This study reconsiders the problems in the opening of the domestic finance market at the time of the Uruguay Round multinational trade negotiation, from the perspective of liberalization in the finance service trade. This study’s objective is to propose measures for the opening of the financial market.
Finance service trades are different from trades of goods because of the general features of services. The general form of finance service trades may be considered to meant that financial institutions are financial service providers to get access to financial service consumers and provide goods to them. Therefore, liberalization of the finance service trades is not meant to be a reduction of tariffs, nor a removal of non-tariff barriers, but a determination of whether there is the national treatment policy for the entry of financial institutions and the business activities thereof after the expansion. By advocating liberalization of service trades at the forefront, the U.S. provides equal opportunity to compete as to the entry of domestic and foreign financial institutions and businesses. Considering this, as to the finance service trades in Korea, banking services can be judged to have accomplished a substantial degree of liberalization.
In the future, the right of establishment is most important, due to the opening of the domestic finance market. It should be policy to give the right of establishment as equally to foreign financial institutions as domestic financial institutions for the following reasons: there are increasing requests by developed countries to open the domestic finance market; the domestic finance market should be opened as a matter of reciprocity in order to expand domestic financial institutions to overseas markets; the Korean government is considering becoming a member state of the OECD. Therefore, policy direction for the establishment of overseas financial institutions proposed by this study conforms to the Code of Capital Liberalization of the OECD.
This study asserts that policy overseas financial institutions expanding into the domestic market.. When competition between domestic and overseas financial institutions is promoted, the benefits of combining the two markets are achieved and, as a result, the welfare of participants in the two markets is increased. In addition, having become a country with an international balance surplus, Korea should make preparations for when Korean financial institutions’ roles will be expanded as a capital exporting country.
However, at the early stages of opening of the domestic finance market, overseas financial institutions may run the risk of unbalanced benefit of combining financial markets, due to the differences in the finance methods between domestic and overseas financial institutions. Therefore, a system should be established to solve such problems without preventing the opening of the finance market.
In order to overcome structural vulnerabilities of the finance service industry in Korea, the currency management system should be improved in a way so that the use of direct credit currency management is restricted, while indirect management of the reserve requirement policy, the re-discount policy, and the open-market operations, etc. are facilitated. In terms of currency management, equal assistance and regulation for domestic banks should be available to foreign banks as well.
우루과이라운드대책연구 서비스부문((A study on countermeasures against Uruguay round in service sector)
금융 및 증권(Finance and securities)
|Series Title; No||정책연구시리즈 / 88-16|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy
Economy < Trade
|Holding||KDI; KDI School|