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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 19 Introduced in House (IH)]

104th CONGRESS
  1st Session
                                 H. R. 19

 To encourage foreign countries to accord national treatment to United 
States banking, securities, and insurance organizations that operate or 
                  seek to operate in those countries.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            January 4, 1995

Mr. Leach and Mr. Schumer (for themselves, Mr. Frank of Massachusetts, 
and Mr. Bereuter) introduced the following bill; which was referred to 
 the Committee on Banking and Financial Services and, in addition, to 
   the Committees on Commerce and Ways and Means, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL

 
 To encourage foreign countries to accord national treatment to United 
States banking, securities, and insurance organizations that operate or 
                  seek to operate in those countries.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fair Trade in Financial Services Act 
of 1995''.

SEC. 2. PURPOSE; DEFINITIONS.

    (a) Purpose.--The purpose of this Act is to encourage foreign 
countries to accord national treatment to United States banking, 
securities, and insurance organizations that operate or seek to operate 
in those countries.
    (b) Definitions.--For purposes of this Act, the following 
definitions shall apply:
            (1) National treatment.--The term ``national treatment'' 
        means, with respect to any foreign country, treatment that 
        offers United States banking, securities, or insurance 
        organizations, as the case may be, the same competitive 
        opportunities (including effective market access) in such 
        country as are available to the foreign country's domestic 
        banking, securities, or insurance organizations in like 
        circumstances.
            (6) Person of a foreign country.--
                    (A) In general.--The term ``person of a foreign 
                country'' means--
                            (i) any entity that--
                                    (I) is organized under the laws of 
                                the foreign country, or
                                    (II) has the entity's principal 
                                place of business in the foreign 
                                country;
                            (ii) an individual who--
                                    (I) is a citizen of the foreign 
                                country; or
                                    (II) is permanently domiciled in 
                                the foreign country; and
                            (iii) any person that is, directly or 
                        indirectly, under the control of any entity or 
                        individual described in clause (i) or (ii).
                    (B) Control.--For purposes of subparagraph (A), the 
                term ``control''--
                            (i) in the case of a banking organization, 
                        has the same meaning as in section 2 of the 
                        Bank Holding Company Act of 1956;
                            (ii) in the case of a securities 
                        organization, has the meaning which the 
                        Secretary shall prescribe, by regulation, in 
                        consultation with the Commission; and
                            (iii) in the case of an insurance 
                        organization, has the meaning which the 
                        President shall prescribe.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.
            (4) Trade Representative.--The term ``Trade 
        Representative'' means the United States Trade Representative.

SEC. 3. EFFECTUATING THE PRINCIPLE OF NATIONAL TREATMENT FOR BANKING 
              ORGANIZATIONS.

    (a) Identifying Countries That May Be Denying National Treatment to 
United States Banking Organizations.--The Secretary shall identify, 
after consultation in accordance with subsection (i), the extent to 
which foreign countries may be denying national treatment to United 
States banking organizations--
            (1) according to the most recent report under section 3602 
        of the Omnibus Trade and Competitiveness Act of 1988 (or the 
        most recent update of such report); or
            (2) based on more recent information that the Secretary 
        considers appropriate.
    (b) Determining Whether Possible Denial of National Treatment May 
Be Having a Significant Adverse Effect.--
            (1) In general.--The Secretary shall determine, after 
        consultation in accordance with subsection (i), whether the 
        possible denial of national treatment to United States banking 
        organizations by a foreign country identified under subsection 
        (a) may be having a significant adverse effect on such 
        organizations.
            (2) Factors to be considered.--In making any determination 
        under paragraph (1), the Secretary shall consider appropriate 
        factors, including the following:
                    (A) The extent of United States trade with and 
                investment in the foreign country, the size of the 
                foreign country's markets for the financial services 
                involved, and the extent to which United States banking 
                organizations operate or seek to operate in those 
                markets.
                    (B) The importance of operations by United States 
                banking organizations in the foreign country to the 
                export of goods and services by United States firms to 
                such country.
                    (C) The extent to which the foreign country 
                provides in advance to United States banking 
                organizations a written draft of any measure of general 
                application that the country proposes to adopt, such as 
                regulations, guidelines, or other policies regarding 
                new products and services, in order to allow an 
                opportunity for such organizations to comment on the 
                measure and for such comments to be taken into account 
                by the foreign country.
                    (D) The extent to which the foreign country--
                            (i) makes available, in writing, to United 
                        States banking organizations the foreign 
                        country's requirements for completing any 
                        application relating to the provision of 
                        financial services by any such organization;
                            (ii) applies published, objective standards 
                        and criteria in evaluating any such application 
                        from any United States banking organization; 
                        and
                            (iii) renders administrative decisions 
                        relating to any such application within a 
                        reasonable period of time.
            (3) Solicitation of comments.--Before making any 
        determination under paragraph (1), the Secretary shall solicit 
        comments concerning the effect of the possible denial of 
        national treatment on United States banking organizations from 
        interested parties.
    (c) Negotiations.--
            (1) Mandatory initiation of negotiations in certain 
        cases.--If the Secretary determines under subsection (b) that 
        the possible denial of national treatment to United States 
        banking organizations by a foreign country identified under 
        subsection (a) may be having a significant adverse effect on 
        such organizations, the Secretary shall initiate negotiations 
        with such foreign country to ensure that such country accords 
        national treatment to United States banking organizations.
            (2) Exceptions.--Paragraph (1) shall not apply with respect 
        to any foreign country if the Secretary--
                    (A) determines that negotiations with such country 
                in accordance with paragraph (1)--
                            (i) would be unlikely to result in progress 
                        toward according national treatment to United 
                        States banking organizations; or
                            (ii) would impair the economic interests of 
                        the United States; and
                    (B) gives written notice of that determination to 
                the Congress.
    (d) Publication of Postnegotiation Determination; Dispute 
Resolution Proceeding.--
            (1) Publication.--If, after making a determination under 
        subsection (b) that the possible denial of national treatment 
        to United States banking organizations by a foreign country may 
        be having a significant adverse effect on such organizations, 
        the Secretary determines, after consultation in accordance with 
        subsection (i), that--
                    (A) any negotiations under subsection (c) have not 
                resulted in, or are not likely to result in, progress 
                toward according national treatment to United States 
                banking organizations; and
                    (B) effective relief is not available under any 
                bilateral or multilateral agreement described in 
                paragraph (2)(A);
        the Secretary may publish, in the Federal Register, a final 
        determination in accordance with subsections (a) and (b) that 
        such country is denying national treatment to United States 
        banking organizations and the denial is having a significant 
        adverse effect on any such organizations.
            (2) Dispute resolution under applicable agreements.--If, 
        after making a determination under subsection (b) that the 
        possible denial of national treatment to United States banking 
        organizations by a foreign country may be having a significant 
        adverse effect on such organizations--
                    (A) the Secretary determines that the acts, 
                policies, or practices of the foreign country which 
                give rise to such determination are subject to any 
                bilateral or multilateral agreement that governs 
                financial services that has been entered into by the 
                President and approved by the Senate and House of 
                Representatives; and
                    (B) the agreement provides for a formal process for 
                resolving disputes regarding obligations under the 
                agreement;
        the United States shall initiate a proceeding under the 
        agreement to enforce the rights of the United States under the 
        agreement.
            (3) Annual review of determinations.--The Secretary shall, 
        not less frequently than annually and after consultation in 
        accordance with subsection (i), review each determination 
        published pursuant to paragraph (1) to determine whether the 
        determination should be rescinded.
            (4) Notification of appropriate state officials of 
        publication of determination.--The Secretary shall inform State 
        bank supervisors (as defined in section 3(r) of the Federal 
        Deposit Insurance Act) of the publication of any determination 
        under paragraph (1).
    (e) Discretionary Sanctions.--
            (1) Action by the secretary.--
                    (A) In general.--Subject to subparagraph (B) and 
                paragraph (2), the Secretary may, after consultation in 
                accordance with subsection (i), recommend to the 
                appropriate Federal banking agency that such agency 
                suspend consideration of or deny a request for 
                authorization that is filed--
                            (i) by a person of a foreign country listed 
                        in a determination published under subsection 
                        (d)(1); and
                            (ii) after the date of the publication of 
                        such determination.
                    (B) Conditions for exercise of authority.--The 
                Secretary may make a recommendation under subparagraph 
                (A), if the Secretary determines that--
                            (i) such action would assist the United 
                        States in negotiations to eliminate denials of 
                        national treatment against United States 
                        banking organizations; or
                            (ii) the country has not adhered adequately 
                        to an agreement reached as a result of 
                        negotiations undertaken pursuant to subsection 
                        (c).
            (2) Consistency with bilateral and multilateral 
        agreements.--The authority of the Secretary under paragraph (1) 
        may not be used to take actions with respect to a foreign 
        country which are inconsistent with any bilateral or 
        multilateral agreement that governs financial services in which 
        such country is obligated to provide national treatment for 
        United States banking organizations.
            (3) Direction of president.--The exercise of any authority 
        of the Secretary under paragraph (1) shall be subject to the 
        specific direction (if any) of the President.
            (4) Suspensions of requests.--
                    (A) In general.--Notwithstanding any other 
                provision of law, but subject to paragraph (5), if, 
                pursuant to paragraph (1), the Secretary recommends to 
                the appropriate Federal banking agency that the agency 
                suspend the agency's consideration of a request for 
                authorization by a person of a foreign country, the 
                agency shall--
                            (i) suspend the agency's consideration of 
                        the request for a period of 180 days; and
                            (ii) at the recommendation of the 
                        Secretary, extend any such suspension for an 
                        additional period of 180 days.
                    (B) Termination of suspension.--The appropriate 
                Federal banking agency shall, at any time, terminate a 
                suspension under subparagraph (A) at the recommendation 
                of the Secretary.
            (5) Exceptions.--
                    (A) In general.--The appropriate Federal banking 
                agency shall act in accordance with any recommendation 
                of the Secretary made under paragraph (1) unless the 
                agency determines, in writing, and transmits such 
                determination to the Secretary and the Congress, that 
                action in accordance with such recommendation--
                            (i) would have a serious adverse effect 
                        on--
                                    (I) the stability of the United 
                                States financial system; or
                                    (II) the safe and sound operation 
                                of the payments system; or
                            (ii) would adversely affect the ability of 
                        the appropriate Federal banking agencies to act 
                        on a request for authorization made in 
                        connection with the resolution of an insured 
                        depository institution described in section 
                        13(c)(2)(B) of the Federal Deposit Insurance 
                        Act because the foreign bank represents the 
                        only bona fide reasonable offer available with 
                        respect to such resolution.
                    (B) Determination of reasonableness of offer.--In 
                determining whether the offer of a foreign bank 
                represents the only bona fide reasonable offer 
                available for purposes of subparagraph (A)(ii), the 
                appropriate Federal banking agency shall consider, 
                among such other factors as the agency may consider to 
                be appropriate, whether the offer represents the least 
                cost to the respective deposit insurance fund relative 
                to all other possible means for meeting the 
                requirements of section 13(c)(4) of the Federal Deposit 
                Insurance Act.
    (f) Reciprocal Grandfather Exemption From Sanctions.--The authority 
of subsection (e) may not be used to suspend or deny a request for 
authorization by any United States depository institution (other than a 
branch of a foreign bank (as defined in section 1(b) of the 
International Banking Act of 1978)) or any company established pursuant 
to section 4(c)(8) of the Bank Holding Company Act of 1956 if--
            (1) such institution or company was controlled as of 
        December 31, 1994, by a person of a foreign country and such 
        control has been maintained continuously since that date; and
            (2) such person's foreign country, by law or regulation 
        (which took effect on or before December 31, 1994, and remains 
        in effect) and in practice, explicitly provides national 
        treatment to--
                    (A) banks which were established or acquired in 
                such country by United States banking organizations 
                before the effective date of such law or regulation of 
                the foreign country; and
                    (B) subsidiaries (of such banks) which were 
                established or acquired in such country by United 
                States banking organizations before such effective 
                date.
    (g) Report.--
            (1) Contents of report.--Not later than December 1, 1996, 
        and annually after such date, the Secretary shall submit to the 
        Speaker of the House of Representatives and the Committee on 
        Banking, Housing, and Urban Affairs of the Senate a report 
        that--
                    (A) specifies the foreign countries identified 
                under subsection (a);
                    (B) if a determination has been published under 
                subsection (d)(1) with respect to a foreign country, 
                provides the reasons for such determination;
                    (C) if the Secretary has not made or has rescinded 
                such a determination with respect to a foreign country, 
                provides the reasons for the failure to make the 
                determination or for the rescission;
                    (D) describes the results of any negotiations 
                conducted under subsection (c)(1) with a foreign 
                country; and
                    (E) discusses the effectiveness of the 
                administration of this section in achieving the 
                purposes of the section.
            (2) Submission of report.--The report required by paragraph 
        (1) may be submitted as part of a report or update submitted 
        under section 3602 of the Omnibus Trade and Competitiveness Act 
        of 1988.
    (h) Definitions.--The following definitions shall apply for 
purposes of this section:
            (1) Appropriate federal banking agency.--The term 
        ``appropriate Federal banking agency''--
                    (A) has the same meaning as in section 3(q) of the 
                Federal Deposit Insurance Act; and
                    (B) includes the Board of Governors of the Federal 
                Reserve System (in addition to any other agency which 
                may be an appropriate Federal banking agency under such 
                section 3(q)) in the case of any request for 
                authorization to--
                            (i) establish a United States 
                        representative office, agency, or branch of a 
                        foreign bank (as such terms are defined in 
                        section 1(b) of the International Banking Act 
                        of 1978);
                            (ii) establish or acquire an interest in a 
                        commercial lending company (as defined in 
                        section 1(b) of the International Banking Act 
                        of 1978) or a corporation organized or 
                        operating under section 25 or 25A of the 
                        Federal Reserve Act; or
                            (iii) acquire an interest in a bank or bank 
                        holding company, or any company that is not a 
                        bank, under the Bank Holding Company Act of 
                        1956 or this Act.
            (2) Banking organization.--
                    (A) In general.--The term ``banking organization'' 
                means any bank, any bank holding company (including any 
                company required to file reports pursuant to section 
                4(f)(6) of the Bank Holding Company Act of 1956), any 
                savings and loan holding company (as such term is 
                defined in section 10(a)(1)(D) of the Home Owners'' 
                Loan Act), any nonbank financial entity the primary 
                purpose of which is to provide credit or financing 
                (regardless of whether such entity accepts deposits), 
                and any subsidiary of any such bank, company, or 
                entity.
                    (B) Banking terms.--For purposes of this paragraph 
                and paragraph (1)(B)(iii), the terms ``bank'', ``bank 
                holding company'', ``company'', and ``subsidiary'' have 
                the same meaning as in section 2 of the Bank Holding 
                Company Act of 1956.
            (4) Definitions relating to depository institutions.--The 
        terms ``depository institution'' and ``depository institution 
        holding company'' have the same meaning as in section 3 of the 
Federal Deposit Insurance Act.
            (5) Request for authorization.--The term ``request for 
        authorization'' means any application, notice, registration, or 
        other request for authorization that is required under Federal 
        banking law or regulation--
                    (A) to establish facilities or engage in activities 
                at a new geographic location;
                    (B) to engage in additional activities or expand 
                existing activities; or
                    (C) involving a change in control of any depository 
                institution or depository institution holding company.
    (i) Consultation.--In the case of any consultation pursuant to this 
section which is required to be made in accordance with this 
subsection, the Secretary of the Treasury shall consult with the 
Secretary of State, the Trade Representative, the Secretary of 
Commerce, and any appropriate Federal banking agency.

SEC. 4. EFFECTUATING THE PRINCIPLE OF NATIONAL TREATMENT FOR SECURITIES 
              ORGANIZATIONS.

    (a) Identifying Countries That May Be Denying National Treatment to 
United States Securities Organizations.--The Secretary shall identify, 
after consultation in accordance with subsection (i), the extent to 
which foreign countries may be denying national treatment to United 
States securities organizations--
            (1) according to the most recent report under section 3602 
        of the Omnibus Trade and Competitiveness Act of 1988 (or the 
        most recent update of such report); or
            (2) based on more recent information that the Secretary 
        considers appropriate.
    (b) Determining Whether Possible Denial of National Treatment May 
Be Having a Significant Adverse Effect.--
            (1) In general.--The Secretary shall determine, after 
        consultation in accordance with subsection (i), whether the 
        possible denial of national treatment to United States 
        securities organizations by a foreign country identified under 
        subsection (a) may be having a significant adverse effect on 
        such organizations.
            (2) Factors to be considered.--In making any determination 
        under paragraph (1), the Secretary shall consider appropriate 
        factors, including the following:
                    (A) The extent of United States trade with and 
                investment in the foreign country, the size of the 
                foreign country's markets for the financial services 
                involved, and the extent to which United States 
                securities organizations operate or seek to operate in 
                those markets.
                    (B) The importance of operations by United States 
                securities organizations in the foreign country to the 
                export of goods and services by United States firms to 
                such country.
                    (C) The extent to which the foreign country 
                provides in advance to United States securities 
                organizations a written draft of any measure of general 
                application that the country proposes to adopt, such as 
                regulations, guidelines, or other policies regarding 
                new products and services, in order to allow an 
                opportunity for such organizations to comment on the 
                measure and for such comments to be taken into account 
                by the foreign country.
                    (D) The extent to which the foreign country--
                            (i) makes available, in writing, to United 
                        States securities organizations the foreign 
                        country's requirements for completing any 
                        application relating to the provision of 
                        financial services by any such organization;
                            (ii) applies published, objective standards 
                        and criteria in evaluating any such application 
                        from any United States securities organization; 
                        and
                            (iii) renders administrative decisions 
                        relating to any such application within a 
                        reasonable period of time.
            (3) Solicitation of comments.--Before making any 
        determination under paragraph (1), the Secretary shall solicit 
        comments concerning the effect of the possible denial of 
        national treatment on United States securities organizations 
        from interested parties.
    (c) Negotiations.--
            (1) Mandatory initiation of negotiations in certain 
        cases.--If the Secretary determines under subsection (b) that 
        the possible denial of national treatment to United States 
        securities organizations by a foreign country identified under 
        subsection (a) may be having a significant adverse effect on 
        such organizations, the Secretary shall initiate negotiations 
        with such foreign country to ensure that such country accords 
        national treatment to United States securities organizations.
            (2) Exceptions.--Paragraph (1) shall not apply with respect 
        to any foreign country if the Secretary--
                    (A) determines that negotiations with such country 
                in accordance with paragraph (1)--
                            (i) would be unlikely to result in progress 
                        toward according national treatment to United 
                        States securities organizations; or
                            (ii) would impair the economic interests of 
                        the United States; and
                    (B) gives written notice of that determination to 
                the Congress.
    (d) Publication of Postnegotiation Determination; Dispute 
Resolution Proceeding.--
            (1) Publication.--If, after making a determination under 
        subsection (b) that the possible denial of national treatment 
        to United States securities organizations by a foreign country 
        may be having a significant adverse effect on such 
        organizations, the Secretary determines, after consultation in 
        accordance with subsection (i), that--
                    (A) any negotiations under subsection (c) have not 
                resulted in, or are not likely to result in, progress 
                toward according national treatment to United States 
                securities organizations; and
                    (B) effective relief is not available under any 
                bilateral or multilateral agreement described in 
                paragraph (2)(A);
        the Secretary may publish, in the Federal Register, a final 
        determination in accordance with subsections (a) and (b) that 
        such country is denying national treatment to United States 
        securities organizations and the denial is having a significant 
        adverse effect on any such organizations.
            (2) Dispute resolution under applicable agreements.--If, 
        after making a determination under subsection (b) that the 
        possible denial of national treatment to United States 
        securities organizations by a foreign country may be having a 
        significant adverse effect on such organizations--
                    (A) the Secretary determines that the acts, 
                policies, or practices of the foreign country which 
                give rise to such determination are subject to any 
                bilateral or multilateral agreement that governs 
                financial services that has been entered into by the 
                President and approved by the Senate and House of 
                Representatives; and
                    (B) the agreement provides for a formal process for 
                resolving disputes regarding obligations under the 
                agreement;
        the United States shall initiate a proceeding under the 
        agreement to enforce the rights of the United States under the 
        agreement.
            (3) Annual review of determinations.--The Secretary shall, 
        not less frequently than annually and after consultation in 
        accordance with subsection (i), review each determination 
        published pursuant to paragraph (1) to determine whether the 
        determination should be rescinded.
            (4) Notification of appropriate state officials of 
        publication of determination.--The Secretary shall inform 
        appropriate State securities regulatory agencies of the 
        publication of any determination under paragraph (1).
    (e) Discretionary Sanctions.--
            (1) Action by the secretary.--
                    (A) In general.--Subject to subparagraph (B) and 
                paragraph (2), the Secretary may, after consultation in 
                accordance with subsection (i), recommend to the 
                Commission that the Commission suspend consideration of 
                or deny a request for authorization that is filed--
                            (i) by a person of a foreign country listed 
                        in a determination published under subsection 
                        (d)(1); and
                            (ii) after the date of the publication of 
                        such determination.
                    (B) Conditions for exercise of authority.--The 
                Secretary may make a recommendation under subparagraph 
                (A), if the Secretary determines that--
                            (i) such action would assist the United 
                        States in negotiations to eliminate denials of 
                        national treatment against United States 
                        securities organizations; or
                            (ii) the country has not adhered adequately 
                        to an agreement reached as a result of 
                        negotiations undertaken pursuant to subsection 
                        (c).
            (2) Consistency with bilateral and multilateral 
        agreements.--The authority of the Secretary under paragraph (1) 
        may not be used to take actions with respect to a foreign 
        country which are inconsistent with any bilateral or 
        multilateral agreement that governs financial services in which 
        such country is obligated to provide national treatment for 
        United States securities organizations.
            (3) Direction of president.--The exercise of any authority 
        of the Secretary under paragraph (1) shall be subject to the 
        specific direction (if any) of the President.
            (4) Additional provisions applicable to requests for 
        authorization.--
                    (A) Authority upon denial of authorization.--
                            (i) In general.--In connection with a 
                        recommendation under paragraph (1)(A) to deny a 
                        request for authorization described in 
                        subsection (h)(2), the Commission may order--
                                    (I) the disposition of any 
                                controlling interest referred to in 
                                clause (ii)(I) of such subsection;
                                    (II) the closure of any office 
                                referred to in subsection clause 
                                (ii)(II) of such subsection; or
                                    (III) the termination of any 
                                advisory relationship referred to in 
                                clause (iii) or (iv) of such 
                                subsection.
                            (ii) Enforcement.--The Commission may 
                        enforce an order under clause (i) through 
                        appropriate action under the securities laws, 
                        including, if necessary, revocation of the 
                        underlying registration of any person who fails 
                        to comply with such an order.
                    (B) Notice required to file requests for 
                authorization.--
                            (i) In general.--If a determination is 
                        published under subsection (d)(1) with respect 
                        to a foreign country on the basis of the 
                        adverse effect the denial of national treatment 
                        by such country is having on securities 
                        organizations, no person of that foreign 
                        country may file a request for authorization 
                        described in subsection (h)(2) unless such 
                        person files notice of such request 
                        simultaneously with the Commission and the 
                        Secretary, not less than 90 days in advance of 
                        the action that is the subject of the request, 
                        in such form and containing such information as 
                        the Commission may prescribe by rule.
                            (ii) Extending 90-day period.--The 
                        Commission may, by order, extend for an 
                        additional 180 days the period during which the 
                        Commission may consider a request for 
                        authorization described in subsection (h)(2) 
                        that is the subject of a notice received under 
                        clause (i).
            (5) Suspensions of requests.--
                    (A) In general.--Notwithstanding any other 
                provision of law, but subject to paragraph (6), if, 
                pursuant to paragraph (1), the Secretary recommends to 
                the Commission that the Commission suspend the 
                Commission's consideration of a request for 
                authorization by a person of a foreign country, the 
                Commission shall--
                            (i) suspend the Commission's consideration 
                        of the request for a period of 180 days; and
                            (ii) at the recommendation of the 
                        Secretary, extend any such suspension for an 
                        additional period of 180 days.
                    (B) Termination of suspension.--The Commission, as 
                the case may be, shall, at any time, terminate a 
                suspension under subparagraph (A) at the recommendation 
                of the Secretary.
            (6) Exceptions.--The Commission shall act in accordance 
        with any recommendation of the Secretary made under paragraph 
        (1) unless the Commission determines, in writing, and transmits 
        such determination to the Secretary and the Congress, that 
        action in accordance with such recommendation would have a 
        serious adverse effect on--
                    (A) the maintenance of fair and orderly securities 
                markets; or
                    (B) the protection of investors.
    (f) Reciprocal Grandfather Exemption From Sanctions.--
            (1) In general.--The authority of subsection (e) may not be 
        used to suspend or deny a request for authorization by any 
        securities organization which is organized under the laws of 
        the United States, any State, or the District of Columbia, if--
                    (A) organization was controlled as of December 31, 
                1994, by a person of a foreign country and such control 
                has been maintained continuously since that date; and
                    (B) such person's foreign country, by law or 
                regulation (which took effect on or before December 31, 
                1994, and remains in effect) and in practice, 
                explicitly provides national treatment to--
                            (i) securities companies which were 
                        established or acquired in such country by 
                        United States securities organizations before 
                        the effective date of such law or regulation of 
                        the foreign country; and
                            (ii) subsidiaries (of such securities 
                        companies) which were established or acquired 
                        in such country by United States securities 
                        organizations before such effective date.
            (2) Securities company defined.--For purposes of paragraph 
        (1)(B), the term ``securities company'' means any company 
        engaged, under the laws or regulations of a foreign country, in 
        the business of--
                    (A) buying, selling, or underwriting securities, 
                including municipal and government securities and 
                instruments which are similar to securities; or
                    (B) acting as an investment adviser, fiduciary, 
                transfer agent, or any similar function involving the 
                provision of investment services.
            (3) Treatment of european community directive during period 
        of implementation by member states.--During the period 
        beginning on the date of the enactment of the Fair Trade in 
        Financial Services Act of 1995 and ending on December 31, 1995, 
        any directive of the European Community which--
                    (A) was adopted before December 31, 1994; and
                    (B) requires the implementation in national law by 
                the Member States of the European Community of national 
                treatment for securities companies and subsidiaries 
                described in paragraph (1)(B);
        may be treated as a law in effect in each such Member State for 
        purposes of paragraph (1).
    (g) Report.--
            (1) Contents of report.--Not later than December 1, 1996, 
        and annually after such date, the Secretary shall submit to the 
        Speaker of the House of Representatives and the Committee on 
        Banking, Housing, and Urban Affairs of the Senate a report 
        that--
                    (A) specifies the foreign countries identified 
                under subsection (a);
                    (B) if a determination has been published under 
                subsection (d)(1) with respect to a foreign country, 
                provides the reasons for such determination;
                    (C) if the Secretary has not made or has rescinded 
                such a determination with respect to a foreign country, 
                provides the reasons for the failure to make the 
                determination or for the rescission;
                    (D) describes the results of any negotiations 
                conducted under subsection (c)(1) with a foreign 
                country; and
                    (E) discusses the effectiveness of the 
                administration of this section in achieving the 
                purposes of the section.
            (2) Submission of report.--The report required by paragraph 
        (1) may be submitted as part of a report or update submitted 
        under section 3602 of the Omnibus Trade and Competitiveness Act 
        of 1988.
    (h) Definitions.--The following definitions shall apply for 
purposes of this section:
            (1) Commission.--The term ``Commission'' means the 
        Securities and Exchange Commission.
            (2) Request for authorization.--The term ``request for 
        authorization'' means--
                    (A) an application to register under section 15(b), 
                15B, or 15C of the Securities Exchange Act of 1934, or 
                section 203(c) of the Investment Advisers Act of 1940, 
                including an application to succeed to the business of 
                a registered entity;
                    (B) an amendment to a registration referred to in 
                clause (i) that reflects--
                            (i) the acquisition of control of the 
                        registered entity; or
                            (ii) the addition of a United States office 
                        by the registered entity;
                    (C) a registration statement filed by an investment 
                company under section 8 of the Investment Company Act 
                of 1940, if a person of a foreign country will serve as 
                an investment adviser to the investment company; and
                    (D) an amendment to an investment company 
                registration statement filed under section 8 of the 
                Investment Company Act of 1940 that reflects the 
                retention of a person of a foreign country as an 
                investment adviser.
            (3) Securities organization.--The term ``securities 
        organization'' means--
                    (A) any broker or dealer (as such terms are defined 
                in paragraphs (4) and (5), respectively, of section 
                3(a) of the Securities Exchange Act of 1934);
                    (B) any investment adviser (as defined in section 
                202(a)(11) of the Investment Advisers Act of 1940); and
                    (C) any investment company (as defined in section 3 
                of the Investment Company Act of 1940).
    (i) Consultation.--In the case of any consultation pursuant to this 
section which is required to be made in accordance with this 
subsection, the Secretary of the Treasury shall consult with the 
Secretary of State, the Secretary of Commerce, the Trade 
Representative, and the Commission.

SEC. 5. EFFECTUATING THE PRINCIPLE OF NATIONAL TREATMENT FOR INSURANCE 
              ORGANIZATIONS.

    (a) Identifying Countries That May Be Denying National Treatment to 
United States Insurance Organizations.--The President shall identify 
the extent to which foreign countries may be denying national treatment 
to United States insurance organizations--
            (1) according to the most recent report under section 3602 
        of the Omnibus Trade and Competitiveness Act of 1988 (or the 
        most recent update of such report); or
            (2) based on other or more recent information that the 
        President considers appropriate.
    (b) Determining Whether Possible Denial of National Treatment May 
Be Having a Significant Adverse Effect.--
            (1) In general.--The President shall determine whether the 
        possible denial of national treatment to United States 
        insurance organizations by a foreign country identified under 
        subsection (a) may be having a significant adverse effect on 
        such organizations.
            (2) Factors to be considered.--In making any determination 
        under paragraph (1), the President shall consider appropriate 
        factors, including the following:
                    (A) The extent of United States trade with and 
                investment in the foreign country, the size of the 
                foreign country's markets for the financial services 
                involved, and the extent to which United States 
                insurance organizations operate or seek to operate in 
                those markets.
                    (B) The importance of operations by United States 
                insurance organizations in the foreign country to the 
                export of goods and services by United States firms to 
                such country.
                    (C) The extent to which the foreign country 
                provides in advance to United States insurance 
                organizations a written draft of any measure of general 
                application that the country proposes to adopt, such as 
                regulations, guidelines, or other policies regarding 
                new products and services, in order to allow an 
                opportunity for such organizations to comment on the 
                measure and for such comments to be taken into account 
                by the foreign country.
                    (D) The extent to which the foreign country--
                            (i) makes available, in writing, to United 
                        States insurance organizations the foreign 
                        country's requirements for completing any 
                        application relating to the provision of 
                        financial services by any such organization;
                            (ii) applies published, objective standards 
                        and criteria in evaluating any such application 
                        from any United States insurance organization; 
                        and
                            (iii) renders administrative decisions 
                        relating to any such application within a 
                        reasonable period of time.
            (3) Solicitation of comments.--Before making any 
        determination under paragraph (1), the President shall solicit 
        comments concerning the effect of the possible denial of 
        national treatment on United States insurance organizations 
        from interested parties.
    (c) Negotiations.--
            (1) Mandatory initiation of negotiations in certain 
        cases.--If the President determines under subsection (b) that 
        the possible denial of national treatment to United States 
        insurance organizations by a foreign country identified under 
        subsection (a) may be having a significant adverse effect on 
        such organizations, the Trade Representative shall initiate 
        negotiations with such foreign country to ensure that such 
        country accords national treatment to United States insurance 
        organizations.
            (2) Exceptions.--Paragraph (1) shall not apply with respect 
        to any foreign country if the President--
                    (A) determines that negotiations with such country 
                in accordance with paragraph (1)--
                            (i) would be unlikely to result in progress 
                        toward according national treatment to United 
                        States insurance organizations; or
                            (ii) would impair the economic interests of 
                        the United States; and
                    (B) gives written notice of that determination to 
                the Congress.
    (d) Publication of Postnegotiation Determination; Dispute 
Resolution Proceeding.--
            (1) Publication.--If, after making a determination under 
        subsection (b) that the possible denial of national treatment 
        to United States insurance organizations by a foreign country 
        may be having a significant adverse effect on such 
        organizations, the President determines that--
                    (A) any negotiations under subsection (c) have not 
                resulted in, or are not likely to result in, progress 
                toward according national treatment to United States 
                insurance organizations; and
                    (B) effective relief is not available under any 
                bilateral or multilateral agreement described in 
                paragraph (2)(A);
        the President may publish, in the Federal Register, a final 
        determination in accordance with subsections (a) and (b) that 
        such country is denying national treatment to United States 
        insurance organizations and the denial is having a significant 
        adverse effect on any such organizations.
            (2) Dispute resolution under applicable agreements.--If, 
        after making a determination under subsection (b) that the 
        possible denial of national treatment to United States 
        insurance organizations by a foreign country may be having a 
        significant adverse effect on such organizations--
                    (A) the President determines that the acts, 
                policies, or practices of the foreign country which 
                give rise to such determination are subject to any 
                bilateral or multilateral agreement that governs 
                financial services that has been entered into by the 
                President and approved by the Senate and House of 
                Representatives; and
                    (B) the agreement provides for a formal process for 
                resolving disputes regarding obligations under the 
                agreement;
        the United States shall initiate a proceeding under the 
        agreement to enforce the rights of the United States under the 
        agreement.
            (3) Annual review of determinations.--The President shall, 
        not less frequently than annually, review each determination 
        published pursuant to paragraph (1) to determine whether the 
        determination should be rescinded.
            (4) Notification of appropriate state officials of 
        publication of determination.--The President shall inform 
        appropriate State insurance regulatory agencies of the 
        publication of any determination under paragraph (1).
    (e) Discretionary Sanctions.--
            (1) Action by the president.--Subject to paragraph (2), the 
        President may recommend to the Secretary of the Treasury that 
        the Secretary suspend the acceptance of, or not accept, a 
        registration statement that is filed pursuant to subsection (j) 
        after the date of publication of a determination under 
        subsection (d)(1) by a person of a foreign country listed in 
        such publication if the President determines that--
                            (i) such action would assist the United 
                        States in negotiations to eliminate denials of 
                        national treatment against United States 
                        insurance organizations;
                            (ii) the country has not adequately adhered 
                        to an agreement reached as a result of 
                        negotiations undertaken pursuant to subsection 
                        (c).
            (2) Consistency with bilateral and multilateral 
        agreements.--The authority of the President under paragraph (1) 
        may not be used to take actions with respect to a foreign 
        country which are inconsistent with any bilateral or 
        multilateral agreement that governs financial services in which 
        such country is obligated to provide national treatment for 
        United States insurance organizations.
            (3) Suspensions of filings of registrations.--
                    (A) In general.--Notwithstanding any other 
                provision of law, if the President recommends, pursuant 
                to paragraph (1), that the Secretary suspend the 
                acceptance of any registration of an alien insurance 
                company under subsection (j), the Secretary shall--
                            (i) suspend the Secretary's acceptance of 
                        such registration for a period of 180 days; and
                            (ii) at the recommendation of the 
                        President, extend such suspension for an 
                        additional period of 180 days.
                    (B) Termination of suspension.--The Secretary 
                shall, on the recommendation of the President, 
                terminate any suspension in effect under clause (i).
                    (C) Alternative action.--If the President 
                determines that the procedure outlined in subparagraph 
                (A) is either inappropriate or impractical to achieve 
                the purpose of this section, the President may take 
                such action under other provisions of law as the 
                President considers necessary and appropriate to 
                encourage foreign countries to accord national 
                treatment to United States insurance organizations that 
                operate or seek to operate in those countries.
    (f) Existing Alien Insurance Organization Activity.--The authority 
of subsection (e) may not be exercised with the respect to any 
registration filed by an alien insurance organization which is engaged 
in insurance activities within the United States as of January 4, 1995.
    (g) Report.--
            (1) Contents of report.--Not later than December 1, 1996, 
        and annually after such date, the President shall transmit to 
        the Speaker of the House of Representatives and the Committee 
        on Banking, Housing, and Urban Affairs of the Senate a report 
        that--
                    (A) specifies the foreign countries identified 
                under subsection (a);
                    (B) if a determination has been published under 
                subsection (d)(1) with respect to a foreign country, 
                provides the reasons for such determination;
                    (C) if the President has not made or has rescinded 
                such a determination with respect to a foreign country, 
                provides the reasons for the failure to make the 
                determination or for the rescission;
                    (D) describes the results of any negotiations 
                conducted under subsection (c)(1) with a foreign 
                country; and
                    (E) discusses the effectiveness of the 
                administration of this section in achieving the 
                purposes of the section.
            (2) Submission of report.--The report required by paragraph 
        (1) may be submitted as part of a report or update submitted 
        under section 3602 of the Omnibus Trade and Competitiveness Act 
        of 1988.
    (h) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Alien insurance organization.--The term ``alien 
        insurance organization'' means an insurance organization which 
        is a person of a foreign country.
            (2) Insurance organization.--The term ``insurance 
        organization'' means any insurer and any reinsurer.
            (3) Insurer.--The term ``insurer'' means a party to a 
        contract of insurance who assumes the risk and undertakes to 
        indemnify the insured, or to pay a certain sum on the 
        occurrence of a specified contingency.
            (4) Reinsurer.--The term ``reinsurer'' means an insurer 
        which contracts to indemnify a ceding insurer for all or part 
        of a risk originally undertaken by the ceding insurer.
    (i) Consultation.--In carrying out the duties under this section, 
the President may consult with the appropriate State insurance 
commissioners or regulatory agencies and other entities the President 
may consider appropriate.
    (j) Registration of Alien Insurance Organizations With the 
Secretary.--
            (1) In general.--No alien insurance organization may engage 
        in insurance activities within the United States after the date 
        of the enactment of this Act unless--
                    (A) a registration statement has been filed by the 
                organization with the Secretary indicating the 
                organization's intention to engage in insurance 
                activities within the United States; and
                    (B) applicable State insurance requirements have 
                been satisfied.
            (2) Annual report.--The Secretary shall submit an annual 
        report to the Congress on the extent of alien insurance 
        organization activity within the United States.
    (k) Delegation.--
            (1) In general.--The President may delegate any authority 
        of the President under this section.
            (2) Exercise of authority.--If the President delegates any 
        authority of the President under this section, the designee's 
        authority shall be exercised according to the specific 
        direction (if any) of the President.

SEC. 6. CONFORMING AMENDMENTS.

    (a) Reports on Foreign Treatment of United States Financial 
Institutions.--Section 3602 of the Omnibus Trade and Competitiveness 
Act of 1988 (22 U.S.C. 5352) is amended--
            (1) in the 1st sentence, by inserting ``with updates on 
        significant developments every 2 years following the study 
        conducted in 1994,'' before ``the Secretary of the Treasury''; 
        and
            (2) by adding at the end the following: ``For purposes of 
        this section, a foreign country denies national treatment to 
        United States entities unless the foreign country offers such 
        entities the same competitive opportunities (including 
        effective market access) as are available to the domestic 
        entities of the foreign country in like circumstances.''.
    (b) Negotiations To Promote Fair Trade in Financial Services.--
Section 3603(a)(1) of the Omnibus Trade and Competitiveness Act of 1988 
(22 U.S.C. 5353(a)(1)) is amended by inserting ``effective'' before 
``access''.
    (c) Primary Dealers in Government Debt Instruments.--Section 
3502(b)(1) of the Omnibus Trade and Competitiveness Act of 1988 (22 
U.S.C. 5342(b)(1)) is amended--
            (1) by striking ``does not accord to'' and inserting ``does 
        not offer''; and
            (2) by striking ``as such country accords to domestic 
        companies of such country.'' and inserting ``as are available 
        to domestic companies of such country in like circumstances.''.
    (d) Conforming Amendments to the Securities Exchange Act of 1934.--
            (1) Section 15.--Section 15(b)(1) of the Securities 
        Exchange Act of 1934 (15 U.S.C. 78o(b)(1)) is amended by adding 
        at the end the following: ``The Commission may suspend 
        consideration or deny registration, as provided in section 4(e) 
        of the Fair Trade in Financial Services Act of 1995.''.
            (2) Section 15b.--Section 15B(a)(2) of the Securities 
        Exchange Act of 1934 (15 U.S.C. 78o-4(a)(2)) is amended by 
        adding at the end the following: ``The Commission may suspend 
        consideration and deny registration, as provided in section 
        4(e) of the Fair Trade in Financial Services Act of 1995''.
            (3) Section 15c.--Section 15C(a)(2) of the Securities 
        Exchange Act of 1934 (15 U.S.C. 78o-5(a)(2)) is amended by 
        adding at the end the following: ``The Commission may suspend 
        consideration and deny registration, as provided in section 
        4(e) of the Fair Trade in Financial Services Act of 1995.''.
    (e) Conforming Amendment to the Investment Company Act of 1940.--
Section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8) is 
amended by adding at the end the following new subsection:
    ``(g) The Commission may suspend consideration and deny 
registration, as provided in section 4(e) of the Fair Trade in 
Financial Services Act of 1995.''.
    (f) Conforming Amendment to the Investment Advisers Act of 1940.--
Section 203(c)(2) of the Investment Advisers Act of 1940 (15 U.S.C. 
(c)(2)) is amended by adding at the end the following: ``The Commission 
may suspend consideration or deny registration, as provided in section 
4(e) of the Fair Trade in Financial Services Act of 1995.''.
    (g) Report on Denial of National Treatment for Insurance 
Organizations.--Section 3602(3) of the Omnibus Trade and 
Competitiveness Act of 1988 (22 U.S.C. 5352(3)) is amended by inserting 
``, insurance organizations,'' after ``banking organizations''.
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