The Doha Round and Financial Services Negotiations

The Doha Round and Financial Services Negotiations AEI STUDIES ON SERVICES TRADE NEGOTIATIONS Claude Barfield, series editor THE DOHA ROUND AND FINANCIAL SERVICES NEGOTIATIONS Sydney J. Key INSURANCE IN THE GENERAL AGREEMENT ON TRADE IN SERVICES Harold D. Skipper Jr. LIBERALIZING GLOBAL TRADE IN ENERGY SERVICES Peter C. Evans REDUCING THE BARRIERS TO INTERNATIONAL TRADE IN ACCOUNTING SERVICES Lawrence J. White The Doha Round and Financial Services Negotiations Sydney J. Key The AEI Press Publisher for the American Enterprise Institute WA S H I N G T O N , D . C . 2003Available in the United States from the AEI Press, c/o Client Distribution Services, 193 Edwards Drive, Jackson, TN 38301. To order, call toll free: 1-800-343-4499. Distributed outside the United States by arrangement with Eurospan, 3 Henrietta Street, London WC2E 8LU, England. Library of Congress Cataloging-in-Publication Data Key, Sydney J. The Doha round and financial services negotiations / Sydney J. Key. p. cm. Incl udes bibliographical references and index. ISBN 0-8447-4182-5 (pbk. ) 1. Financial services industry—Law and legislation 2. Foreign trade regulation. I. Title K1066.K49 2003 343†². 087—dc 22 2003063553 3 5 7 9 10 8 6 4 2 Printed in 2003 by the American Enterprise Institute for Public Policy Research, Washington, D. C. The views expressed in publications of the American Enterprise Institute are those of the authors and do not necessarily reflect the views of the staff, advisory panels, officers, or trustees of AEI. The views expressed by the author in this publication should not be interpreted as representing the views of the Board of Governors of the Federal Reserve System or anyone else on its staff. Printed in the United States of America Contents QFOREWORD, Claude Barfield ACKNOWLEDGMENTS 1 2 INTRODUCTION INTERNATIONAL TRADE IN FINANCIAL SERVICES E-Finance 6 Modes of Supply 7 Services Provided across Borders 8 Foreign Direct Investment 9 Presence of Natural Per sons 9 LIBERALIZATION AND REGULATION Three Pillars of Liberalization 12 National Treatment and Market Access 13 Nondiscriminatory Structural Barriers 15 Freedom of Capital Movements 18 Strengthening Domestic Financial Systems 20 Minimum Standards and Codes of Good Practices 22 â€Å"Surveillance† 23 The Prudential Carve-Out in the GATS 24 NATIONAL TREATMENT AND MARKET ACCESS â€Å"Binding† Existing and Ongoing Liberalization 28 IMF Conditionality 30 Permanence of GATS Commitments 31 Foreign Direct Investment 32 Remaining Barriers to Entry and Operation 33 MFN Exemptions 34 Barriers within the Scope of the Prudential Carve-Out 35 Cross-Border Services 37 Binding Gaps versus Remaining Barriers 38 Uncertainty about WTO Jurisprudence 39 v vii xiii 1 4 3 11 4 27 vi CONTENTSMore Liberal Approaches for Wholesale Services 39 Evolving Regulatory Responses to Retail Cross-Border Services 40 Negotiating Goals 41 5 NONDISCRIMINATORY STRUCTURAL BARRIERS Regulatory Transparency 44 R ules about Developing and Applying Rules 44 Sound Financial Systems 46 â€Å"Effective Market Access† 47 General Anticompetitive Measures 49 â€Å"Necessity† and Domestic Regulation 50 Recognition of Prudential Measures 51 Harmonization 52 Facilitating Access 52 The Intra-EU Approach 53 Remaining Second-Pillar Barriers 54 Applicability of the Intra-EU Approach 55 CONCLUSION 43 6 57 61 87 101 107 NOTES REFERENCES INDEX ABOUT THE AUTHOR Foreword Q In advanced industrial economies, the services sector accounts for a substantial portion of each nation’s gross domestic product.Despite the increasing importance of trade in services, the General Agreement on Trade in Services (GATS), which was negotiated during the 1986–94 Uruguay Round and entered into force in January 1995, marked the first time that rules for opening markets in services were included in the multilateral trading system. The GATS called for periodic negotiating rounds, beginning no later than 2 000, to achieve further liberalization of trade in services. Serious individual sector negotiations, however, did not shift into high gear until a comprehensive new round of multilateral trade negotiations was launched at the November 2001 ministerial meeting of the World Trade Organization (WTO) in Doha, Qatar. The American Enterprise Institute is engaged in a research project to focus on the latest round of trade negotiations on services.Mounted in conjunction with the Kennedy School of Government at Harvard University, the Brookings Institution, and the Coalition of Service Industries Research and Education Foundation, the project entails analysis of individual economic sectors: financial services; accounting; insurance; electronic commerce; energy; air freight and air cargo; airline passenger services; and entertainment and culture. Each study identifies major barriers to trade liberalization in the sector under scrutiny and assesses policy options for trade negotiators and inte rested private sector participants. AEI would like to acknowledge the following donors for their generous support of the trade-in-services project: American Express Company; American International Group; CIGNA Corporation; FedEx Corporation; Mastercard International; the Motion Picture Association of America; and the Mark Twain Institute. I emphasize, however, that the vii viii FOREWORD conclusions and recommendations of the individual studies are solely those of authors.Issues for the Financial Services Negotiations In this study, Sydney J. Key analyzes the role of the GATS and the WTO in the liberalization and regulation of the financial services sector and identifies six broad goals for the financial services negotiations in the Doha round. What makes her analysis unique is that she integrates the two very different perspectives of trade policy and financial regulatory policy. Throughout the study, Key emphasizes the complementary and mutually reinforcing relationship between eff orts to open markets under the GATS and the intensive ongoing international work on strengthening domestic financial systems, including prudential regulation and supervision.The study examines the role of the GATS and the WTO in relation to what Key characterizes as the three pillars of liberalization necessary to achieve â€Å"international contestability of markets†: (1) opening markets to foreign services and service suppliers through GATS commitments to provide â€Å"national treatment† and â€Å"market access†; (2) implementing domestic structural reforms that would eliminate nondiscriminatory structural barriers to trade in financial services; and (3) liberalizing capital movements. Key explains that the GATS deals with third-pillar liberalization only insofar as it affects countries’ specific commitments to liberalize trade in services; in general, liberalization of capital movements is a matter of concern for the International Monetary Fund (IMF). Key emphasizes the importance of focusing on fundamental first-pillar liberalization in the Doha round financial services negotiations and sets forth four first-pillar goals: first, binding in the GATS existing and ongoing liberalization that provides market access and national treatment; second, removing remaining barriers to national treatment and market access and binding the resulting liberalization; third, narrowing or withdrawing the broad exemptions that some countries have taken from the most favored nation (MFN) obligation of the GATS; and, fourth, using an incremental approach for cross-border services that combines strengthening GATS commitments and achieving greater liberalization in practice. CLAUDE BARFIELD ix How far should the Doha round financial services negotiations extend into the realm of second-pillar liberalization?Like other authors in this series, Key grapples with the role of the GATS with regard to the domestic structural reform needed to reduce or elimina te nondiscriminatory structural barriers to trade in services. Key believes that the Doha round financial services negotiations should proceed selectively by concentrating on the areas in which the GATS and the WTO have a comparative advantage. She singles out two particularly important second-pillar goals for the Doha round financial services negotiations: developing stronger GATS disciplines on regulatory transparency; and removing barriers to â€Å"effective market access† and binding the resulting liberalization.Key argues that GATS rules on transparency in developing and applying regulations, together with the closely related principle of procedural â€Å"fairness† in applying regulations, would not only help eliminate barriers created by opaque and unfair regulatory procedures but also help ensure that a country does not use its regulatory process to undermine its commitments to national treatment and market access. Key explains how GATS rules on transparency in financial services regulation could both complement and build upon the work on transparency that is part of international efforts to strengthen domestic financial systems. The other second-pillar goal set forth by Key involves anticompetitive domestic regulatory measures that cannot be justified on prudential grounds and serve primarily to keep foreign financial firms from competing in host-country markets by making entry impractical or too costly—thereby denying them â€Å"effective market access. Key explains that identifying barriers to effective market access that could be negotiated in the Doha round requires a country’s trading partners to determine whether, in practice, a host country’s measures keep foreign firms from competing in its markets and whether a â€Å"critical mass† of regulators believes that the measures are inappropriate for prudential purposes. She points out, however, that even if the prevalent regulatory view is that the measures cannot be justified on prudential grounds, host-country regulators must be persuaded to accept it. What about barriers to trade in financial services that are created by legitimate prudential measures? Key explains the importance of the â€Å"prudential carve-out† for domestic regulation in the GATS Annex on Financial x FOREWORDServices: it ensures the GATS will not interfere with the ability of national authorities to exercise their responsibilities for prudential regulation and supervision to protect consumers of financial services and to promote the integrity and stability of the financial system. She notes that while prudential measures sometimes impose additional requirements on foreign firms, they may also create barriers simply because they differ among countries— that is, financial firms operating on a global basis may often find it burdensome to comply with a multitude of different national rules. Key identifies two approaches for dealing with barriers create d by prudential measures.One would have home-country regulatory authorities convince host-country authorities that their prudential concerns can be addressed with less sweeping requirements. These efforts could take place bilaterally or in various international fora, including the financial services negotiations under the auspices of the WTO, where finance ministries play a major role. A second approach would have home- and hostcountry authorities negotiate a recognition arrangement. Although the GATS Annex on Financial Services facilitates unilateral or mutual recognition of prudential measures by permitting a departure from the MFN obligation of the GATS for such arrangements, Key explains why the WTO is not the appropriate forum for their negotiation.In conclusion, Key summarizes the forces affecting the outcome of the Doha round financial services negotiations and the importance of that outcome to the process of financial sector liberalization: Success in achieving the financial services goals discussed in this study depends significantly on factors beyond the scope of the negotiations. As the GATS explicitly recognizes, liberalization of trade in financial and other services is an ongoing process. For financial services, this process is being driven in large part by market forces and new technologies. It is also being driven by the growing recognition among policymakers that market opening can benefit host-country consumers of financial services and, at the same time, contribute to the resiliency of domestic financial systems.The development of international minimum standards and codes of good practices for sound financial systems and their implementation by individual CLAUDE BARFIELD xi countries provide a strong foundation for moving ahead with further liberalization of trade in financial services. The negotiations in the Doha round can play an important role in helping to accelerate the process of liberalization as well as solidifying its results in th e form of binding commitments subject to the WTO dispute settlement mechanism. CLAUDE BARFIELD American Enterprise Institute for Public Policy Research Acknowledgments Q The author greatly appreciates the assistance of the many individuals who read all or part of the manuscript and provided valuable comments and suggestions in their areas of expertise.She would like to thank Alistair Abercrombie, Claude Barfield, Nicholas Bayne, Stijn Claessens, Steven Fabry, Bernard M. Hoekman, Cecilia Klein, Masamichi Kono, Robert D. Kramer, Patrick Macrory, Ann Main, Marilyn L. Muench, Kathleen M. O’Day, Patrick Pearson, Mary S. Podesta, Amelia Porges, Peter E. W. Russell, Hal S. Scott, Richard E. Self, Jonathan D. Stoloff, and T. Whittier Warthin for reading the manuscript in its entirety. She would also like to thank Peter Berz, Barbara J. Bouchard, James M. Boughton, David T. Coe, Kenneth Freiberg, Ralph Kozlow, Ross B. Leckow, Michael D. Mann, Juan A. Marchetti, Peter K. Morrison, Will iam A. Ryback, David Strongin, Mark W. Swinburne, Andrew Velthaus, and Obie G.Whichard for reading drafts, and often redrafts, of particular sections. Finally, the author would like to thank Juyne Linger for her work in editing the manuscript. xiii 1 Introduction Q The General Agreement on Trade in Services (GATS), the first global trade agreement to cover financial and other services, is an important new element in the international framework for liberalization and regulation of the financial sector. Participation in the GATS, however, does not necessarily mean that a country has made strong commitments to open its markets to foreign services and service providers. Indeed, the strength of commitments varies substantially among countries.The GATS therefore requires periodic negotiating rounds on financial and other services to improve commitments and thus achieve â€Å"a progressively higher level of liberalization. †1 The GATS was negotiated in the Uruguay Round, which was l aunched in 1986 and formally concluded in April 1994. 2 Financial services, however, was one of several sectors for which negotiations on specific commitments were extended, and final agreement was not reached until December 1997. 3 In 2000, in accordance with the deadline established by the GATS for initiating a new round of services negotiations, work began again on financial and other services. This occurred despite the failure of the Seattle ministerial meeting of the World Trade Organization (WTO) in December 1999 to launch a comprehensive new round of trade negotiations.Subsequently, at the Doha ministerial meeting in November 2001, WTO members reached agreement on an agenda for comprehensive multilateral trade negotiations that incorporated the so-called â€Å"built-in† agenda for financial and other services. 4 The ministerial declaration set January 1, 2005, as the deadline for completing the Doha round; the declaration called for the next ministerial meeting, subseq uently scheduled for September 2003 in Cancun, to assess progress and provide any necessary political guidance. 5 1 2 THE DOHA ROUND AND FINANCIAL SERVICES NEGOTIATIONS For financial services liberalization, four aspects of the GATS and the WTO are particularly significant: First, the WTO is a multilateral forum in which the primary goal is reducing or eliminating trade barriers to promote competitive markets and thereby support economic growth and development.The new prominence of this goal at the multilateral level complements the intensive work on strengthening domestic financial systems in a variety of other international fora, ranging from institutions such as the International Monetary Fund (IMF) to specialized bodies such as the Basel Committee on Banking Supervision. 6 Indeed, the efforts to liberalize trade in financial services and the efforts to strengthen domestic financial systems, including prudential regulation and supervision, are mutually reinforcing. In addition, t he WTO is a forum in which all members have the opportunity to participate on an equal basis. Multilateral trade agreements are negotiated in the WTO without the â€Å"conditionality† that links IMF or World Bank financial assistance to the implementation of specific policy measures by a borrowing country. In principle, therefore, GATS commitments to liberalization have â€Å"domestic ownership†Ã¢â‚¬â€that is, they reflect a country’s recognition of the need for policy reform—a quality that the IMF has found to be a crucial determinant of the success of its programs. 8 Second, the GATS provides a mechanism for parties to undertake legally binding commitments subject to enforcement under the WTO dispute settlement mechanism. A GATS commitment is permanent in that it cannot be withdrawn without compensation of trading partners. Failure to honor a commitment could open a country to a dispute settlement proceeding and, ultimately, WTO-sanctioned retaliatory measures by its trading partners. Thus, backsliding in the face of protectionist domestic political pressures could be extremely costly. As a result, binding even the status quo is extremely important.Moreover, for negotiations that stretch over many years, the â€Å"status quo† in the final phase is often different from that at the outset of the negotiations, in part as a result of the negotiating process itself. Third, the GATS is based on the most-favored-nation (MFN) principle, which precludes discrimination among foreign countries. Under the MFN obligation of the GATS, a WTO member must accord to services and INTRODUCTION 3 service suppliers of any other member treatment â€Å"no less favorable† than the treatment it provides to â€Å"like† services and service suppliers of the most favored foreign nation. 9 The reach of the MFN obligation is very broad ecause it applies to all measures affecting trade in services that are covered by the GATS, not just thos e for which a member has made specific commitments to liberalization. 10 Although the GATS does allow members to enter into economic integration agreements—such as the Treaty establishing the European Community (EC Treaty)11 and the North American Free Trade Agreement (NAFTA)—without extending the benefits of the agreements to all WTO members, it establishes stringent criteria for an agreement to qualify for this exception. 12 If a WTO member undertakes liberalizing measures in connection with services obligations in an agreement that does not meet the criteria, it must apply the measures to all WTO members on an MFN basis. 3 Fourth, the GATS negotiating process can itself have a positive impact on domestic policymaking, particularly in emerging market economies and other developing countries. Governments that participate in the negotiations are forced to account to their trading partners for the barriers they impose and to explore the possibility of overcoming domesti c political constraints to reduce or eliminate those barriers. A continuing challenge for the trading partners is to use the GATS negotiating process to provide support for and to harness political and market forces that are creating pressures for liberalization within a host country. In this regard, a country’s â€Å"readiness† for reform is critical. Thus, the outcome of the GATS process depends heavily on factors beyond its purview.The next chapter of this study presents a brief discussion of the international provision of financial services and their coverage by the GATS. The third chapter provides a framework for analyzing the role of the GATS and the WTO in liberalization and regulation of the financial sector. The fourth chapter focuses on the barriers to national treatment and market access that need to be addressed in the financial services negotiations in the Doha round. The fifth chapter examines nondiscriminatory structural barriers and identifies certain a reas of domestic structural reform that could usefully be dealt with in the GATS negotiations. The final chapter presents the conclusions of this study. 2 International Trade in Financial Services QThe financial sector is a critical component of a nation’s economy: It not only contributes directly to output and employment but also provides an essential infrastructure for the functioning of the entire economy. The financial system serves as a channel through which savings can be mobilized and used to finance investment and, at the same time, facilitates transactions necessary for internal and external trade. It also helps to manage risks and reduce so-called information asymmetries between providers and users of funds. 1 For these reasons, a sound and efficient financial system is imperative for economic growth and development. A sound financial system also increases the resiliency of a nation’s economy, thereby helping it to withstand external shocks such as movements in exchange rates or a major increase in global interest rates.International trade in financial services—together with enhanced prudential regulation and supervision and other basic structural reforms—can play an important role in helping countries build financial systems that are more competitive and efficient, and therefore more stable. Financial services trade can enhance capital market efficiency; improve the quality, availability, and pricing of financial services; stimulate innovation through the dissemination of new technologies, know-how, and skills; and promote the use of international good practices in areas such as accounting, risk management, and disclosure of financial information. 2 The rapid growth of trade in financial services in recent years reflects a combination of economic, technological, and regulatory factors. These include new and expanding markets in developing and transition economies, technological advances, and progress in reducing or elimin ating a variety of host-country barriers (see chapter 3). 4 INTERNATIONAL TRADE IN FINANCIAL SERVICES 5 Trade in services, as defined in the GATS, includes services provided across borders and through foreign direct investment. The cross-border provision of services—for example, the provision of financial services from an office located in one country to residents of another country— is broadly analogous to trade in goods. 4 By contrast, foreign direct investment involves the establishment of a commercial presence, such as a branch or subsidiary, within a host country. 5 The GATS approach of defining international trade to nclude services provided to host-country customers through the establishment and operation of a commercial presence differs from the approach used for balance-of-payments purposes, in which once a local branch or subsidiary has been established, the services it provides to host-country customers are treated as domestic. 6 In this study, the term â₠¬Å"financial services† refers to financial services other than insurance, which is the subject of another study in this series. 7 Although the GATS definition of financial services encompasses both â€Å"insurance and insurance-related services† and â€Å"banking and other financial services (excluding insurance),†8 they have been negotiated and listed in the financial services schedules as separate subsectors. 9 These subsectors are, however, closely linked.Many of the major commercial and investment banks operating internationally are part of financial conglomerates that also include firms engaged in insurance underwriting, and banks often engage directly in insurance brokerage activities. Moreover, the development of new types of products and instruments is blurring the distinctions between financial subsectors. Major financial firms now provide a wide range of financial services to customers in other countries. These include commercial banking activities such as lending and deposit-taking; investment banking activities, such as underwriting securities and advising on mergers and acquisitions; trading activities, that is, brokering and dealing in securities and other financial instruments; and asset-management activities, including management of mutual funds and pension funds.Other financial services provided internationally include financial information and data processing services; investment advisory services; payment and money transmission services, including credit cards; settlement and clearing for financial assets; and financial leasing. 6 THE DOHA ROUND AND FINANCIAL SERVICES NEGOTIATIONS Many financial services provided internationally are wholesale in nature; that is, they are provided to â€Å"sophisticated† customers such as corporations and institutions, other financial services firms, and wealthy individuals. 10 Both foreign direct investment and cross-border supply are important means of providing wholesale financia l services.In the banking sector, when wholesale services are provided through establishment of a commercial presence, direct branches of the foreign bank—if permitted by host-country regulation—are usually a more efficient form of organization than subsidiaries. Unlike subsidiaries, branches are not separately incorporated in the host country and operate using the firm’s consolidated worldwide capital (but see chapter 4 regarding lending limits based on branch capital-equivalency requirements). E-Finance Technological advances have long had a major impact on the conduct of wholesale financial activities. Business-to-business electronic transactions within the financial sector have been used for more than two decades, both domestically and internationally.Financial firms have also provided online services to nonfinancial firms over closed proprietary networks for a number of years. Widespread access to the open network technology of the Internet, however, offers a whole new range of possibilities to provide services to a much broader base of customers at substantially lower costs. As a result, online services provided to wholesale customers—both within and across national borders—are growing rapidly. This growth includes not only traditional financial services but also new types of services designed to facilitate business-to-business e-commerce activities. 11 The same technological and cost-saving possibilities exist for the provision of electronic banking and other financial services to retail customers.Within some countries, the provision of some types of financial services over the Internet and through web-enabled technologies, such as mobile telephony, is expanding dramatically. Prominent examples include discount brokerage and mutual funds in the United States, and banking services in Finland, Norway, and Sweden. 12 The cross-border provision of INTERNATIONAL TRADE IN FINANCIAL SERVICES 7 financial services to retail cus tomers over the Internet, however, is still in its infancy. In general, the international provision of retail financial services still takes place primarily through locally incorporated subsidiaries. 13 Indeed, a number of banks are now using their host-country subsidiaries as a base from which to provide electronic banking services to host-country retail customers.The lack of widespread development of cross-border retail banking and other financial services—through the Internet or more traditional methods—reflects host-country regulatory requirements aimed at ensuring adequate consumer protection, consumer preferences, and tax considerations. Some countries actually require the establishment of a commercial presence to provide retail financial services. Even when regulatory requirements for cross-border services involve nondiscriminatory application of host-country prudential standards, firms operating on a global basis may have difficulty meeting a multitude of diffe rent national requirements. Perhaps even more important, consumers may prefer dealing with a local commercial presence, particularly because redress against a local establishment is usually readily available through the domestic legal system.In addition, in a number of countries, consumers receive more favorable tax treatment on financial products that are provided through locally incorporated entities. 14 Modes of Supply In an effort to include all of the ways in which services are provided internationally, the GATS defines â€Å"trade in services† in terms of four so-called modes of supply. Mode 1 and mode 2 cover services provided across borders; for financial services, the distinction between these two modes is not always clear. Mode 3 covers services provided through establishment of a commercial presence—that is, through foreign direct investment, a term that is not used in the GATS.Mode 4 covers services provided through the temporary presence of â€Å"natural persons,† which includes nonlocal employees of a foreign service provider. The GATS uses modes of supply not only to define the scope of its coverage but also as the basis for specific commitments to liberalization that WTO members undertake. 8 THE DOHA ROUND AND FINANCIAL SERVICES NEGOTIATIONS Services Provided across Borders. In this study, the term â€Å"cross-border services† is used broadly without attempting to assign a geographic location to the transaction. Thus, this study does not attempt to determine whether a transaction â€Å"takes place† in the country of the service provider or in the country of the customer.For example, a cross-border financial services transaction could be carried out in a number of different ways: (a) a representative of, say, a foreign bank might visit the country of the customer to arrange a loan; (b) the customer might travel abroad to visit the office of the foreign bank; or (c) the transaction might take place via telephone , fax , or, increasingly, the Internet, which, in this context, is simply another technological means of delivering the service. 15 The GATS, however, distinguishes between services provided to nonresidents â€Å"from† the country of the service supplier (mode 1 or crossborder supply) and services provided â€Å"in† the country of the service supplier (mode 2 or consumption abroad). Usually—but as currently defined by the GATS, not necessarily—mode 2 involves physical movement of the consumer, such as the movement that occurs in tourism. 6 For financial services, however, the line dividing these two modes of supply is not always clear, especially in the case of example (c) in the previous paragraph. Indeed, because financial services are intangible, assigning a geographic site to their provision across borders is difficult and often arbitrary and will become more so as the importance of e-finance increases. From a regulatory perspective, a major issue is whether, and to what extent, the rules of the host country—that is, the country of the customer—are applied to the cross-border transaction. 17 Suppose, for example, that employees of a foreign bank visit the host country to arrange cross-border loans.Even when the host country does not have a regulatory framework in place for cross-border banking services, host-country bank regulators sometimes look at factors, such as the frequency and duration of visits and the permanence of the host-country infrastructure for the visiting employees, to determine whether, for regulatory purposes, the cross-border activity rises to the level of a host-country office. 18 Or suppose that a foreign broker-dealer solicits host-country customers to purchase securities. Securities regulators often use solicitation— in addition to the actual conduct of business with domestic residents—as INTERNATIONAL TRADE IN FINANCIAL SERVICES 9 criterion for determining whether the foreign firm is subject to hostcountry broker-dealer registration requirements. 19 In response to the increasing use of the Internet by the securities industry, a number of regulators also examine factors such as whether a web site is being used to target host-country customers (see chapter 4). 20 Besides regulatory jurisdiction, another important jurisdictional issue arises in the event of a dispute; here the question is which country’s courts have jurisdiction to try the case and which country’s laws apply. 21 Foreign Direct Investment. The inclusion of foreign direct investment in the GATS reflects its importance as a way of providing services internationally. 2 By contrast, the General Agreement on Tariffs and Trade (GATT) does not cover foreign direct investment; for goods, there is only a relatively narrow agreement, negotiated in the Uruguay Round, on trade-related investment measures (TRIMs). 23 Although the GATS includes establishment of a commercial presence as a mod e of supply, it does not have a separate framework for investment like that of the NAFTA or the widely used bilateral investment treaties (BITs). 24 These agreements cover portfolio investment as well as direct investment in both goods and services. Moreover, unlike the GATS, they include provisions to ensure the protection of investments—specific rules governing expropriation and compensation, for example—and also provide for arbitration of disputes between private investors and host-country governments. Presence of Natural Persons.The fourth mode of supply in the GATS, the temporary presence of natural persons, includes the temporary presence in the host country of employees of firms providing services across borders or through a commercial presence. For example, for financial services, this mode of supply covers the presence of nonlocal staff of a host-country branch or subsidiary of a foreign financial firm as well as agents of the firm visiting the host country to facilitate the provision of cross-border services. 25 Although the presence of natural persons is listed as a mode of supply in the GATS, and members can negotiate sectorspecific commitments, countries usually make commitments for the temporary presence of natural persons as â€Å"horizontal commitments† that 10 THE DOHA ROUND AND FINANCIAL SERVICES NEGOTIATIONS apply to all services sectors. 6 For the financial services sector, however, most countries that belong to the Organization for Economic Cooperation and Development (OECD) have incorporated into their schedules a set of commitments allowing the temporary entry of senior managerial personnel and certain types of specialists in association with the establishment of a commercial presence. 27 3 Liberalization and Regulation Q Policymakers, particularly in emerging market economies, are increasingly recognizing that opening markets to foreign financial firms can benefit both consumers of financial services and the domesti c economy as a whole. As noted in chapter 2, the presence of foreign firms can create more competitive and efficient markets for financial services, thereby supporting economic growth and development and contributing to a more resilient domestic financial system.At the same time, however, ensuring adequate prudential regulation and supervision of financial firms and markets, together with other fundamental domestic structural reforms, is essential to obtain the maximum benefits of liberalization while minimizing the risks. Basic structural reforms include increasing transparency and accountability in both the private and public sectors; introducing effective risk management techniques; and developing the institutional infrastructure, such as insolvency laws and appropriate judicial procedures. Because measures to promote competitive markets and to strengthen domestic financial systems are complementary and mutually reinforcing, the relationship between financial sector liberalizatio n and regulation has two distinct dimensions. On the one hand, liberalization requires reducing or removing anticompetitive regulations that pose unnecessary barriers to trade in services. On the other hand, liberalization requires increasing the strength and quality of certain regulations and, in some areas, introducing new regulations. Thus the process of liberalization involves, inter alia, reaching a consensus on where to draw the line between regulations that are simply anticompetitive barriers to trade—and should therefore be eliminated—and regulations that serve legitimate purposes. For financial services, the GATS contains a â€Å"prudential carve-out† for domestic regulation. 2 In the GATS, the term â€Å"prudential† is used broadly 11 12 THE DOHA ROUND AND FINANCIAL SERVICES NEGOTIATIONS o encompass not only measures to promote the integrity and stability of the financial system (as the term has traditionally been used in banking regulation) but also measures designed to protect consumers of financial services. The prudential carve-out, discussed later in this chapter, is designed to ensure that any obligations undertaken or commitments made in the GATS will not interfere with the ability of national authorities to exercise their responsibilities for prudential regulation and supervision. Whether a particular measure is prudential or simply being used to avoid a country’s obligations and commitments under the GATS is, however, an issue that could be brought before a WTO dispute settlement panel. All countries impose certain rules that are clearly prudential.Even if a measure is prudential, however, it may create a barrier to trade in financial services. This could occur because a host country imposes additional prudential requirements on foreign financial firms vis-a-vis their domestic counterparts. Such barriers could also be created simply because prudential rules differ among countries—that is, even if eac h host country applies the same rules to foreign and domestic firms, financial services firms operating on a global basis often find it burdensome to comply with a multitude of different national prudential rules. A critical question is whether such barriers could be addressed without jeopardizing prudential goals.Specifically, in what areas and under what conditions might financial services regulators be able and willing to recognize each other’s regulations and supervisory practices as being as effective as their own? The GATS is permissive with respect to such recognition arrangements. However, as will be explained in chapters 4 and 5, the WTO is not the appropriate forum for financial services regulators to negotiate recognition of prudential measures. Three Pillars of Liberalization â€Å"International contestability of markets† refers to the creation of markets that are competitive and efficient on a global basis—a goal that can be achieved by removing all types of barriers to foreign participation in hostcountry markets. International contestability is, in effect, based on three pillars of liberalization: (1) national treatment and market access; (2) the LIBERALIZATION AND REGULATION 13 removal of nondiscriminatory structural barriers, that is, domestic structural reform; and (3) freedom of capital movements. For financial services, the GATS has so far dealt mainly with the first pillar. An important question for the Doha round is how far the negotiations should extend into the second pillar. The GATS deals with the third pillar only insofar as it affects countries’ specific commitments to liberalize trade in services; in general, liberalization of capital movements is a matter of concern for the IMF 4 . National Treatment and Market Access. The first pillar of international contestability of markets is liberalization aimed at opening markets to foreign services and service suppliers and ensuring that they enjoy substantially the same treatment as their domestic counterparts. Such liberalization requires reducing or removing barriers that discriminate against foreign services and service suppliers with regard to entry and operation in a host-country market. A host country might, for example, discriminate against foreign financial firms by refusing to grant licenses for their branches or subsidiaries; imposing limitations on their ownership position in domestic firms or on their aggregate market share; or prohibiting them from engaging in certain activities that are permissible for their domestic counterparts.First-pillar liberalization also requires removing various quantitative limitations on the overall provision of services in a host-country market. Although these barriers may not, on their face, be overtly discriminatory, they are typically used to block entry by foreign services and service suppliers. A country might, for example, limit the number of service suppliers in a particular market by rest ricting the number of new licenses that may be issued or by relying on an economic needs test, which involves an assessment of â€Å"needs† in the market by host-country authorities. 6 Because these measures have the effect of imposing some type of quantitative limitation on foreign entry, they are similar to the more overtly discriminatory barriers.To deal with these first-pillar barriers, the GATS uses the principles of â€Å"national treatment† and â€Å"market access. † Article XVII (National Treatment) relies on a generally accepted definition of national treatment—that is, it 14 THE DOHA ROUND AND FINANCIAL SERVICES NEGOTIATIONS requires a host country to treat foreign services and service suppliers no less favorably than â€Å"like† domestic services and service suppliers. 7 Barriers to entry or operation that discriminate against foreign services or service suppliers vis-a-vis their domestic counterparts would therefore be inconsistent with national treatment. The GATS does not attempt to define market access.Instead, Article XVI (Market Access) provides a list of restrictive measures, primarily quantitative, that are typically used by host countries to deny entry to foreign services or service suppliers. A country that does not maintain any of these measures is regarded as providing full market access. 8 The list includes seemingly nondiscriminatory quantitative barriers to entry that apply to both domestic and foreign firms, such as limitations—in the form of numerical quotas or economic needs tests—on the number of service suppliers or their total assets. It also includes quantitative barriers to entry that are clearly discriminatory and thus are also inconsistent with national treatment, such as limitations on foreign ownership interests in domestic firms.As a result, some overlap exists in the national treatment and market access provisions of the GATS—that is, certain measures may be inconsi stent with both national treatment and market access. 9 The list of measures in Article XVI also includes restrictions on the type of legal entity through which services may be supplied—for example, requiring establishment of a subsidiary as opposed to a branch. In the GATS, national treatment and market access are â€Å"specific commitments† as opposed to general obligations. 10 As a result, national treatment and market access do not apply across-the-board to all services sectors; instead, they apply only to sectors, subsectors, or activities that a WTO member specifically lists in its schedule of commitments. 1 If a member is making only a partial commitment to national treatment or market access within a listed sector, subsector, or activity, any limitations must be listed in its schedule. 12 The use of specific commitments for national treatment and market access instead of obligations applicable to all services sectors is in some respects a structural weakness of the GATS. 13 Under a more ambitious approach, such as that used in the NAFTA’s services and investment provisions, national treatment and market access would apply in each sector unless an exception was specifically listed in a country’s schedule of LIBERALIZATION AND REGULATION 15 commitments or one of the public policy exceptions, such as the national security exception, applied. 14 Nondiscriminatory Structural Barriers.The second pillar of liberalization required for international contestability of markets is aimed at removing nonquantitative and nondiscriminatory structural barriers. Such barriers are associated with national measures that do not discriminate between domestic and foreign services and service suppliers. A secondpillar barrier could arise because a national measure is primarily anticompetitive or fosters anticompetitive behavior by private parties. In some cases, the barrier could be associated with the inadequacy or absence of domestic regulationâ €”for example, the lack of an adequate domestic legal framework for insolvency. A second-pillar barrier could also arise because of differences in national rules, including prudential rules, that make it difficult to conduct operations on a global basis.Removing second-pillar barriers goes far beyond achieving national treatment and market access. Those principles ensure that foreign services and service suppliers can enter a host-country market as currently structured and enjoy equality of competitive opportunities vis-a-vis their domestic counterparts. By contrast, second-pillar liberalization represents an effort to create maximum potential competitive opportunities in a host-country market. Achieving this could require major domestic structural reform. This would necessarily involve some degree of convergence of national regulatory systems, either de facto or through negotiated harmonization. A longstanding U. S. rohibition on affiliations between banks and insurance compani es in the United States, which was repealed in 1999, created a major second-pillar barrier for many years. 15 Indeed, the European Union had found it difficult to accept that a European financial conglomerate that included both a bank and an insurance company could engage in only one of these businesses in the United States. Regardless of whether this nondiscriminatory restriction was primarily anticompetitive or could have been justified as a prudential measure, it nonetheless constituted a barrier to trade in financial services. Significant second-pillar barriers are often associated with national regulatory regimes for asset-management services. 16 These include 6 THE DOHA ROUND AND FINANCIAL SERVICES NEGOTIATIONS across-the-board prohibitions on delegation of functions, such as portfolio management and administrative operations, by the host-country office to a foreign affiliate; extremely strict asset-allocation requirements for a domestic mutual fund or pension fund; and rules that prohibit such funds from investing in foreign securities. 17 While asset management activities raise legitimate prudential concerns about ensuring adequate protection of hostcountry customers, these types of measures often serve primarily to restrict competition, particularly competition from foreign firms (see chapter 5).Nondiscriminatory structural barriers to trade in financial services are not limited to financial sector regulation. Barriers in other areas that are particularly important for the effective functioning of the financial services sector, such as lack of adequate frameworks for corporate governance or insolvency, are part of the international work on strengthening domestic financial systems, which is discussed later in this chapter. Ineffective or nonexistent competition policy regimes, which could foster anticompetitive behavior by private parties, can also create major second-pillar barriers. Differences in national tax systems are yet another source of second -pillar barriers.Discriminatory treatment of foreign firms under national tax or competition rules, however, would be a first-pillar barrier. 18 Second-pillar barriers can also arise from a country’s administrative procedures—in particular, a lack of regulatory transparency and procedural â€Å"fairness. † For example, a country might fail to publish all of its laws, regulations, and administrative decisions; administer them in an impartial manner; establish a meaningful procedure for interested parties to comment on proposed regulations; act on applications for licenses within a reasonable period of time; or provide a mechanism for independent review of administrative decisions.Because regulatory transparency and procedural fairness can be extremely effective in ensuring that commitments to market access and national treatment are fully implemented, they constitute an important underpinning of first-pillar liberalization. The European Union’s single-mark et program represents the most far-reaching effort to date to remove nondiscriminatory structural barriers among a group of nations. Predicated on political agreement on goals for economic liberalization, that effort is being carried out in the context of LIBERALIZATION AND REGULATION 17 the unique supranational legislative, judicial, and administrative structure of the European Community. 9 Even within the European Union, however, important nondiscriminatory structural barriers to trade in financial services among the member states are still in place (see chapter 5). The GATS addresses certain types of second-pillar barriers. Article III (Transparency) imposes a general transparency obligation on WTO members to publish all measures â€Å"of general application† that are relevant to trade in services. 20 Article VI (Domestic Regulation) addresses, in fairly general terms, barriers created by domestic regulations. It requires countries to apply such regulations in a â€Å"rea sonable, objective and impartial manner† to avoid undermining commitments to market access and national treatment. 1 Moreover, countries must have appropriate legal procedures to review administrative decisions affecting trade in services. 22 Article VI also mandates further work to develop disciplines to ensure that licensing requirements or technical standards do not constitute unnecessary barriers to trade in services. Pending the completion of this work, countries must refrain from adopting licensing rules or technical standards that are so burdensome, restrictive of trade, or lacking in transparency that they undermine the benefits that could reasonably be expected from their commitments to national treatment and market access. 23 The GATS deals with additional second-pillar barriers for individual sectors in members’ schedules of commitments.The most far-reaching example is in basic telecommunications, where a substantial majority of the countries that have made c ommitments to national treatment and market access in that sector have incorporated into their schedules— using the â€Å"additional commitments† column—a reference paper setting forth â€Å"procompetitive† regulatory principles. 24 Designed for a sector where dominant suppliers often control essential host-country facilities, these principles seek to ensure that a country’s national treatment and market access commitments will not be undermined. Countries committing to the principles undertake, among other things, to maintain measures to ensure network interconnection on nondiscriminatory terms and to prevent certain anticompetitive practices. 25 In the financial services sector, most OECD countries addressed nondiscriminatory structural barriers in their 1997 schedules of commitments 18 THE DOHA ROUND AND FINANCIAL SERVICES NEGOTIATIONS imply by making a general â€Å"best efforts† commitment to remove or eliminate any significant adverse effects of such barriers. 26 In addition, the United States and the European Union used the additional commitments column of their schedules to make â€Å"best efforts† commitments to remove specified nondiscriminatory barriers. For example, the U. S. administration committed to try to work with the Congress to remove Glass-Steagall Act restrictions, a goal that was subsequently accomplished, while the European Union pledged that its member states would try to process applications for licenses for banking and insurance subsidiaries within specified periods of time.Japan, under great pressure from its trading partners, went further and made binding commitments regarding removal of certain second-pillar barriers—including restrictions on asset-management services and lack of regulatory transparency and limitations on lines of business in insurance—that were covered in its bilateral financial services agreements with the United States (see chapters 4 and 5). Freedo m of Capital Movements. The third pillar of liberalization involves achieving freedom of capital movements across national borders. Such movements comprise international capital transactions—that is, the creation, transfer of ownership, or liquidation of capital assets, including financial assets—and the payments and transfers associated with such transactions. 27 Restrictions on international capital movements are usually imposed on the underlying transactions as opposed to the related payments and transfers. 8 For example, if a country wished to restrict foreign direct investment in the banking sector, it could prohibit foreign financial firms from acquiring significant ownership interests in host-country banks: it would be unusual to try to achieve this result by permitting the acquisition of the ownership interests while using exchange controls to block payment for them. 29 Although the free movement of capital plays a critical role in allowing efficient allocation of resources on a global basis, the Asian financial crisis of 1997–98 revived a long-standing debate over the appropriateness and effectiveness of capital controls, particularly on short-term flows. 0 Nevertheless, all parties to the debate agree that capital controls can never be a substitute for sound macroeconomic policies and fundamental reforms of domestic financial and legal structures. Indeed, the Asian crisis itself emphasized that weaknesses in domestic financial systems can create significant vulnerabilities LIBERALIZATION AND REGULATION 19 as capital movements are liberalized. At present, conventional wisdom holds that, although imposition of new capital controls should, in general, be avoided, the imposition of limited, temporary capital controls to deal with massive temporary inflows or outflows of short-term debt might be useful in some cases. 1 Moreover, it is now widely recognized that removal of existing controls must be carried out with great care. Of parti cular importance are the pace and appropriate â€Å"sequencing† of liberalization of different types of capital flows and of liberalization of capital movements vis-a-vis structural reforms to strengthen domestic financial systems. 32 Freedom of capital movements per se is not within the purview of the GATS; international capital movements and international trade in financial services are, however, closely related. Establishment of a commercial presence in a host country by a foreign service supplier involves both trade in services under the GATS and international capital transactions.For example, a commitment in the GATS to liberalize financial services trade by allowing foreign financial firms to establish wholly owned subsidiaries is essentially a commitment to allow foreign direct investment that involves the acquisition of 100 percent of the shares of existing or de novo hostcountry financial firms. 33 In theory it is possible that, once established, the subsidiary could conduct its ongoing activities without engaging in additional international capital transactions; however, its activities would need to be limited to transactions with host-country residents involving domestic financial assets. 34 Establishment and operation of branches, which are not separately incorporated in the host country, virtually always involve international capital transactions between the bank’s head office and the branch. 5 These transactions include both foreign direct investment and portfolio investment. 36 For branches conducting a wholesale business, ongoing activities would typically also involve international capital transactions with unaffiliated parties. For cross-border financial services, international capital transactions are typically either integral to, or closely associated with, the provision of the service. For example, international capital transactions are an integral part of accepting deposits from or making loans to nonresidents. In addition, international capital transactions are usually, although not necessarily, associated 20 THE DOHA ROUND AND FINANCIAL SERVICES NEGOTIATIONS ith financial services such as securities trading or asset management on behalf of a customer residing in another country. 37 By contrast, certain crossborder financial services, such as investment advisory services and financial information services, can be provided without an associated international capital transaction. The usefulness of investment advice might be limited, however, if the customer were prohibited from investing in foreign assets. In general, it is difficult to realize fully the benefits of liberalization of trade in financial services without freedom of capital movements. Financial services trade absolutely requires, however, the liberalization of only those capital movements that are necessary for the trade transaction to occur.In recognition of this relationship, Article XI of the GATS (Payments and Transfers) prohibits WTO members from imposing restrictions on capital transactions or associated payments and transfers that would be inconsistent with their specific commitments to liberalization of trade in services. 38 A footnote to Article XVI (Market Access) provides greater detail—namely, a country that has made a specific commitment to market access must allow (a) capital movements that are â€Å"essential† for the provision of a service in mode 1 (cross-border supply); and (b) inward capital movements that are â€Å"related† to a service supplied through establishment of a commercial presence. 39 The bottom line is that if a country makes a commitment to liberalize trade with respect to a particular financial service in the GATS, it is also making a commitment to liberalize most capital movements associated with the trade liberalization commitment.The country is not, however, making an across-the-board commitment to freedom of capital movements. The GATS provisions dealing with capital movements, like GATS specific commitments to liberalize trade in services, are subject to a balance-of-payments safeguard. 40 Both the capital movements and balance-of-payments safeguard provisions of the GATS refer to and are consistent with the IMF’s responsibilities in these areas. 41 Strengthening Domestic Financial Systems The financial services sector has an elaborate and intensively used framework of international fora that are used, both separately and in combination, LIBERALIZATION AND REGULATION 21 o address overall financial and regulatory policy issues; to promote cooperation and coordination among supervisors; to set voluntary but widely accepted international minimum standards and codes of good practices; and, most recently, to provide â€Å"surveillance† of domestic financial systems. This surveillance includes monitoring and helping to build institutional capacity for implementation of the international standards and codes. The international fo ra dealing with these issues include the Group of Seven (G-7), the Group of Ten (G-10), the Group of Twenty (G-20), the Financial Stability Forum, the Basel Committee on Banking Supervision (Basel Committee), and the International Organization of Securities Commissions (IOSCO), as well as the IMF and the World Bank. 2 The international framework for the financial services sector, which has been constructed over the past quarter century and is still evolving, is a response to two major factors: the internationalization of banking and other financial activities; and the special characteristics of the financial sector, especially the phenomenon of â€Å"systemic risk. † Because of systemic risk, problems with one financial firm can be transmitted to unrelated financial firms, both within and beyond a single country. For example, a chain reaction of problems could be triggered through imitative runs on banks as depositors lose confidence in a banking system, through default on do mestic or international interbank obligations, or through domestic or international payment systems.Problems in a country’s financial sector can also affect the real economy, both domestically and internationally, through declines in output and shifts in trade flows. In addition, the existence of global financial firms, with activities falling within many different national jurisdictions, requires cooperation and coordination among home- and host-country authorities to prevent gaps in supervision. Increasingly, these global firms are financial conglomerates, which means that supervisory cooperation and coordination are necessary across financial subsectors as well as national borders. For these reasons, countries have a stake in the quality of each other’s regulation and supervision of the financial sector and also in ensuring cooperation and coordination among supervisors.In this regard it is useful to distinguish between prudential regulation, which includes, for exa mple, capital and other requirements designed to ensure the safety and 22 THE DOHA ROUND AND FINANCIAL SERVICES NEGOTIATIONS soundness of financial institutions, and supervision, which is aimed at making certain that financial firms adhere to such requirements. The importance of strong, effective supervision cannot be overemphasized; without it, the best prudential rules can be meaningless in practice. The extent to which both experience and good judgment are required for such supervision also needs to be emphasized. Indeed, the role and nature of supervision make it particularly difficult for supervisory authorities to reach recognition agreements based on the harmonization of prudential rules (see chapter 5).While regulation and supervision must be strong and effective, a further complication is that a poorly designed regulatory system—for example, an excessively generous deposit-insurance scheme—can create an unacceptable degree of moral hazard; that is, it may enco urage excessive risk-taking by regulated firms. Accordingly, national regulatory and supervisory systems must be designed to complement and support, but not to substitute for, market discipline. Thus, achieving widespread transparency in both the public and private sectors, including accurate and timely disclosure of financial information, is critical

Impact Of Immigration Laws On A Democratic Society

Impacts of Immigration Laws in a Democratic Society: A Literature Review Immigration has changed drastically from the start of the 20th century up to the current age. Immigration is a topic that has had much controversy and debate with each new election and each year that passes. Liberals and Conservatives have many opposing viewpoints when it comes to such a touchy subject as that of immigration. Currently, Presidential candidate Donald Trump has some of the most controversial policies, ideas and thoughts pertaining to the current status of illegal immigrants entering the nation. This has sparked heated debate throughout both political parties and the American society that is currently setting the stage for a division between Trump supporters and other Americans that are more lenient with immigration. During the time of the Great Depression most of the world fell into a deep economic hole. Not many people could afford to move to different countries, nor wanted to due to the hi gh rate of poverty throughout the world. This eventually changed over time. The main reasons behind immigrants migrating to other countries during the early 20th century were for religious and political reasons as well as relief from a lack of economic opportunity. In 1952, the Immigration and Naturalization Act was passed by congress. This act upheld the national origins quota system established by the Immigration Act of 1924 which limited the number of immigrants allowed to enter theShow MoreRelatedThe Issue Of Immigration And Gay Rights1034 Words   |  5 Pagesthroughout the world is immigration and gay rights. Today, many immigration and gay rights issues have arisen in numerous cases and have had controversial sides and opinions The issue of immigration has been a controversial topic between the Democratic and Republican parties. 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I’M Doing This Essay On Which Of The Presidents We Think

I’m doing this essay on which of the presidents we think are either the best or the worst. Some of the presidents that we think are the best are Abraham Lincoln, George Washington, John F. Kennedy, Teddy Roosevelt, Franklin Delano Roosevelt, Dwight D. Eisenhower, Lyndon B Johnson, Woodrow Wilson, Thomas Jefferson, Ronald Reagan. While some of the presidents I think are the worst are George W. Bush, Zachary Taylor, Ulysses S. Grant, John Tyler, Millard Fillmore, William Henry Harrison, Franklin Pierce, Andrew Johnson, Warren G Harding, James Buchanan. (Great introduction!) (Provide more of a preview for a few of these presidents to get the reader interested.) The Top 10 Best Presidents First on the list is Abraham Lincoln. Abraham Lincoln†¦show more content†¦He also tried to lift the U.S. out of the Great Depression, but to no avail. He adopted the â€Å"Good neighbor† policy which helped better the relations with Latin America. Dwight D. Eisenhower was a supreme allied commander in WW2. He worked to bring peace to the world, after WW2, and helped increase the social welfare programs. He also helped to end the Korean War and sent troops to Little Big rock so African American kids could attend school. Lyndon B. Johnson became president after Kennedy was killed, and escalated the war in Vietnam. He created a war on poverty and, because of his unpopularity, did not seek a second term. Woodrow Wilson tried to keep America out of WW1 but later declared war on Germany. He was a college professor, college president and the governor of New Jersey. He founded the League of Nations, a early version of the United Nations, and was determined invalid to serve t he rest of his term due to a stroke in 1919. Thomas Jefferson was one of the founding fathers and a author to the draft of the Declaration of Independence. He sent Lewis and Clark out to explore new US territory. 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Ready to Eat Cereal Case Study - 1760 Words

The value chain, Appendix B, in the RTE cereal industry consists of branded manufactures and private labels that receive their raw materials from suppliers and then distribute their product to food stores, drug stores, and mass merchandisers where the end consumer can eventually purchase the cereal product. Private labels rely on wholesalers and third-party distributors to get their product on the store shelves where the end consumer can purchase these items. In the RTE cereal industry, there were three large manufacturers, General Mills, Kellogg and Philip Morris that had a strong presence in the market. They were extremely profitable with pricing power and dominated the whole market with great market share; all this made it unattractive†¦show more content†¦Private labels also had a better relationship with the grocers because of the better margins they offered to them. This was a bargaining tool Private Labels used to their advantage. Now their product was being placed in more strategically placed locations throughout the grocery store, which increased their sales and decreased the Big Three’s sales. In addition to allowing competitors into the industry, the Big Three hurt themselves by spending millions of dollars on coupons and advertising. There was little to no results that proved these methods were effective in gaining market share. For example, the RTE cereal industry spent $800 million in advertisements and trade promotions, but did not see much reward other than non-loyal consumers switching their products based on current trade promotions. Another factor of the industry crisis was due to the fact that the Big Three stopped their united front of raising prices together. The Big Three no longer made strategic moves together and in return made it easier for others to enter the industry. 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Pttls Unit 1 Free Essays

1. Summarise key aspects of legislation, regulatory requirements and codes of practice relating to own role and responsibilities The key legal and regulatory requirements relating to my role as a teacher are:- †¢ Children Act (2004) – Every child matters †¢ Copyright, Designs Patents Act (1988) †¢ Data Protection Act (1998 amended 2003) †¢ Equality Act (2010) †¢ Freedom of Information Act (2000) †¢ Health Safety at Work Act (1974) †¢ Human Rights Act (1998) Protection of Children Act (1999) †¢ Safeguarding Vulnerable Groups Act (2006) There will be Codes of Practice, either generic or specific, that will need to be followed such as the Code of Professional Practice (2008) introduced by the Institute for Learning. 2. We will write a custom essay sample on Pttls Unit 1 or any similar topic only for you Order Now Explain own responsibilities for promoting equality and valuing diversity It is important that students are able to attend, and participate in their choice of course or learning event, for it to be accessible on equal terms. To support this ideal, I must adhere to the equal opportunity legislation in place, which ensures that learners are not discriminated against in terms of age, gender, sexual orientation, disability, race, pregnancy or maternity, religious or other belief, marriage, civil partnership or gender reassignment. Whilst this is an ideal situation we are not able to treat everyone exactly the same. It is important to understand the needs of learners so that we can give them the best experience in the learning environment. If I have a student who uses a wheelchair, then I must ensure that access to the learning venue is suitable and that any portable ramps etc are available. Where I have students that are from diverse cultural backgrounds I should encourage an environment where differing opinions are respected and prejudice or stereotyping are challenged. Where further support is required by a learner, it should be offered 3. Explain own role and responsibilities in lifelong learning Firstly, I need to identify the needs of the organisation, individuals and me personally. I will ensure that any forms are easy to complete and cater for different languages or print size and are available in hard copy or electronically. I will need to make an initial assessment of the needs of learners and agree learning plans. I need to prepare a scheme of work to include session plans, learning materials to meet the needs of the syllabus and liaise with other interested parties. I will need to facilitate learning using a variety of approaches including formulating ground rules, record keeping, incorporating different teaching and learning materials and even knowing who and where the nominated first aider is. I will need to assess the learning, ensuring that the awarding body rules are met. I must ensure that relevant documentation is completed and kept safe and confidential. I will need to check the students lerning outcomes have been met and that they have gained the necessary skills and knowledge. I need to evaluate my teaching experience by obtaining feedback from others. I can obtain this from the student, awarding body and organisation I am working for. I will also evaluate my own work in order to make improvements to my teaching ability and the learning experience. 4. Explain own role and responsibilities in identifying and meeting the needs of the learners I can identify the learners needs at the application stage, by interview, questionnaire, or at a student 1to1 session, or at the beginning of the session or programme. I must give clear guidance on the process and information to ensure the course meats their personal learning needs. Once I have the information this will help me with my planning. I need to ascertain the required learning support (help with ITC, numeracy, literacy), or student support (help with personal issues, general guidance or advice), and again use the information in my planning and course execution. 2. 1Explain the boundaries between the teaching role and other professional roles It is important to understand where my role as a teacher ends and where I need to involve other professionals. These might include Heads of Dept, HS officers, technicians, support workers or admin staff. Within the ACO I may need to refer to parents/guardians Wing, Region or Head Quarters specialists. I, for instance as a teacher am not qualified to repair a broken plug socket so I would refer to an electrician, similarly I am not a social worker therefore any issues that are of a personal nature (to the student)I would pass over to the relevant specialist rather than trying to deal with it myself, potentially causing more harm. 2. 2Describe points of referral to meet the needs of learners It is possible that I will encounter students with a variety of degrees of needs so I need to remain impartial and sensitive to individual situations. I will not be able to deal with every situation that arises. I must be aware of where I can refer students for help both within and externally to the organisation. Below is a table containing example points of referral. |INTERNAL |EXTERNAL | |accommodation officers |awarding organisations | |careers advisers |banks or building societies | |colleagues carers | |Counsellors |charities | |examination officers |childcare agencies | |financial services staff |Citizens Advice Bureau | |first-aiders |employers | |health and welfare officers |health centre. , slimming clubs, general | |information , advice and guidance staff |practitioners, hospitals | |interpreters |Job Centre Plus | |learning support staff |motoring and transport organisations | |mentors |police | |student support staff |telephone help-lines and agencies such as abuse, alcohol, bereavement support, | |student union representatives |Childline, Crimestoppers, debt, drug, lesbian and gay switchboard, gambling, | |teachers |NHS Direct , parentline, Samaritans, victim support | | |websites which are relevant | Table from ‘Preparing to Teach in the Life Long Learning Sector’ by Ann Gravells – Pg 53 2. 3Summarise own responsibilities in relation to other professionals My main responsibility is to my students, however I need to be aware of the impact my actions will have on other groups or individuals. I will need to be conscious of how I work with other managers on site as well as my peers, with awarding bodies including internal and external verifiers Ofsted inspectors and other external agencies. Within the Air Cadet Organisation (ACO). I will also have responsibilities with regard to parents/ guardians and other members of the ACO. I must remain professional and not exceed my role boundaries 3. Explain own responsibilities in maintaining a safe and supportive learning environment It is imperative that the environment is safe. The room or area for teaching must be large enough to support the activities being undertaken and the number of people involved. A risk assessment should be carried out to highlight and eliminate (so far is practicable) any potential dangers. Consideration must be given to lighting, heating, ventilation and toilet facilities to ensure the comfort of learners and teaching staff. I must inform the group regarding procedures for housekeeping, and emergency evacuation. 3. 2Explain ways to promote appropriate behavior and respect others I would establish with the group some ground rules both for the learners and myself to promote the appropriate safety, behaviour and respect of everyone. It is important that these rules are negotiated and agreed with the group. These rules can be reviewed and changed as the course progresses as needed. For the group – what they should expect from each other, things like courtesy, respecting others views etc. For myself – What the learners can expect from me. Some rules may be imposed – health and safety, no smoking, no anti-social behavior. Some more negotiable – standard of dress, break timings, turning off mobile phones. Reference Book Preparing to Teach in the Life Long Learning Sector’ by Ann Gravells How to cite Pttls Unit 1, Papers

The Legalization of Marijuana free essay sample

Marijuana is the most commonly used illegal drug in the world. The word â€Å"marijuana†, referred to as â€Å"herbal cannabis† by the rest of the world, is the American term for dried flowers and leaves of the cannabis sativa plant (Caulkins 2012). The drug can be dated back to as far as 6000 B. C. when the plant’s seeds were used in China as food. It was used as a pain reliever and sedative in Napoleonic France (Spaulding and Fernandez). The flowers on the cannabis sativa plant contain concentrated amounts of a mind-altering chemical known as tetrahydrocannabinol (THC). 1 THC varies in potency depending on the plant. The leaves of the plant, which have become the social symbol of marijuana, contain lesser quantities of THC. As John Caulkins writes in â€Å"Marijuana Legalization: What Everyone Needs To Know,† marijuana â€Å"creates illicit markets with a total value in the tens of billions of dollars per year. We will write a custom essay sample on The Legalization of Marijuana or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page † The legalization of marijuana has generated a large debate throughout the United States. While 18 states have legalized medicinal marijuana, recreational use remains illegal (until the implementation in Colorado and Washington in 2014). Those in support of legalization emphasize how the prohibition of the drug has been ineffective and that there are many benefits of legalizing it. These include the decrease in trafficking and price of the drug leading to the elimination of illegal drug dealers. More importantly, legalization and regulation of marijuana can lead to a hefty increase in tax revenue on both a state and federal governmental level. In November 2012, Colorado and Washington legalized the use of recreational marijuana for adults over 21. The goal is now to regulate the market and the use of the drug similar to the regulatory laws of alcohol. â€Å"In Colorado, individuals over 21 can grow up to six plants for personal use and purchase one ounce of marijuana from dispensaries† (Spaulding and Fernandez 2013). Only licensed sellers are allowed to sell. Certain American state governments have come a very long way in order to be able to implement this law within their state legislation. The War on Drugs is a prohibition campaign developed by the US government with the intention of reducing illegal drug trade by â€Å"curbing supply and diminishing demand for specific psychoactive substances determine immoral, harmful, dangerous, or undesirable† (Miron 2010). This campaign consists of strictly enforced laws and policies intended to hinder the production, distribution and consumption of illegal drugs. It started during the protests against the Vietnam War when Nixon declared to America that youth were turning to drugs, mainly marijuana, as a symbol of defiance. The War on Drugs was a response to social problems created by the recreational use of these substances. However, despite the efforts of this on going struggle, drug use and abuse are at their worst today. Anti-war activists wanted to end the war and Nixon wanted to end their anti-war demonstrations and therefore created a connection between marijuana and anti-war activism. So, even though Nixon privately wrote, â€Å"They aren’t as radical as most assume,† he had formed a strong enough connection to raid protests with DEA agents. Nixon said, â€Å"‘those who use drugs are the protestors†¦the ones who get caught up in dissent and violence’† (Baum 1996). However, a poll of the college student protestors showed that only 25% of them had even tried marijuana. (Baum 1996). Proven through history, prohibition is an unsustainable and ineffective approach. Ted Galen Carpenter is a senior fellow for defense and foreign policy studies at Cato Institute. Carpenter has written 10 books on foreign affairs, 3 relating to the War on Drugs, and has published over 400 articles and studies that have appeared in the New York Times, Washington Post, Wall Street Journal and more (cato. org). In his CNN Article, Drug Prohibition As a Global Folly,† Carpenter writes that prohibition â€Å"enables the most unsavory, violence-prone individuals and organization to dominate the commerce. † The U. S. prohibition against alcohol in the 1920s and 1930s â€Å"demonstrated that a prohibition strategy empowers and enriches odious criminals† (Carpenter 2013). There was rampant gun violence in the streets of cities such as Chicago and New York just as prohibition of drugs has lead to gang violence in large U. S. cities as well. Once Prohibition ended, legitimate alcohol business emerged and gained economic success as the corruption and violence subsided. Today, the US still deals with alcohol problems such as alcoholism, drunk driving and other societal problems but nothing compared to the issues that were faced during the Prohibition. Arnold Trebach was chief of the Administration of Justice Section, US Commission on Civil Rights from 1960-63, and Chief of Consultant on Administration of Justice (spectator. org). According to the Trebach Report, he has been called the Shadow Drug Czar along with the George Washington of Drug Policy Reform (trebach. com). In his 1987 publication of The Great Drug War, and Radical Proposals That Could Make America Safe Again, he writes, â€Å"Approximately 9,000 murders are related to alcohol use. † Even so, American politicians and citizens have decided that prohibition of alcohol was worse than the related crime, health problems and death associated with it. The War on Drugs declares all drug users, millions of Americans, as an enemy. The War on Drugs does not deal with the most important problems associated with drugs—abuse, crime, and corruption—but rather moves to discourage and punish all drug users. Hate against abusers conquers the conflict, as opposed to motion to help them. This on going billion-dollar war has failed to stop the production and sometimes-abusive consumption of drugs. The US drug laws are â€Å"irrational, based upon flawed scientific assumptions and are out of touch with the desires of millions of Americans thus they cannot be [successfully] enforced† (Trebach 1987). The main focus of the War on Drugs has been to â€Å"end the corruption of the black market† however the U. S. needs to shift their focus to â€Å"the safety and health of its citizens. † As stated in â€Å"War on Drugs: Next Steps,† 76% of voters in a national survey believed that the U. S. war on drugs is failing. The War on Drugs’ laws and policies have led to a multitude of problems such as overcrowded prisons and an increase in drug related crime. â€Å"US federal government spends $14 billion per year fighting drugs†¦54 percent goes for criminal justice and interdiction†¦34 percent goes for treatment and prevention programs. This does not include the requested $385. 1 million requested this year for counternarcotics support to Mexico and Central America† (War on Drugs 2009). Almost half of the 2. 3 million people in American prisons are incarcerated for drug offenses. Increased law enforcement leads to increased drug prices, which is more inviting to new drug dealers and results in increased violence over drugs. The supply of drugs as well as drug dealers will remain constant regardless of who is sent to prison. Dan Baum, staff writer for The New Yorker as well as reporter for the Wall Street Journal specializing in American politics, wrote in his 1996 publication, â€Å"After three decades of increasingly punitive policies, illicit drugs are more easily obtainable, drug potencies are greater and drug barons are richer than ever. † It is clear the enforced prohibition of marijuana is ineffective though support of the War on Drugs is still strong. Today, the same exaggerated dangers of marijuana are used to support anti-marijuana laws as were used in the 1936 at the time of the release of â€Å"Reefer Madness. †2 However, through intensive research by the National Institute on Drug Abuse funded by the government, many of these myths have been disproved. These claims include marijuana as a main cause of lung cancer, impairing immune system function, stunting maturity and reproduction, being addictive, producing amotivational behavior, acting as a gateway to other drugs and more. In fact, all of these claims that are used as evidence to support anti-marijuana legislation were proven wrong. The implementation of legalized marijuana into a regulated market would be advantageous to the U. S. both economically and socially. The population favors the legalization of drugs, especially marijuana. Those against legalization argue that it will decrease crime and addiction, save taxpayer money and benefit individuals, communities and the country as a whole. However, Jeffrey Miron, a senior lecturer on economics at Harvard University counters that argument. Miron is also a senior fellow at the Cato Institute. His field of expertise is libertarianism and he is an avid advocate for the legalization of marijuana. In his 2010 publication of â€Å"The Budgetary Impact of Ending Drug Prohibition,† he argues, â€Å"Legalization means reduced expenditure on enforcement and an increase in tax revenue from legalized sales†¦Approximately $8. 7 billion of the savings would results from legalization of marijuana. † A regulated marijuana market would lead to the elimination of a black market and the violence that is associated with it. Legalization and regulation of marijuana would lead to a decrease in government expenditures and an increase in tax revenue. Legalization eliminates prosecution based on possession and trafficking. Legalization saves governmental costs in areas such as judicial and incarceration. Finally, legalization allows taxation on marijuana production and consumption. â€Å"Legalizing marijuana would save $7. 7 billion per year in government expenditure on enforcement of prohibition. $5. 3 billion of these savings would accrue to state and local governments, while $2. 4 billion would accrue to the federal government† (Miron 2005). Legalization would save money for both state and also federal government by reducing police department resources, judicial resources and correctional facilities and resources since criminal associations with marijuana will be eliminated. By the late 1970s, some states such as Oregon, Alaska, Maine, California, Colorado and New York adopted some form of decriminalization3 of marijuana making possession punishable by fines as opposed to jail time. Starting in 1996 with California Prop 215, medical marijuana usage was made legal. By 2012, 18 states legalized the use of medical marijuana and 50% of Americans supported legalization of marijuana (norml. org). In November 2012, Colorado voters passed Amendment 64, which legalized recreational marijuana use. The amendment also permits licensing marijuana retail stores, cultivation operations, marijuana edible factories and testing facilities (Rocky Mountain HIDTA 2013). The first retail marijuana business will be licensed in January 2014. In 2000, Colorado legalized the use of medical marijuana. In 2009, the medical marijuana dynamics in Colorado drastically changed and expanded. A district judge lifted the limit of dispensary owners to only sell to five people. â€Å"Colorado experienced an explosion to over 20,000 new medical marijuana patient applications and the emergence of over 250 medical marijuana dispensaries†(Rocky Mountain HIDTA 2013). By the end of the year, there were 38,000 additional new patient applications, an increase of 36,000 cardholders and by 2010, over 900 dispensaries were in place. Amendment 64 discusses the concept of sales tax on the newly legalized marijuana. The excise tax is 15% and the first $40 million in annual tax is reserved for the Colorado public school system. This taxation would raise funding for other state-funded programs and services such as the development of educational materials on marijuana. A 25% tax rate was proposed but this rate would discourage consumers from purchasing regulated marijuana and inhibit the effectiveness of the legalization and integration of marijuana into the Colorado marketplace. Amendment 64 also prohibits the sale of products with the mixture of marijuana and nicotine as well as marijuana and alcohol. This is to ensure safety, limit potentially dangerous occurrences and heighten the regulation on these three legal yet harmful substances. Amendment 64 will institute educational efforts to make sure that â€Å"citizens must have current and accurate information on marijuana and its properties, use, dosage, risks, and effects, including impairment and its impact on driving, parenting, and other activities† (Task Force Report Amendment 64 2013). Both students and those over age 21 are entitled and encouraged to this education. Under Amendment 64, those below the age of 21 in possession of marijuana will face legal action. The 2013 Colorado elections covered the post-legalization of marijuana and the passing of Amendment 64. Colorado voters overwhelmingly approved Proposition AA, which imposes a 15 percent excise tax4 on the wholesale price plus an additional 10 percent sales tax on retail marijuana in addition to the existing 2. 9 percent Colorado state sales tax (colorado. gov). Proposition AA also gives the state legislature the right to increase or decrease the excise and sales tax on retail marijuana as long as the tax rate doesn’t exceed 15 percent. Proposition AA allows Colorado citizens their preexisting right to approve new sales taxes. The revenue generated by these sales taxes will be used to fund enforcement resources, testing and tracking facilities, educational and prevention resources as well as regulatory structures such as health and public safety that were not funded before. As stated in Colorado. gov’s analysis of Proposition AA, â€Å"passage of Proposition AA is estimated to increase state tax revenue by $67 million annually†¦and sales to consumers of retail marijuana totaling approximately $394. 6 million per year. † The hopes for Proposition AA are plentiful. The money made from the taxes should help Colorado maintain stability in all other aspects of state social matters such as education, public safety, and health care while they are dealing with the implementation of the legalization. The taxation revenue may be so high that it funds all developing projects for schools and to alleviate public health and safety concerns. It is also meant to keep people out of the black markets. There are many valid oppositions on the legalization of marijuana in the United States. Legalization will not decrease addiction. Legalization would increase the availability and decrease the price of marijuana. This would inevitably lead to drug abuse since increased availability leads to increased use of these addictive substances, which leads to increased addiction. This would lead to an increase in costs to ensure clinical help to addicts. Legalization will also not eliminate illegal trafficking or drug-related violence. â€Å"The pattern of violence shows that when a criminal group is threatened and destabilized is when violence skyrockets† (War on Drugs 2009). A black market will still remain unless all drugs are readily available to every single person in an unlimited amount. The government will have to trust the American society to handle the drug in a responsible and acceptable manner. An argument against Prop AA is that the tax rate is too high that it will send consumers right back to buying marijuana illegally. A legalized drug market is also a violation of international agreements between the United States and other countries. Despite these claims, legalization of marijuana can result in a positive shift in society if the situation is handled correctly. Instead of acting with force, unsuccessfully scaring people out of doing drugs, there should be different drug policies. There should be more focus on treatment for drug abuse, as well as increased prevention education and minimized convictions. So much money is spent on prevention advertisement and instilling fear about drugs. Funding for school education should be increased to enhance student and adult knowledge about drugs and their harm. The U. S. government needs to loosen its firm grip on the issue of marijuana and create a stable base for Americans to comply with instead of defy. Colorado and Washington have begun to create a seemingly successful regulatory plan that when implemented will be able to benefit from what Michael R. Caputo—leading professor at the University of Central Florida’s Department of Economics—claims is the nation’s leading cash crop. Currently, the Obama administration is not in support of legalization or of regulation of marijuana. So while the drug is legal in Colorado along with Washington, marijuana remains illegal at the federal level. Without any progress towards marijuana becoming legal in all of the United States, this could have a great impact in terms of federal funding for these two states and any other states that choose to legalize marijuana. However, the legalization of marijuana will have a great and advantageous impact on American economic and social matters if legalized across the country.