MT116a
28 July 1995
WTO FINANCIAL SERVICES AGREEMENT PROVIDES NEW EXPORT OPPORTUNITIES FOR AUSTRALIA
See original article: Department of Foreign Affairs and Trade
A major factor in the successful outcome was the decision this week by Japan and Korea to support a developing consensus for an MFN-minus-one agreement.
Senator McMullan said that given the priority Australia attached to global liberalisation of trade in services, he had written this week to key Ministers in Japan and Korea urging them to support the MFN-minus-one proposal.
The MFN-minus-one outcome represents an agreement by all WTO participants with the exception of the US to implement the results of the liberalisation negotiations on an MFN basis. Senator McMullan said that during his visit to Washington he had, along with Japan, the EU and others, attempted to persuade the US to support an MFN result but regrettably the US would not accept this outcome. The result nevertheless is a very good one for Australia, and we expect Australian access to the US to remain unchanged.
Senator McMullan said the agreement would provide a major boost to the credibility and strength of the multilateral trading system under the WTO. It underlined the importance of the WTO in providing major market opening opportunities for Australian companies.
"The financial services agreement will directly benefit Australian banks, insurance companies and securities traders."
Senator McMullan said that in view of the importance of our services sector to the Australian economy and jobs, Australia had been particularly active in the negotiations to secure important access opportunities from our key trading partners, especially those in the region.
Senator McMullan added that the result would provide impetus to the process of securing free trade in APEC consistent with the commitment by APEC Leaders in Bogor last year.
Some of the specific liberalisation actions taken by Australia's trading partners were:
an easing of the equity rules for foreign insurance companies and new reinsurance licences in Malaysia.
a standstill commitment by Korea on all financial services and more than twenty other improvements in banking and securities.
new Bangkok International Banking Facility licences and five new asset management licences in Thailand
a commitment allowing 49% foreign ownership of stockbrokers by India
Japan will make available benefits of its bilateral financial services agreement with the United States on an MFN basis and it will guarantee improvements in access conditions to its financial services market
improvements in foreign access to insurance licences issued in the Philippines during the current two-year period under which the Philippines Government is reviewing its insurance regulations.
Senator McMullan also noted that late yesterday, at the last minute in the negotiations, Australia succeeded through its negotiating efforts to obtain an improved offer on market access from India. India has agreed to issue up to eight banking licences a year and to ease conditions for stockbrokers".
Senator McMullan said the agreement represented a solid basis for achieving further liberalisation.
"While the outcome was important, we have by no means finished the task of securing greater liberalisation of financial services markets, especially in our region where we will be looking for progress towards the removal of equity restrictions and the elimination of operating restrictions on foreign-owned financial institutions.
Senator McMullan said the Government consulted closely with the Australian financial services industry throughout the negotiations and would discuss the outcome directly with Australian companies to ensure they gained the maximum benefits from the new opportunities.
Background:
The European Union proposed the MFN minus one initiative in an effort to save the financial services negotiations and the liberalisation offers put forward by WTO participants when the negotiations broke down at the end of June over the unwillingness of the US to grant access to its market on an MFN basis.
The US has indicated that it will only grant access on a MFN basis on the condition that it receives equivalent access for US companies to other markets. The US has concerns over what it judged as inadequate access to markets in some developing countries.
The agreement is due to expire in December 1997. New negotiations are expected to commence once the agreement expires.
Bob McMullan Minister for Trade