Including financial services in preferential trade agreements : lessons of international experience for China

WPS4898 P olicy R eseaRch W oRking P aPeR 4898 Including Financial Services in Preferential Trade Agreements Lessons of International Experience for China Constantinos Stephanou The World Bank East Asia and the Pacific Region Poverty Reduction and Economic Management Department Financial and Private Sector Development and Trade Units April 2009 Policy ReseaRch WoRking PaPeR 4898 Abstract The objective of this paper is to address the main used by countries to include financial services in such considerations for China of including financial services agreements, and identifies good practices in preparing in its preferential trade agreements. The paper briefly for financial services negotiations. Particular emphasis is reviews China's financial liberalization process and the placed on lessons from Latin American preferential trade state of its domestic financial system, discusses the main agreements, given their more frequent and extensive considerations of including financial services in China's coverage of financial services compared with other preferential trade agreements, compares and contrasts regions. the different `architectural' approaches that have been This paper--a product of the Financial and Private Sector Development and Trade units, Poverty Reduction and Economic Management Department in East Asia and the Pacific--is part of a larger effort in the department to shed light on the treatment of financial services in preferential trade agreements.. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The author may be contacted at cstephanou@worldbank.org. The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Produced by the Research Support Team  Including Financial Services in Preferential Trade Agreements: Lessons of International Experience for China by CONSTANTINOS STEPHANOU Keywords: China, trade agreements, financial services, financial liberalization. Constantinos Stephanou (cstephanou@worldbank.org) is a Senior Financial Economist in the World Bank's Financial and Private Sector Development Vice Presidency. The paper is based on a workshop on the same topic that took place in Beijing in early 2008; it reflects solely the views of its author and does not necessarily reflect the views of the World Bank Group or its Executive Directors. The author would like to thank Pierre Sauv