Us Wants Curbs On Foreign Stake In Financial Services Lifted

The US is seeking the right of establishment, substantial national treatment and full majority ownership in the financial services areas from other participating member countries in the negotiations currently on in Geneva under the World Trade Organisation (WTO).

The focus of the US is on Asian and Latin American countries, including India, though it has made requests to over 40 trading partners.

Bilateral talks between countries have already started, much before the July 14 deadline set by the chairman of the financial services negotiations committee in Geneva.

The next meeting of the WTO committee on trade in financial services is scheduled for July 17.

 

Sources said India had started preliminary talks with its primary trading partners.

The negotiations to liberalise banking, securities, insurance and asset management sectors resumed on April 14 and are scheduled to be completed by December 12.

The US has said it will submit an offer by July 14 but refused to make the offer binding until it sees significantly improved offers from a wide range of participants, particularly from key emerging markets in Latin America and Asia.

The intention of the US will be to make the most favoured nation (MFN) principle conditional. Under the MFN principle, countries pledge not to discriminate among trading partners.

In the 1995 negotiations on financial services, the US had opted out since it was not satisfied with the degree of liberalisation offered in the final offers. It was thereafter decided that a fresh negotiation would be entered into in 1997, since US participation was crucial to a full, comprehensive and successful agreement in the area.

India is expected to submit its old offer, submitted in July 1995, for the on-going financial services negotiations, sources said. In several cases, India has gone beyond the commitments made in the old offer, officials claimed. In the case of foreign bank branches licences for instance, India has given 15 new licenses instead of the limit of eight licences set per year for new entrants and existing banks.

The US has said that it is prepared to consider transition periods that will allow for phase-in of commitments by countries over a reasonable period of time.