The voluntary Understanding worked on a 'negative list' that required governments to specify what was not covered by its additional rules. This approach is increasingly common in FTAs, especially those with the US.
Under negative lists governments to bind the hands of their successors, even in the face of unforeseen new challenges. There are also high risks of error. Proposals to adopt negative lists have been resisted in the GATS, including in the Doha round.
It is not clear exactly how the schedules will work for financial services in TISA without access to the rest of the text. It is believed that TISA proposes a 'hybrid' of positive and negative lists. The rules may guarantee foreign firms' access to a country's services market using the positive list approach; that would allow a government to specify which services and sectors will be covered by the market access rules.
However, the requirement of non-discrimination, where a foreign service supplier must be treated no less favourably than domestic competitors, would follow a negative list approach. Governments would have to state what services, activities or laws are not subject to that rule; special restrictions on foreign services, products or measures would only be permitted where they were explicitly listed. This would apply even in sectors that were not opened in the market access (positive) list.
A standstill would also apply: governments would have to bind their existing levels of liberalisation and not introduce new restrictions in the future.
There are also suggestions of a ratchet. When a government reduces restrictions on foreign financial firms, services or products, those changes would automatically be locked in.
Finally, it has been suggested that there may be no provision to add new reservations to the schedules; there is such a provision in the GATS, although it is extremely difficult to use.
The leaked financial services text seems to follow this path.
Access to a country's financial marketThe US has made specific proposals for the scheduling of commitments on financial services.
Under Art X.3.1 parties must list their commitments to allow foreign financial service suppliers from TISA countries to establish a presence in their country.
Their commitments to allow the supply of financial services across the border would apply only to a truncated list of financial services in Art X.8. These mainly relate to insurance and a range of auxiliary services, plus electronic payments and portfolio management services; they do not include mainstream services involving banking and trading of financial products.
Those commitments would be made in accordance with Art I-3 of the main TISA text, which is presumably based on a positive list.
Hong Kong China wants to make it clear that parties can put limitations on the extent to which they are committing a particular financial service, as permitted in the GATS. This proposal implies that the US does not want to allow governments to impose any limitations on a sector they agree will be covered by those rules.
Without the rest of the agreement it is unclear what rules would apply if the US proposal were not adopted. Presumably Art 1-3 of TISA would apply to financial services just like all other services.
Not discriminating against foreign firmsThe US proposal for Art X.3.2 involves commitments not to discriminate against financial services from other TISA countries, known as national treatment. This paragraph only applies to financial services that are supplied across the border. Those commitments are again limited to the services listed in Art X.8.
There is a cross-reference to Art II-2 of the main TISA text, which has not been leaked.
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