I

103D CONGRESS

1ST SESSION H. R. 3565

To provide regulatory incentives to promote national treatment by foreign

countries to United States providers of certain financial and communications services, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

NOVEMBER 19, 1993

Mr. MARKEY introduced the following bill; which was referred to the

Committee on Energy and Commerce

A BILL

To provide regulatory incentives to promote national treatment by foreign countries to United States providers

of certain financial and communications services, and

for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Fair Trade in Services

5 Act of 1993’’.
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1 TITLE I—FINANCIAL SERVICES

2 SEC. 101. EFFECTUATING THE PRINCIPLE OF NATIONAL

3 TREATMENT FOR SECURITIES BROKERS AND

4 DEALERS.

5 The Securities Exchange Act of 1934 (15 U.S.C. 78a

6 et seq.) is amended by adding at the end the following

7 new section:

8 ‘‘NATIONAL TREATMENT

9 ‘‘SEC. 36. (a) PURPOSE.—This section is intended to

10 encourage foreign countries to accord national treatment

11 to United States brokers and dealers that operate or seek

12 to operate in those countries, and thereby end discrimina13 tion against United States brokers and dealers.

14 ‘‘(b) REPORTS REQUIRED.—The Secretary of the

15 Treasury shall, not later than December 1, 1994, and bi16 ennially thereafter, submit to the Congress a report—

17 ‘‘(1) identifying any foreign country—

18 ‘‘(A) that does not accord national treat19 ment to United States brokers and dealers; and

20 ‘‘(B) with respect to which no notice under

21 subsection (e)(1) is in effect;

22 ‘‘(2) explaining why the Secretary has not pub23 lished, or has rescinded, such a notice with respect

24 to that country; and
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1 ‘‘(3) describing the results of any negotiations

2 conducted pursuant to subsection (d)(1) with respect

3 to that country.

4 ‘‘(c) DISCRETIONARY DETERMINATIONS.—The Sec5 retary may, at any time, publish in the Federal Register

6 a determination that a foreign country does not accord

7 national treatment to United States brokers or dealers.

8 ‘‘(d) NEGOTIATIONS REQUIRED.—

9 ‘‘(1) IN GENERAL.—The Secretary of the

10 Treasury shall initiate negotiations with any foreign

11 country in which, according to the report under sub12 section (b) or any determination under subsection

13 (c), there is a significant failure to accord national

14 treatment to United States brokers or dealers, to en15 sure that such country accords national treatment to

16 United States brokers and dealers.

17 ‘‘(2) NEGOTIATIONS NOT REQUIRED.—Para18 graph (1) does not require the Secretary of the

19 Treasury to initiate negotiations with a foreign

20 country if the Secretary—

21 ‘‘(A) determines that such negotiations

22 would be fruitless or would impair national eco23 nomic interests; and

24 ‘‘(B) gives written notice of that deter25 mination to the chairman and ranking minority
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1 member of the Committee on Banking, Hous2 ing, and Urban Affairs of the Senate and of the

3 Committee on Energy and Commerce of the

4 House of Representatives.

5 ‘‘(e) SANCTIONS.—

6 ‘‘(1) SECRETARY’S NOTICE.—If negotiation

7 pursuant to subsection (d) with a foreign country

8 identified pursuant to subsection (b)(1) or (c) has

9 not attained national treatment for United States

10 brokers and dealers within 2 years after the date of

11 such identification, the Secretary of the Treasury

12 shall publish in the Federal Register a notice that

13 a foreign country does not accord national treatment

14 to United States brokers or dealers and that nego15 tiation has failed to attain such national treatment.

16 ‘‘(2) ACTIONS BY COMMISSION.—If the Sec17 retary of the Treasury has published in the Federal

18 Register (and has not rescinded) a notice under

19 paragraph (1) with respect to a foreign country, the

20 Commission shall, based upon the determination

21 concerning national treatment—

22 ‘‘(A) deny any application filed by a person

23 of that foreign country, or
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1 ‘‘(B) prohibit any acquisition for which a

2 notice is required under paragraph (3) by a

3 person of that foreign country,

4 unless the Commission, in consultation with the Sec5 retary, determines, on the record after notice and

6 hearing, that such denial or prohibition is contrary

7 to the public interest.

8 ‘‘(3) NOTICE REQUIRED TO ACQUIRE BROKER

9 OR DEALER.—

10 ‘‘(A) IN GENERAL.—If the Secretary of the

11 Treasury has published in the Federal Register

12 (and has not rescinded) a notice under para13 graph (1) with respect to a foreign country, no

14 person of that foreign country, acting directly

15 or indirectly, shall acquire control of any reg16 istered broker or dealer unless—

17 ‘‘(i) the Commission has been given

18 notice 60 days in advance of the acquisi19 tion, in such form as the Commission shall

20 prescribe by rule and containing such in21 formation as the Commission requires by

22 rule or order; and

23 ‘‘(ii) the Commission has not prohib24 ited the acquisition.
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1 ‘‘(B) COMMISSION MAY EXTEND 60-DAY

2 PERIOD.—The Commission may, by order, ex3 tend the notice period during which an acquisi4 tion may be prohibited under subparagraph (A)

5 for an additional 180 days.

6 ‘‘(C) EFFECTIVE DATE.—The require7 ments of subparagraph (A) shall apply to any

8 acquisition of control that is completed on or

9 after the date on which the notice under para10 graph (1) is published, irrespective of when the

11 acquisition was initiated.

12 ‘‘(4) REVIEW.—The Secretary of the Treasury

13 may, at any time, and shall, annually, review any

14 notice under paragraph (1) and decide whether that

15 notice should be rescinded.

16 ‘‘(f) NATIONAL TREATMENT DEFINED.—A foreign

17 country accords national treatment to United States bro18 kers and dealers if it offers them the same competitive

19 opportunities (including effective market access) as are

20 available to its domestic brokers and dealers.

21 ‘‘(g) PERSONS OF A FOREIGN COUNTRY DEFINED.—

22 A person of a foreign country is a person that—

23 ‘‘(1) is organized under the laws of that

24 country;
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1 ‘‘(2) has its principal place of business in that

2 country;

3 ‘‘(3) in the case of an individual—

4 ‘‘(A) is a citizen of that country; or

5 ‘‘(B) is domiciled in that country; or

6 ‘‘(4) is directly or indirectly controlled by a per7 son described in paragraph (1), (2), or (3).

8 ‘‘(h) EXERCISE OF DISCRETION.—In exercising dis9 cretion under this section, the Secretary of the Treasury

10 and the Commission shall act in a manner consistent with

11 the obligations of the United States under a bilateral or

12 multilateral agreement governing financial services en13 tered into by the President and approved and implemented

14 by the Congress.’’.

15 SEC. 102. EFFECTUATING THE PRINCIPLE OF NATIONAL

16 TREATMENT FOR INVESTMENT ADVISERS.

17 The Investment Advisers Act of 1940 (12 U.S.C.

18 80b–1 et seq.) is amended by adding at the end the follow19 ing new section:

20 ‘‘NATIONAL TREATMENT

21 ‘‘SEC. 223. (a) PURPOSE.—This section is intended

22 to encourage foreign countries to accord national treat23 ment to United States investment advisers that operate

24 or seek to operate in those countries, and thereby end dis25 crimination against United States investment advisers.
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1 ‘‘(b) REPORTS REQUIRED.—The Secretary of the

2 Treasury shall, not later than December 1, 1994, and bi3 ennially thereafter, submit to the Congress a report—

4 ‘‘(1) identifying any foreign country—

5 ‘‘(A) that does not accord national treat6 ment to United States investment advisers; and

7 ‘‘(B) with respect to which no notice under

8 subsection (e)(1) is in effect;

9 ‘‘(2) explaining why the Secretary has not pub10 lished, or has rescinded, such a notice with respect

11 to that country; and

12 ‘‘(3) describing the results of any negotiations

13 conducted pursuant to subsection (d)(1) with respect

14 to that country.

15 ‘‘(c) DISCRETIONARY DETERMINATIONS.—The Sec16 retary may, at any time, publish in the Federal Register

17 a determination that a foreign country does not accord

18 national treatment to United States investment advisers.

19 ‘‘(d) NEGOTIATIONS REQUIRED.—

20 ‘‘(1) IN GENERAL.—The Secretary of the

21 Treasury shall initiate negotiations with any foreign

22 country in which, according to the report under sub23 section (b) or any determination under subsection

24 (c), there is a significant failure to accord national

25 treatment to United States investment advisers, to
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1 ensure that such country accords national treatment

2 to United States brokers or dealers.

3 ‘‘(2) NEGOTIATIONS NOT REQUIRED.—Para4 graph (1) does not require the Secretary of the

5 Treasury to initiate negotiations with a foreign

6 country if the Secretary—

7 ‘‘(A) determines that such negotiations

8 would be fruitless or would impair national eco9 nomic interests; and

10 ‘‘(B) gives written notice of that deter11 mination to the chairman and ranking minority

12 member of the Committee on Banking, Hous13 ing, and Urban Affairs of the Senate and of the

14 Committee on Energy and Commerce of the

15 House of Representatives.

16 ‘‘(e) SANCTIONS.—

17 ‘‘(1) SECRETARY’S NOTICE.—If negotiations

18 pursuant to subsection (d) with a foreign country

19 identified pursuant to subsection (b)(1) or (c) has

20 not attained national treatment for United States

21 investment advisers within 2 years after the date of

22 such identification, the Secretary of the Treasury

23 shall publish in the Federal Register a notice that

24 a foreign country does not accord national treatment
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1 to United States investment advisers and that nego2 tiation has failed to attain such national treatment.

3 ‘‘(2) ACTIONS BY COMMISSION.—If the Sec4 retary of the Treasury has published in the Federal

5 Register (and has not rescinded) a notice under

6 paragraph (1) with respect to a foreign country, the

7 Commission shall, based upon the determination

8 concerning national treatment—

9 ‘‘(A) deny any application filed by a person

10 of that foreign country, or

11 ‘‘(B) prohibit any acquisition for which a

12 notice is required under paragraph (3) by a

13 person of that foreign country,

14 unless the Commission, in consultation with the Sec15 retary, determines, on the record after notice and

16 hearing, that such denial or prohibition is contrary

17 to the public interest.

18 ‘‘(3) NOTICE REQUIRED TO ACQUIRE INVEST19 MENT ADVISER.—

20 ‘‘(A) IN GENERAL.—If the Secretary of the

21 Treasury has published in the Federal Register

22 (and has not rescinded) a notice under para23 graph (1) with respect to a foreign country, no

24 person of that foreign country, acting directly
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1 or indirectly, shall acquire control of any reg2 istered investment adviser unless—

3 ‘‘(i) the Commission has been given

4 notice 60 days in advance of the acquisi5 tion, in such form as the Commission shall

6 prescribe by rule and containing such in7 formation as the Commission requires by

8 rule or order; and

9 ‘‘(ii) the Commission has not prohib10 ited the acquisition.

11 ‘‘(B) COMMISSION MAY EXTEND 60-DAY

12 PERIOD.—The Commission may, by order, ex13 tend the notice period during which an acquisi14 tion may be prohibited under subparagraph (A)

15 for an additional 180 days.

16 ‘‘(C) EFFECTIVE DATE.—The require17 ments of subparagraph (A) shall apply to any

18 acquisition of control that is completed on or

19 after the date on which the notice under para20 graph (1) is published, irrespective of when the

21 acquisition was initiated.

22 ‘‘(4) REVIEW.—The Secretary of the Treasury

23 may, at any time, and shall, annually, review any

24 notice under paragraph (1) and decide whether that

25 notice should be rescinded.
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1 ‘‘(f) NATIONAL TREATMENT DEFINED.—A foreign

2 country accords national treatment to United States in3 vestment advisers if it offers them the same competitive

4 opportunities (including effective market access) as are

5 available to its domestic investment advisers.

6 ‘‘(g) PERSONS OF A FOREIGN COUNTRY DEFINED.—

7 A person of a foreign country is a person that—

8 ‘‘(1) is organized under the laws of that coun9 try;

10 ‘‘(2) has its principal place of business in that

11 country;

12 ‘‘(3) in the case of an individual—

13 ‘‘(A) is a citizen of that country; or

14 ‘‘(B) is domiciled in that country; or

15 ‘‘(4) is directly or indirectly controlled by a per16 son described in paragraph (1), (2), or (3).

17 ‘‘(h) EXERCISE OF DISCRETION.—In exercising dis18 cretion under this section, the Secretary of the Treasury

19 and the Commission shall act in a manner consistent with

20 the obligations of the United States under a bilateral or

21 multilateral agreement governing financial services en22 tered into by the President and approved and implemented

23 by the Congress.’’.
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1 SEC. 103. FINANCIAL INTERDEPENDENCE STUDY.

2 (a) INVESTIGATION REQUIRED.—The Securities and

3 Exchange Commission, in consultation and coordination

4 with the Secretary of the Treasury, and any other appro5 priate Federal agency or department to be designated by

6 the Securities and Exchange Commission, shall conduct

7 an investigation to determine the extent of the inter8 dependence of the securities industry and related financial

9 services sector of the United States and foreign countries,

10 and the economic, strategic, and other consequences of

11 that interdependence for the United States.

12 (b) REPORT.—The Securities and Exchange Commis13 sion shall transmit a report on the results of the investiga14 tion under subsection (a) within 2 years after the date

15 of enactment of this section to the President, the Con16 gress, the Secretary of the Treasury, and any other appro17 priate Federal agency or department as designated by the

18 Securities and Exchange Commission. The report shall—

19 (1) describe the activities and estimate the

20 scope of securities and related financial activities

21 conducted by United States firms in foreign mar22 kets (differentiated according to major foreign mar23 kets);

24 (2) describe the activities and estimate the

25 scope of securities and related financial activities

26 conducted by foreign firms in the United States (dif-
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1 ferentiated according to the most significant home

2 countries or groups of home countries);

3 (3) estimate the number of jobs created in the

4 United States by securities and related financial ac5 tivities conducted by foreign firms and the number

6 of jobs created in foreign countries by securities and

7 related financial activities conducted by United

8 States firms;

9 (4) estimate the additional jobs and revenues

10 (both foreign and domestic) that would be created

11 by the securities and related financial activities of

12 United States firms in foreign countries if those

13 countries offered such firms the same competitive

14 opportunities (including effective market access) as

15 are available to those countries’ domestic firms;

16 (5) describe the extent to which foreign firms

17 engaged in securities and related financial services

18 activities discriminate against United States persons

19 in procurement, employment, providing credit, or

20 other securities or related financial services, or oth21 erwise;

22 (6) describe the extent to which foreign firms

23 and other persons from foreign countries purchase

24 or otherwise facilitate the marketing from the Unit-
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1 ed States of government and private debt instru2 ments and private equity instruments;

3 (7) describe how the interdependence of the se4 curities industry and related financial services sec5 tors of the United States and foreign countries af6 fects the autonomy and effectiveness of United

7 States monetary policy;

8 (8) describe the extent to which United States

9 companies rely on financing by or through foreign

10 firms, and the consequences of such reliance (includ11 ing disclosure of proprietary information) for the in12 dustrial competitiveness and national security of the

13 United States;

14 (9) describe the extent to which foreign firms

15 engaged in securities and related financial services

16 activities, in purchasing high technology products

17 such as computers and telecommunications equip18 ment, favor manufacturers from their home coun19 tries over United States manufacturers; and

20 (10) contain other appropriate information re21 lating to the results of the investigation under sub22 section (a).
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1 TITLE II—TELECOMMUNICA2 TIONS PRODUCTS AND SERV3 ICES

4 SEC. 201. EFFECTUATING THE PRINCIPLE OF NATIONAL

5 TREATMENT FOR PROVIDERS OF TELE6 COMMUNICATIONS PRODUCTS AND SERV7 ICES.

8 The Communications Act of 1934 (47 U.S.C. 151 et

9 seq.) is amended by inserting after section 8 the following

10 new section:

11 ‘‘NATIONAL TREATMENT

12 ‘‘SEC. 9. (a) PURPOSE.—This section is intended to

13 encourage foreign countries to accord national treatment

14 to United States providers of telecommunications products

15 and services that operate or seek to operate in those coun16 tries, and thereby end discrimination against United

17 States providers of telecommunications products and serv18 ices.

19 ‘‘(b) NOTICE.—If—

20 ‘‘(1) by the conclusion of the negotiating period

21 determined under section 1376(c) of the Omnibus

22 Trade and Competitiveness Act of 1988, the Presi23 dent is unable to enter into an agreement under sub24 title A of title I of such Act which achieves the gen25 eral negotiating objectives described in section
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1 1375(b) of that Act (as defined by the specific objec2 tives established by the President for that country);

3 or

4 ‘‘(2) the United States Trade Representative

5 has determined, under section 1377(a)(2) of that

6 Act, that any act, policy, or practice of a foreign

7 country that has entered into an agreement de8 scribed in section 1377(a)(1) of that Act—

9 ‘‘(A) is not in compliance with the terms of

10 such agreement, or

11 ‘‘(B) otherwise denies, within the context

12 of the terms of such agreement, to tele13 communications products and services of Unit14 ed States firms mutually advantageous market

15 opportunities in that foreign country;

16 the United States Trade Representative shall publish a no17 tice in the Federal Register identifying the foreign country

18 and stating the objective which was not achieved (as de19 scribed in paragraph (1)) or the act, policy, or practice

20 which is not in such compliance or which denies such mar21 ket opportunities (as described in paragraph (2)).

22 ‘‘(c) ACTIONS BY COMMISSION.—If the United States

23 Trade Representative has published in the Federal Reg24 ister (and has not rescinded) a notice under subsection

25 (b) with respect to a foreign country, the Commission
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1 shall, based upon the failure to negotiate or the act, policy,

2 or practice identified in such notice, deny any application

3 filed by a person of that foreign country, unless the Com4 mission, in consultation with the United States Trade

5 Representative, determines, on the record after notice and

6 hearing, that such denial is contrary to the public interest.

7 ‘‘(d) APPLICATIONS SUBJECT TO EVALUATION.—The

8 applications referred to in subsection (c) include—

9 ‘‘(1) any license or other application, request

10 for authorization or waiver, notice, tariff, or other

11 document required to be filed for approval by the

12 Commission under this Act; and

13 ‘‘(2) in the case of equipment subject to type

14 acceptance or type approval, any certification or

15 other document required to be submitted to the

16 Commission.

17 ‘‘(e) REVIEW.—The United States Trade Representa18 tive may, at any time, and shall, annually, review any no19 tice under subsection (b) and decide whether that notice

20 should be rescinded.

21 ‘‘(f) DEFINITION.—A person of a foreign country is

22 a person that—

23 ‘‘(1) is organized under the laws of that coun24 try;
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1 ‘‘(2) has its principal place of business in that

2 country;

3 ‘‘(3) in the case of an individual—

4 ‘‘(A) is a citizen of that country; or

5 ‘‘(B) is domiciled in that country; or

6 ‘‘(4) is directly or indirectly controlled by a per7 son described in paragraph (1), (2), or (3).’’.

8 SEC. 202. NATIONAL TREATMENT WITH RESPECT TO EX9 TENSION OF LINES.

10 Section 214 of the Communications Act of 1934 (47

11 U.S.C. 214) is amended by adding at the end the following

12 new subsection:

13 ‘‘(e)(1) In making a determination of the public con14 venience and necessity with respect to an application filed

15 under this section, the Commission shall take into ac16 count—

17 ‘‘(A) for each country identified in the applica18 tion, whether carriers whose principal place of busi19 ness is the United States have equivalent oppor20 tunity to provide telecommunications services in

21 such country as the applicant seeks in the United

22 States; and

23 ‘‘(B) whether the country that is the principal

24 place of business of the applicant affords to carriers

25 whose principal place of business is the United
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1 States opportunity to provide telecommunications

2 services that are comparable to the opportunity the

3 applicant seeks in the United States.

4 ‘‘(2) The Commission may, if it determines under

5 subparagraph (A) or (B) of paragraph (1) that there is

6 not equivalent or comparable opportunity to provide tele7 communications services, find that granting such applica8 tion is not in the public interest.’’.

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