Opinion of the Economic and Social Committee on the 'Proposal for a Council Decision concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the results of the WTO negotiations on financial services and on movement of natural persons`

(96/C 212/14)

On 9 May 1996, the Council decided to consult the Economic and Social Committee, under Articles 54, 100 and 198 of the Treaty instituting the European Community, on the above-mentioned proposal.

The Section for External Relations, Trade and Development Policy was responsible for preparing the Committee's work on the subject. In the course of its work the Economic and Social Committee appointed Mr Pardon as Rapporteur-General (Rules 20 and 50 of the Rules of Procedure).

At its 336th Plenary Session (meeting of 29 May), the Economic and Social Committee adopted the following Opinion with 92 votes in favour and 1 abstention.

I. Introduction

1.1. The General Agreement on Trade in Services (GATS) was one of the major end-products of the Uruguay Round, and now forms an integral part of the legal framework of the World Trade Organization. It covers all service sectors, including financial services, and comprises two elements: firstly the rules and constraints which apply to all members of the World Trade Organization, and secondly the Schedules of Specific Commitments. These Schedules, each of which is legally binding on the member concerned, list the commitments, applicable to various service sectors and service activities setting the terms for market access.

1.2. The basic principles are Most Favoured Nation (MFN) treatment and 'national treatment`. Where members are not in a position to ensure MFN treatment for a given service activity, they can take advantage of what is termed an 'MFN exemption`; however, normally the number and scope of such exemptions are limited.

1.3. The commitments represent the first step in a liberalisation process that is to be gradually extended through a succession of negotiations on services. The binding nature of the commitments made hitherto is also a major factor, ensuring stable and predictable conditions for trade in services, and particularly for foreign investment by service providers.

2.1. At the close of the Uruguay Round 76 countries included the commitments concerning financial services in their initial Schedules of Commitments. However, certain industrialised countries, including the United States, felt that the commitments undertaken by certain Members were insufficient for a definitive agreement to be reached. A similar situation occurred regarding the movement of natural persons.

2.2. It was therefore agreed that the deadline for determining exemptions from MFN commitments, altering the Schedules in the financial services sector and completing negotiations on the movement of persons should be deferred until the end of June 1995, six months after the WTO was created. Negotiations on improved commitments started in Spring 1994. At the end of June 1995, following several intensive rounds of negotiation, the USA announced that it was still not satisfied with the results; it therefore intended to withdraw most of its offer on financial services and apply a blanket MFN exemption on the financial service sector, while maintaining the current position for those financial service providers already operating in the US market.

2.3. The European Union then proposed postponing the 30 June 1995 deadline once again, to 28 July 1995, to see if the gains already made could be saved, if necessary without US participation. This proposal was accepted and all the members undertook to assess to what extent they were prepared to maintain their best offers on an MFN basis, at least for a limited period.

3.1. In practical terms, the agreement allows for the best offers negotiated over the last two years, and more specifically those of recent months, except for those made by the USA, to be put into effect, initially until 1 November 1997. At that point, there will be a 60 day period when members will be able to change or improve the offers incorporated in the Schedules relating to financial services and to set up MFN exemptions in the sector.

3.2. The (second) Protocol, to which the new Schedules concerning financial services are appended, has been left open for acceptance until 30 June 1996, in order to give members time to complete their internal ratification procedures. This Protocol will come into force 30 days after it is accepted by all the parties concerned, along with the relevant commitments. If not all the members concerned have accepted the Protocol by 1 July 1996, a decision on whether it will come into force will be taken within 30 days. The members have undertaken not to take measures in the interim which would be incompatible with their future commitments.

4.1. The European Community and its Member States have also made a major contribution to the successful conclusion of negotiations on the movement of persons providing services, and hence to the adoption of the (third) Protocol on the movement of natural persons.

II. Conclusions

5.1. The Economic and Social Committee regrets that the USA has not altered its position since 30 June 1995 and is therefore taking on a lower level of commitments and applying a blanket MFN exemption.

5.2. The Economic and Social Committee considers that efforts should be made to bring the USA back within the multilateral framework based on the MFN principle.

5.3. The Economic and Social Committee recommends the adoption of the attached Decision concerning the conclusion of the results of the deferred WTO negotiations on financial services and the movement of natural persons.

Done at Brussels, 29 May 1996.

The President

of the Economic and Social Committee

Carlos FERRER