. /.WORLD TRADE
ORGANIZATIONS/CSS/W/50
14 March 2001
(01-1406)
Council for Trade in Services
Special SessionOriginal:  English/
French
COMMUNICATION FROM CANADA
Initial Negotiating Proposal on Financial Services
The attached communication has been received from the delegation of Canada with the
request that it be circulated to Members of the Council for Trade in Services.
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1. Canada reserves the right to modify this pro posal at any time. This proposal does not prejudge
Canada’s position on other service sectors, nor any future offer on this or other sectors. This proposal
should be read in conjunction with the principles and objectives as outlined in Canada’s initial
negotiating proposal.
A. INTRODUCTION
2. Liberalization of trade in financial services provides benefits to the domestic financial sector,
as well as the broader domestic economy. As such, Canada believes that further liberalization of
financial services will be advantageous to all WTO Members.
3. Financial services liberalization can contribute to the strength of domestic financial systems
in many important ways: it can strengthen the capital base and promote state of the art management
practices in financial institutions, and improve credit quality control and risk diversification. It also
encourages domestic capital market innovation that may help channel foreign and domestic savings toproductive investments. In addition, by encouraging transparency and the efficient flow of related
financial data and market information, liberalization enhances the functioning of this sector. All of
this contributes to increased financial sector stability.
4. Furthermore, financial services are key inputs into all economic activities. Increased
competition in the financial sector benefits users of financial services, such as business and individualconsumers, by lowering costs, increasing quality and providing a greater variety of products and
services.
5. A liberal financial services regime does not mean an unregulated regime. The GATS provides
basic and extensive accommodations for the prudential regulation needed to protect the safety and
soundness of financial systems to safeguard the integrity of financial markets and to protect investors.It is Canada’s aim throughout the negotiations to make certain that a Member’s ability to take
measures for prudential reasons, as outlined in the Annex on Financial Services, will not be restricted.S/CSS/W/50
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B. NEGOTIATING MODALITIES
6. Canada supports maintaining the practice established during the Uruguay Round of having
distinct negotiations regarding financial services. The nature of specialized regulation in the sector, as
well as its importance to the economy and macroeconomic stability, warrants the creation of a specific
negotiating group for financial services. The direct participation of financial sector experts in the
negotiation will ensure that the trade rules take into account the unique aspects of this vital sector.
7. Canada supports using the Committee on Trade in Financial Services (CTFS) as the forum for
these distinct negotiations. Canada believes that the new function of the CTFS would not preclude it
from managing housekeeping issues that would normally be addressed by the committee.
8. The negotiations should be conducted through the most effective and pragmatic means
possible, such as through model schedules, request–offer or other suitable means, including a mixture
of approaches if appropriate.
C. OBJECTIVES
9. Canada’s objectives for the GATS 2000 round of financial services negotiations include:
• expanding and strengthening market access and national treatment commitments and
achieving further reductions in barriers to trade in financial services. Negotiationsshould examine all four modes of supply (cross-border, consumption abroad,
commercial presence, and movement of natural persons) with the aim of improvingand expanding liberalization commitments. In addition, scheduled commitments may
have to be expanded in certain modes, particularly cross-border supply and
consumption abroad, to reflect technological advances. The impact of the
development of electronic commerce is particularly relevant in this context.
• furthering the benefits of liberalization by addressing certain ambiguities in the
GATS framework as it applies to financial services. For example, definitional orclassification problems may result in uncertainty as to the scheduling and
interpretation of commitments. As such, we encourage all Members to use the
classification list outlined in the Annex on Financial Services when scheduling
commitments in financial services.
• clarifying transparency disciplines to complement any advances made in market
access and national treatment commitments. While recognising the work being done
by the Working Party on Domestic Regulation (WPDR) in this area, we believe that
disciplines on transparency designed according to the particular needs of the financial
sector will need to be considered.
• recognising the special needs and interests of  developing Member countries. As such,
Canada supports facilitating greater liberalization by allowing Members to phase in
commitments over a specified period. Although a method for phasing in
commitments will have to be agreed upon, Canada supports further exploration of this
matter.
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