GATS Financial Services Liberalization: How do OECD Members Schedules Impact Commercial Banking FDI?

The World Trade Organization (WTO) has come to play an important role for a signifi cant number of countries (currently 150) negotiating fi nancial services liberalization under the General Agreement on Trade in Services (GATS). Nonetheless, despite these signifi cant advances, the GATS is far from being complete. Substantial liberalization is still pending in a considerable group of member countries. This leads to regulatory defi ciencies that contribute to a suboptimal provision of fi nancial services. Among the many aspects needing improvement, is a strengthening of GATS provisions to guarantee greater market access and NT to foreign service providers. The analysis of the scheduled commitments and MFN exemptions undertaken by the 30 Organization for Economic Cooperation and Development (OECD) members points to a great variability in the depth of commitments affecting fi nancial services foreign direct investment (FDI). In particular, entry, establishment and competition of foreign banks is determined through market access and NT limitations under the GATS framework. Given the current stalemate in the negotiation process of the GATS, improvements in the current liberalization framework will come from the combination of several processes such as unilateral opening; regionalism; pressures from the International Monetary Fund (IMF ) and the World Bank (through their lending mechanisms) and the OECD, rather than under the aegis of the WTO.