Financial Services and the GATS 2000 Round

THE FINANCIAL SERVICES Agreement (FSA) concluded in December 1997 under the auspices of the World Trade Organization’s (WTO) General Agreement on Trade in Services (GATS) represents without a doubt one of the hallmark achievements of the Uruguay Round. The FSA is unique in many respects. First, its rules now govern a sector of considerable economywide importance. An efficient financial sector ranks among the very core of “infrastructures” without which modern economies simply cannot hope to function and prosper. It provides intermediation between lenders and borrowers, allows firms to diversify and manage risk, allocates capital across the economy, and provides many of the technical services necessary for both domestic and international commerce to operate. In countries with weak economies, the development of a strong financial sector is now recognized as one of the key ingredients of sustainable development.