The Financial Services Industry Agreement

QUOTE: "Unlike MAI the FSIA is already a done deal."

research by

Scott Balson

Australia has already signed another secretive international agreement called the Financial Services Industry Agreement (FSIA) that effectively turns over control of our nation's finances to international money lenders and dealers.

The WTO has been described by Korten as: "... a global parliament composed of unelected bureaucrats with the power to amend its own charter without referral to national legislative bodies."

Since the FSIA has been signed over 40,000 Australian employees in the finance industry have lost their jobs and several rural bank branches have been closed - all put down to "rationalisation" but clearly timed after Australia signed the FSIA.

FSIA subjects covered on this page:

1999 Updates:

The fifth protocol
Payback to Treasury Chief for destroying Australia's financial sovereignty - 6th July 1999


Return to the MAI and the FSIA main page

Australia has committed to allow 100 percent foreign ownerhip of Australian banks (see also this link):

The big four Australian banks already have foreigners as their major shareholders:

National Australia Bank Shareholding Westpac Shareholding ANZ Shareholding Commonwealth Bank Shareholding
ANZ Nominees 6.6% Aust Mutual Provident Society 11.65% Chase Manhattan Nominees 11.6% ANZ Nominees Ltd 7.41%
Westpac Nominees 5.8% Lend Lease Custodians P/L 9.1% Westpac Custodian Nominees Ltd 8.2% National Nominees Ltd 4.84%
Chase Manhattan Nominees 5.7% Westpac Custodians P/L 8.1% ANZ Nominees Ltd 5.1% Westpac Custodian Nominees Ltd  3.6%
National Nominees Ltd 5.5% Chase Manhattan Nominees 8.1% National Nominees Ltd 4.4% Citicorp Nominees Pty Ltd 3.3%
Perpetual Trustee Aust. Group 2.8% National Nominees Ltd 4.9% MLC Life Ltd 4.4% Chase Manhattan Nominees Ltd 2.6%
Permanent Trustees Group 2.8% ANZ Nominees Ltd 4.9% Australian Mutual Provident Society 2.2% State Authority Super 2.0%

Chase Manhattan run by Rockefeller interests.

Nominee companies are defined as companies established by a bank to hold legal title to stocks and shares on behalf of its owners. A major function is to enable the transfer of funds for overseas interests. A nominee company enables investment of capital by large and mainly foreign investors, and the payment of dividends to them.

Financial Review 17th June 1997 (article on Australian Banks): "There is no shortage of money or resources being lavished on promoting banks to their customers. Yet the "banks are bastards" image not only persists but is fuelled with each interest rate change... While they spend about Au$150 million annually on advertising, their own research reveals that consumers are not just cynical about the banks but can barely distinguish one from the other."


The Financial Services Industry Agreement, dated December 12, 1997, was signed in Geneva by 70 members of the World Trade Organizantion.

In Toronto, where I live, some government Members of Parliament have either denied the treaty's existence or say that they cannot find out anything about it. The Canadian government may be keeping its' own members ignorant of this "agreement," as it did with the MAI.

This "agreement" may allow the sale of Canadian banks, insurance companies etc to foreign investors. People fear that the Bank of Canada may also be sold to private investors.

Source: The FSIA was reported on in the Toronto Globe and Mail on December 15.

By Heather Scoffield

OTTAWA -- Canadian banks, insurance companies and securities firms have gained greater access to international markets under a ground-breaking worldwide agreement signed on the weekend in Geneva.

The Globe report did not name the "agreement" that it was repoting on.

There was also an editorial on the FSIA in the Toronto Globe and Mail on Tuesday, December 16, 1997, which provided even less information.


The lone voices of dissent came from a handful of delegates from developing countries, whose financial-services industries cannot compete outside their domestic markets and will face stiff competition on their home turfs beginning in March 1999.

Egypt's ambassador in Geneva, Mounir Zahran, said of the pact, "In fact, it's one-way traffic. They will come here, but we won't be able to go there."

This thing, (the FSIA) whatever it is, has been signed and goes into effect in March 1999. We need to find out what it is, now.

You may want to look at:

Please let me know the URL of any other documents about the FSIA.

We need to ask for "Australia's final offer" to the World Trade Organization's Financial Services negotiations, that forms part of the Financial Services Agreement (FSA) signed on Friday, 12 December, 1997.

The Financial Services Agreement is probably a public document as it is no longer under negotiation.

Canadians can obtain a copy of Canada's final offer from Frank Swedlove, Director, Financial Sector Division, Department of Finance, L'Esplanade Laurier, 140 O'Connor St., Ottawa, Ontario, K1A 0G5, Tel: (613) 992-4679; Fax: (613) 943-8436.

The email address for Jim Peterson, Secretary of State of International Financial Institutions (the Minister most directly responsible), is and his fax: (613) 995-2355.

The rumour is that the government intends to pass enabling legislation by the end of February and nobody has been allowed to see the agreement yet.

The World Trade Organization issued a summary of the Financial Services Negotiations on Monday December 15, 1997 that lists 7 categories of "Commitments" covered by the FSA and lists the countries that signed each "Commitment." Guess who signed up for everything? Not the USA!


  1. Foreign Investment In Insurance - Allow 100% subsidiaries and entry through branches (45 countries including Canada and the United States)
  2. Market Access And Scope Of Insurance Commitments - Gauranteed market access for all insurance subsectors (52 countries including Canada and the United States)
  3. Cross-Border Insurance Activities - Allow cross-border MAT insurance, reinsurance and brokerage (27 countries including Canada and the United States)
  4. Banking/Securities Commitments

Unconstitutionality of MAI and the FSA

Suzanne Gregory, editor of AVID - Action Vancouver Island for Democracy, has put together the following very succinct statement on the unconstitutionality of the MAI and the FSA.

It will be of help to some of you who are trying to explain that matter.

Also, if you have knowledge of Bill C47 (1994), please notify us.

Because the MAI and FSIA are unconstitutional, the job of Parliament is not merely to seek certain reservations (which would in any case be subject to interpretation by international tribunals). The duty of Parliament is to refuse to pass any measure which violates the Constitution. Period.

There are two areas of unconstitutionality:

  1. The current government may not bind future Parliaments to agreements which cannot be abrogated during their tenure (the MAI would effectively be in force for 20 years; it appears that the FSIA is permanent); and
  2. The Federal government cannot sign agreements which restrict the power of Provinces and Municipalities to legislate in their areas of jurisdiction.

As this struggle goes on, we also need to be mindful that the MAI and FSIA will be attached to C-47 (1994), the World Trade Organization Agreement Implementation Act. If any of you has a researched legal opinion on the constitutionality of that Act, we would greatly appreciate hearing from you.


The World Trade Organisation on Australian and the FSIA:

The WTO web site provides the following, apparently incomplete, information

QUOTE: Australia - Making significant improvements in banking and other financial services:

- Eliminates an MFN exemption based on reciprocity requirements for membership in the Australian Stock Exchange;

- Eliminates a prohibition on the acquisition of control of any of Australia's four main banks. Also eliminates a measure which prohibits banks (resident or non-resident) from holding shares in the Commonwealth Bank of Australia and other entities from holding more than five percent of its issued share capital;

- Eliminates restrictions placed on share ownership of authorized money market dealers by foreign and domestic banks, and restrictions imposed on relationships and dealings between authorized dealers and related banks;

- Relaxes the prohibition on foreign banks located overseas from raising funds in Australia, and allows such banks to raise funds in Australia through the issue of debt securities, subject to conditions ;

- Removes an entry relating to the reservations by State and Territory governments of the right to prohibit foreign control of State-owned or controlled banks.

Non-attributable summary of the main improvements in the new financial services commitments

The following is informal background for information purposes only. It should not be cited or quoted as an official document of the WTO.

- A total of 56 offers (representing 70 countries) were submitted by the negotiating deadline of 12 December 1997 and annexed to the Fifth Protocol to the GATS.

- Five countries (Bolivia, Costa Rica, Mauritius, Senegal and Sri Lanka) made offers in financial services for the first time. At present, 97 WTO Members have commitments in financial services under the GATS. This number will increase to 102 Members with the entry into force of the Fifth Protocol to the GATS.

- India and the United States have withdrawn their broad MFN exemptions based on reciprocity. Mauritius has limited the scope of its MFN exemption to services not listed in its Schedule of Specific Commitments. Venezuela has reduced the scope of its MFN exemption by removing capital market services from the coverage. Hungary has limited the applicability of its MFN exemption by removing a discretionary licensing requirement. The Philippines has reduced the scope of its MFN exemption based on reciprocity in commercial banking by excluding the expansion of existing operations from the scope, leaving only the establishment of new commercial presence.

- In addition to the 57 countries with existing commitments in the provision and transfer of financial information, Costa Rica, Honduras, Israel, Jamaica, Malta, Mauritius, Romania and Sri Lanka (8 countries) have extended the coverage of their commitments to these services.

_______ Canada - Revising its 1995 commitments:

- Undertakes to modify its Schedule by 30 June 1999 to incorporate the results of the implementation of a new foreign bank entry regime which will allow foreign banks to branch directly into Canada;

- Eliminates a requirement to gain Ministerial approval for foreign bank subsidiaries to open more than one branch.

PRESS/86 15 December 1997



Total number of commitments 102
(This chart lists the 70 countries with improved commitments as of December 12)


Total number of commitments 102
(This chart lists the 70 countries with improved commitments as of December 12)


Total number of commitments 102
(This chart lists the 70 countries with improved commitments as of December 12)


Total number of commitments 102
(This chart lists the 70 countries with improved commitments as of December 12)

You will notice (page 4) that Canada, but not the USA, appears to have committed to "100 percent ownership of banks"

I, and others, assume that that means that Canada commits to allowing 100 percent foreign ownership of Canadian banks.

Briefing on the Financial Services Agreement (FSA) or General Agreement on Trade in Services (GATS).

The name of this agreement is several, incl. Financial Services Agreement (FSA), Financial Services Industry Agreement (FSIA), Agreement on Fin. Services (AFS), Gen. Agreement on Trade in Services (GATS), and in some cases government has put forward press releases without any formal name! Makes you wonder, doesn't it?

This agreement is more virulent than even the MAI, because it is a financial, rather than just a trade agreement. And if you want to find out how a system works, the best rule of thumb is 'follow the money'. Further, it should be noted that all these agreements are under the World Trade Organisation's rules that require member states "to ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements." (WTO Paragraph 4 of Article XVI). The "annexed Agreements" include all the substantive multilateral agreements relating to trade in goods and services and agreement on intellectual property rights. This provision thus obligates each member country to revise any national or sub-national laws in conflict with the GATT/WTO. (Korten, 1995).

Indeed, the WTO has been described by Korten as: "... a global parliament composed of unelected bureaucrats with the power to amend its own charter without referral to national legislative bodies."

This agreement was 'initialed' by the Federal Government on 12th December '97. It was, in Geneva. It is to be confirmed within weeks. This agreement doesn't even have a six month or a 'five plus fifteen year' 'get-out' clause like MAI. We have the documentation showing that the Australian government is willing to sign this as a 'permanent' agreement. To quote their own documentation: "To put it another way, the Fifth Protocol will never expire." That is not only signing powers away to a financial dictatorship, but is also in total conflict with the Australian Constitution which states clearly that no parliament can bind any future parliament. And to make the point clear, that constitutional law applies to 'good' legislation as well as 'bad'. If parliament wishes to bind future parliaments by signing 'permanent' agreements, that can only happen with a reviewed and revised constitution.

Briefing on the Financial Services Agreement (FSA) or General Agreement on Trade in Services (GATS) by Duff Conacher of the Canadian Community Reinvestment Coalition (CCRC).

The World Trade Organization Financial Services Industry Agreement (FSIA) affects our banking sector the most, as our insurance, trust, and investment brokerage sectors are already wide open to foreign financial institution entry and ownership, mainly as a result of changes to legislation governing these sectors enacted in 1993-94.

The Agreement as a whole is not yet available, mainly because it is actually a series of agreements or positions of the 70 or so countries that signed the Agreement. Each country has lowered the barriers to foreign financial institutions entering its financial services industry in different ways, because every country had different barriers in place. A compilation of these agreements has not yet been completed, and it usually takes two or three months after any international agreement to complete such a compilation.

However, you can obtain a copy of Canada's final offer to the other countries involved, which is essentially the agreement that Canada signed. Canada's final offer can be obtained from Frank Swedlove, Director, Financial Sector Division, Department of Finance, L'Esplanade Laurier, 140 O'Connor St., Ottawa, Ontario, K1A 0G5, Tel: (613) 992-4679; Fax: (613) 943-8436. I do not have Frank Swedlove's email address, however the email address for Jim Peterson, Secretary of State of International Financial Institutions (the Minister most directly responsible), is <> and his fax: (613) 995-2355.

With regard to the commitments Canada made, they did not go further than the changes to financial institution legislation that were proposed in a Department of Finance discussion paper published late September 1997. Generally the commitments are as follows:

What do these changes mean? (Read Australia for Canada)

First of all, let me make it clear that the Canadian Community Reinvestment Coalition (CCRC) has not taken a position on the Agreement except to call for full, meaningful public consultation before the Agreement is signed and implemented, and to point out some of the potential negative impacts of the Agreement. The CCRC is a project of Democracy Watch's and is made up of 65 small business, community economic development, labour, anti-poverty and consumer groups from nine provinces and the Northwest Territories. Just for clarification, I am the Chairperson and Spokesperson for the CCRC.

According to the CCRC's analysis, not much will visibly change in terms of the financial institutions you see on street corners across the country as a result of the WTO Agreement. Why not? Because 80% of businesses (all small businesses) and 90% of individuals in Canada have less than $150,000 on deposit in a bank. Therefore, foreign banks will only be able to open branches to serve 20% of businesses and 10% of individuals, in other words only a small portion of the market. As a result, it is unlikely that many foreign banks will set up branches in Canada, and likely only in urban centres or other locations where there is a concentration of individuals or businesses with more than $150,000 on deposit in banks.

Another reason discouraging foreign banks from setting up branches here is that most big businesses and wealthy individuals can already deal with foreign banks if they want to, either through subsidiaries in other countries, or by simply opening accounts in other countries. However, the changes do have serious implications concerning the costs of banking, especially for small businesses and low and moderate-income individuals.

Why? Well, foreign banks will be competing with Canada's banks for the deposits of big businesses and wealthy individuals, and the competition will likely lead to lower prices for these businesses and individuals. Therefore, Canada's banks will lose revenue from the sale of products and services to these customers, both because foreign banks will take away some of the business, and also because prices will likely be lower. How will Canada's banks replace this lost revenue. It is likely that the banks will increase their prices for all the customers who cannot deal with foreign banks because they have less than $150,000 on deposit with a bank. In other words, the 80% of businesses and 90% of individuals in Canada with less than $150,000 on deposit in a bank will face higher service charges as a result of these changes.

The only possible way that the changes will not have such a discriminatory effect on small businesses and low and moderate-income individuals, is if "deposit" is very broadly defined to include various investments or credit extended to customers. However, even if the definition is broad, a majority of customers will still not be able to deal with a foreign bank.

Privatisation of state and national banks:

Concerning the rumour that these changes will lead to the privatization of the Bank of Canada, (the Commonwealth Bank of Australia has been privatised with foreigners being the major shareholders) I have no information that would lead me to believe this, and I do not know how or where this rumour started. How will these changes be implemented? As mentioned above, the Department of Finance released a discussion paper on changes to foreign bank entry at the end of September 1997, with consultation until the end of October 1997. Because the proposals in the discussion paper were essentially the same as those in the final WTO Agreement, when Parliament opens again on February 2, 1998, it is likely that a resolution to ratify the Agreement, and legislation to make changes to Canada's financial institution laws in accordance with the Agreement, will be introduced early in the Parliamentary session.

How should you respond to these proposed changes? First, send a letter to your Member of Parliament, Finance Minister Paul Martin (email: <> or fax: (613) 995-5176), Secretary of State for Financial Institutions Jim Peterson (email: <> or fax: (613) 995-2355), In your letter, as the CCRC has been doing for the past seven months, call for full, meaningful public consultation on the changes, both to ensure that there are not other, hidden changes being made, and also to explore fully the implications of the changes.

Tell your MP and the Ministers that a two-tier banking system in Canada is not acceptable (in which big businesses and wealthy individuals have access to foreign bank services but small businesses and low and moderate-income Canadians do not), although if you are not in favour of foreign banks being active in the Canadian market at all, your message will obviously be different.

In addition, make it clear to your MP and the Ministers that these changes do not mean that Canada's big banks will suddenly face severe competition from foreign banks, since Canada's market has only been opened up in a very limited way (ie. only allowing foreign banks to take deposits of over $150,000). It is important to let elected officials know that you don't believe that our market is now wide open. Why? Because Canada's big banks are already using the spectre of foreign competition (even though it hardly exists right now) in their arguments that they should be allowed to merge, and sell insurance and auto leases directly from their branches.

When these changes are made, Canada's banks will use the argument even more, even though foreign competition will likely not increase very much at all. In other words, Canada's big banks are still protected, as they have been for 30 years, from foreign competition. And the only real reason they want to get bigger is because they want to be bigger, not because they need to be bigger to serve their customers or survive and thrive as businesses. In addition, in your letter to elected officials, make it clear that the federal government should enact requirements for all banks, foreign or domestic, to disclose details about their lending, investment and service to customers. Such requirements have existed in the U.S. for over 20 years, and before any bank can expand (e.g. open a branch or ABM) or merge or take over another bank, regulators review the disclosed information and grade the bank's performance. (Australia does not have this safeguard in place).

If the bank receives a failing grade (ie. is discriminating against some customers or generally not serving its customers well) then the application to expand can be denied. Such disclosure and review requirements would allow Canadians to hold banks operating in Canada accountable to high standards of service across the country. Another key accountability change is the creation of a financial consumer organization in Canada. For more information, please view the CCRC's home page at the following address: <> (we are still making a few changes to the page, but it is more or less completed).

The page contains the CCRC's five position papers on the issues of the banking ombudsmen, access to basic banking services, disclosure of business lending statistics, the creation of a financial consumer organization in Canada, and the enactment of an overall accountability system for banks and other financial institutions in Canada. You can also contact me at the address below with any questions or if you would like to receive a full information package by mail concerning Democracy Watch's and the CCRC's work on banking issues and other democratic reform issues in Canada. I hope you find this information interesting and useful, and I hope you can join the CCRC in working for bank accountability in Canada. Sincerely, Duff Conacher, Coordinator Democracy Watch P.O. Box 821, Stn. B Ottawa, Ontario K1P 5P9 Tel: (613) 241-5179 Fax: (613) 241-4758 email: Internet:

Preamble On November 10th, Mr Bill Dymond, Chief Negotiator for Canada for the Multilateral Agreement on Investment (MAI), assured us in a meeting in Nanaimo that openess and transparency for the public was the order of the day in the negotiations around the MAI over the last two years. He had little to say when it was pointed out that as recently as May 11 of this year, on Cross Country Check-Up, that Cabinet Minister Hedy Fry, when asked by Connie Fogal about the MAI, Fry said: "There is no such agreement being negotiated."

We have subsequently been assured by senior civil servants that the Minister was not lying, but simply didn't know. We discovered that only two cabinet ministers and the prime minister knew about this nation impacting issue. Now it has just surfaced that in December this year, Canada is about to sign yet another secretive international agreement called the Financial Services Industry Agreement (FSIA) that will effectively turn over control of our nation's finances to international money lenders and dealers. Laundering questionable money is the lucrative trade of some of these people. Under the auspices of the World Trade Organisation (WTO) in Geneva, this agreement will permit any financial institution in the world to come to Canada (and of course other countries) and to any community, and buy, sell and trade financial institutions at will.

The implications for Canadian sovereignty are worrisome, to say the least. A nation's sovereignty is determined by its control of its money and its central bank. You know which country you are in when you see the money they use. Under 'globalisation' rules, our national bank, the Bank of Canada, will be subject to privatisation. It will then be subject to sell-off to a high bidder, most likely the privately-owned Federal Reserve Bank of the USA.

Once in their control they can simply declare that the U.S. dollar will be our currency. 'Manifest Destiny' is the ideology of the American establishment in which they believe they have the right to own and control whatever country they wish, and extract their resources. They have never really feared Communism. What they have feared and do fear is insubordination and independence, even among their own people, who are our friends.

We work with Americans to stop the MAI, and to roll back NAFTA and the FTA. Canada, with its abundant water and other resources, is a prime candidate for 'access'.

Why bother with an armed invasion, which would be unacceptable to other nations, when a financial invasion will achieve the same end? Do we want to remain a nation or become a dependency like Puerto Rico? It is a fact of history that minority elites have manoeuvered to try and take control of people's lives, in order to exploit them. There is nothing to suggest that it is any different in our century.

The struggles of the past can be wiped out with the stroke of a pen. I don't want that to happen, and I hope you don't either. Following, is a report by Duff Conacher about the up-to-now secret WTO Financial Services Industry Agreement (FSIA) being negotiated in Geneva, and designated to be signed in December by the Liberal Government without any parliamentary debate or public referendum on this nation-deleting agreement.

If you love this country, then come out and help. Perhaps we can get rid of the charletons in Ottawa who are selling us out in the name of 'globalisation'.