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Australia's restrictions on trade in financial services

Staff research paper

This paper by Greg McGuire was released on 19 November 1998. The paper identifies and classifies government regulations affecting financial services in Australia, which potentially may restrict trade in them. It also quantifies the restrictiveness of these measures. The paper uses a framework similar to the General Agreement on Trade in Services (GATS) schedule for financial services, but provides a more comprehensive and detailed listing of measures than the GATS.

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This staff research paper identifies and classifies government regulations affecting financial services in Australia, which potentially may restrict trade in financial services. The paper also quantifies the restrictiveness of these measures.

The paper finds Australia's trade in banking, insurance and securities services very liberal when measured against eight Asian economies - Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore, Thailand and India. In terms of openness, Australia ranks second behind Hong Kong in banking and securities services and third behind Hong Kong and Singapore for insurance services.

The paper uses a framework similar to the General Agreement on Trade in Services (GATS) schedule for financial services, but provides a more comprehensive and detailed listing of measures than the GATS. The paper identifies 165 measures applying to financial services, compared with 38 restrictions listed in Australia's GATS schedule. It includes measures not listed by Australia under the World Trade Organization financial services agreement and measures usually excluded from the coverage of the agreement, many of which are necessary to maintain the efficiency and stability of the financial services sector.

The paper provides a useful source of information on regulatory measures applying to financial services in Australia and a model for identifying and classifying restrictions on trade in financial services in other economies.

Background information

02 6240 3330

Preliminaries
Cover, Copyright, Preface, Contents, Abbreviations, Summary

1 Introduction

2 Restrictions on trade in financial services
2.1 The GATS framework
2.2 Prudential and non-prudential measures
2.3 An approach to identifying and classifying restrictions

3 Australia's financial services measures
3.1 Identifying and classifying Australia's measures
3.2 Australia's measures as limitations on market access and national treatment
3.3 Entry requirements for financial service providers
3.4 Administration and funds management of public sector superannuation schemes
3.5 Workers' compensation insurance

4 Quantifying Australia's financial services measures
4.1 Applying an index to Australia's financial services measures
4.2 Results for Australia
4.3 Some qualifications
4.4 Further research

Appendix A Australia's limitations on market access for financial services

Appendix B Australia's limitations on national treatment for financial services

References