3:11 PM Jun 8, 1995

MOVEMENT ON FINANCIAL SERVICES REPORTED

Geneva 7 June (Chakravarthi Raghavan) -- Trade officials saw signs of some progress -- with some developing countries indicating prospects of some improved offers, at the multilateral financial services negotiations at the WTO -- but were unsure whether it would be sufficient to persuade the US to give up on its threat of conditional most-favoured-nation approach.

US Treasury Secretary Rubin and Trade Representative Mickey Kantor are due to testify before the Senate Finance Committee on Thursday in Washington, and US officials were unwilling to talk to the media (or even the negotiators here) ahead of this.

The Committee on Trade in Financial Services, which is overseeing the negotiations met at senior official level to review the progress in the negotiations, set to end on 30 June by the Marrakesh ministerial meeting, with participants having the option to revise their own offers and schedules they had filed earlier.

The Committee has set tentative 15 June as the date for countries to file their new or revised schedules, and also MFN exemption lists in this area. This would give key nations and their negotiators two weeks to make a judgement about the package. The Committee is due to hold a meeting on 29 June, but another meeting around 23 June seems likely to be set.

Meanwhile, the committee overseeing the negotiations on movement of natural persons has set 12-13 June as the date for filing of schedules in this area.

India, Pakistan and the Philippines in their interventions in the financial services committee Wednesday, reiterated their position linking progress in the negotiations on movement of natural persons for delivering services to the financial services negotiations.

The new agreement on financial services is being sought to be brought into effect by 31 July 1996, according to a proposal before the Committee.

The United States, which got the negotiations to be extended, in a sudden reversal of its position in November 1993, had said that without full liberalization by the major participants, it would only guarantee existing access, and give on a non-MFN basis reciprocal arrangements access to others.

After the meeting Wednesday, trade diplomats said that senior officials from the US and EU reportedly made clear that the month-end should be the final deadline in these negotiations.

The US treasury official, Jeffre Shafer, told the meeting that there had been some "good offers" and signs of willingness to negotiate, but that there had been a number of "insufficient offers".

The EU, while also pressing developing countries to increase their offers of market access, has however been critical of the US approach and has threatened that in the event of the US non-MFN approach, it would do the same.

According to information provided to the Committee Wednesday, some 16 countries have now tabled improved offers. These include (apart from the three majors) Australia, Brazil, Canada, Colombia, Hong Kong, South Korea, Mexico, Morocco, New Zealand and South Africa. Another eight more, including Singapore, Chile and Venezuela were reported to have indicated their intentions.

The US and the EU have been suggesting that while they understood the problems of immediate liberalization for developing countries, these countries should put forward offers, with a time-frame to achieve liberalization -- on the pattern of tariff liberalization to be achieved over a period of time.

This seeming comparison of financial services liberalisation to phased liberalization of tariffs or quotas in goods though appears to miss the qualitative difference between the socalled financial services and other service sectors and trade in goods.

This has been rudely brought home to policy makers, and the public at large, by the Mexican experience and the fact that even the strongest nations seem unable to deal with the speculative attacks on their currencies and domestic economic policies in the wake of liberalization. But trade negotiators, and trade ministries back home, who are repeating ad nauseam about liberalization, seem so far unable to grasp the implications or translate them into their own policies.

On the links between the financial services negotiations and that on movement of natural persons, India said there had been some "encouraging" signals on this.

Canada is reported to have said it could improve its offers in this area, if India were to liberalize its financial services, and an Australian indication of its intent to put some better offers on the table. The EU is reported to have said that it was "seriously considering" this question. Pakistan and Philippines also stressed the linkage.