value of services was modest compared to goods and were not traded in the same way. The CSI thus had to be more than a trade association committed to traditional political lobbying. It invested significantly in researching and developing an intellectual framework to think about services in the context of international trade.
Global demand for services was rising rapidly, mandating this rethinking. For the United States and other developed countries, liberalized trade in services would mean more jobs, more foreign trade income and a strengthened global position. For all countries, it would mean enhanced technological achievements and blossoming in the broad field of intellectual property.
Members of the CSI began to participate in conferences on international trade, launching a serious dialogue among policymakers and scholars. The CSI formed in the United States spawned sister CSI organizations abroad. This growth eventually led to the creation of an umbrella organization called the Global Services Coalition. It also propagated many kindred groups interested in promoting open trade generally and attracted the support of older groups, such as the US Chamber of Commerce.
Checking this momentum were a few vocal opponents who resisted the CSI’ s and AIG’ s efforts, both in the US and abroad. Developing countries, led by Brazil and India, objected to allowing large US financial services companies to compete in their local markets, fearing those would drive local firms out of business. In response, Greenberg repeatedly emphasized in his annual AIG chairman’ s letters and other high-visibility platforms that allowing such competition would help the economies of these developing countries as well.
Although the debate remains one of popular conversation, most economists and policy makers have embraced the notion, first argued as long ago as 1817 by David Ricardo, the influential classical economist, that gains from trading exceed losses for both developed and developing countries when countries specialize in what they do best. True, it is not usually propitious to make radical, rapid shifts from a closed to an open economy, when it is difficult for people to make the inevitable transitions that trade shifts require. In the long term, however, trade has proven to be a better route to prosperity than isolationism.
Cover of the“ General Agreement on Tariffs and Trades”( GATT), dated October 1949.
Despite the mounting proof of the benefits of open trade, it was still met with opposition at home. Environmentalists opposed trade agreements unless countries agreed to control pollution in particular ways; human rights advocates objected to deals with countries tolerant of forced labor.
By far the biggest obstacle to overcome on the road to open trade in services was nationalistic protectionism. Many countries had laws that limited foreign ownership of insurance businesses. In Malaysia, protectionist laws dated to race riots in 1969 when native Malays, called Bumiputra( meaning“ son of the earth”) protested
Universal History Archive / Universal Images Group
26 FINANCIAL HISTORY | Winter 2017 | www. MoAF. org