High Level LOTIS Group
Minutes of meeting, Thursday 20 July 2019, at Barclays Bank
PLC, 54 Lombard Street
Andrew Buxton, Barclays Bank
Keith Clark, Clifford Chance
Harold Freeman, FCO (for Colin
Joseph Halligan, HM Treasury (for Robin Fellgett)
DTI (for Tony Hutton)
Robert Mendelsohn, Royal & SunAlliance
Robert, Linklaters & Alliance (for Charles Allen-Jones)
Roberts, Covington & Burling
David Shaw, HSBC
David Ure, Reuters
Neil Jaggers, BI
Alistair Abercrombie, BI
John Cooke, Association of British
Tim Carroll (IUA), Alastair Clark (Bank of England), Andrew
Dalton (Mercury Asset Management), Michael Foot (FSA), Sir Christopher Morgan
(Chamber of Shipping), Philip Randall (Arthur Andersen), Peter Smith
(PricewaterhouseCoopers), Peter Sutherland (Goldman Sachs International), Sir
David Walker (Morgan Stanley Dean Witter).
Minutes of Meeting of 15 November 2019 approved. No
Referring to his note circulated before the meeting
said that it was proving difficult
for services negotiations to move forward independently of
agriculture. The meetings in Geneva from 5-14 July had been very
sluggish. On the positive side, the Roadmap had been agreed in May
and a paper on tourism was being produced. The EC’s draft
negotiating guidelines had been reasonably well received. A point of
contention had arisen, however, between the European Commission and
the UK and other liberal member states on a new Commission attitude
on how and when to put detailed requests to other WTO members. The
implication was to delay the starting date for bilateral market
The second contentious issue in Geneva had been the
tabling by the US at the end of the meeting – and so not for
discussion until October – of an overly ambitious set of
proposals for the negotiating framework. The most unrealistic of
these was a deadline of December 2002 for completion of the services
negotiations. The Commission’s instinct had been to dismiss
the US proposals as over-ambitious and, by proposing the 2002
end-date, calling into question the idea of a broader, comprehensive
trade round. The UK and other liberal member states had argued
against dismissing the US proposal out of hand because it at least
showed a willingness on the part of the US to engage positively in
concluded by saying there
were grounds to be gloomy about the prospects for negotiations at
thought that it was
too early to despair, drawing on experience from previous
negotiating rounds; however it did depend on agreement to start a
new round next year. On the two contentious issues, he suggested
that we should certainly push the Commission back into effective
negotiations on requests and, on the US paper, that it would be
right to take the good and positive points rather than dismiss it
said that our aim should be to keep
aside from the politics and press for making things happen to
achieve the desired result.
the US paper should not be rubbished. He remarked that the US paper
pressed for market access. We should pick up on that and demand the
same from the US market too.
asked to what extent the EU
position was being affected by the French.
said it was clear that France was badly prepared on
services, not having consulted the industry, and in contrast was
well prepared on agriculture.
said we had
been grateful that Richard Caborn had written to Pascal Lamy. He
proposed taking an ESF mission to Paris (with strong French national
participation) to lobby the French government on services. It was
ridiculous, he said, that agriculture weighed so heavily politically
in the EU.
asked how strongly involved the Germans and French were in the ESF.
said that the Germans were beginning to
realise they had a services industry and their equivalent to the CBI
had recently become active in the ESF. A number of leading French
personalities and companies (like de la Martiniere of AXA) were
Summing up this part of the discussion,
responded to the two questions raised by Malcolm
McKinnon as follows. On the US proposal, it was advisable to pick up
the positive parts (even though we did not agree with the paper as a
whole) and to try to put pressure on the Americans themselves on
market access. On Europe, he thought we could go along with the
European Commission’s approach because the important thing was
to keep the process moving. How long the negotiations took was
secondary. While receiving this message,
warned that some loss would be incurred by drawing
back from arguing for the earliest possible bilateral
Turning to other recent developments,
said that having recently taken an ESF mission to
Geneva it had become clear to him that WTO officials and country
delegations welcomed visits by people with particular points or
sectoral issues to discuss. This was worth taking advantage of in
said that the recent Financial
Leaders’ Working Group visit to Geneva had been the largest of
its kind (with strong US participation) since the end of the
financial services negotiations in December 1997.
added that he was about to go to Washington to
sound out the political scene and then to New York. He would take
opportunities to raise matters like insurance.
said that the General Council of
the WTO had agreed in Geneva on 17 July to resume the study of
E-Commerce issues in the three WTO Councils (Goods, Services and
Intellectual Property). There were questions about how the
WTO’s own rules should apply linked with the question of how
those rules should relate to domestic regulation. E-Commerce should
also provide opportunities for developing countries but some were
reluctant to accept the case for pressing ahead with WTO work in
this area, seeing it as primarily a developed country interest. On
classification, the unresolved question was whether E-Commerce
should be treated as a good, a service or something else. The
European Commission thought that all electronic deliverables were
services (to support inter alia the interests of the European
audio-visual lobby), but this classification presented problems for
other providers (eg of books and software). The WTO secretariat said
that E-Commerce should be seen as a system of delivery and not
classified either as a good or a service. The LOTIS interest, he
suggested, was to find a way which presented the least barriers to
said there was a narrow
grey area between treating e-commerce deliveries as goods or
services. Where material could be downloaded electronically it could
be deemed to be a physical or a non-physical good. This was a
political as well as a technical debate.
asked whether home state control was very much an issue.
thought UK industry was in agreement on that.
said it was necessary to ensure that E-Commerce was
not made into a separate regime. Turning to developing country
interests, he asked the Group to see what arguments could be
gathered together demonstrating the benefits developing countries
could derive from building up their e-commerce expertise. He drew
attention to the group of four leading emerging market countries
– Brazil, Egypt, India and South Africa – which were
working together on ideas to help the developing world.
said that the FCO strongly supported the gathering
of arguments which set out opportunities, not only in e-commerce,
available to developing countries to boost their trading
Movement of Personnel
said that the European Commission would be
reluctant to put this topic on the agenda unless the private sector
pushed the business case for movement of personnel hard with their
, drawing on the work
of PricewaterhouseCoopers in the European Services Forum, reported
on the need for improved opportunities for key managers to be able
to move abroad with less hindrance and that developing countries
themselves wanted similar opportunities for their skilled workers as
well as those typically manual labourers in construction projects
abroad. He said that opposition from EU member states came mainly
from Employment Ministries and the immigration authorities. PwC were
gathering information with a view to a more detailed analysis. When
the evidence became available the arguments could be put more
forcibly to the politicians. The emphasis had to be on facilitating
temporary movement of personnel.
said that, given the fact that
most companies represented in this Group had these problems, how
much noise should we make? From his direct experience, Indian
companies in the software industry were trying to get their
government to distinguish between business personnel and others.
said the Commission would only act if
a strong message came from all the member states. We could see both
sides in the UK. We had strong offensive interests to push on behalf
of our own business people and our immigration authorities
recognised this; it was not so much a trade union problem in the UK
as it was with other EU members.
it was not an issue we should let go. It was very easy to de-link it
from immigration because the sponsoring company would be responsible
and would be required to give an undertaking to get the person out
of the country at the end of their time.
said we did not intend to drop the case, but we looked to countries
like India to put the de-linking into effect.
reported that services suffered more than goods from
regulatory barriers to trade. For real liberalisation to take place
in the next round a further easing of regulatory practices was
needed. The aim for regulation to be objective, fair, neutral and
transparent was embedded in the GATS articles. The question was how
to ensure that regulators saw this so as to allow for
liberalisation. The WTO’s Working Party on Domestic Regulation
now needed to broaden its task, for example to look at the
relationship between the WTO and international regulatory bodies
like the IAIS in insurance. Work was proceeding on this in private
sector groupings like the European Services Forum and the Financial
Leaders Working Group. International bodies including the IMF and
the OECD were also working on it. Where next, now that there was
agreement on the key issues?
It was now necessary to get international agreement
on the way forward. There was consensus on the desirability of
domestic regulators acting in a transparent and equitable manner.
The difficult area arose from decisions about necessity and
proportionality of regulations country by country. How could that be
A recent visit led by Robert Madelin of the Trade
Directorate General of the Commission to meet the Basle Committee
and the IAIS, which John Cooke had joined, had been useful.
said he was keen to involve the
regulators in the WTO process. Therefore the Commission’s
meeting with the banking and insurance supervisors had been welcome.
What was called for were ways to get the message across to domestic
said the UK insurance industry had a well co-ordinated
approach to barriers to establishment and cross-border trade. Their
main concerns were over reinsurance, legal form (especially for
Lloyd’s), intermediation/broker services and investment of
premium income. An EC paper on barriers to insurance services
targeted Japan, Korea and the USA together with leading emerging
markets including the four countries mentioned earlier which were
collaborating on developing country issues. He had nothing to add to
the points covered by John Cooke on regulation.
With regard to the US, their principal concern was
about reinsurance; earlier difficulties over surplus lines had been
resolved. They had had to learn to live with sub-Federal state
regulations dealing with problems state by state. The difficulty
over reinsurance was the requirement to provide gross reserves
irrespective of any reinsurance that was placed.
He welcomed recent openings agreed with
said that although there had
been helpful developments at the senior level with the Chinese, the
message had not filtered down to local regulators who continued to
be very difficult to deal with. On the US, he said that everyone had
found ways round the 50 state problem, but that did not diminish the
fact that it presented a barrier to trade.
asked about Japan, because he
could raise issues in a meeting in New York the following week.
said they preferred a low key approach;
from a selfish point of view, he said, Lloyd’s was all right.
said that nevertheless there were still
huge regulatory barriers in Japan which had to be tackled.
said that the large UK law firms were already major
exporters of their services. They had perceived signs of change in
Asia, with some countries, like Singapore, no longer protecting
their own law firms. In the negotiations with China, the EC had
achieved better terms for law firms than had the US negotiators.
Progress in Japan, however, was extremely limited with strong
resistance to allowing foreign expertise in. India and Korea
remained adamant about protecting domestic firms. He commended the
good work being done by the Law Society. The UK’s own stance
was very liberal; we therefore looked for reciprocity from abroad.
There was a long way to go.
warned that one line of
thinking among EU member states was that, in areas where they
maintained restrictions, it was not possible for the EU to ask more
from third countries than the EU itself was prepared to offer. The
UK continued to resist that attitude.
agreed. He said that that only gave strength to his view that we
still had more to do in our own EU back yard.
reported, drawing on some very helpful input from
AUTIF. Fund managers experienced barriers in the USA, within the EC
and generally elsewhere. Some useful talks between the European
Industry and the US authorities a couple of years previously had
been stymied by the US industry although there had been some slight
movement since. AUTIF’s hopes lay in the positive effects of
structural changes such as the dismantling of Glass-Steagall,
industry consolidation and the effect of the internet leading to US
investors wanting wider choices. This could put increasing pressure
on the protectionist stance of the US industry. Barriers within the
EU were caused by different tax regimes, different marketing
requirements, differing interpretations of UCITS and plain
obstructive bureaucracy. In the rest of the world there were the
usual problems over prohibitive, obscure and contradictory
regulations affecting both cross border trade and
suggested that the next step
should be to seek from the UK fund management industry a
prioritisation of the most serious barriers they were facing and the
key markets in which such barriers presented obstacles to the
expansion of their business.
the Group had agreed that Asset Management was one of the priority
sectors within financial services where the UK looked for
significant market opening around the world. It was another sector
experiencing serious shortcomings within the EU itself.
Any Other Business
said that he required considerably more private
sector input than he had received so far on what was being done in
providing technical assistance and training to the developing world
to help them strengthen not only their capacity to cope with WTO
matters, but more basically to build their domestic infrastructure
and professional skills.
confirmation from Malcolm McKinnon) said that Minister Caborn was
still keen to hear what the UK private sector was doing. A similar
exercise was being conducted in the ESF. It was not an area where
statistics could meaningfully be gathered. It was more a matter of
compiling a file of examples of what companies were doing.
said he would contact individual companies to see
what information they could provide.
There being no other business, the meeting closed
NOTE: The next meeting of the High Level LOTIS
Group will be on Wednesday 29 November at 4pm.