Notice of Intent To Initiate Covered Agreement Negotiations With the European Union, 2965 [2016-00856]

Agencies

• DEPARTMENT OF THE TREASURY
• UNITED STATES TRADE REPRESENTATIVE

[Federal Register Volume 81, Number 11 (Tuesday, January 19, 2016)]
[Notices]
[Page 2965]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00856]



[[Page 2965]]

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DEPARTMENT OF THE TREASURY

UNITED STATES TRADE REPRESENTATIVE


Notice of Intent To Initiate Covered Agreement Negotiations With 
the European Union

AGENCY: Department of the Treasury, Departmental Offices; United States 
Trade Representative, Services and Investment.

ACTION: Notice.

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SUMMARY: This notice announces that the Department of the Treasury and 
the United States Trade Representative intend to initiate negotiations 
to enter into a covered agreement with the European Union (EU) and is 
intended to promote transparency, stakeholder awareness, and public 
engagement.

DATE: Effective date: January 19, 2016.

FOR FURTHER INFORMATION CONTACT: 
    Treasury: Philip J. Goodman, Senior Insurance Regulatory Policy 
Analyst, Federal Insurance Office, (202) 622-1170; Kevin K. Meehan, 
Policy Advisor, Federal Insurance Office, (202) 622-7009.
    USTR: Sarah C. Ellerman, Director, Services & Investment, (202) 
395-9556.

SUPPLEMENTARY INFORMATION: 
    Under Title V of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (the Federal Insurance Office Act of 2010, hereinafter 
the FIO Act), the Secretary of the Treasury (Treasury) and the United 
States Trade Representative (USTR) are authorized to jointly negotiate 
a ``covered agreement'' with one or more foreign governments, 
authorities, or regulatory entities. A covered agreement is a ``written 
bilateral or multilateral agreement regarding prudential measures with 
respect to the business of insurance or reinsurance.'' The FIO Act 
states that Treasury and USTR shall consult with the Committee on 
Financial Services and the Committee on Ways and Means of the House of 
Representatives, and the Committee on Banking, Housing, and Urban 
Affairs and the Committee on Finance of the Senate (the four 
Committees) before initiating negotiations of a covered agreement, 
during such negotiations, and before entering into any such agreement.
    On November 20, 2015, Treasury and USTR jointly sent identical 
letters to the Chair and Ranking member of each of the four Committees. 
The text of the letters reads:

    We write because we intend to initiate negotiations to enter 
into a covered agreement with the European Union (EU). A covered 
agreement is a ``written bilateral or multilateral agreement 
regarding prudential measures with respect to the business of 
insurance or reinsurance.'' The United States and the EU are the two 
largest insurance markets in the world and both markets present 
important opportunities for organic and acquisition-based growth for 
insurers and reinsurers. A covered agreement with the EU would level 
the regulatory playing field for U.S.-based insurers and reinsurers 
operating there, and further confirm that the existing U.S. 
insurance regulatory system serves the goals of insurance sector 
oversight, policyholder protection, and national and global 
financial stability.
    The Federal Insurance Office (FIO) Act of 2010 authorizes the 
Secretary of the Treasury (Treasury) and the United States Trade 
Representative (USTR) jointly to negotiate a covered agreement with 
one or more foreign governments, authorities, or regulatory 
entities. A covered agreement must ``relate[] to the recognition of 
prudential measures with respect to the business of insurance or 
reinsurance that achieves a level of protection for insurance or 
reinsurance consumers that is substantially equivalent to the level 
of protection achieved under State insurance or reinsurance 
regulation.'' \1\
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    \1\ 31 U.S.C. 313(r)(2)(B). Moreover, the FIO Act defines the 
term ``substantively equivalent to the level of protection 
achieved.'' 31 U.S.C. 313(r)(9).
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    In the United States, state insurance regulators have general 
authority over the business of insurance (including reinsurance). 
Treasury and USTR support the U.S. integrated system of state and 
federal insurance regulation, including the primary role of state 
insurance regulators as supervisors of the business of insurance. 
Treasury and USTR will not enter into a covered agreement with the 
EU unless the terms of that agreement are beneficial to the United 
States. State insurance regulators will have a meaningful role 
during the covered agreement negotiating process.
    In particular, covered agreement negotiations with the EU will 
seek to address the following prudential measures: (1) obtain 
treatment of the U.S. insurance regulatory system by the EU as 
``equivalent'' to allow for a level playing field for U.S. insurers 
and reinsurers operating in the EU; (2) obtain recognition by the EU 
of the integrated state and federal insurance regulatory and 
oversight system in the United States, including with respect to 
group supervision; (3) facilitate the exchange of confidential 
regulatory information between lead supervisors across national 
borders; (4) afford nationally uniform treatment of EU-based 
reinsurers operating in the United States, including with respect to 
collateral requirements; and (5) obtain permanent equivalent 
treatment for the solvency regime in the United States and 
applicable to insurance and reinsurance undertakings.
    Effective January 1, 2016, the EU will implement insurance 
regulatory reform (known as Solvency II) that will subject an 
insurer to disadvantageous treatment if the insurer's country of 
domicile is not recognized by the EU as ''equivalent'' under the 
provisions of Solvency II. Through negotiating a covered agreement, 
Treasury and USTR will seek to ensure that U.S. insurers and 
reinsurers will be permitted to operate in the EU on the same 
regulatory terms as insurers and reinsurers domiciled in the EU or 
in jurisdictions deemed equivalent under Solvency II.
    The FIO Act provides that Treasury and USTR jointly shall 
consult with the Financial Services and Ways and Means Committees of 
the House of Representatives and the Banking, Housing, and Urban 
Affairs and Finance Committees of the Senate before initiating 
negotiations of a covered agreement, during such negotiations, and 
before entering into any such agreement. Treasury and USTR welcome 
the opportunity to meet with Committee members and staff to consult 
before we initiate negotiations on this covered agreement and on 
developments during the negotiations.

    The letters can also be found at the following link:

https://www.treasury.gov/initiatives/fio/reports-and-notices/Documents/Covered%20Agreement%20Letters%20to%20Congress.pdf.

Michael T. McRaith,
Director, Federal Insurance Office, U.S. Department of the Treasury.
Sarah C. Ellerman,
Director, Services & Investment, Office of the United States Trade 
Representative.
[FR Doc. 2016-00856 Filed 1-15-16; 8:45 am]
 BILLING CODE 4810-25-P