National Treatment : The Issue of Competitiveness in the International Banking Community

Abstract

The issue of national treatment is of the utmost significance for the United States banking industry. If the U.S. is to remain competitive in a global market, equal treatment for our banks abroad must be assured. The U.S. has been a leader in the policy of according foreign banks privileges which are equal or better than those given to domestic banks. Yet U.S. banks abroad continue to encounter significant barriers in many countries which hinder their ability to effectively compete. If current trends persist, the U.S. will find itself falling dangerously far behind in the international arena. This would have serious ramifications not only on the banking industry, but also on the very foundation of the U.S. economy. Currently, Congress is at work on Fair Trade in Financial Services (FTFS) legislation which would ensure that national treatment is accorded U.S. banks abroad. The proposed legislation would call for retaliatory actions against those countries which deny United States banks national treatment. But is this the correct measure to be taken, or are there other options to be considered? At stake here could very well be the future prosperity of the American banking industry. Steps need to be taken to assure that the U.S. remains competitive in an international marketplace, yet what are the proper steps to be taken?