An Overview
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Notes 1. See Sauvé and Steinfatt (2001) for country-specific examples of barriers to financial services trade. 2. International standard setters include, among others, the World Bank, the International Monetary Fund, the Basel Committee on Banking Supervision, the International Association of Insurance Supervisors, the International Organization of Securities Commissions, and the Organisation for Economic Co-operation and Development. 3. Trade in financial services is often linked to capital movements, notably in the context of the establishment of a commercial presence that requires inward direct investment. Certain types of cross-border financial transactions may also involve capital movements and, hence, require some measure of capital account opening as an inherent part of services provision. In addition, countries often seek to promote greater policy coherence by opening domestic financial markets to foreign competition in the context of broader financial reform efforts. 4. See Demirgüç-Kunt and Levine (2008) for a recent overview of the evidence. 5. See Clarke and others (2003) for a review of the literature. 6. For more on these preconditions, see, for example, IMF (2007). 7. Such reforms go well beyond trade policy and cannot, therefore, be tackled solely in the context of a trade agreement per se. 8. Strictly speaking, the Code of Liberalization of Capital Movements (which also covers direct investment and establishment) and Code of Liberalization of Invisible Operations (which covers services)—which have been in existence since the 1960s—are earlier examples of binding legal instruments for promoting progressive liberalization among member governments of the Organisation for Economic Co-operation and Development. However, they are not treaties or international agreements in the sense of international law, as is the case for WTO agreements. 9. The definition of governmental authority for financial services is described later in this section. 10. According to Harms, Mattoo, and Schuknecht (2003, 30), who estimated the relative size of different modes and subsectors in financial services using U.S. data, “establishment trade is three-and-a-half times greater than cross-border trade for imports and more than twice as large for exports.” 11. Although no universally agreed-on criteria exist, some WTO members have based the distinction between modes 1 and 2 on whether one or two jurisdictions are involved in the provision of a financial service and whether the service was provided as a result of direct online, cross-border solicitation. 12. Permissible departures from most-favored-nation obligations include onetime exemptions (usually based on preexisting reciprocity provisions) taken