By Bruce Odessey
Washington File Staff Writer
Washington -- Bush administration officials say that more prosperous developing countries have failed so far to submit adequate offers in World Trade Organization (WTO) negotiations for opening their markets to financial services.
Of the 148 WTO members, 69 have submitted initial offers, but "the quality of offers in emerging markets of greatest interest is still poor," said Christine Bliss, acting assistant U.S. trade representative for services and investment.
Testifying November 15 before a House of Representatives Financial Services subcommittee, Bliss said that securing higher quality commitments remains a major challenge.
"We need greater participation, particularly among emerging markets, such as Brazil, India, China, Malaysia, Thailand, Indonesia, South Africa and the Philippines," Bliss said.
The negotiations, formally called the Doha Development Agenda, have stalled almost since their launch in 2001 over politically sensitive agricultural trade issues.
They remain stalled a month before a December 13-18 ministerial meeting in Hong Kong, even after the United States made an effort to revive them by proposing substantial reductions in domestic agricultural support payments and agricultural tariffs. (See related article.)
The standoff over agriculture in part has prevented substantial progress in the negotiations over cutting industrial tariffs and opening markets in services. Still, the U.S. position remains that the Doha round negotiations should conclude by the end of 2006.
According to Bliss, the United States wants from the WTO financial services negotiations increased market access for U.S. suppliers coupled with transparency in the development and application of laws and regulations for banking, securities, asset management, pension funds and financial advisory services.
More specifically, she said, the United States asks its WTO trading partners to submit offers on:
• Commercial presence, meaning the right to establish new and acquire existing companies;
• Cross-border supply and consumption rights, which are especially important for marine, aviation, transport insurance, reinsurance and brokerage services; and
• Removal of discriminatory limitations such as monopolies, quotas and economic needs tests.
She said the United States is working with the European Union (EU), Canada, Japan and Switzerland -- other financial services exporters -- to promote offers from other countries.
Developing countries have their own interests in the services negotiations, of course, Bliss said. Some, especially India, are pressing hard on what the WTO calls "Mode 4" -- temporary access for their workers to perform jobs in other countries.
So far, she said, the United States has submitted no offer on Mode 4, mindful of resistance in the U.S. Congress.
Also testifying was Clay Lowery, assistant secretary of Treasury for international affairs. He cited World Bank estimates that by 2015 income gains from services liberalization could provide 4.5 times the gains from goods liberalization alone.
He argued that opening financial markets also would promote financial stability among developing countries.
"Foreign participation in the financial sectors of developing countries brings in strong new players that provide greater liquidity to the market, greater loss-absorption capabilities, and enhanced risk management techniques," Lowery said.
The prepared testimony of Bliss and Lowery is available on the House Financial Services Committee Web site.
For additional information on U.S. trade policy, see USA and the WTO.
(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)