USCIB Letter to Deputy Treasury Secretary Kenneth W. Dam
On Financial Services Liberalization and Protection of Investments
May 23, 2002
The Honorable Kenneth W. Dam
Deputy Secretary of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220
Dear Ken:
I read with great interest your remarks at the meeting of the Pacific Basin Economic Council in Kuala Lumpur, Malaysia, in which you emphasized the need for further financial sector openness in Asia as a means to stronger growth. These same issues figured prominently on the agenda at the recent World Congress of the International Chamber of Commerce in Denver.
USCIB especially appreciates your leadership in encouraging senior decision makers in Asia to recognize the strategic important of financial markets and to support the policy steps necessary for competition and liberalization. Transparency in the regulatory process and consistent implementation of procedures to consult with the public and market participants are key complements to the new commercial opportunities countries will create by their GATs commitments.
I know our members who participate in our Financial Services Committee, chaired by Brant Free of the Chubb Corporation, agree entirely with your views. Through our participation in the ICC’s Commission on Financial Services and Insurance, we exert a strong influence for open, transparent markets in financial services. The Commission issued a statement on financial services liberalization in December 2001 (copy attached) and in mid-April of this year an ICC delegation met with WTO negotiators in Geneva to push for the reduction of barriers to establishment. In particular, efforts at liberalization of financial markets must be sure to provide protection of all existing acquired rights in each market, and to provide meaningful new commercial opportunities by encouraging the development of pro-competitive regulatory regimes as well.
We especially welcome your leadership and initiative in positioning the dialogue with Asian policy makers on the strategic advantages of highly productive financial markets driven by competition, efficient use of domestic capital and investment in the full range of finance-related services. Without a common vision of the contribution of finance to growth and stability, it will be very difficult for negotiators to advance market opening.
On a related issue, you were right on the mark to make the link between investment in financial services and foreign direct investment. Service providers need presence in the countries where they do business. As is the case for other investors, they need protection such as that found in NAFTA chapter 11 and our Bilateral Investment Treaties to ensure that governments fulfill their commitments to fair and equitable treatment, prompt, adequate compensation in the event of taking of property, either directly or through regulatory takings, and an impartial forum – investor to state – when it is impossible to get a fair hearing in a foreign court.
As you know, the issue of the appropriate level of protection for foreign investors has been controversial within the Administration and has arisen in the Congressional debate on Trade Promotion Authority. In our meeting on September 26, 2001, my colleagues and I explained why our members consider the continuation of the long-standing United States position favoring high standards of protection for foreign investors to be so important. USCIB, together with other business organizations, worked the Hill extremely diligently to push back on the Kerry Amendment, as we believed that Amendment would seriously weaken the level of protection needed by all our firms – services and manufacturing – operating in foreign markets. We were obviously delighted that a substantial majority of the Senate agreed with us. I hope that this demonstration of support in the Congress for our traditional policy on protection of foreign investors rights will encourage the Administration to stick with that policy.
We look forward to working with you on these important issues.
Sincerely,
Thomas M. T. Niles
ICC Statement on financial services liberalization
