International Business : U.S. Pushing for Greater Role in Asian Financial Services Markets

As negotiators turn to a major unresolved issue in the global trade agreement that was otherwise completed last month, the Clinton Administration on Tuesday unveiled its primary approach to the talks and pressed Thailand to allow a greater foreign role in its booming financial services market.

Anxious to take advantage of the region’s multiyear run of stunning growth, foreign investors are excitedly eyeing stock exchanges, banking opportunities and a variety of other investment prospects. Nearly all are now protected from foreign participation to one degree or another by government regulations.

“An efficient and open financial services industry helps further integrate both the regional and the global economy,” Treasury Secretary Lloyd Bentsen said in a speech to the Thai Bankers Assn. “From our perspective, that contributes to our goal to sustain growth, which in turn both creates jobs and enhances stability.”

Bentsen has made the goal of opening foreign markets to U.S. investors a central theme of a weeklong tour of Asia, which is now almost certain to include an expanded refueling stop in Japan on the way home Sunday, to allow him to meet with Japanese Finance Minister Hirohisa Fujii. Bentsen would be the most senior member of the Administration to pressure Japanese officials face to face into making progress on the stalled trade framework talks, which carry a deadline of Feb. 11.

Reflecting the growing interest in investment opportunities in Asia, Bentsen has been talking with increasing optimism about the prospects for removing the 19-year embargo that has prohibited U.S. companies from doing business in Vietnam. The embargo is a carry-over from the end of the Vietnam War and is intended to pressure the communist government in Hanoi into making a fuller accounting of the troops listed as missing in action or as prisoners of war.

Speaking favorably about Vietnamese cooperation, reflected in upbeat reports from congressional delegations that have visited Vietnam, Bentsen said at a news conference that the movement toward lifting the embargo is “progressing well.”

He met during the afternoon with Thailand’s prime minister, Chuan Leekpai, and said afterward that the prime minister told him that in coming talks Thailand would “increase and improve its offer on financial services.”

Efforts to remove regulations that stand as obstacles to cross-border operations by investment firms, banks and the insurance industry were unsuccessful in the final days of negotiations that rewrote the General Agreement on Tariffs and Trade. The 117 nations that took part in the final talks in Geneva in December agreed to resume the financial services negotiations, with the goal of completing the outstanding segment before the global pact takes effect, expected on Jan. 1, 1995.

Outlining the approach the United States will pursue in the talks, Bentsen said Washington will seek “to open markets, not close ours.” Thus, he said, the Administration stands ready “to guarantee full market access” to those countries giving American firms satisfactory access.

He said the United States will “negotiate constructively,” avoiding any steps that would harm foreign companies already operating in the U.S. market. And he said the Administration will not try to block foreign companies from entering the U.S. financial services market.

Finally, he said, while the United States seeks a multinational agreement treating all nations equally, “we cannot accept a situation in which other nations retain the right to discriminate against our firms while they are permitted to expand in our market.”

The Administration is pushing for an opening of financial service business because it believes the United States has a competitive advantage in that area. And, in a world that depends on more than manufacturing to create wealth, financial services are expected to play a key role in national prosperity.

“It’s a big world now, and emerging markets are especially important,” a senior Treasury official said.

In a period of growth that is sluggish at best in Europe, Asia, with the exception of Japan, has continued to expand. The economy in Thailand, for example, grew 7.5% last year and averaged 10% annual growth the preceding three years.

Turning to one of the markets with some of the most lucrative potential, Bentsen is beginning a four-day visit to China today.

John S. Wadsworth, Jr., managing director of the Morgan Stanley Asia Ltd. office in Hong Kong, predicted that by the end of the decade, the fledgling Shanghai stock exchange will be the biggest in Asia, capitalized at $2 trillion.

Bentsen began his day Tuesday by meeting privately with Wadsworth and the Asian representatives of such investment firms as Goldman Sachs and Citibank, hearing their complaints about the problems of doing business in the region and their expectations for future operations.