Notes on GATS rules for international trade in banking services for public forum at WTO, 26 September 2012

Andrew Cornford Observatoire de la Finance, Geneva

Challenges to the political and intellectual assumptions of the GATS rules on banking

Negotiation of the GATS rules for banking was completed in the early 1990s, though countries’ commitments only became part of the agreement after negotiations were completed at the end of 1997. While the GATS rules and commitments were actually being negotiated, the overwhelming presumption of policy makers in advanced countries was that benefits from the liberalisation of cross-border financial transactions and of restrictions on the commercial presence of foreign banks would accrue not only to their own financial institutions but also more generally to other economies. It was this presumption which largely shaped the outcome of the Uruguay Round negotiations on financial services, despite reservations expressed principally by some developing countries. As a result the GATS rules have much more to say about what should be the limits on countries’ regulations, where these are a potential impediment to international trade in financial services, than about the contents of the right to regulate and the development of the statistical data required for valuing offers and commitments, compensation in disputes and procedures for safeguard actions.