An Overview
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23. Section D.3. of the understanding provides, “A new financial service is a service of a financial nature, including services related to existing and new products or the manner in which a product is delivered, that is not supplied by any financial service supplier in the territory of a particular Member but which is supplied in the territory of another Member.” 24. See Crawford and Fiorentino (2005); Roy, Marchetti, and Lim (2006); and World Bank (2005) for a description of recent trends and potential drivers. 25. The World Bank (2005) also reports that, on average, Latin American and Caribbean countries belong to eight different PTAs, which is the highest number among developing countries. 26. All Latin American and Caribbean Region free trade agreements (including those not yet implemented), starting with the North American Free Trade Agreement, have been categorized either as North-South (that is, including at least one developed country) or as South-South. 27. A fourth, more technical reason for including financial services in a PTA would be to ensure that the agreement has substantial sectoral coverage and therefore constitutes a lawful exemption to the nondiscrimination requirement articulated in article V of GATS. This issue can be addressed by not carving out a priori financial services from the scope of the agreement. 28. Unlike trade in goods, assessing the direct effect of including financial services in PTAs goes well beyond trade volumes to include various financial sector outcomes, such as depth, efficiency, and stability (see Hoekman 2006). 29. This section is partly based on chapter 3 of this volume. 30. Examples include the adoption of a positive list approach for the cross-border supply of financial services and the treatment of potentially sensitive information, as well as the introduction of a binding—as opposed to “best endeavors” as in NAFTA—market-access provision listing the types of restrictive measures that parties cannot adopt or maintain with regard to investors or providers of another party. 31. Marconini (2006) defines four main aspects of domestic regulation in PTAs: transparency (contact points, publications, notifications, and the like); governance (tribunals, prior comments, reviews and appeals, authorization, and so on); requirements; and recognition. 32. For example, in the case of the Chile-U.S. FTA, the two parties agreed in an annex that measures adopted by Chile (such as applying a restriction on payments and transfers) could be subject to dispute settlement by U.S. investors. Different types of claims were identified to distinguish between short-term and longer-term capital flows, with restrictions on the latter being more punitive for Chile. 33. See Beviglia-Zampetti and Sauvé (2006), as well as Fink and Nikomborirak (2008), for an analysis of rules of origin in services.