4:57 PM Jun 7, 1995


Geneva 7 Jun (Chakravarthi Raghavan) -- The Committee on Trade in Financial Services at the WTO was due to meet at senior officials level Wednesday afternoon to review the state of the negotiations in this area, with trade diplomats expecting little more at this time.

A further meeting of this committee has been tentatively set for 29 June. The negotiation on financial services, along with those on movement of natural persons, is due to conclude by end of the month.

The meeting Wednesday afternoon was preceded by a meeting convened by the WTO Director-General, Renato Ruggiero, of a smaller group of the four majors (US, Canada, Japan and the EU), who are the demandeurs, and of key Asian delegations.

Beyond a repetition of publicly known positions, there was no progress, according to some of the participants.

There were reports, for which no immediate confirmation was available, of similar meetings that Ruggiero held of the four majors with key Latin American delegations.

If this be true, it would suggest a new style of restricted consultations that Ruggiero is bringing into the WTO - forcing smaller groups of developing countries to face the majors in his presence, and in effect pressuring the developing countries involved to yield.

Meanwhile, there are reports among trade diplomats, that the US is trying to bring the issue before the Halifax Summit meeting of the G-7 (and any meetings of the Quad -- Canada, EU, Japan and the US -- that sometimes meets on the sidelines) in an effort to get a common G-7 position and come to the WTO to attempt and face down the developing countries. In this view, the diplomats say, the US while keeping up the pressure does not want any "show-down" at this meeting.

The efforts of the US, and of Ruggiero during his recent visit to Asia, to get developing countries to improve their earlier offers and open up their financial services markets, do not so far appear to have borne fruit, judged by the views and comments of US treasury officials.

While the US, EU and Ruggiero have been trying to delink these negotiations from those on movement of natural persons as a mode of delivery for services, India and a few other countries have refused to accept this delinking.

Ruggiero's remarks in New Delhi has in fact created a political storm of sorts, with the government coming in for sharp questioning in Parliament on what it would be doing.

The Indian Commerce Minister, Chidambaram, in a seminar in Delhi after the Ruggiero visit, made clear that India would stick by its linking the two negotiations -- that on financial services and movement of natural persons.

While the Indian government has been undertaking its own programme of liberalisation in this sector, and has been facing some sharp domestic criticism, it is under pressure (even from within government) not to internationally commit itself on this score, without tangible and equivalent gains and concessions in other areas that it can show to its domestic critics.

The United States has been threatening that if there is not sufficient market openings in financial sector by the major developing economies and its other trading partners to ensure full market access and national treatment, it would revise its own offers in the schedule and would unable to put them on a most-favoured-nation basis.

The New York-based Journal of Commerce quoted India's WTO representative, Amb. Narayanan, as saying that if commitments on movement of people "are not forthcoming from our major trading partners, we may find it difficult to maintain our existing offer in financial services".

Among the Asean countries, Singapore has been arguing that with a fairly open economy, it had done all that it could do, taking an overall account of the balance in the entire Uruguay Round, and its offers were on the table. For Singapore to make any further "improvements", it must be able to get something in return in areas of interest to it -- such as in maritime services.

Malaysia and Indonesia have also so far not agreed to make any more concessions in this area.

Thailand had last month said it would make some improved offers, but observers said that since then the political situation in Bangkok has changed and the election prospects would make it difficult for the government now to make any commitments.

The US and EU has been trying to suggest that they would accept developing countries agreeing to financial services liberalisation in stages, but with such a commitment in their schedules. In effect they are demanding that these major developing countries should set out in their schedule of commitments, a commitment to increase the number of bank, insurance companies, security firms etc who would be allowed to "establish" themselves and begin business, and over a stipulated period increase the numbers until full liberalization is achieved.

None of the Asian countries concerned seem ready to accept such a time-bound commitment.