I
103D CONGRESS
2D SESSION
H. R. 3974
To provide for fair trade in insurance services, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 8, 1994
Mr. LEACH introduced the following bill; which was referred jointly to the
Committees on Energy and Commerce and Ways and Means
A BILL
To provide for fair trade in insurance services, and for other
purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Fair Trade in Insur-
ance Services Act of 1994’’.
SEC. 2. EFFECTUATING THE PRINCIPLE OF NATIONAL
TREATMENT 
FOR 
INSURANCE 
ORGANIZA-
TIONS.
(a) PURPOSE.—The purpose of this section is to en-
courage foreign countries to accord national treatment to
United States insurance organizations that operate or
seek to operate in those countries.
(b) IDENTIFYING COUNTRIES THAT DENY NATIONAL
TREATMENT TO UNITED STATES INSURANCE ORGANIZA-
TIONS.—The President shall identify the extent to which
foreign countries deny national treatment to United States
insurance organizations—
(1) according to the most recent report under
section 3602 of the Omnibus Trade and Competi-
tiveness Act of 1988 (or the most recent update of
any such report); or
(2) based on more recent information that the
President considers to be appropriate.
(c) DETERMINING WHETHER DENIAL OF NATIONAL
TREATMENT HAS A SIGNIFICANT ADVERSE EFFECT.—
(1) IN GENERAL.—The President shall deter-
mine whether the denial of national treatment to
United States insurance organizations by a foreign
country identified under subsection (b) has a signifi-
cant adverse effect on such organizations.
(2) FACTORS TO BE CONSIDERED.—In deter-
mining whether and to what extent a foreign country
denies national treatment to United States insurance
organizations, and in determining the effect of any
such denial on such insurance organizations, the
President shall consider appropriate factors, includ-
ing—
(A) the extent of United States trade with
and investment in the foreign country, the size
of the foreign country’s markets for the insur-
ance services involved, and the ability and the
extent to which United States insurance organi-
zations operate or seek to operate in those mar-
kets;
(B) the importance of operations by
United States insurance organizations in the
foreign country to the export of goods and serv-
ices by United States firms to such country;
(C) the extent to which the foreign country
provides in advance to United States insurance
organizations any measure of general applica-
tion that the country proposes to adopt, such as
regulations, guidelines or other policies regard-
ing new products, services, and markets in
order to allow an opportunity for such insur-
ance 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 coun-
try—
(i) makes available, in writing, to
United States insurance organizations the
foreign country’s requirements for complet-
ing applications relating to the provision of
insurance services;
(ii) applies published, objective, stand-
ards and criteria in evaluating any such
applications from United States insurance
organizations; and
(iii) renders administrative decisions
with respect to any such application within
a reasonable period of time;
(E) the extent to which United States in-
surance organizations may conduct activities or
provide services in the foreign country that in-
surance organizations organized under the laws
of the foreign country may not conduct or pro-
vide in the foreign country; and
(F) the extent to which United States in-
surance organizations are affected in their oper-
ations and ability to compete on an equal basis
by—
(i) the licensing policies of the insur-
ance regulator of that country;
(ii) capital requirements applicable in
that country with respect to insurance ac-
tivities;
(iii) restrictions on acquisitions or
joint ventures, and operations of such ac-
quisitions and joint ventures, by insurance
organizations in that country;
(iv) restrictions on the operation and
establishment of branches in that country;
and
(v) requirements for seeking approval
of rates, rules, and policy forms when in-
troducing new products, services, and pric-
ing techniques.
(d) PUBLICATION OF DETERMINATION.—
(1) PUBLICATION.—If the President determines
that the denial of national treatment to United
States insurance organizations by a foreign country
has a significant adverse effect on such organiza-
tions, the President—
(A) may, after the Trade Representative
has initiated negotiations in accordance with
subsection (g) publish that determination in the
Federal Register;
(B) shall, not less frequently than annu-
ally, in consultation with any department or
agency that the President considers to be ap-
propriate, review each such determination to de-
termine whether the determination should be
rescinded; and
(C) shall inform State insurance commis-
sioners or regulatory agencies of the publication
of such determination.
(2) EXCEPTION
FOR
COUNTRIES
WITH
NA-
TIONAL TREATMENT COMMITMENTS.—Paragraph (1)
shall not apply to a foreign country that the Presi-
dent determines has provided the United States with
a binding and substantially full market access and
national treatment commitment in insurance serv-
ices, and adheres to that commitment in practice.
(e) DISCRETIONARY SANCTIONS.—
(1) ACTION BY THE PRESIDENT.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the President may recommend to
the Secretary of the Treasury that the Sec-
retary suspend the acceptance of, or not accept,
a registration statement that is filed pursuant
to section 3 after the date of publication of a
determination under subsection (d)(1) by a per-
son of a foreign country listed in such publica-
tion if the President determines that—
(i) such action would assist the
United States in negotiations to eliminate
denials of national treatment against Unit-
ed States insurance organizations;
(ii) negotiations undertaken pursuant
to subsection (g) are not likely to result in
an agreement that eliminates the denial of
national treatment; or
(iii) the country has not adequately
adhered to an agreement reached as a re-
sult of negotiations undertaken pursuant
to subsection (g).
(B) CONSISTENCY WITH BILATERAL AND
MULTILATERAL
AGREEMENTS.—The authority
of the President under subparagraph (A) may
not be used to take actions which are inconsist-
ent with any bilateral or multilateral agreement
that governs insurance services that has been
entered into by the President and approved by
the Senate and House of Representatives.
(C) SUSPENSIONS
OF
FILINGS
OF
REG-
ISTRATIONS.—
(i) IN
GENERAL.—Notwithstanding
any other provision of law, if the President
recommends, pursuant to subparagraph
(A), that the Secretary suspend the accept-
ance of any registration of an alien insur-
ance company under section 3, the Sec-
retary shall—
(I) suspend the Secretary’s ac-
ceptance of such registration for a pe-
riod of 180 days; and
(II) at the recommendation of
the President, extend such suspension
for an additional period of 180 days.
(ii) TERMINATION OF SUSPENSION.—
The Secretary shall, on the recommenda-
tion of the President, terminate any sus-
pension in effect under clause (i).
(D) ALTERNATIVE ACTION.—If the Presi-
dent determines that the procedure outlined in
subparagraph (A) is either inappropriate or im-
practical 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 op-
erate or seek to operate in those countries.
(f) EXISTING ALIEN INSURANCE ORGANIZATION AC-
TIVITY.—The authority of subsection (e) may not be exer-
cised with the respect to any registration filed by an alien
insurance organization which is engaged in insurance ac-
tivities within the United States as of March 8, 1994.
(g) NEGOTIATIONS.—
(1) IN GENERAL.—The Trade Representative—
(A) shall initiate negotiations with any for-
eign country with respect to which a determina-
tion made under subsection (c)(1) is in effect to
ensure that such country accords national treat-
ment to United States insurance organizations;
and
(B) may initiate negotiations with any for-
eign country that denies national treatment to
United States insurance organizations to ensure
that the foreign country accords national treat-
ment to such organizations.
(2) EXCEPTIONS.—Paragraph (1) shall not
apply with respect to any foreign country if the
President—
(A) determines that the negotiations—
(i) would be unlikely to result in
progress toward according national treat-
ment to United States insurance organiza-
tions; or
(ii) would impair the economic inter-
ests of the United States; and
(B) submits a written notice of that deter-
mination to the Congress.
(h) REPORT.—
(1) CONTENTS
OF
REPORT.—Not later than
December 1, 1994, and biennially thereafter, the
President shall transmit to the Congress a report
that—
(A) specifies the foreign countries identi-
fied under subsection (b);
(B) if a determination has been published
under subsection (d)(1) with respect to the for-
eign country, provides the reasons for such de-
termination;
(C) if the President has not made or has
rescinded such a determination with respect to
the foreign country, provides the reasons for
the failure to make the determination or for the
rescission;
(D) describes the results of any negotia-
tions conducted under subsection (g)(1) with
the foreign country; and
(E) discusses the effectiveness of this sec-
tion in achieving the purposes of the section.
(2) SUBMISSION OF REPORT.—The report re-
quired 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.
(i) DELEGATION.—
(1) IN GENERAL.—The President may delegate
any authority of the President under this section.
(2) EXERCISE OF AUTHORITY.—If the Presi-
dent delegates any authority of the President under
this section, the designee’s authority shall be exer-
cised according to the specific direction (if any) of
the President.
(j) CONSULTATION.—In carrying out the duties
under this Act, the President, or the President’s designee,
may consult with the appropriate State insurance commis-
sioners or regulatory agencies and other entities the Presi-
dent or designee may consider appropriate.
(k) DEFINITIONS.—For purposes of this section, the
following definitions shall apply:
(1) ALIEN
INSURANCE
ORGANIZATION.—The
term ‘‘alien insurance organization’’ means an insur-
ance organization which is a person of a foreign
country.
(2) INSURANCE ORGANIZATION.—The term ‘‘in-
surance 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) NATIONAL
TREATMENT.—The term ‘‘na-
tional treatment’’ means, with respect to any foreign
country, treatment that offers United States insur-
ance organizations the same competitive opportuni-
ties (including effective market access and market
penetration) in such country as are available to the
country’s domestic insurance organizations in like
circumstances.
(5) PERSON
OF
A
FOREIGN
COUNTRY.—The
term ‘‘person of a foreign country’’ means—
(A) an entity that—
(i) is organized under the laws of the
foreign country, or
(ii) has its principal place of business
in the foreign country;
(B) an individual who—
(i) is a citizen of the foreign country,
or
(ii) is domiciled in the foreign coun-
try; or
(C) any person that is directly or indirectly
controlled by any entity or individual described
in subparagraph (A) or (B).
(6) REINSURER.—The term ‘‘reinsurer’’ means
an insurer which contracts to indemnify a ceding in-
surer for all or part of a risk originally undertaken
by the ceding insurer.
(7) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of the Treasury.
(8) 
TRADE
REPRESENTATIVE.—The 
term
‘‘Trade Representative’’ means the United States
Trade Representative.
SEC. 3. REGISTRATION OF ALIEN INSURANCE ORGANIZA-
TIONS WITH THE SECRETARY OF THE TREAS-
URY.
(a) IN GENERAL.—No alien insurance organization
(as defined in section 2(i)(1)) may engage in insurance
activities within the United States after the date of the
enactment of this Act unless—
(1) a registration statement has been filed by
the company with the Secretary of the Treasury in-
dicating the organization’s intention to engage in in-
surance activities within the United States; and
(2) applicable State insurance requirements
have been satisfied.
(b) ANNUAL REPORT.—The Secretary of the Treas-
ury shall submit an annual report to the Congress on the
level of alien insurance organization activity within the
United States.
SEC. 4. CONFORMING AMENDMENT.
(a) 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 or-
ganizations,’’ after ‘‘banking organizations’’.
(b) 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 up-
dates on significant developments every 2 years fol-
lowing 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 na-
tional treatment to United States entities unless the
foreign country offers such entities the same com-
petitive opportunities (including effective market ac-
cess) as are available to the domestic entities of the
foreign country.’’.
(c) NEGOTIATIONS TO PROMOTE FAIR TRADE IN FI-
NANCIAL 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’’.
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