Keywords: WTO panel, rules, China, electronic payment services, EPS, China Union Pay
On July 16, 2012, a World Trade Organization (WTO) dispute settlement panel determined, in a case brought by the United States, that China maintains a number of measures that treat foreign providers of electronic payment services (EPS) less favorably than the domestic EPS provider, China Union Pay. EPS are services through which transactions involving payment cards (credit, debit, charge) are processed and funds are transferred. The decision is expected to open to foreign EPS providers the Chinese electronic payment market and its more than $1 trillion per year in transactions.
Beginning in 2001, the People's Bank of China, which regulates electronic payment services, issued a series of measures setting out specific requirements affecting all aspects of EPS. China's measures impose requirements on institutions in China that issue payment cards, on all point-of-sale terminal and payment card processing equipment in China, and on the institutions in China that have the relationship with the EPS supplier and that handle payment card transactions for Chinese merchants.
In particular the United States challenged those requirements that it alleged:
Establish China UnionPay (CUP), a Chinese company, as the sole supplier of EPS for all domestic Renminbi (RMB) payment card transactions; Require that payment cards issued by banks in China bear the Yin Lian/UnionPay logo (the logo of CUP's network); Require that all ATMs, merchant card processing equipment and point-of-sale terminals in China be capable of accepting payment cards bearing the Yin Lian/UnionPay logo; Require that acquiring institutions post the Yin Lian/UnionPay logo and be capable of accepting all payment cards bearing the Yin Lian/UnionPay logo; Prohibit the use of non-CUP cards for inter-bank and cross-region payment card transactions; and Establish CUP as the sole supplier of EPS for RMB transactions involving payment cards issued in China and used in Hong Kong or Macao and payment cards issued in Hong Kong or Macao that are used in China. The United States argued that China assumed market access and national treatment commitments under the General Agreement on Trade in Services (GATS) to permit the supply of EPS from either an entity located outside of China (cross-border supply) or through an entity located in China (commercial presence), based on China's GATS...