Issue link: http://clhia.uberflip.com/i/821274
10 5.0 Establishing Cohesive, Transparent and Effective International Trade Rules The services components of Canadian FTAs generally contain several core elements that are vital for financial services: • A negative list approach, meaning that all sectors are covered by the agreement unless specifically identified as being excluded; • A prudential carve-out (as specified in the Financial Services Annex of the General Agreement on Trade in Services). For the financial sector, the prudential carve-out ensures that countries have the ability to protect investors, policyholders and depositors while ensuring the sound regulation of the financial services sector; • Provisions to increase market access and provide non-discriminatory treatment for Canadian financial services firms; and • Ratchet mechanisms that bind future services liberalization. These are all important elements for trade in financial services but there are a number of emerging and important issues that also need to be addressed such as regulatory cooperation, rules governing the operations of State Owned Enterprises (SOEs) and the cross-border transfer of data. In terms of rules governing the commercial operations of SOEs, Canada should promote agreements that prohibit unfair advantages to state affiliated entities. SOEs with commercial operations should be subject to the same requirements as the private-sector competitors with which they compete. Some of the principles that should be covered include: the prevention of preferential treatment of SOEs; the prevention of any guarantees that are extended only to the policyholders of the SOEs; and the limitation of the ability of SOEs to cross-subsidize their insurance-related businesses from other business areas. Another area of trade policy that is rapidly emerging as a key area of concern is the cross-border flow of business data. Canadian life and health insurers with international operations operate on a 24/7 business model. Many rely on the secure flow of data across borders for various commercial and back- office functions. Therefore, the ability of companies to move business data quickly and securely across jurisdictions is vital to their international competitiveness. Recommendation 4: Aside from the standard elements of FTAs, Canadian FTAs should also cover emerging trade issues such as the cross-border flow of information and rules governing the commercial operations of State Owned Enterprises.