RESTRICTED
WORLD TRADE S/IGFS/3
13March 1995
ORGANIZATION
(95-0536)
Interim Group onFinancial Services
NOTE ONTHE MEETING OF3FEBRUARY 1995
1. ThethirdmeetingoftheInterimGrouponFinancialServiceswaschairedbyMrFrankSwedlove
ofCanada. Thediscussion followed theagenda forthemeeting contained inAirgram WTO/AIR/2.
2. Following agreement intheGroup thattheRussian Federation begranted observer status, the
representatives ofJapan andtheUnited States reported ontheirbilateral financial services agreement
announced on10January andsubsequently circulated tomembers oftheGroup indocument S/FIN/W/1.
Itwasstressed thatimplementation oftheagreed measures would beonanMFN basisconsistent with
theapproach taken byJapan ofnottabling MFN exemptions attheendoftheUruguay Round. Although
theagreement wascomplex, anumber ofkeyfeatures were identified relating to:better access for
investment advisory companies topension funds; easier availability ofbusiness licenses aswellas
deregulation intheareaofinvestment trusts; broadening oftypes ofsecurities thatcanbetransacted;
andsimplification ofapproval andnotification processes forcross-border transactions.
3. TheUnited States representative confirmed thattheagreement wasanimportant steptowards
thesuccessful conclusion oftheGATS negotiations andthatthebenefits would beextended toallparties
onanMFN basis. Appropriately scheduled, Japan'scommitments would make asignificant contribution
tothesuccessful outcome ofthenegotiations anditwashoped thatitwould encourage others tocome
forward tomake similar commitments; itwasunderlined thatcommitments made bytheUnited States
would alsobeonanMFN basis. TheUnited States considered thatthese commitments made inthe
agreement were adequately reflected initsschedule.
4. Other delegations welcomed theagreement andsomeexpressed concern thatitshould beapplied
onanunconditional MFN basiswhich would require confirmation intheappropriate written formand
multilateralization intheGATS context byscheduling elements oftheagreement. InJapan'sview,
however, there wasnoobligation tomultilateralize inthesense ofincluding thecommitments inthe
agreement initsschedule; nevertheless depending ontheoffers made byotherparticipants, theJapanese
schedule might beimproved atsome point intheon-going negotiations.
5. Regarding liberalization measures being undertaken elsewhere, thedelegate ofMexico reported
thatthegovernment hadplaced before congress newreform measures affecting banks andotherfinancial
institutions. These measures included further opening forforeign investment infinancial e.g.raising
theceiling forforeign ownership ofMexican banks andthelimits onindividual ownership aswell
asmaking itpossible topurchase outright Mexican banks withlessthanacertain market share
percentage.
6. Regarding progress inbilateral negotiations, anumber ofdelegations reported ontheirbilaterals
overthepastweek. Several expressed satisfaction withwhathadbeendiscussed although thepoint
wasalsomade thatwhatwasonthetablestillrequired improvement iftheexercise wastosucceed,
andinthecaseofoneparticipant inparticular, ifMFN treatment wastobeconfirmed initsownmarket.
./.S/IGFS/3
Page2
Inthisrespect while some useful reform proposals werebeing advanced, there appeared tobeonthe
partofsome delegations acertain reluctance toschedule those intentions inGATS schedules. This
wasbecause forexample some governments needed flexibility, inthelightofchanging circumstances,
toamend reform programmes where theywere staged overanumber ofyears. Amajor problem
therefore washowtoencourage delegations tobindtheirliberalization plans especially when itinvolved
incremental reform intothefuture; thebinding ofmarket access andnational treatment regimes was
essential toafford predictability forforeign investors inthefinancial services sector. Thekeytoa
successful outcome ofthenegotiating process wastranslating domestic liberalization measures into
binding commitments through schedules.
7. Inviewtherefore ofthepressing timetable fortherestoftheprocess andtheneedtorapidly
translate whathadbeendiscussed atthebilateral levelintoamore transparent form, itwassuggested
thatverbal intentions should beputintowriting asconditional offers. Intheabsence ofanyobjection
tothis,theGroup agreed totheChairman 'sproposal thatthose delegations whowished todososhould
submit onaconditional basistheirwritten intentions orconditional offers tothesecretariat by15March.
Inoutlining theoverall timetable fortheremainder ofthenegotiations, theChairman reminded
participants thattheInterim Group wassetuptomonitor theprogress ofbilateral negotiations until
theCommittee onTrade infinancial services wasestablished bymeans oftheDecision onInstitutional
ArrangementsfortheGATSwhichtheServicesCouncilwasduetoadoptatitsfirstmeetingon1March.
Thismeant thattheInterim Group would effectively cease toexistandwould handoveritswork to
theCommittee.
8. Looking ahead, thekeydateswerethe30Junedeadline forthecompletion ofthenegotiations;
inaddition, 30April wasimportant fortworeasons; first,according totheSecond Annex onFinancial
Services, atwo-month period wasprovided forparticipating countries toinscribe intheirschedules
anyimprovements ormodifications totheirspecific commitments aswellastotherelevant parts of
theirMFN exemption lists; inotherwords, after30April countries might choose toaltertheirschedules
andexemptionlists.Second,therewastherequirementfortheCommitteeonTradeinFinancialServices
toreport ontheprogress ofthenegotiations totheServices Council ascalled forbyparagraph 2of
theDecision onFinancial Services. Inorder tobeinaposition tomeet therequirements ofthe30
April deadline, theChairman suggested thattheGroup should havetwofurther meetings, onearound
theendofApril andtheother on28March withafurther round ofbilaterals totakeplace during the
week of27March. Itwassoagreed.