Liberalisation of financial services tops ‘quad’ agenda

Date: 01/05/1997

By Mark Turner

EU-US tension over plans to liberalise the world financial services market will loom large at this week's 'quad' meeting of trade ministers from North America, Europe and Japan.

Trade Commissioner Sir Leon Brittan will renew his calls for the US to agree rules on removing international impediments to the banking and insurance business, regarded by the West as crucial to economic growth.

Although analysts do not expect the real horse-trading to begin until nearer the 15 December deadline for agreement, the European Commission is keen to avoid a repeat of negotiations two years ago when Washington got cold feet at the last minute and a deal fell through.

The EU, which went ahead and secured an interim agreement, suggested the American backtrack owed much to its outdated laws and lack of competitiveness, and claimed it showed Europe was now the global pacemaker for liberalisation. The US argued that the offer on the table in 1995 did not even guarantee the status quo and said it was waiting for more reciprocity in Asian markets. It cites the February agreement on world telecoms liberalisation as a vindication of its negotiating position.

With new talks beginning this month, Brittan is yet to be convinced of Washington's commitment to getting a deal. “We are looking for some sincere application from the US and solidarity within the group,” said a spokesman.

Nevertheless, Union officials point to some “useful statements” from Washington and say that the current climate is more favourable to a solution than two years ago.

Senior bankers and insurers from Europe and the US have united under the umbrella of the 'financial leaders group', and are placing strong pressure on their respective governments to conclude a deal.

Nikolaus Bömcke, of the Banking Federation of the European Communities, called for “a definitive agreement now, and better offers from third countries”.

The industry, which is compiling a study of obstacles to global financing, feels it must convince Asians and Latin Americans that it is in their interest to liberalise.