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WTO ruling to prompt opening

By Chen Yang (Global Times)

08:17, July 18, 2012

A ruling by the World Trade Organization (WTO) dispute panel will put pressure on China to further open up its market.(China daily)

A ruling by the World Trade Organization (WTO) dispute panel will put pressure on China to further open up its market for electronic payment services and offer opportunities to foreign financial institutions, experts said Tuesday.

Among the 24 complaints brought by the US, the panel rejected 13 claims including allegations about the monopoly status of China UnionPay at home, and the view that foreign service providers can provide cross-border electronic payment services in China.

But the panel supported 11 claims of the US, saying that China has broken WTO rules by requiring all yuan-denominated payment cards issued in China to work with the network belonging to China UnionPay, as well as requiring every merchant and ATM to accept UnionPay's cards.

"Though the panel refuted some allegations of the US, the ruling is generally not good news for China, as the panel has said China UnionPay enjoys a monopoly in certain sectors," Tu Xinquan, associate director of the China Institute of WTO Studies with University of International Business and Economics, told the Global Times Tuesday.

China's Ministry of Commerce said Monday that it welcomed part of the ruling but had reservations about the panel's findings that the electronic payment service is included in the payment and money transmission services that China pledged to open up when joining the WTO.

China will seriously review the panel's report, and will properly deal with the ensuing work related to the case in accordance with the WTO's dispute settlement procedures, the ministry said.

Tu said that China should waive its right to appeal the ruling. "Unless China manages to overturn it, the country will have to change its rules to give foreign companies equal access to the Chinese ones and break China UnionPay's monopoly," he noted.

The decision by the WTO was hailed as a victory by the US government. The ruling will support about 6,000 US jobs if it goes through, according to Tim Reif, general counsel for the US Trade Representative's Office.

"We are hopeful that this ruling will pave the way for international payment companies to participate in the domestic payments marketplace in China," Visa Inc said in a statement.

China UnionPay was not available for comment when contacted by the Global Times Tuesday.

"Foreign financial services providers such as Visa and MasterCard are eager to get greater access to the Chinese market, as currently they can only issue cards in partnership with Chinese banks and China UnionPay," said Dong Zheng, a credit card expert based in Beijing.

"China should only gradually open up the electronic payment services sector to both foreign and private companies, because the sector is related to national financial security," Guo Tianyong, director of the Banking Research Center at Central University of Finance and Economics, told the Global Times.


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