Calendar No. 385

103D CONGRESS

2D SESSION S. 1527

[Report No. 103–235]

A BILL

M

To provide for fair trade in financial services.

ARCH 15 (legislative day, FEBRUARY 22), 1994

Reported with an amendment
II

Calendar No. 385

103D CONGRESS

2D SESSION S. 1527

[Report No. 103–235]

To provide for fair trade in financial services.

IN THE SENATE OF THE UNITED STATES

OCTOBER 7 (legislative day, SEPTEMBER 27), 1993

Mr. RIEGLE (for himself, Mr. D’AMATO, Mr. BRYAN, Mr. KERRY, Mr. DOMENICI, Mr. SASSER, Mr. SHELBY, Mr. CAMPBELL, Mrs. BOXER, Mrs.

MURRAY, Mr. SARBANES, Mr. BOND, and Mr. LAUTENBERG) introduced

the following bill; which was read twice and referred to the Committee

on Banking, Housing, and Urban Affairs

MARCH 15 (legislative day, FEBRUARY 22), 1994

Reported by Mr. RIEGLE, with an amendment

[Strike out all after the enacting clause and insert the part printed in italic]

A BILL

To provide for fair trade in financial services.

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; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Fair Trade in Financial Services Act of 1993’’.
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1 (b) TABLE OF CONTENTS.—The table of contents for

2 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Effectuating the principle of national treatment for banking organizations.

Sec. 3. Effectuating the principle of national treatment for securities organizations.

Sec. 4. Financial interdependence study.

Sec. 5. Conforming amendments.

3 SEC. 2. EFFECTUATING THE PRINCIPLE OF NATIONAL

4 TREATMENT FOR BANKING ORGANIZATIONS.

5 The International Banking Act of 1978 (12 U.S.C.

6 3101 et seq.) is amended by adding at the end the follow7 ing new section:

8 ‘‘SEC. 18. NATIONAL TREATMENT.

9 ‘‘(a) PURPOSE.—The purpose of this section is to en10 courage foreign countries to accord national treatment to

11 United States banking organizations that operate or seek

12 to operate in those countries.

13 ‘‘(b) IDENTIFYING COUNTRIES THAT DENY NA14 TIONAL TREATMENT TO UNITED STATES BANKS OR

15 BANK HOLDING COMPANIES.—The Secretary shall iden16 tify the extent to which foreign countries deny national

17 treatment to United States banking organizations—

18 ‘‘(1) according to the most recent report under

19 section 3602 of the Omnibus Trade and Competi20 tiveness Act of 1988 (or update thereof); or

21 ‘‘(2) based on more recent information that the

22 Secretary deems appropriate.
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1 ‘‘(c) DETERMINING WHETHER DENIAL OF NA2 TIONAL TREATMENT HAS SIGNIFICANT ADVERSE EF3 FECT.—

4 ‘‘(1) IN GENERAL.—The Secretary shall deter5 mine whether the denial of national treatment to

6 United States banking organizations by a foreign

7 country identified under subsection (b) has a signifi8 cant adverse effect on such organizations.

9 ‘‘(2) FACTORS TO BE CONSIDERED.—In deter10 mining whether and to what extent a foreign country

11 denies national treatment to United States banking

12 organizations, and in determining the effect of any

13 such denial on such banking organizations, the Sec14 retary shall consider appropriate factors, including—

15 ‘‘(A) the size of the foreign country’s mar16 kets for the financial services involved, and the

17 extent to which United States banking organi18 zations operate or seek to operate in those mar19 kets;

20 ‘‘(B) the extent to which United States

21 banking organizations may participate in devel22 oping regulations, guidelines, or other policies

23 regarding new products, services, and markets

24 in the foreign country;
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1 ‘‘(C) the extent to which the foreign coun2 try issues written regulations, guidelines, or

3 other policies applicable to United States bank4 ing organizations operating or seeking to oper5 ate in the foreign country that are—

6 ‘‘(i) prescribed after adequate notice

7 and opportunity for comment;

8 ‘‘(ii) readily available to the public;

9 and

10 ‘‘(iii) prescribed in accordance with

11 objective standards that effectively prevent

12 arbitrary and capricious determinations;

13 ‘‘(D) the extent to which United States

14 banking organizations may offer foreign ex15 change services in the foreign country; and

16 ‘‘(E) the effects of the regulatory policies

17 of the foreign country on—

18 ‘‘(i) the lending policies of the central

19 bank of that country;

20 ‘‘(ii) capital requirements applicable

21 in that country;

22 ‘‘(iii) the regulation of deposit interest

23 rates by that country;
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1 ‘‘(iv) restrictions on the operation and

2 establishment of branches in that country;

3 and

4 ‘‘(v) restrictions on access to auto5 mated teller machine networks in that

6 country.

7 ‘‘(d) DETERMINATION.—

8 ‘‘(1) PUBLICATION.—If the Secretary deter9 mines that the denial of national treatment to

10 United States banking organizations by a foreign

11 country has a significant adverse effect on such or12 ganizations, the Secretary—

13 ‘‘(A) may, after initiating negotiations in

14 accordance with subsection (g), and after con15 sultation with the United States Trade Rep16 resentative, the Secretary of State, and any

17 other department or agency that the Secretary

18 deems appropriate, publish that determination

19 in the Federal Register;

20 ‘‘(B) shall, not less frequently than annu21 ally, in consultation with any department or

22 agency that the Secretary deems appropriate,

23 review each such determination to determine

24 whether it should be rescinded; and
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1 ‘‘(C) shall inform State bank supervisors

2 of the publication of that determination.

3 ‘‘(2) EXCEPTION FOR COUNTRIES THAT ARE

4 PARTIES TO CERTAIN AGREEMENTS GOVERNING FI5 NANCIAL SERVICES.—Paragraph (1) shall not apply

6 to a foreign country to the extent that a determina7 tion under that paragraph with respect to the for8 eign country would permit action to be taken under

9 this section that would be inconsistent with a bilat10 eral or multilateral agreement that governs financial

11 services that the President entered into with that

12 country and the Senate and the House of Represent13 atives approved, before the date of enactment of this

14 section.

15 ‘‘(e) SANCTIONS.—

16 ‘‘(1) ACTION BY FEDERAL BANKING AGENCY.—

17 If a determination under subsection (d)(1) is in ef18 fect with respect to a foreign country and a publica19 tion of that determination has been made in accord20 ance with subsection (d)(1)(A), in evaluating an

21 application or notice filed by a person of that foreign

22 country, the appropriate Federal banking agency—

23 ‘‘(A) shall consider the determination and

24 the conclusions of—
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1 ‘‘(i) the reports required under section

2 3602 of the Omnibus Trade and Competi3 tiveness Act of 1988 (and updates there4 to); and

5 ‘‘(ii) the reports submitted in accord6 ance with subsection (h);

7 ‘‘(B) shall consult with the Secretary con8 cerning such determination and conclusions;

9 and

10 ‘‘(C) may, only with the concurrence of the

11 Secretary, deny the application or disapprove

12 the notice, based on the determination under

13 subsection (d)(1).

14 ‘‘(2) PREVENTING EXISTING ENTITIES FROM

15 BEING USED TO EVADE THIS SECTION.—

16 ‘‘(A) IN GENERAL.—If a determination has

17 been published in accordance with subsection

18 (d)(1)(A) with respect to a foreign country, a

19 bank, foreign bank described in section 8(a),

20 branch, agency, commercial lending company,

21 or other affiliated entity that is a person of that

22 country shall not, without prior approval of the

23 appropriate Federal banking agency, after con24 sultation with the State bank supervisor, di25 rectly or indirectly, in the United States—
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1 ‘‘(i) commence any line of business in

2 which the person was not engaged as of

3 the date the determination was published

4 in the Federal Register; or

5 ‘‘(ii) conduct business from any loca6 tion at which the person did not conduct

7 business as of that date.

8 ‘‘(B) EXCEPTION.—Subparagraph (A)

9 shall not apply with respect to companies de10 scribed in section 2(h)(2) of the Bank Holding

11 Company Act of 1956.

12 ‘‘(f) EXEMPTIONS FROM SANCTIONS.—

13 ‘‘(1) IN GENERAL.—Subsection (e) does not

14 apply to the subsidiaries in the United States of a

15 person of a foreign country if the Secretary deter16 mines that the banking laws and regulations of the

17 foreign country, as actually applied, meet or ex18 ceed—

19 ‘‘(A) the standards for treatment of sub20 sidiaries of United States banking organizations

21 contained in the Second Banking Directive, and

22 in any amendment to the Second Banking Di23 rective, if the Secretary determines that such

24 amendment—
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1 ‘‘(i) does not restrict any operation,

2 activity, or authority to expand any oper3 ation or activity, permitted under those

4 standards, of any subsidiary in the foreign

5 country of any such bank or bank holding

6 company; or

7 ‘‘(ii) is in accordance with national

8 treatment of subsidiaries of such banking

9 organizations; or

10 ‘‘(B) any set of standards that, taken as a

11 whole, is no less favorable to United States

12 banking organizations than the standards re13 ferred to in subparagraph (A).

14 ‘‘(2) STANDARDS FOR EXERCISE OF DISCRE15 TION.—In exercising any discretion under this sub16 section, the Federal banking agencies, after

17 consultation with the Secretary, shall consider, with

18 respect to a bank, foreign bank, branch, agency,

19 commercial lending company, or other affiliated en20 tity that is a person of a foreign country and is op21 erating in the United States—

22 ‘‘(A) the extent to which the foreign coun23 try is progressing toward according national

24 treatment to United States banking organiza25 tions; and
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1 ‘‘(B) whether the foreign country permits

2 United States banking organizations to expand

3 their activities in that country, even if that

4 country determined that the United States did

5 not accord national treatment to the banking

6 organizations of that country.

7 ‘‘(g) NEGOTIATIONS.—

8 ‘‘(1) IN GENERAL.—The Secretary—

9 ‘‘(A) shall initiate negotiations with any

10 foreign country with respect to which a deter11 mination made under subsection (d)(1) is in

12 effect; and

13 ‘‘(B) may initiate negotiations with any

14 foreign country which denies national treatment

15 to United States banking organizations to en16 sure that the foreign country accords national

17 treatment to such organizations.

18 ‘‘(2) EXCEPTIONS.—Paragraph (1) does not re19 quire the Secretary to initiate negotiations with a

20 foreign country if the Secretary—

21 ‘‘(A) determines that the negotiations—

22 ‘‘(i) would be so unlikely to result in

23 progress toward according national treat24 ment to United States banking organiza25 tions as to be a waste of effort; or
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1 ‘‘(ii) would impair the economic inter2 ests of the United States; and

3 ‘‘(B) gives written notice of that deter4 mination to the chairperson and the ranking

5 minority member of the Committee on Banking,

6 Housing, and Urban Affairs of the Senate and

7 of the Committee on Banking, Finance and

8 Urban Affairs of the House of Representatives.

9 ‘‘(h) REPORT.—

10 ‘‘(1) CONTENTS OF REPORT.—Not later than

11 December 1, 1994, and biennially thereafter, the

12 Secretary shall submit to the Congress a report

13 that—

14 ‘‘(A) specifies the foreign countries identi15 fied under subsection (b);

16 ‘‘(B) if a determination under subsection

17 (d)(1) is in effect with respect to the foreign

18 country, provides the reasons therefor;

19 ‘‘(C) if the Secretary has not made or has

20 rescinded such a determination with respect to

21 the foreign country, provides the reasons there22 for;

23 ‘‘(D) describes the results of any negotia24 tions conducted under subsection (g)(1) with

25 the foreign country; and
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1 ‘‘(E) discusses the effectiveness of this sec2 tion in achieving the purpose of this section.

3 ‘‘(2) SUBMISSION OF REPORT.—The report re4 quired by paragraph (1) may be submitted as part

5 of a report or update submitted under section 3602

6 of the Omnibus Trade and Competitiveness Act of

7 1988.

8 ‘‘(i) DEFINITIONS.—For purposes of this section, the

9 following definitions shall apply:

10 ‘‘(1) APPROPRIATE FEDERAL BANKING AGEN11 CY.—The term ‘appropriate Federal banking agen12 cy’—

13 ‘‘(A) in the case of a noninsured State

14 bank or branch, means the Board of Governors

15 of the Federal Reserve System; and

16 ‘‘(B) in any other case, has the same

17 meaning as in section 3 of the Federal Deposit

18 Insurance Act.

19 ‘‘(2) BANKING ORGANIZATION.—The term

20 ‘banking organization’ means a bank, including a

21 branch or subsidiary thereof, or a bank holding com22 pany.

23 ‘‘(3) NATIONAL TREATMENT.—A foreign coun24 try accords ‘national treatment’ to United States

25 banking organizations if it offers them the same
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1 competitive opportunities (including effective market

2 access) as are available to its domestic banking orga3 nizations.

4 ‘‘(4) PERSON OF A FOREIGN COUNTRY.—The

5 term ‘person of a foreign country’ means—

6 ‘‘(A) a person organized under the laws of

7 the foreign country;

8 ‘‘(B) a person that has its principal place

9 of business in the foreign country;

10 ‘‘(C) an individual who is—

11 ‘‘(i) a citizen of the foreign country,

12 or

13 ‘‘(ii) domiciled in the foreign country;

14 and

15 ‘‘(D) a person that is directly or indirectly

16 controlled by a person described in subpara17 graph (A) or (B), or by an individual described

18 in subparagraph (C).

19 ‘‘(5) SECOND BANKING DIRECTIVE.—The term

20 ‘Second Banking Directive’ means the Second Coun21 cil Directive of December 15, 1989, on the Coordi22 nation of Laws, Regulations, and Administrative

23 Provisions Relating to the Taking Up and Pursuit of

24 the Business of Credit Institutions and Amending

25 Directive 77/780/EEC (89/646/EEC).
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1 ‘‘(6) SECRETARY.—The term ‘Secretary’ means

2 the Secretary of the Treasury.’’.

3 SEC. 3. EFFECTUATING THE PRINCIPLE OF NATIONAL

4 TREATMENT FOR SECURITIES ORGANIZA5 TIONS.

6 (a) PURPOSE.—The purpose of this section is to en7 courage foreign countries to accord national treatment to

8 United States securities organizations that operate or seek

9 to operate in those countries.

10 (b) IDENTIFYING COUNTRIES THAT DENY NATIONAL

11 TREATMENT TO UNITED STATES SECURITIES ORGANIZA12 TIONS.—The Secretary shall identify whether and to what

13 extent foreign countries deny national treatment to United

14 States securities organizations—

15 (1) according to the most recent report under

16 section 3602 of the Omnibus Trade and Competi17 tiveness Act of 1988 (or update thereof); or

18 (2) based upon more recent information that

19 the Secretary deems appropriate.

20 (c) DETERMINING WHETHER DENIAL OF NATIONAL

21 TREATMENT HAS SIGNIFICANT ADVERSE EFFECT.—The

22 Secretary shall determine whether the denial of national

23 treatment to United States securities organizations by a

24 foreign country identified under subsection (b) has a sig25 nificant adverse effect on such organizations.
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1 (d) DETERMINATION.—

2 (1) PUBLICATION.—If the Secretary determines

3 that the denial of national treatment to United

4 States securities organizations by a foreign country

5 has a significant adverse effect on such organiza6 tions, the Secretary—

7 (A) may, after initiating negotiations in ac8 cordance with subsection (g), and after con9 sultation with the United States Trade Rep10 resentative, the Secretary of State, and any

11 other department or agency that the Secretary

12 deems appropriate, publish that determination

13 in the Federal Register; and

14 (B) shall, not less frequently than annu15 ally, in consultation with any department or

16 agency that the Secretary deems appropriate,

17 review each such determination to determine

18 whether it should be rescinded.

19 (2) EXCEPTION FOR COUNTRIES THAT ARE

20 PARTIES TO CERTAIN AGREEMENTS GOVERNING FI21 NANCIAL SERVICES.—Paragraph (1) shall not apply

22 to a foreign country to the extent that a determina23 tion under that paragraph with respect to the for24 eign country would permit action to be taken under

25 this section that would be inconsistent with a bilat-
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1 eral or multilateral agreement that governs financial

2 services that the President entered into with that

3 country and the Senate and the House of Represent4 atives approved, before the date of enactment of this

5 section.

6 (e) SANCTIONS.—

7 (1) RECOMMENDATION BY THE SECRETARY.—

8 If a determination under subsection (d)(1) is in ef9 fect with respect to a foreign country, the Secretary

10 may, after consultation with the United States

11 Trade Representative, the Secretary of State, and

12 any other department or agency that the Secretary

13 deems appropriate, and subject to the specific direc14 tion of the President (if any), recommend to the

15 Commission that the Commission deny any applica16 tion or notice filed by a person of that foreign coun17 try.

18 (2) ACTION BY COMMISSION.—If a determina19 tion under subsection (d)(1) is in effect with respect

20 to a foreign country and a publication of that deter21 mination has been made in accordance with sub22 section (d)(1)(A), in evaluating any application or

23 notice filed by a person of that foreign country con24 cerning which the Commission has received a rec-
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1 ommendation from the Secretary under paragraph

2 (1), the Commission—

3 (A) shall consider—

4 (i) the recommendation of the Sec5 retary; and

6 (ii) the determination and the conclu7 sions of the reports and updates under sec8 tion 3602 of the Omnibus Trade and Com9 petitiveness Act of 1988 and the reports

10 submitted in accordance with subsection

11 (g);

12 (B) shall consult with the Secretary con13 cerning the determinations and conclusions re14 ferred to in subparagraph (A)(ii); and

15 (C) may deny the application or disapprove

16 the notice, unless the Commission determines

17 that the denial or disapproval would be incon18 sistent with the public interest and the protec19 tion of investors.

20 (3) NOTICE REQUIRED TO ACQUIRE REG21 ISTERED SECURITIES ORGANIZATION.—

22 (A) IN GENERAL.—If a determination

23 under subsection (d)(1) is in effect with respect

24 to a foreign country, no person of that foreign

25 country, acting directly or indirectly, may ac-
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1 quire control of any registered securities organi2 zation, unless—

3 (i) the Commission has been given no4 tice not less than 90 days in advance of

5 the acquisition, in such form as the Com6 mission shall prescribe by rule and contain7 ing such information as the Commission

8 may require by rule or order; and

9 (ii) the Commission has not dis10 approved the notice under paragraph

11 (2)(C).

12 (B) NOTIFYING SECRETARY.—The Com13 mission shall promptly notify the Secretary of

14 any notice received under subparagraph (A).

15 (C) EXTENDING 90-DAY PERIOD.—The

16 Commission may, by order, extend for an addi17 tional 180 days the period during which the

18 Commission may disapprove a notice received

19 under subparagraph (A).

20 (4) STANDARDS FOR EXERCISE OF DISCRE21 TION.—In exercising any discretion under this sub22 section, the Secretary and the Commission shall con23 sider, with respect to a securities organization that

24 is a person of a foreign country and is operating in

25 the United States—
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1 (A) the extent to which the foreign country

2 is progressing toward according national treat3 ment to United States securities organizations;

4 and

5 (B) whether the foreign country permits

6 United States securities organizations to ex7 pand their activities in that country, even if

8 that country determined that the United States

9 did not accord national treatment to securities

10 organizations of that country.

11 (f) NEGOTIATIONS.—

12 (1) IN GENERAL.—The Secretary—

13 (A) shall initiate negotiations with any for14 eign country with respect to which a determina15 tion under subsection (d)(1) is in effect; and

16 (B) may initiate negotiations with any for17 eign country which denies national treatment to

18 United States securities organizations to ensure

19 that the foreign country accords national treat20 ment to such organizations.

21 (2) EXCEPTIONS.—Paragraph (1) does not re22 quire the Secretary to initiate negotiations with a

23 foreign country if the Secretary—

24 (A) determines that the negotiations—
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1 (i) would be so unlikely to result in

2 progress toward according national treat3 ment to United States securities organiza4 tions as to be a waste of effort; or

5 (ii) would impair the economic inter6 ests of the United States; and

7 (B) gives written notice of that determina8 tion to the chairperson and the ranking minor9 ity member of the Committee on Banking,

10 Housing, and Urban Affairs of the Senate and

11 of the Committee of Energy and Commerce of

12 the House of Representatives.

13 (g) REPORT.—

14 (1) CONTENTS OF REPORT.—Not later than

15 December 1, 1994, and biennially thereafter, the

16 Secretary shall submit to the Congress a report

17 that—

18 (A) specifies the foreign countries identi19 fied under subsection (b);

20 (B) if a determination under subsection

21 (d)(1) is in effect with respect to the foreign

22 country, provides the reasons therefor;

23 (C) if the Secretary has not made, or has

24 rescinded, a determination under subsection
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1 (d)(1) with respect to the foreign country, pro2 vides the reasons therefor;

3 (D) describes the results of any negotia4 tions conducted under subsection (f)(1) with the

5 foreign country; and

6 (E) discusses the effectiveness of this sec7 tion in achieving the purpose of this section.

8 (2) SUBMISSION OF REPORT.—The report re9 quired by paragraph (1) may be submitted as part

10 of a report or update submitted under section 3602

11 of the Omnibus Trade and Competitiveness Act of

12 1988.

13 (h) DEFINITIONS.—For purposes of this section, the

14 following definitions shall apply:

15 (1) BROKER.—The term ‘‘broker’’ has the same

16 meaning as in section 3(a)(4) of the Securities Ex17 change Act of 1934.

18 (2) DEALER.—The term ‘‘dealer’’ has the same

19 meaning as in section 3(a)(5) of the Securities Ex20 change Act of 1934.

21 (3) COMMISSION.—The term ‘‘Commission’’

22 means the Securities and Exchange Commission.

23 (4) INVESTMENT ADVISER.—The term ‘‘invest24 ment adviser’’ has the same meaning as in section

25 202(a)(11) of the Investment Advisers Act of 1940.
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1 (5) NATIONAL TREATMENT.—A foreign country

2 accords ‘‘national treatment’’ to United States secu3 rities organizations if it offers them the same com4 petitive opportunities (including effective market ac5 cess) as are available to its domestic securities orga6 nizations.

7 (6) PERSON OF A FOREIGN COUNTRY.—The

8 term ‘‘person of a foreign country’’ means—

9 (A) a person organized under the laws of

10 the foreign country;

11 (B) a person that has its principal place of

12 business in the foreign country;

13 (C) an individual who is—

14 (i) a citizen of the foreign country; or

15 (ii) domiciled in the foreign country;

16 and

17 (D) a person that is directly or indirectly

18 controlled by a person described in subpara19 graph (A) or (B), or by an individual described

20 in subparagraph (C).

21 (7) SECRETARY.—The term ‘‘Secretary’’ means

22 the Secretary of the Treasury.

23 (8) SECURITIES ORGANIZATION.—The term

24 ‘‘securities organization’’ means a broker, a dealer,

25 or an investment adviser.
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1 (i) OTHER AUTHORITY NOT AFFECTED.—This sec2 tion does not limit the authority of the Commission, the

3 Secretary, or any other department or agency under any

4 other provision of Federal law.

5 SEC. 4. FINANCIAL INTERDEPENDENCE STUDY.

6 Subtitle G of title III of the Omnibus Trade and

7 Competitiveness Act of 1988 (22 U.S.C. 5351 et seq.) is

8 amended by adding at the end the following new section:

9 ‘‘SEC. 3605. FINANCIAL INTERDEPENDENCE STUDY.

10 ‘‘(a) INVESTIGATION REQUIRED.—The Secretary, in

11 consultation and coordination with the Securities and Ex12 change Commission, the Federal banking agencies, and

13 any other appropriate Federal department or agency des14 ignated by the Secretary, shall conduct an investigation

15 to determine—

16 ‘‘(1) the extent of the interdependence of the fi17 nancial services sectors of the United States and for18 eign countries—

19 ‘‘(A) whose financial services institutions

20 provide financial services in the United States;

21 or

22 ‘‘(B) whose persons have substantial own23 ership interests in United States financial serv24 ices institutions; and
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1 ‘‘(2) the economic, strategic, and other con2 sequences of that interdependence for the United

3 States.

4 ‘‘(b) REPORT.—

5 ‘‘(1) REPORT REQUIRED.—Not later than 3

6 years after the date of enactment of this section, the

7 Secretary shall submit a report on the results of the

8 investigation under subsection (a) to the President,

9 the Congress, the Securities and Exchange Commis10 sion, the Federal banking agencies, and any other

11 appropriate Federal agency or department, as des12 ignated by the Secretary.

13 ‘‘(2) CONTENTS OF REPORT.—The report re14 quired under paragraph (1) shall—

15 ‘‘(A) describe the activities and estimate

16 the scope of financial services activities con17 ducted by United States financial services insti18 tutions in foreign markets (differentiated ac19 cording to major foreign markets);

20 ‘‘(B) describe the activities and estimate

21 the scope of financial services activities con22 ducted by foreign financial services institutions

23 in the United States (differentiated according

24 to the most significant home countries or

25 groups of home countries);
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1 ‘‘(C) estimate the number of jobs created

2 in the United States by financial services activi3 ties conducted by foreign financial services in4 stitutions and the number of jobs created in

5 foreign countries by financial service activities

6 conducted by United States financial services

7 institutions;

8 ‘‘(D) estimate the additional jobs and reve9 nues (both foreign and domestic) that would be

10 created by the activities of United States finan11 cial services institutions in foreign countries if

12 those countries offered such institutions the

13 same competitive opportunities (including effec14 tive market access) as are available to the do15 mestic financial services institutions of those

16 countries;

17 ‘‘(E) describe the extent to which foreign

18 financial services institutions discriminate

19 against United States persons in procurement,

20 employment, the provision of credit or other fi21 nancial services, or otherwise;

22 ‘‘(F) describe the extent to which foreign

23 financial services institutions and other persons

24 from foreign countries purchase or otherwise fa25 cilitate the marketing from the United States of
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1 government and private debt instruments and

2 private equity instruments;

3 ‘‘(G) describe how the interdependence of

4 the financial services sectors of the United

5 States and foreign countries affects the auton6 omy and effectiveness of United States mone7 tary policy;

8 ‘‘(H) describe the extent to which United

9 States companies rely on financing by or

10 through foreign financial services institutions

11 and the consequences of such reliance (includ12 ing disclosure of proprietary information) for

13 the industrial competitiveness and national se14 curity of the United States;

15 ‘‘(I) describe the extent to which foreign fi16 nancial services institutions, in purchasing high

17 technology products such as computers and

18 telecommunications equipment, favor manufac19 turers from their home countries over United

20 States manufacturers; and

21 ‘‘(J) contain other appropriate information

22 relating to the results of the investigation re23 quired by subsection (a).

24 ‘‘(c) DEFINITIONS.—For purposes of this section the

25 following definitions shall apply:
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1 ‘‘(1) DEPOSITORY INSTITUTION AND DEPOSI2 TORY INSTITUTION HOLDING COMPANY.—The terms

3 ‘depository institution’ and ‘depository institution

4 holding company’ have the same meanings as in sec5 tion 3 of the Federal Deposit Insurance Act.

6 ‘‘(2) FEDERAL BANKING AGENCY.—The term

7 ‘Federal banking agencies’ has the same meaning as

8 in section 3 of the Federal Deposit Insurance Act.

9 ‘‘(3) FINANCIAL SERVICES INSTITUTION.—The

10 term ‘financial services institution’ means—

11 ‘‘(A) a broker, dealer, underwriter, clearing

12 agency, transfer agent, or information processor

13 with respect to securities, including government

14 and municipal securities;

15 ‘‘(B) an investment company, investment

16 manager, investment adviser, indenture trustee,

17 or any depository institution, insurance com18 pany, or other organization operating as a fidu19 ciary, trustee, underwriter, or other financial

20 services provider;

21 ‘‘(C) any depository institution or deposi22 tory institution holding company; and

23 ‘‘(D) any other entity providing financial

24 services.
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1 ‘‘(4) SECRETARY.—The term ‘Secretary’ means

2 the Secretary of the Treasury.’’.

3 SEC. 5. CONFORMING AMENDMENTS.

4 (a) REPORTS ON FOREIGN TREATMENT OF UNITED

5 STATES FINANCIAL INSTITUTIONS.—Section 3602 of the

6 Omnibus Trade and Competitiveness Act of 1988 (22

7 U.S.C. 5352) is amended—

8 (1) in the first sentence, by inserting ‘‘with up9 dates on significant developments every 2 years fol10 lowing the study conducted in 1994,’’ before ‘‘the

11 Secretary of the Treasury’’; and

12 (2) by adding at the end the following: ‘‘For

13 purposes of this section, a foreign country denies na14 tional treatment to United States entities unless the

15 foreign country offers such entities the same com16 petitive opportunities (including effective market ac17 cess) as are available to the domestic entities of the

18 foreign country.’’.

19 (b) NEGOTIATIONS TO PROMOTE FAIR TRADE IN FI20 NANCIAL SERVICES.—Section 3603(a)(1) of the Omnibus

21 Trade and Competitiveness Act of 1988 (22 U.S.C.

22 5353(a)(1)) is amended by inserting ‘‘effective’’ before

23 ‘‘access’’.

24 (c) PRIMARY DEALERS IN GOVERNMENT DEBT IN25 STRUMENTS.—Section 3502(b)(1) of the Omnibus Trade
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1 and Competitiveness Act of 1988 (22 U.S.C. 5342(b)(1))

2 is amended—

3 (1) by striking ‘‘does not accord to’’ and insert4 ing ‘‘does not offer’’; and

5 (2) by striking ‘‘as such country accords to’’

6 and inserting ‘‘(including effective market access) as

7 are available to’’.

8 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

9 (a) SHORT TITLE.—This Act may be cited as the

10 ‘‘Fair Trade in Financial Services Act of 1994’’.

11 (b) TABLE OF CONTENTS.—The table of contents for

12 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Effectuating the principle of national treatment for banking organizations.

Sec. 3. Effectuating the principle of national treatment for securities organizations.

Sec. 4. Financial interdependence study.

Sec. 5. Conforming amendments.

13 SEC. 2. EFFECTUATING THE PRINCIPLE OF NATIONAL

14 TREATMENT FOR BANKING ORGANIZATIONS.

15 The International Banking Act of 1978 (12 U.S.C.

16 3101 et seq.) is amended by adding at the end the following

17 new section:

18 ‘‘SEC. 18. NATIONAL TREATMENT.

19 ‘‘(a) PURPOSE.—The purpose of this section is to en20 courage foreign countries to accord national treatment to

21 United States banking organizations that operate or seek

22 to operate in those countries.
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1 ‘‘(b) IDENTIFYING COUNTRIES THAT DENY NATIONAL

2 TREATMENT TO UNITED STATES BANKS OR BANK HOLD3 ING COMPANIES.—The Secretary shall identify the extent

4 to which foreign countries deny national treatment to Unit5 ed States banking organizations—

6 ‘‘(1) according to the most recent report under

7 section 3602 of the Omnibus Trade and Competitive8 ness Act of 1988 (or update thereof); or

9 ‘‘(2) based on more recent information that the

10 Secretary deems appropriate.

11 ‘‘(c) DETERMINING WHETHER DENIAL OF NATIONAL

12 TREATMENT HAS SIGNIFICANT ADVERSE EFFECT.—

13 ‘‘(1) IN GENERAL.—The Secretary shall deter14 mine whether the denial of national treatment to

15 United States banking organizations by a foreign

16 country identified under subsection (b) has a signifi17 cant adverse effect on such organizations.

18 ‘‘(2) FACTORS TO BE CONSIDERED.—In deter19 mining whether and to what extent a foreign country

20 denies national treatment to United States banking

21 organizations, and in determining the effect of any

22 such denial on such banking organizations, the Sec23 retary shall consider appropriate factors, including—

24 ‘‘(A) the size of the foreign country’s mar25 kets for the financial services involved, and the
31

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1 extent to which United States banking organiza2 tions operate or seek to operate in those markets;

3 ‘‘(B) the extent to which United States

4 banking organizations may participate in devel5 oping regulations, guidelines, or other policies

6 regarding new products, services, and markets in

7 the foreign country;

8 ‘‘(C) the extent to which the foreign country

9 issues written regulations, guidelines, or other

10 policies applicable to United States banking or11 ganizations operating or seeking to operate in

12 the foreign country that are—

13 ‘‘(i) prescribed after adequate notice

14 and opportunity for comment;

15 ‘‘(ii) readily available to the public;

16 and

17 ‘‘(iii) prescribed in accordance with

18 objective standards that effectively prevent

19 arbitrary and capricious determinations;

20 ‘‘(D) the extent to which United States

21 banking organizations may offer foreign ex22 change services in the foreign country; and

23 ‘‘(E) the effects of the regulatory policies of

24 the foreign country on—
32

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1 ‘‘(i) the lending policies of the central

2 bank of that country;

3 ‘‘(ii) capital requirements applicable

4 in that country;

5 ‘‘(iii) the regulation of deposit interest

6 rates by that country;

7 ‘‘(iv) restrictions on the operation and

8 establishment of branches in that country;

9 and

10 ‘‘(v) restrictions on access to automated

11 teller machine networks in that country.

12 ‘‘(d) PUBLICATION OF DETERMINATION.—

13 ‘‘(1) IN GENERAL.—If the Secretary determines

14 under subsection (c) that the denial of national treat15 ment to United States banking organizations by a

16 foreign country has a significant adverse effect on

17 such organizations, the Secretary—

18 ‘‘(A) may, after initiating negotiations in

19 accordance with subsection (g), and after con20 sultation in accordance with subsection (i), pub21 lish that determination in the Federal Register;

22 ‘‘(B) shall, not less frequently than annu23 ally, in consultation with any department or

24 agency that the Secretary deems appropriate, re-
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1 view each such determination to determine

2 whether it should be rescinded; and

3 ‘‘(C) shall inform State bank supervisors of

4 the publication of that determination.

5 ‘‘(2) EXCEPTION FOR COUNTRIES THAT ARE PAR6 TIES TO CERTAIN AGREEMENTS GOVERNING FINAN7 CIAL SERVICES.—Paragraph (1) shall not apply to a

8 foreign country to the extent that a determination

9 under that paragraph with respect to the foreign

10 country would permit action to be taken under this

11 section that would be inconsistent with a bilateral or

12 multilateral agreement that governs financial services

13 that—

14 ‘‘(A) the President entered into with that

15 country; and

16 ‘‘(B) the Senate and the House of Rep17 resentatives approved;

18 before the date of enactment of this section.

19 ‘‘(e) SANCTIONS.—

20 ‘‘(1) ACTION BY SECRETARY OF TREASURY.—

21 ‘‘(A) IN GENERAL.—The Secretary may,

22 after consultation in accordance with subsection

23 (i), recommend to the appropriate Federal bank24 ing agency that such agency deny a request for

25 authorization filed after the date of publication
34

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1 of a determination under subsection (d)(1) by a

2 person of a foreign country listed in such publi3 cation if the Secretary determines that—

4 ‘‘(i) such action would assist the Unit5 ed States in negotiations to eliminate dis6 crimination against United States banking

7 organizations;

8 ‘‘(ii) negotiations undertaken pursuant

9 to subsection (g) are not likely to result in

10 an agreement that eliminates the denial of

11 national treatment; or

12 ‘‘(iii) the country has not adequately

13 adhered to an agreement reached as a result

14 of negotiations undertaken pursuant to sub15 section (g).

16 ‘‘(B) EXERCISE OF AUTHORITY.—The au17 thority of subparagraph (A) shall be exercised

18 according to the specific direction (if any) of the

19 President.

20 ‘‘(C) COMPLIANCE EXCEPTIONS.—The ap21 propriate Federal banking agency shall comply

22 with the recommendation of the Secretary made

23 under subparagraph (A), unless the agency deter24 mines, in writing, and transmits such deter-
35

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1 mination to the Secretary and to the Congress,

2 that such recommendation—

3 ‘‘(i) would likely result in a serious

4 impairment to the safe and sound operation

5 of the United States banking system; or

6 ‘‘(ii) would compromise the ability of a

7 Federal banking agency to resolve a failing

8 or failed financial institution because a for9 eign banking institution otherwise barred

10 by an action under subparagraph (A) rep11 resents the only bona fide reasonable offer

12 available to the Federal banking agency.

13 ‘‘(2) APPLICATION TO EXISTING ENTITIES.—

14 ‘‘(A) IN GENERAL.—If a determination has

15 been published in accordance with subsection

16 (d)(1) with respect to a foreign country, a bank,

17 foreign bank described in section 8(a), branch,

18 agency, commercial lending company, or other

19 affiliated entity that is a person of that country

20 shall not, without prior approval of the appro21 priate Federal banking agency, after consulta22 tion with the State bank supervisor, where ap23 propriate, directly or indirectly, in the United

24 States—
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1 ‘‘(i) commence any line of business in

2 which the person was not engaged as of the

3 date the determination was published in the

4 Federal Register; or

5 ‘‘(ii) conduct business from any loca6 tion at which the person did not conduct

7 business as of that date.

8 ‘‘(B) EXCEPTION.—Subparagraph (A) shall

9 not apply with respect to companies described in

10 section 2(h)(2) of the Bank Holding Company

11 Act of 1956.

12 ‘‘(f) EXEMPTIONS FROM SANCTIONS.—

13 ‘‘(1) IN GENERAL.—Subsection (e) does not

14 apply to the subsidiaries in the United States of a

15 person of a foreign country if the Secretary deter16 mines that the banking laws and regulations of the

17 foreign country, as actually applied, meet or exceed—

18 ‘‘(A) the standards for treatment of subsidi19 aries of United States banking organizations

20 contained in the Second Banking Directive, and

21 in any amendment to the Second Banking Direc22 tive, if the Secretary determines that such

23 amendment—

24 ‘‘(i) does not restrict any operation,

25 activity, or authority to expand any oper-
37

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1 ation or activity, permitted under those

2 standards, of any subsidiary in the foreign

3 country of any such bank or bank holding

4 company; or

5 ‘‘(ii) is in accordance with national

6 treatment of subsidiaries of such banking

7 organizations; or

8 ‘‘(B) any set of standards that, taken as a

9 whole, is no less favorable to United States bank10 ing organizations than the standards referred to

11 in subparagraph (A).

12 ‘‘(2) STANDARDS FOR EXERCISE OF DISCRE13 TION.—In exercising any discretion under this sub14 section, the Secretary shall consider, with respect to

15 a bank, foreign bank, branch, agency, commercial

16 lending company, or other affiliated entity that is a

17 person of a foreign country and that is operating in

18 the United States—

19 ‘‘(A) the extent to which the foreign country

20 is progressing toward according national treat21 ment to United States banking organizations;

22 and

23 ‘‘(B) whether the foreign country permits

24 United States banking organizations to expand

25 their activities in that country, even if that
38

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1 country determined that the United States did

2 not accord national treatment to the banking or3 ganizations of that country.

4 ‘‘(g) NEGOTIATIONS.—

5 ‘‘(1) IN GENERAL.—The Secretary—

6 ‘‘(A) shall initiate negotiations with any

7 foreign country with respect to which a deter8 mination made under subsection (c)(1) is in

9 effect; and

10 ‘‘(B) may initiate negotiations with any

11 foreign country which denies national treatment

12 to United States banking organizations to ensure

13 that the foreign country accords national treat14 ment to such organizations.

15 ‘‘(2) EXCEPTIONS.—Paragraph (1) does not re16 quire the Secretary to initiate negotiations with a for17 eign country if the Secretary—

18 ‘‘(A) determines that the negotiations—

19 ‘‘(i) would be so unlikely to result in

20 progress toward according national treat21 ment to United States banking organiza22 tions as to be a waste of effort; or

23 ‘‘(ii) would impair the economic inter24 ests of the United States; and
39

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1 ‘‘(B) gives written notice of that determina2 tion to the chairperson and the ranking minority

3 member of the Committee on Banking, Housing,

4 and Urban Affairs of the Senate and of the Com5 mittee on Banking, Finance and Urban Affairs

6 of the House of Representatives.

7 ‘‘(h) REPORT.—

8 ‘‘(1) CONTENTS OF REPORT.—Not later than De9 cember 1, 1994, and biennially thereafter, the Sec10 retary shall submit to the Congress a report that—

11 ‘‘(A) specifies the foreign countries identi12 fied under subsection (b);

13 ‘‘(B) if a determination is published under

14 subsection (d)(1) with respect to the foreign

15 country, provides the reasons therefor;

16 ‘‘(C) if the Secretary has not made or has

17 rescinded such a determination with respect to

18 the foreign country, provides the reasons therefor;

19 ‘‘(D) describes the results of any negotia20 tions conducted under subsection (g)(1) with the

21 foreign country; and

22 ‘‘(E) discusses the effectiveness of this sec23 tion in achieving the purpose of this section.

24 ‘‘(2) SUBMISSION OF REPORT.—The report re25 quired by paragraph (1) may be submitted as part of
40

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1 a report or update submitted under section 3602 of

2 the Omnibus Trade and Competitiveness Act of 1988.

3 ‘‘(i) CONSULTATION.—Consultation in accordance

4 with this subsection means consultation with the Secretary

5 of State, the Secretary of Commerce, the United States

6 Trade Representative, and the appropriate Federal banking

7 agency.

8 ‘‘(j) DEFINITIONS.—For purposes of this section, the

9 following definitions shall apply:

10 ‘‘(1) APPROPRIATE FEDERAL BANKING AGEN11 CY.—The term ‘appropriate Federal banking agen12 cy’—

13 ‘‘(A) in the case of a noninsured State bank

14 or branch and a representative office of a foreign

15 bank, means the Board of Governors of the Fed16 eral Reserve System; and

17 ‘‘(B) in any other case, has the same mean18 ing as in section 3 of the Federal Deposit Insur19 ance Act.

20 ‘‘(2) BANKING ORGANIZATION.—The term ‘bank21 ing organization’ means—

22 ‘‘(A) a depository institution, as defined in

23 section 3 of the Federal Deposit Insurance Act,

24 including a branch or subsidiary thereof;
41

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1 ‘‘(B) a bank holding company, as defined in

2 section 2 of the Bank Holding Company Act of

3 1956;

4 ‘‘(C) any company required to file informa5 tion pursuant to section 4(f)(6) of the Bank

6 Holding Company Act of 1956; and

7 ‘‘(D) a savings and loan holding company,

8 as defined in section 10(a)(1)(D) of the Home

9 Owners’ Loan Act.

10 ‘‘(3) NATIONAL TREATMENT.—A foreign country

11 accords ‘national treatment’ to United States banking

12 organizations if it offers them the same competitive

13 opportunities (including effective market access) as

14 are available to its domestic banking organizations.

15 ‘‘(4) PERSON OF A FOREIGN COUNTRY.—The

16 term ‘person of a foreign country’ means—

17 ‘‘(A) a person organized under the laws of

18 the foreign country;

19 ‘‘(B) a person that has its principal place

20 of business in the foreign country;

21 ‘‘(C) an individual who is—

22 ‘‘(i) a citizen of the foreign country, or

23 ‘‘(ii) domiciled in the foreign country;

24 and
42

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1 ‘‘(D) a person that is directly or indirectly

2 controlled by a person or persons described in

3 subparagraph (A) or (B), or by an individual or

4 individuals described in subparagraph (C).

5 ‘‘(5) REQUEST FOR AUTHORIZATION.—The term

6 ‘request for authorization’—

7 ‘‘(A) means an application, registration,

8 notice, or other request to commence a financial

9 service or establish a financial services office that

10 is required under title LXII of the Revised Stat11 utes, the International Banking Act of 1978, the

12 Federal Reserve Act, the Home Owners’ Loan

13 Act, or the Bank Holding Company Act of 1956;

14 and

15 ‘‘(B) does not include any such request by

16 a company described in section 2(h)(2) of the

17 Bank Holding Company Act of 1956.

18 ‘‘(6) SECOND BANKING DIRECTIVE.—The term

19 ‘Second Banking Directive’ means the Second Council

20 Directive of December 15, 1989, on the Coordination

21 of Laws, Regulations, and Administrative Provisions

22 Relating to the Taking Up and Pursuit of the Busi23 ness of Credit Institutions and Amending Directive

24 77/780/EEC (89/646/EEC).
43

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1 ‘‘(7) SECRETARY.—The term ‘Secretary’ means

2 the Secretary of the Treasury.’’.

3 SEC. 3. EFFECTUATING THE PRINCIPLE OF NATIONAL

4 TREATMENT FOR SECURITIES ORGANIZA5 TIONS.

6 (a) PURPOSE.—The purpose of this section is to en7 courage foreign countries to accord national treatment to

8 United States securities organizations that operate or seek

9 to operate in those countries.

10 (b) IDENTIFYING COUNTRIES THAT DENY NATIONAL

11 TREATMENT TO UNITED STATES SECURITIES ORGANIZA12 TIONS.—The Secretary shall identify whether and to what

13 extent foreign countries deny national treatment to United

14 States securities organizations—

15 (1) according to the most recent report under sec16 tion 3602 of the Omnibus Trade and Competitiveness

17 Act of 1988 (or update thereof); or

18 (2) based upon more recent information that the

19 Secretary deems appropriate.

20 (c) DETERMINING WHETHER DENIAL OF NATIONAL

21 TREATMENT HAS SIGNIFICANT ADVERSE EFFECT.—The

22 Secretary shall determine whether the denial of national

23 treatment to United States securities organizations by a

24 foreign country identified under subsection (b) has a sig25 nificant adverse effect on such organizations.
44

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1 (d) PUBLICATION OF DETERMINATION.—

2 (1) IN GENERAL.—If the Secretary determines

3 under subsection (c) that the denial of national treat4 ment to United States securities organizations by a

5 foreign country has a significant adverse effect on

6 such organizations, the Secretary—

7 (A) may, after initiating negotiations in

8 accordance with subsection (g), and after con9 sultation in accordance with subsection (h), pub10 lish that determination in the Federal Register;

11 and

12 (B) shall, not less frequently than annually,

13 in consultation with any department or agency

14 that the Secretary deems appropriate, review

15 each such determination to determine whether it

16 should be rescinded.

17 (2) EXCEPTION FOR COUNTRIES THAT ARE PAR18 TIES TO CERTAIN AGREEMENTS GOVERNING FINAN19 CIAL SERVICES.—Paragraph (1) shall not apply to a

20 foreign country to the extent that a determination

21 under that paragraph with respect to the foreign

22 country would permit action to be taken under this

23 section that would be inconsistent with a bilateral or

24 multilateral agreement that governs financial services

25 that the President entered into with that country and
45

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1 the Senate and the House of Representatives approved

2 before the date of enactment of this section.

3 (e) SANCTIONS.—

4 (1) ACTION BY SECRETARY OF TREASURY.—

5 (A) IN GENERAL.—The Secretary may, after

6 consultation in accordance with subsection (h),

7 recommend to the Commission that the Commis8 sion deny a request for authorization filed after

9 the date of publication of a determination under

10 subsection (d)(1) by a person of a foreign coun11 try listed in such publication if the Secretary de12 termines that—

13 (i) such action would assist the United

14 States in negotiations to eliminate dis15 crimination against United States securi16 ties organizations;

17 (ii) negotiations undertaken pursuant

18 to subsection (f) are not likely to result in

19 an agreement that eliminates the denial of

20 national treatment; or

21 (iii) the country has not adequately

22 adhered to an agreement reached as a result

23 of negotiations undertaken pursuant to sub24 section (f).
46

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1 (B) EXERCISE OF AUTHORITY.—The au2 thority of subparagraph (A) shall be exercised

3 according to the specific direction (if any) of the

4 President.

5 (C) COMPLIANCE EXCEPTIONS.—The Com6 mission shall comply with the recommendation

7 of the Secretary under subparagraph (A), unless

8 the Commission determines, in writing, and

9 transmits such determination to the Secretary

10 and to the Congress, that such recommendation

11 would likely result in a serious adverse impact

12 on—

13 (i) the maintenance of fair and orderly

14 securities markets; or

15 (ii) the protection of investors.

16 (2) NOTICE REQUIRED TO ACQUIRE REGISTERED

17 SECURITIES ORGANIZATION.—

18 (A) IN GENERAL.—If a determination is

19 published under subsection (d)(1) with respect to

20 a foreign country, no person of that foreign

21 country, acting directly or indirectly, may ac22 quire control of any registered securities organi23 zation, unless the Commission has been given no24 tice not less than 90 days in advance of the ac25 quisition, in such form as the Commission shall
47

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1 prescribe by rule and containing such informa2 tion as the Commission may require by rule or

3 order.

4 (B) NOTIFYING SECRETARY.—The Commis5 sion shall promptly notify the Secretary of any

6 notice received under subparagraph (A).

7 (C) EXTENDING 90-DAY PERIOD.—The Com8 mission may, by order, extend for an additional

9 180 days the period during which the Commis10 sion may disapprove a notice received under sub11 paragraph (A).

12 (3) STANDARDS FOR EXERCISE OF DISCRE13 TION.—In exercising any discretion under this sub14 section, the Secretary shall consider, with respect to

15 a securities organization that is a person of a foreign

16 country and that is operating in the United States—

17 (A) the extent to which the foreign country

18 is progressing toward according national treat19 ment to United States securities organizations;

20 and

21 (B) whether the foreign country permits

22 United States securities organizations to expand

23 their activities in that country, even if that

24 country determined that the United States did
48

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1 not accord national treatment to securities orga2 nizations of that country.

3 (f) NEGOTIATIONS.—

4 (1) IN GENERAL.—The Secretary—

5 (A) shall initiate negotiations with any for6 eign country with respect to which a determina7 tion under subsection (c)(1) is in effect; and

8 (B) may initiate negotiations with any for9 eign country which denies national treatment to

10 United States securities organizations to ensure

11 that the foreign country accords national treat12 ment to such organizations.

13 (2) EXCEPTIONS.—Paragraph (1) does not re14 quire the Secretary to initiate negotiations with a for15 eign country if the Secretary—

16 (A) determines that the negotiations—

17 (i) would be so unlikely to result in

18 progress toward according national treat19 ment to United States securities organiza20 tions as to be a waste of effort; or

21 (ii) would impair the economic inter22 ests of the United States; and

23 (B) gives written notice of that determina24 tion to the chairperson and the ranking minority

25 member of the Committee on Banking, Housing,
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1 and Urban Affairs of the Senate and of the Com2 mittee on Energy and Commerce of the House of

3 Representatives.

4 (g) REPORT.—

5 (1) CONTENTS OF REPORT.—Not later than De6 cember 1, 1994, and biennially thereafter, the Sec7 retary shall submit to the Congress a report that—

8 (A) specifies the foreign countries identified

9 under subsection (b);

10 (B) if a determination is published under

11 subsection (d)(1) with respect to the foreign

12 country, provides the reasons therefor;

13 (C) if the Secretary has not made, or has

14 rescinded, a determination under subsection

15 (d)(1) with respect to the foreign country, pro16 vides the reasons therefor;

17 (D) describes the results of any negotiations

18 conducted under subsection (f)(1) with the for19 eign country; and

20 (E) discusses the effectiveness of this section

21 in achieving the purpose of this section.

22 (2) SUBMISSION OF REPORT.—The report re23 quired by paragraph (1) may be submitted as part of

24 a report or update submitted under section 3602 of

25 the Omnibus Trade and Competitiveness Act of 1988.
50

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1 (h) CONSULTATION.—Consultation in accordance with

2 this subsection means consultation with the Secretary of

3 State, the Secretary of Commerce, the United States Trade

4 Representative, and the Commission.

5 (i) DEFINITIONS.—For purposes of this section, the fol6 lowing definitions shall apply:

7 (1) BROKER.—The term ‘‘broker’’ has the same

8 meaning as in section 3(a)(4) of the Securities Ex9 change Act of 1934.

10 (2) DEALER.—The term ‘‘dealer’’ has the same

11 meaning as in section 3(a)(5) of the Securities Ex12 change Act of 1934.

13 (3) COMMISSION.—The term ‘‘Commission’’

14 means the Securities and Exchange Commission.

15 (4) INVESTMENT ADVISER.—The term ‘‘invest16 ment adviser’’ has the same meaning as in section

17 202(a)(11) of the Investment Advisers Act of 1940.

18 (5) NATIONAL TREATMENT.—A foreign country

19 accords ‘‘national treatment’’ to United States securi20 ties organizations if it offers them the same competi21 tive opportunities (including effective market access)

22 as are available to its domestic securities organiza23 tions.

24 (6) PERSON OF A FOREIGN COUNTRY.—The term

25 ‘‘person of a foreign country’’ means—
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1 (A) a person organized under the laws of

2 the foreign country;

3 (B) a person that has its principal place of

4 business in the foreign country;

5 (C) an individual who is—

6 (i) a citizen of the foreign country; or

7 (ii) domiciled in the foreign country;

8 and

9 (D) a person that is directly or indirectly

10 controlled by a person described in subparagraph

11 (A) or (B), or by an individual described in sub12 paragraph (C).

13 (7) REQUEST FOR AUTHORIZATION.—The term

14 ‘‘request for authorization’’ means an application,

15 registration, notice, or other request to commence a fi16 nancial service or establish a financial services office

17 that is required under the Investment Company Act

18 of 1940, the Investment Advisers Act of 1940, or the

19 Securities Exchange Act of 1934.

20 (8) SECRETARY.—The term ‘‘Secretary’’ means

21 the Secretary of the Treasury.

22 (9) SECURITIES ORGANIZATION.—The term ‘‘se23 curities organization’’ means a broker, a dealer, or an

24 investment adviser.
52

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1 SEC. 4. FINANCIAL INTERDEPENDENCE STUDY.

2 Subtitle G of title III of the Omnibus Trade and Com3 petitiveness Act of 1988 (22 U.S.C. 5351 et seq.) is amended

4 by adding at the end the following new section:

5 ‘‘SEC. 3605. FINANCIAL INTERDEPENDENCE STUDY.

6 ‘‘(a) INVESTIGATION REQUIRED.—The Secretary, in

7 consultation and coordination with the Securities and Ex8 change Commission, the Federal banking agencies, and any

9 other appropriate Federal department or agency designated

10 by the Secretary, shall conduct an investigation to deter11 mine—

12 ‘‘(1) the extent of the interdependence of the fi13 nancial services sectors of the United States and for14 eign countries—

15 ‘‘(A) whose financial services institutions

16 provide financial services in the United States;

17 or

18 ‘‘(B) whose persons have substantial owner19 ship interests in United States financial services

20 institutions; and

21 ‘‘(2) the economic, strategic, and other con22 sequences of that interdependence for the United

23 States.

24 ‘‘(b) REPORT.—

25 ‘‘(1) REPORT REQUIRED.—Not later than 3

26 years after the date of enactment of this section, the
53

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1 Secretary shall submit a report on the results of the

2 investigation under subsection (a) to the President,

3 the Congress, the Securities and Exchange Commis4 sion, the Federal banking agencies, and any other ap5 propriate Federal agency or department, as des6 ignated by the Secretary.

7 ‘‘(2) CONTENTS OF REPORT.—The report re8 quired under paragraph (1) shall—

9 ‘‘(A) describe the activities and estimate the

10 scope of financial services activities conducted by

11 United States financial services institutions in

12 foreign markets (differentiated according to

13 major foreign markets);

14 ‘‘(B) describe the activities and estimate the

15 scope of financial services activities conducted by

16 foreign financial services institutions in the

17 United States (differentiated according to the

18 most significant home countries or groups of

19 home countries);

20 ‘‘(C) estimate the number of jobs created in

21 the United States by financial services activities

22 conducted by foreign financial services institu23 tions and the number of jobs created in foreign

24 countries by financial service activities con-
54

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1 ducted by United States financial services insti2 tutions;

3 ‘‘(D) estimate the additional jobs and reve4 nues (both foreign and domestic) that would be

5 created by the activities of United States finan6 cial services institutions in foreign countries if

7 those countries offered such institutions the same

8 competitive opportunities (including effective

9 market access) as are available to the domestic

10 financial services institutions of those countries;

11 ‘‘(E) describe the extent to which foreign fi12 nancial services institutions discriminate

13 against United States persons in procurement,

14 employment, the provision of credit or other fi15 nancial services, or otherwise;

16 ‘‘(F) describe the extent to which foreign fi17 nancial services institutions and other persons

18 from foreign countries purchase or otherwise fa19 cilitate the marketing from the United States of

20 government and private debt instruments and

21 private equity instruments;

22 ‘‘(G) describe how the interdependence of the

23 financial services sectors of the United States

24 and foreign countries affects the autonomy and

25 effectiveness of United States monetary policy;
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1 ‘‘(H) describe the extent to which United

2 States companies rely on financing by or

3 through foreign financial services institutions

4 and the consequences of such reliance (including

5 disclosure of proprietary information) for the in6 dustrial competitiveness and national security of

7 the United States;

8 ‘‘(I) describe the extent to which foreign fi9 nancial services institutions, in purchasing high

10 technology products such as computers and tele11 communications equipment, favor manufacturers

12 from their home countries over United States

13 manufacturers; and

14 ‘‘(J) contain other appropriate information

15 relating to the results of the investigation re16 quired by subsection (a).

17 ‘‘(c) DEFINITIONS.—For purposes of this section the

18 following definitions shall apply:

19 ‘‘(1) DEPOSITORY INSTITUTION AND DEPOSITORY

20 INSTITUTION HOLDING COMPANY.—The terms ‘deposi21 tory institution’ and ‘depository institution holding

22 company’ have the same meanings as in section 3 of

23 the Federal Deposit Insurance Act.
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1 ‘‘(2) FEDERAL BANKING AGENCIES.—The term

2 ‘Federal banking agencies’ has the same meaning as

3 in section 3 of the Federal Deposit Insurance Act.

4 ‘‘(3) FINANCIAL SERVICES INSTITUTION.—The

5 term ‘financial services institution’ means—

6 ‘‘(A) a broker, dealer, underwriter, clearing

7 agency, transfer agent, or information processor

8 with respect to securities, including government

9 and municipal securities;

10 ‘‘(B) an investment company, investment

11 manager, investment adviser, indenture trustee,

12 or any depository institution, insurance com13 pany, or other organization operating as a fidu14 ciary, trustee, underwriter, or other financial

15 services provider;

16 ‘‘(C) any depository institution or deposi17 tory institution holding company; and

18 ‘‘(D) any other entity providing financial

19 services.

20 ‘‘(4) SECRETARY.—The term ‘Secretary’ means

21 the Secretary of the Treasury.’’.

22 SEC. 5. CONFORMING AMENDMENTS.

23 (a) REPORTS ON FOREIGN TREATMENT OF UNITED

24 STATES FINANCIAL INSTITUTIONS.—Section 3602 of the
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1 Omnibus Trade and Competitiveness Act of 1988 (22

2 U.S.C. 5352) is amended—

3 (1) in the first sentence, by inserting ‘‘with up4 dates on significant developments every 2 years fol5 lowing submission of the 1994 report,’’ before ‘‘the

6 Secretary of the Treasury’’; and

7 (2) by adding at the end the following: ‘‘For pur8 poses of this section, a foreign country denies national

9 treatment to United States entities unless the foreign

10 country offers such entities the same competitive op11 portunities (including effective market access) as are

12 available to the domestic entities of the foreign coun13 try.’’.

14 (b) NEGOTIATIONS TO PROMOTE FAIR TRADE IN FI15 NANCIAL SERVICES.—Section 3603(a)(1) of the Omnibus

16 Trade and Competitiveness Act of 1988 (22 U.S.C.

17 5353(a)(1)) is amended by inserting ‘‘effective’’ before

18 ‘‘access’’.

19 (c) PRIMARY DEALERS IN GOVERNMENT DEBT IN20 STRUMENTS.—Section 3502(b)(1) of the Omnibus Trade

21 and Competitiveness Act of 1988 (22 U.S.C. 5342(b)(1)) is

22 amended—

23 (1) by striking ‘‘does not accord to’’ and insert24 ing ‘‘does not offer’’; and
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1 (2) by striking ‘‘as such country accords to’’ and

2 inserting ‘‘(including effective market access) as are

3 available to’’.

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