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