“It’s very dark right now,” said David F. Snyder, the American Insurance Association’s Vice President and Assistant General Counsel. He wasn’t speaking about the weather. He was referring to the lack of any serious progress in the current Doha round of trade negotiations in a speech to the GATS and Financial Services Seminar being held by the British Institute of International Comparative Law in London.
Snyder has actively participated in trade and international regulatory negotiations in Amman, Beijing, Geneva, London, Washington and elsewhere. His particular concern is the eventual fate of the changes proposed in the General Agreement on Trade in Services (GATS), which have been underway since 2000.
“The Doha Round has been a serious failure for the insurance sector, despite strong efforts by many parties,” Snyder stated. “Instead of increasing the consensus for free trade, the Round has served to divide the developed countries, especially the US and EU, even as it has failed to open insurance markets in developing countries. Deadlines have come and gone and successive strategies have been unsuccessfully employed to get the negotiations going. Most importantly, the packages that have been tabled to date are disappointing and wholly inadequate both as to quantity and quality.”
Despite the AIA’s optimistic spin on the change in U.S. trade negotiators (See IJ Website April 24), Snyder’s analysis is a good deal more sanguine. He fears, as many involved in the talks do (See IJ Website April 27), that commitments from participating countries are eroding to the extent that no consensus for change will be reached.
With typical American forthrightness Snyder pinned the blame for the stalemate on the agricultural and manufacturing sectors. “Services constitute the lion’s share of the global economy,” he pointed out, “yet progress on global services negotiations has been relegated to a position for all practical purposes behind agriculture and manufacturing. And, as those sectors continue to generate controversy and realize no break-throughs, they slow down services negotiations, as well.”
Divisions caused by self interest, particularly over farm subsidies, have served to divide the U.S. and the EU at a time when their combined influence should be producing change, not preventing it. “So long as the EU and the US can be encouraged to exhaust negotiating resources in blaming each other,” Snyder continued, “closed markets remain closed and a few beneficiaries in them prosper while their countries are deprived of key services and related benefits and the developed countries are deprived of new business revenue.”
Elaborating on that theme, he noted the important role the insurance industry plays in underpinning economic growth. Lack of progress particularly affects less developed countries. Snyder noted: “Among its other social values, insurance compensates for loss that would otherwise be borne by government, thereby freeing public resources for other uses. It provides compensation and thereby supports the security of individuals and businesses. Pending payment of claims, insurance premiums are invested in the economy, largely for infrastructure development, including roads, airports, hospitals and schools that support over-all development. Finally, insurers as risk managers and mitigation advocates can assist in reduction of loss of life, injuries and productivity losses due to preventable occurrences, such as industrial accidents and motor vehicle crashes.”
He also stressed the importance of reasonable regulations, and urged more progress on harmonizing them, which would eventually benefit not only the insurance industry, but also the developing countries.
In his conclusion Snyder bluntly stated: “The Doha Round has been a failure for insurance as it has been for so many other sectors.” He does see some hope, however, citing the “limited success” of some bilateral negotiations.
“We continue to desire a better outcome in Geneva and are working toward that end,” he continued. “But the time is running out and so is the willingness of our companies to support and participate in that system. Whether the current chain of failure will continue or be broken remains to be seen. Is this the darkness before the dawn or just more darkness? Time and our efforts will answer that question.”
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