WTO Financial Services Agreement

The World Trade Organisation's financial services deal will help stabilise Asia's financial markets which should boost consumer confidence in our key Asian markets, as well as bring down the costs to New Zealand firms doing business off-shore, Trade Minister Lockwood Smith said today.

The deal, which was concluded in Geneva yesterday, covers 70 countries including New Zealand's key export markets of Australia, the US, Asian economies and the EU nations. By opening up competition in banking and insurance, it will benefit New Zealand in two ways, Dr Smith said.

"First, the deal underlines the continued commitment of governments to opening their banking and insurance markets to competition despite the recent troubles in Asia. That should help stabilise Asia's troubled banking and financial sectors, helping to boost consumer confidence in some of our key export markets. The sound, long-term approach Asian governments have demonstrated by joining the agreement is to be welcomed.

"Second, increased competition in global financial services should bring down the costs for New Zealand firms doing business off-shore. And any barriers which countries do maintain to free trade in financial services will now be more clearly identified."

Dr Smith said the pledges made by the 70 countries which are part of the deal will lock in present market access opportunities and, in some cases, go beyond this to incorporate future liberalisation intentions. Several countries have crossed the threshold to commit to majority overseas ownership in their banks or insurance companies.

"Given the importance of financial services in underpinning overall economic development, we can only stand to benefit from the efficiency gains that increased competition in this area can generate globally and in our region.

"Because New Zealand already has an open and liberal financial services regime, we will be able to benefit from the deal without having to change any of our existing laws and regulations," Dr Smith said.