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Ottawa, November 7, 1997
1997-101

Federal Government to Table a Revised Offer in the WTO Financial Services Negotiations in Geneva

Related document:

•   Backgrounder.

The Canadian government will table a revised offer, including an international commitment on foreign bank branching, in the World Trade Organization (WTO) financial services negotiations in the context of the General Agreement on Trade in Services (GATS), Finance Minister Paul Martin and International Trade Minister Sergio Marchi announced today.

Canada's revised offer, to be tabled Monday in Geneva, as talks resume, reaffirms its commitment to working constructively towards achieving a successful conclusion of the GATS financial services negotiations.

The revised offer binds Canada's existing open financial services regime and also provides for the following liberalization commitments:

• Canada will bind internationally the commitment it made on February 14, 1997 to allow foreign banks to branch directly into Canada; and

• Foreign bank subsidiaries operating in Canada and originating from a non-NAFTA country will no longer have to seek authorization from the Minister of Finance to open more than one branch. NAFTA-originated subsidiaries are not subject to this requirement.

The revised Canadian offer is conditional upon the level of liberalization commitments undertaken by other WTO members by the December 12 deadline.

With only one month left before the December 12 deadline for negotiations, this improved offer should make a strong positive contribution to moving the talks towards a successful conclusion. Canada invites other WTO members to come forward with similarly improved offers so that the negotiations can be completed successfully.

"A successful outcome to these talks will be good for the health of the Canadian financial services sector, and good for Canadian consumers who will benefit from a wider array of products at increasingly competitive rates," said Minister Martin.

"An agreement would give Canadian firms more secure access to other markets and strengthen the rules-based trading system," Minister Marchi said.

A successful conclusion to these negotiations would provide greater international opportunities for Canadian financial services companies, new job opportunities for Canadians, and competitive benefits to consumers.

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For further information:

Background on the WTO Financial Services Negotiations

In 1995, WTO Members adopted an interim agreement on trade in financial services, under the framework of the General Agreement on Trade in Services (GATS). At that time, it was also decided that negotiations on a new permanent agreement would take place in 1997. Such negotiations started in April and are due to conclude by December 12, 1997.

The financial services sector is vital to the Canadian economy. Canadian financial institutions are world leaders in the adoption of technology and have proven to be highly competitive on the international stage. The financial services sector contributes over 5% of Canada's GDP and directly employs more than 500,000 people. Opening up business opportunities for the Canadian financial services industry through the GATS negotiations will lead to growth and new job opportunities in Canada.

The successful conclusion of these negotiations would result in the first permanent set of multilateral rules governing trade and investment in financial services. It would give Canadian businesses more transparency and certainty regarding their access to other markets. Given the importance of financial services in facilitating trade in other sectors, a successful conclusion would also be seen as an important boost for the world trading system in general.

Canada and the Negotiations

As with the 1995 negotiations, Canada is an active participant in the 1997 negotiations and is committed to reaching an agreement before the December 12 deadline. To reaffirm its commitment, Canada tabled an offer early in the negotiations in July. At that time Canada offered to bind its existing regime, which is one of the most open financial sector markets in the world. In addition, Canada committed to waiving the application of the reciprocity provisions found in federal legislation relating to banks, insurance and trust and loans.

With its improved and revised offer Canada now binds internationally its commitment to allow foreign banks to branch directly in Canada. This commitment was announced by the government in February 1997. In making its international commitment, Canada commits to including in its schedule a provision that branching will be permitted no later than June 30, 1999. Consultations are now underway on an appropriate branching regime and the government intends to bring forward legislation as soon as possible.

The offer also removes the requirement that foreign bank subsidiaries operating in Canada and originating from a non-NAFTA country have to seek authorization from the Minister of Finance to open more than one branch. Finally, the offer also incorporates technical changes with respect to both federal and provincial measures.