Malaysia puts in offer for services liberalization
Malaysia puts in offer for services liberalization
GENEVA (AFP): Malaysia has submitted a long awaited improved offer on financial services liberalization, trade officials said ahead of a key negotiating meeting yesterday aimed at forging a global deal.
Indonesia, the Philippines and Brazil, other key players in the talks, have not yet followed suit.
But the hope is that they will act at the World Trade Organization's Committee on Financial Services meeting which brings together high-level negotiators, a source close to the negotiations said.
The Wednesday session, following two days of bilateral talks here, should provide clues as to whether representatives from 97 countries can meet a Dec. 12 deadline for wrapping up an agreement on financial services, which covers the multi-trillion- dollar markets of banking, insurance and asset management.
The Malaysian proposal, circulated at bilateral talks, has left some insiders unimpressed.
"It is a bit disappointing," said a trade official who has seen the document. "It does not allow foreign firms to have control over their activities in the banking sector."
However, the proposal does permit new foreign majority shareholdings in the domestic insurance sector, an improvement from Kuala Lumpur's previous stance.
The official said the offer "is not the final version. We still have one month".
Attention in the last few months has focussed on emerging economies in Southeast Asia, which are submerged in an economic crisis that has taken them, and their Western trading partners, by surprise.
Commitments from the so-called Tiger economies (as well as large Latin American countries), in the shape of concrete concessions, are seen as vital to winning U.S. approval for an agreement.
Washington walked away from a global liberalization pact in 1995, blaming the paucity of attractive proposals from these countries as justification for its refusal to offer most-favored-nation (MFN) treatment to all foreigners.
MFN applies the principle of non-discrimination to all partners. The United States wants binding commitments allowing its bankers and insurers to set up majority-owned branches overseas. It also wants guarantees that majority ownership rules for firms that have already made investments will be honored in the event of changes in a country's financial services legislative landscape.
Observers say East Asia's financial troubles have spawned a realization in regional trade ministries that a WTO agreement would boost confidence among foreign investors looking for governments to shore up financial regulatory mechanisms.
"This feeling is shared by the (Southeast Asian) negotiators. They are trying hard. The will is there (to further liberalize), but it's a question of tactics," the source said, adding that "we need to keep on encouraging developing countries."
Thailand said it would try its best to put in a better market access package in November, although not much is expected, given the country's particularly severe economic problems and recent political upheavals.
The trade official acknowledged that "at the end of the day, we might have to talk about phased-in market opening offers" from certain Asian countries.
At the start of this week, 30 improved offers had been tabled by 44 countries (counting the European Union as 15) since negotiations resumed in April. Singapore, Hong Kong and South Korea fall into this category. The latest to jump on the bandwagon are South Africa, Israel, Tunisia, Costa Rica, Uruguay and Peru.
The negotiations sprang out of commitments originally made at the end of the Uruguay Round of trade talks in 1993 (under the WTO's predecessor, the General Agreement on Tariffs and Trade) when 82 governments made offers to open up their markets to foreign financial service providers.
The stakes for a deal are enormous. Daily foreign exchange transactions are estimated to top US$1.2 trillion.
Total world banking assets are put at $20 trillion, insurance premiums at $2 trillion and the market value of listed bonds at $10 trillion.