[Congressional Bills 103th Congress] [From the U.S. Government Publishing Office] [H.R. 3974 Introduced in House (IH)] 103d CONGRESS 2d Session H. R. 3974 To provide for fair trade in insurance services, and for other purposes. _______________________________________________________________________ IN THE HOUSE OF REPRESENTATIVES March 8, 1994 Mr. Leach introduced the following bill; which was referred jointly to the Committees on Energy and Commerce and Ways and Means _______________________________________________________________________ A BILL To provide for fair trade in insurance services, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``Fair Trade in Insurance Services Act of 1994''. SEC. 2. EFFECTUATING THE PRINCIPLE OF NATIONAL TREATMENT FOR INSURANCE ORGANIZATIONS. (a) Purpose.--The purpose of this section is to encourage foreign countries to accord national treatment to United States insurance organizations that operate or seek to operate in those countries. (b) Identifying Countries that Deny National Treatment to United States Insurance Organizations.--The President shall identify the extent to which foreign countries deny national treatment to United States insurance organizations-- (1) according to the most recent report under section 3602 of the Omnibus Trade and Competitiveness Act of 1988 (or the most recent update of any such report); or (2) based on more recent information that the President considers to be appropriate. (c) Determining Whether Denial of National Treatment has a Significant Adverse Effect.-- (1) In general.--The President shall determine whether the denial of national treatment to United States insurance organizations by a foreign country identified under subsection (b) has a significant adverse effect on such organizations. (2) Factors to be considered.--In determining whether and to what extent a foreign country denies national treatment to United States insurance organizations, and in determining the effect of any such denial on such insurance organizations, the President shall consider appropriate factors, including-- (A) the extent of United States trade with and investment in the foreign country, the size of the foreign country's markets for the insurance services involved, and the ability and the extent to which United States insurance organizations operate or seek to operate in those markets; (B) the importance of operations by United States insurance organizations in the foreign country to the export of goods and services by United States firms to such country; (C) the extent to which the foreign country provides in advance to United States insurance organizations any measure of general application that the country proposes to adopt, such as regulations, guidelines or other policies regarding new products, services, and markets in order to allow an opportunity for such insurance organizations to comment on the measure and for such comments to be taken into account by the foreign country; (D) the extent to which the foreign country-- (i) makes available, in writing, to United States insurance organizations the foreign country's requirements for completing applications relating to the provision of insurance services; (ii) applies published, objective, standards and criteria in evaluating any such applications from United States insurance organizations; and (iii) renders administrative decisions with respect to any such application within a reasonable period of time; (E) the extent to which United States insurance organizations may conduct activities or provide services in the foreign country that insurance organizations organized under the laws of the foreign country may not conduct or provide in the foreign country; and (F) the extent to which United States insurance organizations are affected in their operations and ability to compete on an equal basis by-- (i) the licensing policies of the insurance regulator of that country; (ii) capital requirements applicable in that country with respect to insurance activities; (iii) restrictions on acquisitions or joint ventures, and operations of such acquisitions and joint ventures, by insurance organizations in that country; (iv) restrictions on the operation and establishment of branches in that country; and (v) requirements for seeking approval of rates, rules, and policy forms when introducing new products, services, and pricing techniques. (d) Publication of Determination.-- (1) Publication.--If the President determines that the denial of national treatment to United States insurance organizations by a foreign country has a significant adverse effect on such organizations, the President-- (A) may, after the Trade Representative has initiated negotiations in accordance with subsection (g) publish that determination in the Federal Register; (B) shall, not less frequently than annually, in consultation with any department or agency that the President considers to be appropriate, review each such determination to determine whether the determination should be rescinded; and (C) shall inform State insurance commissioners or regulatory agencies of the publication of such determination. (2) Exception for countries with national treatment commitments.--Paragraph (1) shall not apply to a foreign country that the President determines has provided the United States with a binding and substantially full market access and national treatment commitment in insurance services, and adheres to that commitment in practice. (e) Discretionary Sanctions.-- (1) Action by the president.-- (A) In general.--Subject to subparagraph (B), the President may recommend to the Secretary of the Treasury that the Secretary suspend the acceptance of, or not accept, a registration statement that is filed pursuant to section 3 after the date of publication of a determination under subsection (d)(1) by a person of a foreign country listed in such publication if the President determines that-- (i) such action would assist the United States in negotiations to eliminate denials of national treatment against United States insurance organizations; (ii) negotiations undertaken pursuant to subsection (g) are not likely to result in an agreement that eliminates the denial of national treatment; or (iii) the country has not adequately adhered to an agreement reached as a result of negotiations undertaken pursuant to subsection (g). (B) Consistency with bilateral and multilateral agreements.--The authority of the President under subparagraph (A) may not be used to take actions which are inconsistent with any bilateral or multilateral agreement that governs insurance services that has been entered into by the President and approved by the Senate and House of Representatives. (C) Suspensions of filings of registrations.-- (i) In general.--Notwithstanding any other provision of law, if the President recommends, pursuant to subparagraph (A), that the Secretary suspend the acceptance of any registration of an alien insurance company under section 3, the Secretary shall-- (I) suspend the Secretary's acceptance of such registration for a period of 180 days; and (II) at the recommendation of the President, extend such suspension for an additional period of 180 days. (ii) Termination of suspension.--The Secretary shall, on the recommendation of the President, terminate any suspension in effect under clause (i). (D) Alternative action.--If the President determines that the procedure outlined in subparagraph (A) is either inappropriate or impractical to achieve the purpose of this section, the President may take such action under other provisions of law as the President considers necessary and appropriate to encourage foreign countries to accord national treatment to United States insurance organizations that operate or seek to operate in those countries. (f) Existing Alien Insurance Organization Activity.--The authority of subsection (e) may not be exercised with the respect to any registration filed by an alien insurance organization which is engaged in insurance activities within the United States as of March 8, 1994. (g) Negotiations.-- (1) In general.--The Trade Representative-- (A) shall initiate negotiations with any foreign country with respect to which a determination made under subsection (c)(1) is in effect to ensure that such country accords national treatment to United States insurance organizations; and (B) may initiate negotiations with any foreign country that denies national treatment to United States insurance organizations to ensure that the foreign country accords national treatment to such organizations. (2) Exceptions.--Paragraph (1) shall not apply with respect to any foreign country if the President-- (A) determines that the negotiations-- (i) would be unlikely to result in progress toward according national treatment to United States insurance organizations; or (ii) would impair the economic interests of the United States; and (B) submits a written notice of that determination to the Congress. (h) Report.-- (1) Contents of report.--Not later than December 1, 1994, and biennially thereafter, the President shall transmit to the Congress a report that-- (A) specifies the foreign countries identified under subsection (b); (B) if a determination has been published under subsection (d)(1) with respect to the foreign country, provides the reasons for such determination; (C) if the President has not made or has rescinded such a determination with respect to the foreign country, provides the reasons for the failure to make the determination or for the rescission; (D) describes the results of any negotiations conducted under subsection (g)(1) with the foreign country; and (E) discusses the effectiveness of this section in achieving the purposes of the section. (2) Submission of report.--The report required by paragraph (1) may be submitted as part of a report or update submitted under section 3602 of the Omnibus Trade and Competitiveness Act of 1988. (i) Delegation.-- (1) In general.--The President may delegate any authority of the President under this section. (2) Exercise of authority.--If the President delegates any authority of the President under this section, the designee's authority shall be exercised according to the specific direction (if any) of the President. (j) Consultation.--In carrying out the duties under this Act, the President, or the President's designee, may consult with the appropriate State insurance commissioners or regulatory agencies and other entities the President or designee may consider appropriate. (k) Definitions.--For purposes of this section, the following definitions shall apply: (1) Alien insurance organization.--The term ``alien insurance organization'' means an insurance organization which is a person of a foreign country. (2) Insurance organization.--The term ``insurance organization'' means any insurer and any reinsurer. (3) Insurer.--The term ``insurer'' means a party to a contract of insurance who assumes the risk and undertakes to indemnify the insured, or to pay a certain sum on the occurrence of a specified contingency. (4) National treatment.--The term ``national treatment'' means, with respect to any foreign country, treatment that offers United States insurance organizations the same competitive opportunities (including effective market access and market penetration) in such country as are available to the country's domestic insurance organizations in like circumstances. (5) Person of a foreign country.--The term ``person of a foreign country'' means-- (A) an entity that-- (i) is organized under the laws of the foreign country, or (ii) has its principal place of business in the foreign country; (B) an individual who-- (i) is a citizen of the foreign country, or (ii) is domiciled in the foreign country; or (C) any person that is directly or indirectly controlled by any entity or individual described in subparagraph (A) or (B). (6) Reinsurer.--The term ``reinsurer'' means an insurer which contracts to indemnify a ceding insurer for all or part of a risk originally undertaken by the ceding insurer. (7) Secretary.--The term ``Secretary'' means the Secretary of the Treasury. (8) Trade Representative.--The term ``Trade Representative'' means the United States Trade Representative. SEC. 3. REGISTRATION OF ALIEN INSURANCE ORGANIZATIONS WITH THE SECRETARY OF THE TREASURY. (a) In General.--No alien insurance organization (as defined in section 2(i)(1)) may engage in insurance activities within the United States after the date of the enactment of this Act unless-- (1) a registration statement has been filed by the company with the Secretary of the Treasury indicating the organization's intention to engage in insurance activities within the United States; and (2) applicable State insurance requirements have been satisfied. (b) Annual Report.--The Secretary of the Treasury shall submit an annual report to the Congress on the level of alien insurance organization activity within the United States. SEC. 4. CONFORMING AMENDMENT. (a) Report on Denial of National Treatment for Insurance Organizations.--Section 3602(3) of the Omnibus Trade and Competitiveness Act of 1988 (22 U.S.C. 5352(3)) is amended by inserting ``, insurance organizations,'' after ``banking organizations''. (b) Reports on Foreign Treatment of United States Financial Institutions.--Section 3602 of the Omnibus Trade and Competitiveness Act of 1988 (22 U.S.C. 5352) is amended-- (1) in the 1st sentence, by inserting ``with updates on significant developments every 2 years following the study conducted in 1994,'' before ``the Secretary of the Treasury''; and (2) by adding at the end the following: ``For purposes of this section, a foreign country denies national treatment to United States entities unless the foreign country offers such entities the same competitive opportunities (including effective market access) as are available to the domestic entities of the foreign country.''. (c) Negotiations To Promote Fair Trade in Financial Services.-- Section 3603(a)(1) of the Omnibus Trade and Competitiveness Act of 1988 (22 U.S.C. 5353(a)(1)) is amended by inserting ``effective'' before ``access''. <all>