Global Growth Hinges on New Pacts.

Insurers praise commitment to key issues during WTO talks.

Insurers said they fared well at the World Trade Organization meeting in Seattle in December, getting their concerns firmly onto the agenda for future global trade negotiations.

The most pressing issue for insurers was the pursuit of "pro-competitive regulatory principles," through which countries would refrain from imposing regulatory burdens that undercut their stated commitments to open markets. The conference was expected to end with a declaration on the agenda for the next round of global trade talks, and insurers' regulatory concerns were encompassed in broader language regarding services industries in general, said John Savercool, assistant vice president of federal affairs at the American Insurance Association.

The expected declaration from the meeting would have established a working group on domestic regulation of services industries, with its first task being to identify relevant regulatory issues by next December, Savercool said. That would have formed the framework for negotiations over regulation in the new round of WTO talks, which is to start this year and wind up in three years, if the United States has its way.

But the talks ended without adopting a declaration because of disagreements on key issues of agriculture, labor standards and anti-dumping regulations among the 135-nation organization that controls world trade. Conference chairwoman Charlene Barshefsky, the U.S. Trade Representative, told ministers at the concluding plenary session: "We found as time passed that divergences of opinion remained that would not be overcome rapidly. Our collective judgment...was that it would be best to take a time out, consult with one another and find creative means to finish the job."

WTO members already have agreed--and written into current WTO agreements -- that talks in agriculture and services will start in the beginning of this year. Whether they will then want to add other topics or complete the agenda that was under discussion in Seattle, remains to be seen.

Savercool said insurers hope the next WTO agreement will commit members to regulation that is transparent, timely and allows input from the private sector.

"There are some countries that let companies in, but they're not able to compete," said Brad Smith, director of international relations for the American Council of Life Insurance.

Smith said insurance industries around the world helped their cause by uniting on the objectives they would press for at the WTO. "When you have 90% of the world's insurance markets agreeing... it makes it easier for the negotiators," Smith said.

A paper issued by the AIA called for improvements to existing market access and national treatment commitments. U.S. companies have encountered ownership, product and geographic restrictions that limit their ability to offer their services and products, the paper said.

The AIA also called for use of definitions that reflect current and pending product developments, rather than vague and incomplete definitions that allow countries to make unclear commitments regarding insurance.

Insurers went into the Seattle meeting with high hopes on the heels of their success in November's U.S. China trade agreement, which greatly increased China's chances of admission to the WTO. Insurers and their trade associations were out in force in Seattle, and they took the opportunity to lobby members of Congress for swift passage of the accord.

Details have continued to emerge about the U.S.-China agreement. One is that foreign nonlife insurers will be allowed to own 51% of a joint venture or branch office upon China's accession to the WTO, with 100% ownership to be allowed by Jan. 1,2002. Life insurers will be restricted to 50% ownership, however.

The ACLI's Smith said the limitation on life insurance ownership was disappointing but still better than in some countries that already belong to the WTO. More important, he said, nothing in the limitation precludes foreign companies from having management control of joint ventures, however small their ownership stakes might be. The different treatment of life insurers is largely symbolic, a sign of resistance to foreign control of companies that hold Chinese citizens' savings, Smith said.

Geographic restrictions for virtually all insurers and products are to be lifted within three years, with 12 cities to be opened to competition within two years, including Beijing, Chengdu and Shenzhen.

The Chinese refused to make a commitment on third-party compulsory automobile insurance, but upon accession, China will open the entire market for large-scale commercial risks.