RESTRICTED
WORLD TRADE S/FIN/M/20
19December 1997
ORGANIZATION(97-5604)
Committee onTrade inFinancial Services
REPORT OFTHE MEETING HELD ON12DECEMBER 1997
Note bytheSecretariat
1. Thetwenty-first meeting oftheCommittee onTrade inFinancial Services waschaired byMr.
Yoshio Okubo ofJapan. Theagenda forthemeeting wascontained inWTO/AIR/743 of24November
1997, andconsisted ofthree items: conclusion ofthefinancial services negotiations; organization of
future work; andother business.
ItemA: Conclusion oftheFinancial Services Negotiations
2. TheChairman reported onthestatus ofthesubmission ofoffers. Intotal56offers representing
70Members hadbeensubmitted. Inaddition tothe45offers thathadbeensubmitted before theprevious
formal meeting on8December, 11offers hadbeensubmitted byBrazil, India, Thailand, Indonesia,
Romania, SriLanka, Bolivia, Honduras, Colombia, Malta andElSalvador. TheSecretariat had
circulated those offers asdocuments S/FIN/W/12/Add. 46toAdd. 56.Atotalof28delegations had
submitted revised offers; alistoftheoffers wasavailable intheroom. Thedocuments inthelistwere
theSchedules andMFN Exemption Lists tobeattached totheFifth Protocol. TheEuropean
Communities, Japan, United States andVenezuela hadsubmitted revised offers justbefore themeeting.
TheChairman invited those delegations thathadsubmitted revised offers tointroduce them.
3. TheEuropean Communities indicated thattherevision ofitsoffer related toadditional
commitments, andthustherestoftheSchedule remained asitoriginally was. Itthanked delegations
andtheSecretariat fortheirhelpinthefinaldiscussions. Japan wasverypleased thatitsrevised offer
incorporated alltheelements contained initsbilateral agreement infinancial services andinsurance,
asadditional commitments.
4. TheUnited States indicated thatitssubmission consisted ofadditions andrevisions toitsoffer
of9December 1997, which otherwise formed theU.S.offer. What wastobeagreed astheresult
ofthenegotiations wasanimpressive package ofcommitments which stood onitsownmerits, asa
major success fortheWTO. Financial services nowcompleted atriadofsolid, global market-opening
agreements reached inthepastyear, together withtheinformation technology agreement andthe
agreement onbasic telecommunications services. Thesetofcommitments covered over95percent
ofworld tradeinfinancial services, withnewandimproved offers from70countries, bothdeveloped
anddeveloping fromallregions oftheworld. Thiswasatrulyglobal deal. Thecommitments covered
17.8trillion USdollars inglobal securities assets, 38trillion dollars inglobal domestic banklending,
and22.2trillion dollars inworldwide insurance premiums. They included intheircoverage awhole
rangeoffinancialservices,fromtraditionalbankingservicestothelatestsecuritiesandassetmanagement
services, aswellasafullrange ofinsurance services. TheUnited States wasleaving itsbroad MFN-
based offer onthetable, butithadanimportant problem which wasaddressed intheoffer just
distributed. Itcould notcondone forced divestiture ofexisting investment totheextent thatacquired
rights werenotprotected bybindings. TheUnited States haddecided toreserve itsrights toaddress
thisproblem intheevent thatU.S.service providers were forced todivest theirinvestments intheS/FIN/M/20
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market ofanother Member.It hoped thatoutstanding issues could beresolved quickly soastoavoid
thenecessity ofretaining thisexception. TheU.S. delegation congratulated alldelegations forthe
achievement.
5. TheChairman asked whether theCommittee agreed that,withtheaddition oftherevised offers
made available justbefore themeeting, thelistofdocuments (attached) represented theresults ofthe
negotiations. TheCommittee soagreed.
6. TheEuropean Communities stated thatitinterpreted theMFN exemption submitted bythe
United States concerning insurance inthesense thatthecircumstances addressed didnotcover cases
ofnationalization ofasector orsubsector when thenationalization applied inthesame manner toall
companies independently oftheirnationality.
7. TheUnited States reiterated theimportance oftheagreement atatimewhen somany have
questioned thesustainability offinancial liberalization. Theagreement sentastrong signal thatfurther
liberalization wasanessential partofaneffective strategy tostrengthen financial systems. TheUnited
States would continue towork constructively toresolve those issues where creative solutions hadso
fareluded them, anditwould dosoalong withacomprehensive effort tohelpequip national authorities
andthesystem asawhole todealeffectively withthechallenges thathaveaccompanied theprocess
ofglobal capital market integration andliberalization. Itstressed thecritical importance itattached
toaddressing circumstances where financial institutions faced theriskofbeing compelled torelinquish,
dilute ordivest equity positions. Initsview, thiswasinbreach ofafundamental principle forthe
WTO. Itadded thatitwould submit apaper related tothisissuetotheWorking Party onInvestment.
TheUnited States complimented delegations andtheDirector-General fortheirhardwork inmaking
theagreement possible.
8. Japan, Canada andThailand onbehalf ofASEAN alsoexpressed words ofcongratulation and
gratitude totheChairman andtoalldelegations whocontributed toachieving asuccessful conclusion
tothenegotiations. Apermanent, full-MFN agreement withverybroad participation hadnowbeen
achieved., despite thedifficult environment. Switzerland echoed those words, although itexpressed
regret thatnotallMembers hadrecognized theimportance oftheprinciple ofgrandfathering.
9. TheDirector-General thanked delegations, inparticular those ofthemany developing countries
whohadparticipated inthenegotiations. 102countries hadnowtaken binding commitments toopen
theirmarkets inconformity withtheirstages ofdevelopment. Hestressed theimportance ofthe
achievement andthebenefits thatwould accrue fromtheagreement. Thishadbeenagolden yearfor
themultilateral trading system.
ItemB: Organization ofFuture Work
ItemC: Other Business
10. Nodiscussions tookplace under these agenda items.S/FIN/M/20
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SITUATION OFOFFERS ONFINANCIAL SERVICES
Country Symbol Date
EUandtheirMember States S/FIN/W/12/Add.1/Rev.2 12December 1997
Switzerland S/FIN/W/12/Add.2/Rev.1 1December 1997
Japan S/FIN/W/12/Add.3/Rev.1 12December 1997
Hong Kong S/FIN/W/12/Add.4/Rev.2 10December 1997
United States S/FIN/W/12/Add.5/Rev.2 12December 1997
Bahrain S/FIN/W/12/Add.6/Rev.1 10December 1997
Canada S/FIN/W/12/Add.7/Rev.2 12December 1997
Norway S/FIN/W/12/Add.8 16July1997
Hungary, Rep.of S/FIN/W/12/Add.9/Rev.1 5December 1997
Australia S/FIN/W/12/Add.10/Rev.1 5December 1997
Slovak Rep. S/FIN/W/12/Add.11/Rev.2 12December 1997
Turkey S/FIN/W/12/Add.12/Rev.1 12December 1997
Venezuela S/FIN/W/12/Add.13/Rev.1 12December 1997
Macau S/FIN/W/12/Add.14 15August 1997
Korea, Rep.of S/FIN/W/12/Add.15 4September 1997
NewZealand S/FIN/W/12/Add.16/Rev.2 12December 1997
Czech Republic S/FIN/W/12/Add.17/Rev.1 10December 1997
Ecuador S/FIN/W/12/Add.18/Rev.3 12December 1997
Singapore S/FIN/W/12/Add.19 18September 1997
Iceland S/FIN/W/12/Add.20 3October 1997
Slovenia S/FIN/W/12/Add.21/Rev.2 12December 1997
Nigeria S/FIN/W/12/Add.22 15October 1997
Kenya S/FIN/W/12/Add.23 15October 1997
12December 1997S/FIN/M/20
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Egypt S/FIN/W/12/Add.24/Rev.1 10December 1997
Tunisia S/FIN/W/12/Add.25 10November 1997
Israel S/FIN/W/12/Add.26/Rev.1 11December 1997
Costa Rica S/FIN/W/12/Add.27/Rev.1 10December 1997
South Africa S/FIN/W/12/Add.28 7November 1997
Uruguay S/FIN/W/12/Add.29 10November 1997
Peru S/FIN/W/12/Add.30/Rev.1 12December 1997
Philippines S/FIN/W/12/Add.31/Rev.1 10December 1997
Mauritius S/FIN/W/12/Add.32/Rev.1 11December 1997
Senegal S/FIN/W/12/Add.33/Rev.1 12December 1997
Chile S/FIN/W/12/Add.34/Rev.1 11December 1997
Poland S/FIN/W/12/Add.35/Rev.1 10December 1997
Cyprus S/FIN/W/12/Add.36 27November 1997
Bulgaria S/FIN/W/12/Add.37 28November 1997
Jamaica S/FIN/W/12/Add.38 3December 1997
Mexico S/FIN/W/12/Add.39 3December 1997
Ghana S/FIN/W/12/Add.40 4December 1997
Kuwait S/FIN/W/12/Add.41 4December 1997
Pakistan S/FIN/W/12/Add.42/Rev.1 11December 1997
Malaysia S/FIN/W/12/Add.43 5December 1997
Dominican Republic S/FIN/W/12/Add.44 5December 1997
Nicaragua S/FIN/W/12/Add.45 5December 1997
Brazil S/FIN/W/12/Add.46/Rev.1 12December 1997
India S/FIN/W/12/Add.47/Rev.1 12December 1997
Thailand S/FIN/W//12/Add.48 10December 1997
Indonesia S/FIN/W/12/Add.49 11December 1997
Romania S/FIN/W/12/Add.50 11December 1997
12December 1997S/FIN/M/20
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SriLanka S/FIN/W/12/Add.51 11December 1997
Bolivia S/FIN/W/12/Add.52 11December 1997
Honduras S/FIN/W/12/Add.53 11December 1997
Colombia S/FIN/W/12/Add.54 12December 1997
Malta S/FIN/W/12/Add.55 12December 1997
ElSalvador S/FIN/W/12/Add.56 12December 1997
12December 1997