No 9 (October 97/Octobre 97/Oktober 97)

A round of intensive negotiations are now underway to reach a new World Trade Organisation (WTO) agreement, before December 12, to open financial services markets. In order to reach this agreement, substantially increased offers of liberalisation are required from a number of key Asian and Latin American emerging market countries. Such offers should grant real market access opportunities to foreign financial institutions and allow them to operate under national treatment conditions. As many of the larger developing countries have still not tabled their offers, the Commission has now engaged in action on the ground. Meetings were held in the margins of the IBRD/IMF Annual Meetings in Hong Kong this autumn in order to persuade emerging market countries. Commissioner Mario Monti is also due to travel to Asia in early November to address the IOSCO Annual Conference and to meet a number of Finance Ministers in the region. For its part, the European Union submitted a new and ambitious offer last July.

Clearly, many Southeast Asian countries are preoccupied with managing their current banking and currency crises. The Commission is therefore working hard to put across the clear message that liberalisation is a part of the solution to the economic problems in the region. Comprehensive offers to liberalise financial services will act as a magnet for long-term foreign investment which will fund the future growth of these emerging economies. In addition, allowing greater levels of access for foreign financial institutions promotes financial stability by providing greater liquidity in domestic capital markets. New services, new technology and new jobs are also available to the emerging market economies that are best able to attract new investors.

On the other hand, the Commission, and other negotiating partners, are sensitive to the concerns expressed by developing market countries. It is crucially important that concerns over possible harm to local financial services industry and over the supervisory capacity of existing regimes are met. That is why the Commission and others have said they will allow commitments from some developing to be phased in over a number of years, and, if necessary, allow market caps to operate for a limited period, if the market share of foreign institutions rises too rapidly. Improving and modernising the supervision of financial sectors in developing countries will be the key to effective implementation of any new agreement. The Commission is working together with a number of international organisations, such as the World Bank, to make sure that technical assistance on supervision is properly targeted, and that the banking and other financial sectors of emerging market countries are put on a sounder footing from both a financial and regulatory point of view.

December 12 deadline

The latest round of negotiations to liberalise trade in financial services began in April at the World Trade Organisation (WTO). Negotiations resumed following the conclusion of a two-year interim agreement in 1995. At that time, the US pulled out of a possible full agreement at the last minute. It was left to EU negotiators to persuade other countries to keep their commitments to liberalise their financial sectors on the table in order to secure the interim agreement. This interim agreement expires on 12 December this year.

Following the leadership that the EU has shown in persuading others to join the interim agreement in 1995, many countries are looking again to the EU to take a leading role in these negotiations. It is crucial that these negotiations are a success: the EU financial services industry must be able to offer its capital and expertise in any market around the world on a non-discriminatory basis. Developing countries require access to sufficient capital to feed their growing economies and fund new infrastructure.

On 1st July, the European Union submitted a new offer to the WTO in Geneva. The new offer came on top of the EU's liberalisation commitments dating from 1995 which provide access to the EU's Single Market in all financial services sectors - banking, insurance and securities - on a most favoured nation (MFN) basis.

The additions to the EU's offer will eliminate twelve restrictions still existing in the present `schedule' of market-opening commitments, and will limit the scope of nine others. Among the most important of these restrictions are: the application of `economic needs' testing in the banking sector in Austria; the requirement for securities firms to incorporate in the EU before becoming members of the Amsterdam Stock Exchange; restrictions on investments abroad by Portuguese investment funds; the requirement for companies to incorporate in Belgium before dealing in securities there; and a number of nationality requirements for directors of financial institutions.

D'intenses négociations se déroulent actuellement pour tenter de parvenir, dans le cadre de l'Organisation Mondiale du Commerce (OMC), à un nouvel accord sur l'ouverture des services financiers avant le 12 décembre. Pour atteindre cet objectif, il faudrait que les principaux pays en développement d'Asie et d'Amérique latine modifient substantiellement leur offre de libéralisation. Ces offres doivent contenir de réelles opportunités d'accès aux marchés financiers pour les étrangers et leur permettre de bénéficier des conditions de traitement nationales. Comme nombre de ces pays n'ont pas encore déposé d'offres sur la table, la Commission a entrepris une action sur le terrain pour convaincre ces pays de l'importance d'un accord. Des rencontres ont eu lieu à Hong-Kong cet automne, en marge de la réunion annuelle du FMI et, en novembre, le Commissaire Mario Monti se rendra lui-même en Asie pour rencontrer les principaux ministres des finances de cette région. Pour sa part, la Commission avait fait en juillet dernier une nouvelle offre particulièrement ambitieuse.

Gegenwärtig sind intensive Verhandlungen im Gange, um bis zum 12. Dezember im Rahmen der Welthandelsorganisaton (WTO) ein neues Abkommen zur Öffnung der Finanzdienstleistungsmärkte zu erzielen. Hierfür ist es allerdings notwendig, daß die wichtigsten Schwellenländer Asiens und Lateinamerikas ihre Liberalisierungsabgebote deutlich verbessern. Diese Angebote müssen ausländischen Finanzinstitutionen einen reellen Zugang zu den Finanzmärkten einräumen, und ihnen ermöglichen, unter den für Inländer geltenden Bedingungen zu operieren. Da viele dieser Länder noch kein Angebot unterbreitet haben, bemühte sich die Kommission vor Ort, sie von der Bedeutung eines solchen Abkommens zu überzeugen. Im Herbst fanden in Hong Kong einige Begegnungen am Rande des Weltbank-/IWF-Jahrestreffens statt, und im November wird Kommissar Mario Monti selbst nach Asien reisen, um einige Finanzminister dieser Region zu treffen. Die Kommission hatte im Juli ein neues, besonders ehrgeiziges Angebot unterbreitet.

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