramme, consisting of three elements.  The first 
one was a presentation of the report "Property an d Casualty Insurance Services:  Competitive 
Conditions in Foreign Markets", recently prepar ed by the US Interna tional Trade Commission 
(USITC) at the request of the US Trade Representa tive, and which was available online at the USITC 
website.  The presentation would be conducted by US officials from USITC.  The second element of 
the programme would consist of presentations by non-life insurance companies regarding their 
experience in foreign markets.  Finally, the th ird element of the programme would consist of 
presentations by experts from interested Members to share their experiences regarding growth of their 
non life insurance markets, the role of market ope ning with sound regulation, and any benefits to 
consumers or domestic industries as a result of grow th in the non-life insurance sector.  The United 
States would welcome participation by Members in this programme, and any further ideas to enhance 
such a programme that members would find useful. 
24. The representatives of Japan , and the European Communities  supported the United States 
proposal.  
25. The representative of Australia  also supported the proposal.  The non-life insurance sector 
was often overlooked in negotiations and was not always well understood.  These issues were unique 
and called for further examination by the Committ ee.  She added that non-life insurance was an 
important sector in her country.  The Australian ma rket was open to foreign suppliers and Australian 
insurers were also active in overseas market s.  She welcomed the proposed programme.  
26. The representative of South Africa  also welcomed the initiative but  raised some questions for 
clarification.  Firstly, while the note made referenc e to the fact that the study by the USITC on non-
life insurance markets focused on developing co untries, he wondered whether the presentations 
envisaged could look at other markets as well, the so-called mature markets, where they might be S/FIN/M/59 
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  similar restrictions or barriers.  He considered that it would be critical to look at both types of 
markets.  Secondly, the note said that "interested developing countri es can present their experiences 
regarding how growth of their non-life insurance ma rkets, and liberalization with sound regulation, 
has benefited their consumers and domestic industries.  The US would be willing to work with 
Members to provide these complementary presentati ons."  He wondered in that regard what 
"complementary" meant in this context and whethe r the US would be willing to collaborate on this 
issue with a particular developing country having a slightly different view.  He added that it would be 
useful to have a broad representation in the programme.  
27. The representative of Norway
 said that the non-life insurance sector was of high priority to 
his country and welcomed the proposal.  The repor t by the USITC provided numerical estimates of 
the costs entailed by trade restrictions and barri ers on non-life insurance.  As expected, the report 
found substantially higher profit margins for producer s in markets that were less open to international 
competition.  Such costs should be an important argume nt for countries to open up the sector to trade.  
He added that regulatory issues should also be addressed .  He explained in that regard that the market 
for insurance services was characterized by impor tant information asymmetries, and in many cases 
trade was restricted for good reasons such as the n eed to correct market failures.  An important 
question was therefore how to design regulation so as to correct market failures, while retaining 
maximum market openness.  In his view, this was an issue that must be discussed openly as part of the 
market access negotiations.  Additionally, it would be  of interest to learn more about the positive and 
negative experiences with liberalization, in particular the steps taken to ensure an appropriate level of 
regulation of non-life insurance services. 
28. The representative of Korea  supported  the US proposal.  He also expressed the hope that the 
exchange of information envisaged would be furt her developed through discu ssions in the Committee, 
with a view to including the different  experiences of other Members.   
29. The representative of Switzerland  also supported the US initiative.  He suggested however 
that the programme would benefit from the participa tion of the International Association of Insurance 
Supervisors (IAIS).  A representative from the IAIS could provide Members with  further information 
on the regulatory environment governing non-life insurance and the cross border cooperation initiatives pursued by national regulators.   
30. The representative of Brazil
 shared some of the concerns raised by South Africa with regard 
to the US proposal.  He said that it would not be  appropriate for the Committee to have a presentation 
of the USITC report referred to in the US proposal, which contained a survey of barriers to trade in 
non-life insurance services in 72 countries.  The Committee had been careful to keep the 
consideration of themes at a technical level.  In his view, what was envisaged in the US proposal was 
not a technical discussion but a discussion of market access issues.  In his opinion, that was not appropriate for the Committee in light of its mandate.  Perhaps the USITC study could best be discussed in the context of a negotiating meeting, su ch as a plurilateral meeting on financial services.  
He expressed his delegation's strong reservation re garding the presentation of this study in this 
Committee.  He said nonetheless that Brazil could r eassess its stance if the US could further clarify 
the content of the study and ensure that the discu ssions would address technical and regulatory issues 
and not market access.  He reitera ted his country's strong reservation vis-à-vis  the proposal as it stood 
at the moment.  
31. The representative of India
 sought more information about the event, the presentations, and 
the report referred to in the US proposal.  He cau tioned against an information exchange programme 
that would convey a one-dimensional view, or that would not cover a wide universe of countries (not 
just emerging markets), or that would serve as a fo rum for dissecting practices in specific markets.  
Echoing the statement by Brazil, he said that it w as indeed the United States who had said in the past 
that this Committee was not a forum to discuss market access issues.  If that approach was to change,  S/FIN/M/59 
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  then it should be made clear, and there should be no surprise if other market access issues were 
brought to the Committee.  Regarding the format fo r such an information exchange, he said that the 
Committee did not seem to be the right forum, but that a seminar could be organized where various Members could make proposals.  If a consensus w as however reached to have the programme in the 
Committee, then other Members should be given th e opportunity to present their papers, or indeed 
their views on the sector.  
32. The representative of Thailand
 suggested that the presentati ons should address how best to 
protect  policy holders in the context of market liberalization. 
33. The representative of Kenya  welcomed the US initiative and looked forward to the 
presentation.  He expressed his expectation that the presentations would show the sector's growth 
rates in developing countries.  A dditionally, he suggested that the presentations could show the 
opportunities for North-South trade in non-life insuran ce services, and in particular for further exports 
from developing countries.  In that regard, he requ ested that the Secretariat prepare a background note 
on the  exports of non-life insurance services fr om developing countries to both developing- and 
developed-country markets.   
34. The representative of Chinese Taipei  said his delegation was particularly interested in the US 
proposal.  He suggested that the presentations by  the USITC address the sector's contribution to 
economic growth and the potential for the expans ion of trade in non-life insurance services.  
Additionally, because of the unique characteristics of the insurance sector, where for example liability 
management seemed to be more important than asset management, the specific aspects of the regulatory regime should also be discussed.  
35. The representative of Chile
 supported the US initiative, which would be to the benefit of both 
developing and developed countries.  He considered that it was not usef ul to exagerate the technical or 
negotiating aspect of this proposal.  In his view, th is proposal fit this agenda item, since the proposed 
programme would allow for a discussion of technical  issues on the basis of the situation in one 
specific sector.  He saw therefore no inconvenient in the Committee taking up this issue and holding 
the information exchange programme  proposed by the United States. 
36. The representative of Pakistan  also welcomed the US initiativ e, and expressed his expectation 
that the discussion would be balanced and of a tec hnical nature.  In his view, the discussion could be 
balanced if some additions were made to the programme.  Firstly, although the USITC study was 
entitled "Property and Casualty Insurance Services:  Competitive Conditions in Foreign Markets," a 
balanced approach would require that the situation in  the US market be also analyzed.  Secondly, in 
addition to the presentation of the experience of a non-life insurer from a developed country in foreign 
markets, the programme should also include a presentation on the experience of – and the regulatory and competitive conditions faced by – insurance companies from developing countries in the US 
market or in other developed markets.  Finally, while the third element of the US proposal included a 
presentation by interested developing countries on th e benefits of liberaliza tion and sound regulation, 
a balance approach would also require presentations  on how liberalization  and sound regulation had 
contributed to the growth of the insurance industry, and how much foreign companies had gained in these markets.  These additions would make the discussion more balanced.  
37. The representative of China
 said she was somewhat puzzled by the nature of the event 
proposed by the United States.  If such an activity were to be organized, it should be framed within 
the scope of activity of the Committee.  In fact , the event proposed by the United States looked 
unbalanced.  In her view therefore, the Chair should pursue further consultations with Members 
regarding the content of such an event.  S/FIN/M/59 
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  38. The representative of Malaysia
 said that her delegation could consider discussing the USITC 
study if the programme also included some develo pment issues and were not so focused on market 
access barriers.  In her view, the paper was indeed very much focused on market access.  Like Brazil, 
she considered that the Committee was not the appropriate forum to discuss market access.  The event 
should be framed, as China mentioned, within the scope of this Committee. 
39. The representative of Indonesia  associated himself with the views expressed by the 
representatives of South Africa, Brazil, and India.   
40. The representative of the Philippines  echoed the views expressed by China and Malaysia.  He 
added that more time was needed to reflect  on the proposal by the United States.   
41. The representative of Canada  supported the organization of dedicated discussions on Islamic 
finance and microfinance.  Turning to the US propos al, he welcomed the emphasis put by the Chair in 
seeking formal written proposals from Members as a means of generating useful technical work.  
With that in mind, he thanked the US delegation for circulating a proposal in advance of the meeting.  
Canada welcomed and supported the proposal for an information exchange on non-life insurance 
services.  He saw that work as clearly falling with in the realm of the  Committee's activities.  In 
Canada's view, the Committee should focus on promo ting liberalization and r esisting protectionism.  
And that is the kind of work proposed by the United States, even though it might require some fine-tuning.  This kind of discussion would not be the same as taking up market access issues pertaining to the round.  For example, this kind of work w ould be different from rais ing questions about the 
collective request on financial services.  He adde d that there was a fine line between DDA negotiating 
issues and technical issues of interest to a sector .  His delegation was quite convinced that the US 
proposal was consistent with  Canada's approach.   
42. The representative of Guatemala
 expressed some reservations concerning discussion of 
market access issues in the Committee, and said her delegation would need more time to reflect on the 
US proposal.  
43. Having heard the concerns expressed by some delegations regarding initiatives which – in 
their view – ventured into market a ccess issues, the representative of Chile  expressed his concern that 
the Committee's work might be si gnificantly reduced.  In fact, this Committee was about trade in 
financial services, and from that perspective, issues related to the liberalization of trade in financial 
services should be at the centre of its activities.  He wondered where initiatives like this one – which 
just touched upon market access issues in an indire ct manner – would be discussed if they were not 
discussed in this Committee.  In that sense, he  considered that Members should not work on the 
assumption that initiatives such as the US one would have an impact whatsoever on the round of 
negotiations.  He reckoned nonethel ess, as Canada mentioned, th at some fine-tuning might be 
necessary when organizing this event in order to cat er for the concerns expressed by some Members.  
But that did not mean that the US initiative should not be pursued.   
44. The representative of Mexico  said her delegation was still cons idering the US proposal.  She 
encouraged the United States to provide further details  on the proposal in order to help consideration 
by capitals.  
45. The representative of the Philippines  agreed with his colleague from Chile that there was 
room for market access discussions in the Committee.   The main problem was how this particular 
proposal had been formulated, with a somewhat  pronounced bias towards market access issues and 
trade barriers.  He considered that more informal discussions and consultations with the United States 
and other interested delegations were needed in order to find a way forward for this proposal.   S/FIN/M/59 
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  46. The representative of Mauritius  said that the proposed information exchange programme 
should be balanced in terms of  country coverage, with both de veloping and deve loped countries 
covered, and in terms of content.  Regarding the la tter, he considered that issues related to regulation 
and policy holder protection should be addressed.   
47. The representative of India  agreed that there was room to di scuss market access issues in this 
Committee, but that a consistent approach should be  adopted.  He considered in that regard that 
instead of choosing issues according to one's own convenience, the best approach was to discuss 
everything that Members might want to discuss, even if it was related to market access issues.   He also suggested that the Committee might adopt th e practices of other WTO Committees (particularly 
in the rules negotiations), where Members are gi ven the opportunity to present proposals on specific 
subjects within a deadline.  In his view, that appro ach allowed for a balanced presentation of different 
points of view on the same subject.  If applied to the issue under discussion – non-life insurance services – Members might be given the opportuni ty to express their views about practices and 
regulations affecting this sector in other trading partners.  
48. The representative of Malaysia
 associated herself with the statement made by India.  She 
reiterated that her delegation w as open to discuss the US proposal, provided the discussion was not 
exclusively focused on market access issues.  
49. In replying to the comments made, the representative of the United States  said that the 
intention was indeed to present a balanced progr amme.  She saw the programme as looking at the 
non-life insurance sector in a holistic way.  So for ex ample, the idea would be to look at the sector in 
the global marketplace, the operations of propert y and casualty (P&C) insurers, supply and demand 
factors, the nature of the service, and the motivati ons behind P&C trade.  She said that her delegation 
was prepared to work with Members to present a bala nced look at the sector.  She also agreed that it 
was important that any Member be able to present its views on its own market.  Different views on these issues should be presented to the Committee as well.  Her delega tion was prepared to work with 
Members with a view to presenting this programme and addressing the concerns raised.  She finally 
clarified that the submission by the United Stat es was not a negotiating document, but rather a 
proposal to share information on a particular subject.  
50. The Chairperson
 said that his intention had always been  to try to overcome the impasse that 
the Committee had reached, and to try to take the wo rk of the Committee on technical issues forward.  
In his view, Members were facing two issues – one of  procedure, and one of substance.  From the 
procedural point of view, the Committee had not made much progress in discussions under this 
agenda item because of a general reluctance across th e membership to discuss anything pertaining to 
market access.  The Committee's responsibilities,  as stated in the Decision on Institutional 
Arrangements for the General Agreement on Trade in Services, were inter alia  "to provide a forum 
for technical discussions, to conduct studies on measures of members and to conduct examinations of any other technical matters affecting trade in services in the sector concerned."  He failed to see how 
the Committee could actually make any progress under this agenda item without even touching on 
market access issues.  It was in that context that he began his informal consultations, stressing to 
Members (both developed and developing ones) that a more flexible and pragmatic approach would 
be needed.  And such an approach was welcomed by those Members that were consulted, and was 
indeed supported during the informal meeting on 3 June.  He recalled that on that occasion he had 
urged Members to make written proposals for the vari ous reasons outlined in his introductory remarks 
to the agenda item.  In his view, as gleaned from the comments made, there was an agreement in 
principle to the discussion of this issue – non-lif e insurance services.  However, further discussion 
was needed on the format and content of such work.  He would undertake consultations with 
Members, with a view to refining the structure a nd content of the proposed programme.  He clarified 
in that regard that he envisaged the information exchange programme to be held under this agenda 
item, in dedicated sessions of the Committee.  He saw no problem in the Secretariat's fulfilling 
Kenya's request for statistics on im ports and exports, but he reminded Members that the Secretariat's 
paper on financial services would be  coming out later this year.   S/FIN/M/59 
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  51. The representative of Pakistan
 said that his delegation would like to discuss the impact of 
technological developments and electronic commer ce on financial services trade.  He further 
announced that his delegation would present a written s ubmission on this issue at the next meeting.  
52. The representative of India  made a suggestion with regard to  procedure.  He suggested, taking 
into account that the Chairperson would conduct info rmal consultations on how to implement the US 
proposal, that after those consultations Members c ould be invited by email to make proposals or 
express their views on the issue of non-life insurance services.  And those proposals or views could be 
discussed together with the US proposal on the sam e issue.  That was how other WTO Committees 
proceeded.  That approach would allow for a more balanced discussion of issues.  And this procedure 
could be followed in the future to discuss other i ssues the Committee might agree on.  For example, 
the ideas that had just been raised  by Pakistan could be preliminary discussed on the basis of a paper 
by Pakistan, and then more papers and propo sals could be invited on that issue.   
53. The Chairperson  replied to India that that was certainly  how he envisaged to move forward.   
54. The Committee took note  of the statements made and decided  to revert to this agenda item at 
the next meeting.  
C. RECENT DEVELOPMENTS IN FINANCIAL SERVICES TRADE  
55. The Chairperson  said that Members had a very rich exchange of views under this agenda item 
at the previous meeting.  Some of the interventi ons made reference to recent developments in the 
financial sector, with particular reference to the current financial crisis, while others touched upon 
future work.  He had already referred to future wo rk under the previous agenda item.  Nonetheless, 
apart from any future work that the Committee might undertake, he was of the opinion that this 
particular agenda item provided a good opportunity fo r Members to keep abreast of developments in 
the financial sector.  This could be achieved by either presentations by Members or presentations made by experts from other international organi zations on specific topics of interest for the 
Committee.  Members would certainly gain from improving their understanding of current 
developments in the financial sector and, if possi ble, identifying the potential consequences for trade 
in financial services.  
56. The representative of South Africa
 said that the following systemic issues should be part of 
the Committee's work programme.  Firstly, the Committee should conduct an examination of the 
extent to which conditions of competition were unfairly modified by the bailout of financial 
institutions and the possible regulatory options availa ble to Members.  Due to the interconnection of 
modern financial markets, the South African delegati on was of the view that a brief assessment of the 
impact of these bailouts on developing countries' fi nancial markets was warranted.  The South African 
delegation was working closely with the Finance Ministry of South Africa to contribute towards generating that assessment but it would be useful fo r this Committee to engage in a similar exercise.  
Secondly, he proposed to initiate a discussion about the scope of the prudential carve-out for financial 
services.  Lastly, while he acknowledged that vari ous multilateral organizations such as the ILO and 
the IMF were currently seized with the matter of the economic crisis, th ey did so consistent with their 
particular and limited mandates, and that might or might not prove useful for the purposes of this Committee and the WTO Members.  Accordingly, this  Committee had a significant role to play in 
finding ways to mitigate the effects of the financial crisis.  A proposal along this line had been made by Argentina, for example, at a recent General Council meeting.  On that occasion, some Members 
replied that the issue should be dealt with at the relevant committee.  In his view, the Committee on 
Trade in Financial Services was the relevant co mmittee to discuss these issues.   The objective of the 
exercise would be to assist developing countries like South Africa in exploring mechanisms to manage the impact of the crisis in their financia l markets.  Furthermore, this would ensure the 
consistency of such mechanisms with GATS commi tments.  He said that this proposal would be 
submitted in writing shortly.   S/FIN/M/59 
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  57. The representative of Chile  said, as a preliminary reaction and while waiting for the written 
submission, that the elements just outlined by the South African delegation were in line with his own 
country's ideas about the Committee's work under this  agenda item.  He reminded Members that at the 
previous meeting, he referred to the role the Committee could play in the context of the current 
financial crisis, and he made exp licit reference to the report prepared  by the Director-General as part 
of the monitoring of measures adopted by Members in  the financial sector.  The elements contained in 
South Africa's statement were highly relevant.  In fact, as mentioned by South Africa, the interaction 
between the measures adopted in light of the cris is on the one hand, and Members' commitments in 
this sector on the other hand, was an aspect that sh ould be analysed by the Committee.  He failed to 
see why Members could not discuss this matter in this  Committee.  He expressed the hope that this 
agenda item might be fleshed out in the future  on the basis of the South African proposal.  
58. The representative of India  said that recent developments, a nd not just the financial bailouts, 
had already had their impact on developing countries in terms of interest spreads, which were higher 
for developing countries' firms and governments, maki ng it more difficult for them to raise capital in 
global markets.  And more worrisome still was th e increasing level of public spending, with the 
consequent rise in public debt, which had reac hed about 150 percent of GDP in a number of 
Members.  In his view, Members needed to start thinking about these issues, and that was exactly what South Africa was proposing.  His delegation fully supported this proposal.  
59. The representative of Kenya
 supported the South African pr oposal, while reminding Members 
that his delegation had also expressed an interest in this topic at the last meeting.  His delegation was 
also working on a note on this issue and he hoped that the note could be circulated shortly.  
60.  The representative of Argentina  thanked the South African delegation for raising these issues 
at the Committee, and associated himself with th e comments made by Chile, India and Kenya.  He 
reminded Members that his country had submitted a proposal to the General Council with a view to 
analysing the effect of Members' recent measures on the conditions of competition.  He clarified however that the Argentinean proposal referred not  only to services – including financial services – 
but also to goods.  Without prejudging the work carri ed out by the Director-G eneral in the framework 
of the trade policy review mechanism, dealing w ith the issues put forward by the South African 
delegation would provide the Director-General wi th an important input, and would also draw 
Members' attention to the effects that these measures might have not on ly on developing countries but 
on the wider WTO membership.  
61. The representative of China
 supported the South African initiative.  
62. The representative of Canada  made preliminary comments on each element of the South 
African initiative.  In his view, the first element – the extent to which ec onomic recovery measures 
might affect competition – was not really worthy of attention since there had not been a lot of discussion on trade and competition policy in the WTO.  Turning to the second element of the proposal – the suggestion that some Members might be abusing the prudential carve-out in 
implementing certain economic recovery measures – he said that there was no need to initiate a 
specific discussion on that, since Members alrea dy had the possibility of discussing this sort of 
concerns bilaterally.  Turning to the third elemen t of the proposal – the role of this Committee in 
mitigating the effects of the crisis – he said that it would be useful if the written proposal to be 
submitted could further elaborate on the specific valu e added that the Committee could provide in that 
regard, particularly taking into account that inte rnational organizations and governments around the 
world were already working with a view to mitiga ting the adverse effects of the current crisis.   
63. The representative of the United States
 concurred with some of the comments made by 
Canada.  She agreed that, for example in the ar ea of prudential measures,  governments could raise 
their concerns on a bilateral basis or in other fora  if they believed that another Member had taken S/FIN/M/59 
Page 10  
 
  measures affecting its GATS commitments.  She expressed doubts regarding the role that the 
Committee could play in that process.  Additionally, more information was needed with regard to the 
potential role of the Committee in mitigating the eff ects of the financial crisis.  For example, more 
information was needed regarding the topics that  might be discussed and the outcome envisaged.  
Further information and detail were  therefore necessary before her delegation could pronounce itself 
on the proposal.   
64. The representative of India
 said that the statements made by some delegations were 
contradictory and confusing.  Having heard the pr evious discussion on the US proposal, he thought 
that there was some scope to discuss market access issu e in the Committee, but that did not seem to be 
the case.  Commenting on Canada's statement th at the Committee was not the place to discuss 
competition policy, he recalled that the US proposal  did speak about competitive conditions in foreign 
markets.  He wondered why Members would support discussing competition conditions in one 
proposal and not in another.  Some Members also  referred to the forum wh ere these issues should be 
discussed.  He reminded Members in that regard that the reaction to the proposal submitted by 
Argentina to the General Council was that ther e was a Committee to look at these issues – the 
Committee on Trade in Financial Services.  In his vi ew, that was precisely South Africa's intention.  
Since the prudential carve-out was part of the GATS Annex on Financial Services, Members would 
then better discuss it at this Committee.  He was mindful, as some Members said, that there were a 
variety of fora to discuss potential violations of  specific commitments, and the Committee was one of 
them.   
65. The representative of Chile  said that some coherence was called for on the part of Members.  
While he supported the US proposal under the previ ous agenda item, he was also surprised by the 
arguments used by the delegations of Canada and the United States not to take up the issues raised by 
South Africa.  The delegation of Canada said,  for example, that the Committee was not the 
appropriate place to discuss prudential measures.  If that was the case then, he wondered where those 
issues would be discussed.  In his view, since the prudential carve-out was a central element of the 
Annex on Financial Services, it wa s only natural that the Committee discuss the scope of prudential 
measures.  The issue raised by South Africa related to the interaction between specific commitments on financial services, regulation and conditions of competition, had nothing to  do with the discussion 
on trade and competition policy in the WTO.  Rather , the issue was whether certain measures taken by 
Members had an effect on the liberalization commitments those same Members had taken in financial services.  In his view, it was not coherent to have  the Director General issuing a report on measures 
taken in light of the crisis, an important section of which was devoted to measures in the financial 
sector, and then prevent the Committee on Trade in Financial Services to discuss the same issues.  
This would be incomprehensible for any observer looking at the work of this Committee.  He 
therefore requested the delegations of  Canada and the United States to reflect on this, and to be more 
coherent in their approach towards the issues that must be dealt with in the Committee.  
66. The representative of Malaysia
 said that her delegation's main concern was to avoid 
duplicating the work carried out elsewhere.  She nevertheless looked forward to receiving the written 
proposal.  
67. The representative of Brazil  agreed with the statements made by Chile and India.  In his view, 
Members should avoid double standards in the Co mmittee.  Members should not support issues that 
were convenient to them, and then reject those that  were inconvenient to them.  Turning to the point 
made by Canada about competition policy, he said that  competition policy was not really at stake.  It 
was enough to look at Article XVII:3 of the GATS to  see in what context competition had been raised 
by South Africa.  This article of the GATS contai ned a competition test – " formally identical or 
formally different treatment to services suppliers sha ll be considered less favourable if it modifies the 
conditions of competition in favour of services or services suppliers of the Member compared to like 
services or service suppliers of any other Member."   The proposal by South Africa was indeed fully  S/FIN/M/59 
 Page 11 
 
 
  consistent with the Committee's mandate that, as r ecalled by the Chairperson, included the study or 
the examination of measures taken by Members affecting trade in services in the sector concerned –in this case, financial services.  He therefore requested  the delegations of Canada and the United States 
to reassess their position regarding this proposal, a nd avoid double standards or a selective approach 
to the issues. 
68. The representative of the European Communities
 also requested further information on the 
proposal's intention with regard to the prudential carve-out and the Committee's role in mitigating the 
effects of the crisis.  Additionally, she said that her delegation was very supportive of the work carried 
out by the Trade Policy Review Body, and that Members should be cautious not to duplicate work being done in other fora.  
69. The representative of Bolivia
 supported the proposal made by S outh Africa.   He recalled that 
some months ago his country had proposed to conduct a study of this kind, which was objected by various Members who understood that there were va rious fora taking care of these issues.  It was 
however quite strange to realize that the only commit tee that was not dealing with issues related to the 
financial crisis was in fact the Committee on Trade in  Financial Services.  It was all the more strange 
taking into account that all other WTO bodies were  actually discussing how the emergeny measures 
taken by Members were affecting WTO agreements.   
70. The representative of Australia
 said that in principle her delegation had no objections to any 
of the topics that had been proposed for discussion.   The question was rather the Committee's ability 
to review these topics in a considered way.  It wo uld be important then to have the South African 
proposal in writing, in order to review its contents  in a considered way and to discuss the question of 
the appropriate forum to deal with those issues.   
71. The representative of Ecuador  supported in principle the proposal made by South Africa, and 
associated himself with the statements made by Chile and India.   
72. The representative of Canada  clarified that he his delegation was not objecting a discussion 
on any proposal.  His comments were of a preliminar y nature and aimed at helping the South African 
delegation in the preparation of the written proposal.  It was not his intention to be inconsistent or to 
apply a double standard.  He then clarified what  he had said on the three elements outlined by the 
South African delegation.  Firstly, he did not meant to object to the Committee's taking up competition issues in more detail in the context of fi nancial services.  He si mply said he would need 
to consult his authorities on those issues.  Secondl y, he did not mean to say that it would be 
inappropriate to discuss the scope of the prudentia l carve-out in this Committee.  Any Member was 
entitled to raise issues related to the prudential car ve-out in the Committee and his delegation would 
then react accordingly.  But he fa iled to identify a specific issue in the South African statement, apart 
from a general call to discuss the prudential carve-out . Thirdly, he did not mean to say that the 
Committee had no role to play in mitigating the eff ects of the crisis.  His suggestion was for South 
Africa to clarify its intention in that respect, a nd to give more details on how the Committee could 
actually help mitigate the effects of the crisis.  In addition, Canada was very supportive of the 
monitoring process carried out by the Trade Policy Re view Body.  If any Member thought that some 
of the issues addressed in the D-G reports were worth taking up in the Committee, Canada would then participate in the discussion.   
73. The representative of Pakistan
 supported the South African proposal, and made some 
comments.  Firstly, he failed to see how this propo sal differed from the objectives outlined by Canada 
for this Committee, that is, promoting liberalizati on and resisting protectionism.  Secondly, the South 
African proposal did not raise a competition policy issu e.  Rather, it referred to changes in conditions 
of competition that might affect the supply of financia l services.  In the same vein, the US proposal on 
non-life insurance services also looked at the cond itions of competition faced by US insurers in S/FIN/M/59 
Page 12  
 
  foreign markets.  There was indeed a problem of co herence, as some Members indicated.  Thirdly, he 
failed to see why some Members considered that  the Committee was not the appropriate forum to 
discuss issues related to the prudential carve-out.  Nothing in the Committee's mandate prevented it 
from addressing this particular issue.   
74. The representative of Hong Kong, China
 said her delegation was open to discuss any of the 
issues raised during the meeting, but reserved her right to make detailed comments once the proposals 
had been made in writing.  
75. The representative of South Africa  thanked delegations for the preliminary responses to the 
issues raised by his delegation.  He took the occasion  to reply to some of the comments made.  In his 
view there had never been a crisis of this nature in economic history.  Therefore, the suggestion that 
Members should continue to deal with these matters  only at the Trade Policy Review Body or through 
bilateral channels was, in his view, astounding.  South Africa had been hit hard, in terms of 
employment and economic activity, by a crisis that wa s not of its own doing.  Therefore, to hear that 
the question of the prudential carve-out had to be  dealt with bilaterally, as if these were normal 
circumstances, was again in his view astounding.  Members had dealt with the prudential carve-out 
before, in another context, in the absence of a fi nancial crisis.  And that was the reason behind his 
country's proposal, and as many Members had said, th is Committee was the appr opriate forum to deal 
with it.  A discussion of the carve-out in the Co mmittee should be in addition to discussions held 
bilaterally.  Lastly, he turned to the role the Co mmittee should play in the current context.  He said 
that while other organizations were reviewing, pr oposing, and implementing various responses to the 
economic and financial crisis, they did so within their own mandates.  However, the role of this 
Committee in the present context was unclear pr ecisely because Members had not discussed it.  
Developing countries like South Africa did not have money to bailout industries, but their constituencies looked at the WTO for assistance, not financial assistance, but assistance in terms of 
policies and regulations.  There ha d to be response from this Comm ittee.  This was what domestic 
constituencies in every Member were looking for.  The Committee had been operating at a sub-
optimal standard, and this was an opportunity to render it relevant.  He said his delegation would 
submit the proposal in writing as soon as possible.    
76. The Chairperson
 said that his views on the proposal announced by South Africa were exactly 
the same as those he had expressed with regard to the US proposal under the previous agenda item.  In 
other words, he called upon Members to show flexib ility and pragmatism.  He urged South Africa to 
table its proposal in writing as soon as possible so that other Members could respond on the basis of a 
written document.  In his view, as was evident during the discussion on non-life insurance services 
under the previous agenda item, Members were willi ng to discuss these issues but what remained to 
be clarified was their exact nature and content.  He  finally indicated that he would hold consultations 
with Members on both the South African and the US  proposal, once the former had been submitted in 
writing.   
77. The Committee took note  of the statements made and decided  to revert to this agenda item at 
the next meeting.    
D. OTHER BUSINESS  
78. There was no issue raised under this agenda item.  
 
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