WORLD TRADE  
ORGANIZATION   
WT/DS413/R/Add.1 
16 July 2012 
 (12-3730) 
 Original:   English 
  
 
     
CHINA – CERTAIN MEASURES AFFECTING 
ELECTRONIC PAYMENT SERVICES 
 
 
 
 
Report of the Panel  
 
Addendum 
 
  This addendum  contains Annexes A to H to the Fina l Report of the Panel to be found in 
document WT/DS413/R.  
_______________ 
  WT/DS413/R/Add.1 
 Page i 
 
 
  LIST OF ANNEXES 
  
ANNEX A 
 
EXECUTIVE SUMMARIES OF THE FIRST WRITTEN 
SUBMISSIONS OF THE PARTIES 
 
Contents Page 
Annex A-1 Executive summary of the first written submission of the United States A-2 
Annex A-2 Executive summary of the first written submission of China A-11 
 
 
ANNEX B 
 
ORAL STATEMENTS OR EXECUTIVE SUMMARIES THEREOF, OF  
THE PARTIES AT THE FIRST SUBSTANTIVE MEETING 
 
Annex B-1 Executive summary of the opening or al statement of the United States at the 
first substantive meeting B-2 
Annex B-2 Closing oral statement of the United States at the first substantive meeting B-6 
Annex B-3 Executive summary of the oral statement of China at the first substantive 
meeting B-7 
 
 
ANNEX C 
 
WRITTEN SUBMISSIONS AND ORAL STATEMENTS, OR INTERGRATED 
SUMMARIES THEREOF, OF THE THIRD PARTIES 
 
Annex C-1 Integrated executive summary of the third party written submission and oral 
statement of Australia C-2 
Annex C-2 Third party oral statement of Ecuador at the first substantive meeting C-7 
Annex C-3 Integrated executive summary of the third party written submission and oral 
statement of the European Union C-10 
Annex C-4 Integrated executive summary of the third party written submission and oral 
statement of Japan C-13 
Annex C-5 Integrated executive summary of the third party written submission and oral 
statement of the Republic of Korea C-19 WT/DS413/R/Add.1 
Page ii  
 
  ANNEX D 
 
EXECUTIVE SUMMARIES OF THE SECOND WRITTEN 
SUBMISSIONS OF THE PARTIES 
 
Annex D-1 Executive summary of the second written submission of the United States D-2 
Annex D-2 Executive summary of the second written submission of China D-11 
 
 
ANNEX E 
 
ORAL STATEMENTS OR EXECUTIVE SUMMARIES THEREOF, OF  
THE PARTIES AT THE SECOND SUBSTANTIVE MEETING 
 
Annex E-1 Executive summary of the oral st atement of the United States at the second 
substantive meeting E-2 
Annex E-2 Executive summary of  the oral statement of Chin a at the second substantive 
meeting E-7 
 
 
ANNEX F 
 
REQUEST FOR A PRELIMINARY RULING 
 
Annex F-1 Executive summary of China's request for a preliminary ruling F-2 
Annex F-2 Executive summary of the United States' submissions in response to China's 
request for a preliminary ruling F-3 
Annex F-3 Executive summary of China's comments on the United States' submissions in 
response to China's request for a preliminary ruling F-12 
 
 
ANNEX G 
 
EXCERPT OF CHINA'S SCHEDULE 
 
Annex G-1 The People's Republic of China - Schedule of Specific Commitments, 
GATS/SC/135 - excerpt G-2 
 
 
ANNEX H 
 
TABLE OF TRANSLATIONS OF LEGAL MEASURES 
AND OTHER INSTRUMENTS 
 
Annex H-1 Table of translations of legal measures and other instruments referred to by the 
parties H-2 
   WT/DS413/R/Add.1 
Page A-1 
 
 
 ANNEX A-1 
 
EXECUTIVE SUMMARIES OF THE 
FIRST WRITTEN SUBMISSIONS OF THE PARTIES 
 
Contents Page 
Annex A-1 Executive summary of the first written submission of the United States A-2 
Annex A-2 Executive summary of the first written submission of China A-11 WT/DS413/R/Add.1     
Page A-2  
 
 ANNEX A-1 
 
EXECUTIVE SUMMARY OF THE  
FIRST WRITTEN SUBMISSION OF THE UNITED STATES 
 
 
I. INTRODUCTION 
1. Operating from a protected home market m onopoly position, China UnionPay, Co. Ltd. 
("CUP") has thrived since its creation nearly a decade ago.  With competitors shut out of China, CUP 
has solidified its complete domestic market dominan ce.  CUP has also experienced explosive growth 
abroad.  While serving as China's domestic champi on, CUP, has been expanding its payment card 
issuance and acceptance internationally and enjo ys full and unencumbered access to the domestic 
payment card market in a growing number of forei gn countries in which it has chosen to operate (now 
numbering more than 110). 
2. Back in 2001, China made important commit ments with respect to electronic payment 
services ("EPS") for payment card transactions wh en it joined the World Trade Organization 
("WTO").  EPS enable, facilitate, and manage th e transfer of funds between cardholders and 
merchants and are essential to processing the sev eral hundred million card-based electronic payment 
transactions that occur daily around the world.  In the financial services sector, as set out in China's 
Schedule of Specific Commitments on Services, China undertook to provide by December 2006 both market access and national treatment for "all payment and money transmission services, including 
credit, charge and debit cards."    
3. Yet, at the same time as CUP expands aggr essively abroad, China maintains a government-
mandated domestic monopoly, enablin g only CUP to provide these services in China.  China refuses 
to allow foreign suppliers of EPS to process paymen t card transactions in China denominated and paid 
in China's domestic currency, renminbi ("RMB").  China has also enacted and maintains numerous 
barriers to prevent foreign suppliers of EPS from es tablishing the processing infrastructure, network, 
rules, and procedures that are essential to the processing of card-based electronic payment transactions in China.  In addition, China maintain s measures that also impact the other key entities in 
payment card transactions, including the institutions that issue payment cards ("issuing institutions"), 
acquiring institutions (those that seek to "acquire" transactions using payment cards and that have 
relationships with merchants), a nd merchants in terms of requirements pertaining to payment card-
processing equipment and point-of-sale ("POS") terminals.   
4. These measures have entrenched CUP's monopoly po sition in China and accord less favorable 
treatment to foreign suppliers of EPS. 
II. PROCEDURAL HISTORY 
5. On September 15, 2010, the United States requ ested consultations with China pursuant to 
Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes  
("DSU"), and Article XXII of the General Agreement on Trade in Services  ("GATS") with respect to 
certain restrictions and requirements maintained by China pertaining to electronic payment services 
for payment card transactions and the suppliers of those services.  The United States and China held 
consultations on October 27 and 28, 2010, but those consultations did not resolve the dispute.  The 
United States submitted its request for the establishm ent of a panel on February 11, 2011, the Dispute 
Settlement Body ("DSB") established a panel on Ma rch 25, 2011, and the Panel was composed on 
July 4, 2011.   WT/DS413/R/Add.1 
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 6. On July 5, 2011 China filed a request for a preliminary ruling on the consistency of the U.S. 
panel request with DSU Article 6.2.  On July  29, 2011, the United States filed a submission in 
response to China's request for a preliminary ruling ("U.S. July 29, 2011 Response").  (The U.S. July 
29, 2011 Response, in its entirety and including all of the exhibits attached thereto, was subsequently 
incorporated by express reference into the U.S. First Written Submission, dated September 13, 2011.)  
On September 7, 2011, the Panel issued its prelim inary ruling in which it rejected all of China's 
claims that the U.S. panel request failed to satisfy  the requirements of Article 6.2 of the DSU.    
III. FACTUAL BACKGROUND 
A. ELECTRONIC PAYMENT SERVICES FOR PAYMENT CARD TRANSACTIONS  
7. Card-based electronic payments take many forms,  including credit cards, charge cards, debit 
cards, deferred debit cards, ATM cards, prepaid cards, private label cards and other types of general-
purpose and limited-use payment cards.  A supplier of EPS enables cardholders' banks to pay merchants' banks the amount they are owed.  Suppliers of electronic payment services supply, directly or indirectly, a system that t ypically includes the following:   
 the processing infrastructure, network, and ru les and procedures that facilitate, manage, 
and enable the transmission of transaction information and payments, and which provide 
system integrity, stability and financial risk reduction;  
 the process and coordination of  approving or declining a transaction, with approval 
generally permitting a purchase to be finalized or cash to be disbursed or exchanged;  
 the delivery and transmission of transaction information among participating entities;  
 the calculation, determination, and reporting of the net financial position of relevant 
institutions for all transactions that have been authorized in a given period; and  
 the facilitation, management and/or other par ticipation in the transfer of net payments 
owed among participating institutions. 
8. Electronic payment services provide an efficient,  timely and reliable means to facilitate the 
transmission of funds from the holders of paym ent cards who purchase goods or services to the 
individuals or businesses that supply them.  The ne twork, rules and procedures, and operating system 
that are part of the EPS architecture that allow payment card transactions to be processed to enable 
merchants to be paid promptly the amounts they are owed, and to ensure that customers pay what they 
owe.  EPS suppliers receive, check and transmit the in formation that the parties need to conduct the 
transactions, and manage, facilitate , and enable the transmission of  funds between participating 
entities.  The rules and procedures established by the EPS supplier give the payment system stability 
and integrity, and enable it to efficiently handle net flows of mone y among the institutions involved in 
card payments.  EPS suppliers also provide their customers with certain guarantees to ensure the 
integrity of the electronic payment services, includi ng, for example, instances where customers fail to 
honor payment cards or where issuers or acquirers fail to fund obligations. 
9. EPS, whether provided in connection with ope n-loop (four-party) systems or closed-loop 
(three party) systems, encompass both (1) "front-end processing" (which determines whether a payment card user has sufficient funds or is othe rwise authorized to make a purchase and provides 
that information to the merchant or ATM owne r), and (2) "back-end processing" (which, among other 
things, determines, calculates, and instructs banks  regarding net payments owed among participating 
institutions).   WT/DS413/R/Add.1     
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 B. T
HE EVOLUTION OF CHINA 'S PAYMENT CARD SYSTEM AND THE CREATION OF CUP 
10. China's payment card system was inefficient a nd fragmented, and limited to local regional 
transactions.  Chinese banks' independent and unc oordinated efforts undermined the efficacy of 
payment card use.  Bank cards were inconvenient for individual consumers to use because they were 
not widely accepted by merchants, and the networks' ad hoc development resulted in some merchants 
having multiple terminals and othe rs having none.  Additionally, consumers could access cash and 
purchase items only from the POS terminals bearing their respective bank's logo.  Incompatibility 
between the various bank networks also prevente d cross-bank or inter-bank transactions at the 
national level.   
11. Instead of allowing these market in efficiencies to be remedied with the opening of its market 
to competition, including from foreign suppliers of  EPS consistent with its WTO commitments, the 
Chinese government took steps to consolidate the i ndustry under a domestic champion.  First, in 
January 2001, the PBOC issued a series of measures  that standardized bank cards and mandated the 
use of the "UnionPay" logo.  Second, in March 2002, the PBOC approved and authorized the establishment of CUP,
 a private limited liability corporation who se shares were primarily held by four 
of China's state-owned commercial banks.   
12. From its inception, CUP was envisioned not only as a means to create a uniform national 
platform for electronic payment services for ca rd-based electronic transactions, but also as a 
homegrown company championing a national brand.   The Chinese government has taken a deep 
interest in the development and progress of CUP, and the corporation has hired as its top executives 
key former PBOC officials. 
13. With China's accession to the WTO in 2001, th e Chinese government worked to build CUP's 
core capabilities and to prepare it for the arrival of China's deadline to comple te liberalization of the 
financial sector in 2006.  The Chinese government 's efforts to strengthen CUP coincided with 
measures that resulted in the systematic exclusi on of foreign suppliers of EPS from the market.  
14. By 2010, CUP had grown its network outside of China, and CUP cards could be used in well 
over 100 countries, including in Australia, Canada, Malaysia, Singapore, the United Arab Emirates, 
and the United States.  In the years since its inception in 2002, CUP has emerged as a dominant 
domestic and international player in the EPS market .  CUP controls the merchant services network 
and owns half of the POS terminals in China.  In  2007, just five years after CUP was created, PBOC 
reported on the company's explosive growth and its mammoth transaction volume (placing it then 
fourth within the world).  Because of its success,  CUP briefly considered an initial public offering 
("IPO") in 2008, with President Xu Luode stating th at he remained open to considering an IPO again 
if the conditions were right.  China continues to sustain CUP's growth and to maintain a regulatory 
environment that has entrenched CUP's hold over the Chinese payment card market. 
C. CHINA 'S MEASURES THAT MAINTAIN CUP' S MONOPOLY ON THE SUPPLY OF EPS  AND THAT 
AFFECT THE SUPPLY OF EPS  BY FOREIGN SUPPLIERS  
15. China maintains the following measures:  
 Requirements that mandate the use of CUP and/or establish CUP as the sole supplier 
of EPS for all domestic transactions denominated and paid in RMB.   China requires 
that all transactions denominated and paid in RMB in China be processed and cleared in 
RMB through CUP, and that where there is a choice, all domestic transactions on dual 
currency cards be routed in RMB through CUP.  See U.S. July 29, 2011 Response, 
sections V.B, V.C, V.D   WT/DS413/R/Add.1 
Page A-5 
 
 
  Requirements that RMB denominated payment  cards issued in China bear the CUP 
logo.   China requires that any bank cards issued  in China for RMB purchases in China, 
including dual currency payment cards issued in  China, must bear the CUP logo.  This 
means that issuers – the institutions that i ssue payment cards to consumers – must have 
access to the CUP system, and must pay CUP for that access.  See U.S. July 29, 2011 
Response, sections V.B, V.C, V.E.  
 Requirements that all automated teller ma chines ("ATM"), merchant card processing 
equipment, and POS terminals in China accept CUP cards.  China requires that all 
ATMs, merchant card processing equipment, and POS terminals in China be capable of accepting CUP cards.  There are no equivalent requirements for non-CUP cards.  See U.S. July 29, 2011 Response, sections V.B, V.C, V.F. 
 Requirements on acquirin g institutions to post the CUP logo and be capable of 
accepting all payment cards bearing the CUP logo.   China requires that all acquiring 
institutions – the institutions that sign up me rchants to accept payment cards – in China 
post the CUP logo and be capable of accepting all payment cards bearing the CUP logo.  
An acquiring institution, often a bank, pr ovides POS terminal and processing equipment 
to merchants so it can process payment cards , maintains the merchant's account, handles 
relations with the merchant, and ensures that payments are properly credited to the 
merchant.  See U.S. July 29, 2011 Response, sections V.B, V.C, V.G. 
 Broad prohibitions on the use of non-CUP cards.   China prohibits the use of 
domestically issued non-CUP payment cards where the issuing bank and acquiring bank  are different.
  China also requires that all inter-ban k transactions for all bank cards be 
handled through CUP.  See U.S. July 29, 2011 Response, sections V.B, V.C, V.H. 
 Requirements pertaining to card-based el ectronic transactions in China, Macao and 
Hong Kong.   China requires that CUP be used to  handle all RMB transactions in Macao 
or Hong Kong using bank cards issued in Chin a.  China also requires that CUP be used to 
handle any RMB transactions in China using RMB cards issued in Hong Kong or Macao.  
See U.S. July 29, 2011 Response, sections V.B, V.C, V.I. 
IV. CHINA'S SPECIFIC COMMITMENTS IN ITS GATS SCHEDULE 
A. CHINA 'S SCHEDULE OF GATS  COMMITMENTS COVERS "ALL PAYMENT AND MONEY 
TRANSMISSION SERVICES , INCLUDING CREDIT , CHARGE AND DEBIT CARDS …" (ITEM D )  
16. In Sector 7B, under the Banking and Other Fina ncial Services heading of China's Services 
Schedule, the services listed include: 
(d) All payment and money transmission services, including credit, charge and 
debit cards, travellers cheques and ba nkers drafts (including import and 
export settlement). 
17. China undertook market access and national treatme nt commitments with respect to "[a]ll 
payment and money transmission services," which in cludes the electronic payment services supplied 
in connection with "credit, charge and deb it cards," and other payment card transactions.  WT/DS413/R/Add.1     
Page A-6  
 
 B. EPS
 FALL WITHIN THE ORDINARY MEANING OF "ALL PAYMENT AND MONEY TRANSMISSION 
SERVICES , INCLUDING CREDIT , CHARGE AND DEBIT CARDS …" (ITEM D ) 
18. China's commitments pertain to " all payment and money transmission services, including 
credit, charge and debit cards," indicating that the scope of the commitment covers any service that is 
essential to "payment and money transmission" incl uding "credit, charge, and debit cards" payment 
transactions.  EPS suppliers are at the heart of this service. 
19. EPS are at the center of all payment card transactions and without these services the 
transactions could not occur.  EPS fall within the ordinary meaning of payment and money 
transmission services, within item (d) of China's Sche dule.  The language of item (d) itself makes this 
abundantly clear. 
20. First, EPS involve the services through which transactions involving payment cards are 
processed and through which transfers of funds between  institutions participating in the transactions 
are managed and facilitated.  EPS clearly fall within  the ordinary meaning of "payment and money 
transmission services" as one type of " all" such services. 
21. Second, the phrase "all payment and money transmission services" is modified with an 
illustrative list that explicitly provides that it "include [s] credit, charge and debit cards."  This explicit 
reference is in line with the recognition that EPS are integral to the processing of credit, charge, debit 
and other payment card-based electronic payment transactions, and without these services, payment 
card transactions could not occur.  EPS suppliers such as Visa, MasterCard, and American Express 
are names recognized around the world as credit cards and charge cards.  The reference to debit cards 
covers suppliers of EPS for debit card transactions lik e Visa, MasterCard, Discover, First Data, Pulse, 
NYCE, STAR, and PLUS. 
V. CHINA'S MEASURES SHOULD BE CONSIDERED BOTH INDIVIDUALLY AND IN 
CONJUNCTION WITH OTHER MEASURES 
22. China maintains a monopoly structure that ensures that CUP is the sole entity that can provide 
EPS for RMB transactions in China – the vast major ity of all transactions in China.  Chinese measures 
that provide for the monopoly structure and restrict  the supply of EPS by foreign suppliers affect 
every aspect of a payment card transaction and all of the key participants in such transactions. 
23. As the Panel confirmed in its preliminary ru ling, the United States has challenged measures 
that establish or maintain requirements that fall with in six categories.  The United States requests the 
Panel to analyze China's measures both individually and in conjunction with one another as indicated 
by the United States. 
VI. CHINA'S MEASURES ESTABLISHING AND SUPPORTING CHINA UNIONPAY'S 
MONOPOLY ON THE SUPPLY OF EPS ARE INCONSISTENT WITH ARTICLE XVI OF THE GATS 
A. GATS
 ARTICLE  XVI  (MARKET ACCESS )  
24. The measures imposed by China on the supply of  electronic payment services are inconsistent 
with Article XVI of the GATS because they  limit the number of suppliers of EPS for 
RMB-denominated transactions that are paid in RMB.   
25. Article XVI:2(a) provides that where a Member  has made a market access commitment in its 
Services Schedule, that Member is prohibited from imposing limitations on the number of service 
suppliers, including through the use of monopolies,  quotas, and exclusive service suppliers, unless the   WT/DS413/R/Add.1 
Page A-7 
 
 
 Member has included that limitation in its Schedule.   Thus, in order to show that a measure is 
inconsistent with Article XVI:2, it is necessary firs t to demonstrate that a Member has undertaken a 
market access commitment and then establish that  the measure in question imposes the type of 
limitation prohibited by Article XVI:2.  
B. CHINA MADE EXTENSIVE MARKET ACCESS COMMITMENTS COVERING THE SUPPLY OF 
ELECTRONIC PAYMENT SERVICES  
26. China made mode (1) and mode (3) market acc ess commitments with respect to "All payment 
and money transmission services, including credit, charge and debit cards…," a category that encompasses electronic payment services for payment card transactions. 
27. China's own pronouncements confirm its rec ognition that its WTO accession commitments 
included providing market access for foreign suppliers  of EPS and that any purported limitations on 
such access were to be eliminated by 2006: 
By 2006, the RMB bank card operation shall be opened to the outside world in an all-
around manner, and accordingly the bank card industry of our country is facing a comparatively big challenge and we should make use of the limited time to enhance 
the international competitiveness of our industries. 
C. C
HINA 'S MEASURES RELATED TO CHINA UNION PAY AND THE USE OF CUP  PAYMENT CARDS 
OPERATE TO LIMIT THE NUMBER OF FOREIGN SUPPLIERS OF EPS 
28. First, China imposes requirements that mandate the use of CUP and/or establish CUP as the 
sole supplier of EPS for all domestic transactions denominated and paid in RMB.  These measures 
require that all transactions denominated and paid  in RMB in China must processed and cleared in 
RMB through CUP, and where there is a choice, all domestic transactions on dual currency cards 
must be routed in RMB through CUP.   
29. Second, China imposes requirements on issuer s of payment cards that any payment cards 
issued in China must bear the CUP logo.  No other payment card logo benefits from such a mandate.  Any dual currency card issued in Ch ina also must bear the CUP logo.  This means that issuers must 
have access to the CUP system, and pay CUP for that access.   
30. Third, China requires that all ATM, merchant card processing devices, and POS terminals in 
China post the CUP logo and be capable of accep ting CUP cards.  These requirements extend to all 
such processing equipment and POS terminals in China and there is no equivalent requirement 
mandating acceptance for any other card.   
31. Fourth, China imposes requirements on acquiring institutions that they post the CUP logo and 
be capable of accepting all bankcards bearing the CUP logo.  
32.  Fifth, China imposes broad prohibitions on th e use of non-CUP cards for cross-region or 
inter-bank (or cross-bank) transactions.  China al so requires that all inter-bank (or cross-bank) 
transactions for all bankcards be handled through CUP.  
33. Finally, China requires that CUP be used to handle all RMB transactions in Macao or Hong 
Kong using bankcards issued in China.  China al so requires that CUP be used to handle any RMB 
transactions in China using RMB cards  issued in Hong Kong or Macao. WT/DS413/R/Add.1     
Page A-8  
 
 VII. CHINA'S MEASURES ESTABLISHING AND SUPPORTING CHINA UNIONPAY'S 
MONOPOLY ON THE SUPPLY OF EPS ARE INCONSISTENT WITH ARTICLE XVII OF THE GATS BECAUSE THEY ACCORD LESS FAVORABLE TREATMENT TO FOREIGN EPS SUPPLIERS 
A. GATS
 ARTICLE  XVII  (NATIONAL TREATMENT )  
34. The measures imposed by China affecting forei gn suppliers of electronic payment services 
are also inconsistent with Article XVII of the GATS.  A national treatment commitment under 
Article XVII of the GATS obligates a WTO Member to accord services and service suppliers of other Members "treatment no less favorable than that it accords to its own like services and services suppliers."  Article XVII:2 specifies that a Member  may accord foreign services or suppliers different 
treatment to achieve this objective.  Article XVII:3 defines treatment as "less favorable" if it 
"modifies the conditions of competition in favour of  services or service suppliers of the Member." 
B. C
HINA MADE NATIONAL TREATMENT COMMITMENTS REGARDING THE SUPPLY OF 
ELECTRONIC PAYMENT SERVICES  
35. China made mode (1) and mode (3) national treatment commitments with respect to "All 
payment and money transmission services, including credit, charge and debit cards…" which clearly 
encompass the electronic payment services at is sue here.  China thereby committed to provide 
national treatment within the meaning of Artic le XVII to foreign suppliers of EPS.  
C. CHINA 'S MEASURES AFFECT THE SUPPLY OF ELECTRONIC PAYMENT SERVICES  
36. China maintains numerous measures affecti ng the supply of electronic payment services 
under modes (1) and (3).  The measures operate to prevent market access irrespective of the mode.  
The terms "affecting" and "supply of services" have been construed broadly by the Appellate Body.  
37. The measures at issue affect the supply of services in two principal ways. 
38. First, there are measures that impose a limitation such that CUP is the sole entity that can 
process certain transactions, such as domestic RMB tr ansactions.  This of course means that foreign 
suppliers of EPS are prevented from supplying the service at all.   
39. Second, there are measures that promote CU P's position in the marketplace such as by 
imposing certain requirements on every key player in a card-based electronic payment transaction, 
including issuers (all cards issued in China for domestic RMB transactions must bear the CUP logo), 
merchants (all merchant card processing equipment and POS terminals must accept CUP cards), and acquiring institutions (which must post CUP logo and accept CUP cards).        
40. The following measures affect every aspect of  a card-based electronic payment transaction 
and the key players – issuers, acquiring institutions , merchants, and EPS suppliers – involved in such 
transactions.   
 China's measures ensure that CUP is the sole  supplier of certain transactions such as 
interbank transaction, transactions denominated  and paid in RMB, and transactions in 
certain border areas such as Hong Kong a nd Macau.  These provisions discriminate 
against foreign suppliers of EPS by either cat egorically precluding their participation in 
the market, and/or by adversely modifying the conditions of competition among the key 
participants – issuers, acquiring institutions , merchants, and the EPS supplier – in card-
based electronic payment transactions.     WT/DS413/R/Add.1 
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  China's measures requiring that any paymen t cards used only for RMB purchases in 
China, as well as any dual currency cards issued  in China, bear the CUP logo.  No other 
EPS provider is afforded such a privilege.  Sinc e any issuer of payment cards in China is 
required to have access to the CUP system (and to pay for that privilege), the issuer has 
no reason to seek an alternative supplier of EPS.   The requirement also means that even if 
a card was issued for a foreign EPS supplie r, CUP would also gain as the CUP logo 
would be on the card as well.  
 China's measures requiring all automatic te ller machines, merchant card processing 
equipment and point of service terminals ac cept CUP cards.  No foreign EPS supplier is 
afforded a similar privilege.  To the extent  a foreign supplier of EPS was to create or 
secure access to a POS, then CUP would also  gain as well because of this requirement.  
 China's measures requiring that all acquiring institutions in China post the CUP logo and 
to accept all bankcards bearing that logo.   No foreign EPS supplier is afforded a similar 
privilege.     
41. These measures affect the supply of electronic payment services within the meaning of 
Article XVII because they directly regulate the te rms on which they may be provided in China. 
D. CHINA 'S MEASURES TREAT SUPPLIERS OF ELECTRONIC PAYMENT SERVICES OF OTHER 
MEMBERS LESS FAVORABLY THAN CUP,  CHINA 'S LIKE SUPPLIER OF EPS 
42. The measures at issue provide disparate treatme nt solely according to the identity of the EPS 
supplier:  CUP or not CUP. The Panel in China - Publications and Audiovisual Products  found that: 
When origin is the only factor on which a measure bases a difference of treatment 
between domestic service suppliers and fore ign suppliers, the "like service suppliers" 
requirement is met, provided there will, or can, be domestic and foreign suppliers that 
under the measure are the same in all materi al respects except for origin.  We note 
that similar conclusions have been reached by previous panels.  We observe that in 
cases where a difference of treatment is not exclusively linked to the origin of service suppliers, but to other factors, a more deta iled analysis would probably be required to 
determine whether suppliers on either side of the dividing line are, or are not, "like."
  
43. Here, it is self-evident from China's own doc uments that China was concerned about the 
potential competition its domestic supplier of EP S faced from foreign suppliers of EPS and was 
determined to enhance its industry's position b ecause, as the Chinese Government stated, it was 
"facing a comparatively big challenge and we shoul d make use of the limited time to enhance the 
international competitiveness of our industries." 
44. Therefore, it is unsurprising that the measures at issue here are meant to favor the domestic 
Chinese entity and accordingly discriminate on that basis.   
45. Outside of China, with the ability to opera te from its protected home market, CUP has 
become a significant and increasingly active part icipant in this competition and EPS suppliers 
describe CUP as a competitor.  CUP's Articles of A ssociation are explicit that the company is "to 
provide advanced electronic payment technologies and specialized services in connection with the 
inter-bank bank card information switching."  CUP itself recently noted the global reach of its 
"payment services" around the world. 
46. It is clear that CUP provides services for paym ent card transactions "like" those provided by 
foreign suppliers of EPS for payment card transactions  and that the basis for the differential treatment WT/DS413/R/Add.1     
Page A-10  
 
 by China in its measures is ultimately one of orig in, and the "like service suppliers" requirement of 
Article XVII is therefore satisfied. 
47. The Panel in China – Publications an d Audiovisual Products explained:  
a measure that prohibits foreign service suppliers from supplying a range of services 
that may, subject to satisfying certain c onditions, be supplied by the like domestic 
supplier cannot constitute treatment ‘no less favourable,' since it deprives the foreign 
service supplier of any opportunity to compete with like domestic suppliers.  In terms of paragraph 3 of Article XVII, such treat ment modifies conditions of competition in 
the most radical way, by eliminating all competition by the foreign service supplier with respect to the service at issue. 
48. On their face, many of the measures at issu e explicitly prohibit any entity other than CUP 
from supplying services in the Chinese market.  Chin a's measures thus categorically exclude foreign 
suppliers of EPS from providing EPS on RMB and in terbank transactions.  Because these measures 
categorically prohibit foreign EPS suppliers from part icipating in certain transactions, their treatment 
is less favorable than that afforded CUP, a Chin ese entity, and therefore inconsistent with China =s 
obligations under GATS Article XVII. 
49. China's measures include those th at prevent competition against CUP altogether in regards to 
certain transactions.  Other measures, however, while not per se  banning competition modify the 
conditions of competition to disf avor foreign suppliers of EPS as opposed to CUP.  These measures 
include: 
 requirements on issuers that payment card s issued in China bear the CUP logo; 
 requirements that all ATM and POS Terminals in China Accept CUP cards; 
 requirements on acquiring institutions to post the CUP logo; and  
 broad prohibitions on the use of non-CUP cards.  
50. These measures are inconsistent with Article  XVII of the GATS because they accord less 
favorable treatment to foreign suppliers of EPS than to CUP.  
VIII. CONCLUSION 
51. The United States respectfully requests that the Panel find that China's measures, as set out 
above, are inconsistent with China's obligations under Article XVI:1 and XVI:2(a) and Article XVII 
of the GATS.  The United States further requests, pur suant to Article 19.1 of the DSU, that the Panel 
recommend that China bring its measures into  conformity with its WTO obligations. 
   WT/DS413/R/Add.1 
Page A-11 
 
 
 ANNEX A-2 
 
EXECUTIVE SUMMARY OF THE  
FIRST WRITTEN SUBMISSION OF CHINA 
 
 
I. INTRODUCTION AND OVERVIEW 
1. The Panel should dismiss the U.S. claims in  their entirety, because the United States has 
failed to prove that China undertook relevant ma rket access and national treatment commitments in 
the cross-border and commercial presence modes of suppl y for the services at issue in this dispute.   
2. The services at issue are those services that fall within the U.S. definition of what it has 
described as "electronic payment services", and that are actually affected by the measures at issue.  As 
China will demonstrate, the services at issue in th is dispute are those services that operators of 
interbank payment card networks supply to financial institutions , including clearing and settlement 
services. 
3. Once the services at issue have been identified, the task before the Panel is to classify those 
services in relation to China's Schedule and identify the commitments, if any, that China made in 
respect of those services.  The U.S. claims fail co mpletely at this juncture, because the United States 
has failed to prove its assertion that the services at issue in this dispute are encompassed by subsector 
(d), "all payment and money transmission services", and because the United States has failed to prove 
that China undertook relevant commitments in subsector (d) for Modes 1 and 3.   
4. In the absence of any relevant commitments, th ere is no legal basis for the Panel to proceed to 
what would otherwise be the next task before it,  namely, determining whether the measures at issue 
are inconsistent with the specific commitments th at China actually made.  China will, however, 
conclude this submission by demonstrating that th e U.S. national treatment claims under Article XVII 
do nothing more than repeat the "monopoly" allegations  that are the basis of its market access claims 
under Article XVI.  This approach is  inconsistent with the fact th at Article XVI provides the sole 
basis for evaluating measures of the types liste d in Article XVI:2(a)-(f), including monopolies under 
Article XVI:2(a).  Thus, in all events, there is no le gal basis for the U.S. national treatment claims in 
this dispute. 
II. BACKGROUND 
A. P AYMENT CARDS AND INTERBANK PAYMENT CARD NETWORKS  
5. The measures and services at issue in this dispute, and the alleged "monopoly" that is the 
centrepiece of the U.S. claims, relate to interbank  payment card transactions.  Interbank payment card 
transactions are based on what is commonly referred to as the "four-party" (or "open loop") model.  
The defining characteristic of the four-party model is  that there is more than one financial institution 
involved in the payment card transaction.  This mean s that the financial institutions participating in 
the payment card transactions (the "participating fi nancial institutions") must have some method of 
authorizing  the transactions, clearing  transaction data, and settling  their financial claims in respect of 
each other.   
6. In most cases, financial institutions aut horize, clear, and settle interbank payment card 
transactions by obtaining these services from the opera tors of interbank payment card networks.  An 
interbank payment card network is a telecommunica tions and data processing infrastructure through 
which the network operator provides certain aut horization, clearing, and settlement services to 
participating financial institutions.  Throughout this dispute, China w ill refer to operators of interbank WT/DS413/R/Add.1     
Page A-12  
 
 payment card networks as "network operators", and will refer to the services that network operators 
provide to financial ins titutions as "network services".  This terminology is consistent with how 
governments and antitrust authorities have referred to  these services, as well as service suppliers like 
Visa, MasterCard, and American Express.  Moreover,  unlike the term "electronic payment services", 
the terms "network operator" and "network service s" are objectively based on prior usage, were not 
invented for the purpose of this dispute, and are not  designed to prejudge either the number of distinct 
services at issue or their classification in relation to China's Schedule. 
7. The market for network services is distinct from the market in which financial institutions 
issue payment cards and acquire payment card transacti ons.  This has been the consistent finding of 
antitrust authorities and other government regulators.  The two markets also differ in terms of the 
nature and identity of th e relevant service suppliers.  Suppliers  of network services are not financial 
institutions and are not regulated as such.  They are, as one observer notes, "primarily technology-based processing companies".  Issuers and acquirers, on the other hand, are almost always banks or other types of regulated financial institutions.  Most issuers and acquirers provide these payment 
services as part of an array of other banking ser vices.  In short, these tw o markets are the polar 
opposites of each other, from the standpoint of economics, regulation, and the identity of the service 
suppliers.   
B. T
HE MEASURES AT ISSUE  
8. The measures at issue in this dispute estab lish a national interbank network for clearing and 
settling RMB-denominated payment card transactions .  In addition to establishing this domestic 
network, the measures require interbank payment card s issued in China, as well as POS terminals, to 
adhere to certain technical standards and to bear a common logo indicating their ability to be used for 
domestic interbank transactions.   
9. As the United States has summarized, the challenged measures emerged from a period in 
which Chinese commercial banks were issuing propri etary, three-party payment cards bearing their 
own logos.  Merchants that wanted to accept more than one type of payment card had to maintain a 
separate POS terminal for each type of card.  Consumers who wanted the convenience of payment 
cards often carried different payment cards from di fferent banks, in order to increase the likelihood 
that any given merchant would accept one of their cards.   
10. Beginning in 1993, the People's Bank of China (" PBOC") began a series of efforts to develop 
a functional interbank payment card network.  In March 2002, the project was transferred to China 
Union Pay ("CUP"), a legal entity established to ru n this network.  Today, CUP operates China's 
interbank payment card network under the direct  supervision and regulation of the PBOC. 
11. Some of the measures that gave rise to Ch ina's interbank payment card network are among the 
measures that the United States has challenged in th is dispute.  Document No. 37, for example, 
established uniform technical standards for interba nk payment cards and for POS terminals that accept 
interbank payment cards, and established the "Y in Lian" logo as the common logo for interbank 
payment cards and POS terminals that conform to these standards.  Document No. 57 requires 
payment cards issued for domestic interbank use to  bear the Yin Lian logo, and requires commercial 
banks that issue and acquire interbank payment car ds to adhere to the Business Specifications for 
Bankcard Interoperability in Document No. 76.  These and other measures finally allowed China to 
realize the network effects of a genuine interbank payment card system, and, as demonstrated below, 
are entirely consistent with its WTO commitments.   WT/DS413/R/Add.1 
Page A-13 
 
 
 III. THE SERVICES AT ISSUE ARE NETWORK SERVICES SUPPLIED BY 
OPERATORS OF INTERBANK PAYMENT CARD NETWORKS 
12. The services at issue in this dispute are determ ined by two factors: (1) the U.S. definition of 
the services at issue, as set forth in its panel re quest; and (2) the scope and effect of the challenged 
measures.  The services at issue cannot be broade r than the services that the United States has 
described in its panel request, and cannot be broader than the services that are actually affected by the 
challenged measures. 
13. The panel request describes the services at i ssue as "the services through which transactions 
involving payment cards … are processed and through which transfers of funds between institutions 
participating in the transactions are managed and faci litated."   The next sentence describes "a system" 
that "[s]uppliers of electronic payment services suppl y, directly or indirectly".  This "system," 
according to the United States, "typical ly includes" what appear to be five distinct elements, which the 
United States separates with semicolons.  These are:  (1) "the processing infrastructure, network, and 
rules and procedures that facilitate, manage, and enable transaction information and payment flows 
and which provide system integrity, stability and financial risk reduction;" (2) "the process and 
coordination of approving or declining a transacti on, with approval generally permitting a purchase to 
be finalized or cash to be disbursed or exchanged; " (3) "the delivery of transaction information among 
participating entities;" (4) "the calculation, determ ination, and reporting of the net financial position 
of relevant institutions for all transactions that have been authorized;" and, (5) "the facilitation, 
management and/or other participation in the tr ansfer of net payments owed among participating 
institutions." 
14. There are several noteworthy features of this  description.  First, it does not encompass the 
issuance of payment cards or the acquisition of payment card transactions.  That is, it does not encompass payment card services that are typically provided by banks or other types of financial institutions.  Second, the description seems to relate  exclusively to four-party payment card models, 
since it contemplates the participation of more than one financial institution in the "system" ( e.g., in 
its references to "participating in stitutions").  Finally, at least three of the five elements of the 
"system" that it describes relate to the clearing a nd settlement of interbank payment card transactions 
– the third and fourth elements relate to clearing,  while the fifth element relates to settlement.   
15. Turning to the scope and effect of the cha llenged measures, the measures at issue in this 
dispute establish a national network for clearing and settling RMB-denominated interbank payment 
card transactions.  These measures affect the ability of other network operators to provide network 
services to financial institutions in China for th e purpose of authorizing, clearing, and settling RMB-
denominated interbank payment car d transactions.  The measures do not affect the ability of financial 
institutions to enter and compete in the market for issuing payment cards and acquiring payment card 
transactions, and do not affect their ability to prov ide proprietary (three-party) payment card services.  
Nor do the challenged measures affect the ability of co mpanies to enter and compete in the market for 
issuer processing or merchant processing services. 
16. Based on the description of the services at i ssue in the panel request and the scope of the 
challenged measures, China concludes that the ser vices at issue in this dispute are the network 
services that China has described above.  Fundament ally, these services relate to the operation of a 
telecommunications and data processing infrastru cture through which network operators supply 
authorization, clearing, and settlement servi ces to banks and other financial institutions. 
17. As China noted above, a minimum of three of th e five elements of the "system" described by 
the United States in its panel requ est relate to clearing and settleme nt.  However many other services 
might be at issue in this dispute, clearing a nd settlement services are plainly among them.  Thus, 
while the United States makes heroic efforts to avoi d using the terms "clearing" and "settlement" in WT/DS413/R/Add.1     
Page A-14  
 
 the narrative of its submissions, China believes it should be undisputed that the services at issue 
include clearing and settlement services.  Moreover,  as the United States acknowledges, these clearing 
and settlement services are "central" to what  it calls "electronic payment services". 
IV. THE UNITED STATES HAS FAILED TO DEMONSTRATE THAT CHINA MADE 
MARKET ACCESS AND NATIONAL TREATMENT COMMITMENTS IN 
RESPECT OF THE SERVICES AT ISSUE IN THIS DISPUTE 
A. T
HE CLEARING AND SETTLEMENT SERVICES AT ISSUE IN THIS DISPUTE ARE CLASSIFIABLE 
UNDER ITEM (XIV) OF THE ANNEX ON FINANCIAL SERVICES , WHICH IS UNBOUND IN CHINA 'S 
SCHEDULE  
18. Given the "central" importance of clearing a nd settlement services to the services at issue in 
this dispute, China will begin with the classificati on of these services in relation to China's Schedule.  
As China will proceed to demonstrate, China made no market access or national treatment 
commitments in respect of clearing and settlement ser vices.  The Panel must therefore reject the U.S. 
claims as they relate to these services. 
19. Section 5 of the Annex on Financial Services  lists 16 distinct types of financial services that 
fall within the definition of a "financial service."  China made no market access or national treatment 
commitments in respect of item (xiv) in the Annex , "settlement and clearing services for financial 
assets, including securities, derivative products, and other negotiable instruments".  Had China made a commitment in respect of this service, it would have  been subsector (j) in China's Schedule.  China's 
Schedule skips over this subsector in its sequen ce of commitments, jumping from subsector (f) to 
subsector (k), and not elsewhere referring to "settle ment and clearing services for financial assets".   
20. The term "financial assets", as used in item (xiv) in the Annex , refers broadly to cash or any 
sort of monetary claim.  Looking at the words "financial" and "assets" separately, the ordinary 
meaning of the term "financial" is "[o]f or pertai ning to revenue or money matters", while an "asset" 
is "a thing or person of use or value".  Putting these two definitions together, a "financial asset" can be 
understood as any revenue or mone tary item ("financial") that h as value to its possessor ("asset").  
The same ordinary meaning is supported by refe rring to sources that define "financial assets" as a 
single term.  The Oxford Dictionary of Economics , for example, defines "financial assets" as 
"[m]oney and claims, as distinct from physical assets  such as land, buildings, or equipment."  This 
definition includes cash and any right to receive cash. 
21. Interbank payment card transac tions involve the clearing and settle ment of cash or contractual 
rights to receive cash, and therefore involve the clear ing and settlement of financial assets within the 
ordinary meaning of item (xiv).  An interbank pa yment card transaction gives rise to a claim by the 
acquiring bank against the issuing bank in the amount of the transaction, to be paid in cash.  Operators 
of interbank payment card networks provide clear ing and settlement service s for these cash claims 
and positions.  Whether one views these clearing a nd settlement services as relating to cash or rights 
to receive cash, in either event these services are encompassed by item (xiv) because they involve the 
clearing and settlement of financial assets. 
22. Because clearing and settlement services for payment card transactions are encompassed by 
item (xiv), it is unnecessary for the Panel to examine the U.S. assertion that these clearing and 
settlement services are encompassed by  subsector (d).  It is a well-established rule of classification 
that the heading or subsector that  provides the most specific description shall be preferred to more 
general headings or subsectors that might otherw ise encompass the good or service at issue.  As 
compared to subsector (d), item (xiv) would clear ly provide the more specific description of the 
clearing and settlement services at issue in this dis pute, even if there were otherwise a basis to   WT/DS413/R/Add.1 
Page A-15 
 
 
 interpret subsector (d) as encompassing cleari ng and settlement services – which, as China will 
proceed to demonstrate, there is not.   
B. T HE UNITED STATES HAS NOT MET ITS BURDEN OF PROVING THAT SUBSECTOR (D) 
ENCOMPASSES THE SERVICES AT ISSUE  
23. The United States has staked its entire case on the proposition that all of the services at issue 
in this dispute should be classified under subsect or (d), "all payment and money transmission 
services".  Because the United States agrees that th e sectors and subsectors in a Member's Schedule 
are mutually exclusive, it follows that, in the United States' view, none of the services at issue in this 
dispute can be classified under another sector or s ubsector.  That is the case that the United States has 
decided to present. 
24. China has just demonstrated that the clearing and settlement  services at issue in this dispute 
are encompassed by a subsector that China le ft unbound.  Accordingly, these services are not 
classifiable under subsector (d), and the U.S. cl aims in respect of these services must fail.  
Nevertheless, the United States has failed to prove that any of the services at issue in this dispute – 
much less all of the services that might be at issue – are encompassed by subsector (d).  Subsector (d) 
encompasses payment services that banks and other fi nancial institutions provide to their cardholder 
and merchant customers.  The United States argues, in effect, that subsector (d) encompasses not only 
card issuance and acquisition services provided by banks , but also services provided to banks by non-
bank  service suppliers.  This in terpretation is in error. 
25. Subsector (d) is one of six subsectors lis ted in China's Schedule under the heading of 
"banking services".  The ordinary meaning of "ba nking services" is services provided by banks.  
Consistent with this ordinary meaning, all of  the services listed under the heading of "banking 
services" are services that are typically provided by banks, finance companies, and other types of financial institutions.   
26. Properly interpreted in this  context, the "payment services" referred to in subsector (d) 
encompass the issuance and acceptance by financial institutions of payment instruments other than 
cash.  These are characteristically "banking servi ces" because they involve banks acting as payment 
intermediaries.  At some point in the transactional chain, the banks are in possession of the relevant funds and are paying these funds to another party.  The banks are making a payment  within the 
ordinary meaning of that term, i.e., they are engaging in "[a]n act, or the action or process, of 
paying … ."   
27. China believes the United States would ag ree with the conclusi on that issuance and 
acquisition are banking services encompassed by subsect or (d).  However, issuance and acquisition 
are not among the services at issue in this disput e, among other reasons because these services are not 
within the U.S. description of the services at issue.  Instead, the corn erstone of the U.S. interpretation 
of subsector (d) is that the term "payment and money transmission services" includes any service that 
could be said to "manage" or "facilitate" a payment ca rd transaction, or that relates to the "processing" 
of a payment card transaction.  The U.S. interpretati on is untenable as a matter of treaty interpretation. 
28. To begin with, as discussed above, the ordinary  meaning and context of subsector (d) support 
the conclusion that a "payment service" is a banking service in which the service supplier ( i.e., the 
bank or other financial institution) becomes a part y to the payment transaction, having rights and 
obligations of payment in relation to the payer and payee (or their respective financial institutions).  A 
service supplier that is merely "managing" or "fac ilitating" the supply of this type of payment service, 
or "processing" payment transactions, is not itself a party to the payment transaction.  It is neither 
issuing nor accepting the payment instrument and is ne ver in possession of the funds to be paid.  It is WT/DS413/R/Add.1     
Page A-16  
 
 not "paying" anyone, and is not providing a "payment service" within the ordinary meaning of that 
term. 
29. More generally, services that "manage" or "facilita te" the supply of a service, or that relate to 
the "processing" of another service transac tion, are not necessarily classifiable as that other service .  
The Members have expressly affirmed that services that  help to "manage" or "facilitate" the supply of 
another service, or that relate to its "processing", must  be classified separately to  the extent that they 
are distinct and separately identifiable services.  In this regard, the 2001 Scheduling Guidelines state 
that "[i]t is understood that market access and national treatment commitments apply only to the sectors or sub-sectors inscribed in the schedule.  They do not imply a right for the supplier of a 
committed service to supply uncommitted services which are inputs to the committed service. "   
30. Equally untenable is the proposition that an y service that relates to the "processing" of a 
service transaction (such as a payment card transac tion) is necessarily the same as the service to 
which the processing relates.  Different types of processing services are recognized as distinct services 
throughout China's Schedule, and throughout th e taxonomy of W/120 generally.  For example, 
item (xv) in the Annex  list of financial services, corresponding to subsector (k) in China's financial 
services commitments, refers to "financial data pro cessing and related software by suppliers of other 
financial services".  Subsector 2.C.n in the Servi ces Sectoral Classification List refers to "on-line 
information and/or data processing ( incl. transaction processing )".  These processing services are 
clearly distinct from any other service that they happen to support ( e.g., the "other financial service" 
referred to in subsector (k) or the "transaction" refe rred to in subsector 2.C.n).  The contention that 
services relating to the "processing" of payment card transactions are necessarily "payment services" 
under subsector (d) would obliterate these distinctions. 
31. For all of these reasons, the Panel must reject the U.S. assertion that subsector (d) 
encompasses all services that "manage", "facilitate", or "process" payment card transactions.  As this 
assertion is the foundation of the U.S. position that a ll of the services at issue in this dispute are 
classifiable under subsector (d), the U.S. claims th at are based on this interpretation must fail.   
C. C
ONCLUSION TO SECTION IV 
32. The failure of the United States to meet its burden of proof in respect of the classification of 
the services at issue brings this matter to an end.   Because the United States has failed to prove its 
proposed classification of the services at issue, there is no legal basis for the Panel to proceed to an 
evaluation of whether the challenged measures are in consistent with relevant specific commitments.  
The remainder of this submission is advanced entirely on an arguendo  basis, accepting the erroneous 
premise that some or all of the services at issue ar e classifiable under subsector (d).  As the next two 
sections will demonstrate, the Panel would still need to reject the entirety of the U.S. claims, even 
under this erroneous premise. 
V. EVEN IF SOME OR ALL OF THE SE RVICES AT ISSUE WERE COVERED BY 
SUBSECTOR (D), THE UNITED STA TES HAS FAILED TO ESTABLISH 
RELEVANT MARKET ACCESS AND NATIONAL TREATMENT COMMITMENTS 
IN MODE 1 AND MODE 3 
33. The United States has staked its  case on the proposition that all of the services at issue in this 
dispute are encompassed by subsector (d), a propos ition that the United States has failed to prove.  
But even if some or all of the services at issue in this dispute were  classifiable under subsector (d), the 
United States has failed to prove that China made relevant market access and national treatment 
commitments under this subsector in the cross-bor der and commercial presence modes of supply.  
This is a separate and independent reason why the Pane l must reject all of the U.S. claims in this 
dispute.   WT/DS413/R/Add.1 
Page A-17 
 
 
 A. C HINA 'S MODE 1 MARKET ACCESS ENTRY FOR SUBSECTOR (D) IS UNBOUND  
34. China's entry in the market access column fo r subsectors (a) through (f) states that the cross-
border mode of supply is "unbound except for the fo llowing".  The entry then repeats, verbatim, the 
descriptions of subsectors (k) and (l), which appear  in China's Schedule under the heading of "[o]ther 
financial services".   
35. The meaning of this portion of China's Sc hedule could not be clearer: China undertook no 
market access commitments under Mode 1 with r espect to subsectors (a) through (f), including 
subsector (d).  Notwithstanding the fact that sub sector (d) is unbound in Mode 1, the United States 
makes no effort whatsoever to explain the logical or le gal basis for its Mode 1 claims in this dispute.  
The failure of the United States to make this showing means that it has failed to establish a prima 
facie  case of violation in respect of its Mode 1 claims , and the Panel must reject these claims in their 
entirety. 
B. C HINA 'S MODE 3 MARKET ACCESS AND NATIONAL TREATMENT COMMITMENTS FOR 
SUBSECTOR (D) ARE LIMITED TO FOREIGN FINANCIAL INSTITUTIONS  
36. The U.S. claims under Mode 3 are based on a si ngle premise: that all of the market access and 
national treatment limitations inscribed in China's Schedule for subsector (d), Mode 3, "were to be 
eliminated within five years after China's accession."  The United States has provided no 
interpretative support for this conclusion whatsoever – it is sheer assertion, wholly unsupported by the 
actual text of China's Mode 3 market access and national treatment commitments. 
37. For example, under the heading of "Clients", China's market access inscription for subsectors 
(a) through (f) states that  "[w]ithin five years after accession, foreign financial institutions will be 
permitted to provide services to all Chinese clients."  This is an express limitation on China's market 
access commitment: the only types of entities that "will be permitted" to provide the services under 
subsectors (a) through (f) are "foreign financial institu tions".  It follows that China made no market 
access commitment under subsectors (a) through (f) in  respect of entities that are not "foreign 
financial institutions".   
38. By its express terms, this limitation on ma rket access applied after the five-year phase-in 
period, and continues to apply to this day.  Ch ina committed to allow "foreign financial institutions" 
to "provide services to all Chinese clients" on a co mmercial presence basis no later than 11 December 
2006.  Contrary to the implicit U.S. suggestion that this limitation expired on 11 December 2006, in 
fact that is the date on which the commitment became effective .  As of that date – and going forward 
thereafter – "foreign financial institutions" woul d "be permitted" to provide the services under 
subsectors (a) through (f) "to all Chinese clients."  China made no commitment to permit entities that 
are not foreign financial institutions to provi de these services, at any point in time. 
39. The ordinary meaning of the term "financial institution" is "[a] regulated organization that 
provides a range of banking and investment services".   It is "[a]ny organization, such as a bank, 
building society, or finance house, that collects funds from individuals, other organizations, or 
government agencies and invests these funds or lends  them on to borrowers." As these definitions 
reflect, the essential attributes of a financial ins titution are (1) that it collects funds from the public 
(whether as deposits or investments), and (2) that it is subject to some type of prudential regulation or 
supervision.  These are the types of entities to which China has opened its market for the services 
listed in subsectors (a) through (f), in accordance with China's commitments.   
40. China has fully adhered to the commitments th at it actually made under subsector (d).  With 
regard to payment card acquisition services, China allo wed foreign financial ins titutions to engage in 
this business even before it acceded  to the WTO.  With regard to the issuance of payment cards, WT/DS413/R/Add.1     
Page A-18  
 
 China promulgated a number of measures that allowe d foreign financial institutions to enter this 
market in line with China's commitments.  Foreign financial institutions in China issue payment cards 
and acquire payment card transactions, and do so  on an equal footing with Chinese financial 
institutions.  The United States has not alleged otherwise in this dispute. 
41. Nor has the United States made any effort to  demonstrate that what it calls "electronic 
payment services suppliers" are foreign financial institu tions – either in general, or in the case of the 
specific service suppliers that it has identified by name in its submissions.  Presumably, this is because it has erroneously concluded that the lim itations on market access and national treatment 
inscribed in China's Schedule for Mode 3 expired five years after accession.   
42. Having failed to demonstrate that "elect ronic payment services suppliers" are foreign 
financial institutions, the United States has ne cessarily failed to demonstrate that China's 
commitments in Mode 3 are relevant to the services and service suppliers at issue in this dispute and 
do not preclude the rights of market access and national treatment to which it claims to be entitled.  The Panel must therefore reject the U.S. claims of violation under Articles XVI and XVII of the GATS, even accepting the erroneous proposition that subsector (d) encompasses the network services 
at issue in this dispute. 
VI. IN ALL EVENTS, THE U.S. NATIONAL TREATMENT CLAIMS MUST FAIL 
BECAUSE THE UNITED STATES RELIES UPON THE SAME ASPECTS OF THE SAME MEASURES THAT IT RELIES UPON IN SUPPORT OF ITS MARKET ACCESS CLAIMS 
43. This section accepts, arguendo , that some or all of the services at issue in this dispute are 
classifiable under subsector (d), and that China made relevant market access and national treatment 
commitments in the cross-border and commercial pr esence modes of supply.  Even if both of these 
assumptions were true, the U.S. national treatment cl aims must still fail, because the United States 
improperly bases its national treatment claims on the same aspects of the same measures that are the foundation of its market access claims. 
44. Article XVI:2 of the GATS lays out the six types of measures that a Member may not 
maintain or adopt in any sector in which it h as undertaken a market access commitment, unless that 
measure is identified in its Schedule.  These measures,  identified in Article XVI:2(a)-(f), can be either 
discriminatory or non-discriminatory.  The United St ates claims that the same aspects of the measures 
that allegedly confer a monopoly on CUP in viola tion of China's market access commitments also 
violate China's national treatment commitments unde r Article XVII of the GATS, which governs the 
imposition of discriminatory measures.   
45. Even accepting the faulty U.S. argument that  the provision of a monopoly is discriminatory, 
the text of the GATS plainly requires that monopo lies be addressed under Article XVI:2(a), and not 
Article XVII.  Article XX:2 of the GATS explains that "[m]easures inconsistent with both Articles 
XVI and XVII shall be inscribed in the column re lating to Article XVI", in which case the measure 
"will be considered to provide a condition or qualifica tion to Article XVII as well."  By virtue of this 
provision, the inscription in the market access colu mn of a discriminatory limitation on market access 
will also be considered a limitation on national treat ment.  This would include any respect in which 
the existence of a monopoly could be considered "discriminatory".   
46. According to the Scheduling Guidelines, a Member's entry of "unbound" in its Schedule 
means that the Member is "free in a given sector and mode of supply to introduce or maintain 
measures inconsistent with market access or national treatment", as the case may be.  Because 
Article XX:2 provides that measures inconsistent with both Article XVI and Article XVII are to be 
inscribed in the market access colu mn, an entry of "unbound" in the market access column means that   WT/DS413/R/Add.1 
Page A-19 
 
 
 a Member is free to introduce measures of the typ es specified in Article XVI:2, without regard to 
whether those measures are discriminatory or non-discriminatory.  What the United States is doing in this dispute – invoking the same aspects  of the same measures to establish both a market access and 
national treatment violation – would render inutile  a Member's entry of "unbound" in the market 
access column. 
47. The current dispute presents a perfect example of the flaw in the U.S. approach.  China's 
market access entry in Mode 1 fo r subsector (d) is "unbound", with a cross-reference to subsectors (k) 
and (l).  By inscribing "unbound " in Mode 1, China elected not to undertake market access 
commitments with respect to the cross-border supply of the services in subsectors (a)-(f).  Therefore, 
for the supply of those services in Mode 1, China reserved the right to maintain and introduce 
measures of the types listed in Article XVI:2, including a monopoly under Article XVI:2(a).   
48. China's national treatment commitment for the cross-border supply of the services under 
subsectors (a) through (f) is "none".  The United St ates claims that the same aspects of the measures 
that allegedly confer a monopoly upon CUP also violate China's national treatment commitments.  
This contention, if accepted, would entirely defeat  the choice that China made by leaving market 
access unbound in Mode 1.  China reserved the righ t to introduce market access limitations for this 
subsector and mode of supply, including limitatio ns under Article XVI:2 that might be seen as 
discriminatory, and its right to introduce such m easures cannot be taken away by a finding that the 
exact same aspects of the measures are inconsistent with Article XVII. 
49. The essence of the U.S. claim in this dispute is that China is maintaining a monopoly in the 
supply of network services, which it erroneously believes to be in consistent with China's market 
access commitments.  The United States has prese nted no evidence or legal argument that other  
aspects of the challenged measures are inconsistent  with China's national treatment commitments.  
Accordingly, the Panel must reject the U.S. national tr eatment claims in this dispute, without regard to 
its disposition of any other issue before it. 
VII. CONCLUSION 
50. For the reasons set forth in this submission, China respectfully requests that the Panel reject 
the U.S. claims in this dispute in their entirety.    
_______________ 
 
   WT/DS413/R/Add.1 
Page B-1 
 
 
  ANNEX B 
 
ORAL STATEMENTS, OR EXECUTIVE SUMMARIES THEREOF, OF THE PARTIES 
AT THE FIRST SUBSTANTIVE MEETING 
 
Contents Page 
Annex B-1 Executive summary of the opening or al statement of the United States at the 
first substantive meeting B-2 
Annex B-2 Closing oral statement of the United States at the first substantive meeting B-6 
Annex B-3 Executive summary of the oral statement of China at the first substantive 
meeting B-7 WT/DS413/R/Add.1     
Page B-2  
 
  ANNEX B-1 
 
EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT 
OF THE UNITED STATES AT THE FIRST SUBSTANTIVE MEETING 
 
 
I. INTRODUCTION 
1. When China joined the World Trade Organization ("WTO") in 2001, it made important 
commitments with respect to electronic payment services ("EPS") for payment card transactions.  
China explicitly acknowledged its commitments in  2005 and recognized that by 2006 its payment 
card market would be "opened to the outside worl d in an all-around manner."  Simply put, China has 
not honored its WTO commitments. 
2. Under the terms of China's Schedule of Specific Commitments on Services, China committed 
to provide both market access and national treat ment for "all payment and money transmission 
services, including credit, charge and debit cards" for domestic currency transactions.  Yet, despite 
these commitments, China continues to mainta in a government-mandated domestic monopoly, 
enabling only its national champion, China UnionPay , Co. Ltd. ("CUP"), to provide these services, 
thereby blocking foreign service suppliers.  The measures at issue establish a monopoly and systematically discriminate against and restrict  foreign EPS suppliers while favoring China's own 
supplier of EPS.  
II. EPS FOR PAYMENT CARD TRANSACT IONS FALL WITHIN THE ORDINARY 
MEANING OF "ALL PAYMENT AND MONEY TRANSMISSION SERVICES, 
INCLUDING CREDIT, CHARGE AND DEBIT CARDS…" (SUBSECTOR (D)) 
3. EPS is the service through which transactions involving credit, char ge, debit and other 
payment cards are processed and through which tran sfers of funds between institutions participating 
in the transactions are managed and facilita ted.  China's commitments pertain to " all payment and 
money transmission services, including credit, charge and debit cards," indicating that the scope of the 
commitment covers the service that is essential to pa yment card transactions.  EPS suppliers are at the 
heart of this service.  Without EPS, these payment card transactions could not occur. 
4. First, EPS clearly falls within the ordinary meaning of "payment and money transmission 
services" as one type of " all" such services.  Second, the phrase "all payment and money transmission 
services" is modified with an illustrative list that ex plicitly provides that it "i nclude[s] credit, charge 
and debit cards."  This explicit reference is in lin e with the recognition that EPS is integral to the 
processing of credit, charge, debit and other card- based electronic payment transactions, and without 
this service, payment card transactions could not occur. 
III. CHINA'S MODE 1 AND MODE 3 COMMITMENTS FOR "ALL PAYMENT AND 
MONEY TRANSMISSION SERVICES, INCLUDING CREDIT, CHARGE AND 
DEBIT CARDS…"  
5. China argues that its mode 3 commitments in subsector (d) apply only to services supplied by 
banks because subsector (d) falls under the headin g of "banking services."  The term "banking 
services" is not limited in this manner. As even  China has recognized, major U.S. EPS suppliers, as 
well as CUP, were formally operated as associati ons of banks – and from their inception they were 
clearly performing "banking services."  The nature of the service that an entity supplies does not 
change merely because that entity assumes a new co rporate form.  In analyzing a service for purposes 
of a GATS commitment, one must look at the characteri stics and nature of the service to classify that 
service.    WT/DS413/R/Add.1 
Page B-3 
 
 
  6. It is also evident from China's Schedule itsel f that the term "banking services" listed in 
China's Schedule, including those listed in subsector (d) are not limited to those provided by banks as 
China claims.  In addition to the explicit referenc e to "non-bank financial institutions" in China's 
Schedule, there are references to "foreign finance companies" in the market access column and to 
"foreign financial leasing corporations" in the additional commitments column.  Moreover, the 
definition of "financial service supplier" in the Annex on Financial Services to the GATS covers not 
only banks but other suppliers of financial services,  which supply or wish to supply financial services 
within the meaning of the Annex. 
7. For similar reasons, China's argument that its mode 3 market access and national treatment 
commitments for subsector (d) are limited to fore ign financial institutions, and that EPS suppliers do 
not qualify, must also fail.  Although China incl udes certain limitations with respect to foreign 
financial institutions, this does not mean that its  commitments are limited to foreign financial 
institutions.  Such a limitation would have needed to be imposed explicitly.  China's the Schedule 
states that "[c]riteria for authorization to deal in China's financial services sector are solely 
prudential."  Thus, under China's Schedule, th e only limitations China may impose are prudential 
restrictions and the explicitly listed limitations – defunct restrictions on geographic scope and use of 
domestic currency, and ongoing require ments applicable to banks.  Finall y, the definition of "financial 
institution" offered by China is far too narrow.  Ther e are many definitions that are much broader, and 
some explicitly include "an operator of a credit card system."  
8. It is also plain from the text that China has taken mode 1 commitments for "all payment and 
money transmission services, including credit, char ge and debit cards…"  The word "Unbound" is 
followed by the qualifying phrase "except for the follo wing," which in turn is further elaborated by 
two sentences that describe elements of the servi ces within subsector (d) for which China has taken 
mode 1 commitments.  A fundamental tenet of treaty interpretation requires that the qualifying phrase 
"except for the following" and the further specific elaboration following the word "Unbound" should be given meaning.  China focuses solely on the term  "Unbound."  If China wished to in fact be fully 
"Unbound," that is, not to have any commitments, it would have left the word  "Unbound" unqualified.  
However, as the Schedule reflects, China did not do so. 
9. Much of the activity involved in the supply of EPS for paymen t card transactions entails the 
transfer of financial information and financial data processing, and much of this occurs on a cross-
border basis.  It is therefore not surprising that  China made cross-border commitments for subsector 
(d) for EPS for payment card transactions to the ex tent that the activities entail the provision and 
transfer of financial informa tion and financial data processing . 
IV. THE SERVICE AT ISSUE IS NOT "SETTLEMENT AND CLEARING SERVICES 
FOR FINANCIAL ASSETS, INCLUDING SE CURITIES, DERIVATIVE PRODUCTS, 
AND OTHER NEGOTIABLE INSTRUMENTS" 
10. In classifying EPS for payment card transactions  under item (xiv), China ignores the ordinary 
meaning of the provision, the scope of which is limi ted to investment instruments, such as securities, 
derivatives, and other negotiable instruments.  The context-specific nature of these terms is evident 
from the international institutional framework that establishes separ ate regimes for payment systems 
and securities settlement systems.  The Committee on Payment and Settlement Systems ("CPSS"), a 
part of the Bank for International Settlements ("BI S"), is charged with developing the multilateral 
framework that governs payment systems, on the one  hand, and securities settlement systems, on the 
other hand – two very distinct systems.  
11. The CPSS provides guidance concerning payment systems (which include suppliers of EPS 
for payment card transactions) and securities settlement  systems.  The CPSS "glossary of terms used 
in payments and settlement systems" clearly illustra tes that the terms "clearing" and "settlement" each WT/DS413/R/Add.1     
Page B-4  
 
  have different meanings in the respective payment and securities contexts.  The definitions relating to 
payments systems, including EPS for payment card transactions, are drawn from different source documents than those for securities settlement systems. 
12. It is clear that "settlement and clearing servi ces for financial assets," as explicitly qualified in 
item (xiv) of the GATS are clearing and settlement se rvices for assets like derivative products, stocks, 
or bonds. In contrast, EPS for payment card trans actions are used to clear and settle payments 
associated with the transfer of goods and services, not financial assets.  This is also entirely consistent 
with the explicit reference to "cre dit, charge and debit card" payment transactions in item (viii) ("all 
payment and money transmission services…") and the lack of any similar reference to card transactions in item (xiv). 
V. CHINA'S MEASURES ESTABLISHING AND SUPPORTING CHINA UNIONPAY'S 
MONOPOLY ON THE SUPPLY OF EPS ARE INCONSISTENT WITH ARTICLE XVI OF THE GATS 
13. The measures imposed by China on the supply of  EPS are inconsistent with Article XVI of 
the GATS because they limit the number of suppliers of EPS for RMD-denominated payment card 
transactions in China.  China maintains numerous measures that ensure CUP's privileged position by 
explicitly and effectively limiting the number of fo reign EPS suppliers.  China's State Council and the 
People's Bank of China ("PBOC")  approved and authori zed only one entity, CUP, to process inter-
bank card-based payment transactions.   
14. The terms of certain measures are explicit in th eir requirements or prohibitions that establish 
CUP as the exclusive supplier of EPS for RMB denom inated domestic payment card transactions in 
China.  Other measures establish requirements or prohibitions that effectively preclude foreign EPS 
suppliers from being in the market.  China's measu res that create the monopoly structure and restrict 
the supply of EPS by foreign suppliers affect every element of the electronic payment system and all of the key participants (issuers, acquiring institu tions, merchants, and EPS suppliers themselves) and 
card-based electronic payment transactions.  China has chosen not to offer substantive rebuttal to U.S. 
claims related to the challenged measures or to the CUP monopoly. 
VI. CHINA'S MEASURES ESTABLISHING AND SUPPORTING CHINA UNIONPAY'S 
MONOPOLY ON THE SUPPLY OF EPS ARE INCONSISTENT WITH ARTICLE XVII OF THE GATS 
15. The measures at issue affect the supply of servi ces in two principal ways.  First, there are 
measures that impose a limitation such that CU P is the sole entity that can process certain 
transactions, such as domestic RMB transactions.  This  of course means that foreign suppliers of EPS 
are prevented from supplying the service at all.  Second, there are measures that promote CUP's 
position in the marketplace such as by imposing cer tain requirements on every key player in a card-
based electronic payment transaction, including issu ers (all cards issued in China for domestic RMB 
transactions must bear the CUP logo), merchants (all merchant card processing equipment and POS 
terminals must accept CUP cards), and acquiring institutions (which must post the CUP logo and 
accept CUP cards).        
16. It is important to note that the measures at i ssue provide disparate treatment solely according 
to the identity of the EPS supplier:  CUP or not CUP.    The EPS supplied is the same, and therefore is 
"like services." 
17. China's own documents demonstrate China's concern about the potential competition its 
domestic supplier of EPS would face from foreign EPS suppliers:   WT/DS413/R/Add.1 
Page B-5 
 
 
  By 2006, the RMB bank card operation shall be opened to the outside world in an all-
around manner, and accordingly the bank card industry of our country is facing a comparatively big challenge and we should make use of the limited time to enhance 
the international competitiveness of our industries. 
18. It is unsurprising that the measures at issue here are meant to favor the domestic Chinese 
entity and accordingly discrim inate on that basis.  
VII. CONCLUSION 
19. The United States respectfully requests that  the Panel find that China's measures are 
inconsistent with China's obligations under Artic le XVI:1 and XVI:2(a) and Article XVII of the 
GATS. 
 WT/DS413/R/Add.1     
Page B-6  
 
  ANNEX B-2 
 
CLOSING ORAL STATEMENT OF THE UNITED STATES 
 AT THE FIRST SUBSTANTIVE MEETING 
 
 
1. The United States would first like to thank the Pane l and the Secretariat staff assisting it.  The 
United States would also like to thank China for its participation in this meeting.  The United States 
found that the Panel’s written and oral questions we re very helpful in fostering a very focused 
discussion.  We also found the third party session usef ul and consider the third party statements and 
our meeting confirm our concerns with China’s measures. 
2. The United States notes that China’s defense rest s entirely on a series of truly implausible 
arguments.  For example: 
3. China expects you to believe that there are no restrictions on foreign EPS suppliers handling 
RMB card transactions, but no foreign supplier has chosen  to enter its market.  Is that because foreign 
suppliers are not eager to enter the Chinese market ?  Or because the Chinese ma rket is not lucrative 
enough?  
4. China expects you to believe that it took commit ments under subsector (d) for "credit, charge 
and debit cards" but took no commitments for the "payment and money transmission services" we all 
associate with the use of those cards an d that are the heart of the service. 
5. China expects you to believe that it restricted  the supply of foreign services to "financial 
institutions" without having used language to indicat e that, without any definition of that term, and 
despite stating in its Schedule that criteri a for authorization are solely "prudential." 
6. China expects you to believe that it incl uded extensive language qualifying the word 
"Unbound" under mode 1 for subsector (d), but th at those words are entirely redundant of other 
subsectors, (k) and (l), and that it does not even  know why it included those words under mode 1. 
7. In contrast, the United States has provided explanations grounded in the text of China's 
Schedule and the GATS and that are legally sound and fully consistent with the commercial reality of 
the way EPS for card transactions are supplied. 
8. We look forward to further engaging in the pr ocess with you and again thank you for your 
service on the panel.   WT/DS413/R/Add.1 
Page B-7 
 
 
  ANNEX B-3 
 
EXECUTIVE SUMMARY OF THE ORAL STATEMENT 
OF CHINA AT THE FIRST SUBSTANTIVE MEETING 
 
 
I. INTRODUCTION  
1. In the interest of moving expeditiously to the Panel's questions, and in order to avoid 
repeating the arguments laid out in China's first written submission, I will limit my opening remarks 
this afternoon to three key issues.  These are: (1 ) the fact that China made no market access or 
national treatment commitments in respect of clea ring and settlement services; (2) the contention by 
the United States that services that "manage" or "facilita te" the supply of a service, or that relate to the 
"processing" of another service transaction, are classi fiable as that other service; and (3) China's 
limitation of its Mode 3 market access and national treatment commitments for subsector (d) to foreign financial institutions. 
II. CLEARING AND SETTLEMENT SERVICES 
2. Item (xiv) of the Annex , which would have been subsector (j) in China's Schedule had China 
made a commitment for this service, refers to "settlement and clearing services for financial assets, including securities, derivative products, and other ne gotiable instruments".  Pursuant to Article 31 of 
the Vienna Convention, any analysis of this provisi on must begin with the ordinary meaning of its 
terms.   
3. There can be no question that "electronic payment service suppliers" like Visa and 
MasterCard provide clearing and settlement services.   As China demonstrated in its first written 
submission, these clearing and settlement services ar e for "financial assets" within the ordinary 
meaning of that term.  The Oxford Dictionary of Economics , for example, defines "financial assets" as 
"[m]oney and claims, as distinct from physical asset s such as land, buildings, or equipment", a 
definition that includes cash and any right to receive  cash.  In its oral statement, the United States 
offered nothing to contradict this understanding .  Because interbank payment card transactions 
involve the clearing and settlement of cash or ri ghts to receive cash, these transactions necessarily 
involve the clearing and settlement of financial as sets within the ordinary meaning of item (xiv). 
4. The United States has taken the position that all of  the services at issue in this dispute should 
be classified under subsector (d), "all payment a nd money transmission services".  Furthermore, the 
United States has agreed that the sectors and subsectors in a Member's Schedule are mutually 
exclusive.  Accordingly, the U.S.  claims with respect to cleari ng and settlement services must fail, 
because these services cannot fall in to a subsector that China left unbound and simultaneously fall 
into subsector (d).   
III. SERVICES THAT "MANAGE", "FACILITATE", OR RELATE TO THE 
"PROCESSING" OF A SERVICE 
5. The cornerstone of the U.S. interpretation of subsector (d) is that the term "payment and 
money transmission services" includes any service th at could be said to "manage" or "facilitate" a 
payment card transaction, or that relates to the "processing" of a payment card transaction.   But 
subsector (d), properly interpreted, only encompass es payment services that ba nks and other financial 
institutions provide to their cardholder and merchant  customers.  It does not encompass the U.S. 
notion of "electronic payment services", which are services provided to banks by non-bank  service 
suppliers.    WT/DS413/R/Add.1     
Page B-8  
 
  6. Subsector (d) falls under the heading of "ban king services" in China's Schedule, and the 
ordinary meaning of "banking services" is services pr ovided by banks.  Consistent with this heading, 
China limited its commitments for subsectors (a) th rough (f) to banks and ot her types of financial 
institutions.  Properly interprete d in this context, subsector (d) encompasses th e issuance and 
acceptance by financial institutions of payment instruments other than cash. 
7. The problem for the United States is that i ssuance and acquisition are not among the services 
at issue in this dispute, leaving the United States in the untenable position of having to argue that 
services which help "manage", "facilitate", or "process"  the services actually covered by subsector (d) 
are likewise properly classified in the same subsector.  Taken to its logical extreme, this interpretation 
would sweep into subsector (d) a large array of te lecommunications, data processing, and clearing and 
settlement services – among other potential services – that are typically supplied to banks and other 
financial institutions by non-bank service suppliers.   
8. The 2001 Scheduling Guidelines state, "[i]t is understood that market access and national 
treatment commitments apply only to the sectors or  sub-sectors inscribed in the schedule.  They do 
not imply a right for the supplier of a committed service to supply uncommitted services which are 
inputs to the committed service."  In many cases, se rvices that "manage" or "facilitate" the provision 
of another service or that relate to its "processing"  could properly be seen as "inputs" to the provision 
of that service.  But a Member's decision to make different commitments (or no commitments) for these "input" services must be given effect.   
9. Because clearing and settlement services are properl y classified in a subsector that China left 
uncommitted, and because the United States has faile d to prove, in any event, that services that 
"manage", "facilitate", or "process" payment card tran sactions are properly classified in subsector (d), 
the U.S. claims fail at the threshold.  However, ev en accepting the erroneous premise that some or all 
of the services at issue are classifiable under subsector  (d), the U.S. argument with respect to China's 
commitments in this subsector would require the Pane l to reject the U.S. claims in this dispute.  
IV. CHINA'S MODE 3 COMMITMENTS FOR SUBSECTOR (D) 
10. The United States claims that all of the market access and national treatment limitations 
inscribed in China's Schedule for su bsector (d) in Mode 3 "were to be eliminated within five years 
after China's accession."  Incredibly, however, the United States has failed to provide any textual support for this assertion in its first submission or it s oral statement.  What  China's market access 
inscription for subsectors (a) through (f) actually  says is that "[w]ithin five years after accession, 
foreign financial institutions will be permitted to provide services to  all Chinese clients."  The only 
plausible reading of China's commitments is that Ch ina agreed to allow "foreign financial institutions" 
to "provide services to all Chinese c lients" on a commercial presence basis no later than  
December 11, 2006.   
11. China can only imagine that the reason why th e United States has now forgotten the obvious 
meaning of China's Mode 3 limitations is because th e U.S. claims must fail unless the United States 
can convince the Panel that these restrictions have di sappeared entirely.  Per the clear terms of China's 
Mode 3 commitments, the only types of entities that  "will be permitted" to provide the services under 
subsectors (a) through (f) are "foreign financia l institutions".  But the United States has not 
demonstrated that its "electronic payment services" s uppliers are financial institutions.  In fact, Visa 
and MasterCard, whose documents the U.S. cites fr equently as relevant "industry sources", go out of 
their way to make clear that they are not financia l institutions.  As such, China's market access and 
national treatment commitments in subsector (d) woul d not extend to these entities, either before or 
after December 2006.   WT/DS413/R/Add.1 
Page B-9 
 
 
  12. The absence of any relevant commitments brings th is dispute to an end.  As a final matter, 
however, China wishes to correct the U.S. mischaract erization of the measures at issue.  The United 
States has failed to identify anything in the challe nged measures that woul d require all interbank 
payment card transactions to be processed over th e CUP network, or that would prevent other 
networks from processing interbank payment card tran sactions.  Contrary to the U.S. assertion, there 
is nothing in the challenged measures that establishe s any sort of "monopoly".  The measures at issue 
ensure that every interbank payment card in China is capable, at a minimum, of being processed over 
the CUP network.  But establishing a common  network is not the same as establishing a monopoly  
network.   
13. China reiterates, however, that there is neither a need nor a legal basis for the Panel to reach 
this issue.  As prior panels have recognized, the firs t task before the Panel is to classify the services at 
issue and determine the extent of the commitments, if any, that China undertook in respect of those services.  Because the United States has failed to de monstrate the existence of any such commitments, 
the U.S. claims fail at the threshold and must be dismissed in their entirety. 
14. China thanks the Panel for its attention, a nd looks forward to answering its questions. 
 
_______________ 
 
    WT/DS413/R/Add.1 
Page C-1 
 
 
  ANNEX C 
 
THIRD PARTY SUBMISSIONS 
 
Contents Page 
Annex C-1 Integrated executive summary of the third party written submission and oral 
statement of Australia C-2 
Annex C-2 Third party oral statement of Ecuador at the first substantive meeting C-7 
Annex C-3 Integrated executive summary of the third party written submission and oral 
statement of the European Union C-10 
Annex C-4 Integrated executive summary of the third party written submission and oral 
statement of Japan C-13 
Annex C-5 Integrated executive summary of the third party written submission and oral 
statement of the Republic of Korea C-19 WT/DS413/R/Add.1   
Page C-2  
 
  ANNEX C-1 
 
INTEGRATED EXECUTIVE SUMMARY OF THE  
THIRD PARTY WRITTEN SUBMISSION AND ORAL STATEMENT OF AUSTRALIA 
 
 
I. INTRODUCTION 
1. These proceedings, initiated by the United St ates, present Members with an important 
opportunity to consider the interpretation of Me mbers' obligations under the Schedule of Specific 
Commitments under the General Agreement on Trade in Services (GATS). 
2. Australia has identified the following key matters , which raise issues of legal importance: 
a. The meaning of the words "all payment and money transmission services" in 
subsector 7B(d) of China's Schedule of Sp ecific Commitments under the GATS (China's 
Schedule);
1 
b. The scope of China's GATS commitments under subsector 7B(d); and 
c. Interpretation of the sectoral classifications used by Members in their GATS Schedules. 
II. THE GENERAL AGREEMENT ON TRADE IN SERVICES 
A. THE MEANING OF "ALL PAYMENT AND MONEY TRANSMISSION SERVICES " 
3. A material issue in this matter is the me aning of the words "all payment and money 
transmission services" in subsector 7B(d) of China's Schedule, and whether the services at dispute are 
captured by this provision. 
4. The United States contends that subsector 7B (d) of China's Schedule captures "electronic 
payment services" (as defined by the United States in its Request for Establishment of a Panel).2 
China submits that the services at dispute are co rrectly characterised as "network operator" and 
"network services".3 China's view is that these services are classified under an alternative subsector, 
which China has left unbound in its Schedule – namely , "settlement and clearing services for financial 
assets" as set out in sub-paragraph 5(a)(xiv) of the Annex on Financial Services  (Annex).4  
5. Australia submits that, having regard to the ordinary meaning of the terms, the phrase "all 
payment and money transmission services" should be  interpreted broadly to encompass services 
which are integral to payment and money transmission services, including services which manage and facilitate credit card based payments. 
6. Australia therefore submits that the services desc ribed by both the United States and China in 
their submissions may be correctly classified under su bsector 7B(d) of China's Schedule. In particular, 
the services that the United States refers to as "e lectronic payment services", involve services through 
                                                      
1 Section II, 7 (Financial Services), B (Banking and Other Financial Services) of China's Schedule 
(circulated in WT/ACC/CHN/49/Add.2 and WT/MIN(01)/3/Add.2), item (d). 
2 See page 1 and note 2 of China – Certain Measures Affecting Electronic Payment Services, 
WT/DS413, U.S. Request for the Establis hment of a Panel, February 11, 2011. 
3 See para 24 of China – Certain Measures Affecting Electronic Payment Services, WT/DS413, First 
Submission of China, October 11 2011 (China 11 October First Submission).   
4 See para 11 of China 11 October First Submission.   WT/DS413/R/Add.1 
Page C-3 
 
 
  which transactions involving payment cards are processed, and through which transfers of funds 
between institutions participating in th e transaction are managed and facilitated.5  By managing and 
facilitating the transfer of money or payment from one person or place to another, Australia agrees 
that credit card based payment se rvice suppliers engage in both "payment and money transmission 
services" and thus fall under subsector 7B(d).  
7. Similarly, Australia submits that the meaning of "all payment and transmission services" 
correctly captures the services described by China.  That is, the services described by China, including 
clearing and settlement services as they relate to credit card based payments, are fundamental 
components of card based transactions.  Indeed, without the processing infrastructure, network and rules and procedures, which China refers to  as "telecommunications and data processing 
infrastructure",
6 card based payment transactions could not occur.  These services are fundamental to 
the transmission of funds in a card based transaction.  
8. The Appellate Body has found that under Artic le 31 of the Vienna Convention on the Law of 
Treaties (1969) (Vienna Convention), the ordinary m eaning of treaty terms may be ascertained only in 
their context, and in light of the object and purpose of the treaty.7 The Appellate Body has accepted 
that Members may therefore refer inter alia to a Member's GATS Schedule, provisions of the GATS, 
and the GATS Schedules of other Members as releva nt context in determining the meaning of a 
scheduled commitment.8 
9. To this end, Australia notes that China has in cluded the words "including credit, charge and 
debit cards, travellers cheques and bankers drafts  (including import and expo rt settlement)" in its 
Schedule, as examples of activities envisaged under "all payment and money transmission services".  
The inclusion of these additional words in "all pa yment and money transmission services", further 
supports the view that subsector 7B(d) was at least intended to cover the services under dispute.   In 
particular, inclusion of these words makes it clear  that services which manage and facilitate the 
transmission and processing of money and payment tr ansactions, such as through  the use of payment 
cards (i.e. credit and debit cards), fall within the confines of China's market access and national 
treatment commitments.   
10. In addition, Australia submits that reference to the provisions of the GATS provides further 
relevant context for interpretation of subsector 7B (d) of China's Schedule.  Paragraph 5(a) of the 
Annex sets out a detailed list of activities falling under the meaning of financial services, which 
evidences the intention of the negotiators to cove r comprehensively the activities of the financial 
sector.  In particular, sub-paragraph 5(a)(viii) of the Annex refers to "c redit, charge or debit cards" as 
examples of activities envisaged under "all payment and money transmission services". This clarifies 
that members intended that credit card and debit card transmission services are categories of financial services, for which Members may choose to make commitments.   
11. Reference to the other categories under paragra ph 5(a) of the Annex also provides additional 
context informing the meaning of "all payment and transmission services".  China submits that the 
services relating to card based transactions at dispute,  including clearing and settlement services, more 
appropriately fall under sub-paragraph 5(a)(xiv) of  the Annex, which relates to "settlement and 
                                                      
5 See para 155 of China – Certain Measures Affecting Electronic Payment Services, WT/DS413, 
Submission of the United States of America in Response to China's Request for a Preliminary Ruling, July 29, 
2011 (including Exhibits US-1 - US-62) (U. S. July 29 Response) sections V.B, V.C, V.D. 
6 See para 72 of China 11 October First Submission. 
7 See para 348 of China – Measures Affecting Trading Rights and Distribution Services for Certain 
Publications and Audiovisual Entertainment Products, WT/DS363/AB/R ( China – Publications and 
Audiovisual Products ), citing article 31, Vienna Convention on the Law of Treaties, 1969.  
8 Ibid, at para. 358. WT/DS413/R/Add.1   
Page C-4  
 
  clearing services for financial assets". Australia subm its that this subsector concerns settlement and 
clearing services for financial assets, other than card based transactions.  Australia notes that sub-
paragraph 5(a)(xiv) includes the words "secur ities, derivative products and other negotiable 
instruments", as examples of the subject of the transactions envisaged by "settlement and clearing 
services for financial assets".  The distinguishing qua lity of sub-paragraph 5(a)(xiv) is that it concerns 
services relating to financial assets.   
12. In addition, unlike sub-paragraph 5(a)(viii), s ub-paragraph 5(a)(xiv) does not make specific 
reference to "credit, charge and debit cards". Aust ralia submits that inclusion of the words "credit, 
charge or debit cards" under "all payment and money transmission services" in sub-paragraph 
5(a)(viii), further supports the view that credit and debit card transactions, including clearing and 
settlement services in so far as th ey are integral to card based transactions, more appropriately fall 
under sub-paragraph 5(a)(viii) of  the Annex, rather than s ub-paragraph 5(a)(xiv).   
13.  Article 32 of the Vienna Convention provides that recourse may be had to supplementary 
means of interpretation, including the preparatory work of the treaty and the circumstances of its 
conclusion in order to confirm the meaning resulting from the application of Article 31.
9  In the US-
Gambling dispute, the Appellate Body noted th at the Services Sectoral Classification List 
(MTN.GNS/W/120, 10 July 1991) "constitutes supple mentary means of interpretation, including the 
preparatory work of the treaty."10 W/120 appears to have been the  starting point for China's Schedule, 
which sets out its categories and entries, under th e heading of "B. Banking and Other Financial 
Services (excluding insurance and securities)", by  using similar entries, including numbering and 
letters, as those contained in the "Banking and othe r Financial Services (EXCL. insurance)" section of 
W/120. Importantly, subsector 7(B)(d) of W/120 only refers to "all payment and money transmission 
services", such that China's inclusion of the additi onal words "including credit, charge and debit cards, 
travellers cheques and bankers drafts"  clarifi es that services which facilitate the transmission of 
money and payment transactions, such as through th e use of payment cards (i.e. credit and debit 
cards), fall within subsector 7B (d) in China's Schedule.   
14. It therefore follows that the services at dis pute, described by the United States and China 
respectively as "electronic payment services" and/ or "network services", are correctly classifiable 
under subsector 7B(d) of China's Schedule. 
B. CHINA 'S GATS  COMMITMENTS ON FINANCIAL SERVICES  
15. Another important matter in this dispute is the interpretation of China's scheduled services 
commitments under subsector 7B(d).  Australia notes that this is a complex area, not least because not 
all Members have followed the scheduli ng Guidelines in all instances.   
16. Australia notes the WTO Secretariat takes the view that all commitments in a Member's 
Schedule are bound unless otherwise specified.11  If a member wishes to remain free in a given sector 
and/or mode of supply (i.e. where it wishes to retain the flexibility to  introduce or maintain limitations 
on market access or national treatment) the Member will enter the term "unbound" in its Schedule of 
Specific Commitments.  Conversely,  where a Member wishes to bind it self to a market access and/or 
national treatment commitment, for which it mainta ins no limitations, it will enter "none" with respect 
                                                      
9 See paras 404 and 405 of Appellate Body Report, China – Publications and Audiovisual Products.  
10 See para 196 of Appellate Body Report in United States – Measures Affecting the Cross Border 
Supply of Gambling and Betting Services , WT/DS285/AB/R, adopted 20 April 2005, DSR 2005:XII, 5663 
(Corr.1, DSR 2006:XII, 5475) 
11 See WTO's "Guide to reading the GATS schedules of specific commitments and the list of article II 
(MFN) exemptions" at  http://www.wto.org/english/trat op_e/serv_e/guide1_e.htm   WT/DS413/R/Add.1 
Page C-5 
 
 
  to the relevant sector or mode.  A Member may also make a commitment with limitations by 
providing specific explanation in the text of the Schedule.   
17. In addition, Australia recognises the point made by  the European Union in its submission, that 
Article I:2(c) of the GATS defines mode 3 services as the supply of a service "by a service supplier of one member, through commercial presence in another Member".
12  Importantly, if a Member wishes 
to limit the service suppliers that are permitted to pr ovide a particular service, then it must explicitly 
inscribe such a limitation in its schedule of commitments.  
18.  Australia is of the view that a proper interp retation of China's commitments with regard to 
subsector 7B(d) is as follows.  Under the "marke t access" column for subsector 7B(d), China has 
inscribed neither "Unbound" nor "None" with respect to  mode 3.  Australia submits that other than the 
prudential licensing limitations on fo reign financial entities, China's Sc hedule should be interpreted as 
"otherwise, none" as to any further limitations relating to subsector 7B(d).  Similarly, given the expiry 
of the geographic and client restrictions in 2006, there are no limitations relating to China's national 
treatment commitments.  This is confirmed by the inclusion of the words "otherwise, none" under 
"national treatment".  
19. It is therefore Australia's view that the commitments made by China with respect to 
subsector 7B(d) are not limited to foreign financ ial institutions, as claimed by China, as no such 
limitation has been inscribed in its Schedule.  Australia submits that although China has inscribed 
certain limitations and clarifications under "marke t access" and "national treatment", which relate to 
foreign financial institutions, this does not mean that  its commitments are limited to foreign financial 
institutions. If this were the case, China woul d have included the words "unbound except" or 
"otherwise unbound" in its Schedule, as indeed it has with respect to mode 1.  
C. INTERPRETATION OF THE SECTORAL CLASSIFICATION USED IN GATS  SCHEDULES  
20. In its submission, China highlights the impor tance of interpreting GATS Schedules in line 
with the 2001 Scheduling Guide lines. Australia agrees with China's position that the system of 
classifying services would "collapse" if distinct and separately identifiable services could be classified 
under another sector or subsector, simply because they  manage or facilitate or relate to the processing 
of that service. Australia acknowledges that sector s and subsectors in a Member's Schedule are 
mutually exclusive, and agrees that preserving this  reading of the architecture of the Schedules is 
fundamental to a meaningful interpretation of Members' commitments 
21. Australia remains of the view, however, that "electronic payment services" or "network 
services" are a fundamental component of credit card based payment services, and should properly be 
included under the definition of "all payment a nd money transmission services". To this end, 
Australia reiterates that, based on the applicati on of Article 31 of the Vienna Convention, "all 
payment and money transmission services" should be  interpreted to encompass services that are 
integral to payment and money transmission servi ces, including services which manage and facilitate 
credit card based payments.  
III. CONCLUSION 
22. Central to this dispute are a number of importa nt systemic issues concerning the interpretation 
of Members' GATS Schedules.  As set out above, Au stralia submits that subsector 7B(d) "all payment 
and money transmission services, including credit, ch arge and debit cards, travellers cheques and 
                                                      
12 See para 34 of China – Certain Measures Affecting Electronic Payment Services, WT/DS413, Third 
Party Submission of the European Union, October 18 2011. WT/DS413/R/Add.1   
Page C-6  
 
  bankers drafts (including import and export settlement)" should be interpreted broadly, so as to 
include services essential to card based payment services, including services which manage and facilitate credit card based payments, and clearing and settlement services insofar as they relate to 
card transactions.  Further, Australia has offe red some views on how China's GATS Schedule should 
be interpreted, noting the importance of interp reting GATS Schedules consistently with the 2001 
Scheduling Guidelines.   
   WT/DS413/R/Add.1 
Page C-7 
 
 
  ANNEX C-2 
 
THIRD PARTY ORAL STATEMENT OF ECUADOR 
AT THE FIRST SUBSTANTIVE MEETING 
 
 
I. INTRODUCTION 
1. Members of the Panel: The Government of Ecuador  thanks the Panel and the Parties for this 
opportunity to present its views on certain issues involved in this dispute.  Ecuador is participating in 
this case given its systemic concerns with regard to the correct interpretation of the Schedules of 
specific commitments in services undertaken by Memb ers and, hence, the correct legal interpretation 
of the General Agreement on Trade in Services (GATS). 
2. In this oral submission, the Government of Ecuador will focus on briefly highlighting 
two legal aspects relating to:  (i) specific guidelines for interpreting commitments under the 
General Agreement on Trade in Services (GATS);  and (ii) the scope of the obligations under 
Articles XVI and XVII of the GATS in relation to monopolies. 
II. GUIDELINES FOR INTERPRETING GATS COMMITMENTS 
A. COMMITMENTS IN SERVICES ARE THE RESULT OF POSITIVE LIST NEGOTIATIONS  
3. A reading of the GATS reveals that Members de cided that their services commitments were 
contingent upon public policy spaces in the area concerne d that they had chosen to protect.  Parallel to 
this, in their positive lists, they established independ ently the level and scope of and restrictions on 
those spaces.  The fourth recital of the preamble to the GATS confirms the importance attached by 
Members to the link between public policies and specific commitments by recognizing the right of Members to "… regulate, and to introduce new regulations on, the supply of services within their territories in order to meet national policy objectives". 
4. It is evident from a review of a number of GATS provisions, for example Articles XVI, XVII, 
XVIII, XIX and XX, that Members have decided to grant market access and non-discriminatory 
treatment to foreign services suppliers solely  and exclusively  in the sectors or subsectors included in 
their schedules of specific commitments.  Memb ers may, in full compliance with GATS rules, 
undertake, amend or eliminate commitments, notably  on market access and non-discrimination, on the 
basis of public policies the definition of which corre sponds to each individual Member.  In short, as 
far as trade in services is concerned, market access a nd non-discrimination are restricted to the level 
of the commitments that Members agreed to undertake. 
5. As a result, there is no room for interpretation as regards the scope of specific services 
commitments in the schedules of original commitments when, in spite of the complexity of the issue, 
these commitments have been clearly specified by a Member.  To seek to broaden the scope to cover 
other sectors by means of an expansive interpreta tion of the schedule of specific commitments would 
constitute an unacceptable impairment of Member s' right to define its scope and content. 
6. The interpretation of specific commitments s hould take into account the context and the 
object and purpose of the GATS, which indicate that  specific commitments are established solely on 
the basis of the positive list of commitments, and th ereby avoid attempts, by means of interpretation, 
to broaden the range of these commitments to cover sectors that are not included. WT/DS413/R/Add.1   
Page C-8  
 
  B. I
N THE EVENT OF THE EXISTENCE OF TWO SPECIFIC COMMITMENTS ON THE SAME SERVICE , 
THE MORE SPECIFIC COMMITMENT TAKES PRECEDENCE  
7. A general legal principle is that a special law prevails over a general law.  This principle is 
applied, mutatis mutandis , to the disciplines of the various covered agreements set forth in 
Appendix 1 to the Understanding on Rules and Proce dures Governing the Settlement of Disputes.  In 
the context of the interpretation of specific servic es commitments, there is no reason why this general 
legal principle should not apply to the legal rela tionship between the specific commitments that a 
Member has undertaken in respect of the other Memb ers of this Organization, all the more so since 
the rules on the classification of services state that  the most specific description of the sectors or 
subsectors that could correspond to a services commitment shall prevail over a more general 
description.1  The criterion of the primacy of the special law over the general law forms a constituent 
part of legal hermeneutics, which cannot be left unaddressed in the review of the scope of specific 
GATS commitments. 
C. THE TERMS OF COMMITMENTS MUST BE INTERPRETED STRICTO SENSU  
8. The specific  commitments undertaken by Members are based ab initio  on a number of 
specific  trade concessions which facilitate  market access or reduce  or eliminate  discrimination 
between domestic and fore ign suppliers in relation only to committed sectors of trade in services.  
This involves the voluntary imposition of self-restraint with regard to the power to implement national 
policies relating to these sectors or subsectors, thr ough the regulation of the supply of services or the 
establishment of new regulations. 
9. In light of the above, a broad and unrestrict ed interpretation of the specific services 
commitments undertaken by Members could lead, in practice, to Members disregarding the 
specificities that characteri ze the supply of services of a different nature.  This would not only weaken 
the predictability of the multilateral trading system  but would undermine Members' power to regulate 
trade in services on the basis of the sel f-restraint imposed, where this exists. 
10. An excessively broad interpretation of, for example, the descriptors established in the 
classification of the schedules of specific commitments could therefore open the way for attempts to 
include commitments where they do not exist, whic h means covering more than what it was voluntary 
agreed upon to liberalize. 
11. For instance, the term "payment" is defined as the "handover of money or kind that is owed".2  
This term is clear in its common usag e and should therefore be interpreted stricto sensu  with regard to 
the effective transfer of resources, which means ex cluding from its coverage any step or action that 
facilitates or administers a "payment", even if it is a related service. 
D. THE CHARACTERIZATION OF A SERVICE BY THE INDUSTRY DOES NOT NECESSARILY 
DETERMINE THE NATURE OF THE SERVICE  
12. In Ecuador's view, the industry's characterizati on of a service does not determine the nature of 
that service.  It is clear that when negotiati ng their schedules of specific commitments Members 
established the scope of the specific sectors or sub sectors that they were prepared to liberalize, 
i.e. they defined the types of services for which they would open up markets and grant national treatment.  It is therefore up to the Members to  define what is meant by a specific service. 
                                                      
1 United Nations Provisional Central Product Cla ssification (CPC), Rule of interpretation 1(a). 
2 Diccionario de la Lengua Española, 22nd edition, volume 2, p. 1647.   WT/DS413/R/Add.1 
Page C-9 
 
 
  13. The fact that one or several companies deci de to describe the services they supply as 
"payment services" does not necessarily confer that ch aracter upon them.  In defining what they do 
internally, companies may be guided by categories or definitions that will not necessarily coincide 
with Members' understanding as established and assume d in the schedules of specific commitments.  
Moreover, these categories or definitions may vary  from company to company, sector to sector, or 
even country to country. 
14. In order to determine the nature of services, an assessment should be made of the objective 
characteristics of the facts, and of the services pr ovided by the service supplier and their customers or 
consumers.  If, for example, the services offered by a service supplier consist of data transmission, 
digital trade facilitation or data storage, it is diffi cult to argue that they can be characterized as 
"payment services". 
15. The legal value of the characterization of a servi ce in the light of the opinion of its suppliers is 
therefore questionable, as not only would subjective criteria and private interests be privileged, but 
there would also be a risk of impairing rights which the Members are responsible for defining. 
III. SCOPE OF THE OBLIGATIONS UNDER ARTICLES XVI AND XVII OF THE 
GATS IN RELATION TO MONOPOLIES 
A. SERVICES PROVIDED BY A MEMBER 'S MONOPOLIES AND EXCLUSIVE SERVICE SUPPLIERS 
ARE ONLY LIMITED BY THE SPECIFIC COMMITMENTS UNDERTAKEN BY THAT MEMBER  
16. In Ecuador's view, it is important to note that the services provided by a Member's 
monopolies and exclusive service suppliers will only be limited by the level of the specific commitments that this Member has included in its  schedule of commitments.  In this respect, the 
provisions of Articles VIII, XVI and XVII converge in specifying that the monopolies and exclusive 
service suppliers of a Member may operate without  any restriction unless ma rket access commitments 
are undertaken in the sectors in which they operate and/or where national treatment has been granted 
"in the sectors inscribed in its Schedule [in that of  the Member], and subject to any conditions and 
qualifications set out therein …". 
17. In conclusion, it should be noted that if a Me mber has not undertaken any commitment in its 
schedules of commitments, i.e. if it has entered the term "unbound" for the sector, or left the sector blank, it will be taken to mean that there is no commitment in favour of either foreign suppliers 
(market access) or domestic suppliers (national treatment) and that, as a result, both types of supplier will be equally impeded from supplying the service s that Members have reserved for designated 
monopolies or exclusive service suppliers. WT/DS413/R/Add.1   
Page C-10  
 
  ANNEX C-3 
 
INTEGRATED EXECUTIVE SUMMARY OF THE  
THIRD PARTY WRITTEN SUBMISSION AND ORAL STATEMENT 
OF THE EUROPEAN UNION  
 
 
I. THE MEASURES AT ISSUE 
1. The EU agrees with the US that measures can be  subject to challenge individually as well as 
collectively and that, when this is necessary to ass ist the DSB in discharging its duties, the panel 
should review both. 
2. When provisions of certain individual measures together and collectively amount to a general 
scheme and that scheme nullifies or impairs the benef it of a Member, such a scheme can be construed 
as a measure. The scheme as a whole is therefore su sceptible to review, provided it can be defined 
with sufficient precision in the panel request.  
II. WHETHER CHINA'S SPECIFIC COMMITMENTS IN ITS GATS SCHEDULE 
INCLUDE ELECTRONIC PAYMENT SERVICES FOR PAYMENT CARD 
TRANSACTIONS 
3. China argues in favour of a narrow reading of its scheduled commitment for "all payment and 
money transmission services" and a broad reading of a sector as defined in the Annex on Financial 
Services  to the GATS, with respect to which it did no t schedule any commitments; namely "settlement 
and clearing services for financial assets". 
4. In the view of the EU the ordinary meaning of China's commitments relating to "all payment 
and money transmission services" does not support the narrow reading advanced by China and 
consequently does not warrant the conclusion th at the services at issue are excluded from its 
commitments. 
5. Firstly, China's Schedule uses the term "banking services" not "services of banks". Explicit 
terminology used by China in its Schedule fully supports the view that China's commitments under 
"Banking services" are not solely and exclusively re lated to banks, but also  "suppliers of other 
financial services" (Section II.7.B, Subsector (d), se cond column, Mode 1, first indent) and "foreign 
financial institutions" (Section II.7.B, Subsector (d), second column, Mode 3, points B and C ). 
6. Secondly, China has undertaken specific co mmitments with respect to a category of 
"services", as opposed to a category of "service providers". This is clear from the text of the 
individual commitment under Section II.7.B, Subsect or (d), as well as its heading and subheading. 
Nothing in the text of China's Schedule of Specifi c Commitments supports Chin a's argument that the 
supply of "payment and money transmission services" pursuant to China's GATS Schedule is limited to certain entities. It may therefore be concluded that these services can be offered by any financial 
service supplier. In fact, Article 5(b) of the GATS Annex on Financial Services  makes it clear that the 
Annex introduces a very wide definition of financia l service suppliers. Furthermore, in order to be a 
financial service supplier under the GATS the natural or judicial person does not, in principle, need to be previously or solely engaged in the supply of financial services. 
7. Thirdly, the Panel may consider and examin e the differences in meaning between sub-
paragraphs (viii) and (xiv) of Paragraph 5 of the GATS Annex on Financial Services .   WT/DS413/R/Add.1 
Page C-11 
 
 
  8. In the opinion of the EU, "payment and m oney transmission services" cannot take place 
without the actual transfer of money between one pa rty and another. This would necessarily entail a 
process of "clearing" and "settlement", or basically  the removal or debiting of funds from the accounts 
of one person or entity, in order to pay or credit th e accounts of another person or entity. This process 
is an essential part of the operations of any cred it, charge or debit card system, and without this 
transfer of funds the system simply will not work.   
9. The EU is of the opinion that the term "elect ronic payment services", the services at issue in 
this dispute, falls within the meaning of s ub-paragraph (viii) of pa ragraph 5 of the GATS Annex on 
Financial Services  and within paragraph (d) listed in China's GATS Schedule of Specific 
Commitments. The meaning of "all payment and m oney transmissions services" is wide enough to 
include "electronic payment services" that the US refers  to. Moreover, the fact th at this phrase is then 
followed by the words "including credit, charge and debit cards", also clearly indicates that the term 
"electronic payment services" would also fall under this definition.  
10. The term "clearing and settlement for financials assets", does not relate to "credit, charge and 
debit cards", which clearly and specifically fall unde r the definition of paragraph 5 (viii) of the GATS 
Annex on Financial Services . Moreover, paragraph 5 (xiv) gives ex amples of the "financial assets" 
which could fall within its definition, namely " securities, derivative products and other negotiable 
instruments". Credit cards, debit cards or charge car ds which are the subject of this present dispute are 
very distinct from the "financial assets" that pa ragraph 5(xiv) is referring to. The "clearing and 
settlement services" involved in the trading (buyin g and selling) of "securities, derivative products 
and other negotiable instruments", are separat e and distinct from the "payment and money 
transmission services" which take place when there is a transfer of funds between different persons or 
entities, in order to settle "credit, charge or debit card" transactions. 
III. WHETHER CHINA'S MEASURES ARE INCONSISTENT WITH ARTICLE XVI OF 
THE GATS 
11. Article XVI of the GATS sets forth the obligations on market access, which apply where a 
WTO Member has taken specific commitments in a given service sector. In its second paragraph it 
inter alia prohibits WTO Members from maintain ing or adopting "limitations on the number of 
service suppliers", unless appropriate reservations ha ve been made in their Schedule of Specific 
Commitments. 
12. It is clear from China's Schedule of Specific Commitments that China made market access 
commitments with respect to Section II.7.B, Subsector  (d) of its Schedule. It is also evident from the 
text of the commitment that certain limitations exist (or existed) with respect to Mode 1 and Mode 3.  
13. The parties disagree on the exact scope of the co mmitments. In the view of the EU, anything 
that is not explicitly included in the scheduled limitation falls un der China's commitment to provide 
market access. Nothing in the text  of the reservations previously mentioned provides for a limitation 
on the number of service suppliers scheduled by China;  not in general terms, nor specifically in favour 
of China Union Pay. China did not argue otherwise in its First Written Submission. Furthermore, the 
EU notes that China does not seem to dispute the fact that the measures at issue in this dispute result 
in a privileged position for China Union Pay (China 's First Written Submission, paras 36-46, 54-57). 
It is therefore clear that in the absence of a sche duled limitation, China is subject to the obligations 
under Article XVI. WT/DS413/R/Add.1   
Page C-12  
 
  IV. WHETHER CHINA'S MEASURES ARE INCONSISTENT WITH ARTICLE XVII OF 
THE GATS 
14. In order to review a claim under Article XVII of  the GATS, one must assess: Firstly, whether 
China's Schedule of Specific commitments includes national treatment commitments on electronic payment services. Secondly, whether there are " like" services/suppliers. And thirdly, whether 
maintaining such measures amounts to less favourab le treatment than that granted to domestic 
services and suppliers; that is (a) whether the meas ure modifies the conditions of competition and (b) 
whether this modification is in favour  of domestic services and suppliers. 
15. In the few cases in which the term "like" as it appears in the GATS has been interpreted so 
far, the services and suppliers at issue were found to  be "like". This was done essentially by looking at 
the similarity of the activity performed and of the result of such activity (that is the service itself). 
16. The EU agrees with the reasoning of the pane l in China – Publications and Audiovisual 
Products, also referred to by the US in its Firs t Written Submission. In that case the panel took the 
view that when origin is the only factor on whic h a measure bases a difference of treatment between 
domestic service suppliers and fore ign suppliers, the "like service s uppliers" requirement is met, 
provided there will, or can, be domestic and foreign suppliers that under the measure are the same in 
all material respects except for origin. On the basi s of the information presently before it, the EU 
observes that the measures at issue in this dispute appear to differentiate so lely on the basis of the 
identity of the service supplier. 
V. RELATIONSHIP BETWEEN ARTICLES  XVI AND XVII OF THE GATS 
AGREEMENT 
17. In the absence of scheduled limitations, Article XVII GATS prohibits any form of 
discrimination, de facto or de iure, against fo reign services and foreign service suppliers. As this 
provision applies to all measures affecting service supply, it also covers any discriminatory measure 
of the types mentioned under Article XVI:2 GATS. In  that respect it overlaps with Article XVI. More 
specifically, any measure that falls under Article XVI :2(a)-(d) that restricts market access and that is 
discriminatory, and all discriminatory restricti ons concerning legal entity or foreign equity 
participation that fall under Article XVI:2(e)-(f), would then be covered by the Articles XVI and 
XVII. 
18. The text of Article XX:2 GATS confirms that  there is a potential overlap between Articles 
XVI and XVII GATS and provides guidance on avoi ding problems and unintentional commitments 
when scheduling limitations. Following Article XX:2 , Members that have scheduled as limitations in 
their market access column any of the measures li sted under Article XVI:2, do not need to schedule 
such limitations twice. But in order to exempt th emselves from obligations under Article XVII, they 
would still have to schedule in the national treat ment column any discriminatory measure that does 
not fall under the categories set out in Article XVI:2. 
19. Article XX:2 establishes a hierarchy with respect  to the scheduling of limitations to specific 
commitments under Articles XVI and XVII GATS. However, it does not establish a hierarchy as to 
the substance of those provisions.   WT/DS413/R/Add.1 
Page C-13 
 
 
 ANNEX C-4 
 
INTEGRATED EXECUTIVE SUMMARY OF THE  
THIRD PARTY WRITTEN SUBMISSION AND ORAL STATEMENT OF JAPAN 
 
 
I. THE SERVICES AT ISSUE 
1. The United States describes the services at issue as "electronic payment services" ("EPS") 
supplied either on a cross-border (Mode 1) or comme rcial presence (Mode 3) basis.  In its panel 
request, the United States indicates that EPS involve  "[…] the services through which transactions 
involving payment cards […] are processed and thro ugh which transfers of funds between institutions 
participating in the transactions  are managed and facilitated."1 
2. In response, China contends in its First Writte n Submission ("FWS) that the services at issue 
must be determined by taking into account the overlap  of two factors: (1) the United States' definition 
of the services at issue, as set out in the panel request; and (2) the scope and effect of the challenged measures.
2  Thus, China concludes that the services at  issue are limited to what China describes as 
"network services".3  Since the definition of the services at i ssue can influence all issues related to the 
application of the GATS, Japan would request the Panel to carefully examine the definition of the 
service at issue.  
II. CHINA'S GATS COMMITMENTS 
A. THE RELEVANT SECT OR OR SECTORS  
3. The United States claims that the EPS it has iden tified are covered by sub-sector 7.B(d) of 
China's GATS Schedule.4  In response, China contends that there is no specific commitment in its 
Schedule which is relevant to the services at issue,  and rather that they are classifiable under item 
(xiv) of the Annex on Financial Services  which is unbound in China's Schedule. 
4. Although what the relevant service sub-sector or sectors are in this dispute is still not 
definitive, Japan would recall that, as the Appellate Body in US-Gambling made clear, the meaning of 
a GATS Schedule of a Member must be determined according to the rules contained in Article 31 of 
the Vienna Convention on the Law of Treaties ("Vi enna Convention") and, if necessary, Article 32.5 
1. Sub-sector 7.B(d) of China's GATS Schedule 
5. Two parties have drawn different conclusions  regarding the meaning and scope of its 
commitments in sub-sector 7.B(d) of China's Schedul e.  The main point of contention is whether the 
phrase "All payment and money transmission services"  only covers services which actually involve 
                                                      
1 See footnote 1 of U.S. Request for the Establishment of a Panel, China – Certain Measures Affecting 
Electronic Payment Services , WT/DS413/2, February 11, 2011. 
2 First Submission of China, October 11, 2011 (China FWS), para. 61. 
3 Ibid., paras. 63-65. 
4 Sub-sector 7.B(d) of China's GATS Schedule provides that "All payment and money transmission 
services, including credit, charge and debit cards, travellers cheques and bankers drafts (including import and 
export settlement)". 
5 Appellate Body Report in United States – Measures Affecting the Cross-Border Supply of Gambling 
and Betting Services , WT/DS285/AB/R, para. 160. WT/DS413/R/Add.1   
Page C-14 
 
 
  making a payment or transmitting money, or whether the commitment also extends to any services 
which are "essential" to the execution of those services.6 
6. In this regard, Japan notes that item (xiv) of the Annex on Financia l Services concerning 
"settlement and clearing services for financial assets" is one source of relevant context.  The question 
is whether the service at issue involves "settlement" and/or "clearing services" within the meaning of 
item (xiv) which is unbound in China's Schedule. 
2. China's all or nothing proposition 
7. In its FWS, the United States argues that all of the services at issue fall within the scope of 
sub-sector 7.B(d).  Further, the United States reca lls that, as the Appellate Body stated in US-
Gambling, a specific service cannot fall within the two different sectors or sub-sectors since they are 
"mutually exclusive".7  In response, China argues that the Pa nel must refuse to find that any of the 
services at issue fall within the scope of sub-sector 7.B(d) if it agrees that three of the five services 
cited by the United States in its panel request fall wi thin "settlement" and/or "clearing" services within 
the meaning of item (xiv) of the Annex on Financial Services.8 
8. To the extent that any of the services do fall within the scope of "settlement and clearing 
services", it must be determined which service sector or  sub-sector (or sectors) is applicable to the 
remaining services.  In Japan's view, no Vienna C onvention principle would permit the Panel to find 
that the remaining services also fall within the sc ope of item (xiv) solely on the basis that the 
"majority" of the other services challenged fall within the scope of that provision.  Moreover, along the same lines, if the Panel finds that any of th e services at issue are classifiable under sub-sector 
7.B(d) of China's Schedule, the mere fact that the United States claims that all such services fall 
within the scope of China's commitment cannot pr eclude the Panel from analyzing the United States' 
claims with respect to any services which do fall within the scope of that sub-sector. 
3. Limitations on China's "payment and mone y transmission services" commitment 
9. If the EPS which the United States describes in its  panel request fully or partially fall within 
the scope of sub-sector 7.B(d) of China's GATS Schedule, a further issue is whether China has 
inscribed market access and national treatment limitations on the services at issue. 
10. The United States has clarified that it is pursu ing claims in relation to both Mode 1  and 
Mode 3 services for both Article XVI and Article XVII claims.  Furthermore, it has also frequently stated that China imposes no relevant limitations on both Mode 1 and 3 services in sub-sector 7.B(d) 
of its Schedule.
9  In response, China claims that it has no relevant commitment in sub-sector 7.B(d).  
As regards Mode 1, it states that it has inscribed "unbound" in the market access column for those 
services.  As regards Mode 3, China argues that its  commitments only apply with respect to financial 
institutions.   
11. In relation to Mode 1, Japan requests the Pane l to carefully consider the precise scope of 
China's sub-sector 7.B(d) commitment.  For Mode 3,  Japan specifically requests the Panel to consider 
whether the interpretation by China is consistent with  entries in other parts of its Schedule, especially 
those concerning "All Insurance and Insurance-Rela ted Services" and "Securities" which are also 
contained in Sector 7 on Financial Services.  Th e question is whether any entity that provides a 
                                                      
6 First Submission of the United States, September 13, 2011 (US FWS), para. 22. 
7 US FWS, para. 24. 
8 China FWS, paras. 89-93. 
9 See, e.g., US FWS, paras. 41,77.   WT/DS413/R/Add.1 
Page C-15 
 
 
 financial service covered by those commitments is n ecessarily included in the concept of "financial 
institution" under China's commitments. 
III. ARTICLE XVI OF THE GATS 
12. The United States considers that the measur es imposed by China on the supply of EPS are 
inconsistent with Article XVI:2(a) of the GATS becau se they limit the number of suppliers of EPS for 
renminbi ("RMB")-denominated transactions that are paid in RMB.10 
13. China does not contend that the measures at issue would not violate Article XVI:2(a) of the 
GATS, even if the relevant measures are bound by its market-access commitm ents.  Nevertheless, 
should the Panel determine that Article XVI is applic able to the measures in question, it needs to be 
specifically considered whether the United States has demonstrated a prima facie case.11  Thus, if the 
services which the United States complains about ar e only partially covered by China's commitments, 
the Panel should ensure that the United States has demonstrated that the relevant measure (or set of 
measures) affects the supply of the covered servi ce and otherwise has the Article XVI:2(a) impact 
which the United States claims (e.g. a monopol y) with respect to the covered service. 
IV. ARTICLE XVII OF THE GATS 
14. China contends that the Article XVII national treatment claims of the United States must fail 
on the basis that (1) they are the same measures that are the founda tion of its market access claims; 
and (2) Articles XVI and Article XVII are mutually exclusive.12  In other words, China seems to claim 
that any measure which violates Article XVI ca nnot constitute the violation of Article XVII. 
15. To support its view that Articles XVI and XV II are mutually exclusive, China points to 
Article XX:2 of the GATS.  In China's view, fi nding that measures which confer a monopoly contrary 
to Article XVI are also discriminatory under Article XVII would be directly contrary to this order of 
precedence established by Article XX:2.   China also notes that, if a monopoly could be 
discriminatory under Article XVII, separate and apar t from the effect that it has on market access 
under Article XVI, a Member would need to schedul e the "discriminatory" aspects of a monopoly in 
its national treatment column, even if it had left  market access unbound and thereby reserved the right 
to maintain exactly the same monopoly.13 
16. In Japan's view, the Chinese claim that Artic les XVI and XVII are mutually-exclusive needs 
to be examined by taking into account Article  XX:2 of the GATS and paragraph 18 of the 2001 
Scheduling Guidelines(S/L/92).14  Japan also ask the Panel to take into account the following: (1) 
whether the scope of the measures challenged by the United States under both Article XVI and 
Article XVII in fact overlap; and (2) whether the po ssibility for a measure to violate both Article XVI 
and Article XVII may depend on the way of committing market access a nd limitations applicable to 
the measure at issue. 
                                                      
10 US FWS, para. 37. 
11 See Appellate Body Report, US-Gambling , paras. 140-141. 
12 China FWS, paras. 148, 154-156. 
13 China FWS, para. 155. 
13 Ibid., paras. 155, 157. 
14 Guidelines for the Scheduling of Specific Commitments Under th e General Agreement on Trade in 
Services(GATS), adopted by the Council for Trade in Services on 23 March 2001, S/L/92, 28 March 2001. WT/DS413/R/Add.1   
Page C-16 
 
 
  V. ORAL STATEMENT  
A. INTRODUCTION  
17. Mr. Chairman, members of the Panel: Thank you for the opportunity to present the views of 
Japan in this third party session.  Today, Japan w ill focus on one point: namely, the extent of China's 
Mode 3 commitments for "All payment and money transmission services". 
18. If the Panel finds that all or part of the services at issue fall within the scope of "All payment 
and money transmission services", as contained in  sub-sector 7.B(d) of China's GATS Schedule, 
China takes the view that the Panel should dismiss a ll of the United States' claims related to Mode 3 
on the basis that its Mode 3 commitments are limited to "financial institutions".15  Japan will address 
whether China has in fact limited its Mode 3 "All payment and money transmission services" 
commitments to "financial institutions". 
19. It is worth noting, before arguing this issue in detail, that the China's argument is without 
merit if the term "financial institution" in China' s Schedule refers to all entities which supply financial 
services within the meaning of China's sector 7. B "[…] Financial Services" commitments on a 
"Mode 3" basis.16  In that case, it is, thus, unnecessary for the Panel to examine whether China has 
limited its Mode 3 commitments on "All payment and money transmission" only to "financial 
institutions". 
B. WHETHER CHINA 'S "ALL PAYMENT AND MONEY TRANSMISSION SERVICES " COMMITMENTS 
ARE LIMITED TO SERVICES SUPPLIED BY "FINANCIAL INSTITUTIONS " 
20. Regarding the existence of a "f inancial institution" limitati on, Japan understands China to 
argue that it has limited its "All payment a nd money transmission" Mode 3 commitments to a 
particular type of "service supplier" of a WTO Member, namely those which are "financial institutions". 
21. In Japan's view, there is nothing in the GA TS which would prohibit China from limiting the 
scope of its Mode 3 "All payment and money tr ansmission services" commitment to services supplied 
by "financial institutions".  The important questi on is whether China has in fact done this in its 
Schedule.  In US-Gambling, the Appellate Body recognized that the 1993 Scheduling Guidelines
17 
serve to assist parties in reviewing offers made by others Members and, moreover, that they constitute 
a supplementary source of interpretation within th e meaning of Article 32 of the Vienna Convention 
on the Law of Treaties.18  Likewise, in Japan's view, the 2001 Scheduling Guidelines constitute a 
supplementary source of interpretation.19 
22. Japan notes that the 2001 Scheduling Guidelin es set out the principle that GATS schedules 
should contain clear descriptions of limitations.  Th us, paragraph 3 of those Guidelines states that a 
                                                      
15 China FWS, para. 132. 
16 One reason for this is that "financial institution"  is not defined.  Absent a definition or any other 
commonly understood meaning, it seems that the term could be interpreted in a number of ways and, moreover, 
if China's suggested understandings are accepted, the scope of China's commitment could change over time 
depending on the evolving regulatory systems of other WTO Members.  Japan doubts that China would have 
wanted to formulate its commitments in such a manner.      
17 1993 Guidelines for the Scheduling of Specific Commitments under the GATS (Document 
MTN.GNS/W/164) (hereinafter "1993 Scheduling Guidelines"). 
18 See Appellate Body Report, US-Gambling , paras. 196 and 204.   
19 2001 Guidelines for the Scheduling of Specific  Commitments under the GATS (Document S/L/92), 
(hereinafter "2001 Scheduling Guidelines).   WT/DS413/R/Add.1 
Page C-17 
 
 
 schedule contains, inter alia, a clear description of limitations to market access and to national 
treatment.  Furthermore, paragraph 22 explains th at since "[s]chedules record, for each sector, the 
legally enforceable commitments of each Member", "[i]t is therefore vital that schedules be clear, 
precise and based on a common format and terminology."20  Moreover, Japan notes that the 
Guidelines seem to specifically contemplate the pr ecise situation where a Member only wants to bind 
its commitments with respect to a certain category of suppliers for a particular mode.  In this 
circumstance, the Guidelines state that this "may be achieved through an indication […] such as 
'Unbound except for measures affecting [the category of suppliers which the Member wishes to exclude]'".
21 
23. In scheduling its GATS commitments, there can  be little doubt that China applied the 
principles set out in the 2001 Scheduling Guidelin es and that other WTO Me mbers assessed China's 
offers in light of the Guidelines.  Therefore, in Japan's view, these Guidelines are an important source 
for interpreting China's GATS Schedule, i.e. for de termining what China meant to schedule and what 
other Member's understood China's Schedule to mean.  In this regard, Japan recalls that the task of 
ascertaining the meaning of a Schedule involves identifying the "common intention" of Members 
which is to be achieved by the customary rules of in terpretation of public international law codified in 
the Vienna Convention.22 
24. Following this guidance, therefore, one would expect some part of China's Schedule to state 
that its Mode 3 commitments for "All payment and money transmission services" are "unbound" to the extent that any measures affect service suppliers  which are not "financial institutions".  China's 
Schedule does not contain this or any similar language .  Japan therefore agrees  with Australia and the 
European Union that the absence of any "unbound excep t" or similar language strongly indicates that 
China's commitments are not limited to "f inancial institutions", as China contends
23 
25. In this regard, Japan notes that China did use su ch language in other parts of its Schedule to 
effectuate limitations on the type of service suppliers  covered by a commitment.  For example, in the 
horizontal section of its Schedule, for Mode 4 China explicitly inscribed "Unbound except for 
measures concerning the entry and temporary stay of natural persons who fall into one of the 
following categories […]."  In Japan's view, this fact  can also be "context" that strongly suggests that 
China's "All payment and money transmission serv ices" Mode 3 commitments are not limited to 
"financial institutions", as China contends. 
26. Although the use of "unbound except for" language would seem to be the expected means for 
limiting the scope of a commitment to a particular type of supplier, Japan would not exclude that 
China could have limited its Mode 3 commitments to  suppliers which are "financial institutions" in 
another manner.  However, in order to respect the "common" intention of the Members, any such limitation would need to be "clear" as the 2001 Sche duling Guidelines require.  In Japan's view, China 
did not do so by any means.  Thus, for example, if China had wanted to limit its commitments to 
"financial institutions", China could have stated  – as it did when noting limitations on forms of 
commercial presence in other parts of its Schedule – that its commitments were "only for service suppliers which are financial institutions".
24  China did not.  Moreover, it seems that China could have 
                                                      
20 In light of this fundamental need, the Guidelines  are therefore devoted to clarifying not only what 
items should be scheduled, but also how they should be scheduled. 
21 2001 Scheduling Guidelines, para. 45.   
22 See Appellate Body Report, EB- Computer Equipment , para. 84; Appellate Body Report, US-
Gambling , para. 159. 
23 See EU TPS, paras. 35-36; Australia TPS, para. 24 (see also paras. 25-26 of Australia's TPS). 
24 For example, in numerous parts of its Schedule and with respect to Mode 3 commitments, China 
often inserted the sentence that "Only in the form of jo int ventures, with foreign majority ownership permitted" 
(emphasis added). WT/DS413/R/Add.1   
Page C-18 
 
 
  made a distinct category for such a limitation as it did with respect to "geographic coverage" and 
"clients", for example.  Again, China did not. 
27. Therefore, Japan submits that China's Schedul e cannot be interpreted, as China claims, as 
limiting its commitments only to a particular type of  service supplier, namely "financial institutions", 
and that China has no limitations on "All paymen t and money transmission" Mode 3 commitments 
with respect to entities which are not "financial institutions".   WT/DS413/R/Add.1 
Page C-19 
 
 
 ANNEX C-5 
 
INTEGRATED EXECUTIVE SUMMARY OF THE THIRD PARTY WRITTEN 
SUBMISSION AND ORAL STATEMENT OF THE REPUBLIC OF KOREA 
 
 
1. This dispute raises an important issue regard ing the proper meaning of the entries contained 
in the Schedules of Specific Commitments that Chin a submitted at the time of its accession to the 
WTO in 2001.  It also rai ses a critical issue regarding ho w the terms contained in the Annex on 
Financial Services  of the GATS should be interpreted in terms of credit card or debit card 
transactions, which are indispensable to modern daily commercial activities.   
2. The measure challenged by the complainant is  China's requirement that all Electronic 
Payment Services ("EPS"), such as transactions us ing credit cards or debit cards, denominated in 
RMB should go through a designated bank - China UnionPay, Co. Ltd. ("CUP").  The complainant alleges that the respondent's me asure constitutes discriminatory treatment of foreign electronic 
payment services providers in terms of both market access and national treatment in a way that 
deviates from China's obligations under its Schedules  of Specific Commitment s.  These measures are 
therefore inconsistent with China's obligations under Articles XVI:1, XVI:2 and XVII of the GATS.  
3. In its third party submission, Korea offers its vi ews on two issues: (i) the interpretation of the 
term "settlement and clearing services for financia l assets" as it appears in Item (xiv) of the Annex on 
Financial Services  and (ii) identification of a measure at the WTO panel proceeding when multiple 
measures exert a single effect, bot h individually and collectively. 
4. First , Korea discusses interpretation of key terms rai sed in this dispute. Korea notes that the 
parties present two completely different interpreta tions of the terms.  The difference between the 
positions of the two parties hinges upon whether the EPS should be categorized as "payment and 
money transmission services" under Item (d) of China' s schedule (which is also identical with Item 
(viii) of the Financial Services Annex of the GATS)  or instead "settlement and clearing services for 
financial assets" under Item (xiv) of the Annex on Financial Services .  The United States supports the 
former view while China does the latter one.  
5. More specifically, China argues that the EPS at issue in this dispute constitute one form of 
clearing and settlement services for financial assets a nd thus should be classified under Item (xiv) of 
the Annex on Financial Services .  In Korea's view, China's point warrants a careful scrutiny from the 
Panel.  Korea submits, however, that the ordinary m eaning of the relevant term s in Item (d) and Item 
(xiv) together with their context apparently lead to  a different conclusion than the one China presents.  
In a nutshell, it seems that Item (xiv) of the Annex on Financial Services  addresses mainly paper-
based financial asset transactions which, in and of  themselves, represent or carry designated monetary 
value and which always require settlement and clear ing process to complete the transactions.  To the 
contrary, Item (d) apparently addresses payments thr ough the utilization of credit cards or debit cards.  
Item (xiv) is about "clearing" while Item (d) is about "payment."  Korea believes credit card and debit 
card are more directly related to "payment."  Thus, in Korea's view the U.S. interpretation seems more 
persuasive and reasonable under the general usage of  the terms as they are used in daily commercial 
activities.   
6. The term "financial assets" in Item (xiv) shoul d mean something of a financial value when we 
follow the ordinary meaning of the term.  To borro w the definition of the term proposed by China, it 
means "any revenue or monetary item that has value to its possessor."   In other words, it refers to an 
object or instrument that contains or represents some sort of monetary value to the owner.  It is not 
clear whether EPS such as "credit card transactions or debit card transactions" fall under this category.  
Most notably, credit card transactions or debit card transactions, in and of themselves, do not contain WT/DS413/R/Add.1   
Page C-20  
 
  or represent some sort of monetary value in them.  More properly understood, these are simply 
"payment" methods – a type of delayed payment depending on the credit of the card-holders, where 
the card-holders purchase products first, and th e actual payments are made afterwards.  
7. This conclusion is also supported when we cons ider the interpretation suggested by China.  
As noted above, China interprets the term "finan cial asset" as any reve nue or monetary item 
("financial") that has value to its possessor ("asset").   But, again, it is difficult to accept that a credit 
card transaction constitutes revenue or monetary item that has value to the merchant.  If anything, 
revenue or monetary gain is only provided when the payment is actu ally made, either through cash or 
credit card payment; thus a credit card transaction is  one method of such commercial payment.   
8. In addition, Korea draws the Panel's attention to the examples that immediately follow the 
term "financial assets" in Item (xiv) of the Annex on Financial Services : they are securities, derivative 
products and other negotiable instruments.  Obvious ly, as noted above, they all constitute financial 
assets.  At the same time, they all share one im portant commonality, in that they are all written 
documents that signify or carry some sort of monetary value.  At the same time, all of them can change hands, from one person to anot her (thus "negotiable").  But, again, the credit card or credit 
card transaction does not fall under this category: it does not carry any instrument that signifies the 
entitlement to cash payment afterwards.  The cred it card or credit card transaction itself does not 
signify or carry some sort of monetary value: the monetary value lies in the product that the card-holder purchases with the credit card.  Nor does th e credit card transaction involve "changing hands" 
as other examples do in Item (xiv).  Thus, Kor ea sees a significant difference between the two.  
9. As the EPS should be covered by Item (d) of  the China's schedule, China is under the 
obligation to comply with the terms and conditions set out in its schedule regarding the market access 
and national treatment.   
10. Korea's second point concerns the identification of a measure in this dispute.  The United 
States presents a series of legal instruments that, individually and collectively, indicate China's policy 
that all transactions denominated and paid in RM B in China must be processed and cleared in RMB 
through CUP. 
11. If individual measures are inter-related and comp lement and supplement each other in a way 
that introduces one general scheme, Korea submits that both individual measures and collective measures should constitute the cha llenged measures, respectively.   
12. This approach is also supported by  the Appellate Body precedents.  In U.S.-Zeroing (EC)  
(21.5) , the Appellate Body explicitly upheld the nexus based approach while rejecting a "formalistic 
reliance on the date of issuance of the [individual m easures]."  Although the Appellate Body in that 
dispute discussed this matter in terms of an implem entation dispute, such an analysis should equally 
apply to original disputes where, as here, all individual measures individually and collectively 
constitute one single scheme of CUP-only EPS system .  Arguably, there seems to exist a sufficient 
close nexus among the individual measures identified in the U.S. First Written Submission. 
13. Also, in a recent dispute, a WTO panel a dopted a similar approach.  The panel in U.S.-Tuna II  
stated in recent finding that it "must therefore consider whether these various instruments taken together may be described as constituting the measures before us."   The panel also stated that the 
question it must consider "is whether it is appropr iate to consider these measures jointly in our 
analysis of Mexico's claims, and make findings b ased on their combined operation, rather than on the 
basis of each individual measure separately."   The sa me rationale should be e qually applicable to the 
present dispute.     WT/DS413/R/Add.1 
Page C-21 
 
 
 14. In conclusion, Korea respectfully submits th at in reaching its decision in this important 
dispute, the Panel should ensure that the provisions of the GATS are construed in their proper context, 
which will give effect to the ordinary meaning of the terms consistently with the context, object and 
purpose of the agreements as a whole. 
 
_______________ 
 
    WT/DS413/R/Add.1 
Page D-1 
 
 
  ANNEX D 
 
EXECUTIVE SUMMARIES OF THE SECOND WRITTEN SUBMISSIONS  
OF THE PARTIES 
 
Contents Page 
Annex D-1 Executive summary of the second written submission of the United States D-2 
Annex D-2 Executive summary of the second written submission of China D-11 
 WT/DS413/R/Add.1    
Page D-2  
 
  ANNEX D-1 
 
EXECUTIVE SUMMARY OF THE  
SECOND WRITTEN SUBMISSION OF THE UNITED STATES 
 
 
I. INTRODUCTION 
1. China created and maintains a monopoly for Chin a UnionPay, Co. Ltd. ("CUP") to supply the 
service necessary for credit, charge, debit and other payment card transactions to occur in China for 
all transactions where the card is issued in China and used in Ch ina.  Such transactions, whether 
RMB-payment card transactions or transactions us ing foreign currency denominated payment cards 
issued in China, constitute the overwhelming num ber of all payment card transactions in China. 
2. The evidence and arguments adva nced by the United States also  establish that the service at 
issue is a single, integrated service falling with in subsector (d) of China Schedule of Specific 
Commitments:  "All payment and money transmis sion services, including credit, charge and debit 
cards…"  China undertook both mode 1 (cro ss-border) and mode 3 (commercial presence) 
commitments with respect to subsector (d).  Finall y, China's measures are inconsistent with China's 
obligations under Articles XVI:1  and XVI:2 of the General Agreement on Trade in Services 
("GATS") not to adopt or maintain measures of the types listed in Article XVI:2, and with China's 
obligations under GATS Article XVII to accord to ser vices and service suppliers of any other Member 
treatment no less favorable than that it accords to its own like services and service suppliers, in 
respect of all measures affecting the supply of services. 
II. EPS FOR PAYMENT CARD TRANSACTIONS IS A SINGLE, INTEGRATED 
SERVICE THAT FALLS WITHIN THE ORDINARY MEANING OF SUBSECTOR 
(D) OF CHINA'S SCHEDULE  ("ALL PAYMENT AND MONEY TRANSMISSION SERVICES, INCLUDING CREDIT, CHARGE AND DEBIT CARDS…")  
3. As the United States has demonstrated, EPS for payment card transactions is a single, 
integrated service – one that is supplied and cons umed as such.  The extens ive evidence provided by 
the United States demonstrates that EPS is at the cen ter of all payment card transactions and without 
this service the transactions could not occur.  EPS fall within the ordinary meaning of payment and 
money transmission services, within subsector (d) of China's Schedule.  The language of subsector (d) 
itself makes this abundantly clear.  EPS clearly fall within the ordinary meaning of "payment and 
money transmission services" as one type of "all" su ch services.  In addition, the phrase "all payment 
and money transmission services" is modified with an illustrative list that explicitly provides that it 
"include[s] credit, charge and debit cards."  The e xplicit reference to these types of cards is in line 
with the recognition that EPS is integral to the processing of credit, charge , debit and other payment 
card-based electronic payment transactions, and without EPS, payment card transactions could not 
occur.   
4. China tries to delink and disaggregate certain components of EPS that are central to payment 
card transactions.  China combines its disaggr egation strategy with an exceedingly narrow 
interpretation of its commitments, arguing that on ly issuing and acquiring services are covered by 
subsector (d).  Indeed, China has declined even to provide a respon se to the question of where – even 
under its flawed disaggregation theory – rema ining elements of EPS should be classified, 
underscoring the difficulty of its position.   Simply , China's arguments cannot be reconciled with the 
text of its commitments or how the service at issue operates in practice. 
5. Contrary to China's assertions, EPS for paymen t card transactions constitutes one integral 
service.  The service is supplied as coherent whole.   A supplier of EPS enables cardholders' banks to   WT/DS413/R/Add.1 
Page D-3 
 
 
  pay merchants' banks the amount they are owed.  EPS suppliers provide an efficient, timely and 
reliable means to facilitate the transmission of fu nds from the holders of payment cards who purchase 
goods or services to the individuals or businesses that supply them.  The network, rules and procedures, and operating system that are part of the EPS architecture allow merchants to be paid the amounts they are owed and ensure that cardholders pa y what they owe.  EPS suppliers receive, check 
and transmit the information that the parties need  to conduct the transactions, and manage, facilitate, 
and enable the transmission of funds between pa rticipating entities.  The rules and procedures 
established by the EPS supplier give the payment system stability and integrity, and enable it 
efficiently to handle net flows of money among th e institutions involved in card payments.  Each 
component is critical to effectuate the payment card transaction and EPS suppliers provide the entire 
package of services to their customers, the institu tions that are participating in the payment card 
transactions. 
6. Regarding China's assertion that the approach described by the United States (and endorsed 
by several third parties) would somehow undermine the GATS and the principle of mutual exclusivity, this argument is also misplaced.  To th e contrary, if China's position were accepted – that 
a service must first be disaggregated into subcomponents and each subcomponent separately 
classified – it would render Members' concessions meaningless for a wide range of services. 
III. EPS FOR PAYMENT CARD TRANSACTIONS DOES NOT FALL WITHIN ITEM 
(XIV) ("SETTLEMENT AND CLEARING SERVICES FOR FINANCIAL ASSETS, INCLUDING SECURITIES, DERIVATIVE PRODUCTS AND OTHER NEGOTIABLE INSTRUMENTS") 
7. China relies on an exceedingly narrow reading of  subsector (d) that essentially reads the 
qualifying word "all" out of the sectoral description of "all payment and money transmission services, 
including credit, charge, and debit cards…" and on ar guments that fail to accoun t for the fact that EPS 
are at the heart of credit, charge and debit card transactions.  Moreover, China's exceedingly narrow 
reading of subsector (d) stands in stark contrast to China's exceedingly broad interpretation of item 
(xiv) of the Annex.  China's broad reading is comb ined with an incorrect understanding of the services 
in item (xiv) that places China's interpretation at od ds with fundamental, recognized differences in the 
operation and risk profile of financial services unde r item (xiv) and services related to retail payment 
processing, such as EPS for payment card transactions.   
8. The same rules of treaty interp retation that compel the conclusion that EPS for payment card 
transactions fall within subsector (d) also co mpel the conclusion that EPS for payment card 
transactions do not fall within item (xiv).  In  this regard, Article 31(1) of the Vienna 
Convention requires that the terms "settlement and clearing services for financial assets, including securities, derivatives and other negotiable instrument s" be interpreted "in good faith in accordance 
with the ordinary meaning to be given to the terms of  the treaty in their context and in the light of its 
object and purpose."  Various commentaries on the Vienna Convention point out that "ordinary 
meaning" cannot be analyzed independently from the other interpretive elements described in 
Article 31, including "context."   
9. China's position is inconsistent with the ordina ry meaning of "settlement and clearing services 
for financial assets" and also fails to recognize that  item (xiv) is a substantially different financial 
service than EPS for payment card transactions, which is a type of retail payment service.  The BIS 
CPSS has explained that "[r]etail payments are generally classified as cash payments or non-cash 
payments," which are subclassified into "cheque paym ents, direct funds transfers and card payments."  
Indeed, there are many practical differences between the systems used to settle and clear investment 
instruments of the kind referenced in item (xiv) and the systems used to settle and clear retail payment 
instruments, like payment cards.  These differences relate to: (1) the financial instruments involved 
and the value of typical transactions, (2) the mark et participants involved in the transaction and WT/DS413/R/Add.1    
Page D-4  
 
  related processing; (3) the infrastructure needs for such processes to occur safely and efficiently; and 
(4) regulatory oversight and the relative risks presen ted to the financial system as a whole.   
10. China's position also fails to interpret the term "financial asset" within its immediate context, 
i.e., the full sentence in item (x iv).  An examination of each of  the items in the illustrative list 
demonstrate that retail receipts, such as a claim on a payment card, are not of the same type of 
financial assets as the items included in the illustra tive list – "securities, derivative products and other 
negotiable instruments."  This further supports the conclusion that they are not within the scope of 
"financial assets" referenced in the provision.  
11. A "security" is generally defined as "an instru ment that signifies an ownership position in a 
corporation (a stock), a creditor relationship with a corporation or government body (a bond) or rights 
to ownership…"  Securities are, in short, owners hip and investment instruments.  Credit and debit 
cards are not similar to securities.  Payment card s are retail payment instruments.  They provide a 
non-cash alternative for consumers to use when ma king purchases.  A payment card does not provide 
a pledge of property to secure a loan, it is not an investment instrument, and it is not tradeable on 
money markets or capital markets.     
12. Derivatives are also investment instruments.  A de rivative is "a financial contract the value of 
which depends on the value of one or more underlyi ng reference assets, rates or indices" such as 
futures contracts and options.  A payment card is not a contract whose value is dependent of the 
performance of some other asset or investment.  It is simply an instrument for making retail 
purchases.  
13. Payment cards and the sales slips generated from payment card transactions do not meet the 
internationally accepted criteria for a negotiable instrument.  A payment card transaction does not 
involve a written promise or order to pay that satis fies the definition above and, thus, does not involve 
a negotiable instrument.  Some payment card tr ansactions are processed entirely electronically, 
without the cardholder signing a sales slip and, thus, do not result in the creation of any writing, signed by the cardholder, either promising to pa y or ordering the payment of an amount to the 
merchant.  Other payment card transactions require the cardholder to sign a sales slip instructing the 
bank that issued the payment card to pay the merchant  for the transaction, but the sales slips created in 
connection with such transactions are not payable to bearer, but rather, are payable only to the 
identified merchant.  Finally, payment cards are not similar to the types of negotiable instruments referenced in Item (xiv), such as commercial paper,  which a type of investment instrument that is 
processed through settlement and clearing.  As noted, in context, the types of negotiable instruments 
referenced in item (xiv) are tradeable assets, and do not include instruments that are used for retail 
payments. 
IV. CHINA'S MODE 1 AND MODE 3 CO MMITMENTS FOR SUBSECTOR (D) "ALL 
PAYMENT AND MONEY TRANSMISSION SERVICES, INCLUDING CREDIT, CHARGE, AND DEBIT CARDS…" 
A. C
HINA 'S MODE 1 COMMITMENTS FOR "ALL PAYMENT AND MONEY TRANSMISSION 
SERVICES , INCLUDING CREDIT , CHARGE AND DEBIT CARDS…" 
14. It is plain from the text that China has ta ken mode 1 commitments for "all payment and 
money transmission services, including credit, char ge and debit cards…"  The word "Unbound" is 
followed by the qualifying phrase "except for the follo wing," which in turn is further elaborated by 
two sentences that describe elements of the servi ces within subsector (d) for which China has taken 
mode 1 commitments.  Proper treaty interpretation requires that the qualifying phrase "except for the 
following" and the further specific elaboration following the word "Unbound" should be given meaning.  In response to the Panel's questions, the United States prepared a chart in which it identified   WT/DS413/R/Add.1 
Page D-5 
 
 
  several aspects of EPS that are covered by th e mode 1 market access commitment undertaken by 
China.   
15. China's responses to the Panel's questions rega rding the meaning of the extensive language 
qualifying the term "Unbound…" essentially reduces to th e single point that all of the extensive 
language qualifying the term "Unbound" in its market commitments wa s provided simply to confirm 
language already existing elsewhere.  In short, accord ing to China, that the additional wording should 
be given no meaning.  This is not credible.  If Chin a wished to in fact be fully "Unbound," that is, not 
to have any commitments, it would have left th e word "Unbound" unqualified.  However, as the 
Schedule reflects, China did not do so.  It is not cr edible to argue that this language is merely for 
greater certainty to repeat China' s commitments in subsectors (k) and (l).  Such an argument fails to 
give meaning to this treaty language. 
16. The services defined by the sector and sub sector descriptions cannot be altered by the 
commitments made in the market access or nati onal treatment columns.  While a WTO Member may 
place limitations on the scope of its commitment with respect to a given sector, limitations inscribed in the market access and national treatment columns cannot change the scope of the sector description 
itself.    
17. Elements of CUP's own activities are described in  terms similar to the "excepted" elements 
that are set out in China's mode 1 market acc ess commitments.  The Chinese regulatory system 
similarly describes a primary activity of CUP as ex changing information among financial institutions.  
This is all of course consistent w ith the recognition that the ability to  "transfer financial information" 
and supply "advisory, intermediation and other auxili ary financial services" cross-border with respect 
to an integrated service (when the service supplier is located in a particular country) is often necessary 
for corporate risk management purposes and typically  occurs in the ordinary course of business.  
18. Finally, the concept that a service may include  elements of "provision and transfer of 
financial information, and financ ial data processing" was recognized, for example, in paragraph 8 of 
the Uruguay Round Understanding on Commitments in  Financial Services.  The provision and 
transfer of financial information and data proces sing is central to the supply of many different 
financial services, and, according to the Understa nding, signatory WTO Members cannot frustrate 
their commitments by, for example, blocking the ability to communicate and process information. 
B. C
HINA 'S MODE 3 COMMITMENTS FOR "ALL PAYMENT AND MONEY TRANSMISSION 
SERVICES , INCLUDING CREDIT , CHARGE AND DEBIT CARDS…" 
19. China has mode 3 market access and national tr eatment commitments for subsector (d).  The 
presence of the term "financial institution" in  China's schedule does not create a separate and 
independent limitation.  There is nothing in Ch ina's Schedule that indicates it may condition the 
supply of a service on the criteria listed in column 2 and in addition require that another Member's 
supplier meet additional (and unspecified) criteria to be recognized as a "foreign financial institution."  
The Schedule states that "[c]riteria for authorizatio n to deal in China's financial services sector are 
solely prudential."  Thus, under China's Schedule,  the only limitations China may impose are in 
connection with legitimate prudential regulation a nd the limitations explicitly listed in China's 
Schedule – the now defunct restrictions on geogra phic scope and use of domestic currency, and 
ongoing requirements applicable to banks.  The additional references to the term "financial 
institution" in the paragraphs that follow the explic it statement that the criteria are "solely prudential" 
does not alter that unequivocal statement as to the so le criteria for authorization to deal in China's 
financial services sector.  
20. The fact that subsector (d) falls under the head ing of "banking services" does not operate to 
limit China's commitments to "banks" or other "re gulated financial institutions" as China argues. The WT/DS413/R/Add.1    
Page D-6  
 
  "banking services" heading does not operate in this manner.  The characteristics and nature of the 
service control the classification of that service.  
21. It is also evident from China's Schedule itsel f that the term "banking services" listed in 
China's Schedule, including those listed in subsector  (d) are not limited to those provided by banks as 
China claims.  The definition of "financial servi ce supplier" in the Annex on Financial Services 
provides additional support in this regard:  "A fina ncial service supplier means any natural or juridical 
person of a Member wishing to supply or supplying financial services but the term ‘financial service 
supplier' does not include a public entity." This defi nition covers not only banks  but other suppliers of 
financial services, which supply or wish to supply fi nancial services within the meaning of the Annex. 
22. China also argues that its mode 3 market access and national treatment commitments for 
subsector (d) are limited to foreign financial ins titutions.  Although China includes certain limitations 
with respect to foreign financial institutions, this does not mean that its commitments are limited to 
foreign financial institutions.  Such a limitation would have needed to be imposed explicitly, and 
China did not do so.  Finally, even if it were the case that the term "finan cial institution" somehow 
served as a limitation in China's Schedule (and it is clear from the above that it does not), the 
definition of "financial institution" offered by Chin a is far too narrow.  Many definitions are much 
broader, and some explicitly include "a n operator of a credit card system."   
V. CHINA'S MEASURES ESTABLISHING AND SUPPORTING CHINA UNIONPAY'S 
MONOPOLY ON THE SUPPLY OF EPS ARE INCONSISTENT WITH ARTICLE XVI OF THE GATS  
23. The measures imposed by China on the supply of EPS are inconsistent with Article XVI:2 of 
the GATS because they limit the number of suppliers  of EPS for RMB-denominated transactions that 
are paid in RMB.  The evidence provided by th e United States demonstrates that China's measures 
limit the number of suppliers of EPS for payment card transactions.  China requires that all RMB-denominated payment card transactions in China be processed by CUP, and that CUP process all 
foreign currency denominated card transactions where th e card is issued in China.  In short, China 
requires that CUP process all payment card transactions  where the card is issued in China and used in 
China. 
24. During the Panel's first meeting with the Parti es, China asserted several times that the United 
States had failed to demonstrate that foreign EPS suppliers could not supply EPS for payment card 
transactions in China.  The Panel has now asked  China Question 22(b) from the Panel to China: 
25. Could China confirm that operators other than China UnionPay could be authorised to 
establish their own network and process domestic  RMB-denominated payment card transactions 
independently from China UnionPay's network?  If relevant, please identify legal instruments and provisions that address this. 
26. China did not answer the Panel's question.  This  is not surprising because, as the United States 
has demonstrated, in fact and as China's measures mandate, EPS suppliers other than China UnionPay 
cannot process domestic RMB-denominated payment card transactions in China.  EPS suppliers other 
than CUP cannot process any payment card transactions  in China where the car d is issued in China 
and used in China. 
27. Requirements that mandate the use of CUP and/ or establish CUP as the sole supplier of EPS 
for all domestic transactions denominated and paid in RMB.    
28. Even without considering Documents Nos. 94, 272 and 66, which China argues have either 
been repealed or replaced, the remaining instru ments establish and maintain the CUP monopoly in   WT/DS413/R/Add.1 
Page D-7 
 
 
  essentially three ways.  First, certain instruments ex plicitly state that CUP must be used to process 
specific types of transactions.  Second, certain instru ments establish and/or require the use of business 
specifications and technical standards which mandate the use of CUP.  Finally, certain instruments 
implicitly recognize that CUP is the sole supplier of EPS services for RMB denominated transactions.  
29. Several instruments independently designate CUP as a sole supplier.  Document No. 53 
(Exhibit US-51) is a primary example.  Article V. 2 of Document 53 states that "[d]omestic card 
transactions inside China shall be settled in RMB th rough domestic clearing channels . . . ."  CUP is 
the only "domestic clearing channel" and, therefor e, the only entity that can settle domestic card 
transactions.  Article V.3 sets forth procedures for correcting the erroneous processing of such 
transactions through an internationa l bank card organization.  Moreover,  Article VII.3 then states that 
"[d]omestic RMB card clearing organizations shall do a good job in the RMB clearing of domestic 
transactions of home-foreign currency cards."   These are foreign denominated currency payment 
cards that are issued in China. 
30. Document No. 16 (Exhibit US-44) states that, with respect to Hong Kong, "[m]atters in 
relation to individual RMB bank card clearing shall be organized and handled by the clearance banks 
and China UnionPay Joint Stock Co., Ltd."  Document No. 254 (Exhibit US-48) requires that CUP 
process RMB transactions involving RMB cards issued in China and used in Hong Kong or Macao, or 
involved RMB cards issued in Hong Kong or Macao and used in China.  Document No. 8 (Exhibit 
US-46) requires that CUP be used to clear RMB de nominated transactions in Macao.  China does not 
deny that CUP has a monopoly over such services.  Section 1.2 of Document 153 (Exhibit US-49) appears to explicitly recognize that "China UnionP ay is the domestic clearance organization which 
specializes in the RMB bank inter-bank informati on routing and exchange" (emphasis supplied).  
Other provisions of Document No. 153 appear to c onfirm the designation of CUP as the sole supplier. 
31. Section 2.2 of Document No. 37 (Exhibit US-40) states that cards that do not comply with 
"the unified requirements and the CUP logo usage requ irements" must be replaced and that, "[s]tarting 
in 2004, all bank cards not bearing a CUP logo will not be used for cross-region or inter-bank 
transactions."  Article 6 of Document 57 (Exhibit US-41) requires that all "regional bank card 
interoperability logos produced and designed regionally shall be gradua lly abolished."  Also, Article 6 
of Document 153 (Exhibit US-49) states that, in an y country where dual currency cards are used, "the 
Chinese issuing banks should support routing th rough the CUP network and open RMB accounts 
related transactions and settlements to the CUP netw ork."  Document 149 (Exhibit US-50) states that 
"acquiring organizations may not allow the non-CU P and non-PBOC 2.0 pre-payment cards to be 
accepted at any POS terminals."  Document No. 219 , Article III, prohibits processing of payment card 
transactions by third-parties, mandating that "no me rchant shall… authorize a third party to handle 
Renminbi card business or transfer such business to a third party." 
32. In addition, certain instruments establish and/ or require the use of business specifications and 
technical standards which mandate the use of CUP.  Document No. 76 (Exhibit US-56/US-63) 
includes the "Notice of People's Bank of China in Relation to Issuance of Business Practices for the 
Interoperable Services of Bank Cards,"  and an accompanying Appendix, which includes the "Business Practices for the Interoperable Services of  Bank Cards" ("Business Practices Appendix").  
The Business Practices Appendix requires that all dom estic transactions on domestically issued cards 
be processed over the network that was to become  CUP. Several of the 19 instruments explicitly 
require the use of uniform business specifications a nd technical standards, including:  Document No. 
37 (Exhibit US-40); Document 57 (Exhibit US-41); Document 153 (Exhibit US-49); Document 129 
(Exhibit US-53); Document 142, (Exhibit US-55); Document 49 (Exhibit US-62); Document 17 (Exhibit US-52); and Document 103 (Exhibit US-1) WT/DS413/R/Add.1    
Page D-8  
 
  33. Another category of instruments recognizes that CUP is the sole supplier of EPS services for 
transactions on cards issued and used in China.  These measures include, for example, measures 
related to fraud protection and si milar regulation which is explicitly directed only to CUP.   
34. Logo requirements on issuing institutions, requi rements related to POS terminals and ATMs, 
requirements on acquiring institutions, prohibitions  on the use of non-CUP cards and non-CUP EPS 
suppliers, and requirements for certain transactions involving RMB denominated cards issued and/or 
used in Macau and Hong Kong   
35. The collective effect of these me asures is to establish CUP as the sole entity able to provide 
EPS for payment card transactions in China where the card is issued in Chin a and used in China.  
Banks in China must use CUP's network in order to  issue or acquire bank card transactions.  Only 
CUP cards can be issued as RMB denominated cards .  The logo and interoperability requirements 
mean that that all banks that wish to acquire merchant transactions or  operate ATMs and all 
merchants who wish to accept bank cards must join  CUP and process transactions in accordance with 
CUP's rules and procedures as set out in Docu ment No. 76 (Exhibit US-56/US-63).  These 
requirements gave CUP automatic and universal ac ceptance of its RMB payment card products by 
banks and merchants in China and permitted and supported CUP beco ming the sole supplier of EPS in 
China.  These measures have entrenched CUP's mon opoly position.  Suppliers of EPS must ordinarily 
invest heavily and incur substantial expense to build acceptance of their payment card products by 
merchants, often in vigorous competition with other supp liers of EPS.  All transactions that take place 
involving cards issued in China and used for tran sactions in China must be processed over CUP's 
network as well as transactions involving RMB denomi nated cards issued and/or used in Macau and 
Hong Kong.   
VI. CHINA'S MEASURES ACCORD LESS FAVORABLE TREATMENT TO FOREIGN 
EPS SUPPLIERS 
36. A national treatment commitment under Article  XVII of the GATS obligates a WTO Member 
to accord services and service suppliers of other Memb ers "treatment no less favorable than that it 
accords to its own like services and services suppliers."   Article XVII:2 specifies that a Member may 
meet this requirement in instances in which it accord s foreign services or suppliers formally different 
treatment.  Article XVII:3 defines treatment as "less favorable" if it "modifies the conditions of 
competition in favour of services or service suppliers of the Member."   
37. The measures at issue affect the supply of servi ces in two principal ways.  First, there are 
measures that impose a limitation such that CU P is the sole entity that can process certain 
transactions, such as domestic RMB transactions.  This  of course means that foreign suppliers of EPS 
are prevented from supplying the service at all.  Second, there are measures that promote CUP's 
position in the marketplace such as by imposing cer tain requirements on every key player in a card-
based electronic payment transaction, including issu ers (all cards issued in China for domestic RMB 
transactions must bear the CUP logo), merchants (all merchant card processing equipment and POS 
terminals must accept CUP cards), and acquiring institutions (which must post CUP logo and accept 
CUP cards).        
38. The United States has explained how China's m easures affect every aspect of a card-based 
electronic payment transaction and the key players – issuers, acquiring institutions, merchants, and 
EPS suppliers – involved in such transactions.   
39. China's measures ensure that CU P is the sole supplier of EPS for payment card transactions in 
China where the card is issued in China and used in  China, and for certain payment card transactions 
involving Hong Kong and Macau.  The description of the scope of CUP's business in CUP's Articles 
of Association, CUP's "Notification of Business License Approval and Issuance," and PBOC's reply   WT/DS413/R/Add.1 
Page D-9 
 
 
  with respect to the establishment of CUP clearly establish that CUP is to be the single nationwide 
inter-bank card network.  Additi onal provisions prohibit processing of  transactions by third-parties 
(i.e., any network other than CUP).  China's measu res discriminate against foreign suppliers of EPS 
by either categorically precluding their participati on in the market, or by modifying the conditions of 
competition among the key participants – issuers,  acquiring institutions, merchants, and the EPS 
supplier – in card-based electronic payment transactions.   
40. China's measures require that any payment car ds used only for RMB purchases in China, as 
well as any dual currency cards issued in China, bear the CUP logo.  No other EPS provider is 
afforded such a privilege.  Any issuer of payment car ds in China is required to have access to the CUP 
system (and to pay for that privilege) and, as a result, issuers have no reason to seek alternative 
suppliers of EPS.  The logo requirements also operate  such that even if a card was issued with the 
logo of a foreign EPS supplier, CUP would also obtain an advantage as the CUP logo would have to appear on the card as well. 
41. Similarly, China's measures require all ATMs, POS terminals, and merchant card processing 
equipment accept CUP cards.  Once again, no forei gn EPS supplier is afforded  a similar privilege.  
Moreover, even were a foreign supplier of EPS able to create or secure access to a POS terminal, then 
China's measures would still provide CUP with an advantage because of the requirement that all 
ATMs, POS terminals, and merchant card processing equipment accept CUP cards.   
42. For the same reasons, China's measures requiring th at all acquiring institutions in China post 
the CUP logo and accept all cards bearing that l ogo distort the competitive relationship between CUP 
and foreign suppliers.   No forei gn EPS supplier is afforded a simila r privilege.  Acquiring institutions 
have important relationships with  merchants, often providing POS terminal and processing equipment 
to merchants so it can process payment cards.  Acqui ring institutions also maintain the merchant's 
account, handle relations with the merchant, and ensu res that payments are properly credited to the 
merchant. 
43. The broad prohibitions on the use of non-CUP car ds and that prevent foreign suppliers of EPS 
have similar adverse effects on competition and oper ate to accord less favorable treatment to foreign 
EPS suppliers.  China requires that all inter-bank tr ansactions for all bank cards be handled through 
CUP.   
44. Finally, the requirements pertaining to card-based  electronic transactions in China, Macao and 
Hong Kong also modify the conditions of competition and operate to accord less favorable treatment 
to foreign EPS suppliers.   China requires that CU P be used to handle all RMB transactions in Macao 
or Hong Kong using bank cards issued in China.    China also requires that CUP be used to handle any 
RMB transactions in China using RMB cards issued in Hong Kong or Macao.    
45. These measures affect the conditions of compe tition in the supply of EPS within the meaning 
of Article XVII because they directly regulate th e terms on which they may be provided.  The 
measures at issue provide different treatment sole ly according to the identity of the EPS supplier:  
CUP or not CUP  
46. The effect of these measures is to completely  distort competition in China's market for EPS 
for payment card transactions.  These measures estab lish and maintain CUP the sole entity able to 
provide the full range of EPS for payment card transac tions in China where the card is issued in China 
and used in China.  Banks in China must join CUP in order to issue or acquire bank card transactions.  
Only CUP cards can be issued as RMB denomin ated cards.  The logo and interoperability 
requirements mean that all banks that wish to acqui re merchant transactions or operate ATMs and all 
merchants who wish to accept bank cards must join  CUP and process transactions in accordance with 
CUP's rules and procedures as set out in Docu ment No. 76 (Exhibit US-56/US-63).  These WT/DS413/R/Add.1    
Page D-10  
 
  requirements gave CUP automatic and universal ac ceptance of its RMB payment card products by 
banks and merchants in China and permitted and supported CUP beco ming the sole supplier of EPS in 
China.  No foreign EPS supplier enjoys any of thes e advantages and CUP is not constrained in the 
ways in which foreign EPS suppliers are constrained. 
47. The measures at issue were meant to favor the domestic Chinese entity and accordingly 
discriminate on that basis.  They have been effectiv e in this regard and outside of China, with the 
ability to operate from its protected home market , CUP has become a significant and increasingly 
active competitor.  CUP's Articles of Associati on are explicit that the company is "to provide 
advanced electronic payment technologies and specia lized services in connection with the inter-bank 
bank card information switching" and CUP's success in the global market for card-based electronic 
payment transactions reflects and is in accord with the "purpose of the company," which is to foster 
"and promote the rapid development of China's bank card industry." 
48. Finally, it is clear that CUP provides services for payment card transactions "like" those 
provided by foreign suppliers of EPS for paymen t card transactions and that the basis for the 
differential treatment by China in its measures is  ultimately one of origin, and the "like service 
suppliers" requirement of Article XVII is therefore satisfied.   
VII. CONCLUSION 
49. The United States respectfully requests that  the Panel find that China's measures are 
inconsistent with China's obligations under Artic le XVI:1 and XVI:2(a) and Article XVII of the 
GATS.  The United States further requests, pursuan t to Article 19.1 of the DSU, that the Panel 
recommend that China bring its measures into  conformity with its WTO obligations.   WT/DS413/R/Add.1 
Page D-11 
 
 
  ANNEX D-2 
 
EXECUTIVE SUMMARY OF THE  
SECOND WRITTEN SUBMISSION OF CHINA 
 
 
I. THE UNITED STATES HAS FAILED TO MEET ITS BURDEN OF PROOF IN 
RESPECT OF THE CLASSIFICATION  OF THE SERVICES AT ISSUE 
A. THE CLEARING AND SETTLEMENT SERVICES AT ISSUE IN THIS DISPUTE ARE CLASSIFIABLE 
UNDER ITEM (XIV) OF THE ANNEX  LIST 
1. Item (xiv) of the Annex list encompasses "s ettlement and clearing services for financial 
assets, including securities, derivative products, and ot her negotiable instruments".  The United States 
acknowledges that clearing and settlement services are "cen tral" to the services at issue in this dispute, 
and that these clearing and settlement services relate  to interbank claims for payment.  The only 
interpretative issue that remains is whether these clearing and settlement services are "for financial 
assets" within the ordinary meaning of that term, in its context and in light of the object and purpose 
of the agreement.   
1. Ordinary meaning 
2. It is axiomatic that "the words of the treaty fo rm the foundation for the interpretive process".  
"The meaning of a treaty provision, properly construed,  is rooted in the ordinary meaning of the terms 
used".  As China demonstrated in its first written submission, every definition of the term "financial 
assets" points to the same conclusion: it refers to "money and claims", including cash and any right to 
receive cash.   
3. The United States has offered nothing that is  relevant under Article 31 of the Vienna 
Convention that would contradict the ordinary mean ing of the term "financial assets" that China has 
put forward.  The only definition of the term "financial assets" to which the United States refers is the 
definition of this term in Article 8 of the U.S.  Uniform Commercial Code ("UCC").  But the United 
States fails to explain how the municipal law of a si ngle Member is relevant to the process of treaty 
interpretation under Article 31 of  the Vienna Convention.   
4. The inability of the United States to identify a co herent understanding of the term "financial 
assets" becomes most evident in its response to  Question 38(b) from the Panel, concerning asset-
backed securities.  The United States acknowledges,  as common sense dictates, that the "assets" in 
"asset-backed securities" are claims that an issu ing bank has against cardholders.  It then asserts, 
however, that "[t]he contractual obligation to pay is  only with respect to the issuing bank", and, for 
this reason, "only the issuing bank can securitize rece ivables."  According to the United States, it is 
only when credit card receivables are securitised th at they "could be deemed a financial asset." 
5. The United States seems to be suggesting that  issuing banks have no obligation to pay 
acquiring banks.  Obviously, this is incorrect – in the four-party model, the acquiring bank has a valid 
claim against the issuing bank, just as the issuing bank has a valid claim against the cardholder.  The 
U.S. solution to this flaw in its reasoning is to assert that the claim to payment only becomes a 
financial asset once it is bundled into an asset-backed security.  Again, this makes no sense – it is the 
fact that the claim to payment is already  a financial asset that allows it to be bundled into an " asset -
backed" security.   
6. The last refuge for the United States is to asser t that interbank claims for payment "are not 
transferable".  The notion that "transferability" is re levant to the interpretation of the term "financial WT/DS413/R/Add.1    
Page D-12  
 
  assets" is connected to the U.S. asser tion that item (xiv) is limited to instruments that "settle and clear 
like securities and derivative produc ts", an assertion that China rebuts below.  But in any event, the 
assertion that an acquiring bank's claim against an issu ing bank is not transferable is just that – an 
assertion.  The United States presents no evidence to support this claim. 
7. For these reasons, China considers that the ordinary  meaning of the term "financial assets" is 
uncontested in this dispute.  The ordinary meaning of this term includes cash and any right to receive 
payment.  The services at issue in this dispute in clude clearing and settlement services "for financial 
assets". 
2. Context 
8. Lacking any support for its interpretation of item (xiv) in the ordinary meaning of the term 
"financial assets", the United Stat es insists that its interpretation is  supported by the illustrative list of 
financial assets that appears in item (xiv): " securities, derivative products, and other negotiable 
instruments".  Even though the parties agree that these are merely three ex amples of what constitutes 
a "financial asset", the United States tries to work backwards from thes e examples to limit the 
ordinary meaning of the term "financial assets" to what it calls "tradeable financial instruments" or, 
alternatively, "tradeable investment instruments". 
9. As China has previously explained, the refere nce to "negotiable instruments" in item (xiv) 
unambiguously includes retail payment instruments su ch as cheques and traveller's cheques.  Like 
securities and derivatives, these are "financial assets " within the ordinary meaning of that term 
because they give rise to claims for payment.  As  context, the illustrative list of examples therefore 
confirms that the drafters of item (xiv) intended to  use the term "financial assets" according to its 
common and ordinary meaning.  Moreover, because item (viii) of the Annex  list provides examples of 
negotiable instruments as types of "payment services", the drafters understood that the clearing and settlement of these instruments unde r item (xiv) was distinct from the issuance and acceptance of 
these instruments under item (viii).   
10. Faced with these circumstances, the United States  had only one option: to deny the ordinary 
meaning of the term "negotiable instruments".  In response to the Panel's questions, the United States 
takes the extraordinary position that "[i]tem (xiv) only indicates that there are negotiable instruments 
that settle and clear like securities and derivativ e products … [and] to the extent a negotiable 
instrument appears in item (viii), it is not a nego tiable instrument referred to in item (xiv)." 
11. The objections to this line of reasoning are obvious.  First, why is the test whether a particular 
instrument is "settled and cleared  like securities and derivative products"?  Securities and derivative 
products are two of the three examples provided in the illustrative list: why do these two examples 
govern the meaning of the third example?  The relevant question is what these three examples have in 
common  that makes them non-exhaustive examples of the term "financial assets".  What they have in 
common, of course, is that they all give rise to cl aims for payment that need to be cleared and settled 
– not that they are "investment instruments".   
12. Second, and relatedly, what does it even mean fo r a particular type of financial asset to be 
"settled and cleared like securities and derivative produc ts"?  It is undisputed that cheques and other 
types of negotiable instruments need to be cleared  and settled.  While the United States insists that 
clearing and settlement services for securities and de rivatives "differ in crucial ways", it offers no 
explanation of why these alleged differences are releva nt to the interpretation of the term "financial 
assets" or somehow change the ordinary meani ng of the term "negotiable instruments".   
13. Finally, why would the drafters of the Annex  list refer to certain types of negotiable 
instruments in item (viii), but then not intend to ha ve these instruments covered by the reference to   WT/DS413/R/Add.1 
Page D-13 
 
 
  negotiable instruments in item (xiv)?  The United St ates asks the Panel to believe that the drafters 
drew an arbitrary distinction between different typ es of negotiable instruments – a distinction that is 
nowhere evident in the text.  Among other absurdities, the U.S. theory leads to the result that clearing 
and settlement services for certain types of negotia ble instruments are expressly covered by item 
(xiv), while clearing and settlement services for ot her types of negotiable instruments are somehow 
implied by "necessity" in item (viii). 
14. In sum, the overall U.S. interpretation of  item (xiv) is unmoored from any objective 
understanding of the ordinary meaning of terms and from the context in which those terms are used.  
According to the United States, the term "financial  assets" does not mean "financial assets" as that 
term is commonly understood, and neither does the te rm "negotiable instruments".  The United States 
purports to use the context of the illustrative list to inform its interpretation of the term "financial 
assets", but then gives the terms in the illus trative list their own special (and erroneous) 
understanding.  As a result, the U.S. interpretati on becomes hopelessly circular: the term "financial 
assets" is limited to "investment instruments", wh ich is demonstrated by interpreting the term 
"negotiable instruments" to be limited to "invest ment instruments".  Neither term means anything 
other than what the United States wants it to mean. 
3. Object and purpose 
15. It is well established that "the security and predictability of Members' specific commitments" 
is an important object and purpose of the GATS.  The interpretative approach taken by the United 
States is neither "secure" nor "predictable".  It is arbitrary, illogical, and completely unpredictable.  
The U.S. approach leads to an inte rpretation of China's Schedule and the Annex list in which nothing 
means what it says, services are not clearly defined, and, as a result, it is impossible to schedule and 
interpret specific commitments with any degree of  security or predictability.  This approach is 
manifestly contrary to the object and pur pose of the GATS, and must be rejected. 
4. Conclusion to Part A 
16. In China's view, the inability of the United Stat es to rebut China's interpretation of item (xiv) 
should bring this dispute to an end.  China will nonetheless proceed to discuss the U.S. interpretation 
of subsector (d) on its own terms.  As China will de monstrate, the U.S. interpretation of subsector (d) 
has effectively collapsed.  This confirms that the United States has failed to meet its burden of proof 
in respect of the classification of the services at issue. 
B. THE UNITED STATES HAS FAILED TO ESTABLISH THAT THE SERVICES AT ISSUE ARE 
CLASSIFIABLE UNDER SUBSECTOR (D) 
17. It is hard to know what is left of the U.S. in terpretation of subsector (d) following its answers 
to the Panel's questions.  In an effort to jam all of the services at issue in to the exception to China's 
unbound Mode 1 inscription for subsector (d), the Unite d States now takes the position that all five of 
the "components" of what it calls "electronic payment services" match the descriptions of 
subsectors (k) and (l).  The question that naturally arises is this: what is left of subsector (d)?  The 
United States continues to insist that the services described by subsectors (k) and (l) are "embedded in 
the core ‘payment and money transmission' services", but  there does not appear to be any "core" left.   
18. As best as China can understand the U.S. theo ry, the United States believes that the services 
described by any given subsector can become "embedde d" in another subsector if they are "central" to 
the provision of services under that other subsector.  That is, any service that is "central" to the provision of another service (or "necessary", "essential" , "at the heart of", etc.) ceases to exist as an 
independent subsector and merges into the other subs ector.  The U.S. theory would apply not only to WT/DS413/R/Add.1    
Page D-14  
 
  subsectors (k) and (l), but to any subsector with in the taxonomy of services that could be seen as 
"essential" or "central" to the provision of some other service. 
19. It is absurd for the United States to contend that this theory of "embedded" services is 
consistent with the principle of mutual exclusivity.   Its theory leads direc tly and inevitably to the 
collapsing of distinct subsectors into an indiscrimin ate mass of services.  Consider the reference in 
subsector (k) to "financial data processing and re lated software by suppliers of other financial 
services".  As the United States acknowledges, this subsector "applies only to suppliers who provide 
‘other financial services.'"  It is, by its express terms, a subsector that s upports the provision of 
services that are covered by other subsectors, and applies only in cases where the same service 
supplier is providing both sets of services.  Yet under the U.S. theory, subsector (k) automatically 
collapses into other subsectors whenever the services that subsector (k) describes are "integral" or 
"necessary" to the provision of another financia l service.  Under what circumstances would that not be 
the case?  When would subsector (k) ever apply as a distinct subsector?  The same problem would 
arise for countless other sectors and subsectors across the entire taxonomy of services that have relationships of "necessity" to each other.  
20. It is solely  on the basis of this "embedding" theory  that the United States finds any of the 
services at issue in this dispute to be classifiable  under subsector (d).  As discussed above, the United 
States fails to identify any service at issue in this dispute that is actually  a "payment and money 
transmission service", as opposed to what it alleges to be an "aspect" of subsector (k) or (l) that is 
"embedded" in "payment and money transmission services".  The United States has therefore failed to satisfy its burden of proving that the services at  issue in this dispute are classifiable under 
subsector (d). 
C. C
ONCLUSION TO SECTION I 
21. "[T]he absence of any relevant commitment … would suffice to dismiss this case."  That is 
the situation before the Panel.  China considers that  there is no legal basis for the Panel to proceed to 
an evaluation of any other issue in this dispute.  Fo r this reason, China sets forth the remainder of this 
submission on an arguendo  basis, accepting the U.S. position that the services at issue in this dispute 
are classifiable under subsector (d).   
II. THE UNITED STATES HAS FAILED  TO ESTABLISH THE EXISTENCE OF 
RELEVANT MARKET ACCESS AND NATIONAL TREATMENT COMMITMENTS FOR MODE 1 AND MODE 3 OF SUBSECTOR (D) 
A. M
ODE 1 
22. In its response to Question 7 from the Panel, the United States has revealed its true agenda in 
this dispute: to make it possible for companies lik e Visa and MasterCard to provide network services 
in China entirely  on a cross-border basis.  The United Stat es asserts, unabashedly, that "[t]he U.S. 
EPS supplier would have no or a very limited physical presence in China".  It then provides a lengthy 
description of how every aspect of what it calls "e lectronic payment services" would be provided on a 
cross-border basis.  In stark contrast, in respon se to Question 8 from the Pa nel, the United States 
offers a single perfunctory sentence about services that might be provided on a commercial presence 
basis in China.   
23. To suggest that the United States is trying to ha ve it both ways would be an understatement.  
The United States wants to prove its central assertion that  all of the services at issue in this dispute are 
classifiable under subsector (d).  At the same time, it wants to establish an unfettered right of market 
access for these services in th e cross-border mode of supply.  The small wrinkle in the U.S. plan is 
that China's Mode 1 market access entry for subsec tor (d) is unbound, except for the description of   WT/DS413/R/Add.1 
Page D-15 
 
 
  subsectors (k) and (l).  Therefore, the United States  needs the services at issue to be in two places at 
once: in subsector (d), and in subsector (k) or (l).   This is the genesis of its "embedded services" 
theory, discussed above. 
24. The absurd consequences of this  theory could hardly be more  evident than in the case of 
China's Mode 1 market access entry for subsector (d).  In order to give effect to China's unbound 
market access entry for subsectors (a) through (f), it is  critically important to be able to distinguish 
between those activities that are unbound in Mode 1 and those activities that meet the exception.   
25. As China described above, the United States associat es all five of the "components" of what it 
calls "electronic payment services" with the descriptions  of subsectors (k) and (l).  As a result, there 
appears to be nothing left in subsector (d).  It  is understandable why the United States does not want 
to identify the "core" services that, in its view, make  subsector (d) the linchpin of this dispute – the 
necessary implication would be that China has no Mode 1 market access commitment in respect of 
those services.  But for subsector (d) to be relevant at all, there must be something in subsector (d) to 
begin with. 
26. In sum, the United States cannot have it both wa ys – the services cannot be in subsector (d), 
and also in subsectors (k) and (l).  If the services  at issue are so "integral" or "essential" to 
subsector (d) that they become "embedded" in subsect or (d) under the U.S. theory, then it follows that 
they are among the services that are unbound in China's Schedule in the cross-border mode of supply. 
B. MODE 3 
27. China's market access and national treatment co mmitments in Mode 3 of subsector (d) are 
limited to foreign financial institutions.  Thus, even if the United States were to prove that the services 
at issue in this dispute are classifiable under subsector (d) – the premise of this entire section – it 
would still need to demonstrate that the terms, limitations, and conditions  inscribed in China's 
Schedule for Mode 3 do not preclude the U.S. claims in this dispute.   
28. The United States appears to have three conflic ting theories in respect of China's Mode 3 
commitments for subsector (d): (1) that networ k operators like Visa and MasterCard are "foreign 
financial institutions" within the ordinary meani ng of that term, and are entitled to market access 
under Mode 3 according to the same terms, limitati ons, and conditions that apply to other foreign 
financial institutions; (2) that ne twork operators like Visa and Mast erCard are not "foreign financial 
institutions" and are not subject to any of the terms, limitations or conditions on market access 
inscribed in China's Mode 3 entr y; or, (3) that network operators like Visa and MasterCard are not 
"foreign financial institutions", but are subject to the terms, limitations, a nd conditions on market 
access in Mode 3 as if the term "foreign financia l institution" were synonymous with the term 
"financial service supplier".  China will begin with  the theory that network operators like Visa and 
MasterCard are financial institutions.   
29. As China discussed in response to Question 61  from the Panel, network operators like Visa 
and MasterCard are not "financial institutions" with in any understanding of th is term.  Nor is CUP a 
"financial institution" under Chinese law.  But even if one were to accept the proposition that network 
operators are "financial institutions", or the equa lly erroneous proposition that the term "financial 
institution" is synonymous with the term "financi al service supplier", the United States would still 
need to demonstrate that its claims in this dis pute are consistent with the terms, limitations, and 
conditions inscribed in China's Schedule.  The Unite d States contends that "the only limitations China 
may impose are in connection with legitimate pruden tial regulation and the limitations explicitly listed 
in China's Schedule – the now defunct restrictions on geographic scope and use of domestic currency, 
and ongoing requirements applicable to banks ."  Yet the United States never explains what it 
considers these "ongoing requirements" to be, a nd why they are only "applicable to banks." WT/DS413/R/Add.1    
Page D-16  
 
  30. China's Mode 3 market access entry for sub sectors (a) through (f) clearly specifies the 
conditions that foreign financial in stitutions must satisfy in order to  engage in local currency business 
under any of these subsectors.  If the United States is correct that network operators like Visa and 
MasterCard are "financial institutions", or that the term "financial institution" is synonymous with the 
term "financial service supplier", then the licensing conditions inscribed in the market access column 
are applicable to these service suppliers.  These c onditions are applicable to "foreign financial 
institutions", not just "banks".  Moreover, it is clear  that the United States is claiming a right of market 
access to engage in "local currency business" under subsector (d).   
31. Perhaps in recognition of the problems that it faces in Mode 3, it appears that the United 
States is trying to preserve the alternative theory that network operators like Visa and MasterCard are 
not "financial institutions" and, as a result, are not subject to any limitations or conditions on market 
access and national treatment.  This theory leads to  the absurd conclusion that entities that are not 
financial institutions have an unlimited right to en ter the Chinese market for the purpose of supplying 
regulated banking services, while the types of financ ial institutions that actually supply these services 
are required to satisfy additional conditions on market access.   
32. In sum, no matter what theory the United States ultimately adopts on Mode 3, it has no place 
to land.  The correct answer is that network ope rators like Visa and MasterCard are not financial 
institutions of any sort, and therefore have no right of market access under China's Mode 3 commitments, even accepting the classification of the services at issue under subsector (d).  But even 
if Visa and MasterCard were financial institutions , the United States would still need to demonstrate 
that "EPS suppliers" satisfy the conditions on ma rket access and national treatment inscribed in 
China's Schedule for engaging in local currency business.  This it cannot do. 
C. C
ONCLUSION TO SECTION 0 
33. Even if the United States were to establish th at the services at issue in this dispute are 
classifiable under subsector (d), it has failed to pr ove that China undertook re levant market access and 
national treatment commitments in Mode 1 and Mode 3 in respect of these services.  As China 
explained in its first written submission, this is th e second juncture at which the U.S. claims in this 
dispute fail in their entirety.   
III. THE UNITED STATES HAS FAILED TO DEMONSTRATE A MONOPOLY BASED 
ON THE MEASURES AT ISSUE 
A. THE U.S.  "MONOPOLY " CLAIM UNDER ARTICLE  XVI:2( A) MUST BE BASED ON MEASURES 
THAT ARE WITHIN THE TERMS OF REFERENCE  
34. The United States is well aware that the specifi c legal instruments that it identified in the 
panel request do not support its "monopoly" claims in  this dispute, and so it now contends that there 
are "measures" at issue in this dispute that exist independently  of any particular legal instrument.  
Those "measures" are the six alleged "requirements" that  it invented for the purpose of this dispute.   
35. The situation before the Panel is highly remi niscent of the "total prohibition on the cross-
border supply of gambling and betting services"  that Antigua alleged to exist in US – Gambling .  Like 
Antigua, the United States appears to be arguing that  there are "measures" that the Panel can evaluate 
independently of the content of any particular law or  regulation.  Like the "t otal prohibition", the six 
"requirements" are meant to describe the effect of an unknown and unspecified set of laws and 
regulations, of which the instruments identified in  the panel request are merely "illustrative". 
36. In US – Gambling , the panel and Appellate Body flatly re jected this approach to identifying 
the measures at issue, and the Panel should do the same here.  Among other c onsiderations, the panel   WT/DS413/R/Add.1 
Page D-17 
 
 
  in US – Gambling  noted that "Article 6.2 of the DSU requires that measures be ‘specifically' 
identified in a panel request", a standard that ca nnot be met where the complaining Member purports 
to challenge any conceivable law or regulation that might be construed as having a particular "effect".  
37. While the analogy to US – Gambling seems more apt, one could also see the United States as 
alleging that the six "requirements" constitute unwritten  "rules or norms of general and prospective 
application" that are capable of being challenged as independent measures on an "as such" basis.  But 
in US – Zeroing (EC) , the Appellate Body held that a Member  seeking to challenge an unwritten rule 
or norm "must clearly establish, through arguments and supporting evidence, at least that the alleged 
‘rule or norm' is attributable to the responding Member; its precise content; and indeed, that it does 
have general and prospective app lication."  The Appellate Body considered that there is a "high 
threshold" for such claims.  The United States has no t even remotely met that high threshold.  It has 
presented no evidence whatsoever that these allege d "requirements" exist independently of the 
identified instruments. 
38. The six independent "measures" that the United States has invented are not "specific measures 
at issue" within the meaning of Article 6.2 of the DSU and are not within the Panel's terms of 
reference under Article 7 of the DSU.  The Panel mu st therefore reject this attempt by the United 
States to base its claims on anything other than th e legal instruments specifically identified in the 
panel request.  It is on the basis of these measur es that the U.S. claims must succeed or fail. 
B. THE UNITED STATES HAS FAILED TO ESTABLISH A "MONOPOLY " ON THE BASIS OF 
MEASURES THAT ARE WITHIN THE TERMS OF REFERENCE  
39. Turning to the measures that are within the term s of reference, the United States has failed to 
prove its claim under Article XVI of the GATS, even under its own theory of how to classify the 
services at issue and interpret China's commitments. 
40. It is worth recalling the six "requirements" th at the United States set out to prove in this 
dispute: (1) requirements that mandate the use of CUP and/or establish CUP as the sole supplier of 
EPS for all domestic transactions denominated and paid in RMB; (2) requirements on issuers that 
payment cards issued in China bear the CUP logo;  (3) requirements that all ATM and POS terminals 
in China accept CUP cards; (4) requirements on acq uiring institutions to post the CUP Logo and be 
capable of accepting all bank cards bearing the CU P logo; (5) broad prohibitions on the use of non-
CUP cards; and, (6) requirements relating to Chin a, Macao, and Hong Kong that mandate the use of 
CUP.  Of these six alleged requirements, the United States has failed to demonstrate that four of them 
have anything to do with the maintenance or adopt ion of a limitation on market access "in the form 
of" a monopoly or exclusive service supplier arrangement.   
41. Requirements 2, 3 and 4 relate to the use of  the CUP logo and the ability of financial 
institutions to process transactions made with CUP cards.  As China explained in its responses to 
questions from the Panel, these measures estab lish a common national network for processing 
domestic interbank payment card transactions by ensu ring that all interbank payment cards and POS 
devices adhere to a common technical standard, a nd by requiring all banks that issue interbank 
payment cards to be members of a common netw ork.  Because the United States has failed to 
establish that these measures impose "quantitative, or  ‘quantitative-type'" limitations on market 
access, they are irrelevant to the U.S. claim under Article XVI:2(a). 
42. With respect to the sixth alleged requireme nt, concerning Hong Kong and Macao, the United 
States has failed to establish how this requirement is relevant to China's market access commitments 
for subsector (d).  Pursuant to Article XVI:2 of the GATS, a Member's market access commitments 
impose limitations on the measures that a Member may maintain or adopt "either on the basis of a 
regional subdivision or on the basis of its entire territory , unless otherwise specified in its Schedule".  WT/DS413/R/Add.1    
Page D-18  
 
  In other words, a Member's Schedule implicates the provision of services in the territory of that 
Member .  In the current dispute, this means that Chin a's commitments relate only to the provision of 
services in China , and not to the supply of services in the territories of other Members.  For this 
reason, there is no legal basis to find that th e measures relating to Hong Kong and Macao contain 
"quantitative, or ‘quantitative-type'" limita tions on market access within the scope of 
Article XVI:2(a). 
43. Having dispensed with requirements 2-4 and require ment 6, this leaves the first of the alleged 
requirements, i.e., "requirements that mandate the use of CUP and/or establish CUP as the sole 
supplier of EPS for all domestic transactions denom inated and paid in RMB", and the fifth of the 
alleged requirements, i.e., the "broad prohibition on the use of non-CUP cards".  China will address 
these two requirements collectively as measures th at the United States believes to require the 
processing of domestic, RMB-denominated interb ank payment card transactions over the CUP 
network. 
44. Exhibit CHI-74 accompanying China's response to Question 22(a) from the Panel is a table 
that indicates all of the provisions of the measures: (1) that were in effect on the date of establishment 
of this Panel; and (2) that the United States has cited in support of its allegation that CUP has a 
"monopoly" on the processing of domestic interbank payment card transactions.  In the last column of this table, China explains why each of the five provisions cited by the United States does not require 
domestic interbank payment card transactions to be processed over the CUP network. 
45. Unable to demonstrate the existence of a "monopol y" on the face of the measures at issue, the 
United States resorts to creative juxtapositions and rewordings of different measures.  For example, 
the United States interprets Article I.2 of Docume nt No. 153 to state that "China Union Pay is the 
domestic clearance organization".  Based on this mi sinterpretation, it concludes that "CUP is the only 
‘domestic clearance organization'", even though the wo rd "only" is nowhere to be found in the text.  
In fact, Article I.2 states that "China Union Pay is a domestic clearance organization", not that it is 
"the" domestic clearance orga nization, let alone "the only" domestic clearance organization.  But this 
does not stop the United States from carrying its misinterpretation over to a different document, 
Document No. 53, where it interprets the terms "domestic clearing channe ls" and "domestic RMB 
clearing organizations" to refer exclusively  to CUP.  Document No. 53 does not even refer to CUP by 
name, much less confer any sort of monopoly upon it. 
46. The fact that the United States must resort to th is sort of manipulation of the measures merely 
confirms that it is unable to prove its case under Ar ticle XVI:2(a).  Not a si ngle one of the provisions 
cited by the United States even remotely im poses a quantitative or quantitative-type limitation on 
market access "in the form of" a monopoly or ex clusive service supplier arrangement.  For these 
reasons, the Panel must reject the U.S. claim under Article XVI:2(a), even assuming that all of the 
services at issue are classifiable under subsector (d) and that the United States has established the 
existence of relevant market access commitments. 
IV. THERE IS NO BASIS FOR THE U.S. NATIONAL TREATMENT CLAIMS IN THIS 
DISPUTE 
47. The parties do not dispute that an entry of "u nbound" in the market access column means that 
a Member has reserved the right to adopt or main tain any of the types of measures listed in 
Article XVI:2.  Nor do the parties dispute that the types of measures listed under Article XVI:2 can be 
either discriminatory or non-discriminatory (exc ept for Article XVI:2(f), which is inherently 
discriminatory).  It follows that a Member that has left a particular subsector and mode of supply 
unbound is free to adopt or maintain measures under Article XVI:2, including measures that are 
discriminatory, and that any such measure cannot  simultaneously be the subject of a claim under 
Article XVII.  Allowing such a claim would be co ntrary to the meaning of the term "unbound", and   WT/DS413/R/Add.1 
Page D-19 
 
 
  contrary to the intention, reflected in Article XX:2, to leave measures of the type listed under 
Article XVI:2 governed exclusively by th e entry in the market access column. 
48. The United States does not have a meaningful r esponse to this conclusion.  In response to 
Question 69(b) from the Panel, it asserts that "[i] f a Member had no commitments with regard to 
Article XVI, but a full commitment with regard to  Article XVII, that Member could not retain a 
market access restriction that was simultaneously inc onsistent with national treatment."  It claims that, 
in these circumstances, the "Member could come in to … compliance with its obligations by removing 
the national treatment inconsis tency, while leaving the market access limitation in place." 
49. The "solution" proposed by the United States merely begs the question of how to evaluate 
limitations on market access that are also discriminatory.  Consider, for example, limitations on the 
participation of foreign capital under Article XVI:2(f).   This is a limitation on market access that is 
inherently discriminatory, and one that a Member is allowed to adopt or maintain if its market access 
entry is unbound.  Given its inherently discrimin atory nature, how could a Member "remov[e] the 
national treatment inconsistency, while leavi ng the market access limitation in place"?  The 
discrimination is the market access limitation;  it cannot be removed "while leaving the market access 
limitation in place". 
50. The impossibility of what the United States is pr oposing demonstrates that its interpretation of 
how Articles XVI and XVII relate to each other is in error.  The agreed meaning of the term 
"unbound", as well as the clear intention behind Article XX:2, is to have measures of the type listed in 
Article XVI:2 governed by the entry in the market access column, including in  any respect in which 
they might be seen as discriminatory. 
V. CONCLUSION 
51. For the foregoing reasons, China respectfully request s that the Panel reject the U.S. claims in 
this dispute 
 
_______________ 
 
   WT/DS413/R/Add.1 
Page E-1 
 
 
  ANNEX E 
 
ORAL STATEMENTS, OR EXECUTIVE SUMMARIES THEREOF, OF THE PARTIES 
AT THE SECOND SUBSTANTIVE MEETING 
 
Contents Page 
Annex E-1 Executive summary of  the oral statement of the United States at the second 
substantive meeting E-2 
Annex E-2 Executive summary of the oral stat ement of China at the second substantive 
meeting E-7 WT/DS413/R/Add.1    
Page E-2  
 
  ANNEX E-1 
 
EXECUTIVE SUMMARY OF THE ORAL STATEMENT 
OF THE UNITED STATES AT THE SECOND SUBSTANTIVE MEETING 
 
 
I. INTRODUCTION 
1. The United States has shown that China's measu res prevent foreign suppliers from supplying 
the service that enables credit, charge, debit and ot her payment card transactions  to occur in China for 
all transactions where the card is issu ed in China and used in China.  These transactions constitute the 
overwhelming number of transactions in China, wh ether they be RMD-payment card transactions or 
transactions using foreign currency denominated paym ent cards issued in Chin a.  Instead, China has 
granted one Chinese domestic company, China UnionPay, Co. Ltd. ("CUP"), a monopoly to supply the service.  China's written and oral submissions show  nothing to the contrary.  In fact, in its defense 
thus far, China has largely avoided substa ntive discussion of the challenged measures.  
II. EPS FOR PAYMENT CARD TRANSACTIONS IS A SINGLE, INTEGRATED 
SERVICE THAT FALLS WITHIN TH E ORDINARY MEANING OF "ALL 
PAYMENT AND MONEY TRANSMISSION SERVICES, INCLUDING CREDIT, CHARGE AND DEBIT CARDS…" (SUBSECTOR (D)) 
2. The United States has demonstrated that EPS fo r payment card transactions is a single, 
integrated service that is properly classified under su bsector (d) in China's Schedule.  EPS is supplied 
as coherent whole, and this service enables cardhol ders' banks to pay merchants' banks the amount 
they are owed.  EPS suppliers provide an efficien t, timely and reliable means to facilitate the 
transmission of funds from the holders of paym ent cards who purchase goods or services to the 
individuals or businesses that supply them.  The ne twork, rules and procedures, and operating system 
provided by an EPS supplier enable payment card tr ansactions to occur.  EPS suppliers receive, check 
and transmit information that the parties need to conduct the transactions, and enable the transmission 
of funds between participating entities.  Each com ponent of EPS is critical to effectuate payment card 
transactions.  The customers of EPS suppliers – the entities that are participating in the payment card 
transactions – demand and rely on EPS as a complete, integrated, and unified service. 
3. The clear language of subsector (d) compels the conclusion that EPS falls within the ordinary 
meaning of "payment and money transmission services" as one type of " all" such services.  The 
illustrative list that explicitly prov ides that the services in subsector (d ) "include[s] credit, charge and 
debit cards" underscores that EPS is integral to th e processing of credit, charge, debit and other 
payment card transactions.   
III. THE SERVICE AT ISSUE IS NOT "SETTLEMENT AND CLEARING SERVICES 
FOR FINANCIAL ASSETS, INCLUDING SECURITIES, DERIVATIVE PRODUCTS, 
AND OTHER NEGOTIABLE INSTRUMENTS" 
4. China's arguments regarding subsector (d) are anchored to a flawed premise, cannot be 
reconciled with the text of its commitments, and are contrary to how the service at issue operates in 
practice.  Moreover, China's position hinges on an exceedingly narrow reading of subsector (d).  
China's interpretation fails to give meaning to the word "all" in the sectoral description of "all 
payment and money transmission services, including credit, charge, and debit cards…"  At the same 
time that it reads out the word "all" and pushes fo r an extremely narrow reading of subsector (d), 
however, China advocates an overly broad interpre tation of "settlement and clearing services for 
financial assets" that is inconsiste nt with its proper context.       WT/DS413/R/Add.1 
Page E-3 
 
 
  5. China continues to assert that certain elem ents of EPS for payment card transactions 
constitute separate services that are classified in a sector, item (xiv) of the GATS Annex on Financial 
Services, for which China has made no market ac cess or national treatment commitments.  China's 
overly broad reading is also combined with an in correct understanding of the services in item (xiv) 
that fails to account for fundamental, recognized di fferences in the operation and risk profile of 
financial services under item (xiv) and services relate d to retail payment processing, such as EPS for 
payment card transactions. 
6. The ordinary meaning of the services described in  item (xiv) is evidenced  by the words, the 
illustrative list in item (xiv), the additional context provided by para graph 5 of the Annex on Financial 
Services, and other sources, including the United Na tions, the OECD, the World Bank, International 
Monetary Fund ("IMF"), Bank for International Se ttlements ("BIS"), and BIS Committee on Payment 
and Settlement Systems ("CPSS"), which all confirm that the ordinary meaning of item (xiv) does not include EPS for payment card transactions.  Moreover , even if one were to erroneously attempt to 
disaggregate the component parts of EPS, no element of EPS falls within item (xiv).  In short, the 
same rules of treaty interpretation that compel the conclusion that EPS for payment card transactions 
fall within subsector (d) also compel the conclusi on that EPS for payment card transactions do not fall 
within item (xiv).   
7. The ordinary meaning of the term "financial as sets" that China has put forward is incorrect 
and contradicted by several sources.  The United St ates has cited to the IMF's explanation that "a 
financial asset is negotiable if it is actively or inac tively traded in a secondary market."  In addition, 
the United States identified the Uniform Commercial Code ("UCC") definition of "financial asset," 
which is in accord with the IMF's explanation.  Similarly, the BIS CPSS "glossary of terms used in 
payments and settlement systems" clearly illustrates  that the terms "clearing" and "settlement" each 
have different meanings in the respective payment and securities contexts, confirming that context is 
crucial and all the terms in item (xiv) must be take n into account in determining the ordinary meaning 
of "settlement and clearing services for financial assets, including securities, derivative products, and 
other negotiable instruments." 
8. The BIS CPSS glossary definitions relating to payments systems, including EPS for payment 
card transactions, are drawn from different source documents than those for securities settlement systems.  China's interpretation of "financial asset" fails to account for the fact that "settlement and 
clearing services for financial assets" is a substa ntially different financial service than EPS for 
payment card transactions, which is a type of re tail payment service.  The CPSS has explained that 
"[r]etail payments are generally classified as cash payments or non-cash payments," which are 
subclassified into "cheque payments, direct funds  transfers and card payments."  The United States 
provided a detailed explanation of the many practical  differences between the systems used to settle 
and clear investment instruments of the kind refere nced in item (xiv) and the systems used to settle 
and clear retail payment instruments, like payment cards.  
9. Because credit card receivables can be used to  create asset-backed securities, China also 
argues that there is "no distinction whatsoever be tween the issuing bank's claim against the cardholder 
and the acquiring bank's claim against the issuing bank."  China is wrong here too.  The assets that are used to create credit card asset-backed securities are not the obligations between issuing and acquiring 
banks that are processed by EPS suppliers on a daily basis.  The relevant assets are the loans  that are 
extended from the issuing bank to the cardholder.  E PS suppliers are not involved in the processing of 
such loans. 
10. China cites the Basel Committee on Banking Supervision, Report on Special Purpose Entities 
(Exhibit CHI-76) ("Basel Report"), for the proposition that credit card receivables are financial assets.  
However, the Basel Report makes it clear that the "a ssets" are not the obligations between the issuing 
and acquiring banks, but instead are receivables that ge nerate income or cash flow (that is, the loan).  WT/DS413/R/Add.1    
Page E-4  
 
  Thus, this source actually supports the pr oposition that the "financial assets" are the loans between the 
issuing bank and the cardholders .   
11. China's argument that clearing and settlement services for certain types of retail payment 
instruments such as checks are covered by item (xiv)
 is also flawed.  Item (xiv) covers only those 
types of "negotiable instruments" that qualify as "f inancial assets," and instruments such as personal 
checks do not fall within that category.  The Syst em of National Accounts (SNA), an international 
standard system of national accounts, prepared jointly by the United Nations, the OECD, the World 
Bank, the IMF, and the European Commission, dis tinguishes between financial claims that are 
negotiable and those that are not, and according to the SNA the term "negotiable instrument' does not 
include retail payment instruments such as checks. 
12. Finally, paragraph 5(a) of the Annex provides additional context that supports the U.S. 
interpretation.  The terms "financial assets" and "n egotiable instruments" also appear item (x) of the 
Annex, which covers, "Trading for own account or for account of customers, whether on an exchange, 
in an over-the-counter market or otherwise."  As used in item (x), these terms refer to tradeable 
investment assets, rather than "interbank claims for payment."  Thus, the context for item (xiv) 
indicates that "negotiable instruments" and "finan cial assets" are not retail payment vehicles like 
payment cards.  Additional context is item (viii) of the Annex, which contains the most specific and accurate description of the service for purposes of  classifying EPS for payment card transactions. 
IV. CHINA'S MODE 1 AND MODE 3 COMMITMENTS FOR "ALL PAYMENT AND 
MONEY TRANSMISSION SERVICES, INCLUDING CREDIT, CHARGE AND DEBIT CARDS…" 
13. It is plain from the text that China has taken mode 1 market access commitments for "all 
payment and money transmission services, including credit, charge and debit cards…"  The word "Unbound" in the market access column of its Sc hedule is qualified.  The phrase "except for the 
following" is further elaborated by two sentences that describe elements of the service within 
subsector (d) for which China has taken mode 1 commitments.  The qualifying phrase and specific 
elaboration following the word "Unbound" must be given meaning.    
14. Meanwhile, China's reaction to the U.S. response underscores its attempt to conflate the 
classification of a service in a particular subsector, on the one hand, with the interpretation of market 
access limitations, on the other.  China states that "the  United States needs the service at issue to be in 
two places at once:  in subsector (d) and in subsect ors (k) or (l)."  Sequence is critical to a proper 
analysis.  Step one is to classify the service:  the service at issue is a single, integrated service that 
falls within subsector (d).  Step two is to discer n China's commitments for subsector (d), such as 
China's mode 1 commitments.  This is a separat e and distinct exercise from step one.  Yet China 
continues to muddle the discussion of these separate steps.  
15. China's arguments fail to give any meaning to  the extensive language qualifying the term 
"Unbound" in its mode 1 commitments.  They essen tially reduce to the single point that all of the 
extensive language qualifying the term "Unbound" in  its mode 1 market access commitments was 
provided simply to confirm language already existin g elsewhere in China's Schedule.  According to 
China the additional wording should be given no mean ing whatsoever.  If China wished to be fully 
"Unbound," that is, not to have any mode 1 commitments, it should not have qualified its 
commitments; rather it should have left the word  "Unbound" unqualified.  However, as its Schedule 
reflects, China did not do so.  It is not credible to argue that the additional language is merely for 
greater certainty to repeat China' s commitments in subsectors (k) and (l).  Such an argument fails to 
give meaning to this treaty language.  Perhaps know ing this, China implores the Panel to "imagine" 
instead different treaty language rather than the actual words in its Schedule.   WT/DS413/R/Add.1 
Page E-5 
 
 
  16. Elements of CUP's own activities are described in  terms similar to the "excepted" elements 
that are set out in China's mode 1 market ac cess commitments, and China's regulatory system 
similarly describes a primary activity of CUP as exch anging information among fi nancial institutions.   
Moreover, the concept that a service may include el ements of "provision and transfer of financial 
information, and financial data processing" was recognized, for example, in paragraph 8 of the 
Uruguay Round Understanding on Commitments in Financ ial Services.  The provision and transfer of 
financial information and data processing is central to  the supply of many different financial services, 
and, according to the Understanding, signatory WTO Members cannot frustrate their commitments 
by, for example, blocking the ability to communicate and process information. 
17. With respect to China's mode 3 market access commitments for subsector (d), the presence of 
the term "financial institution" in China's sch edule does not create a separate and independent 
limitation.   The Schedule states that "[c]riteria for authorization to deal in China's financial services sector are solely prudential."  There is nothing in  China's Schedule that indicates it may condition the 
supply of a service on the criteria listed in the mark et access commitment column and also require that 
another Member's supplier meet additional (and unsp ecified) criteria to be recognized as a "foreign 
financial institution."  Such a limit ation would have needed to be imposed explicitly in its Schedule, 
and China did not do so.  Finally, even if it were  the case that the term "financial institution" 
somehow served as a limitation in China's Schedule, th e definition of "financial institution" offered by 
China is too narrow.  Many definitions are much br oader, and some explicitly include "an operator of 
a credit card system."   
V. CHINA'S MEASURES ESTABLISHING AND SUPPORTING CHINA UNIONPAY'S 
MONOPOLY ON THE SUPPLY OF EPS ARE INCONSISTENT WITH ARTICLE 
XVI OF THE GATS 
18. China's measures limit the number of suppliers  of EPS.  The United States identified 19 
instruments in the U.S. panel request and is ch allenging each of them independently.  The United 
States has also identified six separate categories of  requirements that constitute six separate measures 
that are implemented through several instruments operating in conjunction: 
 Requirements that mandate the use of CUP and/or establish CUP as the sole supplier of 
EPS; 
 Requirements that RMB denominated payment car ds issued in China bear the CUP logo;  
 Requirements that all automated teller machines ("ATM"), merchant card processing 
equipment, and POS terminals in China accept CUP cards; 
 Requirements on acquiring institutions to post the CUP logo and be capable of accepting 
all payment cards bearing the CUP logo; 
 Broad prohibitions on the use of non-CUP cards; and 
 Requirements pertaining to card-based transac tions in China, Macao and Hong Kong. 
19. These measures establish and maintain CUP's monopoly and limit the number of suppliers of 
EPS for payment card transactions and are inconsiste nt with China's obligations under Article XVI of 
the GATS.  WT/DS413/R/Add.1    
Page E-6  
 
  VI. CHINA'S MEASURES ARE INCONSISTENT WITH ARTICLE XVII OF THE GATS 
20. The measures at issue affect the supply of ser vices and accord less favorable treatment to 
foreign suppliers of EPS, and are inconsistent with China's oblig ations under Article XVII of the 
GATS.  Some measures impose a limitation such that  CUP is the sole entity that can process certain 
transactions, such as domestic RMB transactions.  This  of course means that foreign suppliers of EPS 
are prevented from supplying the service at all.  Other measures promote CUP's position in the 
marketplace such as by imposing certain requirements on every key player in a card-based electronic payment transaction.  The United States has explai ned how China's measures affect every aspect of a 
card-based electronic payment transaction and the ke y players, including issuers (all cards issued in 
China for domestic RMB transactions must bear the CUP logo), merchants (all merchant card 
processing equipment and POS terminals must accep t CUP cards), and acquiring institutions (which 
must post CUP logo and accept CUP cards).        
VII. CONCLUSION 
21. The United States respectfully requests that  the Panel find that China's measures are 
inconsistent with China's obligations under Artic le XVI:1 and XVI:2(a) and Article XVII of the 
GATS.  The United States again thanks the Panel fo r its continued service in this dispute and looks 
forward to responding to any questions the Panel may have.   WT/DS413/R/Add.1 
Page E-7 
 
 
  ANNEX E-2 
 
EXECUTIVE SUMMARY OF THE ORAL STATEMENT 
OF CHINA AT THE SECOND SUBSTANTIVE MEETING 
 
 
I. INTRODUCTION 
1. It is not my intention this morning to review China's arguments as they relate to all of the 
issues in this dispute.  As a result of the questions  posed by the Panel after the first meeting and the 
parties' subsequent submissions, the key issues in this dispute are now reasonably well defined.  I 
intend to focus my remarks on those key issues and,  in particular, on the positions that the United 
States has taken in respect of those issues.   
II. CLASSIFICATION: ITEM (XIV) OF THE ANNEX LIST 
2. The only issue that remains in disput e in respect of item (xiv) of the Annex  list is whether 
interbank claims for payment are among the "financial  assets" that are covered by item (xiv).  China 
has definitively established that the ordinary meaning of the term "financial assets" includes cash and 
any right to receive cash.  An acquiring bank's right to receive payment from an issuing bank is indisputably a "financial asset" within this ordinary meaning. 
3. In its second submission, the United States continues to search for some  definition or usage to 
support its position that the term "financial assets" is  limited to what it calls "investment instruments".  
The United States cites only two "sources" in support of  its interpretation: the Monetary and Financial 
Statistics Guide prepared by the IMF, and the defini tion of the term "financial assets" in Article 8 of 
the U.S. UCC.  Neither one of these supports the U.S. position. 
4. The United States cites a passage from the Mone tary and Financial Statistics Guide that 
explains the types of financial assets that the IMF considers to be negotiable  for statistical purposes.  
The United States fails to explain why this statistical  definition of negotiability is relevant to the 
interpretation of the term "financial assets" in ite m (xiv).  That omission aside, the more important 
point is that the IMF defines th e term "financial assets" – the operative  term in item (xiv) – to include 
"all financial claims".  Moreover, the Monetary an d Financial Statistics Guide cited by the United 
States, as well as the System of National Accounts ma intained by the IMF, are expressly based on the 
International Financial Reporting Standards.  As China has previously explained, those standards 
define the term "financial asset" to include "cash" and any "contractual right to receive cash".   
5. As for Article 8 of the U.S. UCC, the United St ates has yet to explain why U.S. municipal law 
is relevant to the process of discerning the common  intention of the Members with respect to the 
meaning of item (xiv).  But setting aside its interp retative irrelevance, the United States neglects to 
point out that the subject matter of Article 8 is expressly limited to investment securities.  Naturally, 
the definition of the term "financial assets" in Article 8 is tailored to the subject matter of that article.  
The limitation that the United States seeks to impose upon the ordinary meaning of the term "financial 
assets" is entirely arbitrary. 
6. Lacking any support for its position in the ordinary meaning of the term "financial assets", the 
United States spends eight pages  of its second submission describing alleged differences between the 
clearing and settlement of "investment instruments"  and the clearing and settlement of retail payment 
instruments.  What the United States never e xplains is why any of these alleged differences matter  for 
the purpose of determining the ordinary meaning of the term "financial assets" in item (xiv).   WT/DS413/R/Add.1    
Page E-8  
 
  7. The last refuge for the United States is its so -called "contextual" interpretation of the term 
"financial assets", based on the three examples provide d in item (xiv).  First, the United States asserts 
that because "payment cards" are "not similar" to securities or derivative products, and "are not 
negotiable instruments", they are not "of the same type of financial assets as the items included in the illustrative list" and therefore are not covered by ite m (xiv).  The United States knows that this is not 
the issue in dispute.  Network operators do not clear  and settle "payment cards".  They clear and settle 
interbank claims for payment that arise under f our-party payment card models.  Whether such claims 
for payment  are financial assets within the meaning of item (xiv) is the only interpretative issue in this 
case.  As China has shown, all legitimate interpre tative tools demonstrate that interbank claims for 
payment are "financial assets" within the ordinary meaning of that term. 
8. The second key point is that the U.S. "contextual" interpretation is based entirely  on a 
misinterpretation of what that context means.  The critical underpinning of the U.S. "contextual" approach is to deny that the term "negotiable in struments" in item (xiv) includes cheques and other 
types of retail payment instruments.  It is unde rstandable why the United St ates must take this 
position.  To acknowledge the obvious fact that ch eques are negotiable instruments would destroy not 
only the U.S. position that item (xiv) is limited to "i nvestment instruments", but also its position that 
all clearing and settlement services relating to paym ent instruments are implied by interpretative 
necessity in item (viii).   
9. The United States adds to the litany of contra dictions in the very next section of its 
submission, when it points to item (x) of the Annex list as an "illustrative list" of what it considers to 
be the types of financial assets that are covered by  item (xiv).  Apparently overlooked by the United 
States is the fact that item (x)(A) of this list exp licitly refers to "cheques" as among the "negotiable 
instruments" and "financial assets" that are included within this category.  This fatally undermines the 
U.S. insistence that the drafters of the Annex list meant to exclude cheques from the ordinary meaning 
of the terms "financial assets" and "negotiable instruments".   
10. One final point about the U.S. "contextual" argument deserves highlighting.  In addition to all 
of its other flaws, the U.S. interpretation does not co me to terms with the fact that the illustrative list 
in item (xiv) is a non-exhaustive list of "financial assets".  The U.S. interpretation of item (xiv) not 
only misinterprets the meaning of the three exampl es that are provided, it then treats those three 
examples as if they were the only types  of "financial assets" that are covered by item (xiv).  As China 
has shown, this is not the role that illustrative lists play in the process of treaty interpretation. 
III. CLASSIFICATION: SUBSECTOR (D) 
11. Like its interpretation of item (xiv), the U.S.  interpretation of subsector (d) has become an 
exercise in how many inconsistencies and c ontradictions the United States can maintain 
simultaneously.  The United States contends that all of the services at issue are in subsector (d), but 
then argues that the same services are actually describ ed by subsectors (k) and (l).  It agrees that the 
subsectors in a Member's Schedule are mutually exclusive, but then argues that subsectors can 
become "embedded" in other subsectors by "necessity".  In its attempt to reconcile these inconsistent 
positions, the United States unwittingly creates oxymorons like "auxiliary central services" and "optional essential services".   
12. In its second submission, the United States pl aces significant emphasis on the proposition that 
the services at issue in this dispute "constitute one integral, indivisible service."  As a factual matter, 
the United States is mistaken in its premise.  In f act, it is common for the network infrastructure of a 
payment card system to be supplied separately fro m the clearing and settlement services that banks 
use to reconcile and discharge their obliga tions toward each other.  For example:   WT/DS413/R/Add.1 
Page E-9 
 
 
   In Australia, most ATM and EFTPOS networks  are owned by specific banks.  As a 
result of interconnection agreements, these networks effectively operate as a single national network.  ATM and EFTPOS transac tions are not cleared and settled over 
this network.  Instead, banks clear and se ttle payment card transactions on a bilateral 
basis, using a gross settlement system operated by the Australian Payments Clearing 
Association and the Reserve Bank of Australia. 
 In Canada, the principal network for AT M and EFTPOS transactions is operated by 
Interac, a non-profit association owned pr imarily by Canadian banks.  Interac 
provides the front-end authorization netw ork for ATM and EFTPOS transactions.  
These transactions, however, are cleared a nd settled through the Automated Clearing 
and Settlement System (ACSS), a differe nt system operated by the Canadian 
Payments Association.  The ACSS clears and settles all types of interbank claims, 
including not only ATM and EFTPOS transac tions, but also paper-based cheques. 
13. France, Germany, Italy, Japan, the Netherlands , and Sweden are just a few other examples of 
countries where the network infrastructure is supplied separately from clearing and settlement 
services.  The fact that Visa and MasterCard happe n to bundle certain services into a single service 
offering does not mean that all network services are provided on this basis or that the bundling of 
these services is required as a matter of operational necessity.   
14. In addition to its factual inaccuracy, the U.S. theory is based on the notion that any set of 
services that is supplied on a "bundled" basis must  be classified as a single service, at least if some  
service suppliers happen to provide the services on th is basis.  But the manner in which a service 
supplier combines and prices services does not change  their classification as distinct services.  For 
example, a hotel might include a tour of the local sights as part of a package price, but this does not 
change the fact that it is providing both hotel services and tour services.  Nor can it be the case that 
the same service takes on a different  classification only in those cases where a particular service 
supplier happens to bundle it with another service.  This would violate the principle of mutual 
exclusivity. 
15. In sum, there is no reason, either as a matter of fact or as a matter of law, why the services at 
issue in this dispute can or should be classified into one and only one subsector.  The clearing and 
settlement services at issue in this dispute, in pa rticular, are plainly recognizable as a distinct and 
separately classifiable serv ice under item (xiv) of the Annex  list.   
IV. COMMITMENTS: MODE 1 
16. The U.S. position on how to classify the services at issue is now directly in conflict with its 
position that China made relevant Mode 1 commitment s in respect of those services.  In its second 
written submission, the United States has strongly reaffirmed its position that all of the services at issue in this dispute are classifiable under subsector  (d).  Yet at the same time, the United States 
maintains that every aspect  of what it calls "electronic payment services" fits within the description of 
subsectors (k) and (l).   
17. The U.S. theory that China undertook Mode 1 commi tments in respect of the services at issue 
rests entirely on the proposition that the services described in one subsector can become "embedded" 
in another subsector to the extent that they are "i ntegral" to the provision of the latter service.  As 
China has explained, this theory is flatly inconsiste nt with the principle of mutual exclusivity, and the 
Panel must reject it for this reason alone.   
18. The U.S. position, if accepted, would make a mockery of China's actual commitments for 
subsectors (a) through (f).  Both th e text and context of China's Sc hedule establish that the intention WT/DS413/R/Add.1    
Page E-10  
 
  behind these commitments was that the banking servi ces listed in subsectors (a) through (f) would be 
supplied by foreign financial institutions operati ng in China on a commercial presence basis.   
19. According to the United States, network operato rs like Visa and Mast erCard could provide all 
of the services at issue in this dispute with "no or a very limited physical presence in China".  
Moreover, entities like Visa and MasterCard could provide these services in China even though they 
are not financial institutions.  In other words,  services that were meant to be supplied on a commercial 
presence  basis by financial institutions would be supplied on a cross-border  basis by service suppliers 
that are not financial institutions.   
20. Other than in the case of sub sector (d), the United States appears to understand the nature of 
China's commitments for these subsectors.  In r esponse to question 28 from the Panel, the United 
States provided examples of a financial institution that provides a core banking service in China on a 
commercial presence basis and, in conjunction with that service, provides certain other services on a cross-border basis that the United States considers to be within the description of subsectors (k) or (l).  
The United States would presumably agree that, in  each instance, the core banking service is unbound 
in Mode 1.  In the case of subsector (d), however, the United States has yet to identify any service at 
issue in this dispute that would be unbound in Mode 1.  According to the United States, all of the 
services at issue fit within the ex ception and could be supplied on a cross-border basis.  There is no 
"core" service to be supplied on a commercial presence basis – the services are the exception. 
21. The exception to China's unbound market acce ss entry for subsector (d) only becomes 
relevant if there is something in subsector (d) to begi n with – that is, if there is some service that the 
service supplier is legitimately supplying in China on a commercial presence basis.  If the United 
States believes that there is such a service, and is able to identif y what it is, that service is necessarily 
unbound in Mode 1.  Otherwise, the United States ca n no longer maintain that subsector (d) has any 
relevance to this dispute.   
V. COMMITMENTS: MODE 3 
22. The United States still has not committed to a single, coherent theory of how China's 
commitments in Mode 3 relate to the services and servi ce suppliers at issue in this dispute.  There is 
one thing, however, that is reasonably clear: the United States knows  that China's market access 
commitments for subsector (d) are limited to foreign financial institutions.  This is the only plausible 
explanation for why the United States continues to  insist that Visa and MasterCard are financial 
institutions, even though they are not financial institutions under any commonly understood definition 
of that term, and even though Visa and MasterCard routinely deny any such status.   
23. The problem for the United States, however, is that Visa and MasterCard are not financial 
institutions.  Once this is properly taken into  account, the U.S. claims to market access under 
subsector (d) simply evaporate, in both  Mode 3 and Mode 1.  As I discussed earlier, China's 
commitments for subsectors (a) through (f) contemplate that foreign financial in stitutions will provide 
these services in China on a commercial presence basi s.  For the exception to China's unbound market 
access entry in Mode 1 even to be relevant, the service supplier at issue must be providing one or 
more of these services in China on a commercial pr esence basis.  Because Visa and MasterCard are 
not financial institutions, they have no right of market  access in Mode 3.  It follows that they have no 
right of market access in Mode 1 that could even potentially be relevant to the services that they provide.   
24. For these reasons, even if the services at issue were properly classifiable under subsector (d), 
which they are not, in no event do China's commitments in Mode 1 or Mode 3 extend to service 
suppliers that are not financial institutions.   WT/DS413/R/Add.1 
Page E-11 
 
 
  VI. CONCLUSION 
25. It is easy to lose sight of the fact that there are at least three distinct layers to this dispute: 
classification, commitments, and the consistency of the measures at issue.  For all of the reasons that 
China has set forth in its submissions, China consid ers that the United States has failed to meet its 
burden of proof in respect of the classification of the services at issue.  China co nsiders that the failure 
of the United States to meet its burden of proof in respect of classification should lead the Panel to 
dismiss the U.S. claims in their entirety.   
26. Even if the Panel were to conclude that some or all of the services at issue in this dispute are 
classified under subsector (d), the Panel should find that the United States has failed to prove that 
China undertook relevant commitments in Mode 1 and M ode 3.  This, too, would require the Panel to 
dismiss the U.S. claims in their entirety. 
27. It is only if the Panel were to find that some or  all of the services at issue are classified under 
subsector (d), and that China undertook relevant commitments in either or both modes of supply, that 
the Panel would need to evaluate the consistency of the measures at issues with those commitments.  
Here, too, the United States has failed to prove its  case.  As China detailed in its second written 
submission, the United States is now grasping at st raws, arguing that the six alleged "requirements" 
are freestanding "measures" that the Panel can evalua te independently of an y of the specific legal 
instruments identified in the panel request.  The United  States has been forced to  take this approach – 
which it so strenuously opposed in Gambling –  because the measures that are actually  at issue in this 
dispute plainly do not support its claims.  Thus, even  in this scenario, the Panel would need to dismiss 
the U.S. claims in their entirety.   
28. China respectfully submits that th is is the order of analysis that the Panel should follow.  At 
every juncture in this analysis, the end result is  the same: the United States has failed to prove its 
claims in this dispute, and the Panel must ther efore reject those claims in their entirety.   
 
_______________ 
   WT/DS413/R/Add.1 
Page F-1 
 
 
   
 
ANNEX F 
 
REQUEST FOR A PRELIMINARY RULING 
 
Annex F-1 Executive summary of China's request for a preliminary ruling F-2 
Annex F-2 Executive summary of the United States' submissions in response to China's 
request for a preliminary ruling F-3 
Annex F-3 Executive summary of China's comments on the United States' submissions in 
response to China's request for a preliminary ruling F-12 
 
 WT/DS413/R/Add.1   
Page F-2  
 
  ANNEX F-1 
 
EXECUTIVE SUMMARY OF CHINA'S REQUEST FOR A PRELIMINARY RULING 
  
I. THE U.S. PANEL REQUEST DOES NOT PROVIDE A BRIEF SUMMARY OF THE 
LEGAL BASIS OF THE COMPLAINT SUFFICIENT TO PRESENT THE PROBLEM CLEARLY 
1. China hereby requests a preliminary ruling by the Panel with respect to the consistency of the 
U.S. panel request with Article 6.2 of the Unde rstanding on Rules and Procedures Governing the 
Settlement of Disputes ("DSU").  Article 6.2 of the DS U provides, in relevant part, that "[t]he request 
for the establishment of a panel shall … identify th e specific measures at issue and provide a brief 
summary of the legal basis of the complaint sufficient to present the problem clearly."   
2. The Appellate Body has held that "in order for a panel request to ‘present the problem 
clearly’, it must plainly connect the challenged measure(s) with the provision(s) of the covered 
agreements claimed to have been infringed, so that  the respondent party is aware of the basis for the 
alleged nullification or impairment of the compla ining party’s benefits." The Appellate Body has 
further held that the sectors and subsectors set fo rth in a Member’s schedule of specific commitments 
under the General Agreement on Trade in Services ("GATS") are mutually exclusive.  Thus, by 
operation of law, any given service that is the subject of a claim under the GATS must fall into one, and only one, sector or subsector of the responding Member’s schedule of specific commitments.  It 
follows that, in order to "present the problem clearl y" under Article 6.2 of the DSU, the panel request 
must identify the specific sector or subsector that  allegedly encompasses the service at issue or, if 
there are multiple services at issue, plainly asso ciate those services with the specific sector or 
subsector that allegedly encompasses each service. 
3. The foundation of the U.S. panel request in this dispute is a lengthy definition of the services 
that it alleges to be at issue – what it calls "electr onic payment services".   This is a term of the United 
States’ own making – it does not correspond to any of the service subsectors set forth in China’s 
Schedule of Specific Commitments ("Schedule").  Th e lack of any such correspondence is evidenced 
by the fact that the United States cites three diffe rent and mutually exclusive subsectors in China’s 
Schedule as the legal basis for its claims.  These subsectors are, in brief: (1) "all payment and money transmission services"; (2) "provision and transfer  of financial informati on, and financial data 
processing and related software by supplier of other financial services"; and (3) "advisory, 
intermediation and other auxilia ry financial services".   
4. The nature and extent of China’s market access and national treatment obligations in the three 
subsectors identified in the panel request depend up on the particular subsector involved, as well as the 
mode of supply.  Notwithstanding these differenc es in China’s legal obligations, the U.S. panel 
request fails to explain, even concisely, how its definition of "electronic payment services" relates to 
China’s specific commitments in an y one of the three subsectors, a nd fails to provide any indication 
of which mode (or modes) of supply the United States considers to be at issue.  In these critical respects, the U.S. panel request fails to connect  the challenged measures to the provisions of the 
covered agreements that the United States re lies upon as the legal basis for its claims. 
5. In light of these deficiencies, the U.S. panel re quest has failed to "present the problem clearly" 
as required by Article 6.2 of the DSU.  In order to  address China’s due process concerns, and in order 
to avoid prejudice to either party, China respectfu lly requests that the Panel issue a preliminary ruling 
at the earliest opportunity.   WT/DS413/R/Add.1 
Page F-3 
 
 
  ANNEX F-2 
 
EXECUTIVE SUMMARY OF THE UN ITED STATES' SUBMISSIONS IN 
RESPONSE TO CHINA'S REQUEST FOR A PRELIMINARY RULING 
 
 
I. INTRODUCTION 
1. Each day around the world, credit, charge, debit, and other payment cards are used in 
hundreds of millions of transactions where cardholde rs purchase a vast array of goods and services, 
ranging from groceries, clothing, and gasoline, to  airplane tickets, hotel accommodations, and dining 
at restaurants.  In terms of both volume and va lue, the amount of goods ` and services subject to 
payment card transactions is staggering.  The services  that enable, facilitate, and manage the transfer 
of funds between cardholders a nd merchants – commonly known as electronic payment services 
("EPS") – are essential to processing the several hundred million card-based electronic transactions 
that occur daily around the world.  These services ar e vital to the operation of a modern economy.   
2. When China joined the World Trade Organization ("WTO") in 2001, it made important 
commitments with respect to electronic payment ser vices.   In 2005, China explicitly recognized that 
"the RMB bank card operation shall be opened to the outside world in an all-around manner."  In the 
financial services sector, as set out in China’s Sche dule of Specific Commitmen ts on Services, China 
undertook both market access and na tional treatment commitments with respect to electronic payment 
services.  Under the terms of its Schedule, China was required to fully implement these commitments 
as of December 2006.  Yet, despite China’s comm itments to provide both market access and national 
treatment for "all payment and money transmission se rvices, including credit, charge and debit cards" 
for domestic currency transactions, China continu es to maintain a government-mandated domestic 
monopoly, enabling only its domestic champion, China UnionPay, Co. Ltd. ("CUP" or "China UnionPay"), to provide these services, thereby blocking participation by foreign suppliers. 
3. China itself acknowledged in 2005 that "the ba nk card industry of our country is facing a 
comparatively big challenge" because its WTO commitmen ts were to take effect in 2006.  Yet despite 
the December 2006 deadline for th e implementation of its WTO commitments, China failed to 
remove the measures that form the basis for CUP’s monopoly on the supply of EPS for RMB payment 
card transactions ( e.g., those using credit card, charge card, and debit cards).  Not only did China fail 
to eliminate the monopoly, it also adopted additi onal measures to lock in CUP’s dominance.  
Statements from PBOC and CUP officials suggest  that China did not dismantle CUP’s monopoly 
because China wanted more time to establish and solidify CUP’s presence overseas before it would 
eventually have to face competition fro m foreign EPS suppliers in China.   
4. Since December 2006, China has steadfastly refu sed to allow foreign suppliers of electronic 
payment services to process RMB payment card transactions and has enacted numerous barriers to 
establishing the processing infrastructure, network, rules, and procedures that are essential to the 
supply of EPS, and hence necessary for foreign supp liers’ processing of such card-based transactions 
in China.  Meanwhile, operating from its protect ed home market monopoly position, CUP has been 
rapidly expanding its card acceptance and issuance internationally since 2003.  Unlike foreign 
suppliers of electronic payment services in China, CUP is able to have fu ll and unencumbered access 
to the domestic payment card market in a growing nu mber of foreign countries in which it has chosen 
to operate (now numbering more than 110).  In ot her words, foreign EPS suppliers in China do not 
have the same market access in Ch ina that CUP enjoys abroad.   
5. China failed to open its market as required by its WTO obligations.  The measures that 
provide for CUP’s monopoly position remain in place, and China has introduced reinforcing measures 
to strengthen and entrench the CUP monopoly.  This  monopoly structure ensures that CUP is the sole WT/DS413/R/Add.1   
Page F-4  
 
  entity that can provide EPS for RMB transactions in China – the vast majority of all transactions in 
China.   
6. The United States enumerated its concerns re garding China’s measures in the U.S. panel 
request.  Nonetheless, on July 5, 2011, China filed a request for a preliminary ruling with respect to 
the consistency of the U.S. panel request with Article 6.2 of the Understanding on Rules and 
Procedures Governing the Settlement of Disputes  ("DSU").  Yet the U.S. panel request is in writing, 
indicates that consultations were held, identifies th e specific measures at issue, and provides a brief 
summary of the legal basis of the complaint suffi cient to present the problem clearly.  China’s 
procedural challenge is baseless.  The U.S. panel re quest is fully consistent with DSU Article 6.2.  
II. PROCEDURAL HISTORY OF CHINA’S PRELIMINARY RULING REQUEST 
7. On July 5, 2011 China filed a request for a preliminary ruling on the consistency of the U.S. 
panel request with DSU Article 6.2.  In its su bmission, China requested that the Panel adopt 
procedures and a timetable to provide for separate submissions, a hearing, and findings by the Panel 
on China’s request before the United States had had an opportunity to provide its first submission.  
However, China failed to explain why it would su ffer prejudice from receiving the U.S. response in 
the U.S. first submission, an approach consiste nt with the customary practice in responding to 
preliminary ruling requests.  Nor did China explain how its request would avoid prejudice to the United States and its interest, as the complaining pa rty, in presenting its case in a coherent manner.  
Rather, China’s request would require the United St ates to address certain key aspects of its case in 
advance and separate from other key aspects.  And China failed to address the delay in the Panel 
proceedings caused by its request, a delay that Chin a itself had successfully argued to a prior panel as 
grounds for denying a similar request. 
III. THE U.S. PANEL REQUEST SATISFIES THE REQUIREMENTS OF DSU ARTICLE 
6.2 
A. T
HE REQUIREMENTS OF DSU  ARTICLE 6.2 
8. Article 6.2 of the DSU provides in part as follows: 
The request for the establishment of a panel shall be made in writing.  It shall indicate 
whether consultations were he ld, identify the specific measu res at issue and provide a 
brief summary of the legal basis of the complaint sufficient to present the problem 
clearly. 
9. The Appellate Body has described the requirements of DSU Article 6.2 as follows: 
When parsed into its constituent parts, Article 6.2 may be seen to impose the 
following requirements.  The request must:  (i) be in writing; (ii) indicate whether 
consultations were held; (iii) identify the sp ecific measures at issue; and (iv) provide 
a brief summary of the legal basis of the complaint sufficient to present the problem 
clearly.  
10. In analyzing whether a panel request complies w ith DSU Article 6.2, the Appellate Body has 
stated that "compliance with the requirements of Ar ticle 6.2 must be determined on the merits of each 
case, having considered the panel request as a whole,  and in the light of attendant circumstances."  
Compliance with the requirements of DSU Article 6. 2 must be determined by considering the panel 
request as a whole, and not simply on the basis of isolated portions of the panel request.     WT/DS413/R/Add.1 
Page F-5 
 
 
  B. THE U.S.  PANEL REQUEST IS IN WRITING , INDICATES THAT CONSULTATIONS WERE HELD , 
IDENTIFIES THE SPECIFIC MEASURES AT ISSUE , AND PROVIDES A BRIEF SUMMARY OF THE 
LEGAL BASIS OF THE COMPLAINT SUFFICI ENT TO PRESENT THE PROBLEM CLEARLY .   
11. The U.S. panel request meets each of these requi rements under Article 6.2 of the DSU.  The 
panel request identifies the specific measures being challenged, the specific commitments at issue in 
China’s schedule, and the specific oblig ations that are the subject of the U.S. complaint.  In addition, 
the U.S. panel request specifies, with precision, th e services at issue:  "electronic payment services for 
payment card transactions."   The United States also  provides in its panel request a detailed narrative 
of the claims it is making as an additional basis for China to understand "the legal basis of the complaint."  The U.S. panel request contains inform ation "sufficient to present the problem clearly."  
12. China’s argument essentially reduces to th e assertion that the United States needed to 
"explain how or why the United States considers th e challenged measures to be inconsistent with 
China’s specific commitments."  Chin a also states that "[t]he foundation of the U.S. panel request in 
this dispute is a lengthy definition of the services that it alleges to be at issue – what it calls ‘electronic 
payment services’" and that "[t]his is a term of the United States’ own making."  China further argues 
that the term electronic payment services "does not  correspond to any of the service subsectors set 
forth in China’s Schedule of Specific Commitments." 
13. As an initial matter, China is wrong factually.  Fi rst, as explained in detail in this submission,
 
the description of the sector at issue in this disp ute that is set out in the U.S. panel request – 
"electronic payment services" for "payment card " transactions – is drawn from industry sources and 
reflects the broad and common understanding within this  sector.  Suppliers of the services at issue in 
this dispute who work within this sector are de scribed as supplying, or characterize themselves as 
supplying, "electronic payment services" and as oper ating within the "global payments industry."   
The sector that services credit, charge, debit, and other payment card transactions characterizes itself 
as providing "electronic payment services."  China si mply cannot credibly assert that the use of this 
term is somehow confusing or prejudicial.  
14. An analogous issue was addressed in the context of a challenge to a product description in a 
panel request and the purported lack of clarity in  terms of tariff classification.  The panel in EC – 
Computer Equipment  rejected the EU’s argument regarding the purported lack of clarity of the term 
"LAN equipment" and found the definition "is sufficiently specific for the purposes of our 
consideration of this dispute."  The panel in EC – Computer Equipment also rejected the same type of 
argument advanced in connection with the term "PC’ s with multimedia capability."  The EU appealed 
these panel findings in that dispute on the basis that that the purported lack of clarity violated the 
EU’s due process rights.  The Appellate Body upheld  the panel’s findings, rejected the EU’s alleged 
due process claims.  
15. China’s assertion that the term "electronic pa yment services" does not correspond to any of 
the service subsectors set forth in China’s GATS sc hedule is equally unavailing.  EPS fall within the 
definition of " all payment and money transmission services, including credit, charge and debit 
cards…"  The language of item (d) of Ch ina’s Schedule itself makes this clear.   
16. EPS are at the center of all payment card transactions and without these services the 
transactions could not occur.  EPS fall within the ordinary meaning of payment and money 
transmission services, within item (d) of China’s Schedul e.  As set forth in the U.S. panel request, and 
as detailed in this submission, EPS involve the services through which transactions involving payment 
cards are processed and through which transfers of  funds between institutions  participating in the 
transactions are managed and facilitated.  EPS clearly  fall within the ordinary meaning of "payment 
and money transmission service" as one type of " all" such services.  Second, the phrase "all payment 
and money transmission services" is modified with an illustrative list that explicitly provides that it WT/DS413/R/Add.1   
Page F-6  
 
  "include[s] credit, charge and debit cards."  Vi sa, MasterCard, Discover, and American Express are 
names recognized around the world as credit, debit and charge cards .  The reference to debit cards 
covers suppliers of EPS for debit card transactions  like First Data, Pulse, NYCE, STAR, and PLUS.  
17. And China is wrong as a legal matter as well.  The "explanation" that China seeks goes 
beyond what is required by Article 6.2 of the DSU and instead asks the United States to provide China 
the U.S. arguments as to "why" China’s measures breach the identified obligations.  Similarly, 
China’s arguments that the services do not fall within  the specified sectors is a defense by China to 
the claims – a defense it will be free to make in its  first written submission.  There is no failure to 
satisfy the requirements of Article 6.2.  And China’ s arguments in this regard demonstrate that China 
does in fact understand the matter raised in the U.S. panel request.     
18. Also without merit is China’s argument that "the United States cites three different and 
mutually exclusive subsectors in China’s Schedul e as the legal basis for its claims."  Whether a 
complainant can prevail on separate claims advan ced under potentially mutually exclusive subsectors 
in a Member’s GATS schedule is a substantive lega l issue to be decided on the merits based on the 
evidence and legal arguments presented to the Pane l.  Identifying potentially mutually exclusive 
claims in the U.S. panel request is not a failure under Article 6.2 to provide a summary of the legal 
basis of the complaint.  In the three subsectors id entified in the U.S. panel request, China undertook 
both market access and national treatment commitmen ts for modes (1) and (3) as specified in its 
Schedule.  The U.S. panel request thus puts Chin a on notice as to China’s market access and national 
treatment commitments, including the modes of supply, that are before the Panel.  
19. In its request, China appears to acknowledge the claims in the U.S. panel request, but then 
seeks more – China seeks a detailed explanation of  the U.S. legal arguments as to exactly how 
China’s measures put it in breach of these commitments .  In other words, Chin a concedes that specific 
commitments and claims are identified in the U.S.  panel request, but asks for more than what is 
required by DSU Article 6.2.  With its request fo r a preliminary ruling, China seeks to have specific 
legal arguments presented as to how the measures at issue breach commitments identified in the U.S. 
panel request.  China is not entitled to see how the United States will present its legal arguments in 
advance of the U.S. first submission.  Yet, that  is precisely what China seeks with its preliminary 
ruling request. 
20. The U.S. panel request identifies that Ch ina undertook both market access and national 
treatment commitments with respect to item (d) "All payment and money transmission services, including credit, charge and debit cards…"   In a ddition, the U.S. panel request identifies the specific 
measures being challenged and the speci fic obligations that are the subject of the U.S. complaint.  The 
United States also specifies with precision the service at issue:  "electronic payment services for 
payment card transactions," and provides in its pane l request a detailed narrative of the claims it is 
making in order to provide additional information for China to understand "the legal basis of the 
complaint."  The U.S. panel request also indicates the following. 
21. China maintains requirements that mandate the use of CUP and/or establish CUP as the sole 
supplier of EPS for all domestic transac tions denominated and paid in RMB.  China requires that all 
transactions denominated and paid in RMB in Chin a be processed and cleared in RMB through CUP, 
and that where there is a choice, all domestic tran sactions on dual currency cards be routed in RMB 
through CUP. 
22. China maintains requirements that RMB denomi nated payment cards issued in China bear 
the CUP logo.  China requires that any bank cards issu ed in China for RM B purchases in China, 
including dual currency payment cards issued in Ch ina, must bear the CUP logo.  This means that 
issuers – the institutions that issue payment card s to consumers – must have access to the CUP 
system, and must pay CUP for that access.    WT/DS413/R/Add.1 
Page F-7 
 
 
  23. China maintains requirements that all automat ed teller machines ("ATM"), merchant card 
processing equipment, and point of sale ("POS") terminals in China accept CUP cards.   C h i n a  
requires that all ATMs, merchant card processing equi pment, and POS terminals in China be capable 
of accepting CUP cards.  There are no equivalent requirements for non-CUP cards. 
24. China maintains requirements on acquiring ins titutions to post the CUP logo and be capable 
of accepting all bank cards bearing the CUP logo.   China requires that all acquiring institutions – the 
institutions that sign up merchants to accept paym ent cards – in China post the CUP logo and be 
capable of accepting all bank cards bearing the CUP logo.  An acquiring institution, often a bank, 
provides POS terminal and processing equipment to merchants so it can process payment cards, maintains the merchant’s account, handles relations w ith the merchant, and ensures that payments are 
properly credited to the merchant. 
25. China maintains broad prohibitions on the use of non-CUP cards.   China prohibits the use of 
domestically issued non-CUP payment cards where the issuing bank and acquiring bank  are different.  
China also requires that all inter-bank transacti ons for all bank cards be handled through CUP. 
26. China maintains requirements pertaining to ca rd-based electronic transactions in China, 
Macao and Hong Kong.   China requires that CUP be used to handle all RMB transactions in Macao or 
Hong Kong using bank cards issued in China.  Chin a also requires that CUP be used to handle any 
RMB transactions in China using RMB cards issued in Hong Kong or Macao. 
27. The U.S. panel request also asserts that these measures are inconsistent with China’s 
obligations under GATS Article XVI:1 and XVI:2 not  to adopt or maintain measures of the types 
listed in Article XVI:2.   The U.S. panel request al so asserts that these measures are also inconsistent 
with China’s obligations under GATS Article XVII to  accord to services and service suppliers of any 
other Member treatment no less favorable than that it accords to its own like services and service 
suppliers, in respect of all measures affecting the supply of services.  Accordingly, the U.S. panel 
request is fully consistent with DSU Article 6.2,  China’s request is without merit, and the Panel 
should reject China’s request and decide this case on its merits.  
IV. THE U.S. PANEL REQUEST IDENTIFIES WITH PRECISION "ELECTRONIC 
PAYMENT SERVICES" FOR "PAYMENT CARD" TRANSACTIONS 
28. The U.S. panel request identifies the specific measures at issue and provides a brief summary 
of the legal basis of the complaint that presents the problem clearly.  As part of that summary, the 
United State also described the nature of the services at issue – "electronic payment services for 
payment card transactions."  The United State further provides in the U.S. panel request footnotes that 
set out a description of those services and an illust rative list of payment cards.  As explained above, 
this is more than adequate to satisfy the require ments of DSU Article 6.2.  We also note that the 
description "electronic payment services" is known and customarily used by market participants.  The 
United States further highlights the clarity of its panel request by presenting extensive evidence 
regarding the use of these terms. 
29. Contrary to China’s assertion that the description of the service as set out in the U.S. panel 
request is "a term of the United States’ own maki ng" the description is drawn from industry sources 
and reflects the broad and common understanding within this sector.  Suppliers of the services at issue 
in this dispute who work within this sector are described as supplying, or characterize themselves as 
supplying, "electronic payment services" and as opera ting within the "global payments industry."  In 
this submission the United States provides extensiv e evidence in support of this description of the 
sector at issue in this dispute and as specifically set out in the U.S. panel request – "electronic 
payment services" for "payment card" transactions. WT/DS413/R/Add.1   
Page F-8  
 
  30. A supplier of EPS enables cardholders’ banks to pay merchants’ banks the amount they are 
owed.  Suppliers of electronic payment services supply, directly or indirectly, a system that typically includes the following:   
 the processing infrastructure, network, and ru les and procedures that facilitate, manage, 
and enable the transmission of transaction information and payments, and which provide 
system integrity, stability and financial risk reduction;  
 the process and coordination of approving or  declining a transaction, with approval 
generally permitting a purchase to be finalized or cash to be disbursed or exchanged;  
 the delivery and transmission of transaction information among participating entities;  
 the calculation, determination, and reporting of the net financial position of relevant 
institutions for all transactions that have been authorized in a given period; and  
 the facilitation, management and/or other par ticipation in the transfer of net payments 
owed among participating institutions. 
31. Electronic payment services provide an efficient,  timely and reliable means to facilitate the 
transmission of funds from the holders of paym ent cards who purchase goods or services to the 
individuals or businesses that supply them.  The ne twork, rules and procedures, and operating system 
that are part of the EPS architecture that allo w processors of payment card transactions to pay 
merchants promptly the amounts they are owed, and to  ensure that customers pay what they owe.  
EPS suppliers receive, check and transmit the info rmation that the parties need to conduct the 
transactions, and manage, facilitate , and enable the transmission of  funds between participating 
entities.  The rules and procedures established by the EPS supplier give the payment system stability 
and integrity, and enable it to efficiently handle net flows of mone y among the institutions involved in 
card payments. 
32. The two principal types of networks used in  card-based electronic payment transactions are 
often referred to as either "open-loop" (or some times referred to as "four party" networks) and 
"closed-loop" (sometimes referred to as "three party"  networks).   EPS suppliers also provide their 
customers with certain guarantees to ensure the inte grity of the electronic payment services, including, 
for example, instances where customers fail to honor payment cards or where issuers or acquirers fail 
to fund obligations. 
33. In addition to the EPS supplier, other entities play a role in a payment card transaction: 
 The issuing institution (or issuer).    Issuing institutions solicit cardholders, establish 
individual credit limits, fix terms such as interest rates and fees, and issue payment cards.  
Debit cards are linked to the card holders’ checki ng or savings account with the issuer, while 
credit cards provide an unsecured personal line of  credit from the issuing bank.  An institution 
seeking to issue cards must itself be capable of supplying EPS or must use an EPS supplier.  Issuing institutions agree to adhere to specifi ed rules that allow the EPS supplier to process 
transactions that use the cards issued by the bank.  The issuer administers the cardholder’s 
account and handles relations with the cardholder.  The issuer is responsible for ensuring that 
the cardholder is able to pay, charging the car dholder for each purchase, and the transmission 
of funds to the EPS’s settlement bank for settleme nt of payment obligations incurred by its 
cardholders. 
 The acquiring institution.    Acquiring institutions seek to "acquire" transactions on payment 
cards.  Acquiring institutions, often a bank, pr ovide point-of-sale terminals or payment card   WT/DS413/R/Add.1 
Page F-9 
 
 
  processing equipment ( e.g. a card swiper) to merchants so they can process payment cards.  
As with issuers, an acquiring institution must its elf be capable of supplying EPS or must use 
an EPS supplier.  Acquiring institutions also  must adhere to specific rules governing 
transactions processed on the payment card transactions it has acquired.  Acquiring 
institutions maintain merchant accounts, handle re lations with the merchant, and ensure that 
payments are properly credited to the merchant. 
 The settlement bank.   In an open-loop (four party) ne twork, the EPS’s settlement bank 
manages the flow of money between issues and acquirers.  Typically, issuers will transfer 
funds to the EPS’s settlement bank, and the EPS ’s settlement bank will transfer funds to 
acquirers.     
34. Outside of China, the competition to provi de services for card-based electronic payment 
transactions is intense.  EPS suppliers explain that they compete "in the global payment marketplace 
against all forms of payment, including paper-based  forms (principally cash and checks)" and "card-
based payments (including credit, charge, debit, ATM, prepaid, private-label and other types of 
general purpose and limited use cards)." 
35. CUP is a significant and increasingly active par ticipant in this competition and EPS suppliers 
describe CUP as a competitor.  CUP’s Articles of A ssociation are explicit that the company is "to 
provide advanced electronic payment technologies and specialized services in connection with the 
inter-bank bank card information switching."  CUP itself recently noted the global reach of its 
"payment services" around the world: 
As the bankcard association in China, Ch ina UnionPay operates the national inter-
bank clearing and settlement system, deve lops the worldwide UnionPay Card 
acceptance network, promotes the issuance a nd usage of the UnionPay Card as well 
as other innovative payment solutions, so as to provide quality, efficient and safe 
payment services to cardholders.  To date, the total number of the UnionPay Card issued both at home and aboard has exceede d 2.5 billion.  The UnionPay network has 
been extended to all the cities and rural ar eas in China. In add ition, China UnionPay 
has enabled the UnionPay Card acceptan ce over 110 countries and regions through 
extensive cooperation with about 400 fi nancial institutions around the world. 
36. As the discussion in above in section IV makes clear, the term "electronic payment services" 
as set out in the U.S. panel request is a commonl y understood term for serv ice supplied for payment 
card based electronic transactions, and, outside of China, there is intense global competition to provide these services, and CUP is an active competitor. 
V. THE U.S. PANEL REQUEST IDENTIFI ES SPECIFIC MEASURES OF CHINA 
THAT MAINTAIN CUP’S MONOPOLY ON  THE SUPPLY OF EPS AND THAT 
AFFECT THE SUPPLY OF EPS BY FOREIGN SUPPLIERS 
37. In addition to the narrative description of Chin a’s measures that maintain CUP’s monopoly on 
the supply of EPS and that affect the supply of EP S by foreign suppliers, the U.S. panel request 
enumerated separate instruments.   The U.S. panel request identifies the following: 
 Requirements that mandate the use of CUP and/or establish CUP as the sole supplier of 
EPS for all domestic transactions denominated and paid in RMB.  China imposes 
requirements that all transactions denominated  and paid in RMB in China be processed and 
cleared in RMB through CUP, and that where there is a choice, all domestic transactions on 
dual currency cards be routed in RMB through CUP. WT/DS413/R/Add.1   
Page F-10  
 
   Requirements on issuers that payment cards issued in China bear the CUP logo.  China 
imposes requirements that any bank cards issu ed in China for RMB purchases in China, as 
well as any dual currency cards issued in China,  must bear the CUP logo.  In practice, this 
means that issuers must pay CUP for access to the CUP system. 
 Requirements that all ATM and POS terminals in China accept CUP cards.   China requires 
that all ATM, merchant card processing equipm ent, and point-of-sale terminals in China be 
capable of accepting CUP cards.  There is no equivalent requirement for other non-CUP 
cards. 
 
 Requirements on acquiring institutions to post the CUP Logo and be capable of accepting 
all bank cards bearing the CUP logo.   China requires that all acquiring institutions in China 
post the CUP logo and be capable of accepting all bank cards bearing the CUP logo.  
 Broad prohibitions on the use of non-CUP cards.   China maintains broad prohibitions on the 
use of non-CUP cards for cross-region or inter-bank (cross-bank) transactions.  China also 
requires that all inter-bank transactions fo r all bank cards be handled through CUP. 
 Requirements in China, Macao, and Hong Kong.   China also requires that CUP be used to 
handle all RMB transactions in Macao or Hong Ko ng using bank cards issued in China.   In 
addition, China also requires that CUP be u sed to handle any RMB transactions in China 
using RMB cards issued in Hong Kong or Macao. 
VI. THE U.S. PANEL REQUEST SPECIFIES THAT CHINA’S GATS SCHEDULE 
INCLUDES BOTH MARKET ACCESS AND NATIONAL TREATMENT 
COMMITMENTS WITH RESPECT TO "ALL PAYMENT AND MONEY TRANSMISSION SERVICES, INCLUDING CREDIT, CHARGE AND DEBIT CARDS…"  
38. The Appellate Body has confirmed that the customary rules of treaty interpretation reflected 
in Articles 31 and 32 of the Vienna Convention appl y to the interpretation of specific commitments in 
a Member’s GATS Schedule.
  Article 31(1) of the Vienna Convention requires a treaty to be 
interpreted "in good faith in accord ance with the ordinary meaning to be given to the terms of the 
treaty in their context and in the light of its object  and purpose."  The Appellate  Body has stated that 
"the structure of the GATS necessarily impli es two things.  First, because the GATS covers 
all services except those supplied in the exercise of gove rnmental authority, it follows that a Member 
may schedule a specific commitment in respect of any service.  Second, because a Member's 
obligations regarding a particular  service depend on the specific commitments that it has made with 
respect to the sector or subsector within which th at service falls, a specific service cannot fall within 
two different sectors or subsectors.  In other words, the sectors and subsectors in a Member’s Schedule must be mutually exclusive." 
39. EPS are at the center of all payment card transactions and without these services the 
transactions could not occur.  EPS fall within the ordinary meaning of payment and money 
transmission services, within item (d) of China’s Sche dule.  The language of item (d) itself makes this 
abundantly clear.  First, as detailed extensively in  this submission and described in greater detail 
below, EPS involve the services through which transactions involving payment cards are processed 
and through which transfers of funds between ins titutions participating in the transactions are 
managed and facilitated.  EPS clearly fall within the ordinary meaning of "payment and money 
transmission services" as one type of " all" such services.  Second, the phrase "all payment and money 
transmission services" is modified with an illustrati ve list that explicitly pr ovides that it "include[s] 
credit, charge and debit cards."  This explicit re ference is in line with the recognition that EPS are 
integral to the processing of credit, charge, deb it and other payment card-based electronic payment   WT/DS413/R/Add.1 
Page F-11 
 
 
  transactions, and without these services, payment ca rd transactions could not occur.  EPS suppliers 
such as Visa, MasterCard, and American Express are names recognized around the world as credit 
cards and charge cards.  The reference to deb it cards covers suppliers of EPS for debit card 
transactions like Visa, MasterCard, Discover, First Data, Pulse, NYCE, STAR, and PLUS.  
VII. THE U.S. PANEL REQUEST SPECIFIES THAT CHINA’S MEASURES ARE 
INCONSISTENT WITH CHINA’S GATS MARKET ACCESS AND NATIONAL 
TREATMENT COMMITMENTS  
40. In addition to identifying the service at issue,  the specific measures at  issue, and China’s 
GATS commitments, the U.S. panel request specifi es that China’s measures that maintain CUP’s 
monopoly on the supply of EPS and that affect the suppl y of EPS by foreign suppliers are inconsistent 
with China’s obligations under GA TS Article XVI:1 to accord services and services suppliers of any 
other Member treatment no less favorable that that provided for in China’s Schedule and that China is 
maintaining or adopting measures set out in Article XVI:2.  The U.S. panel request also states that 
these measures are inconsistent with China’s obl igations under GATS Article XVII to accord to 
services and service suppliers of any other Member tr eatment no less favorable than that it accords to 
its own like services and service suppliers. 
VIII.  CONCLUSION 
41. The U.S. panel request is fully consistent with DSU Article 6.2.  The U.S. panel request is in 
writing, indicates that consultations were held, iden tifies the specific measures at issue, and provides a 
brief summary of the legal basis of the compla int sufficient to present the problem clearly.  
Accordingly, the United States reque sts that the Panel reject in its entirety China’s request for 
preliminary ruling. WT/DS413/R/Add.1   
Page F-12  
 
  ANNEX F-3 
 
EXECUTIVE SUMMARY OF CHINA'S COMMENTS ON THE UNITED STATES' 
SUBMISSIONS IN RESPONSE TO CHINA' S REQUEST FOR A PRELIMINARY RULING 
 
I. THE U.S. RESPONSE CONFIRMS THE INCONSISTENCY OF THE PANEL 
REQUEST WITH ARTICLE 6.2 OF THE DSU 
1. The unprecedented scale of the U.S. response to Ch ina’s request for a preliminary ruling – 64 
pages of single-spaced text, with 62 accompanying exhibits – offers definitive proof that the U.S. 
panel request failed to "provide a brief summary of  the legal basis of the complaint sufficient to 
present the problem clearly", as required by Article 6.2 of the DSU.   
2. As far as China can discern, there is no material disagreement between the parties concerning 
the requirements of Article 6.2 or its associated jurisprudence.  Apparently, the United States hopes 
that by supplying explanations and connections th at are nowhere evident in the panel request, the 
Panel will be willing to overlook the fact that the U.S. pa nel request is deficient on  its face.  It is "well 
established", however, "that compliance with the requi rements of Article 6.2 must be determined on 
the face of the request for the estab lishment of the panel and that defects therein cannot be ‘cured’ in 
the subsequent submissions of the parties during the panel proceedings."   
3. In its response, the United States could have ac knowledged the failure of the panel request to 
indicate which modes of supply are at issue, and a ttempted to defend this om ission as consistent with 
the requirements of Article 6.2.  Instead, the United States pretends that the panel request actually did 
put China on notice as to which modes of supply were at issue, stating that "[w]ith respect to each of 
the subsectors identified in the U.S. panel requ est, China undertook both market access and national 
treatment commitments for modes (1) and (3) as spec ified in its Schedule [and] [t]he commitments for 
each mode of supply for items (d), (k), and (l) in China’s Schedule are specified therein." 
4. As China understands this statement, the Unite d States appears to be saying: (1) that it 
considers its claims to arise under Modes 1 and 3;  and (2) that because Modes 1 and 3 are among the 
four modes of supply, the panel request "put China on notice" as to which modes of supply were at issue.  Yet the panel request makes no reference what soever to the modes of supply.  The fact that 
Modes 1 and 3 are among the four possible modes of supply did not, by itself, put China on notice as to which modes of supply were at issue and provide a sufficient basis for China to begin preparing its 
defence.   
5. Furthermore, despite the belated explanations from the United States, the U.S. panel request 
remains unclear as to the legal relevance of the three distinct and mutually exclusive subsectors 
identified in the panel request.  The United States now asserts, categorically and unequivocally, that 
the entirety of what it calls "electronic payment services" is encompassed by subsector D, "all 
payment and money transmission services".   
6. As with its belated indication of the modes of s upply, the tone of the U.S. response is that it 
should have been self-evident to any reader of th e panel request that the United States intended to 
encompass all of "electronic payment services" in s ubsector D.  But taking two of the three subsectors 
off the table in a subsequent submission does not rectify the obvious lack of clarity in the panel request itself.   
7. Indeed, the U.S. response only ser ves to deepen the confusion as to how the three subsectors 
relate to its claims in this dispute.  Twice in its  response, the United States implies that it intends to 
advance "separate claims" under each of the three s ubsectors identified in the panel request.  If the 
United States intended to advance "separate clai ms" under three different and mutually exclusive   WT/DS413/R/Add.1 
Page F-13 
 
 
  subsectors, the time for setting forth these "separate claims" was in the panel request.  But the panel 
request merely lists the three subsectors and ma kes an undifferentiated set of claims that the 
challenged measures are inconsistent with China’s market access and national treatment commitments.   
8. In sum, what Article 6.2 requires, and what is still missing from even the "amended" U.S. 
panel request, is a concise explan ation of how the identified services relate to China’s specific 
commitments in the identified subsectors and modes of supply.  The inability of the United States to provide this explanation is further proof that th e U.S. panel request does not "present the problem 
clearly" as required by Article 6.2.   
II. CONCLUSION 
9. There is now little doubt that the panel request provides an insufficient legal basis for this 
proceeding to continue.  The course of action that is both prudent and required by Article 6.2 of the 
DSU is to require the United States to submit a revised panel request to the DSB. 
 
   WT/DS413/R/Add.1 
Page G-1 
 
 
  ANNEX G 
 
EXCERPT OF CHINA'S SCHEDULE 
 
Annex G-1 The People's Republic of China – Schedule of Specific Commitments, 
GATS/SC/135 – excerpt G-2 
  
  WT/DS413/R/Add.1        
Page G-2 Modes of supply:  (1)  Cross-border supply (2)  Consumption abroad     (3)  Commercial presence       (4) Presence of natural p ersons 
Sector or sub-sector Limitations on market access Li mitation on national treatment Additional commitments 
7. FINANCIAL SERVICES    
A. All Insurance and Insurance-Related 
Services1 
[…]   
 
[…]  
 
[…]  
B. Banking and Other Financial 
Services 
 (excluding insurance and securities) 
 
 Banking services as listed below: 
 
(a) Acceptance of deposits and other 
repayable funds from the public; 
(b) Lending of all types, including 
consumer credit, mortgage credit, factoring and financing of 
commercial transaction; 
(c) Financial leasing; (d) All payment and money (1) Unbound except for the following: 
- Provision and transfer of financial 
information, and financial data 
processing and related software by 
suppliers of other financial services; 
- Advisory, intermediation and other 
auxiliary financial services on all activities listed in subparagraphs (a) 
through (k), including credit 
reference and analysis, investment and portfolio research and advice, 
advice on acquisitions and on 
corporate restructuring and strategy. 
(2) None (1) None 
  
 
 
 
  
 
  
 
 (2) None For financial leasing services, foreign 
financial leasing corporations will be permitted to provide financial leasing 
service at the same time as domestic 
corporations. 
 transmission services, including 
credit, charge and debit cards, travellers cheques and bankers 
drafts(including import and export 
settlement); 
(e) Guarantees and commitments; 
(f) Trading for own account or for 
account of customers: foreign exchange. (3)  
A.  Geographic coverage 
 For foreign currency business, there 
will be no geographic restriction 
upon accession. For local currency business, the geographic restriction 
will be phased out as follows: Upon 
accession, Shanghai, Shenzhen, Tianjin and Dalian; Within one year 
after accession, Guangzhou, Zhuhai, 
Qingdao, Nanjing and Wuhan; 
within two years after accession, 
Jinan, Fuzhou, Chengdu and (3) Except for geographic restrictions 
and client limitations on local currency business (listed in the 
market access column), foreign 
financial institution may do business, without restrictions or 
need for case-by-cas e approval, with 
foreign invested enterprises, non-Chinese natural persons, Chinese 
natural persons and Chinese 
enterprises.  Otherwise, none.  
                                                      
1 Any further authorization provided to fore ign insurers after accession under more fa vorable conditions than those contained in  this schedule (including the extension of 
grandfathered investments through branching, sub-branching or any other legal form), will be made available to other foreign se rvice suppliers which so requested.  
   WT/DS413/R/Add.1
 Page G-3Modes of supply:  (1)  Cross-border supply (2)  Consumption abroad     (3)  Commercial presence       (4) Presence of natural p ersons 
Sector or sub-sector Limitations on market access Li mitation on national treatment Additional commitments 
  Chongqing; within three years after 
accession, Kunming, Beijing and 
Xiamen; Within four years after 
accession, Shantou, Ningbo, Shenyang and Xi'an. Within five 
years after accession, all geographic 
restrictions will be removed.   
 B. Clients 
 For foreign currency business, 
foreign financial institutions will be 
permitted to provide services in 
China without restriction as to clients upon accession.  
 For local currency business, within 
two years after accession, foreign financial institutions will be 
permitted to provide services to 
Chinese enterprises. Within five years after accession, foreign 
financial institutions will be 
permitted to provide services to all Chinese clients. Foreign financial 
institutions licensed for local 
currency business in  one region of 
China may service clients in any 
other region that has been opened 
for such business. 
C. Licensing 
 Criteria for authorization to deal in 
China's financial services sector are 
solely prudential (i.e., contain no 
economic needs test or quantitative limits on licenses). Within five years 
after accession, any existing non-
prudential measures restricting ownership, operation, and juridical 
form of foreign financial    
  WT/DS413/R/Add.1        
Page G-4 Modes of supply:  (1)  Cross-border supply (2)  Consumption abroad     (3)  Commercial presence       (4) Presence of natural p ersons 
Sector or sub-sector Limitations on market access Li mitation on national treatment Additional commitments 
institutions, including on internal 
branching and licenses, shall be 
eliminated.  
  Foreign financial institutions who 
meet the following condition are permitted to establish a subsidiary of 
a foreign bank or a foreign finance 
company in China: 
- total assets of more than US $10 
billion at the end of the year prior to 
filing the application.  
 Foreign financial institutions who 
meet the following condition are 
permitted to establish a branch of a foreign bank in China: 
- total assets of more than US $20 
billion at the end of the year prior to filing the application. 
 Foreign financial institutions who 
meet the following condition are 
permitted to establish a Chinese-
foreign joint bank or a Chinese-foreign joint finance company in 
China: 
- total assets of more than US $10 
billion at the end of the year prior to 
filing the application.  
 Qualifications for foreign financial 
institutions to engage in local 
currency business are as follows: 
- three years business operation in 
China and being profitable for two 
consecutive years prior to the 
application, otherwise, none.      
 (4) Unbound except as indicated in  
horizontal commitments.  (4) Unbound except as indicated in  
horizontal commitments.     
   WT/DS413/R/Add.1
 Page G-5Modes of supply:  (1)  Cross-border supply (2)  Consumption abroad     (3)  Commercial presence       (4) Presence of natural p ersons 
Sector or sub-sector Limitations on market access Li mitation on national treatment Additional commitments 
- Motor vehicle financing by non-
bank financial institutions (1) Unbound except for the following: 
- Provision and transfer of financial 
information, and financial data 
processing and related software by suppliers of other financial services; 
- Advisory, intermediation and other 
auxiliary financial services on all activities listed in subparagraphs (a) 
through (k), including credit 
reference and analysis, investment 
and portfolio research and advice, 
advice on acquisitions and on corporate restructuring and strategy. 
(2) None 
(3) None (4) Unbound except as indicated in  
horizontal commitments. 
 (1) Unbound 
 
 
  
 
  
 
 
 
  
(2) None 
(3) None (4) Unbound except as indicated in  
horizontal commitments.  
- Other financial services as listed 
below: 
(k) Provision and transfer of financial 
information, and financial data processing and related software by 
supplier of other financial services; 
(l) Advisory, intermediation and other 
auxiliary financial services on all 
activities listed in subparagraphs (a) 
through (k), including credit reference and analysis, investment 
and portfolio research and advice, 
advice on acquisitions and on 
corporate restructuring and strategy. 
 (1) None 
(2) None 
(3) None (Criteria for authorization to 
deal in China's financial services sector are solely prudential (i.e., 
contain no economic needs test or 
quantitative limits on licenses). Branches of foreign institutions are 
permitted. 
(4) Unbound except as indicated in  
horizontal commitments. (1) None 
(2) None 
(3) None  
  
 
  
 
(4) Unbound except as indicated in   
horizontal commitments.  
- Securities (1) Unbound except for the following: 
- Foreign securities institutions may 
engage directly  (without Chinese 
intermediary) in B share business. (1) None 
  
   
  WT/DS413/R/Add.1        
Page G-6 Modes of supply:  (1)  Cross-border supply (2)  Consumption abroad     (3)  Commercial presence       (4) Presence of natural p ersons 
Sector or sub-sector Limitations on market access Li mitation on national treatment Additional commitments 
(2) None 
(3)  
(a) Unbound, except for the following: 
- Upon accession, representative 
offices in China of foreign securities 
institutions may become Special 
Members of all Chinese stock exchanges. 
- Upon accession, foreign service 
suppliers will be permitted to 
establish joint ventures with foreign 
investment up to 33 per cent to conduct domestic securities 
investment fund management 
business. Within three years after China's accession, foreign 
investment shall be increased to 49 
per cent. Within three years after accession, foreign securities 
institutions will be permitted to 
establish joint ventures, with foreign minority ownership not exceeding 
1/3, to engage (without Chinese 
intermediary) in underwriting A shares and in underwriting and 
trading of B and H shares as well as 
government and corporate debts, launching of funds. 
(b).  Criteria for authorization to deal in 
China's financial industry are solely 
prudential (i.e., contain no economic 
needs test or quantitative limits on licenses). 
(4) Unbound except as indicated in  
horizontal commitments. (2) None 
(3) None 
 
  
 
  
 
 
 
  
 
  
 
  
 
  
 
  
 
  
 
 
 
  
(4) Unbound except as indicated in  
horizontal commitments. 
 
_______________   WT/DS413/R/Add.1 
 Page H-1 
 
 
   
ANNEX H 
 
TABLE OF TRANSLATIONS OF LEGAL MEASURES 
AND OTHER INSTRUMENTS 
 
Annex H-1 Table of translations of legal measures and other instruments referred to by the 
parties H-2  
  WT/DS413/R/Add.1        
Page H-2 TABLE OF TRANSLATIONS OF LEGAL MEASURES AND OTHER INSTRUMENTS REFERRE D TO BY THE PARTIES1 
 
DOCUMENT NO. TRANSLATION BY UNITED STATES TRANSLATION BY CHINA TRANSLATION AGREED BY PARTIES / 
TRANSLATION SUGGESTED BY UNOG 
CUP's Articles of 
Association 
Exhibit US-20 
 Art. 11 
The purpose of the Company: by adopting advanced and 
practical technical means and scientific and flexible 
operational and managerial  methods, to set up and 
operate a unified, highly e fficient and safe inter-bank 
bank card information exchange network across the 
country, ensure the inter-bank common use of bank 
cards and the joint development of bank card business, 
provide specialized services with regard to the inter-
bank bank card information exchange, improve the 
environment for bank card use, and promote the rapid 
development of China's bank card industry.   [No Chinese Exhibit] [See the parties' translations] 
Art. 12 
Upon being registered according to law, the business 
scope of the Company is as fo llows:  (1) to establish and 
operate a single nationwide inter-bank bank card 
information switching network;  (2) to provide advanced 
electronic payment techno logies and specialized 
services in connection with the inter-bank bank card 
information switching; (3) and to engage in bankcard 
technological innovation; (4) to manage and operate the 
brand of "UnionPay"; (5) to formulate the code and 
technical standards for inter-bank bank card 
transactions, and to mediate and arbitrate any business 
disputes arising out of inte r-bank transactions; (6) to 
organize trainings for the industry, business seminars 
and international exchange programs; and  (7) to 
conduct related researches a nd consulting services; and 
to conduct such other rela ted businesses as may be 
approved by competent authorities. [No Chinese Exhibit] [See the parties' translations] 
                                                      
1 This annex is available in English only, as it speci fically relates to Chinese-to-English translations. 
  
   WT/DS413/R/Add.1
 Page H-3DOCUMENT NO. TRANSLATION BY UNITED STATES TRANSLATION BY CHINA TRANSLATION AGREED BY PARTIES / 
TRANSLATION SUGGESTED BY UNOG 
Notification of 
Approval of CUP's 
Business Licence 
Exhibit US-29 
 Business Scope  
To establish and operate a single nationwide inter-bank 
bank card information switching network, to provide 
advanced electronic pa yment technologies and 
specialized services in c onnection with the inter-bank 
bank card information switching, and to engage in 
bankcard  technological innov ation; to manage and 
operate the brand of "UnionPay", to formulate the code 
and technical standards for inter-bank bank card 
transactions, to mediate and arbitrate any business 
disputes arising out of in ter-bank transactions, to 
organize trainings for the industry, business seminars 
and international exchange programs, and to conduct 
related researches and c onsulting services; and to 
conduct such other  relate d businesses as may be 
approved by the People's Bank of China. [No Chinese Exhibit] [See the parties' translations] 
Document No. 8 
Exhibit US-46 
Exhibit CHN-62 
 
 Art. 6 
Matters in relation to individual RMB bank card 
clearing shall be organized and handled by the clearance 
banks and ChinaUnionPay Joint Stock Co., Ltd. 
Mainland residents may use individual RMB bankcards 
issued by the domestic banks to pay for travelling 
expenses (such as shopping,  meals, accommodation, 
transportation, and medical expenses) in Macao and to 
withdraw small-amounts of cash in Macao dollars from 
ATM machines in Macao but may not withdraw 
Renminbi cash. RMB bankcards issued to Macao 
individual residents by part icipating banks or their 
subsidiaries can be used to  pay for individual expenses 
in Mainland China and to withdraw small amounts of 
RMB cash from ATM machines in Mainland China. Art. 6 
Matters in relation to indi vidual RMB bankcards are 
organized and handled by the Clearing Bank and China 
UnionPay Co., Ltd.  A ma inland resident may use an 
individual RMB bankcards issued by a mainland bank to make payments in respect of  touring and consumption in 
Macao for shopping, catering, accommodation, traffic, 
medical care, etc., and may withdraw a small amount of 
MOP cash on ATMs in Macao, but may not withdraw 
RMB cash.  A RMB bankcard issued by a Participating 
Bank or its subsidiary to a Macao resident may be used 
to make payments in respect  of individual consumption 
in the mainland, and to withdraw a small amount of 
RMB cash on ATMs in the mainland. [See the parties' translations]  
  WT/DS413/R/Add.1        
Page H-4 DOCUMENT NO. TRANSLATION BY UNITED STATES TRANSLATION BY CHINA TRANSLATION AGREED BY PARTIES / 
TRANSLATION SUGGESTED BY UNOG 
Document No. 16 
Exhibit US-44 
Exhibit CHN-60 Art. 6 
Matters in relation to individual RMB bank card 
clearing shall be organized and handled by the clearance 
banks and China UnionPay Joint Stock Co., Ltd. 
Mainland residents may use individual RMB bank cards 
issued by the domestic banks to pay for travelling 
expenses (such as shopping,  meals and accommodation) 
in Hong Kong and to withdraw  small amounts of cash in 
Hong Kong dollars from ATM machines in Hong Kong. 
RMB bankcards issued to Hong Kong individual 
residents by participating banks  or their subsidiaries can 
be used to pay for individual expenses in Mainland 
China and to withdraw small amounts of RMB cash 
from ATM machines in Mainland China. Art. 6 
Matters in relation to individual RMB bankcard clearing 
are organized and handled by the clearing banks and 
China UnionPay Co., Ltd.  Mainland residents may use 
the individual RMB bankcards issued by mainland 
banks to make payments in respect of touring and 
consumption in Hong Kong for shopping, catering, 
lodging, etc., and may withdr aw a small amount of HKD 
cash on ATMs in Hong Kong.  The RMB bankcards 
issued by the participating ba nks or their subsidiaries to 
Hong Kong residents may be used in the mainland to 
make payments for indi vidual consumption and 
withdraw a small amount of RMB cash on ATMs in the 
mainland. Art. 6 – UNOG translation :  
The clearance of individual RMB bankcards will be 
organized and handled by the clearing banks and China 
UnionPay Co., Ltd.  Mainland residents may use 
individual RMB bankcards issued by mainland banks to 
make payments in Hong Kong for such travelling 
expenses as shopping, m eals and lodging, and may 
withdraw small amounts of cash in Hong Kong dollars 
from ATMs in Hong Kong.  RMB bankcards issued to 
Hong Kong residents by participating banks or their 
subsidiaries may be used to make payments for 
individual expenses and to withdraw small amounts of 
cash in RMB from ATMs on the mainland. 
Document No. 17 
Exhibit US-52 
Exhibit CHN-53 Art. 5 
Bank cards are classified into credit cards and debit 
cards.  
Bank cards may be classified into RMB cards and 
foreign currency cards according to the currency type; 
entity cards (commercial card) and individual cards 
according to the target of issuance; and magnetic cards and integrated circuit (IC) cards according to the 
information carrier. Art. 5 
Bankcards include credit cards and debit cards. 
Bankcards can be classified into RMB cards and foreign 
currency cards according to different currencies of the 
cards; entity cards (comme rcial cards) and individual 
cards according to different issue targets; and magnetic 
cards and integrated circuit (IC) cards according to different information carriers. [See the parties' translations] 
Art. 7 
Debit cards may be classified into cards for transferring 
accounts (including savings cards, same as below), cards 
for special purposes and stored-value cards. Debit cards 
do not possess the overdrawing function. Art. 7 
According to different functions, debit cards can be 
classified into account transferring cards (including 
stored value cards, similarly hereafter), special use cards 
and stored value cards.  Debit cards do not have 
overdraw function. [See the parties' translations] 
 
Art. 8 
The card for transferring accounts refers to the debit card which makes real-time deduction of accounts.  It 
possesses such functions as transfer, settlement, 
depositing and withdrawing cash, and consumption. Art. 8 
An account transferring card refers to a debit card which 
provides instant deduction servic e.  It provides functions 
including account transferring  and clearing, cash deposit 
and withdrawal, and consuming, etc.. [See the parties' translations]  
   WT/DS413/R/Add.1
 Page H-5DOCUMENT NO. TRANSLATION BY UNITED STATES TRANSLATION BY CHINA TRANSLATION AGREED BY PARTIES / 
TRANSLATION SUGGESTED BY UNOG 
Art. 9 
The card for special purpose refers to the debit card 
which is for any special purpose and used in certain 
specially designated areas. It possesses such functions as 
transfer, settlement, deposit ing and withdrawing cash.  
Special purpose refers to a purpose other than those in 
the industries of genera l merchandise, catering, 
restaurant and entertainment. Art. 9 
A special use card refers to a debit card used in specific 
areas for specific purposes.  Its provides functions 
including account transferring  and clearing, cash deposit 
and withdrawal, etc.. 
 
Special use means being used other than in the 
industries of general mercha ndise, catering, dining and 
entertainment. [See the parties' translations] 
 
Art. 10 
Stored-value card refers to purse-style debit card which 
requires advance payment, and when the card-issuing 
bank transfers the money of the cardholder into this card 
upon the request of the car dholder and the money is 
deducted from the card when a transaction is made. Art. 10 
A stored value card refers to prepaid wallet-style debit 
card which allows to transfer the cardholder's funds to 
the card for storage according to the cardholder's 
requirements and deduct mone y from this card directly 
when a transaction is made. [See the parties' translations] 
Art. 27  
[See agreed translation] Art. 27  
[See agreed translation] Art. 27 – Translation agreed by parties : 
Commercial banks, when acting as agents for overseas 
bankcard acquiring services, shall charge a merchant 
settlement commission, which shall be no less than four 
percent of the transaction amount. 
Art. 30  
[See agreed translation] Art. 30  
[See agreed translation] Art. 30 - Translation agreed by parties : 
As for the account of a foreign currency entity card, 
funds shall be deposited by means of transferring from 
the foreign exchange account of the entity, and no cash 
in foreign currency may be deposited or withdrawn 
within the territory of China. The foreign exchange 
account of the entity shall satisfy the following 
conditions: 
(1) The account shall be opened according to relevant 
provisions issued by the People's Bank of China regarding the administration of foreign exchange 
accounts within the territory of China; 
(2) The specific items of pa yment shall be indicated 
accordingly within the scope of the revenue and 
expenditure of the fore ign exchange account.  
  WT/DS413/R/Add.1        
Page H-6 DOCUMENT NO. TRANSLATION BY UNITED STATES TRANSLATION BY CHINA TRANSLATION AGREED BY PARTIES / 
TRANSLATION SUGGESTED BY UNOG 
 Art. 48  
[See agreed translation] Art. 48  
[See agreed translation] Art. 48 - Translation agreed by parties : 
Where losses are still not fully recovered after taking 
measures listed under Article 47, the issuing bank shall 
apply the Administrative Measures on Reserves for 
Uncollectible Accounts, issued by the Ministry of 
Finance. 
 Art. 64 
A commercial bank (or financial institution) within the 
borders of the People's Republic of China shall, when 
issuing any variety of bank card (except those with the 
mark of any international credit card organization), 
implement the technical standards prescribed by the 
state.  
As for an entity card, relief stamp of such characteristics 
as "DWK" shall be made at a proper place of the bottom 
left of the card.  
The following elements shall be indicated on the surface 
of a bank card: name of the primary legal person of the 
card-issuing bank, uniform brand name, brand mark 
(except the cards for special purposes), card number 
(except IC cards), points of attention for the cardholder, 
customer service telephone num ber, signature bar for the 
cardholder (except IC cards), etc. Art. 64 
Any type of bankcard issued by a commercial bank (or 
financial institution) within the territory of the People's 
Republic of China shall follow the technical standards 
prescribed by the state, except for those bankcards 
affixed with logos of international credit card 
organizations. 
With regard to an entity card, a relief stamp of such 
characters as "DWK" shall be marked at a proper place 
at the lower left of the card. 
The following information shall be indicated on the 
surface of a bankcard: name of the card-issuing bank, 
brand name of the card, brand logo (except for cards 
with special purposes), card number (except IC cards), 
user attention, customer service telephone number, and 
signature bar for the cardholder (except IC cards), etc. [See the parties' translations] 
Art. 65 
As for the domestic circulation and use of bank cards 
issued by other financial institutions and overseas 
institutions approved by the People’s Bank of China as 
qualified for operating bank card business, these 
Measures shall apply. Art. 65 
These measures are applicable to the circulation and use 
within the territory of the PRC of the bankcards issued 
by other financial institutions which have been approved 
by the People's Bank of China for operating bankcard 
business, or the bankcards issued by overseas 
institutions. Art. 65 – UNOG translation : 
[If overseas financial institutions are indeed subject to 
regulation by the domestic authorities ]: These measures 
[shall] apply to the domestic  circulation and use of 
bankcards issued by other financial and overseas 
institutions authorized by the People’s Bank of China to 
conduct bankcard operations.  
[Or, if overseas financial instit utions are NOT subject to 
regulation by the domestic authorities ]: These measures 
[shall] apply to the domestic  circulation and use of 
bankcards issued by other financial institutions 
authorized by the People’s Bank of China to conduct 
bankcard operations, and to bankcards issued by 
overseas institutions.  
   WT/DS413/R/Add.1
 Page H-7DOCUMENT NO. TRANSLATION BY UNITED STATES TRANSLATION BY CHINA TRANSLATION AGREED BY PARTIES / 
TRANSLATION SUGGESTED BY UNOG 
Document No. 37  
Exhibit US-40 
Exhibit CHN-54 Art. 1.2(i) 
By the end of this year, all commercial banks shall, in 
accordance with unified standards and specifications of 
bank cards, complete transformation of their bank card 
processing system, and make technical preparations for 
accepting bank cards bearing the CUP logo. Art. 1.2(i) 
Before the end of this year, all Commercial Banks shall 
complete the transformation of their own bankcard 
business processing systems according to requirements 
of the uniform standards and specifications for 
bankcards and make technical preparation for accepting 
the cards bearing the "Yin Lian" logo. Art. 1.2(i) – UNOG translation :
 All commercial banks shall complete the transformation 
of their internal bankcard business processing systems 
before the end of this year, in accordance with the 
requirements of the uniform standards and specifications 
for bankcards, and make te chnical preparations for 
accepting cards bearing the "Yin Lian/UnionPay" logo. 
Art. 1.2(ii) 
The head office of the National Bank Card Information 
Exchange and all city centers shall basically complete 
transformation of the exchange system by October 1 of 
this year and conduct various system joint adjustment 
work in cooperation with member banks to realize 
transaction information inter-bank transfer for bank 
cards bearing the CUP logo by the end of the year. Art. 1.2(ii) 
The transformation of the switching system of the 
National Bankcard Informa tion Center ("General 
Center") and the switching systems of the urban centers 
shall be completed basically before October 1 this year.  
Cooperate with the member banks in the collaborative 
adjustment of systems and realize the cross-bank 
transmission of transaction information for the cards 
bearing the "Yin Lian" logo before the end of the year. [See the parties' translations] 
Art. 1.2(iii) 
All commercial banks and c ity centers which have 
adopted POS integrated management shall, in 
conjunction with progress made in their business 
processing system transformation, speed up the 
transformation of terminal equipments such as ATM, 
POS, etc., and strive to complete all transformation tasks 
by the end of 2002.  Before the end of this year, 
transformation in all municipalities directly under the 
Central Government, provincial capitals and in 
Shenzhen, Dalian, Xiamen, Qingdao, Ningbo, etc. shall 
be basically completed.  From  the second quarter of this 
year, all terminal equipments such as ATM, POS etc. 
newly placed by all commercial banks (centers) shall 
comply with the requirement s of unified standards and 
specifications, to avoid repetitive transformation. Art. 1.2(iii) 
All commercial banks and the urban centers that apply 
the POS centralized manageme nt mode shall, according 
to the transformation progress of their own business 
processing system, hasten the transformation of the 
terminals, e.g. ATM and POS,  and try to complete all 
transformation before the end of 2002.  Before the end 
of this year, transformation shall basically be completed 
in the municipalities di rectly under the Central 
Government, the provincial ca pital cities and Shenzhen, 
Dalian, Xiamen, Qingdao and Ningbo, etc..  From the 
second quarter of this year, terminals, e.g. ATM and 
POS, which are newly launched by the commercial 
banks (centers), shall meet requirements of the uniform 
standards and specifications to obviate the need for 
further transformation. [See the parties' translations]  
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Art. 2.1(i) 
Bank cards issued by all commercial banks with inter-
bank usability in China must bear the CUP logo at the 
specified position on the front of the cards, and all RMB 
credit cards issued solely for domestic use must also 
bear the CUP special anti-counterfeiting logo at the 
specified position, provided th at special cards issued 
solely for specific regions or for specific usage shall not 
use the CUP logo:   Art. 2.1(i) 
All the bankcards issued by Commercial Banks for 
domestic cross-bank use must bear the "Yin Lian" logo 
printed uniformly at the designated position on the front 
of the cards.  The RMB credit card limited to domestic 
interoperable use shall also bear the special anti-
counterfeiting mark of the "Yin Lian" at the designated 
position.  However, the "Yin Lian" logo shall not be 
used on the special usage cards which are limited to use 
in a certain region or a particular purpose. [See the parties' translations] 
Art. 2.1(ii) 
All terminals (such as ATM and POS) which join the 
nationwide bank card inter-bank processing network 
must be capable of accepting all bank cards bearing the 
CUP logo and must post the CUP logo; and Art. 2.1(ii) 
The terminals, e.g. ATM a nd POS, which have joined 
the national bankcard cross-bank switching network, 
must be able to accept any type of bankcards with the 
"Yin Lian" logo, and must bear the "Yin Lian" logo. [See the parties' translations] 
Art. 2.1(iii) 
All cards bearing the CUP logo must strictly abide by 
the unified technical specifications and all bank card 
issuers must provide corre sponding cross-region and 
inter-bank services pursuant to the unified business 
specifications. Art. 2.1(iii) 
All bankcards bearing the "Yin Lian" logo must be in 
strict compliance with uniform technical standards.  
Card issuing banks must provide corresponding cross-
regional and cross-bank servi ces as required by uniform 
business specifications. [See the parties' translations] 
Art. 2.2(i) 
Starting this year, all commercial banks shall arrange the 
replacement of all bank cards which do not conform to 
the unified requirements and the CUP logo usage 
requirements and will basically complete the work by 
the end of 2003. Starting in 2004, all bank cards not 
bearing a CUP logo will not be used for cross-region or 
inter-bank transactions; and Art. 2.2(i) 
From this year, all Commercial Banks shall make 
overall arrangements for the replacement of the 
bankcards that do not meet the uniform standards and 
the requirements for the use of the "Yin Lian" logo, and 
the replacement shall basically be completed before the 
end of 2003.  From 2004, any bank's bankcards issued 
without the "Yin Lian" logo may not be used for cross-
region or cross-bank transactions. [See the parties' translations] 
Art. 2.2(ii) 
By the end of this year, all state-owned banks shall issue 
bank cards bearing the CUP logo in the five cities of 
Beijing, Shanghai, Guangzhou, Shenzhen and 
Hangzhou, and shall gradually issue these cards in other 
cities in consideration of their progress in terminal 
equipment transformation.  Joint stock commercial 
banks, urban commercial ba nks and postal savings Art. 2.2(ii) 
Before the end of this year, the State-owned commercial 
banks shall introduce bankcards bearing the "Yin Lian" 
logo in the five cities of Beijing, Shanghai, Guangzhou, 
Shenzhen and Hangzhou before gradually spreading the 
same into other cities according to the transformation 
progress of the terminal acceptance equipments of the 
banks.  Joint-stock and urban commercial banks and [See the parties' translations]  
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institutions shall endeavor to issue the bank cards bearing the CUP logo in the said cities this year. postal saving institutions shall also strive to introduce 
the bankcards bearing the "Yin Lian" logo in the 
aforementioned cities within the year. 
Art. 3.1(i) 
Commercial banks which have opened bank card business in China must join the nationwide bank card 
inter-bank exchange network, to complete the 
interoperability of its bank card business processing 
system and nationwide bank card inter-bank processing 
network. Art. 3.1(i) 
The commercial banks that operate bankcard business 
within the territory of China must join the national 
bankcard cross-bank switching network in order to 
realize the interoperability between their own bankcard 
business processing systems and the national bankcard 
cross-bank switching network. [See the parties' translations] 
Document No. 49 
Exhibit US-62 
Exhibit CHN-68 Art. IV  
[See agreed translation] Art. IV  
[See agreed translation] Art. IV – Translation agreed by parties : 
A wholly foreign-funded bank or Chinese-foreign equity 
joint bank which plans to issue bank cards shall abide by 
the bank card business and technical standards as 
formulated by the People's Bank of China and meet the 
general requirements regarding the network for 
bankcard interoperability. 
Document No. 53 
Exhibit US-51 
Exhibit CHN-71 Art. V.2 
Domestic card transactions inside China shall be settled 
in RMB through domestic clearing channels after 
subtracting the amount of cas h in foreign currencies  
withdrawn over the counter.  Any overdraft arising from 
domestic transactions shall be paid by the cardholder in 
RMB. Art. V.2 
Transactions occurring within the territory of China with 
domestic cards shall, after the deduction of the amount 
of the cash in any foreign currency withdrawn over the 
counter, be cleared in RMB through domestic clearing 
channels.  Any overdrawn amounts arising from 
domestic transactions shall be paid in RMB by the card 
holder. [See the parties' translations] 
Art. V.3 
If, for any reason, the clearing of transactions made 
inside China with domestic cards is made through an 
international bank card organization, the card-issuing 
financial institution may, after clearing in foreign 
currency, purchase exchange with the RMB funds to 
make up the foreign exchange that has been used in the 
clearing. "Clearing through an  international bank card 
organization" refers to tw o circumstances: the clearing 
of domestic transactions made with domestic foreign 
currency cards through a international bank card 
organization; and "wrong throw", in which the clearing 
is made through an international bank card organization Art. V.3 
Where transactions occurring within the territory of 
China with domestic cards are cleared through an 
international bankcard organization for a particular 
reason, upon the completion of the clearing in foreign 
currencies, the card-issuing financial institutions may 
use the RMB repaid by the card holders to purchase 
foreign exchanges to reimburse for the foreign exchange 
paid in advance.  A transac tion might be cleared through 
an international bankcard organization under the 
following two circumstances: (1) Transactions occurring 
within the territory of China with domestic foreign 
currency cards are cleared through an international Art. V.3 - UNOG translation : 
Where, under special circumstances, domestic-card 
transactions occurring within China are cleared through 
an international bankcard or ganization, the card-issuing 
financial institutions may, after completing the clearing 
in foreign currencies, purchase foreign exchange using 
the RMB repaid by the card holders to make up for the 
foreign exchange already advanced. Clearance through 
an international bankcard or ganization occurs under one 
of two circumstances: (1) where domestic foreign-
currency card transactions occurring within China are 
cleared through an international bankcard organization;  
and (2) "wrong hand- off" transactions, in which  
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due to the merchant service institution’s mistreating a domestic home-foreign currency card as a foreign 
currency card, which, when used within the territory of 
China, shall be regarded as a RMB card. bankcard organization; (2) A "wrong throw" transaction, 
which refers to the circumstance where a transaction 
occurring within the territory of China with a domestic 
dual currency card, which should have been processed 
same as that of a RMB card, was mistakenly identified 
by an acquiring financial institution as a foreign 
currency card and thus processed through an 
international bankcard organization. domestic dual-currency cards,  which should be treated 
as RMB cards, are mistakenly identified by the 
acquiring financial institution as foreign-currency cards 
and thus handed off to an inter-national bankcard 
organization for clearance. 
Art. VII.3  
[See agreed translation] Art. VII.3  
[See agreed translation] Art. VII.3 – Translation agreed by parties : 
Domestic RMB card clearing organizations shall do a 
good job in the RMB clearing of domestic transactions 
of home-foreign currency car ds. Card-issuing financial 
institutions must report the bank identification number 
of their cards to the domestic RMB card clearing 
organization for the acquiring financial institution to 
download. The merchant serv ice financial institutions 
shall properly set up their bank card systems under 
which RMB cards precede others when being read. 
Document No. 57  
Exhibit US-41 
Exhibit CHN-55 Art. 1 
All bank cards issued by commercial banks solely for 
domestic interoperable use mu st bear the CUP logo at 
the specified position at the lower right corner on the 
front of the cards, and all RMB credit cards issued 
solely for domestic interoperable use must also bear the 
CUP holographic anti-counterfeiting logo at the 
specified position at the lower right corner on the front 
of the cards. Commercial ba nks have the discretion to 
decide whether to place the CUP holographic logo on 
their RMB debit cards issued solely for domestic 
interoperable use, but shall not use any anti-counterfeit 
logo other than the CUP holographic anti-counterfeit 
logo. Art. 1 
The bankcards issued by the commercial banks only for 
domestic interoperable use mu st bear a uniform "Yin 
Lian" logo printed at the designated position on the 
lower right side of the card front. The RMB credit cards 
only for domestic interoperable use shall also bear the 
holographic anti-counterfeiting mark of the "Yin Lian" 
logo at the designated position on the lower right side of 
the card front. With respect to the RMB debit cards only 
for domestic interoperable use, the commercial banks 
may decide by themselves whether to use the 
holographic anti-counterfeiti ng mark thereon, but no 
anti-counterfeiting mark other than the holographic anti-
counterfeiting mark of the "Yin Lian" logo may be used.Art. 1 - UNOG translation :
Bank cards issued by all commercial banks solely for 
domestic interoperable use mu st bear the uniform "Yin 
Lian/UnionPay" logo printed at the specified position at 
the lower right corner on the front of the cards, and the 
"Yin Lian/UnionPay" holographic anti-counterfeiting 
logo shall also be added at the specified position at the 
lower right corner on the front of RMB credit cards 
issued solely for domestic interoperable use.  
Commercial banks have the di scretion to decide whether 
to place a holographic anti-counterfeiting logo on their 
RMB debit cards issued solely for domestic 
interoperable use, but shall not use any anti-counterfeit 
logo other than the "Yin Lian/ UnionPay" holographic 
anti-counterfeit logo. 
Art. 2 
All "dual account" bank cards issued by any commercial 
banks for both domestic and foreign interoperable use 
must bear the unified CUP logo at the specified position 
at the upper right corner on the front of the cards. Art. 2 
The "dual-account" bankcards issued by the commercial 
banks for both domestic and foreign interoperable use 
must bear a uniform "Yin Lian" logo printed at the 
designated position on the upper right side of the card 
front. Art. 2 - UNOG translation : 
 "Dual-account" bankcards i ssued by all commercial 
banks for both domestic and foreign interoperable use 
must bear a uniform "Yin Lian/UnionPay" logo printed 
at the designated position on the upper right side of the 
card front.  
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Art. 3 
From the issuance date of this Circular, bank cards 
which are newly issued by commercial banks upon 
application with cross-regi on or inter-bank use function 
must comply with the unified ‘Business Specifications 
for Interoperable Service of Bank Cards’ and relevant 
technical standards.  The co mmercial banks must submit 
to PBOC a card sample which complies with the use 
requirements of CUP logo in accordance with the 
requirements of this Circular. Art. 3 
From the date of issuing this  Circular, all bankcards for 
cross-regional or cross-bank use that are newly issued 
by commercial banks upon their application, must 
comply with requirements of the "Business 
Specifications for Bankcard In teroperability" and other 
relevant technical standards, and, a sample card that 
complies with the requirements for the use of the "Yin 
Lian" logo must be submitted  to the People's Bank of 
China according to requirements of this Circular. [See the parties' translations] 
Art. 4 
In order to effectively prevent risks to the bank card 
business from various counterf eiting activities, the CUP 
holographic anti-counterfe it logo is produced by 
designated agents and operate d under special control.  
The Zhongchao Credit Card Plant under China 
Banknote Printing and Minting Company is responsible 
for unified production and sales. By July 1, 2001, China 
Banknote Printing and Minting Company shall complete 
various product designs and related production 
preparation for the CUP holographic anti-counterfeit logo. 
The National Bank card Office is  responsible for the use 
of the CUP logo and for making specific management 
rules on printing, marketing, transportation and other 
management work of the CUP holographic anti-
counterfeit logo and shall also be responsible for 
supervising the implementation of such rules. Art. 4 
To effectively prevent the risks to bankcard business 
arising from forgery, the holographic label for anti-
counterfeiting of "Yin Lian" will be made and sold by 
the credit card factory under China Banknote Printing 
and Minting Corporation through fixed-point production 
and operation under special cont rol.  Before July 1, 
2001, China Banknote Printing and Minting Corporation 
shall complete the product de sign and related production 
preparations for the holographic label for anti-
counterfeiting of "Yin Lian". The National Bankcard Offi ce is responsible for 
formulating specific manage ment measures regarding 
the use of the "Yin Lian" logo and the printing, sales and 
transportation of the holographic label for anti-
counterfeiting of "Yin Lian " and shall supervise the 
implementation thereof. [See the parties' translations] 
Art. 5 
All commercial banks shall take the job of promoting 
CUP logo use and acceptance seriously and gradually 
reduce the role of their own bank card brands in the 
market.  Starting January 1 2004, all POS terminals and 
merchants in the bank card ac ceptance market must have 
the CUP logo posted. Art. 5 
All commercial banks shall carefully promote the use 
and acceptance of the "Yin  Lian" logo, and gradually 
phase out the role of their own card brands on the 
acceptance market.  From January 1, 2004, all terminals 
and merchants in the bankcards acceptance market must 
bear the "Yin Lian" logo. [See the parties' translations] 
Art. 6 
Regional bank card interopera bility logos produced and 
designed regionally shall be gradually abolished. 
Starting January 1, 2002, no bank cards allowed to bear Art. 6 
Logos designed and produced by each region for its 
regional interoperability of bankcards shall be phased 
out gradually.  From January  1, 2002, logos for regional [See the parties' translations]  
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any regional interoperability  logo. Starting January 1, 
2004, the specially engaged merchants of bank cards 
and terminal equipment such as ATM, POS, etc. shall 
not bear any regional card interoperability logo. interoperability of bankcards shall not be used by 
bankcard merchants or on bankcard terminals such as 
ATM or POS. 
Document No. 76  
Exhibit US-56/ US-63 
Exhibit CHN-56 Paragraph 2 of the Notice  
The Business Practices shall apply to all commercial 
banks, postal savings and re mittance bureaus and rural 
credit cooperatives which are participating in bankcard 
service in China, all Interoperating  Bank cards and 
relevant cross-bank business; Paragraph 2 of the Notice  
The Specifications apply to all commercial banks, postal 
saving and remittance bureaus and rural credit 
cooperatives which operate ba nkcard business within the 
territory of China, as well as to all networked bankcards 
and relevant cross-bank business. [See the parties' translations] 
Paragraph 3 of the Notice  
[See agreed translation] Paragraph 3 of the Notice  
[See agreed translation] Paragraph 3 of the Notice – Translation agreed by 
parties : 
From the date of implementation of the Business 
Practices to the end of Year  2001, all acquiring banks 
that have been participating in bank card acceptance business shall meet the relevant requirements of the 
Business Practices; the card- issuing Banks shall start 
compulsory businesses, and shall complete the bank 
card processing system reform in combination with the 
implementation of technical standards of various bank 
cards. All Bank Card Information Exchange Centers 
shall complete the system reform within a stipulated 
period of time, and shall carry  out information switching 
and processing for releva nt cross-bank service. 
Paragraph 4 of the Notice  
Before the establishment of a unified bank card industry 
organization, the State Bank Card Office shall be 
responsible for the interpretation of the Business 
Practices, and shall organize to amend the same 
according to business development needs. Paragraph 4 of the Notice  
Before the establishment of  the industrial organization 
for interoperability of bankcards, the National Bankcard 
Office ("NBCO") is respons ible for interpreting the 
Specifications and organizing amendment thereof 
according to the business development. [See the parties' translations] 
Paragraph 5 of the Notice  
[See agreed translation] Paragraph 5 of the Notice  
[See agreed translation] Paragraph 5 of the Notice – Translation agreed by 
parties : 
From the date of implementing the Specifications, all 
bankcard business rules that are inconsistent with the 
Specifications shal l be abolished.  
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Appendix, Chapter I, Art.1.1 
Purpose 
These Business Practices aim to promote the bank card 
interoperable service in China, to establish a business 
practice system for bank card interoperation, to regulate 
bank card cross-bank operation, to improve the bank 
card utilization environment, to achieve the use of bank 
cards throughout the country, and to promote the 
development of bank card business.  Appendix, Chapter I, Art.1.1 
Purpose 
The purpose of these Specific ations is to promote the 
interoperability of our bank card business, establish a 
system of business specifications for the bankcard 
interoperability, standardize the cross-bank business 
operations of bankcards, improve the environment for 
use of bankcards, achieve the nationwide use of 
bankcards and boost the deve lopment of the bankcard 
business. [See the parties' translations] 
Appendix, Chapter I, Art.1.3  
[See agreed translation] Appendix, Chapter I, Art.1.3  
[See agreed translation] Appendix, Chapter I, Art.1.3 – Translation agreed by 
parties : 
These Business Practices apply to each of the 
commercial banks and non-bank  financial institutions 
participating in bank card in teroperable services, various 
types of interoperated bank cards and relevant cross-
bank businesses. 
Appendix, Chapter I, Art. 2.1  
[See agreed translation] Appendix, Chapter I, Art. 2.1  
[See agreed translation] Appendix, Chapter I, Art. 2.1 – Translation agreed by 
parties : 
After applying for membership of a BJO and becoming 
its formal member, a Bankcard Financial Institution will 
be eligible to apply for participation in bankcard 
interoperability business and becoming a network 
member. 
Appendix, Chapter I, Art. 4.1 
Purpose The purpose is to regulate and develop the domestic 
bank card acquiring market, to facilitate customers 
acquiring and training, and to set up a unified bank card 
network logo while carrying out interoperating business.Appendix, Chapter I, Art. 4.1 
Purpose 
To standardize and develop domestic bankcard 
acceptance market and facilitate the acceptance and 
training of merchants, a uniform bankcard networking 
logo will be created concurrently with the 
implementation of networked interoperability business. [See the parties' translations] 
Appendix, Chapter I, Art. 4.2 
Network Logo 
The logo of the network is comprised of the Chinese 
character of "UnionPay" a nd a graph symbolizing the 
united network, which has been formulated by the 
United Association and registered with the trademark 
registration bureau.  The United Association possesses Appendix, Chapter I, Art. 4.2 
Networking Logo 
Composed of the Chinese characters of "Yin Lian" and 
the pattern symbolizing the network, the networking 
logo is made by BJO and registered with the trademark 
bureau. Its ownership and use management right both 
belong to BJO, which will  draw up the management [See the parties' translations]  
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the ownership in and the us e and management right of 
the logo, and promulgates administrative measures for 
the production, utilization etc. of the network logo. measures for the making and use of the networking logo.
Appendix, Chapter I, Art. 4.3 
Use right of logo 
The Interoperating Members automatically obtain the 
right to use the logo as from the date on which cross-
bank business is officially carried out thereby upon 
approval of the United Association. Appendix, Chapter I, Art. 4.3 
Logo Use Right 
Networked members obtain the logo use right 
automatically starting from the day their cross-bank 
business is launched formally with the approval of BJO. 
 [See the parties' translations] 
Appendix, Chapter I, Art. 4.4 
Use of logo 
A. The network logo is used by Interoperating Bank 
cards of all Interoperating Members, terminal equipment 
and processing premises, advertising and promoting 
materials for bank card business of each Interoperating 
Member, etc. 
B. Each Interoperating Member shall use the network 
logo 
 according to the requirements, and shall not change the 
logo without permission. 
C. While providing training for the Designated 
Merchants, the Interopera ting Members must promote 
the united network logo and provide training in relation 
to the logo, and must instruct the customers to accept all 
bank cards bearing the united network logo. 
D. The Interoperating Members shall obtain the written 
consent of the United Association if they make use of the logo beyond the scope of the interoperable business. Appendix, Chapter I, Art. 4.4 
Use of Logo 
A. The networking logo is used for all networked 
bankcards, terminals and acceptance sites of all 
networked members as well as  the advertising publicity 
they conduct for bankcard business. 
 
B. Networked members shall use the networking logo as 
required and shall not take the liberty to change it. 
 
C. When training their merchants, networked members 
must publicize the networking logo, train them in the 
use of it and require them to accept all bankcards 
bearing the logo. 
 
 
D. Networked members must obtain the written 
approval of BJO before using the logo outside the networked interoperability business.  [See the parties' translations] 
Appendix, Chapter I, Art. 5.2.1 
Qualification of interoperability 
The Bank-Card Financial Institutions shall first join the 
United Association in order to apply for interoperability, 
and the other Professional Service Institutions shall 
obtain specific acknowledgement from the United 
Association in order to apply for interoperability. Appendix, Chapter I, Art. 5.2.1 
Network Access Eligibility 
A Bankcard Financial Instit ution that applies for 
network access must join the BJO first.  Other 
specialized service instituti ons that apply for network 
access must obtain the special approval of BJO. [See the parties' translations]  
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Appendix, Chapter I, Art. 5.2.2 
Requirement for system 
The Interoperating Banks shall have secure and highly 
efficient computer processing system, and shall meet the 
technical specifications a nd standards of the National 
Bank Card Networks. Appendix, Chapter I, Art. 5.2.2 
Requirement for System 
A Networked Bank must have  a secure and efficient 
computer processing system that meets the technical 
specifications and standard s of the National Bankcard 
Center. [See the parties' translations] 
Appendix, Chapter I, Art. 5.2.3 
Business requirements 
An Interoperating Bank can be either an Issuing Bank or 
an Acquiring Bank, and can be both an Issuing Bank 
and an Acquiring Bank.  If an Interoperating Bank is an 
Issuing Bank, when interopera ting, it must comply with 
relevant industry standards for card and usage standard 
under Bankcards Issuer Identification Code and Card 
Number, Bankcards Magnetic StripInformation Formats 
and Use Specifications, Chin a Financial Integrated 
Circuit (IC) Card Specifications ; if it is an Acquiring 
Bank, when interoperating, it s terminal equipments must 
comply with the requirements of Bankcard Magnetic 
Strip Specifications of Sales Point Terminals (POS)  and 
other relevant regulations; meanwhile, its terminals for 
acceptance of IC cards shall comply with terminal 
standards under China Financial Integrated Circuit (IC) 
Card Specifications . Appendix, Chapter I, Art. 5.2.3 
Requirements for Business 
A Networked Bank can be either a card-issuing bank or 
an acquiring bank or both.  For network access as a 
card-issuing bank, it must observe relevant standards of 
the industry for cards and use thereof, including the 
Identification Codes and Card Numbers of Bankcard-
issuing Banks , the Specifications for the Format and 
Use of the Information on the Magnetic Stripes of 
bankcards  and the Specifications of China for Financial 
Integrated Circuit (IC) Cards ; for network access as a 
card acquiring bank, it must have terminals that meet the 
requirements of the Specifications for Points of Sales 
(POS) of Bank Magnetic Stripe Cards  and other relevant 
regulations, while the termin als that accept IC cards 
must also meet the criteria for terminals set out in the 
Specifications of China for Financial Integrated Circuit 
(IC) Cards . [See the parties' translations] 
Appendix, Chapter II, Art. 1.2 
Unified Logo 
The Unified Network Logo must be posted on the 
machines and equipment of any merchant developed by 
each Interoperating Member in accordance with relevant 
regulations of interoperabili ty, and shall be posted on 
the merchant's cash machines. Appendix, Chapter II, Art. 1.2 
Uniform Logo 
The machines and equipment of the merchants 
developed by networked memb ers must be affixed with 
the uniform networking logo according to the 
regulations on networked inte roperability, which must 
be placed or pasted on the checkout counter of the 
merchants. [See the parties' translations] 
Appendix, Chapter IV, Art. 1.4 
Principles of Settlement 
The national cross-bank funds settlement of bank cards 
shall be based on the settle ment data provided by the 
Information Exchange Center. The settlement data of the 
Information Exchange Center  shall be generated from 
transaction records of the Information Exchange Center Appendix, Chapter IV, Art. 1.4 
Clearing Principle 
The national fund clearing of the cross-bank business of 
bankcards is based on the clearing data of the 
Information Switching Center, which are generated on 
the basis of the central transaction records and the 
clearing documents uploaded by the acquiring banks.  [See the parties' translations]  
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and from the settlement documents submitted by Acquiring Banks. If the accounts of the Interoperating 
Members are inconsistent with  those of the Information 
Exchange Center, the date of the Information Exchange 
Center shall be used as a basis for settlement first and, if 
any error is discovered after the settlement, such error 
shall be handled in accordance with relevant provisions 
of Errors Correction. When a networked member ca nnot reconcile its account 
with the Information Switching Center, clearing shall 
take place first on the basis of the data of the 
Information Switching Center.  If any error is found 
after the clearing, the relevant provisions on error 
handling shall apply. 
Appendix, Chapter IV, Art. 3.2 
Cross-bank transaction settlement not through the Headquarter Center  
Bank card cross-bank transa ctions transmitted only 
through the Regional Center (and not through the 
Headquarter Center) shall be handled by a Regional 
Center and its Interoperating Members by reference to 
measures for settlement of cross-bank transactions 
transmitted through the Headquarter Center. Appendix, Chapter IV, Art. 3.2 
Clearing of Transactions That Do not Go through 
General Center 
 
The cross-bank transactions of bankcards that are 
diverted only through a regional center (rather than 
through the General Center) are handled by the regional 
centers and their networked members according to the 
clearing methods for the cross-bank transactions 
diverted through the General Center. [See the parties' translations] 
Appendix, Chapter X 
Supplemental Provisions 
All bank cards referred to in these Business Practices 
shall adopt the definitions and classifications in the 
Measures for the Administratio n of Bank Card Business 
by PBOC. 
These Business Practices are not applicable to the 
situation where a foreign currency card issued outside 
China is used in China. 
The State Bank Card Office w ill be responsible for the 
interpretation of these Business Practices. 
These Business Practices shall be implemented as from 
the date of promulgation by PBOC. Appendix, Chapter X 
Supplementary Provisions 
The bankcards mentioned he rein are subject to the 
definition and classification in the Administrative 
Measures for Bankcard Business of the People's Bank of 
China. 
These Specifications do not  apply to the domestic 
interoperable use of the foreign currency cards issued 
outside China. 
These Specifications shall be interpreted by NBO. 
 
These Specifications are implemented as from the day 
they are released by the People's Bank of China. [See the parties' translations]  
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Schedule: Definitions of Terms  
 
Unified Network Logo is comprised of the unified brand 
name of the domestic bank cards (namely the Chinese 
characters of "China UnionPay") and the symbolized 
logo of the united network, has been registered with the 
trademark office, and the ownership and usage 
management right thereof belongs to the United 
Association. The United A ssociation will promulgate 
the measures for the promul gation, use and management 
of the logo of inter operability separately. Schedule: Definitions of Terms  
 
"Networking logo" consists of the uniform brand name 
of domestic bankcards  (i.e. the Chinese characters of 
"Yin Lian") and the design that symbolizes 
interoperability network. It is registered with the 
trademark office, with its ownership and use 
management right belonging to BJO, which will 
separately formulate the measures for the production, 
use and management of the networking logo. Schedule: Definitions of Terms  - UNOG translation :  
The network logo comprises the uniform brand name for 
domestic bank cards (the Chinese characters yinlian  
银联 )  and the design symbolizing the united network, 
as registered with the trademark office. All rights of 
ownership and use belong to the Association of 
Interoperable Bank Card Service (AIBCS), which will 
separately define measures for the production, use and management of the logo. 
Document No. 103 
Exhibit US-1 
Exhibit CHN-65 Section II.5(1)  
Consolidating and improving the achievements of 
networking use: We shoul d earnestly summarize and 
spread the working experience of networking use in 
recent years, where the range of networking use shall be 
further extended to all the cities at and above the 
prefecture-city level and economically-developed cities 
at the county level. We shoul d ensure that all bankcard 
machines satisfy the relevant criteria and standards of 
networking use, strictly abide by the principle of "one counter, one machine" so as to realize the sharing of 
resources. We should improve  the technical standards 
for using RMB bankcards as soon as possible and 
strengthen the popularization of the technical standards 
of RMB bankcards that are formulated according to the 
international criteria. Those RMB bankcards as newly 
issued by any commercial bank shall meet the said 
technical standards and shall complete the work of 
changing the present non-standardized bankcards as 
soon as possible. Section II. 5(1)  
Consolidate and heighten the results of the networked 
interoperability.  Carefully sum up and spread the 
experience in the networke d interoperability efforts 
made in recent years, further expand the scope of 
networked interoperability to  all prefecture-level and 
higher-level cities  and economically-developed county-
level cities; ensure that all bankcard machines meet the 
specifications and standards for networked 
interoperability, strictly observe the principle of "one machine one counter" and realize the sharing of 
resources; lose no time to improve and implement the 
Chinese technical standard for RMB bankcards, 
intensify the popularization of the Chines e technical 
standard for RMB bankcards formulated according to 
international standards.  The new RMB bankcards 
issued by commercial banks must meet the technical 
standard.  The replacement of the existing cards that do 
not meet the standard shall be completed as soon as 
possible. [See the parties' translations] 
Section III  
…By 2006, the RMB bank card operation shall be 
opened to the outside world in an all-around manner, 
and accordingly the bank card industry of our country is 
facing a comparatively big challenge and we should 
make use of the limited time to enhance the international 
competitiveness of our industries. Section III  
…When the RMB bankcard business is opened 
completely to the outside world by the end of 2006, the 
Chinese bankcard industry will be faced with serious 
challenges and must capitalize on the limited time to 
enhance its international competitiveness… Section III  - UNOG translation :  
The RMB bankcard business opens fully to the outside 
world at the close of 2006, posing greater challenges to 
the Chinese bankcard indus try; the limited time 
[remaining] must be used to boost that industry’s 
competitiveness.  
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Document No. 129 
Exhibit US-53 
Exhibit CHN-59 Art. 3.2(i)  
[See agreed translation] 
 Art. 3.2(i)  
[See agreed translation] 
 Art. 3.2(i) – Translation agreed by parties : 
All commercial banks and postal saving and remittance 
bureaus should further speed up the standardization of 
terminals and the developmen t of cross-bank business, 
and should, before the end of 2003, in all prefecture-
level and higher-leve l cities, realize resource sharing of 
all terminals such as ATM and POS and the cross-bank 
and cross-region use of various types of non-special- 
purpose bankcards. 
 Art. 3.2(ii) 
Universal use of bank cards bearing the CUP logo.  All 
RMB bank cards newly issued by all commercial banks 
and all postal savings and remittance bureaus must 
conform to the unified business specifications and 
technical standards and must bear the unified CUP logo; 
all commercial banks and all postal saving and 
remittance bureaus must formulate specific plans for 
replacement of and specific working requirements on 
the remaining bank cards not bearing the CUP logo and 
mustfile the replacement plans and other materials with 
the PBOC before August 20, 2003.  Art. 3.2(ii) 
Overall popularization of the "Yin Lian" logo cards.  All 
types of RMB bankcards newly issued by the 
commercial banks, postal saving and remittance 
bureaus, must comply wi th uniform business 
specifications and technical standards, and shall bear the 
uniform "Yin Lian" logo as stipulated; for the existing 
cards without "Yin Lian" logo, the commercial banks, 
postal saving and remittance bureaus shall draw up 
replacement plans and clarif y work requirements, and 
materials such as the replacement plans shall be reported 
to PBOC for record before August 20, 2003. [See the parties' translations] 
 
Art. 3.4 
Fully improve the efficiency of error processing in inter-
bank bank card transactions. 
(i) China Unionpay Joint Stock Co., Ltd. shall, in 
conjunction with all co mmercial banks, further 
supplement and perfect erro r processing management 
measures and implementation rules, establish a scientific 
and effective error processing procedures, clarify the 
responsibilities of the parties involved in error 
processing and specify the task assignment at each link. 
(ii) All commercial banks, postal saving and remittance 
bureaus and China UnionPay Joint Stock Co., Ltd. Shall 
continue to improve the technical processing methods, 
strengthen the supervision and inspection of error 
processing at each link and improve the efficiency of 
error processing. 
(iii) Pay special attention to complaints handling, 
improve the efficiency of complaints handling and 
provide better services to cardholders Art. 3.4 
Improve the efficiency of error handling in the cross-
bank transactions of bankcards 
(i) China UnionPay Co., Ltd. shall join the commercial 
banks in further supplementing and improving the 
management measures for error handling and the 
detailed rules for implementation thereof, establishing a 
scientific and effective flow of error handling, clarify 
the responsibilities of thos e participating in error 
handling and detail the division of work at all links. 
(ii) The commercial banks, postal saving and remittance 
bureaus and China UnionPay Co., Ltd. shall continue to 
improve technical processing means, strengthen the 
urging and inspection of all links of error handling and 
improve the efficiency of error handling. 
(iii) Attach great importance to complaint handling, 
improve the efficiency of complaint handling and 
provide better service for cardholders. [See the parties' translations]  
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 Page H-19DOCUMENT NO. TRANSLATION BY UNITED STATES TRANSLATION BY CHINA TRANSLATION AGREED BY PARTIES / 
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Document No. 142 
Exhibit US-55 
Exhibit CHN-69  Art. II.3 
Protecting the information sa fety of cardholders. Card 
issuers shall set up an effective information safety 
protection system to protect the information safety of 
cardholders. They shall provide clients with safe and 
reliable services for setti ng and changing passwords and 
make sure that clients can change their passwords over 
the counter, through telephone banking or in other 
expedite and safe ways. They shall hide part of the card 
number on the account statements or other service 
vouchers (except those printed out over the counter) 
issued to cardholders.  Bank cards issued by card issuers 
shall meet the requirements of the Bank Card 
Specifications (JR0052-2099)  and the Technical 
Specifications on Bankcard Interoperability (JR0055-
2009).  Card issuers shall give priority to the issuance of 
IC bank cards which adopt the PBOC 2.0 Standards so 
as to improve the anti-counterfeiting ability of bank 
cards. For large transactions, upon the consent of 
cardholders, card issuers may make confirmations with 
or give risk alerts to cardholders or take other risk 
control measures through phone calls or text messages. 
Where there is any risk of leakage of bank card 
information, the card issuer shall contact the cardholder 
and suggest that the cardholder change the card or 
password as soon as possible. If it cannot reach the 
cardholder in the case of emergency, it can take 
measures to temporarily lock up the cardholder's 
account. Art. II.3 
Protect the security of card holders' information.  Card-
issuing institutions shall establish an effective 
information security protection system to protect the 
security of cardholder inform ation.  They shall provide 
applicants with safe and reli able services for setting and 
modifying password, which should be able to be quickly 
and safely changed over the counter, through telephone 
banking or other channels.  The card number on the 
bank statement and other se rvice vouchers provided to 
cardholders shall be partially shielded (except the 
vouchers printed for counter business).  Bankcards 
issued shall comply with the Specifications for 
Bankcards (JR0052-2009) and the Technical 
Specifications for Bankcard Interoperability (JR0055-
2009).  Card issuing institutions shall actively issue 
bank IC cards that adopt PBOC 2.0 Standard to enhance 
the anti-counterfeiting capability of the cards.  Subject 
to cardholders' consent, card-issuing institutions may 
take risk management me asures for large-amount 
transactions, such as making  confirmation or giving risk 
reminders for cardholders through telephone or short 
message.  Where there is any risk of leakage of 
bankcard information, card-issuing institutions shall 
contact the cardholder in que stion and suggest him/her 
to change the card or cha nge its password as soon as 
possible.  If the cardholder cannot be contacted, the 
card-issuing institution can take measures to temporarily 
lock the cardholder's card. [See the parties' translations] 
Art. II.5 
...Card issuers shall timely submit the risk information 
on bank cards to the credit system of the People's Bank 
of China, and voluntarily submit the same to the bank 
card risk information sharing system of China 
Unionpay, so as to make full use of such information 
sharing mechanisms to prevent and control risks Art. II.5 
...Card-issuing institutions shall promptly report relevant 
bankcard risk information to the credit system of PBOC 
and the bankcard risk information sharing system of 
China UnionPay to makes full use of the sharing 
mechanism for risk prevention. [See the parties' translations]  
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Page H-20 DOCUMENT NO. TRANSLATION BY UNITED STATES TRANSLATION BY CHINA TRANSLATION AGREED BY PARTIES / 
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 Art. III.7 
..Acquiring institutions shall set up strict rules for the 
real name examination and on-site investigation of 
merchants, make full use of  the identity information on-
line check system, the credit system of the People's 
Bank of China and the bank card risk information 
sharing system of China Unionpay to verify the 
identities of the legal representatives of persons in 
charge and the authorized representatives of 
merchants… Art. III.7 
…Acquiring institutions shall es tablish a strict system of 
real name examination a nd site investigation for 
absorption of merchants.  They shall fully utilize the 
online identity information examination system, the 
credit system of PBOC and the bank risk information 
sharing system of China UnionPay to verify the personal 
identity of the legal representative or leader and 
authorized operator of a merchant... [See the parties' translations] 
Art.III.8 
…When finding that any merc hant illegally accepts 
bank cards, the acquiring institution shall timely make 
investigation, verification and correction…..Once it is 
confirmed that the merchant has committed any of such 
illegal acts, the acquiring institution shall immediately 
terminate its bank card transactions, report it to the 
public security departme nt, report the relevant 
information to the People's Bank of China, submit the 
relevant information on th e merchant and its legal 
representative or person in charge to the credit system of the People's Bank of China, and voluntarily submit it to 
the bank card risk informati on sharing system of China 
Unionpay… Art.III.8 
…If any merchant is found to accept bankcards in 
suspected violation of re gulations, the acquiring 
institution shall make timely investigation and 
verification for correction…. .for any merchant with 
confirmed acceptance of counterfeit cards, illegal 
information copying, cash-out of fraudulency, the 
acquiring institution shall immediately terminate its 
bankcard transactions, report the same to the public 
security department and PBOC and submit the 
information of the merchant and its legal representative or leader to the credit system of PBOC and the bankcard 
risk information sharing system of China UnionPay… [See the parties' translations] 
Art. III.11 
…Acquiring institutions shall correctly set and register 
the relevant merchant inform ation with China Unionpay, 
submit correct information to China Unionpay at the 
time of transaction processing, and make sure that the 
card acceptance terminals can fully and accurately read 
and transmit the card verification code. Art. III.11 
…Acquiring institutions shall correctly set and register 
with China UnionPay the information of relevant 
merchants, upload accurately to China UnionPay during 
transactions processing.  Meanwhile, they shall ensure 
that the acceptance terminals can read and transmit card 
verification code completely and accurately [See the parties' translations]  
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Art. V.15 
Improving the Anti-risk Service Level of China 
Unionpay 
Setting up and improving the bank card risk prevention 
and control system.  China Unionpay shall set up a 
transaction data recording, analyzing and monitoring 
system, make more efforts in monitoring and analyzing 
suspicious transactions, a nd make comprehensive and 
dynamic assessment and cate gorized management of 
transaction risks, so as to protect the safety of accounts 
and transaction information…China Unionpay shall 
strengthen the standard administration of its branches 
and subsidiary companies, implement the relevant bank 
card business standards and technical norms, separate 
the inter-bank clearing business, acquiring business and 
outsourcing service business from each other and 
assume the compensatory liability for cases or losses 
caused by its poor manageme nt of acquiring business or 
outsourcing service business… Art. V.15 
Raise the Risk Prevention Service Level of China 
UnionPay 
Establish and improve bankcard risk prevention and 
controls system.  China UnionPay shall establish the 
system for the recording, analyzing and monitoring of 
transaction data, strengthen th e supervision and analysis 
of suspicious transactions, make comprehensive and 
dynamic assessment and conduct  classified management 
of transaction risks to protect the security of accounts 
and transaction information…China UnionPay shall 
strengthen the standardiza tion management of its 
branches and subsidiaries, strictly implement the 
business specifications and technical standards related to 
bankcard, separate cross- bank clearing business, 
acquiring business and outs ourcing service business, 
assume compensation responsibility for the cases and 
losses resulting from its poor management on acquiring 
business and outsourci ng service business… [See the parties' translations] 
Art. V.16 
…China Unionpay shall coordinate all member 
institutions in setting up a work mechanism for 
preventing bank card risks and an information sharing 
platform so as to provide good services for member 
institutions to submit information on suspicious bank 
card transactions and violati on of laws and regulations 
and use the bank card risk information sharing system, 
and make continuous efforts to improve the bank card 
risk information sharing mechanism… Art. V.16 
…China UnionPay shall coordinate the member 
institutions to establish the working mechanism for 
preventing bankcard risks and a information sharing 
platform, provide them with  good services in reporting 
the information on bankcard transactions that are 
suspicious and violate laws  and regulations and using 
the bankcard risk information sharing system, 
continuously improve the mechanism of sharing 
bankcard risk information… [See the parties' translations] 
 
Art. VI.18 
…The People's Bank of China shall, together with the 
Ministry of Public Security, set up a long-term effective 
mechanism for cracking down on bank card crimes as 
soon as possible, coordinate the forces and resources of 
both of them as well as t hose of commercial banks and 
China Unionpay, jointly set up an office for jointly 
combating bank card crimes, and keep smooth 
intelligence channels. Art. VI.18 
…PBOC shall, together with the Ministry of Public 
Security, establish a long-term regime as soon as 
possible for the joint penaliz ation of bankcard crimes, 
coordinate the strength and resources of the two 
departments and the commercial banks and China 
UnionPay, set up the office for the joint penalization and 
keep the information channel unblocked. [See the parties' translations]  
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Document No. 149 
Exhibit US-50 
Exhibit CHN-70 Art. 2(5)(iii)  
Strictly control the openi ng of bankcard acceptance 
terminals. The acquiring  in stitutions may not allow the 
non-CUP and non- PBOC 2.0 pre-payment cards issued 
by other enterprises to be accepted at any POS 
terminals. Art. 2(5)(iii)  
Strictly control the openi ng of bankcard acceptance 
terminals. No acquiring inst itutions may, through the 
bankcard acceptance terminals, accept non-"Yin Lian" 
or non-PBOC2.0 standard prepaid cards issued by non-
financial institut ion enterprises. Art. 2(5)(iii)  - UNOG translation :  
Strictly control access to bankcard terminals. No 
acquiring institutions may allow non-"Yin 
Lian/UnionPay" and non-PBOC2.0 standard prepaid 
cards issued by non-financial social enterprises to be 
accepted at bankcard terminal equipment. 
Document No. 153 
Exhibit US-49 
Exhibit CHN-66 Art. 1.2 
…At the present time, China UnionPay is the domestic 
clearance organization which specializes in the RMB 
bank card inter- bank information routing and exchange.  
Its main responsibility is to set up and operate a secure 
and efficient bank card inter-bank information routing 
and exchange network to achieve the inter-bank use of 
bank cards. China UnionPay shall focus on this main 
business, improve the networ k service level and enhance 
the management and operation of the brand "China 
Unionpay".  Art. 1.2 
…China UnionPay is a cl earing organization within 
China that currently specializes in the cross-bank 
information exchange for RMB bankcards. Its primary 
responsibility is to establish and operate a secure and 
efficient network for the cross-bank information 
exchange of bankcards, and to realize the cross-bank 
interoperability of bankcards .  China UnionPay shall 
focus on this primary business, improve its network 
services and strengthen the management and operation 
of the "Yin Lian" brand. Art. 1.2 - UNOG translation :  
China UnionPay is currently the domestic clearing 
organisation specialising in RMB bank card inter-bank 
information routing and exchange.  Its main 
responsibility is to set up and operate a secure and 
efficient bank card inter-ba nk information routing and 
exchange network to bring about bank card inter-
operability among banks. Chin a UnionPay shall focus 
on this primary business, conscientiously improve the 
level of network service, and enhance the management 
and operation of the "Yin Lian/UnionPay" brand.  
Art. 1.3 
Regarding the third party serv ice providers of merchant 
acquiring business. The third party service providers are 
the legal person enterprises which engage in non-core business of the bank card acquiring business entrusted 
by merchant acquiring inst itutions on the basis of 
making their own operation decisions and taking full 
responsibility for their own profits and losses.  
Since the bank card information exchange system 
concerns the security of financial information and 
payment system, engagement in bank card information 
exchange services is subject to a system of strict access 
and management. No third pa rty service provider shall 
engage in bank card info rmation exchange services. Art. 1.3 
About the third party servic e providers for merchant 
acquiring business.  Third pa rty service providers refer 
to those legal entities that are entrusted by merchant acquiring institutions to carry out the non-core business 
in the bankcard acquiring business and are independent 
in operation and responsible for their own profits and 
losses. 
Since the bankcard information switching system is 
significant to the security of financial information and 
the payment system, there is strict access and 
administrative system for engaging in bankcard 
information switching business; thus, no third party 
service provider may engage in the bankcard 
information switching business. [See the parties' translations]  
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 Page H-23DOCUMENT NO. TRANSLATION BY UNITED STATES TRANSLATION BY CHINA TRANSLATION AGREED BY PARTIES / 
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 Art. 2.2 
POS terminals placed by the acquiring institutions or by 
third party service providers must conform to the 
business specifications and t echnical standards of cross-
network interoperability, be posted with the unified CUP 
logo, and be capable of accepting all bank cards bearing 
the CUP logo. For the acquiring institutions which 
cannot accept all bank cards bearing the CUP logo or 
intentionally set obstacles ag ainst the bank cards issued 
by others, customers, merchants and issuers are entitled 
to report and file complaints to PBOC.    Art. 2.2 
The POS machines placed by merchant acquiring 
institutions or by third party service providers entrusted 
by merchant acquiring institutions, shall be in 
accordance with business specifications and technical 
standards of networked interoperability, bear the 
uniform "Yin Lian" logo and be  able to accept all "Yin 
Lian" logo cards.  With re spect to merchant acquiring 
institutions that cannot reali ze the acceptance of all "Yin 
Lian" logo cards or intentio nally set obstacles against 
bankcards that are not issued by its own bank, 
customers, merchants and card-issuing institutions have 
the right to report and complain to the People's Bank of 
China. [See the parties' translations] 
Article 4, second paragraph  
Merchant acquiring institutions shall take precautions 
against acquiring risks in  conducting POS direct 
connections business, and strengthen daily training to 
the direct connection mercha nts.  Merchant acquiring 
institutions shall comply with the principle of 
interoperability in conducti ng POS indirect connection 
business, open all acquiring equipment to CUP cards, 
and strictly comply with th e unified inter-bank business 
specifications and technical standards. Article 4, second paragraph  
While carrying out POS business of direct connection, a 
merchant acquiring institu tion shall guard against 
acquiring risks and strengthen the daily training of 
merchants of direct connec tion; while carrying out the 
POS business of indirect connection, it shall meet the 
principle of networked interoperability, open acquiring machines to all China UnionPay cards and strictly 
observe uniform cross-bank business specifications and 
technical standards. [See the parties' translations] 
Article 5, second paragraph  
After being approved by PBOC, China UnionPay may 
set up branches in regions where there is a market 
demand, in accordance with the company's overall plan 
to provide bank card information exchange and 
clearance services.  A nationwide inter-bank transaction 
network shall be formed as soon as possible. Article 5, second paragraph  
With the approval of the People's Bank of China, China 
UnionPay may set up affiliates in regions with market 
demand according to its own overall plan to provide 
bankcard information switching and clearing services 
and form an cross-bank transa ction network system that 
covers the whole country. [See the parties' translations]  
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Article 5, third paragraph  
In order to regulate the payment clearance services 
market, and strengthen the administration of information 
routing and exchange, the current professional service 
platform established by China UnionPay in non-CUP 
branch regions and engagement in inter-bank POS 
transaction information transfer shall be directly 
managed and operated by China Unionpay, and shall not 
be indirectly manage d or operated through 
authorization. Article 5, third paragraph  
To standardize the payment clearing service market and 
strengthen the management of information transfer, the 
professional service platforms that have been set up by 
China UnionPay in regions without China UnionPay 
branch to engage in the transfer of POS cross-bank 
transaction information shal l be managed and operated 
directly by China UnionPay , which shall not manage 
and operate the professional se rvice platform s indirectly 
through authorization. [See the parties' translations] 
 Art. 6, third paragraph  
[See agreed translation] Art. 6, third paragraph  
[See agreed translation] Art. 6, third paragraph – Translation agreed by parties : 
…When dual currency credit ca rds and debit cards are 
used in Hong Kong, Macao and other countries/regions 
where the CUP network exists, the Chinese issuing 
banks should support routing through the CUP network 
and open the RMB accounts related transactions and 
clearing services to the CUP network… 
Art. 6, third paragraph (last sentence) 
…No organizations should se t any obstacles or cause 
any interference. Art. 6, third paragraph (last sentence) 
…no institution may set any obstacle and intervene 
thereto. [See the parties' translations] 
Document No. 219  
Exhibit US-47 
Exhibit CHN-63 Art. III 
A Renminbi card acquiring institution in a border area 
shall regulate the merchants’ execution of contracts, and 
clarify in the relevant Renminbi card acquisition 
agreement that no merchant shall use the sales slip, sales 
settlement slip, the "UnionPay" mark or the POS for the 
purposes not covered by the acquisition agreement, 
bring the POS outside the territory for use, authorize a 
third party to handle the Renminbi card business or 
transfer such business to the third party, counterfeit 
another merchant transac tion as its own merchant 
transaction to carry out liquidation with the acquiring 
institution, or use fictitious  POS transaction to draw 
cash for clients. Art. III 
The acquiring agreement of relevant RMB cards shall 
clearly stipulate that merchants shall not use the 
purchase slips, purchase st atements, "Yin Lian" logo 
and POS terminals for pur poses outside the scope 
delimited by acquiring agreem ent; shall not take any 
POS set abroad; shall not entrust or transfer the business 
of accepting RMB cards to any third party; shall not use 
the transactions of other merchants to pass for the 
transactions of their own for clearing with the acquiring 
institution; shall not use POS machines to fabricate 
transactions so as to withdraw cash for customers.   Art. III - UNOG translation :   
RMB card acquisition agreements shall clearly stipulate 
that merchants must not use sales slips, purchase 
receipts, the Yin Lian/UnionP ay logo or POS terminals 
for purposes outside the sc ope of those agreements, 
must not take POS devices for use outside the country, 
must not entrust or transfer the handling of RMB card 
business to a third party, must not pass off other 
merchants’ transactions as their own for clearance with 
the acquiring institution, and must not use POS 
terminals to fabricate transactions so as to withdraw 
cash for customers.    
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Document No. 254  
Exhibit US-48 
Exhibit CHN-64 Art. 3 
Where RMB bank cards issued  by domestic banks are 
used for paying expenses or  withdrawing cash in Hong 
Kong dollars or Macao dolla rs in Hong Kong or Macao, 
the issuers shall process clearing in RMB with China 
UnionPay Joint Stock Co., Ltd. (hereinafter "China 
UnionPay") and China UnionPay shall, after purchasing 
foreign exchanges from the designated foreign exchange 
banks, process clearing in Hong Kong dollars or Macao 
dollars with the acquiring banks in Hong Kong and 
Macao;    Art. 3 
If a RMB bankcard issued by a Mainland Bank is used 
in Hong Kong or Macau for consumption or withdrawal 
of HKD or MOP cash, the card- issuing bank shall use 
RMB to clear with China UnionPay Co., Ltd. (hereafter 
referred to as "China UnionPay").  China UnionPay 
shall then purchase foreign currency from designated 
foreign exchange banks and clear with Hong 
Kong/Macau acquiring banks in HKD or MOP. [See the parties' translations] 
 Art. 4  
[See agreed translation] 
 Art. 4  
[See agreed translation] 
 
 Art. 4 – Translation agreed by parties : 
Where the RMB bank cards issued by Hong Kong or 
Macao participating banks are used for paying expenses 
or withdrawing RMB cash in Mainland China, the 
issuers shall process the clearing in RMB with the 
Mainland acquiring banks through the clearing banks 
and China UnionPay. 
Art. 17 
Banks in Mainland China shall, in accordance with "the 
notice" and this circular, handle relevant business and 
clearing through the clearing banks and China 
UnionPay, and shall not directly carry out RMB 
transactions with other Hong Kong or Macao 
Institutions. Art. 17 
Mainland banks shall, as required by the 
Announcements and the Circular, operate and clear 
relevant business through clearing banks and China 
UnionPay, and shall not make  RMB transactions with 
other Hong Kong/Macau institutions directly. [See the parties' translations] 
 
 
__________