8:00 AM Jun 26, 1995

US WANTS MORE ON FINANCIAL SERVICES FROM OTHERS

Geneva 26 June (Chakravarthi Raghavan) -- An informal meeting of the Committee on Financial Services was advised Monday of a number of improved and revised "offers" tabled by the Members, but with the US still speaking of 'significant deficiencies' and need for a successful conclusion of the talks if the WTO was to get 'political support' in the United States!

This has become a constant refrain of US negotiators and Congressmen: that if the United States cannot get its way in these trade negotiations, with market openings for its enterprises exporting goods and services, the WTO will lose US support.

Two parallel negotiations, one on financial services and the other on movement of natural persons, are now nearing a deadline set at Marrakesh, 30 June, with the United States insisting that without significant improvements and commitments from others towards full liberalisation in a limited time-period, the US will enter most-favoured-nation reservations, and proceed with a liberalisation process open only to a few judged by it to be providing reciprocal access.

The WTO Director-General and others have been pointing to this latter likelihood as involving a loss of credibility for the WTO, and appealing to everyone to do everything to ensure a multilateral agreement.

At the Financial Services committee meeting, its chairman, Frank Swedlove of Canada, reported that 26 countries had now submitted draft final schedules: Brazil, Canada, Chile, Czech Republic, European Communities, Hong Kong, Hungary, Indonesia, Japan, Korea, Kuwait, Malaysia, Mexico, New Zealand, Norway, Pakistan, the Philippines, Poland, Singapore, Slovakia, South Africa, Switzerland, Thailand, Turkey, the United States and Venezuela. Mauritius, he said, had submitted an MFN exemption list only. Four countries who had submitted schedules earlier were: Australia, Colombia, Dominican Republic and Morocco.

In interventions, India said it would be prepared to consider improvements in the financial services sector provided there were higher levels of commitment from others on the issue of movement of natural persons, and that India intended to submit a schedule on financial services within the next few days.

The committee on movement of natural persons is due to meet Monday afternoon. There have been reports of some "improved offers" by Canada and Australia -- but these were described by others as hedged in with conditions that made them practically useless.

The Canadian offer to allow computer software experts to go to Canada and undertake 'services' for e.g. reportedly requires the 'expert' to have a post-graduate qualification and have ten years experience. Computer industry experts say that people with such qualifications would not be travelling to work on 'debugging' the computer software problems of customers.

The EU is said to be still consulting with the EU-member States on this question, while Australia has reportedly "offered" to provide "three-month visas" to those computer experts belonging to corporate enterprises with financial standing etc.

The four or five countries seeking "market access offers" for natural movement of persons to deliver services say that these and similar conditions including 'means tests' are really intended to deny in practice what is being scheduled, and thus not meaningful.

In other remarks Monday, Norway thought the negotiations had come a long way and urged everyone to do their utmost to finalise an agreement which it viewed as necessary to provide political impetus for other negotiations -- on telecommunications and maritime sectors.

The EU thought the financial services agreement was within reach, but was "a little disappointed" with what was on the table. It also detected room for improvement and manoeuvre in the intense bilateral negotiations taking place.

On the Indian stand about 'natural persons movement', the EU said it had nothing to report at the moment, but was continuing to reflect on it within the EU.

Canada spoke about its offers and the higher level of market access and national treatment envisaged by it, all on MFN basis, but stressed this was conditional (on others taking the MFN route).

The US saw some improvements in the offers, but also significant deficiencies and that a failure in the negotiations could undermine political support in the US for the WTO.

Financial services, the US delegate said, was the "basic driver" on development -- good (meaning liberalised) financial services was essential for development and full development was essential to derive full benefits of the Uruguay Round. The US also spoke of the problems in the insurance sector in relation to "acquired rights" in some markets, the problems caused by brokers not being allowed to enter some markets, and the limitations on inward investments. The US also complained that the offers did not provide protection for equity shareholding, and hence divesting of shares could be forced on foreign companies at a future. Some of the offers also denied access to new markets and called for higher capital requirements from foreigners than domestic companies.

The Committee which is to hold a final session on 29 June, also discussed the subject of a draft protocol to wind up the negotiations, with a planned 30 July deadline 1996 for bringing the agreement into force.

However, Japan said the protocol would be meaningless unless the negotiations concluded on an MFN basis -- a polite warning addressed to the United States.