Border Busting

As a Washington lobbyist and international advocate for insurance brokers, I’ve often considered the process of free trade agreements and multilateral trade dialogues as lethargic exercises that take years to conclude. 

Working with Congress for more than a decade on complex public policies taught me it takes an army of high-ranking officials spending countless hours of labor and capital to build consensus and achieve any policy goal.

On the international scene, that process is typically amplified and drawn out, considering the parochial interests of each country and its own domestic political battles. It took years for the Bush administration to get the Central America Free Trade Agreement enacted, and I lost track of how many times the wide-ranging rounds of Doha trade talks have died and been revived. That’s why what’s unfolding now with international trade is so groundbreaking and full of potential for international insurance brokers.

Countries across the globe are actively engaged in multilateral free trade negotiations that are unfolding at an unprecedented pace. The Trans-Pacific Partnership (TPP) agreement consists of promising talks with 12 emerging and established economies along the Pacific Rim. The Trade in Services Agreement (TiSA) evolved from the failed Doha talks and is now an active conversation among 22 countries and the European Union. It aims to significantly expand international trade for the services industry (the last major services agreement was established by the World Trade Organization in 1995). And the Transatlantic Trade and Investment Partnership (TTIP) is emerging to build one of the strongest economic partnerships in the world.

Each agreement includes countries that are enthusiastic about achieving an end, and the United States is striving to make the Trans-Pacific Partnership a benchmark for all future trade treaties. This environment gives us the potential to open markets and expand trade between dynamic economies. It’s critical that negotiators include robust provisions that strengthen digital trade and open economies to insurance intermediary services.

Council members regularly place commercial insurance policies for companies with risk exposure in countries that span the globe, making regulatory compliance complex, duplicative and seemingly impossible in some government environments. It is our common goal to remove market barriers and restrictions that disrupt the business of covering international risk. The opportunities before us with all of the negotiations are ripe with potential. The Council is encouraging all negotiators to focus on three elements affecting insurance intermediaries when they address insurance services:

1. Insurance intermediaries should have the ability to conduct business in large risks, MAT (marine, aviation and transport) and reinsurance on a cross-border basis.
2. Insurance intermediaries should have the right to establish branches under national market treatment without discrimination.
3. The level of liberalization offered to insurance intermediaries should be equal to the one that is provided to insurance carriers. Removing these barriers would increase business opportunities for brokers, ease international commerce and aid global economic growth.

Insurance carriers are also working to remove market barriers through these negotiations, with a particular emphasis on easing electronic data flows. Specifically, carriers want participating countries to allow multinational companies to transfer, access, process or store digital information across borders. Carriers argue that global businesses increasingly rely on international flows of data to manage operations, improve productivity, build relationships, and deliver products and services. It’s true that consumers in countries throughout the world are looking to digital products and services to enhance their quality of life, and international commerce is struggling to meet that global demand. Current trade rules are insufficient to ensure that borders remain open to data flows and that digital products and services receive equal treatment in key markets.

Achieving an enforceable agreement that includes these provisions with even one of the three dialogues would be groundbreaking. The negotiations are tedious exercises riddled with domestic political implications. For example, it’s been suggested that including any language affecting the American financial services industry could begin to dismantle the recent rewrite of U.S. laws regulating the financial industry (known as Dodd-Frank). And there are policies where national security, public safety and privacy concerns are unique to specific countries and legitimately warrant some exceptions. But these issues should not be used to create barriers for insurance brokers, carriers or international commerce.

The speed at which these negotiations are occurring is promising. While I still believe the day governments around the world will adequately meet the demands of a global economy is distant, the steps staring at us in these negotiations are significant and achievable.