Good news for SE Asia and the world: Landmark Financial Accord Reached
AP Online, Friday, December 12, 1997 at 23:05
(Note comments on Korea, etc. This comes at an important time considering the
SE Asian situation. -- Dan)
By PHILIP WALLER
Associated Press Writer
GENEVA (AP) - Negotiators meeting through the night sealed a
long-delayed global trade accord Saturday that opens up
multitrillion-dollar banking and insurance sectors to foreign
competition.
The delegates resolved a series of snags in frenzied late-night
bargaining at the World Trade Organization, most notably a row
between the United States and Malaysia over access to insurance
markets, sources said.
In fact, it has been the United States, with its effort to wrest
better market-opening offers from Asian nations, that had been
regarded as the greatest potential stumbling block to the deal.
''We have got it,'' said Renato Ruggiero, director general of
the WTO, his hands raised in jubilation. He called this year a
''golden year'' for the international trading system.
It is the third global accord reached by the WTO in less than 12
months, following agreements on information technology and trade in
telecommunications.
U.S. and European industry leaders also hailed Friday's pact,
which was reached shortly after a midnight deadline set by the WTO.
The agreement incorporates about 70 countries all of which have
made commitments to open their banking, insurance and securities
markets to outside firms.
President Clinton said the accord would help ensure the United
States' strong global position in financial services.
''In the wake of recent financial instability, it is
particularly encouraging that so many countries have chosen to move
forward rather than backward,'' he said in a statement read by
chief U.S. negotiator Jeffrey Lang.
Aside from paving the way for expansion in the financial
services sector, the accord is expected to create a much more
predictable and secure business environment, underpinned by
international rules.
At a time when a number of Asian countries are trying to climb
out of financial straits, supporters say the deal sends a
reassuring signal: that the world trading system is being carefully
tended to.
International trade negotiators have been struggling for more
than 15 years to strike some sort of financial services deal.
Washington walked away from the talks in 1995 and there had been
fears it might opt for only a partial deal this time around if it
wasn't happy with the Asian offers.
Although details had yet to emerge, the final agreement seemed
to promise something for everyone.
European and U.S. banks hope to gain a larger chunk of the
banking business in South Korea and Thailand, while insurance
companies are seeking better access to Japanese and Malaysian
markets.
Asian countries that have placed restrictions on foreign capital
will likely benefit from the injection of overseas investment, even
though local industries could be hurt in the short term.
''It's a very good deal,'' said Bob Vastine, president of the
Coalition of Service Industries, which represents U.S. and European
banks, insurance and securities companies.
''It's especially good for the growing markets and should lead
to their stabilization,'' he said.
At stake are the $1.2 trillion worth of foreign exchange deals
done daily; total world banking assets of $20 trillion; and
insurance premiums of $2 trillion.
The accord comes amid dramatic growth in the number of foreign
banks, insurance companies and securities houses either operating
abroad or providing services to foreign customers.
Cross-border commerce more than tripled between 1985 and 1995
and now tops $50 billion for the top trading countries.
Since 1970, jobs in the financial sector have risen by 50
percent in some industrialized countries and currently represent 3
percent to 5 percent of total world employment, according to WTO
figures.
As the clock wound down on negotiators Friday, the United States
kept up its pressure on Asian nations. The main hitches holding up
the deal involved the reluctance of Asian economies like Malaysia
and South Korea to allow more foreign competition.
In particular, politically powerful U.S. companies like American
International Group Inc. insisted that Malaysia guarantee that
foreign insurers already in the country could keep 100 percent of
their investments.
The Malaysian government - which blamed currency speculators for
its recent financial woes - proposed that foreigners should not be
allowed to own more than 51 percent of local firms.
Negotiators managed to overcome that dispute, or at least
sidestep it, said the sources, who spoke on condition of anonymity. |
