Prospects for WTO services deal perk up

Prospects for WTO services deal perk up

GENEVA (AFP): Prospects for clinching a December deal liberalizing global financial services have improved, trade officials said Thursday amid a flurry of better bids expected from countries including Malaysia and Indonesia.

Counting the European Union as 15, some 38 countries have put in more attractive offers on foreign market access in sectors such as banking and insurance since negotiations under the auspices of the World Trade Organization resumed in April.

Hong Kong, Singapore, South Korea, and Macau figure in this category. Five nations -- Iceland, Slovenia, Nigeria, Kenya and Egypt -- have done so since Oct. 1 and a further 13, including Brazil, have pledged to submit reworked packages before a high- level negotiating meeting set for November 12 in Geneva.

Negotiators are up against a Dec. 12 deadline to conclude an agreement that covers a sector involving $1.2 trillion in foreign exchange transactions every day. The aim of a deal is to inject more competition into old businesses like banking and newer ones such as fund management.

Week-long bilateral meetings were capped Friday by a session of the WTO committee on trade in financial services.

"I think the mood is positive. Countries did not approach this week's meetings with particularly high expectations, so they were not disappointed, " said a Western trade official.

"The real crunch will be in November when there will be more pressure on countries to table offers."

Southeast Asia's currency turmoil cast gloom over the last series of talks in Geneva in September.

Fears were widespread then that domestic political concerns would stall further moves by countries such as Thailand, Malaysia and the Philippines, battered by falling investor confidence, to open up their financial service markets to foreign firms.

Malaysia and Indonesia have promised to sweeten their bids by Nov. 12 and Thailand, courting bankruptcy after a decade-long boom, said it would "give its best shot" at following suit, trade sources said.

"It seems the Southeast Asians, now that they're dealing with their currency crisis, are starting to separate macroeconomic problems from trade negotiations," the Western official said."

"These (talks) are not about macroeconomic reforms and that message has been getting through to them."

Philippine negotiators at the committee meeting Friday said they realized the need for "prudent policies and proper pacing," trade sources said.

Southeast Asian countries were among the 43 countries which improved on their original 1994 Uruguay Trade Round offers on financial services liberalization, in talks that ended without success in July 1995 because the United States scuppered an agreement.

U.S. financial chieftains blocked a deal, saying that packages in hand, especially from Asia's booming economies, were not sufficiently attractive to warrant Washington granting most favored-nation-status (MFN) treatment to all foreigners in the U.S. financial marketplace.

The key question for participants is whether Washington will jump on board -- and withdraw its MFN exemption -- even if countries like Thailand do not agree to further market opening.

U.S. trade negotiators appear to have adopted a more realistic and flexible attitude in the wake of Southeast Asia's troubles, according to diplomats. A U.S. source said on Thursday though, "we can put it together but (a deal) is not there yet," adding that a "critical mass" had not so far been achieved.

The U.S. delegation at Thursday's committee meeting stressed it was seeking a number of commitments, including full majority ownership of domestic companies, treatment of U.S. firms on an equal footing with domestic companies, and the right to establish in foreign markets.

"If private U.S. interests want accord, we'll have one," said a source close to the negotiations.

Said the western official: "Time is running short but people are trying to make the contributions that will be necessary for a successful conclusion... I think the United States realizes this."