Business

China discriminates against US

Wednesday, July 18, 2012    

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WASHINGTON - The United States welcomed Monday a WTO decision upholding its claim that China discriminates against US suppliers of electronic payment services, including credit and debit cards transactions.

US Trade Representative (USTR) Ron Kirk said the victory in the World Trade Organisation dispute would allow US companies to compete on a level playing field with China's own company, China Union Pay, which has dominated the market.

"The WTO panel agrees that China's pervasive and discriminatory measures deny a level playing field to American service providers, which are world leaders in this sector," Kirk said in a statement.

"This decision will help US companies and increase American jobs as a more efficient credit and debit payment system in China enables consumers to buy more goods, including quality, made-in-America products," he said.

According to industry estimates, the United States will gain 6,000 jobs related to electronic payment services, the Obama administration said.

Most of the world's top providers of electronic payment services for credit and debit card transactions are headquartered in the United States.

White House spokesman Jay Carney welcomed the announcement as "another clear win for the United States in a trade dispute with China."

Traveling with President Barack Obama to Ohio, a key battleground state for Obama's re-election bid, the spokesman praised the president's trade policies with the Asian giant.

"Today's win highlights that tackling unfair Chinese trade practices has been a priority of this president" since he took office in January 2009, he said, according to a pool report.

The WTO trade victory came less than four months ahead of the November 6 election as the Democratic president fends off criticism from Republican rival Mitt Romney, who has pledged to get tough with China over its massive trade surplus.

The Obama administration launched the case in September 2010, with a request for consultations.

In February 2011, the US requested the WTO set up a dispute settlement panel in the row with China, where more than US$1 trillion ($89 trillion) EPS transactions are processed each year.

Tim Reif, USTR general counsel, said in a teleconference with reporters that the WTO panel found in favor of the United States "with respect to each aspect."

It sends a signal that the US "does not intend to sit still" and allow China to flaunt its WTO trade obligations.

The WTO news "clarifies the market situation and makes those opportunities for our company all the more interesting in this important region," said Jim Issokson at US card giant MasterCard.

"MasterCard has long been of the view that open payment systems promote growth by reducing the need for cash payments, fostering innovation and reducing system risk."

The WTO said that China had violated trade rules in its regulations that also entrenched China Union Pay (CUP) as the dominating force in the market.

Among the violations cited were China's requirement that all payment cards issued in China bear the CUP logo, and all terminal equipment must be capable of accepting CUP-logo cards.

Washington, however, did not win every single element of its complaint. The WTO rejected the US claim that China maintains CUP as an "across-the board monopoly supplier" for processing all payment-card transactions denominated in renminbi, as the yuan currency is officially known.

But the WTO determined that CUP was a monopoly supplier for clearing certain types of yuan payment-card transactions.

Both sides have 60 days to appeal the WTO decision. The USTR said it planned to adopt the report.

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