Negotiations on Foreign Market Access Slow to a Crawl

Worldwide talks on liberalizing access to financial markets have slowed down with little prospect that they will succeed before a Dec. 12 deadline, according to a well-placed official.

"The jury's out at the moment, and there's no way of knowing which way the talks will go," said Thomas L. Farmer, general counsel at the Washington-based Bankers' Association for Foreign Trade. "Basically there's nothing in terms of offers on the table from the key countries we're interested in."

Mr. Farmer said that the economic problems that have roiled the markets of Southeast Asia have made some countries skittish about liberalizing their markets. That has only contributed to the slowdown in the World Trade Organization talks.

The talks, which involve over 90 countries, have been taking place since early September in Geneva.

If there is no agreement, Mr. Farmer said, the United States is likely to decline full participation in any program for liberalizing world trade and opt instead to reach most-favored-nation agreements with individual countries.

The Bankers' Association for Foreign Trade, whose members are U.S. banks with significant international operations, has come out strongly in favor of worldwide liberalization that would let U.S. banks expand operations in countries that now restrict foreign banks' activities.

Countries with rapidly growing financial services markets that continue to restrict foreign banks' activities include India, Taiwan, Malaysia, Thailand, Indonesia, Brazil, Argentina and to some extent Venezuela and Mexico.

Neither China nor Russia, two important trading powers, is participating in the World Trade Organization talks because they are not members of the organization, which sets the rules of international commerce.

Mr. Farmer said proposals by some Southeast Asia countries to let foreign banks have more ownership of financial institutions to ease the financial crisis there are of little interest to U.S. banks.

"This is not the way U.S. banks want to go in," he said.

"Banks want to set up their own institutions, they want to develop their own niche in areas like project finance and corporate banking," Mr. Farmer said. "They don't want to buy a local institution that does everything from retail banking to agricultural lending."

He declined to speculate on the outcome of the talks. But he did emphasize that the United States has expressed a great deal of flexibility in trying to coax developing countries to make concessions.

"We're not saying that this has to happen all at once," he said. "We're certainly willing to move ahead on a phased-in basis. But there does have to be a clear timetable."

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