The WTO Agreement on Trade in Financial Service
The Financial Service Agreement (FSA) became an Annex to the GATS agreement in 1997. The main propose of it is to open commercial banks, securities and insurance industries to foreign competition providing a better financial service and helping countries’ economy to grow. Liberalization of Financial Services allows services and services providers to enter the country. Each country has its GATS list or schedule, where they add which sectors the country decided to liberalize or make commitments. A country can fully or partly liberalize its financial services under GATS. Over 100 nations including the EU and the United States signed up to the Financial Service Agreement (FSA). Some nations allowed foreign firms to establish wholly owned asset management subsidiaries in their country. Other nations agreed to open up cross-border access to foreign firms. The Annex on Financial Services provides some specification on how authorities can take measures relating to financial services. In addition, the Annex (Art. 5.) Provides a non-exhaustive list of insurance, banking and other financial services that are subject to GATS rules and commitments. The Annex describes which "services supplied in the exercise of governmental authority" are exempted from the GATS agreement (Art. 1), such as activities by central banks or by the public retirement systems. (Stichele, 2004). International Chamber of Commerce (ICC) and other business group agreed that the financial services liberalization benefits developing countries introducing foreign firms with new skills and products, increasing investment in those counties, lower costs for loans, better interest, enable reliable and efficient settlement of payments. Developing Countries opposed the agreement but were pressured into accepting it. The US and Europe were the ones who more supported the agreement and were also the most beneficiated. They used the financial crisis in Asia to...
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