Home 
Publications Online Publications Document
|
Financial Sector Legal and Regulatory Toolkit : Part Four: Regional Financial Integration : II. Trade in Financial Services
A. General Agreement on Trade and Services (GATS)The GATS contains general obligations respecting trade in services, including MFN treatment, transparency, and domestic regulation. As one aspect of its general coverage of services, the GATS addresses financial services. It also includes further elective provisions for financial services liberalization that set generally higher requirements for members. All these commitments form the setting and basis for negotiations addressing liberalization of trade in financial services. The provisions for foreign access are not inclusive, as with trade in goods, their adoption remains in the discretion of WTO members and financial services trade liberalization is thus often limited. In addition, financial services negotiations have made no progress since 1999 in the deadlocked Doha round negotiations. In respect to interaction with regional frameworks such as the ASEAN AFAS, the GATS does not prevent its members from becoming party to agreements to liberalizing trade in services, and although it contains restrictions on regional economic integration, the WTO process is permissive with regard to regional trade agreements. Since WTO financial commitments overlap with many regional trade agreements, both are relevant to any program for financial liberalization. The framework is a sound start to supporting foreign competition in financial services trade, but needs to be extended through negotiation and incorporated into international standards. This is important in the relationship between liberalization and financial stability. Acceding WTO members commit to certain levels of financial services liberalization in banking, securities markets, and insurance, but taking such measures without regard for sequencing and safeguards can be a precursor to excessive volatility, and was a consideration in the Asian financial crisis. Analysis of recent crises also indicates the essential function of institutions, including the role of law, enforcement, regulation and legal systems in lessening or making manageable the risks associated with financial liberalization (see Arner 2007). Links in prudential regulation and financial liberalization are increasingly accepted and have been recognized as important in EU regional financial integration.
|
RSS Feeds
Back
Top of page