CHINA – CERTAIN MEASURES AFFECTING ELECTRONIC PAYMENT SERVICES
Document: Report of the Panel
Date: 16 July 2012
Document codes: WT/DS413/R
Complainant: U.S.
Respondent: China
Third parties: Australia, Ecuador, EU, Guatemala, Japan, South Korea, India
Dispute stage: Panel
Agreements cited: Art. XVI, XVI:1, XVI:2(a), XVII  Services (GATS)  Dispute Settlement Understanding (DSU)

CHINA – CERTAIN MEASURES AFFECTING
ELECTRONIC PAYMENT SERVICES

Report of the Panel

I. INTRODUCTION
A. COMPLAINT OF THE UNITED STATES
1.1 On 15 September 2010, the United States requested 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 the
measures and claims set out below.3
B. ESTABLISHMENT AND COMPOSITION OF THE PANEL
1.2 On 11 February 2011, the United States requested the establishment of a panel pursuant to
Article 6 of the DSU with standard terms of reference.4 At its meeting on 25 March 2011, the Dispute
Settlement Body (DSB) established a panel pursuant to the request of the United States in document
, in accordance with Article 6 of the DSU. 5 The Panel's terms of reference are the
following:
To examine, in the light of the relevant pr ovisions of the covered agreements cited by
the parties to the dispute, the matter referred to the DSB by the United States in
document and to make such findings as will assist the DSB in making
the recommendations or in giving the rulings provided for in those agreements.
6
1.3 On 23 June 2011, the United States request ed the Director-General to determine the
composition of the panel, pursuant to Article 8.7 of the DSU. On 4 July 2 011, the Director-General
accordingly composed the Panel as follows:
 Chairperson: Mr Virachai Plasai

 Members: Ms Elaine Feldman
 Mr Martín Redrado

1.4 Australia, Ecuador, the European Union, Guatemala, India
7, Japan, and the Republic of Korea
reserved their rights to participate in the Panel proceedings as third parties.
C. PANEL PROCEEDINGS
1. General
1.5 On 5 July 2011, China submitted to the Panel a request for a preliminary ruling with respect
to the consistency of certain aspects of the United St ates' panel request with Article 6.2 of the DSU.
The Panel issued its preliminary ruling to the pa rties, with a copy to the third parties, on
7 September 2011. The Panel held a first substantive meeting with the parties on 26-27 October 2011.
A session with the third parties took place on 27 Oct ober 2011. The Panel held a second substantive
meeting with the parties on 13-14 December 2011. On 25 January 2012, the Panel issued the
descriptive part of its Panel Report. The Pane l issued its Interim Report to the parties on
11 April 2012. The Panel issued its Final Report to the parties on 25 May 2012.

3 WT/DS413/1.
4 WT/DS413/2.
5 See WT/DSB/M/294.
6 WT/DS413/3.
7 India filed its notification of interest to particip ate in the Panel proceedings as a third party following
the date of the Panel's composition. The Panel included In dia in the list of third par ties after consultations with
the parties.

2. Preliminary ruling on the consistency with Article 6.2 of the DSU of the United States'
request for the establishment of a panel
1.6 China submitted its request for a preliminary ruling to the Panel on 5 July 2011 (see
Annex F-1). After consultations with the parties, the Panel decided to issue a preliminary ruling
before the date of receipt of the United States' fi rst written submission. The Panel noted that this
approach would avoid delay in the proceedings. The Panel provi ded the United States with an
opportunity to submit written comments on China's request and also invited the third parties to submit
any written comments they might have in response to the views expressed by the parties. The Panel
also provided the parties with an opportunity to request a preliminary ruling hearing to discuss the
matter. As neither party requested a hearing on the preliminary ruling issue, the parties were given an
opportunity to submit further written comments on the other party's initial written submissions.
1.7 On 29 July 2011, the United States submitted a re sponse to China's request for a preliminary
ruling (see Annex F-2). China commented on the United States' submission on 25 August 2011. The
United States filed further comments on 30 August 2011. None of the third parties submitted
comments on the first set of submissions.
1.8 The Panel issued its ruling to the parties, with a copy to the third parties, on
7 September 2011. The Panel rejected China's preliminary objection of 5 July 2011.
8 After
consulting the parties, the Panel requested the Chai rperson of the DSB to circulate the ruling to the
WTO membership. The ruling was circulated as document WT/DS413/4 on 30 September 2011. The
ruling forms an integral part of the findings in Section VII of this report.
3. Translation issues
1.9 The United States submitted translations of certa in measures at issue in this dispute in its
response of 29 July 2011 to China's request for a preliminary ruling and also in its first written
submission of 15 September 2011. In a communication to the Panel on 22 September 2011, China
identified a number of issues with these translati ons, alleging that the United States had incorrectly
translated certain words or phrases, thereby affecting the original meaning of the measures.
1.10 In a communication to the parties on 12 October 2011, the Panel indicated that it would
discuss the translation issues raised by China during th e first substantive meeting with the parties. At
that meeting the Panel asked the parties if they would be able to agree on a translation from the outset,
or otherwise specify those translation issues on which they could not agree. The Panel suggested that,
if the parties were unable to agree, an independent translator could be selected in consultation with the
parties to provide expert linguistic advice on the correct translation for outstanding issues. The parties
agreed to the selection of an independent translat or for any outstanding issues. On 9 December 2011,
the parties informed the Panel of the translation issues on which agreement had been reached as well
as those that could not be resolved.
1.11 At the second substantive meeting, the parties ag reed in principle to the Panel's suggestion to
appoint, as the independent translator, UN Geneva's (UNOG) Conference Services Division. At this
time, the Panel further requested the parties to pr ovide a brief rationale setting out their views on
outstanding translation issues to facilitate the indepe ndent translator's work. On 4 January 2012, the
parties each submitted a brief rationale setting out their views on outstanding translation issues.
1.12 The Panel appointed UNOG as the independent translator on 26 January 2012. This Report
will hereinafter refer to the "independent translator" when discussing advice provided by UNOG. The
independent translator provided advice to the Pa nel on the outstanding issues on 15 February 2012.

8 See WT/DS/413/4, para. 58.

This advice was promptly forwarded to the pa rties who submitted written comments thereon on
24 February 2012.
II. FACTUAL ASPECTS
2.1 These proceedings concern a series of legal requirements relating to electronic payment
services that the United States alleges are maintained by China. According to the United States, these
legal requirements, alone or in combination, "affect electronic payment services for payment card
transactions and the suppliers of those services".9
2.2 According to the United States, "electronic payment services" involve the following:
services through which transactions involving payment cards (as defined below) are
processed and through which transfers of f unds between institutions participating in
the transactions are managed and facilitated. Suppliers of electronic payment
services supply, directly or indirectly, a sy stem that typically includes the following:
the processing infrastructure, network, and rules and procedures that facilitate,
manage, and enable transaction informati on and payment flows 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 of transaction
information among participating entities; the calculation, determination, and reporting
of the net financial position of relevant institutions for all tr ansactions that have been
authorized; and the facilitation, management a nd/or other participation in the transfer
of net payments owed among participating institutions.
10
2.3 The United States definition of the term "payment card" includes the following:
a bank card, credit card, charge card, debit card, check card, automated teller machine
(ATM) card, prepaid card, and other similar card or payment or money transmission
product or access device, and the unique account number associated with that card or
product or access device.11
2.4 The United States challenges what it alleges to be the following legal requirements:
 requirements that mandate the use of China UnionPay, Co. Ltd. (CUP) and/or establish
CUP as the sole supplier of electronic payment services for all domestic transactions
denominated and paid in China's domestic currency, renminbi (RMB);
 requirements that payment cards issued in China bear the CUP logo;
 requirements that all automated teller machines (ATM), merchant card processing
equipment, and point-of-sale (POS) terminals in China accept CUP cards;
 requirements on acquiring institutions to 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 for cross-region or inter-bank
transactions; and

9 WT/DS413/2, p. 1.
10 See WT/DS413/2, fn 1.
11 See WT/DS413/2, fn 2.

 requirements pertaining to card-based electr onic transactions in Hong Kong, China and
Macao, China.12
2.5 The United States considers that these require ments are maintained through a series of
instruments that are identified in the request for establishment of a panel:13
 Document No. 17;
 Document No. 37;
 Document No. 57;
 Document No. 76;
 Document No. 94;
 Document No. 272;
 Document No. 129;
 Document No. 16;
 Document No. 66;
 Document No. 8;
 Document No. 219;
 Document No. 254;
 Document No. 103;
 Document No. 153;
 Document No. 273;
 Document No. 49;
 Document No. 142;
 Document No. 149;
 Document No. 53;
 The "'business specifications' and 'technical standards' that are identified in the
instruments above, including in Document No. 17, Document No. 57, Document No.
129, and Document No. 49"; and

 any amendments to date or any related implementing measures "to date".14

III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1 The United States requests that the Pane l find that each of the legal requirements
identified in the request for the establishmen t of a panel (and enumerated in paragraph 2.4
above) is inconsistent with China's obligations under Article XVI:1 and XVI:2(a) and Article XVII of
the GATS. The United States further requests, pursu ant to Article 19.1 of the DSU, that the Panel
recommend that China bring its measures into conformity with its WTO obligations.
3.2 China requests that the Panel reject the United States' claims in this dispute in their entirety.

12 United.States' request for the establishment of a panel, pp. 1-4; United States' submission in response
to China’s request for a preliminary ruling, 29 July 2011 ("United States' response to China's request for a
preliminary ruling"), para. 77; Panel’s preliminary ruling, para. 15; and United States'. first written submission,
paras. 29-31.
13 See list "Abbreviations of measur es, evidence, and other instruments referred to in this Report",
p. viii.
14 See WT/DS413/2, p. 4.

IV. ARGUMENTS OF THE PARTIES
4.1 The arguments of the parties are reflected in their executive summaries provided to the Panel
in accordance with paragraph 16 of the Working Procedures adopted by the Panel (see List of
Annexes, pages vi and vii).
V. ARGUMENTS OF THE THIRD PARTIES
5.1 The arguments of Australia, Ecuador, the Europ ean Union, Japan, and the Republic of Korea,
are reflected in their executive summaries provided in accordance with paragraph 16 of the Working
Procedures adopted by the Panel (see Annex C). Gu atemala and India did not submit written or oral
arguments to the Panel.
VI. INTERIM REVIEW
6.1 On 11 April 2012, the Panel submitted its In terim Panel Report to the parties. On
25 April 2012, the United States and China each subm itted written requests for the review of precise
aspects of the Interim Report. On 9 May 2012 , the United States submitted comments on China's
requests for review. China did not submit any co mments on the United States' requests for review.
Neither party requested an interim review meeting.
6.2 In accordance with Article 15.3 of the DSU, this section of the Report sets out the Panel's
response to the parties' requests made at the interi m review stage. The Panel modified aspects of its
Report in the light of the parties' comments where it considered these appropriate, as explained below.
References to sections, paragraph num bers and footnotes in this section relate to the Interim Panel
Report, except as otherwise noted.
6.3 Turning to the parties' requests, both parties ask ed the Panel to make certain changes of an
editorial nature to improve clarity and accuracy . Accordingly, the Panel made changes to
paragraphs 7.35, 7.36, 7.58, 7.154, 7.208, 7.227, 7.311, 7.522 and 8.1; footnotes 1, 12, and 91; and the
"Table of Abbreviations of Measures, Evidence and Other Instruments Referred to in this Ruling".
The Panel made additional editorial corrections and revisions in response to the parties' comments.
6.4 Regarding footnote 30, the United States requests inclusion of a citation, as an example, to
paragraphs 35-54 of its submission in response to Ch ina's request for a preliminary ruling, given the
reference made in that footnote to submissions made by the United States.
6.5 The Panel notes that footnote 30 supports a sec tion containing a description of technical and
commercial aspects of payment card transactions based on information and evidence included in the
parties' submissions. This section contains a numbe r of references to the evidence presented by the
parties. In the Panel's view, in the specific cont ext of footnote 30, it is not necessary to add the
citation requested by the United States.
6.6 Regarding paragraph 7.14, China notes that, in describing the steps in a payment card
transaction, the Panel states that "[t]he issuer au thorizes transactions at POS terminals, collects
payment from the card holder, and transmits the funds to the payment card company's settlement bank
for settlement of payment obligati ons incurred by the card holder " (emphasis added by China). The
italicized portion of this sentence, China argues, is not accurate in all cases. According to China,
there are many payment card systems in which th e settlement of payment obligations takes place
through a mechanism that is operated independently of a "payment card company". China notes that
this could include, for example, an inter-bank funds transfer system operated by the central bank, or a

clearing and settlement mechanism operated by a different company. 15 On the basis of this argument,
China requests that the Panel either (i) indicate that it is describing the operations of a particular
"payment card company" (in this case, Visa); or (ii) modify the sentence to reflect more broadly the
variety of means by which inter-bank payments ar e effected (e.g., "transmits the funds through the
relevant inter-bank payment channel for settlement …").
6.7 The United States considers that identifying a particular payment card company is not
necessary. Rather, China's alte rnative suggestion, as indicated in item (ii) of its comment on
paragraph 7.14 (i.e., to "modify the sentence to re flect more broadly the variety of means by which
inter-bank payments are effected"), may be an acceptable way to modify the sentence should the
Panel consider it appropriate to do so.
6.8 The Panel agrees with the United States that identifying a particular payment card company is
not necessary. We accept, however, that it is useful to reflect more broadly the variety of means by
which inter-bank payments are effected. As a result, the Panel made appropriate changes to
paragraph 7.14 along the lines of China's alternative suggestion.
6.9 Regarding paragraph 7.24, China notes that the second sentence states: "Merchants submit
transaction information for clearing and payment to acquirers, which forward their transaction claims
to the relevant payment card company ."(emphasis added by China) China argues that, for the same
reasons explained by China in relation to paragraph 7.14, the italicized portion of this sentence is not
accurate in all cases. In many systems, China argues, the acquiring bank will place a cleared
transaction item directly into an inter-bank se ttlement mechanism that has no connection to a
"payment card company". More generally, according to China, the entirety of paragraph 7.24 is
describing the particular type of multilateral deferred net settlement system operated by companies
like Visa and MasterCard. This is not the only type of settlement system for payment card
transactions, contrary to the impression created by this paragraph. China indicates that Australia's
EFTPOS system is a case in point. China explains that within that system, issuing and acquiring
financial institutions exchange transaction items directly with each other on a bilateral basis.
16 Once
a day, financial institutions use these bilateral tran saction items to calculate their credit and debit
positions in relation to all other financial institutions, and report these positions to the "Collator",
which is operated by the Reserve Bank of Australia. 17 The Collator then calculates the multilateral
net positions of the financial institutions and tran smits these positions to Australia's high-value inter-
bank transfer system (known as RITS) for final settlement. 18 Within this system, acquiring financial
institutions do not "forward their transaction claims to the relevant payment card company." In fact,
according to the explanation provided by China in this specific request, there is no "payment card
company" involved in the process at all.
6.10 For these reasons, China requests that the Panel (i ) indicate that paragraph 7.24 is describing
the typical model of operations for global network operators like Visa and MasterCard; or (ii) modify
the paragraph to reflect more broadly the variety of back-end clearing and settlement mechanisms that
are used in payment card systems.
6.11 The United States indicates that it would not object to the inclusion of clarifying language that
confirms that there are variations of both the "four-party model" and the "three-party model".
However, the United States observes that a compan y-specific reference is unnecessary. The United
States submits that an accurate and acceptable reference would be to describe the process as a "typical

15 China refers to Exhibits CHN-101 (Australia), CHN-102 (Canada) and CHI-103 (France).
16 China refers to Exhibit CHN-101, p. 31.
17 China refers to Exhibit CHN-101, pp. 31-33.
18 China refers to Exhibit CHN-101, n. 23.

four-party model". The United States also acknow ledges that there may be more than one way in
which the settlement component of a payment card transaction can be conducted.
6.12 The Panel agrees with the United States that identifying a particular payment card company is
not necessary. The Panel also notes that paragra ph 7.24 describes the typical back-end processing of
payment card transactions in four-party and three-pa rty models. Therefore, we consider that the
sentence in question in paragraph 7.24 could be modified along the lines proposed by the United
States. As a result, we made relevant changes to the second sentence of paragraph 7.24.
6.13 Regarding paragraph 7.28, the United States reque sts, for greater accuracy, that the Panel's
reference in the second sentence to the United States' definition of "payment cards" be modified to
include the phrase "and the unique account number asso ciated with that card or product or access
device" as is set forth in the United States' panel requ est, and as is referred to in paragraph 7.25 of the
Interim Report.
6.14 The Panel considers that the requested change would be more faithful to the definition
presented by the United States, which is referred to in paragraph 7.28, and therefore the Panel
modified paragraph 7.28 accordingly.
6.15 Regarding paragraphs 7.38 to 7.45, China requests that the Panel clarify what the relevant
service transaction would be in the case of three-part y models. In particular, China requests that the
Panel indicate whether it considers that (i) the opera tors of three-party models supply the services at
issue to themselves; (ii) the operators of thr ee-party models supply the services at issue to card
holders and/or merchants; or (iii) the Panel h as some other understanding of the relevant service
transaction in the case of three-party models.
6.16 The United States considers that the particular details China proposes to include regarding
three-party models are not necessary to the Panel's analysis. Nor has China offered any explanation
as to why these "clarifications" are necessary.
6.17 The Panel notes at the outset that, as pointed ou t by the United States, China did not offer any
explanation as to why the requested clarifications are useful or necessary. It is unclear to us what are
the rationale and purpose of those purported clarific ations. We recall that paragraphs 7.38 to 7.45
address whether the services at issue cover the three-part y model in addition to the four-party model.
These paragraphs of the Report should be read in conjunction with the previous sections on payment
card transactions and the services at issue. In particular, the main features of three-party models (in
contrast with four-party models) are described in paragraphs 7.18 to 7.24 of the Report. In the Panel's
view, it is clear from paragraphs 7.23 and 7.24 th at operators of three-party models supply their
services directly to card holders and merchants. For these reasons, the Panel does not find it
necessary or appropriate to make the changes requested.
6.18 Regarding paragraph 7.39, the United States requ ests that the Panel include a new footnote at
the end of the first sentence. The new footnote would refer to United States' responses to Panel
question Nos. 25 and 74 and the United States' response to China's request for a preliminary ruling.
6.19 The Panel notes that the United States' responses to Panel question No. 25, paragraphs 81-83,
and No. 74, paragraphs 26-28, are referred to in footno te 80, at the end of paragraph 7.39. As regards
the requested reference to the United States' respon se to China's request for a preliminary ruling, in
the Panel's view, the United States' arguments cited in paragraph 7.39 do not come from the
paragraphs identified by the United States (paragraphs 40-41 and 54)''. As a result, the Panel does not
find it appropriate to add a new footnote to paragraph 7.39.

6.20 Regarding footnotes 94 and 97, the United States requests that, for completeness, a reference
be included to paragraphs 11-14 of its second written submission.
6.21 In the Panel's view, paragraphs 11-14 of the United States' second written submission deal
with whether EPS constitute a single integrated service, with a view to substantiating its claim that
EPS should be classified in subsector (d) of China' s schedule of specific commitments. Having said
that, we added a reference to those paragraphs in footnote 94, which contains a summary of the
United States' arguments on that issue. As regard s footnote 97, we note that the point made in the
fifth sentence of paragraph 7.59, to which footnote 97 relates, was not made in paragraphs 11-14 of
the United States' second written submission, but in pa ragraph 17 of that submission. For that reason,
we modified footnote 97 to refer to paragraph 17 of the United States' second written submission.
6.22 Regarding paragraph 7.61, the United States requests that the last sentence of this
paragraph include a new footnote that refers to speci fied paragraphs of its submissions and responses
to questions.
6.23 The Panel notes that paragraph 7.61 addresses whether the services at issue are integrated
services, regardless of their classification in Chin a's schedule of specific commitments. The Panel
also notes that paragraphs 35-54 of the United Stat es' response to China's request for a preliminary
ruling, as well as paragraph 10 of the United States ' first written submission, are not related to the
precise issue addressed in paragraph 7.61 of the Report . We also note that the relevant paragraph of
the United States' response to Panel question No. 26 is paragraph 84, which is quoted in footnotes 94
and 97 of that section, and that the relevant para graph of the United States' second written submission
is paragraph 17, which we added to footnote 97. For these reasons, the Panel does not find it
appropriate or necessary to introduce a footnote to paragraph 7.61 of the Report.
6.24 Regarding paragraph 7.75 and footnote 110 , the United States requests that the Report reflect
that arguments put forward by the United States regarding the ordinary meaning of the service
covered in China's subsector (d) also addresses the plain meaning of the phrase "including credit,
charge and debit cards". The United States requ ests the Panel to add a sentence reflecting this
argument in either paragraph 7.75 or footnote 110.
6.25 The Panel notes that the phrase "including cr edit, charge and debit cards" is discussed
subsequently in the Report and therefore the Panel included an appropriate reference in footnote 142.
The Panel also added an additional reference to United States' arguments in footnote 110.
6.26 Regarding footnotes 131, 152, 163, 181, 217 and 230, the United States requests the Panel to
include references to additional paragraphs in Un ited States' submissions that support the arguments
cited by the Panel in the paragraphs concerned.
6.27 The Panel included additional relevant refere nces in footnotes 131, 152, 163, 181, 217
and 230.
6.28 Regarding footnote 142, the United States request s that the citations include references to
additional paragraphs in United Stat es' submissions that support the argument cited by the Panel, and
also indicate that the United States made arguments regarding the ordinary meaning of this phrase.
6.29 The Panel made appropriate additions to footnote 142.
6.30 Regarding footnote 160, the United States requests that the Panel refer to and cite the United
States' rebuttal regarding China's letters of credit argument.

6.31 The Panel included in footnote 160 a reference to the United States' rebuttal argument on
China's letters of credit argument.
6.32 Regarding footnote 176, the United States requ ests that for completeness the Panel include
the United States' arguments made in its second written submission at paragraphs 103 to 115.
6.33 The Panel does not find it necessary to reflect the requested references to additional
United States' arguments in this particular f ootnote, as these arguments are not specifically
summarized in the paragraph to which footnote 176 is attached.
6.34 Regarding footnote 210, the United States requests that the Panel include a citation to relevant
United States' arguments made in its second written submission.
6.35 The Panel does not find it necessary to refer to the United States' second written submission
in relation to paragraph 7.157 as this paragraph summarizes the response given by the United States to
question No. 39(a) by the Panel. However, the Panel modified footnote 210 so as to include a
reference to the United States' complete response to Panel question No. 39(a).
6.36 Regarding paragraph 7.209 (and also paragra phs 7.238, 7.299, 7.334 and 7.360), the
United States notes that paragraph 7.209 identif ies the alleged requirements challenged by the
United States. The United States requests that new footnotes be added for each requirement to reflect
the United States' arguments as set forth in its su bmissions. The United States further requests that
the Panel modify its description of the issuer, term inal equipment and acquirer requirements to reflect
accurately the scope of the United States' claims concerning these requirements. Finally, the
United States requests that the Panel make corres ponding changes to the subheadings that appear
directly under paragraphs 7.238, 7.299, 7.334 and 7.360.
6.37 The Panel added a new footnote at the beginning of paragraph 7.209 to include appropriate
references to the United States' submissions and clar ified in the first sub-paragraph that the short
names for the requirements were chosen by the Panel. We note that the concise descriptions given in
paragraph 7.209 of the issuer, terminal equipmen t and acquirer requirements are those used by the
United States in its own submissions, as is clear fro m the references included in the new footnote. In
the light of this, we decline the request to add fu rther elements to these d escriptions along the lines
proposed by the United States. We recall in this re gard that the precise scope of the United States'
claims concerning the issuer, terminal equipment and acquirer requirements is discussed in
Section VII.E.2(a)-(c) of the Interim Report. As we did not modify the relevant descriptions in
paragraph 7.209, but for one editorial change, we also did not make the consequential changes sought
by the United States to paragraphs 7.238, 7.299 and 7.334 (except for one corresponding editorial
change). In the subheading following paragraph 7. 360, we added a missing word, as requested by the
United States.
6.38 Regarding paragraph 7.227, the United States re quests that the Panel include the concluding
sentence from footnote 282 as the new last sentence in paragraph 7.227, and include a new footnote
that refers to the United States' response to Panel question No. 70.
6.39 The Panel modified paragraph 7.227 and includ ed a new footnote to reflect the requested
change.
6.40 Regarding paragraph 7.228, the United States requests that the Panel modify the eigth
sentence to replace the reference to measures "that are currently in fo rce", with a reference that the
measures "were in force at the time of panel establis hment". The United States submits that the Panel
itself referred in paragraphs 7.227 and 7.228 to the time of the panel's estab lishment as the relevant
point in time. It submits further that the Appellate Body in its recent Report on China – Raw

Materials (paragraphs 260-261) confirmed that the date of panel establishment is the relevant point in
time for a panel's analysis.
6.41 The Panel incorporated the United States' suggested change.
6.42 Regarding paragraph 7.289, the United States re quests that, at the end of the second sentence,
the Panel add specified references to the United States' panel request and written submissions.
6.43 The Panel added a footnote to paragraph 7.289 to include appropriate references to the United
States' panel request and written submissions.
6.44 Regarding paragraph 7.290, China comments that the Panel appears to engage in a substantive
examination of Document No. 94. China points out that the Panel in paragraph 7.229 states that it
declines to take Document No. 94 into account and will not consider it any further. China submits
that it is unclear, therefore, why the Panel engaged in this analysis. China suggests that the Panel omit
any discussion of Document No. 94.
6.45 The United States responds that the Panel's di scussion of Document No. 94 provides useful
and important context for the Panel's analysis of the United States' claims. The United States
therefore requests that the Panel not omit this discussion.
6.46 In the light of the parties' comments, the Pane l finds it appropriate to clarify the relationship
of paragraph 7.290 with paragraph 7.229. We therefore made changes to paragraph 7.290 that take
into account more clearly and explicitly the Panel's statements in paragraphs 7.221-7.229. We also
made a consequential change to footnote 380 of the Interim Report.
6.47 Regarding paragraphs 7.367, 7.368, 7.371, 7. 507(d) and 7.606, China requests that the Panel
remove findings on the applicability of certain measures to the processing of RMB-denominated
payment cards that are issued and used in Hong Kong, or issued and used in Macao. China considers
that the United States, in its panel request, limited the scope of the relevant claims under Articles XVI
and XVII of the GATS to (i) those RMB payment card transactions taking place in Macao or Hong
Kong using payment cards issued in China, and (ii) those RMB payment card transactions taking
place in China using payment cards issued in Chin a, Hong Kong, or Macao. It considers that the
panel request does not refer to those transac tions where the payment card is both issued and used in
either Hong Kong or Macao. China requests that the Panel modify the Report to find that this third
category of transactions is not within the terms of reference, or, otherwise, to reflect in the Final
Report China's position that these transactions are not within the Panel's terms of reference.
6.48 The United States requests the Panel to reject China's request. As an initial matter, the United
States argues that China provides no legal basis under Article 6.2 of the DSU to support its request.
In addition, the United States considers that there is no basis to read language in its panel request as
excluding transactions where the payment card is both issued and used in either Hong Kong or
Macao. In this respect, the United States notes that its panel request specifies that "China … requires
the handling by CUP of all RMB transactions in Macao or Hong Kong using payment cards issued in
Mainland China, as well as any RMB transactions in Mainland China using RMB payment cards
issued in Hong Kong, China or M acao, China". In addition, the Unite d States notes the statements in
its panel request that "China also requires that all cross-bank or inter-bank transactions involving
payment cards be handled through CUP. China prohibits the use of non-CUP payment cards for
cross-region or cross bank or inter-bank transactions". The United States also submits that its panel
request identifies the particular instruments through which China implements the measures.
6.49 The Panel recalls that the United States' panel request supplies a brief narrative description of
the impugned measures. As noted by the parties, the panel request states in relevant part that "China

… requires the handling by CUP of all RMB tran sactions in Macao or Hong Kong using payment
cards issued in Mainland China, as well as any RMB transactions in Mainland China using RMB
payment cards issued in Hong Kong, China or Macao, China".19
6.50 Because the panel request refers only to RMB payment card transactions taking place in
Macao or Hong Kong using payment cards issued in China, and to RMB payment card transactions
taking place in China using payment cards issued in Hong Kong, or Macao, the Panel modified its
findings to clarify that they do not refer to tho se transactions where the payment card is both issued
and used in either Hong Kong or Macao. The panel request does not refer explicitly to the latter type
of transactions, nor does it indicate, through the use of words such as "e.g.", "in particular", "inter
alia", etc., that the types of transactions mentioned are but a subset of the relevant transactions. The
United States further argues that its panel request sp ecifies that China also requires that all cross-bank
or inter-bank transactions be handled through CU P, and that China prohibits the use of non-CUP
payment cards for cross-region or cross-bank or inte r-bank transactions. Consistent with the fact that
these alleged requirements are specified separatel y from the "Hong Kong/Macao requirements" in the
panel request, the Panel considered allegations of the United Stat es concerning cross-bank or inter-
bank transactions and cross-bank or inter-bank prohibitions separately from the alleged Hong
Kong/Macao requirements. Consequently, the Pa nel modified paragraphs 7.367 (including new
footnote 469), 7.368, 7.371, 7.507(d), 7.578, 7.606, 7.621, 7.622 (including new footnote 804), 7.623,
7.624, 7.627, 7.636, and 8.1(d) (iv); and footnote 800. In doing so, we consider that our Report
adequately reflects the United States' view that transactions where the payment card is both issued
and used in either Hong Kong or Macao form part of its claims.20
6.51 Regarding paragraphs 7.716, 7.727 and 7.740, the United States requests that the Panel
modify them so as to reflect that its claims and arguments concerning the issuer, terminal equipment
and acquirer requirements explicitly cover three-party models. The United States notes that in the
aforementioned paragraphs, the Panel states that the United States has not specifically addressed
three-party networks in the context of issuer, te rminal equipment and acquirer requirements. The
United States further points out that the Panel in paragraphs 7.38-7.45 recognized that the United
States argued that the three-party model was include d in the services at issue. Finally, the United
States refers the Panel to certain arguments it made in the course of the proceedings.
6.52 The Panel does not see any inconsistency between the statements in paragraphs 7.716, 7.727
and 7.740, on the one hand, and paragraphs 7.38 -7.45, on the other. There is no suggestion in
paragraphs 7.716, 7.727 or 7.740 that the United States' claims concerni ng the issuer, terminal
equipment and acquirer requirements fail to cover th ree-party models. Having said this, for greater
clarity and accuracy, we slightly modified paragraphs 7.727 and 7.740. In paragraph 7.716, we added
one of the arguments to which the United States ma de reference and made a ppropriate consequential
changes. Further consequential changes were made to paragraphs 7.613 and 7.620.
VII. FINDINGS
A. PRELIMINARY RULING UNDER ARTICLE 6.2 OF THE DSU
7.1 As noted in paragraphs 1.6-1.8 above, on 5 July 2011 21 China submitted a request for a
preliminary ruling to the Panel with respect to the consistency of certain aspects of the United States'
panel request with Article 6.2 of the Unders tanding on Rules and Procedures Governing the
Settlement of Disputes (the "DSU"). China argued that the United States' panel request fails to
provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly in

19 WT/DS413/2, p. 2.
20 See Interim Panel Report, paras. 7.364, 7.367, 7.369, 7.378, 7.396, 7.399 and 7.612.
21 China's Letter of 5 July 2011.

two respects: first, by failing to explain how the de finition of "electronic payment services" relates to
China's specific commitments in any of the thr ee subsectors identified in the panel request; and
second, by failing to indicate which mode or modes of supply the United States considers to be at
issue.22 China argued that these deficiencies are central to all of the United States' claims and should
be addressed at the earliest opportunity in the interest of due process before either party filed its first
submission. The United States requested the Panel to decline China's request to make findings in
advance of either party filing its first submission. 23 The United States further challenged the
substance of China's request.24
7.2 After consulting with the parties, the Panel decide d to issue a preliminary ruling to the parties
on 7 September 2011, prior to receiving the United States' first written submission. The Panel
observed that this would take into account China's concerns regarding the implications of the ruling
on the substance of the case without causing additional delays in the proceedings. At the request of
the Panel, the Chairperson of the DSB circulated the ruling to the World Trade Organization (WTO)
membership on 30 September 201125.
7.3 As set out in further detail in its preliminary ruling, the Panel concluded that China had failed
to establish that the United States' panel request is inconsistent with Article 6.2 of the DSU on the
grounds that it does not provide a brief summary of the legal basis sufficient to present the problem
clearly. The Panel found that the text of the panel request makes it clear that each of the requirements
allegedly imposed by China is considered by the Un ited States to be in breach of Articles XVI:1 and
XVI:2 and Article XVII of the General Agreement on Trade in Services (GATS). The Panel also
concluded that the United States' panel request cons idered as a whole does not need to explain further
how the challenged measures are inconsistent with China's commitments under the relevant modes of
supply. Accordingly, the Panel rejected China's preliminary objection of 5 July 2011 in its entirety
and stated that it would continue its considerati on of the case in accordance with the timetable that
had been set for these proceedings.
7.4 The Panel's preliminary ruling circulated as document WT/DS413/4 dated 30 September 2011
forms an integral part of the present findings.
B. G
ENERAL ISSUES
1. Burden of proof
7.5 The general rule on burden of proof in WTO dispute settlement is that a party claiming a
violation of a provision of a covered agreement by another Member must assert and prove its claim. 26
Moreover, any party that asserts a fact, whether cl aimant or respondent, is responsible for providing
proof thereof. This conforms to the generally accepted canon of evidence in civil law, common law,
and, in fact, in most jurisdictions, that the burde n of proof rests upon the party, whether complaining
or responding, who asserts the affirmative of a par ticular claim or defence. If that party adduces
evidence sufficient to raise a presumption that what is claimed is true, the burden then shifts to the
other party, who will fail unless it adduces sufficient evidence to rebut the presumption.27
7.6 Similarly, in WTO dispute settlement, once a complaining party has made a prima facie case,
the burden of proof moves to the responding party, which must in turn counter or refute the claimed

22 China's request for a preliminary ruling.
23 United States' Letter of 6 July 2011.
24 United States' response to China's request for a preliminary ruling; Un ited States' comments to
China's reply.
25 WT/DS413/4.
26 Appellate Body Report, US – Wool Shirts and Blouses, p. 16, DSR 1997:I, 323 at p. 337.
27 Appellate Body Report, US – Wool Shirts and Blouses, p. 14, DSR 1997:I, 323 at p. 335.

inconsistency.28 The Appellate Body has stated that "a prima facie case is one which, in the absence
of effective refutation by the defending party, requires a panel, as a matter of law, to rule in favour of
the complaining party presenting the prima facie case." 29 A prima facie case must be based on
evidence and legal argument put forward by the complaining party in respect of each of the elements
of the claim.30 The amount and type of evidence that will be required will necessarily vary from case
to case.31
7.7 Generally, the complainant in a given case initia lly bears the burden of proof to establish a
prima facie case of inconsistency of a measure with a provi sion of a WTO covered agreement. In this
dispute, therefore, the United States bears the initial burden to establish a prima facie case that China's
measures are inconsistent with the cited provisions of Articles XVI and XVII of the GATS.
2. Treaty interpretation
7.8 Article 3.2 of the DSU directs panels to cl arify the existing provisions of the covered
agreements "in accordance with customary rules of interpretation of public international law". It is
well settled that the rules codifi ed in Articles 31 and 32 of the Vienna Convention on the Law of
Treaties (Vienna Convention) are such customary rules.32 These provisions read as follows:
Article 31: General rule of interpretation
1. A treaty shall be interpreted in go od faith in accordance with the ordinary
meaning to be given to the terms of the treat y in their context and in the light of its
object and purpose.
2. The context for the purpose of the interpretation of a treaty shall comprise, in
addition to the text, including its preamble and annexes:
(a) any agreement relating to the treaty which was made between all the parties
in connection with the conclusion of the treaty;
(b) any instrument which was made by one or more parties in connection with
the conclusion of the treaty and accepted by the other parties as an instrument related
to the treaty.
3. There shall be taken into account, together with the context:
(a) any subsequent agreement between the parties regarding the interpretation of
the treaty or the application of its provisions;
(b) any subsequent practice in the appli cation of the treaty which establishes the
agreement of the parties regarding its interpretation;
(c) any relevant rules of international la w applicable in the relations between the
parties.

28 Appellate Body Report, EC – Hormones, para. 98.
29 Appellate Body Report, EC – Hormones, para. 104.
30 Appellate Body Report, US – Gambling, para. 140.
31 Appellate Body Report, US – Wool Shirts and Blouses, p. 14, DSR 1997:I, 323 at p. 335.
32 Appellate Body Reports, US – Gasoline , p. 17, DSR 1996:I, 3 at pp. 15-16; India – Patents (US) ,

4. A special meaning shall be given to a te rm if it is established that the parties
so intended.
Article 32: Supplementary means of interpretation
Recourse may be had to supplementary me ans 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, or to determine the
meaning when the interpretation according to article 31:
(a) leaves the meaning ambiguous or obscure; or
(b) leads to a result which is manifestly absurd or unreasonable.
33
7.9 Article XX:3 of the GATS provides that WTO Members' "Schedules of specific commitments
shall be annexed to this Agreement and shall form an integral part thereof." Consistent with
Article 3.2 of the DSU, GATS Schedules must be in terpreted according to the "customary rules of
interpretation of public international law". In US – Gambling, the Appellate Body confirmed that:
[T]he task of identifying the meaning of a concession in a GATS Schedule, like the
task of interpreting any other treaty text, involves identifying the common intention of
Members. […] we consider that the meaning of the United States' GATS Schedule
must be determined according to the rules c odified in Article 31 and, to the extent
appropriate, Article 32 of the Vienna Convention.34 (emphasis original)
7.10 Accordingly, the Panel shall apply these princi ples in interpreting the relevant provisions of
the covered agreements at issue in this dispute.
C. THE SERVICES AT ISSUE
7.11 The Panel begins its analysis with an examinati on of the services at issue. We first consider
the essential features of payment card transactions 35, based on the parties' submissions. Thereafter,
we turn to the scope of the services at issue, addr essing in particular areas of disagreement between
the parties, namely (a) whether the services at issu e cover the "three-party model" in addition to the
"four-party model"; (b) whether the services at is sue include the services supplied by third-party
processors; and (c) whether the services at issue are single/integrated services.

33 The Vienna Convention on the Law of Treaties (the "Vienna Convention"), done at Vienna,
23 May 1969, 1155 U.N.T.S. 331; 8 International Legal Materials 679.
34 Appellate Body Report, US – Gambling, para. 160.
35 Both parties have used the expression "payment card transactions" when describing the transactions
at issue in this dispute. See, e.g. United States' response to China's request for a preliminary ruling, para. 44 and
China's first written submission, para. 15. The Panel will also use this term in its Report.

1. Payment card transactions36
7.12 A typical transaction involving the purchase of a good or a service entails a payment to the
merchant by the consumer. Transactions often involve payment cards.37 A "payment card" includes a
bank card, credit card, charge card, debit card, ch eck card, automated teller machine (ATM) card,
prepaid card, and other similar card or payment or money transmission product or access device, and
the unique account number associated with that card or product or access device. 38 Payment cards
typically fall into one of three categories, depending on the timing of the payment: "pay later" cards
(e.g. credit and charge cards); "pay now" cards (e.g . debit cards); and "pay before" cards (e.g. prepaid
or stored-value cards). 39
7.13 A "pay later" payment occurs after receiving th e goods or services, and typically involves the
use of a credit card. A credit card enables a cons umer to access a credit line account at a financial
institution. In general, credit cards have revolving credit arrange ments that allow card holders to
make purchases and be billed later. Most credit card accounts allow the card holder to carry a balance
from one billing cycle to the next and make a mini mum payment in each billing cycle, rather than
requiring payment of the full balance. A charge card is a specific kind of credit card that has a short-
term, fixed-period credit arrangement. The balance on a charge card account is payable in full when
the statement is received and cannot be rolle d over from one billing cycle to the next. 40 A "pay now"
payment, which typically involves the use of a debit card, occurs at the time of purchase of goods or
services. A debit card payment is linked to an exis ting transaction account at a financial institution.
Debit cards are either online (i.e. PIN-based) 41 or off-line (i.e. signature-based). Debit card
transactions are authorized in real time at the poi nt-of-sale (POS) terminal using the same electronic
funds transfer networks that handle ATM transactions.42 The term "pay before" refers to payments for
goods or services with prepaid or stored-value cards, loaded with funds before the purchase of goods
or services occurs. The account associated with the prepaid debit card may be the liability of a
financial institution. Prepaid cards are generally issued to persons who deposit funds into an account

36 The information used to prepare this section comes from the parties' submissions. More information
about the technical and commercial aspects of payment card transactions is found in the submissions made by
the United States than in the submissions made by China, which explains the frequent reference to the sources
provided by the former. We note in that regard that in paragraph 15 of its first written submission, China states
that "China does not substantially disagree with those descriptions insofar as they go. China will therefore try to
avoid repeating what the United States has already desc ribed, to the extent that China agrees with those
accounts".
37 The Panel considers that information regarding the different types of cards and their functioning is
relevant notably for the discussion of classification of the services at issue (see Section VII.D of this report).
38 United States' request for the establishment of a panel, fn. 2; response to China's request for a
preliminary ruling, para. 35. The United States' res ponse to China's request for a preliminary ruling was
incorporated into the United States' first written subm ission (See United States' first written submission,
para. 9). We note that China has used extensively the expression "payment card" in its submissions, and has not
contested the definition provided by the United States in its request for the establishment of a panel.
39 US SEC Amendment No. 4 to Form S-1 Registratio n Statement Under Securities Act of 1933, Visa
Inc. IPO Prospectus, February 25, 2008, (Visa IPO Prospectus), Exhibit US-3, p. 128; US SEC Form 10-K, Visa
2010 Annual Report (as of September 30, 2010), (Visa 2010 Annual Report), Exhibit US-4, pp. 6-7; US SEC
Form 10-K, MasterCard Incorporated Annual Report, for fiscal year en ded December 31, 2010, (MasterCard
2010 Annual Report), Exhibit US-6, p. 6; and Federal Financial Institutions Examination Council (FFIEC),
Retail Payment Systems, IT Examination Handbook (February 2010), (FFIEC IT Examination Handbook),
Exhibit US-12, pp. 17, 20-21, and 24.
40 FFIEC IT Examination Handbook, Exhibit US-12, p. 18; and BIS Red Book 2003, Payment Systems
in the United States, (BIS Red Book 2003), Exhibit US-11, p. 440.
41 PIN stands for Personal Identification Number.
42 FFIEC IT Examination Handbook, Exhibit US-12, pp. 20-22; and BIS Red Book 2003,
Exhibit US-11, p. 440.

of the issuer, while stored-value cards do not t ypically involve a deposit of funds as the value is
prepaid and stored directly on the cards.43
7.14 Payment card transactions involve several entities: issuing institutions (or issuers), acquiring
institutions (or acquirers), payment card companies 44, and settlement banks. 45 Issuers, usually banks,
are the entities that make payment cards available to card holders. Issuers solicit card holders and
establish applicable card holder terms, including in dividual credit limits, fees, interest rates and
payment schedules. Payment cards commonly feature the logo or trademark of the issuer as well as
the logo or trademark of the relevant payment car d company or network. An institution seeking to
issue cards must be capable of supplying card-b ased payment services or must use a payment card
company to do so. 46 Issuers agree to adhere to rules sp ecified by the payment card company that
allow the payment card company to process transactions that use the cards issued by the bank. The
issuer authorizes transactions at POS terminals, collects payment from the card holder, and transmits
the funds through the relevant inter-bank payment channel for settlement of payment obligations
incurred by the card holder.47
7.15 Acquirers sign up merchants to accept payment cards for a specific payment card company.
In other words, they "acquire" transactions fo r a specific payment card company and network.
Acquirers, often banks, maintain me rchant accounts, handle relations with the merchant, receive all
bank transactions from the merchant, ensure that pa yments are properly credited to the merchant, and
provide the merchant with connectivit y to the relevant payment network. 48 Like issuers, acquirers
must be capable of supplying card-based payment services or must use a payment card company to do
so.49 Acquirers must adhere to specific standards, rules and procedures (typi cally set by the payment
card company) governing the processing of transacti ons in the payment card network for which
transactions have been acquired.
7.16 Issuers and acquirers may choose to partially or totally outsource the services they supply in
connection with payment card transactions to so-called "third-party" processors. 50 Broadly speaking,
these third-party processors can be categorized as merchant and issuer processors. Merchant and
issuer processors provide payment-related services on behalf of acquirers and issuers, respectively. In
so doing, they interconnect to, and interact with, the payment card company (or network). Third-party
processors provide a potentially broad range of services.51

43 FFIEC IT Examination Handbook, Exhibit US-12, p. 24.
44 Throughout this section (paras. 7.13-7.25) on payment card transactions, and only for the sake of this
section, the Panel refers to "payment card companies", defined by the Bank for International Settlement as "a
company which owns trademarks of payment cards (credit, debit or prepaid cards) and may also provide a
number of marketing, processing or other services to institutions issuing its cards." (BIS, Committee on
Payments and Settlement Systems, A Glossary of Term s used in Payments and Settlement Systems, March
2003, (« BIS glossary »), Exhibit US-68, p. 16). We are using this term, rather than "EPS suppliers" and
"network operators" as done by the United States and China, respectively, in order not to prejudge the
discussion in subsequent sections. We are also using the term "payment card services" in this section to refer to
the services supplied by these companies, and "payment card networks" to refer to the infrastructure and
networks owned and operated by payment card companies.
45 Visa IPO Prospectus, Exhibit US-3, pp. 129-130.
46 United States response to China's request for a preliminary ruling, para. 43.
47 Visa IPO Prospectus, Exhibit US-3, pp. 129-130.
48 Visa IPO Prospectus, Exhibit US-3, pp. 129-130.
49 United States response to China's request for a preliminary ruling. para. 43.
50 Visa IPO Prospectus, Exhibit US-3, p. 130; and China's first written submission, para. 30.
51Visa IPO Prospectus, Exhibit US-3, p. 130 (under the title "Functions perfor med in connection with
payment card transactions"); China's first written submissi on, paras. 31 and 32; and United States' response to

7.17 Payment card companies own, manage and promote payment brands, which they licence to
their primary customers (i.e. issuers and acquirers ). They approve card design, specifications and
other requirements in connection with card issuance and acceptance. 52 Payment card companies
establish rules and standards for their product plat forms and payment networks, including eligibility
for participation in the network, product platfo rm features and functionality, merchant acceptance
standards, and dispute and arbitration processes. They provide and operate the processing
infrastructure and network necessary for the execution of payments via payment cards. They typically
transfer authorization and clearing data and he lp settle funds between issuers and acquirers. 53
Payment card companies also provide issuers and acquirers with certain guarantees, including for
example, indemnification for any settlement loss that issuers or acquirers may suffer due to the failure
of another issuer or acquirer to fund its daily settlement obligations.54
7.18 There are two main business models used in card-based electronic payment transactions.
These are often referred to as "open-loop", or "fou r-party" models, and "closed-loop", or "three-party"
models. 55 In the four-party model, different en tities handle the issuing of payment cards, the
acquisition of transactions and the actual processing of transactions. Payment card companies in this
model do not issue payment cards, nor do they acquire transactions with those payment cards.
Payment card companies own and operate the netw orks that connect issuers and acquirers, and
process transactions made in connection with paymen t cards. In the four-party model, the payment
card company does not interact directly with either the card holder or the merchant. 56 It is the issuer
and the acquirer that interact directly with, respectively, the card holder and the merchant. 57
Moreover, in four-party models, it is the issuer th at extends credit to the card holder, not the payment
card company.58
7.19 In the three-party model, the payment card company itself is responsible for issuing cards,
handling the acquisition of transactions, and processing the transactions. In recent years, certain
payment card companies that operate three-party models have also developed relationships with banks
and other institutions, allowing them to issue these cards and acquire transactions for these cards'
networks, thereby emulating certain aspects of the four-party model.59
7.20 The processing of transactions, whether in connec tion with four-party or three-party models,
encompasses both (1) "front-end processing" (w hich serves to authenticate and authorize

52 United States' response to China's request for a preliminary ruling, para. 44.
53 Visa IPO Prospectus, Exhibit US-3, p. 131; Visa 2010 Annual Report, Exhibit US-4, pp. 5 and 7-13;
A Time of Change: A World of Opportunities, MasterCard 2009 Annual Report, Exhibit US-5, pp. 4 and 7-9;
UBS Securities LLC, Visa 201: No Better Way to 'Play the Swipe ' (June 25, 2008), Exhibit US-10, pp. 28-30;
and Bank for International Settlements (BIS) Committee on Payment and Settlement Systems (CPSS) Clearing
and Settlement Arrangements for Retail Payments in Selected Countries , September 2000, Exhibit CHN-1,
pages 2-6.
54 Visa 2010 Annual Report, Exhibit US-4, pp. 30-31; and MasterCard 2010 Annual Report,
Exhibit US-6, p. 38.
55 Visa IPO Prospectus, Exhibit US-3, p. 128.
56 Visa IPO Prospectus, Exhibit US-3, pp. 128-129; and MasterCard 2010 Annual Report,
Exhibit US-6, pp. 4 and 7.
57 Visa IPO Prospectus, Exhibit US-3, p. 129.
58 Ibid. p. 128.
59 Visa IPO Prospectus, Exhibit US-3, p. 128; US SEC Form 10-K, American Express Company
Annual Report, for the fiscal year ended November 30, 2010, ("American Express 2010 Annual Report"),
Exhibit US-7, pp. 4-11; and US SEC Form 10-K, Discover Financial Services Annual Report, for the fiscal year
ended November 30, 2010, ("Discover 2010 Annual Report"), Exhibit US-8, pp. 1-4.

transactions), and (2) "back-end processing" (whi ch serves, essentially, to clear and settle
transactions).60
7.21 Front-end processing occurs at the time of the transaction. A card-based payment transaction
can be initiated either at a terminal (e.g. a merc hant's POS) or remotely via e-mail, telephone or
internet. When a card holder presents a payment card to pay for a transaction, the merchant uses its
POS terminal to transmit a request for authorization to its acquirer or a merchant (third-party)
processor. The acquirer or its third-party process or determines the type of transaction (debit or
credit), and the particular payment card network th rough which the transaction should be routed, and
then forwards that request to the relevant payment card company.
7.22 After the payment card company receives the authorization request, it undertakes several
tasks. Under a four-party model, it ascertains the t ype of transaction (e.g. credit or debit), determines
various transaction parameters (e.g . location and type of merchant), identifies the issuer, and then
routes the authorization request to the issuer. At that point, the issuer identifies the card holder's
account and decides whether to authorize the transac tion after confirming that the card is authentic,
the account is in good standing, and the account li mit is not exceeded (in the case of a credit
transaction) or that sufficient funds are available (i n the case of a debit transaction). The issuer then
authorizes or rejects the transaction based on these validations as well as the card holder's record. The
authorization (or rejection) information is sent back to the merchant via the payment card network. If
the acquirer and the issuer are one and the same, a transaction is referred to as an "on-us" transaction.
If the transaction has been authorized, the paymen t card company receives the approved transaction
information. Then the payment card company returns the authorization information to the acquirer, or
to the merchant processor or merchant, as the case ma y be. Finally, when the merchant receives the
authorization, it completes the sale.
7.23 Under the three-party model, the payment card company, which is also the issuer and the
acquirer, determines various tran saction parameters, identifies the card holder's account and decides
whether to authorize the transaction. The authori zation (or rejection) information is sent by the
payment card company directly to the merchant.
7.24 Back-end processing occurs at the time of the transaction or at a later point in time.
Merchants submit transaction information for cleari ng and payment to acquirers, which forward this
information to the appropriate entity (e.g. a payment card company in the case of a typical "four-party
model" transaction) for purposes of establishing ne t settlement positions. The payment card company
aggregates and processes all the information and prod uces a daily report of the net and debit positions
of issuing and acquiring financial institutions. Th e settlement bank relies on the report generated by
the payment card company but does not perform any data processing itself. The payment card
company organizes this information by the respec tive card-issuing bank, and then forwards the
transaction information to the participating entities specifying those transactions that were cleared and
the net amounts to be paid (by issuers) and receive d (by acquirers). The transfer of money from the
card holder to the issuer and from the acquirer to th e merchant is carried out in accordance with the
contractual agreements between those parties. Under the three-party model, there are no inter-bank
transactions, because the payment card company act s as payment card network and processor, card
issuer and merchant acquirer. In this case, it is the payment card company that debits the card holder's
account and credits the merchant's account.
 61

60 United States response to China's request for a pr eliminary ruling, paras. 49-53; and China's first
written submission, para. 20. China also makes refere nce to "back-end processing" (China's first written
submission, para. 31).
61 American Express 2010 Annual Report, Exhibit US-7, pp. 4-11; Discover 2010 Annual Report,
Exhibit US-8, pp. 1-4; and China's first written submission, fn. 7.

2. The services at issue
7.25 The United States' request for th e establishment of a panel specifies that the present dispute
concerns "certain restrictions and requirements maintained by China affecting electronic payment
services for payment card transactions and the suppliers of those services (electronic payment services
suppliers)" (footnotes omitted). 62 It describes "electronic payment services" and a "payment card" as
follows:
"Electronic payment services" involve the services through which transactions
involving payment cards (as defined below) are processed and through which
transfers of funds between institutions par ticipating in the transactions are managed
and facilitated. Suppliers of electronic payment services supply, directly or
indirectly, a system that typically includes the following: the processing
infrastructure, network, and rules and pro cedures that facilitate, manage, and enable
transaction information and payment flows and which provide system integrity,
stability and financial risk reduction; the process and coordinati on of approving or
declining a transaction, with approval gene rally permitting a purchase to be finalized
or cash to be disbursed or exchanged; the delivery of transaction information among
participating entities; the calculation, determination, and reporting of the net financial
position of relevant institutions for all transac tions that have been authorized; and the
facilitation, management and/or other partic ipation in the transfer of net payments
owed among participating institutions.
63
A "payment card" includes a bank card, cred it card, charge card, debit card, check
card, automated teller machine (ATM) card, prepaid card, and other similar card or
payment or money transmission product or access device, and the unique account
number associated with that card or product or access device.64
7.26 According to the United States, electronic paym ent services (EPS) are at the centre of all
payment card transactions, and without these services the transactions could not occur.65 EPS provide
an efficient, timely and reliable means to facilita te the transmission of funds from the holders of
payment cards who purchase goods or services to the individuals or businesses that supply them. EPS
suppliers receive, check and transmit the informati on that the parties need to conduct the transactions,
and manage, facilitate, and enable the transmission of funds between participating entities. According
to the United States, 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 money among the
institutions involved in card payments.
66 EPS suppliers also provide their customers with certain
guarantees to ensure the integrity of the electronic payment services, including, for example, instances
where customers fail to honour payment cards or wher e issuers or acquirers fail to fund obligations. 67
In the United States' view, the processing infrastruct ure, network, and rules and procedures, which
facilitate, manage, and enable transaction informati on and payment flows, a nd which provide system
integrity, stability and financial risk reduction, are key components of electronic payment services. 68
7.27 China submits that the services at issue, as d escribed in the United States' request for the
establishment of a panel, relate to inter-bank pa yment card transactions, i.e. transactions where the

62 United States' request for the establishment of a panel, para, 1.
63 Ibid. fn. 1.
64 United States' request for the establishment of a panel, fn. 2.
65 United States' first written submission, para. 25.
66 United States' response to China's request for a preliminary ruling, para. 40.
67 Ibid. para. 42.
68 Ibid. para. 45.

financial institution that issues the payment card to the card holder is unrelated to the financial
institution that acquires the payment card transaction from the merchant.69 These financial institutions
(i.e. issuers and acquirers) authorize, clear, a nd settle inter-bank payment card transactions by
obtaining these services from the operators of inter-bank payment card networks. 70 China considers
that an inter-bank payment card network is a te lecommunications and data-processing infrastructure
through which a network operator provides certain au thorization, clearing, and settlement services to
participating financial institutions.71 According to China, the operator of the network is not a party to
the payment card transaction (which, it argues, is wh y it is a "four-party" model, not a "five-party"
model),72 but provides financial institutions with an ex ternal network for authorizing, clearing, and
settling the payment card transactions to which they are parties. 73 The services at issue are what
payment card companies describe as their "tra nsaction processing services", consisting of the
operation of a "processing infrastructure" that is us ed to provide certain "core processing services"
relating to the "authorization, clearing, and settle ment" of payment card transactions. These are, in
China's view, "network services", i.e. the service s that network operators provide to financial
institutions for the purpose of authorizing, clearing, and settling inter-bank payment card
transactions.74
7.28 The Panel notes first that the services at issue are "electronic payment services for payment
card transactions" or, in other words, electronic payment services for transactions with payment cards.
We also note that the definition of services at issue provided by the United States includes
transactions with payment cards, which the United States defines as including bank cards, credit
cards, charge cards, debit cards, check cards, ATM cards, prepaid cards, and other similar cards or
payment or money transmission products or access devices, and the unique account number
associated with those cards or products or access devices.
75
7.29 We also observe that the descriptions provided by the parties of the services involved in the
processing of payment card transactions do not differ fundamentally. We find confirmation of this
observation in China's first written submission, where China states that "the United States has
provided lengthy descriptions of the technical and commercial aspects of payment card transactions.
China does not substantially disagree with those descriptions, insofar as they go".76
7.30 The Panel further notes that China acknowledged that the services at issue are determined by
the United States' description in its request for the establishment of a panel and the scope of the
challenged measures.77 Indeed, China does not challenge the f act that the five "elements" described
by the United States in its panel request correspond to what EPS suppliers − as the United States calls
them − or "network operators" − as China prefers to call them − do. In analysing the five elements,
China observes that:

69 China's first written submission, para. 18.
70 Ibid. para. 22.
71 Ibid. para. 22.
72 Ibid. para. 22.
73 Ibid. para.22.
74 Ibid. para. 73.
75 United States' request for the establishment of a panel, fn. 2.
76 China's first written submission, para. 15.
77"The services at issue in this dispute are determin ed by two factors. (1) the U.S. definition of the
services at issue, as set forth in its panel request; and (2) the scope and effect of the challenged measures. It is
the overlap of these two factors that determines the servi ces at issue. The services at issue cannot be broader
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". (China's first written submission, para. 61).

[T]he first element of the "system" - "the processing infrastructure, network, and rules
and procedures" - appears to correspond, at least in part, to what payment card
companies describe as their telecommunications and data-processing infrastructure;
the second element of the "system" - "the process and coordination of approving or
declining a transaction" - appears to co rrespond to what payment card companies
describe as the authorization component of their core data processing services;
the third and fourth elements of the "s ystem" - "the delivery of transaction
information among participating entities" a nd "the calculation, determination, and
reporting of the net financial position of rele vant institutions for all transactions that
have been authorized" - appear to co rrespond to what payment card companies
describe as the clearing component of their core data processing services; and
the fifth element of the "system" - "the facilitation, management and/or other
participation in the transfer of net paym ents owed among partic ipating institutions" -
appears to correspond to what payment card companies describe as the settlement
component of their core data processing services.78
7.31 Moreover, both parties recognize that other institutions, such as issuers, acquirers and
settlement banks, also participate in payment card transactions.79
7.32 We observe that China did not request that any element of the definitions of the services at
issue provided by the United States be eliminated from the dispute. Indeed, while China emphasizes
the clearing and settlement aspect of payment card transaction processing, it does not deny that the
services at issue encompass other aspects of paym ent card transaction processing as well. In China's
own words:
However many other services might be at issue in this dispute, clearing and
settlement services are plainly among them … Thus, while the United States makes
heroic efforts to avoid using the terms "cl earing" and "settlement" in the narrative of
its submissions, China believes it should be undisputed that the services at issue
include clearing and settlement services.80
7.33 We also note that the parties agree that the ser vices at issue, as described in the United States'
request for the establishment of a panel, do not incl ude the services supplied by issuing and acquiring
institutions.81
7.34 However, before proceeding further, the Pane l would like to clarify two issues on which the
parties differ, namely (i) whether the services at issue relate only to "inter-bank payment card
transactions"; and (ii) whether the payment card company is a party to the payment card transaction.
7.35 Regarding the first question, we note China's argument that the services at issue relate to
inter-bank payment card transactions, defined by Ch ina as transactions where the financial institution
that issues the payment card to the card holder is unr elated to the financial institution that acquires the

79 United States' response to China's request for a pr eliminary ruling, para. 43; and China's first written
submission, para. 20.
80 China's first written submission, para. 75.
81 In its response to Panel question No. 43, the United States indicated that "[a]s a threshold matter,
classification of issuing and acquiring services is not neces sary for the panel’s resolution of this dispute, as the
U.S. claims do not pertain to this service".

payment card transaction from the merchant. 82 As will become clear in the subsequent sections
dealing with the third-party mode l and third-party processors, we do not agree with this argument by
China. In our view, the services at issue relate not only to inter-bank payment card transactions, as
defined by China, but also to payment card tran sactions where the issuing financial institution is
related to - or can indeed be the same as - the ac quiring financial institution. This is the case, for
example, of "on-us" payment card transactions, as well as transactions carried out under the three-
party model.
7.36 Turning to the second question, China argues that the "operator of the network" (or the
payment card company, as we have called it) is not a party to the payment card transaction (which is
why it is a "four-party" model, not a "five-party" model); rather, the "operator of the network"
provides financial institutions with an external network for authorizing, clearing, and settling the
payment card transactions to which they are parties. 83 We do not agree with this argument by China.
In our view, as evidenced by the description of payment card transactions provided in paragraphs 7.13
to 7.24 above, payment card companies or netw orks are indeed a party to the payment card
transaction. This is not only the case with networ ks operating under the "three-party" model, but also
with other networks generally operating under th e "four-party" model. Among other things, these
operators own the payment card brand; set rules, standards, and procedures by which issuers and
acquirers must abide; and provide authorizati on, clearing and settlement services to issuers and
acquirers. More importantly, they guarantee the trans actions and get paid by issuers and acquirers for
the services supplied.
7.37 In concluding, we recall that the services at i ssue in this dispute are determined by the
description in the United States' panel request. In our view, the services at issue are therefore
electronic payment services for all types of paymen t card transactions. These are the services the
Panel must focus on, regardless of th e labels used by the parties to re fer to them. Hereinafter, we will
use the expression "electronic payment services for tr ansactions involving the use of various types of
payment cards" (EPS) and "electronic payment service suppliers" (EPS suppliers) to refer to,
respectively, the services at issue and the service su ppliers supplying those services. We find support
for this terminology in the fact that: (i) China does not deny that the dispute is about services related
to "payment card transactions"; (ii) transactions with all types of payment cards are envisaged; (iii)
these services are currently conducted exclusively th rough "electronic" means; and (iv) as will
become clearer in the discussion on classification (S ection E below), the services at issue are, in our
view, "payment services".
3. Whether the services at issue cover the three-pa rty model in addition to the four-party
model
7.38 China argues that the definition of the service s at issue proposed by the United States is
premised on a four-party model.84 The services at issue do not include the supply of services in three-
party models and, therefore, the Panel should not reach findings on the supply of services under this
model. Focusing on the five elements described by the United States, China argues that the definition
of the services at issue proposed by the Unite d States is based on the notion that there are
"participating institutions" or "participating entities" involved in the "system". The essential feature
of this "system", according to China, is to aut horize, clear, and settle payment card transactions
among "participating institutions". In a three-party model, China argues, there is no need to authorize,
clear and settle payment card transactions among di fferent financial institutions, because the issuer
and the acquirer are the same entity. Because ther e are no inter-bank transactions in the three-party

82 China's first written submission, para. 18.
83 Ibid. para. 22.
84 China's second written submission, para. 104.

model, there is no need for the operator of a three-party payment card system to obtain network
services from a network operator.85
7.39 The United States argues that the services at issue cover services supplied in three-party
models. For the United States, three-party model transactions include both those EPS systems that
perform the functions of issuer and acquirer intern ally and "on-us" transactions occurring in a four-
party system where the issuer and the acquirer are the same entity. In a three-party transaction, the
role of the EPS supplier may vary by circumstance, but its activities would nevertheless fall within the
definition of EPS provided in the panel request. The United States submits that, in some markets and
systems, three-party model transactions are proc essed over the EPS provider’s network in the same
manner as transactions involving a different issuer an d acquirer. Even if the transaction is processed
internally and not over the EPS network, it is th e EPS provider that developed the payment product
(card program), it is the EPS provider’s intellect ual property that enables the switching of the
transaction and supports the electronic paymen t process, the transaction is governed by the EPS
provider’s rules and procedures, and the transaction is secured by the EPS provider’s risk
management and fraud protections. According to the United States, the fact that certain payment card
transactions may occur where the issuing institutio n and acquiring institution are the same does not
change the definition or scope of the service being provided. Even in three-party models, the United
States argues, the EPS supplier still must conduct an authorization of the transaction, which includes
providing information such as the merchant code, POS terminal ID, country codes of the issuer,
acquirer, and merchant, transaction currency, etc. The United States further submits that, in many
instances, it "would be virtually impossible to distin guish "on-us" three-party transactions from four-
party transactions".
86
7.40 Replying to a Panel question, Australia, th e European Union, Guatemala, and Korea
submitted that the services at issue should be classifi ed in the same subsector irrespective of whether
they are supplied under the three-party or the four-party model. 87 According to the European Union,
China's commitments refer to the ser vices, not to the participants in the transaction; Guatemala is of
the view that the participants in the supply of the service do not change the nature of the service.88
7.41 The Panel recalls that the services at issue, as defined in the pane l request, consist of a
"system" that "typically includes" five elements, namely (i) 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 reducti on; (ii) 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 exchange d; (iii) the delivery of transaction information among
participating entities; (iv) the calculation, determinat ion, and reporting of the net financial position of
relevant institutions for all transactions that have been authorized; and (v) the facilitation,
management and/or other participation in the tr ansfer of net payments owed among participating
institutions.89 As noted above, China has not challenged this description. Moreover, China agrees
that the definition of the services at issue propo sed by the United States includes EPS suppliers
operating four-party models.90

85 China's second written submission, paras. 104-107.
86 United States' response to Panel questions No. 25, paras. 81-83; and 74, paras. 26-28.
87 Australia's response to Panel question No. 5; European Union's response to Panel question No. 5,
para. 14; Guatemala's response to Panel question No. 5, para. 23; and Korea's response to Panel question No. 5.
88 European Union's response to Panel question No. 5, para. 14, and Guatemala's response to Panel
question No. 5, para. 23.
89 United States' request for the establishment of a panel, fn. 1.
90 China's second written submission, para. 104.

7.42 We consider important the use of the words "typ ically includes" in the panel request. By
describing the "system" being supplied as "typically " including a number of specified elements, the
panel request provides certain general parameters of the system under consideration, rather than
seeking to confine the Panel's examination to a "s ystem" that necessarily contains each and every
element listed, and only those elements. 91 We note that EPS suppliers operating three-party models
provide essentially all the elements of the "system" referred to above, as well as other services, such
as card issuing and transaction acquiri ng, which are not within this sy stem and are thus outside the
scope of the services at issue. In particular, three-party model EPS suppliers provide the processing
infrastructure, network, and rules and procedur es that facilitate, manage, and enable transaction
information and payment flows and which provide system integrity, stability and financial risk
reduction; the process and coordina tion of approving or declining a transaction, with approval
generally permitting a purchase to be finalized or cash to be disbursed or exchanged; the delivery of
transaction information among participants in the transaction; the calculation, determination, and
reporting of the net financial positi on of relevant participants in the transactions (e.g. total debit
position of a card holder); and the facilitation, manageme nt and/or other participation in the transfer
of payments among participants in the transaction. We are aware that in a three-party model, the
supply of the fourth and fifth elements of the system 92 would usually involve individuals (e.g. card
holders and merchants) rather than "institutions". However, in our view, that aspect does not change
the nature of the EPS supplied. Nor does this differe nce mean that the three-party model falls outside
the broadly defined "system" under consideration. In our view, EPS suppliers operating under three-
and four-party models provide in essence the same services, as argued by the United States and some
of the third parties.
7.43 China also argues that the three-party model does not make it necessary to authorize, clear
and settle payment card transactions among different financial institu tions, because the issuer and the
acquirer are the same entity. Theref ore, in China's view, there is no need for the operator of a three-
party payment card system to obtain network services from a network operator. We agree with the
United States that the fact that a payment card transa ction is processed by a supplier that is also the
issuer and the acquirer (meaning that there is ther efore no inter-bank transaction) does not change the
fact that such supplier provides the services at issue.
7.44 The Panel also notes the United States' argument that three-party model transactions include
both those EPS systems that perform the functions of issuer and acquirer internally and "on-us"
transactions occurring in a four-party system where the issuer and the acquirer are the same entity.
The Panel observes that, depending on the identity of the issuer and acquirer, payment card
transactions processed within − in principle − four-party models may resemble the processing of
transactions within three-party models. This is th e case of the "on-us" transactions within four-party
models, in which the same bank is both the acquirer for the merchant and the issuer to the card holder.
In such a case, the transaction is not processed ove r the network of the EPS supplier, but is handled
solely by the bank concerned. In such a case, balances are shifted on the books of that bank, and there
are no inter-bank transactions. This is very similar to the processing of payment card transactions by
service suppliers operating under three-party models. It would be virtually impossible, in the Panel's
view, to distinguish between the processing of a three-party transaction and the processing of an "on-
us" four-party transaction, which, China agrees, are undoubtedly within the scope of the services at
issue.

91 We note that, according to the Shorter Oxford English Dictionary , typically means symbolically,
representatively, characteristically. See Shorter Oxford English Dictionary, 6th ed., A. Stevenson (ed.) (Oxford
University Press, 2007) (Shorter Oxford English Dictionary), Vol. 2, page 3393.
92 Respectively, the calculation, determination, and re porting of the net financial position of relevant
institutions for all transactions that have been auth orized; and the facilitation, management and/or other
participation in the transfer of net payments owed among participating institutions.

7.45 For the above-mentioned reasons, the Panel fi nds that the services at issue include the
services supplied under three-party models, in a ddition to the services supplied under four-party
models.
4. Whether the services at issue include the services supplied by issuer and merchant
processors
7.46 The parties disagree on whether services supplied by issuer and merchant processors fall
within the issues to be decided in this dispute.
7.47 China argues that issuer and merchant pro cessors are providers of outsourced technology
services to the issuing and acquiring institutions, respectively. Among other services, merchant
processors provide the equipment necessary for the merchant to accept payment cards, route payment
card transactions to the correct network, handle transaction authorizations, and undertake the back-
end processing necessary for the merchant to ob tain payment. Among other services, issuer
processors manage and provide the information t echnology necessary for the card issuer to interact
with network operators for the purpose of authorizing, clearing, and settling transactions that are made
with the payment cards that it issues. China submits that the description of the services at issue by the
United States makes no reference to these types of outsourced services. China further argues that the
panel request refers to a "system" provided by "EPS suppliers", that allows for the authorization,
clearing and settlement of inter-bank payment card transactions. In China's view, issuer and merchant
processors do not supply a "system".93
7.48 The United States argues that issuers and acquire rs may choose to perform services related to
the processing of transactions in-house or may c hoose to outsource these services to issuer and
acquirer processors, that will then handle or transm it electronic payment information to or from an
EPS supplier. Issuer and acquirer processors are optional entities for card-based electronic payment
transactions. According to the United States, this is in contrast to an EPS supplier that provides
necessary infrastructure and services for card-based electronic payment transactions.94
7.49 The Panel recalls that the parties agree th at the services at issue do not encompass the
issuance of payment cards and the acquisition of payment card transactions, activities which are
typically handled by banks. Thus, we address on ly the question of whether or not the services
supplied by issuer and merchant processors are included in the services at issue.
7.50 We note that third-party processors have a very broad reach in terms of the services supplied.
One global EPS supplier acknowledges that it faces "competition from transaction processors
throughout the world, such as FirstData Corporation and Total Systems Services, Inc., some of which
seek to enhance their networks that link issuers directly with point-of-sale devices for payment card
transaction authorization and processing services. Certain of these transaction processors could
potentially displace MasterCard as the provider of these payment processing services".
95
7.51 The Panel recalls that the definition of the ser vices at issue involves two particular elements
relevant to third-party processors, i.e. "services through which transactions involving payment cards
are processed", and "services through which the transmission of funds between institutions
participating in the transactions are managed and facilitated". Once they are accredited by payment
card companies, as noted above, these third-party pr ocessors participate in the processing of payment
card transactions. As such, they provide "servi ces through which transactions involving payment
cards are processed", including, for example, termin al operation, authorization routing, and electronic

93 China's second written submission, paras. 110-114.
94 United States' response to Panel question No. 36(a), para. 93.
95 MasterCard 2010 Annual Report, Exhibit US-6, p. 22.

data capture. They also provide "services th rough which the transmission of funds between
institutions participating in the transactions are managed and facilitated", including the preparation
and submission of clearing files, settlement processing, card holder and merchant statement
preparation, and charge-back processing.
96
7.52 We are therefore of the view that, due to th eir substantial involvement in the process, and
considering the overlap between, on the one hand, the services supplied by third-party processors,
and, on the other hand, those supplied by el ectronic payment services suppliers (see discussion
regarding the role of EPS suppliers, in paragraphs 7.12 to 7.24 above) 97, third-party processors are
part of the payment services loop.
7.53 We turn now to the statement in the United St ates' request for the establishment of a panel
those [s] uppliers of electronic payment services supply, directly or indirectly, a system that typically
includes five elements
98. A textual analysis of this phrase supports our conclusion that the services at
issue include the services supplied by third-party processors. We observe first that the definition
refers to "suppliers" in the plural (not "a supplier", singular), and makes reference to "a system" in the
singular (not "systems", plural). This suggests, in our view, that the services can be supplied by one
or several suppliers, who, together, provide "a sy stem". Secondly, the definition indicates that the
suppliers supply "directly or indirectly" a system , which suggests that the supplier may supply the
system "directly", meaning on its own, or "indirectly", meaning with the participation of other service
suppliers. Thirdly, as noted above, many of the services "typically" included in the system are
supplied by third-party processors, some of whic h are seen by global EPS suppliers as competitors. 99
Therefore, we do not consider that there is a need for a service supplier to supply all five elements of
the "system" described by the United States to be considered, in terms of the United States' request for
the establishment of a panel, as a "supplier of electronic payment services".
7.54 In the light of the foregoing analysis, the Panel concludes that the services at issue include the
services supplied by third-party processors.
5. Whether the services at issue are integrated services
7.55 The United States argues that electronic payment services for payment card transactions are
one integral service – one that is supplied and consumed as such. Moreover, the service is supplied as
a coherent whole. According to the United States , each component of the "system" is "critical to
effectuate the payment card transaction and EPS supp liers provide the entire package of services to
their customers, the institutions that are particip ating in the payment card transactions." For the
United States, each of the elements of the system is integrated and necessary to facilitate a payment
card transaction and, as such, constitutes a single serv ice. Indeed, without the entire system supplied
by the EPS supplier, no issuer would be able indivi dually to offer a card that is as widely accepted by
merchants, and no acquirer could offer merchants a service that can deliver such a large number of
card holders. It is necessary for each component element to work collectively for EPS to function
properly.100

96 A "charge back" is a reversal of a payment card tr ansaction, typically initiated by the card issuer at
the card holder's request. Charge backs can occur for a number of reasons, including fraud and processing
errors.
97 We recall that for the sake of neutrality at that stage of the report, paragraphs 7.12 to 7.24 made
reference to "payment card companies” instead of “EPS suppliers".
98 United States' request for the establishment of a panel, fn.1 (emphasis added).
99 MasterCard 2010 Annual Report, Exhibit US-6, p. 22; and Visa IPO Prospectus, Exhibit US-3, table
in p. 130.
100 United States' response to Panel question No. 26, para. 84; United States' second written submission,
paras. 11-14.

7.56 China argues that the services at i ssue do not have the nature of a single, integrated service.
For China, the argument by the United States is a necessary con sequence of its position that all
services that "manage", "facilitate", or relate to the "processing" of a payment card transaction (or that
are "essential", "integral", or "necessary") must be classified as "payment services". This
interpretation, according to China, does not allow fo r "dividing" the services at issue. While the
United States identified five elements of a "syste m" that "[s]uppliers of electronic payment services
supply", it is clear – China argues – that the United States perceives no distinction among these
elements for the purpose of classifyin g the services at issue in this dis pute, or in relation to the case
that it has decided to present.101
7.57 The Panel notes that two different – albeit closel y related – issues arise. One is whether the
services at issue can be considered an integrated service, which is supplied as such; the other is
whether the services at issue should be classified under a single subsector or under more than one
subsector in the classification system. We shall exam ine here the first issue; the discussion related to
the classification of the services at issue is found in Section E below.
7.58 The Panel observes that the definition of the servi ces at issue refers to a "system" composed
of several elements. Those elements could be c onsidered, individually, as services in their own right ,
e.g. "the process and coordination of approving or declining a tr ansaction", "the delivery 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", and
"the facilitation, management and/or other participation in the transfer of net payments owed among
participating institutions." In the Panel's view, all these elements show that "electronic payment
services for payment card transactions" are made up of different services that may be individually
identified.
7.59 The United States argues, however, that the various elements of the system are integrated and
necessary to facilitate a payment card transaction a nd, as such, constitute a single service. In our
view, all elements of the system, together, are necessary for the payment card transaction to
materialize. None of the elements of the "sys tem", individually, would be sufficient to process a
payment card transaction. Each of them must be integrated into a whole.102 Indeed, we agree with the
United States' argument that without the entire sy stem supplied by the EPS supplier, no issuer would
be able individually to offer a card that is as widely accepted by merchants, and no acquirer could
offer merchants a service that can deliver such a large number of card holders. 103 From that
perspective, considering the transaction from be ginning to end, electronic payment services for
payment card transactions constitute an integrated service.
7.60 A related question is whether "electronic payment services for payment card transactions",
despite being made up of several services, are neve rtheless supplied as an "integrated" service, or
whether those different service components can be supplied – and are in fact supplied – as separate
services by different service suppliers. China argu es that different "elements" or "components" of
"electronic payment services" are routinely supplied as different services by different service suppliers
in several countries. One of the examples put forw ard by China to support this assertion is France,
where, according to China, the authorization pro cess for payment card transactions is carried out by
the network of " Groupement des Cartes Bancaires " (or CB), while the clearing and settlement of

101 China's response to Panel question No. 29, paras. 22-24.
102 The Shorter Oxford English Dictionary, Vol. 1, p. 1402, defines "integrated" as: "1 Combined into
a whole; united; individual, … c Uniting several components previously regarded as separate".
103 United States' response to Panel question No. 26, para. 84, United States' second written submission,
para. 17.

transactions is handled by "C ompensationREtail" (or CORE). 104 The United States argues that the
fact that two separate entities may provide different elements of "electronic payment services" is not
inconsistent with the fact that each of the elemen ts is integrated and necessary to facilitate payment
card transactions, and as such constitutes a single ser vice. In the United States' view, "electronic
payment services" could not be effectuated through the provision of the service provided by STET
only, or the service provided by CB only. It is, in the United States' view, the combination that
enables the payment card transaction to occur.
7.61 We agree with the United States' view on this matter. How the supply of "electronic payment
services" is organized depends on different parame ters (e.g. the business models adopted by the
entities participating in the payment card transacti on). On the one hand, global electronic payment
services suppliers provide all the components of th e "system" identified by the United States, thus
supplying a final product that looks like a "single" service for the direct user (the issuing and
acquiring institutions) and for the ultimate benefi ciaries of these services (the card holder and the
merchant), and that in many countries that is the case. On the other hand, there are jurisdictions
where the different components of the "system" are supplied by different servi ce suppliers. Further,
as we saw previously, third-party processors may also intervene in the processing of payment card
transactions. In the Panel's view, therefore, the services at issue may as a factual matter be supplied
by a single service supplier or by more than one service supplier acting in concert.
7.62 We conclude therefore that the services at issue include both the instances in which these
services are supplied as a single service by a single service supplier, and those instances in which
different elements of the "system" described by the United States are supplied by different service
suppliers.
D. C
HINA'S SPECIFIC COMMITMENTS CONCERNING THE SERVICES AT ISSUE
7.63 The United States claims that, in sector 7.B, under the heading "Banking and Other Financial
Services" of its GATS Schedule, China undertook market access and national treatment commitments
with respect to subsector (d), which reads "[a] ll payment and money transmission services, including
credit, charge and debit cards, travellers che ques and bankers draft (i ncluding import and export
settlement)" (subsector (d)). According to the Un ited States, subsector (d) includes the electronic
payment services supplied in connection with "credit, charge and debit cards", and other payment card
transactions.105
7.64 China argues that the United States has failed to pr ove that any of the services at issue, much
less all of them, fall within subsector (d) of its Sc hedule. In China's view, the clearing and settlement
services at issue fall under paragraph 5(a), subsector (xiv), of the GATS Annex on Financial Services
(subsector (xiv)), which covers "[s]ettlement a nd clearing services for financial assets, including
securities, derivative products, and other negot iable instruments", a subsector for which no
commitments have been made in China's Schedule. China maintains that the fact that those clearing
and settlement services do not fall within the scope of subsector (d) defeats the United States'
assertion that all of the services at issue fall within s ubsector (d). According to China, the "payment
services" referred to in subsector (d) encompass the issuance and acceptance by banks and other types

104 CORE is a payment processing network develope d and operated by the STET company (Systèmes
Technologiques d’Echange et de Traitement). Examples of European countries in which the national
authorization network is independen t of the clearing and settlement mech anism for payment card transactions,
Exhibit CHN-103, pp. 2 and 5.
105 United States' first written submission, para. 13.

of financial institutions of payment instruments other than cash. However, issuing and acquiring
services are not part of this dispute.106
7.65 Australia, the European Union and Korea s ubmit that the services at issue fall under
subsector (d) of China's Schedule. 107 According to Ecuador, an ex cessively broad interpretation of
specific commitments in GATS schedules would constitute an unacceptable impairment of WTO
Members' rights to define the scope and content of such commitments.108
7.66 The Panel must determine whether, as claime d by the United States, China has undertaken
specific commitments on the services at issue un der subsector (d) of its Schedule of Specific
Commitments (China's Schedule). 109 To do so, it will need to inte rpret China's Schedule as well as
relevant provisions of the GATS.
7.67 Article XX:1 of the GATS provides that each Member "shall set out in a schedule the specific
commitments it undertakes", notably on market access and national treatment. This schedule,
according to Article XX:3, "shall form an integral part" of the GATS 110, and is thus legally part of the
WTO Agreement. 111 For that reason, GATS schedules mu st be interpreted according to the
"customary rules of interpretation of public interna tional law", as codified in Articles 31 and 32 of the
Vienna Convention.112
7.68 As a result, we will interpret China's Schedul e and other relevant treaty text in accordance
with the ordinary meaning to be given to the terms of the Schedule in their context, and in the light of
the object and purpose of the GATS and the WTO Agre ement. The Panel will turn to supplementary
means of interpretation pursuant to Article 32 of the Vienna Convention as appropriate.
1. Order of analysis of the subsectors identified by the parties
7.69 As a preliminary matter, the Panel must decide wh ether to start its interpretative analysis with
subsector (d) of China's Schedule, or with subsect or (xiv) of the GATS Annex on Financial Services
(Annex).
7.70 China submits that, because clearing and settlement services for payment card transactions are
encompassed by subsector (xiv) of the Annex, it is unnecessary for the Panel to examine the United
States' assertion that those services are encompassed by subsector (d). According to China, the Panel
should begin with an analysis of subsector (xiv) of the Annex – a subsector not listed in China's
Schedule – because this subsector offers the more specific description of the clearing and settlement
services at issue. Referring to the rules of interp retation contained in the United Nations' Provisional
Central Product Classification113 (CPC), China claims that the category that provides the most specific

106 China's first written submission, paras. 78 and 96.
107 Australia's third-party submission, para. 7; European Union's third-party submission, para. 23; and
Korea's third-party submission, para. 11.
108 Ecuador's third-party statement, para. 5.
109 Schedule of Specific Commitments of the People's Republic of China, GATS/SC/135 (14 February
2002). The relevant part of China's Schedule is contained in Annex G to this Report.
110 Article XX:3 of the GATS provides: "Schedules of specific commitments shall be annexed to this
Agreement and shall form an integral part thereof."
111 Pursuant to Article II:2 (Scope of the WTO) of the Marrakesh Agreement Establishing the World
Trade Organization (WTO Agreement), the GATS, which is included in Annex 1B of the WTO Agreement, is
an integral part of that Agreement.
112 DSU Art. 3.2. See also Appellate Body Report, US – Gambling, para. 160. For the text of Articles
31 and 32 of the Vienna Convention, see above, para. 7.8.
113 Provisional Central Product Classification, Statistical Papers, Series M No.77, United
Nations (1991).

description is to be preferred to categories providing a more general description. 114 The United States
did not offer specific arguments on this issue.
7.71 The Panel notes, first, that this dispute con cerns the scope of China's GATS commitments.
The issue before us is whether the United States can properly base its claims in respect of the services
at issue on China's commitments under subsector (d). For this reason, we believe that it would be
incongruous for the Panel to begin its analysis by interpreting a subsector not relied on by the United
States and not contained in China's Schedule. Furtherm ore, under the approach proposed by China,
the Panel would need to determine at the outset of its examination which of subsectors (d) and (xiv) is
"more specific". In our view, the matter is not so obvious that we could confidently determine,
without undertaking a detailed examination, that sub sector (xiv) is "more specific" in relation to the
services at issue.
7.72 For these reasons, we are not persuaded that we must, from the outset, follow the CPC rule of
interpretation referred to by China and thus direct our initial analysis away from the provisions of
China's Schedule, in particular subsector (d). Na turally, this neither prevents nor dispenses us from
subsequently examining subsector (xiv) of the An nex as relevant context for the interpretation of
China's Schedule. The Panel will thus start its analysis by examining subsector (d) of China's
Schedule.
2. Interpretation of subsector (d) in China's Schedule
7.73 The parties have different views on the scope of subsector (d). The United States argues that
subsector (d) encompasses the services at issu e. China disagrees and submits that this
subsector covers issuing and acquiring services, which are not among the services at issue.
7.74 As explained above, we will interpret subsect or (d) as described in China's Schedule in
accordance with customary rules of interpretation. Therefore, we will first determine the ordinary
meaning of relevant terms used to describe the services contained in subsector (d). We shall then turn
to the context, which includes, inter alia, other elements of China's Schedule, the GATS itself, the
GATS Annex on Financial Services, and the schedules of other WTO Members. 115 Finally, we shall
consider the object and purpose of the GATS and th e WTO Agreement. As indicated above, we may
turn to supplementary means of interpretation pursuant to Article 32 of the Vienna Convention as
appropriate.
(a) Ordinary meaning
7.75 The United States argues that the services at issue fall within the ordinary meaning of
"payment and money transmission services" as one type of "all" such services within subsector (d) of
China’s Schedule. According to the United States, the ordinary meaning of "payment" and "money
transmission", as reflected in definitions from the Shorter Oxford English Dictionary and specialized
financial sources, demonstrates that subsector (d) covers the action of transferring money from one
person to another.
116
7.76 China argues that subsector (d) is listed in Ch ina's Schedule under the heading of "banking
services". Consistent with the ordinary meaning of "banking services", all of the services listed under

114 China's first written submission, para. 89.
115 In US – Gambling , a dispute about commitments included in the GATS Schedule of the United
States, the Appellate Body found that the context included: (i) the remainder of the Member's Schedule; (ii) the
substantive provisions of the GATS; ( iii) the provisions of covered agreements other than the GATS; and (iv)
the GATS Schedules of other Members. See Appellate Body Report, US – Gambling, para. 178.
116 United States' response to China's request for a preliminary ruling, para s. 150-155; first written
submission, para. 26; and second written submission, paras. 19-32.

that heading are services that are typically provided by banks, finance companies, and other types of
financial institutions. The banks are making a "payme nt" within the ordinary meaning of that term,
i.e. they are engaging in "[a]n act, or the action or process, of paying …". Hence, according to China,
the payment services referred to in subsector (d) encompass the issuance and acceptance by financial
institutions of payment instruments other than cash, but do not cover the services at issue.117
7.77 Australia submits that the ordinary mean ing of the terms "all payment and money
transmission services" encompasse s services which manage and facilitate the transfer of funds,
whether for the purpose of payment for a good, service or debt, or for purposes unrelated to payment,
from one person or place to another.118
7.78 The Panel recalls that subsector (d) in China's Schedule reads as follows:
All payment and money transmission servi ces, including credit, charge and debit
cards, travellers cheques and bankers draft (including import and export settlement)
7.79 We begin our textual analysis of the phrase "all payment and money transmission services" by
examining the terms "payment", "money" and "transmi ssion". We shall then turn to the terms "all"
and "services".
(i) Ordinary meaning of "payment", "money" and "transmission"
Dictionaries and glossaries
7.80 The Panel observes at the outset that, for the purpose of determining the ordinary meaning of
the terms of subsector (d), dictionary definitions of those terms are a useful starting point. However,
such definitions are not always sufficient. As the Appellate Body has explained:
[I]n order to identify the ordinary meaning, a Panel may start with the dictionary
definitions of the terms to be interpreted. But dictionaries alone are not necessarily
capable of resolving complex questions of interpretation, as they typically aim to
catalogue all meanings of words – be those meanings common or rare, universal or
specialized.119
7.81 We first consider the term "payment" in subsector (d). The Shorter Oxford English
Dictionary defines "payment" as "an act, or the action or process, of paying". 120 In turn, the verb
"pay" is defined as "give (a person) money etc. th at is due for goods received, a service done, or a
debt incurred; remunerate. Also, hand over or tr ansfer (money etc.) in return for something." 121 This
general definition of "payment" is consistent with definitions in certain glossaries and specialized
dictionaries submitted by the United States: (i) a "transfer of funds in any form between two
parties";122 or (ii) the "transfer of money from one party to another with the assent of both parties". 123
We glean from these definitions that the three main elements in a payment are (i) there is a transfer,
(ii) what is transferred is money, and (iii) the transferred money is due for goods, services or a debt
incurred. The Panel next considers the term "money". The Shorter Oxford English Dictionary
provides the following general definition:

117 China's first submission, paras. 95-97.
118 Australia's third-party submission, para. 10.
119Appellate Body Report, US – Gambling, para. 164 (footnotes omitted, emphasis original).
120 Shorter Oxford English Dictionary, Vol. 2, p. 2130.
121 Ibid., p. 2129.
122 Banking Terminology , 3rd ed., (American Bankers Association, 1989) ( Banking Terminology ),
Exhibit US-59, p. 262.
123 John V. Terry, Dictionary for Business & Finance, 1990, Exhibit US-60, p. 240.

… A current medium of exchange in the form of coins and (in mod. use) banknotes;
coins and banknotes collectively. … Any ob ject or material serving the same
purposes as coins. … Property, wealth, possessions, resources, etc., viewed as
convertible into coin or banknotes or having value expressible in terms of these.
124
7.82 In glossaries and specialized dictionaries, the term "money" is defined as the following: (i)
"[a]nything which is immediately a nd generally acceptable for the dischar ge of a debt or in exchange
for a good or service" 125; (ii) "the means of facilitating the exchange of goods and services and the
accumulation of financial wealth, commonly reco gnizable as banknotes, coins and bank deposits" 126;
(iii) "[a]nything that is generally acceptable as a mean s of settling debt. Money is said to have three
main functions, being: a store of value; a means of exchange; and a means of debt settlement (cf. fiat
money)".127
7.83 As one might expect, the definitions found in specialized dictionaries and glossaries are more
technical than the general definition found in the Shorter Oxford English Dictionary; however, they
are consistent with this definition. The definitions suggest that "money" can be characterized as (i) a
generally acceptable means of exchange, (ii) that represents wealth, and (iii) is generally acceptable as
payment.
7.84 Finally, the Panel considers the term "transmission". The Shorter Oxford English Dictionary
defines this term as "[c]onveyance or transfer from one person or place to another; the action or
process of passing from one person, organism, generati on, etc., to another, as by personal contact,
stored information, genetic inheritance, etc." 128 This definition suggests that the two main elements
characterizing "transmission" are (i) a transfer, (ii) from one person or place to another.
7.85 In sum, our analysis of definitions contained in dictionaries and glossaries suggests that the
terms "payment", "money" and "transmission", when u sed in combination, refer to the transfer of a
generally acceptable means of exchange from one pers on or place to another. The money transferred
may be due for goods or services received, or for se ttling a debt. We continue our consideration of
the ordinary meaning of the terms used in subsector (d) with an examination of industry sources.
Industry sources
7.86 The United States argues that the description of the sector at issue drawn from industry
sources is relevant to determining the ordinary me aning under Article 31 of the Vienna Convention.
According to the United States, industry sources confirm the ordinary meaning of the service and
demonstrate that EPS is a payment service that is one type of "all" "payment and money transmission
service" falling within subsector (d). The United States contends that, in many instances, the common
meaning of a term corresponds to its usage within a particular industry or sector and provides the
basis for dictionary definitions. Consequently, th e United States suggests, it is appropriate and may
be helpful to look at how those involved in the service at issue understand the terms found in a GATS
schedule. The United States further submits that sector sources describe the suppliers of the services
at issue in this dispute as supplying "electronic payment services" for "payment card" transactions and

124 Shorter Oxford English Dictionary, Vol. 1, p. 1821.
125 D. Rutherford, Dictionary of Economics, Routledge, 1992, p. 305.
126 G. Bannock & W. Manser, The Penguin International Dictionary of Finance , Penguin Books,
3rd ed., 1999, p. 181.
127 Peter Moles & Nicholas Terry, The Handbook of International Financial Terms, Oxford University
Press, 1997.
128 Shorter Oxford English Dictionary, Vol. 2, p. 3325.

as operating within the "global payments industry." This confirms, according to the United States,
that the services at issue are payment services falling under subsector (d) of China's Schedule.129
7.87 China argues that the United States provides no support for the proposition that the manner in
which certain service suppliers characterize their services is relevant, as a matter of treaty
interpretation, to how those services should be classified in relation to a Member's schedule. Thus,
industry sources like company brochures, annual reports, or company websites are not relevant for the
purpose of establishing the ordinary meaning of the terms at issue in this dispute, one reason being
that they might be biased and self-serving. Moreove r, China observes that th e United States has not
pointed to a single panel or Appellate Body repo rt that uses industry s ources as a means of treaty
interpretation. China further argues that, even if the industry sources cited by the United were legally
relevant to the classification of the services at i ssue, they would support China's position that these
services include clearing and settlement, among other possible services. There are only a handful of
references in these sources to the "payment industry" or "payment systems", compared to far more
numerous references to the telecommunications, da ta processing, and clearing and settlement services
that these companies describe themselves as providing.130
7.88 Ecuador submits that the industry's characterization of a service does not determine the nature
of that service and the fact that one or several s uppliers describe the services they supply as "payment
services" does not necessarily confer that character upon them. The legal value of industry sources is
therefore questionable.131
7.89 The Panel begins by assessing whether it is a ppropriate to examine industry sources in
addition to dictionaries for the purpose of determining the ordinary meaning of a term appearing in a
GATS schedule.132 We acknowledge that, sometimes, industry sources may define a term in a way
that might reflect self-interest and, thus, might be "biased and self-serving", as argued by China. To
that extent, we see some merit in China’s concerns about relying on such sources, without more.
Nevertheless, we see no basis to completely disr egard industry sources as potential relevant evidence
of an ordinary meaning of a specific term in a pa rticular industry. Indeed, we see no reason why a
panel's search for the ordinary meaning of any term s hould always be confined to regular dictionaries.
A panel's initial task in interpreting treaty provisi ons is to determine the ordinary meaning of the
words used. If industry sources can be shown to assist w ith this task in a particular dispute, we see no
reason why a panel should not refer to them. As with a panel's consideration of dictionary definitions,
however, panels must be mindful of the limitati ons, such as self-interest, that industry sources may
present and should govern their interpretive task accordingly.
7.90 With these preliminary observations in mind, we now examine the relevance of the terms that
appear in the industry sources referred to by the pa rties for purposes of the interpretation of the terms
used in subsector (d). We note that both parties refer to industry sources – sometimes the very same
ones133 – but draw different conclusions from them. 134 The United States argues that the way industry

129 United States' first written submission, para. 26; and response to Panel question No. 82, para. 52.
130 China's first written submission, paras. 117 and 118; and response to Panel question No. 82, paras. 1
and 2.
131 Ecuador's third-party statement, paras. 12, 13 and 15.
132 We observe that, pursuant to Article 31(4) of the Vienna Convention, "[a] special meaning shall be
given to a term if it is established that the parties so inte nded". In the present dispute, no party is relying on this
provision. Hence, we shall not consider it.
133 China submits in this regard that "[i]ronically, many of the materials that the United States
references and includes as exhibits are materials that Chin a was already planning to cite – and, in fact, has cited
above – for the proposition that the services at issue in this dispute include clearing and settlement services."
China's first written submission, fn. 69.
134 For example, both parties refer to MasterCard's 2010 annual report. Our examination of this report
indicates that, as argued by the United States, it describes the company as providing "a global payment network"

sources describe their own services confirms that EPS is a payment service that is one type of "all"
"payment and money transmission service" falling within subsector (d). China has not relied on
industry sources to shed light on the meaning of "all payment …". In China's view, "[r]eading
through the various corporate materials and other 'industry sources' that the United States cites as
evidence, one is struck not by the handful of references to the 'payment industry' or 'payment systems',
but rather by the far more numerous references to the telecommunications, data processing, and
clearing and settlement services that these companies describe themselves as providing".135
7.91 The Panel notes that industry sources cited in this dispute refer to payment transactions,
electronic payments and the various types of cards specifically identified in subsector (d) of China's
Schedule.136 We also note that the usage of these term s in industry sources is consistent with the
definitions found in general dicti onaries and more specialized glossar ies that we examined in the
preceding section. We find, however, that industry sources do little to shed further light on the scope
of subsector (d).
The expression "payment and money transmission services"
7.92 Having considered the ordinary meaning of "payment", "money" and "transmission", the
Panel notes that these three elements must be ex amined in conjunction with the term "services",
which they qualify. Our understanding is that the phrase "payment and money transmission services"
refers to, respectively, "payment services" and "m oney transmission services". The parties and third
parties in this dispute have the same reading. What is thus at stake in this dispute is the scope of the
expressions "payment services" and "money transmission services".
7.93 The United States argues that EPS is the service through which transactions involving
payment cards are processed and through which tran sfers of funds between institutions participating
in the transactions are managed and facilitated. It considers that EPS clearly fall within the ordinary
meaning of "payment and money transmission services" as one type of "all" such services.137
7.94 China submits that a service supplier that is me rely "managing" or "facilitating" the supply of
this type of payment service, or "processing" payment transactions, is not itself a party to the payment
transaction. In China's view, the supplier is neither issuing nor accepting the payment instrument and
is never in possession of the funds to be paid. It is not "paying" anyone, and is not providing a
"payment service" within the ordinary meaning of that term. China also submits that the United

and operating in the "global payment industry". The report also refers to various means of payment, including
"credit cards, charge cards, debit cards (including … [A TM] cards), prepaid cards, …" and indicates that the
company provides "payment services and solutions". We observe however that, as submitted by China, the
same report also refers to MasterCard as providing "transaction switching", which includes "authorization,
clearing and settlement". MasterCard 2010 Annual Report, Exhibits US-6, pp. 4-10.
135 China's first written submission, para. 118.
136 Visa IPO Prospectus, Exhibit US-3, p. 128; MasterCard 2009 Annual Report, Exhibit US-5;
MasterCard 2010 Annual Report, Exhibit US-6, p. 6; American Express 2010 Annual Report, Exhibit US-7,
pp. 4-11; Discover 2010 Annual Report, Exhibit US-8, pp. 1-4; First Data Corp 10-K Annual Report (March
10, 2011), Exhibit US-9; UBS Investment Research, "V isa 201: No Better Way to 'Play the Swipe', June 25,
2008, Exhibit US-10, pp. 28-30; JCB Corporate Overview: JCB – A Leader in the Payments Industry (as of
July 2011), Exhibit US-16; JCB Smart Card Press Rel ease: JCB International and Vital Processing Services
Team Up to Introduce JCB Smart Card Capability in th e United States (November 2002), Exhibit US-17; JCB
History (2001-2009, JCB International Co., LTD), Exhibit US-18; JCB System network: Most Advanced
Payment System Network, Exhibit US-19; and CUP's Articles of Association, Articles 11-12, Exhibit US-20.
See United States' response to China's request for a pr eliminary ruling, paras. 55-61 and 164-178; and first
written submission, para. 27.
137 United States' response to China's request for a preliminary ruling, para. 147-155; first written
submission, paras. 25-26; and second written submission, paras. 19-32.

States has not given a proper interpretation to subsector (d) because the United States has failed to
acknowledge that network operators are not "paying" or "transmitting money" to anyone.138
7.95 The Panel observes that the GATS provides no definition of the word "service", although it
defines related concepts, such as the supply of a service and a service supplier. 139 Paragraph 5(a) of
the GATS Annex on Financial Services defines a "f inancial service" as "any service of a financial
nature offered by a financial service supplier of a Member", and contains a list of financial services
that comprises "all payment and money transmission services, including …" under subsector (viii).
7.96 It is clear to the Panel that the supply of a "payment service" is not the same thing as the act of
paying for goods or services. Purchasers who, on their own account, pay merchants for goods or
services received are not thereby providing a "payme nt service" to these merchants. The payment in
such case is what a purchaser gives in return fo r the good or service received, and not a separate
service received by the merchant. Thus, "payment services" in our view are supplied, if at all, by a
person or entity othe r than the payer or payee. Typically, wh en payment instruments other than cash
are used, a third party intervenes between the payer and the payee, in order to facilitate or make
possible the "act of paying". The same can be said about "money transmission services", since
transmitting money normally involves the participation of an intermediary to ensure that the money is
transferred from one party to another.
7.97 We consider, therefore, that whoever supplies a "payment service" does not "pay", but makes
the payment between payer and payee, for exam ple by processing payment transactions involving the
use of credit cards, debit cards, or other such in struments. Similarly, when it comes to "money
transmission services", the supplier of the service intervenes between the sender and the recipient
(payer and payee) to ensure that the money is transmitted. In our view, a "money transmission
service" encompasses, among other situations, tho se where the supplier either transmits the funds
from the payer's account to the payee's account (as in the three-party model) or connects the parties
involved in a payment transaction, and ensures that payment instructions are executed and funds are
transferred pursuant to the transaction (as in a fou r-party model). Hence, suppliers of "payment and
money transmission services" are providing a "servi ce" that facilitates and enables payments and
money transmissions. For that reason, we agree with the United States that "payment and money
transmission services" include those services that "manage", "facilitate" or "enable" the act, of paying,
or transmitting money.
Ordinary meaning of "all"
7.98 As noted, subsector (d) begins with the word "a ll". It is the only subsector in the financial
services section of China's Schedule that does so. Subsector (viii) of the GATS Annex on Financial
Services, on which, according to China, s ubsector (d) of China's Schedule is based, 140 also starts with
the word "all".141
7.99 Consistent with the principle of effective treaty interpretation, we consider that the word "all"
before "payment and money transmission services" mu st be given meaning and effect. In our view,
the use of the term "all" manifests an intentio n to cover comprehensively the entire spectrum of
"payment and money transmission services". More partic ularly, this term indicates to us an intention
to include all services essential to payment and money transmission, all means of payment and money

138 China's second written submission, para. 40.
139 Article XXVIII(b) of the GATS defines the "supply of a service" as including "the production,
distribution, marketing, sale and delivery of a service" and, pursuant to Article XXVIII(g) of the GATS, a
service supplier means "any person that supplies a service".
140 China's first written submission, para. 80.
141 The Shorter Oxford English Dictionary , Vol. 1, p. 55 defines "all" as "the entire number of; the
individual constituents of, without exception".

transmission (i.e. paper-based, card-based and others ), and all associated business models (e.g. four-
party model, three-party model and any variations thereof).142
Summary of findings on the ordinary meaning of "all payment and money transmission
services"
7.100 Our analysis of the ordinary meaning of the relevant text indicates that "payment and money
transmission services" include those services that "man age", "facilitate" or "enable" the act of paying
or transmitting money. Finally, we concluded that th e use of the term "all" manifests an intention to
cover comprehensively the entire spectrum of payment and money transmission services.
7.101 Having determined the ordinary meaning of these terms, we shall turn now to the contextual
elements of the phrase "all payment and money transmission services".
(b) Context
7.102 Pursuant to the rule codified in Article 31(2) of the Vienna Convention, the "context" within
which a treaty provision shall be interpreted notably comprises the text of the treaty, including its
preamble and annexes. For the purpose of inte rpreting a Member's GATS schedule, the Appellate
Body found in US – Gambling that the context includes (i) the remainder of the Member's schedule;
(ii) the substantive provisions of the GATS; (iii) th e provisions of covered agreements other than the
GATS; and (iv) the GATS schedules of other WTO Members.143
7.103 When looking at the remainder of a Member's schedule as part of a contextual analysis,
panels and the Appellate Body have consid ered several aspects. For instance, in US – Gambling, the
Appellate Body examined th e structure of the schedule. 144 In China – Publications and Audiovisual
Products, the Appellate Body considered such aspects as the contextual relevance of the sectoral
heading at stake; market access, national treatment and additional commitments under the subsector at
stake; subsectors adjacent to th e services at stake; and commitments scheduled under another related
sector.145
7.104 In the present dispute, we therefore consider that our examination of the context should, as
also reflected in the parties' arguments, cover the fo llowing elements: (i) the rest of subsector (d); (ii)
the headings in the sector at stake; (iii) market access, national treatment and additional commitments
in the sector at stake; (iv) the structure of th e GATS; (v) the GATS Annex on Financial Services; and
(vi) the schedules of other WTO Members. We sha ll examine these different contextual elements in
turn.
(i) The rest of subsector (d)
7.105 We recall that subsector (d) of China's Schedule reads as follows:
[A]ll payment and money transmission services, including credit, charge and debit
cards, travellers cheques and bankers drafts (including import and export settlement)
7.106 The phrase "[A]ll payment and money transmission services" in subsector (d) of China's
Schedule is immediately followed by the phrase: "inc luding credit, charge and debit cards, travellers
cheques and bankers drafts (including import and e xport settlement)". We observe that this phrase is

142 The Panel uses the term "essential" to refer to all component services which are needed to complete
a payment transaction or money transmission.
143 Appellate Body Report, US – Gambling, para. 178.
144 Appellate Body Report, US – Gambling, para. 179.
145 Appellate Body Report, China – Publications and Audiovisual Products, paras. 361-372.

similar to that found in subsector (v iii) of the Annex on Financial Services 146, on which, according to
China, subsector (d) is based. 147 The only difference is the parenthetical addition "(including import
and export settlement)" in subsector (d). We sha ll examine first the phrase "including credit, charge
and debit cards, travellers chequ es and bankers drafts" and shall th en turn to the parenthetical
addition.
The phrase "including credit, charge and debit cards, travellers cheques and bankers drafts"
7.107 The United States argues that the explicit refere nce to credit, charge and debit cards accords
with the recognition that EPS is integral to the processing of these types of cards and other payment
card-based electronic payment transactions. The United States observes that without EPS, payment
card transactions could not occur.148
7.108 China submits that, properly interpreted in its context, the "payment services" referred to in
subsector (d) encompass the issuance and acceptance by financial institutions of payment instruments
other than cash. All of the specific types of pa yment instruments referenced in subsector (d) are
methods of payment that allow the buyers and selle rs of goods and services to complete transactions
without a direct transfer of cash.149
7.109 The Panel first observes that the phrase "including credit, charge and debit cards, travellers
cheques and bankers drafts" refers to payment and money transmission instruments, not to services.
In our view, this phrase sets out various types of instruments that require payment and money
transmission services for them to work effectively. We also note that the instruments listed are
preceded by the word "including". As explained by the panel in China – Publications and
Audiovisual Products , "the word 'including' in ordinary usage indicates that what follows is not an
exhaustive, but a partial, list of all covered items". 150 In a similar vein, we consider that the phrase
"including credit, charge and debit cards, travelle rs cheques and bankers drafts" in subsector (d)
provides a non-exhaustive list of instruments used in connection with payment and money
transmission services.151 In the Panel's view, the explicit refere nce to "credit, charge and debit cards"
in subsector (d) of China's Sche dule sheds light on the type of services covered by the phrase "all
payment and money transmission services" as it appears in China's Schedule. It notably suggests that
the phrase covers payment and money transmission services that are essential for the use of the
enumerated instruments.
7.110 Turning to dictionary definitions, a "credit card" is "a card issued by a bank, business, etc.,
authorizing the acquisition of goods and services on credit". 152 A "charge card" is "a credit card, esp.
for use at a particular store or chain of stores or for an account which must be cleared in full on receipt
of a statement".
153 A "debit card" is defined as "giving the holder access (through a computer
terminal) to an account in order to transfer funds to another's account when making a purchase,
etc."154 These general definitions are confirmed by defi nitions found in more specialized glossaries,

146 In paragraph 5(a) of the Annex, subsector (viii) is defined as "[a]ll payment and money transmission
services, including credit, charge and debit cards, travellers cheques and bankers drafts".
147 China's first written submission, para. 80.
148 The United States also argues that the ordinary meaning of the phrase "including credit, charge and
debit cards" supports the position that EPS for payment card transactions fall within subsector (d) in China's
Schedule. United States' response to China's request for a preliminary ruling, para. 149 and 156-163; first
written submission, paras. 25-26; and second written submission, paras. 19-23 and 33-37.
149 China's first written submission, para. 96.
150 Panel Report, China – Publications and Audiovisual Products, para. 7.294.
151 In our view, these instruments also include other types of cards, such as ATM cards.
152 Shorter Oxford English Dictionary, Vol. 1, p. 555.
153 Ibid. p. 385.
154 Ibid. p. 615.

such as the BIS Glossary of terms used in payment and settlement systems .155 Moreover, "credit,
charge and debit cards" are commonly associated with EPS suppliers, which own and licence card
brands. Finally, we note that definitions of "trave llers cheques" and "bankers drafts" also identify
them as payment and money transmission instruments involving transmission of money.156
7.111 Accordingly, we find that the phrase "including credit, charge and debit cards, travellers
cheques and bankers drafts", which sheds light on the types of services covered by the phrase "all
payment and money transmission services", refers to an illustrative list of payment and money
transmission instruments. Dictionary definitions identify these instruments as instruments enabling
the holder to make payments without cash and to tr ansfer money from one person or place to another.
Consequently, the list confirms that "[a]ll paymen t and money transmission services" refers to those
services that are essential to the processing and comple tion of transactions using payment cards. The
Panel considers that such transactions include not only those involving, for instance, the use of a
credit card at a POS terminal for the purpose of a good or service, but also those involving the use of a
credit, debit or ATM card for the purpose of withdrawing cash from an ATM. In the Panel's view, the
latter constitutes a form of money transmission service.
157
The reference to "(including import and export settlement)"
7.112 The United States submits that the parenthetical phrase "(including import and export
settlement)" does not appear in subsector (viii) of the GATS Anne x on Financial Services, but was
added by China to the description of the services co vered by subsector (d). According to the United
States, the explicit use of "settlement" suggests that there is an elem ent of settlement and clearing that
occurs as part of the payment service.158
7.113 China submits that the term "import and export settlement" refers to the services that banks
provide as payment intermediaries for import and expor t transactions through letters of credit. Unlike

155 The BIS defines a "credit card" as "a card indicating that the holder has been granted a line of credit.
It enables the holder to make purchases and/or withdraw cash up to a prearranged ceiling; the credit granted can
be settled in full by the end of a specified period or can be settled in part, with the balance taken as extended
credit. Interest is charged on the amount of any exte nded credit and the holder is sometimes charged an annual
fee." The same glossary defines a "debit card" as "card enabling the holder to have his purchases directly
charged to funds on his account at a deposit-taking institution (may sometimes be combined with another
function, e.g. that of a cash card or cheque guarantee card)." Finally, the glossary defines a "travel and
entertainment card" as "card issued by non-banks indicating that the holder has been granted a line of credit. It
enables him to make purchases but does not offer extended credit, the full amount of the debt incurred having to
be settled at the end of a specified period. The holder is usually charged an annual fee. Also called charge
card." BIS Glossary, Exhibit US-68, pp. 16, 19 and 50.
156 A travellers cheque is "a cheque for a fixed amount of money which may be cashed or used in
payment abroad, on the holder's signature", Shorter Oxford English Dictionary, Vo. 2, p. 3331. A "bank draft"
is defined as (i) "a check that a bank draws on itself, used when the payee does not wish to accept the credit of
the customer as drawer. The customer purchases the bank draft with good funds, which gives the payee
confidence that the check will be honoured. Also known as banker's check." The Palgrave Macmillan
Dictionary of Finance, Investment and Banking (Palgrave MacMillan, New York, 2010) ( The Palgrave
Macmillan Dictionary of Finance, Investment and Banking), p. 44; or as (ii) "a cheque drawn by a bank on itself
or its agent. A person who owes money to another buys the draft from a bank for cash and hands it to the
creditor who need have no fear that it might be dishonour ed. A bank draft is used if the creditor is unwilling to
accept an ordinary cheque." A Dictionary of Finance and Banking , Oxford Paperback Reference,
Exhibit CHN-80, p. 34.
157 In our view, the use of a credit, debit or ATM card to withdraw cash from an ATM constitutes a
form of money transmission service, insofar as, for ex ample, the card issuing institution or card holder's bank
authorizes the transmission of money fr om the card holder's bank account to the location of the ATM or, in the
case of a credit card, a cash advance to the location of the ATM.
158 United States' response to Panel question No. 83, paras. 54-58.

the case of payment cards, there is no third party th at provides clearing and settlement services to the
financial institutions that are involved in an impor t/export transaction. The financial institutions deal
with each other directly, and use the internati onal inter-bank payment system to complete the
necessary transfer of funds. According to China, th e reference to "settlement" in subsector (d) in no
way suggests that clearing and settle ment services are within the scope of this subsector, as there are
no clearing and settlement services involved in an im port/export transaction. China also submits that
it is significant that subsector (d) does not use the word "clearing".159
7.114 The Panel notes that, as pointed out above in paragraph 7.106, the words in parenthesis –
"including import and export settleme nt" – do not appear in subsector (v iii) of the Annex; they were
added by China to its Schedule. Consistent with th e principle of effective treaty interpretation, these
words must be given meaning.
7.115 In our view, the terms "import and export" s uggest that the parenthetical phrase refers to
payment services supplied in connection with international trade transactions. China appears to hold a
similar view as it considers that the phrase refers to the services that banks provide as payment
intermediaries for import and export transactions.
160 We observe that the parenthetical phrase
qualifies inter alia the expression "bankers drafts", which gene rally refers to a draft drawn by a bank
on itself.161 Bankers' drafts are payment instruments used in international trade transactions between
importers and exporters. Like other payment instrume nts listed in subsector (d), bankers' drafts must
be settled in order to complete the transaction. 162 In our view, the word "settlement" at the end of the
phrase refers to the completed transaction. Therefor e, the parenthetical phrase serves to confirm that
payment services for transactions between importers and exporters where payment occurs by means
of bankers' drafts are covered by subsector (d) of China's Schedule.
7.116 We note China's argument that the fact that subsector (d) does not use the word "clearing"
should be given interpretative significance. 163 In the Panel's view, the fact that the word "clearing" is
not mentioned in the bracketed language does not mean that no clearing is involved in situations
where bankers' drafts are used. Bankers' drafts, like any other type of cheque, are normally cleared
before they are settled. We also note that various sources suggest that clearing is usually a prior step
to settlement: the term "clearing" is defined as "[t]he system of settling payments due from one bank
to another"164 or "[t]he exchange of mutual claims by fi nancial institutions with settlement of the net
balance".165 Settlement marks the final stage in an import/export transaction completed through
bankers' drafts. Hence, in our view, "clearing" of a bankers' draft is imp lied in the parenthetical
phrase.

159 China's response to Panel question No. 83, paras. 1-3; and comments on United States' response to
Panel question No. 83, para. 53.
160 In response to Panel question No. 83, China submits that "[t]he term 'import and export settlement'
refers to the services that banks provide as payment in termediaries for import and export transactions. … They
involve banks acting as trusted payment intermediaries to allow the parties to an import/export transaction to
avoid the use of cash." China's response to Panel question No. 83, para. 1.
161 See above fn. 156 for definitions of "bank draft".
162 We note in this regard that the BIS definition cited above in fn. 156 likens bankers' drafts to
cheques.
163 China's comments on United States' response to Panel question No. 83, para. 53.
164 Oxford Dictionary of Economics, 3rd ed., Oxford University Press, 2009, Exhibit CHN-4, p. 64.
165 Banking Terminology, Exhibit CHN-3, p. 64-65, definition 2. Another source defines "clearing" as
"the process of transmitting, reconciling and, in some cases, confirming payment orders or security transfer
instructions prior to settlement, possibly including the netting of instructions and the establishment of final
positions for settlement." BIS Glossary, Exhibits US-68; CHN-2, p. 13.

7.117 We understand China's arguments to suggest that the language in parentheses applies
primarily to letters of credit. 166 We agree that letters of cred it are payment instruments used in
international trade transactions and that payment services to complete transactions through letters of
credit arguably can fall under subsector (d). Thus the words "including import and export settlement"
might also relate to letters of credit. We observe, however, that letters of credit are not mentioned in
the illustrative list under subsector (d). Moreover, a parenthetical phrase is a grammatical device
often used to link the words in parent hesis to language that precedes them. 167 Here, the parenthetical
phrase follows a list of instruments that does not in clude letters of credit. In our view, it is
implausible that the parenthetical phrase relates primarily to letters of credit, i.e. a payment instrument
that has not even been included in the list that precedes the parenthetical phrase.
7.118 The Panel therefore concludes that the pare nthetical addition "(including import and export
settlement)" in China's Schedule confirms that s ubsector (d) includes settlement, and by implication
clearing, e.g. when bankers' drafts are used as payment instruments for transactions between importers
and exporters. We perceive no sound basis for assu ming that subsector (d) includes settlement, and
where appropriate clearing, of transactions involvi ng the use of bankers' drafts, but that it would
exclude settlement and clearing of transactions involving the use of the other payment instruments
listed in subsector (d). In our view, the pare nthetical phrase merely seeks to make explicit – in
relation to one particular type of transaction – something that the broad phrase "[a]ll payment and
money transmission services …" already contains implicitly.
Summary of findings on the phrase "including credit, charge and debit cards, travellers
cheques and bankers drafts (including import and export settlement)"
7.119 Our examination of the phrase "including credit, charge and debit cards, travellers cheques
and bankers drafts" in subsector (d) as immediate context for interpreting the preceding words "[a]ll
payment and money transmission services", led us to conclude that this phrase is an illustrative list
which provides confirmation that the phrase "[a] ll payment and money transmission services"
includes those services that are essential to the processing and completion of transactions using
payment cards. Moreover, the parenthetical a ddition "(including import and export settlement)"
confirms that subsector (d) includes settlement, and by implication clearing, when bankers' drafts are
used as payment instruments for transactions betw een importers and exporters. The parenthetical
addition also suggests to us that settlement and cl earing of transactions involving the use of other
payment instruments listed in subsector (d) would likewise be classifiable under this subsector.
7.120 We now proceed to examine whether other cont extual elements confirm or undermine these
conclusions.
(ii) Other elements of China's Schedule
The subheading "Banking services as listed be low" in the sectoral column of China's
Schedule
7.121 China argues that subsector (d) is one of si x subsectors listed in China's Schedule under the
heading "Banking services …". According to China, the ordinary meaning of "banking services" is
services provided by banks. Consistent with this or dinary meaning, all of the services listed under the
heading of "Banking services …" are services that are typically provided by banks, finance

166 China's response to Panel question No. 83, para. 2. United States' rebuttal arguments regarding
China's letter of credit arguments are set out in United States' response to Panel question No. 83, paras. 54-58.
167 The Shorter Oxford English Dictionary , Vol. 2, p. 2102 defines "parenthesis" as "a word, clause,
sentence, etc., inserted (as an explana tion, qualification, aside, or afterthou ght) into a passage which is already
grammatically complete, and usu. marked off by brackets, dashes, or commas."

companies, and other types of financial institutions . China also submits that China's market access
and national treatment inscriptions for mode 3 confirm that the services encompassed by
subsectors (a) through (f) are services supplied by banks and other financ ial institutions, which
confirms that subsector (d) does not encompass services that are supplied to banks by non-bank
service suppliers. According to China, when inte rpreted in this context, the "payment services"
referred to in subsector (d) en compass the issuance a nd acceptance by financial institutions of
payment instruments other than cash. China also submits that there is no indication in any Member’s
commitments for subsector (viii) of the Annex that these services are provided by suppliers other than
banks or other financial institutions.168
7.122 The United States submits that the heading "Ba nking services…" does not have the effect of
limiting the scope of the commitments to "banks " and other "regulated financial institutions".
According to the United States, the definition of "f inancial institution" offered by China is far too
narrow. The United States also observes that, in addition to the explicit reference to "non-bank
financial institutions" in China’s Schedule, there ar e other references to "foreign finance companies"
in the market access column and to "foreign fina ncial leasing corporatio ns" in the additional
commitments column. The United States further argu es that, even if China's approach were correct,
suppliers of payment card services would qualify b ecause they were formerly operated as associations
of banks and, according to the United States, the na ture of the service that an entity supplies does not
change merely because that entity assumes a new corp orate form. The United States also submits that
the characteristics and nature of the service contro l the classification of that service, and where the
identity of the supplier is relevant, the sectoral description must clearly indicate that to be the case.169
7.123 Australia, the European Union, Guatemala and Korea are of the view that the subheading
"Banking services …" does not affect the scope of China's commitments under subsector (d). 170
7.124 The Panel notes that the heading "B. Banking a nd Other Financial Services …" in China's
Schedule encompasses four categories, namely "Banking services as listed below", "Motor vehicle
financing by non-bank financia l institutions", "Other financia l services as listed below", and
"Securities".171 Subsector (d) is listed under the subhe ading "Banking services as listed below". The
four categories are specific to China's Schedule: they are not present in the GATS Annex on Financial
Services and do not appear in other WTO Members' GATS schedules.
7.125 Turning first to the ordinary meaning of "banking", this term is defined as (i) "the provision of
payments facilities, credit, and capital to individuals, firms, and the government. …";
172 (ii) "the
business of banks"; 173 and (iii) "the area of finance related to taking of deposits, granting of loans,
and provision of other financial services, which may include investment, trading, and advisory". 174

168 China's first written submission, paras. 95-98; and China's response to Panel question No. 60,
paras. 108 and 109. The Panel recalls that subsector (v iii) of the Annex corresponds to subsector (d) of China's
Schedule.
169 United States' second written submission, paras. 118-124; and response to Panel questions No. 60,
paras. 151-153 and No. 61, paras. 154 and 155.
170 Australia's third-party response to Panel question No. 9 (no paragraph numbering provided);
European Union's third-party response to Panel question No. 9, para. 29; Guatemala's third-party's response to
Panel question No. 9, para. 34; and Korea's third-party's response to Panel question No. 9 (no
paragraph numbering provided).
171 See excerpt of China's Schedule in Annex G to this Report. We note that the last three subheadings
are preceded by a hyphen. We view the lack of a hyphen before "Banking services as listed below" as a
typographical error.
172 Oxford Dictionary of Economics, 3rd ed., Oxford University Press, 2009, Exhibit CHN-41, p. 26.
173 Dictionary of Banking and Finance, 4th ed., A & C Black, 2010, Exhibit CHN-42, p. 30.
174 The Palgrave Macmillan Dictionary of Finance, Investment and Banking, Exhibit CHN-47, p. 46.

We observe that these definitions do not indicate th at "banks" are necessarily the exclusive providers
of "banking" services.
7.126 We also observe that all of the services listed in subsectors (a) to (f) under the subheading at
issue are commonly supplied by banks, but non- bank financial services suppliers can also supply
them. For example, deposits (subsector (a)) can be taken by post offices; loans (subsector (b)) can be
granted by post offices and finance companies; leasing services (subsector (c)) can be supplied by
leasing companies; money can be transferred (subsector (d)) by post offices or other specialized
suppliers; guarantees (subsector (e)) can be granted by finance companies; and foreign exchange
(subsector (f)) can be traded by speci alised foreign exchange dealers a nd brokers. Hence, in practice,
different types of entities can supply the services listed in subsectors (a) to (f).
7.127 Moreover, the commitments contained in th e market access column, which are relevant
context for interpreting the subhead ing at issue, make reference to "finance companies", which are
non-bank entities. 175 Finally, the additional commitment s column under the subheading "Banking
services …" contains a reference to "financial leasing corporations" which are also non-bank entities.
With these considerations in mind, it is clear to us that "banking services" as that term appears under
the subheading at issue includes services supplied by banks and non-banks.
7.128 China argues that "[c]onsistent with this ordi nary meaning [i.e. the ordinary meaning of
banking services, which, according to China, refers to "services provided by banks"], all of the
services listed under the heading of 'banking servi ces' are services that are typically provided by
banks, finance companies, and other types of financial institutions ."176 In other words, China's
argument amounts to saying that "services provided by banks" are "services provided by banks and
non-banks".
7.129 Moreover, as pointed out by the United States, when China wished to undertake a
commitment with respect to a certain category of supplier only, it did so explicitly, such as in the
subsector "[m]otor vehicle financing by non-bank financial institutions".177
7.130 Furthermore, the Panel observes that, as evid enced by the arguments presented by both the
United States and China, there is a close histor ical association between banks and EPS suppliers.
Both parties have made reference to the fact that certain United States' EPS suppliers were operated as
associations of banks until 2006, i.e. until we ll after China's accession to the WTO in 2001. 178 If, as
argued by China, the identity of the supplier is relevant for purposes of classifying services, then those
EPS suppliers were arguably providing "banking ser vices" as China defines that term (i.e. services
supplied by banks) until they changed their corporate form in 2006. The Panel has already indicated
that it does not share China's narrow interpretation of the term "banking services". Having said that,
the Panel agrees with the United States that the cl assification of a service should not change solely
because the suppliers of that service modify their ownership structure or legal form. Such an
interpretative approach to classification would u ndermine the predictability, security and clarity of
GATS specific commitments.
7.131 We also find relevant in this respect eviden ce submitted by China (to which we referred in
connection with determining whether the services in question are supplied as integrated services) 179

175 A "finance company" is defined as "a non-bank financial institution …" See The Palgrave
Macmillan Dictionary of Finance, Investment and Banking, Exhibit CHN-88, p. 206.
176 China's first written submission, para. 95 (emphasis added).
177 United States' response to Panel question No. 60, para. 152.
178 China's first written submission, para. 50 ("Prior to their initial public offerings in 2006, Visa and
MasterCard were operated as associations of banks … that issued and acquired payment cards under a common
brand."); and United States' response to Panel question No. 60, para. 152.
179 See para. 7.60 above.

demonstrating that, in France, for example, the au thorization system for payment card transactions is
operated by CB, an association of banks. Moreover, clear ing and settlement of retail payments
transactions, including payment card transactions, is operated by STET Inter-bank Payment Services,
an institution created and still owned by five banks in France. In our view, this is further evidence of
the continuing link between banks and EPS.180
7.132 Finally, as noted above, the heading "B. Banking and Other Financial Services …"
encompasses four subheadings, namely, "Banking servi ces as listed below", "Motor vehicle financing
by non-bank financial institutions", "Other financia l services as listed below", and "Securities". The
subheadings "Banking services as listed below" and "Other financial services as listed below" group
together, respectively, six and two subsectors. We note that the pattern of market access and national
treatment commitments under each of these four subh eadings is different. Hence, in our view, the
heading "Banking services as listed below" may also serve a practical purpose, which is to separate
China's commitments that apply in the same way to subsectors (a) to (f) from its commitments that
apply only to certain categories of services (motor vehicle financing by non-bank financial
institutions) or to other services listed further dow n in China's Schedule (namely, other financial
services … and securities). As indicated, China h as undertaken different market access and national
treatment commitments under the four subheadings in question.

7.133 In sum, our analysis of the subheading "Ba nking services as listed below" leads us to
conclude that this subheading is not indicative of an intention to circumscribe the commitments under
subsectors (a) to (f) to a certain category of services suppliers, namely banks. Rather, this subheading
indicates that the services concerned are typically su pplied by banks, or were typically provided by
banks in the past. This does not detract from the fact, however, that some of these services can be,
and are, also provided by other types of financia l entities. Additionally, and from a more practical
point of view, this subheading may also serve to separate commitments undertaken in respect of
subsectors (a) to (f) from different commitments undertaken in respect of other subsectors listed
further down in China's Schedule.
7.134 We conclude therefore that the placement of subsector (d) under the heading "Banking
services as listed below" does not contradict our view explained above that subsector (d) encompasses
services that are essential to the processing and completion of transactions using payment cards.
The market access commitment under mode 1
7.135 In its arguments concerning the scope of th e market access commitment undertaken by China
under mode 1 181 , the United States submits that the wo rd "Unbound" in China's market access
commitment under mode 1 is followed by the qua lifying phrase "except for the following," which in
turn is further elaborated by two sentences that de scribe elements of the services within subsector (d)
for which China has undertaken mode 1 commitments, namely:
- Provision and transfer of financial info rmation, and financial data processing
and related software by suppliers of other financial services;
- Advisory, intermediation and othe r auxiliary financial services on all
activities listed in subparagraphs (a) thr ough (k), including credit reference and
analysis, investment and portfolio researc h and advice, advice on acquisitions and on
corporate restructuring and strategy.

180 See China's response to Panel question No. 75, para. 2 and Cartes Bancaires 2010 Annual Report,
Exhibit CHN-106, p. 13.
181 The Panel will use the term "mode 1" to refer to th e supply of a service that is "from the territory of
one Member into the territory of any other Member", as provided for in Article I:2(a) of the GATS.

7.136 For the United States, China's mode 1 commitment must be understood as recognizing that
elements of "payment and money transmission" servi ces include "provision and transfer of financial
information" and "advisory, intermediation and othe r auxiliary services", to the extent that such
elements are integral to the core service, and that the service of which they form a part is properly
classified within "payment and money transmission" services and not in subsector (k) or (l) of China's
Schedule.182
7.137 China replies that, in an effort to "jam" a ll of the services at issue into the exception to
China’s unbound mode 1 inscription for subsector (d), the United States takes the position that all five
of the "components" of the services at issue match the descriptions of subsectors (k) and (l). By doing
so, the United States removes everything from the bask et of subsector (d) and, as a result, has nothing
left in this subsector.183
7.138 The Panel is of the view that the market access entry under mode 1 constitutes relevant
context for the purpose of interpretin g the scope of subsector (d). The Panel refers to its detailed
discussion of China's market access commitment under m ode 1 in Section VII.F.1(a) below. There,
the Panel finds that this entry is properly unders tood as referencing China's mode 1 market access
commitment for subsectors (k) and (l). Hence, the context provided by the market access entry under
mode 1 does not suggest an interpretation that is di fferent from that suggested by the other contextual
elements examined so far. In other words, the mode 1 market access commitment does not contradict
our conclusion that subsector (d) encompasses services that are essential to the processing and
completion of transactions using payment cards.
(iii) The GATS Annex on Financial Services
The scope of subsector (xiv) in the Annex
7.139 Article XXIX of the GATS ( Annexes) states that "[t]he Annexes to this Agreement are an
integral part of this Agreement". Pursuant to that provision, the GATS Annex on Financial Services
is treaty text. Moreover, it constitutes context for purposes of interpreting China's Schedule, which is
itself an integral part of the GATS. Paragraph 5 ( Definitions) of the Annex contains several
definitions and a classification of financial service s that WTO Members may use – and many of them
did use – when scheduling their commitments on financ ial services. We recall that China stated that it
scheduled its financial services commitments by refe rence to the definition of financial services set
forth in the Annex.184 We shall therefore turn to the Annex as relevant context for the interpretation of
China's Schedule.
7.140 Subsector (xiv) in paragraph 5(a) of the A nnex, which falls under the heading "Banking and
other financial services (excluding insurance)", states as follows:
Settlement and clearing services for financia l assets, including securities, derivative
products, and other negotiable instruments185
7.141 China argues that the clearing and settlement servic es at issue in this dispute are classifiable
under subsector (xiv) of the Annex, a subsector fo r which China undertook no commitments. China

182 United States' response to Panel question No. 45, para. 118; and second written submission,
paras. 103-108.
183 China's second written submission, paras. 37 and 38.
184 China's first written submission, para. 80.
185 We note China's comment that "[b]ecause the proc ess of 'clearing' comes before the process of
'settlement', China will refer to 'clearing and settlement services' even though item (xiv) refers to these two
processes in the opposite order" (China's first written s ubmission, fn. 49). Like China and for the same reason,
we shall refer to "clearing and settlement services".

maintains that every definition of the term "financi al assets" points to the conclusion that it refers to
"money and claims", including cash and any right to receive cash. Furthermore, the reference to
"negotiable instruments" in subsector (xiv) unambi guously includes retail payment instruments, such
as cheques and travellers' cheques. It is China's vi ew that, as context, the illustrative list of examples
confirms that the drafters of subsector (xiv) intend ed to use the term "financial assets" according to its
common and ordinary meaning.186
7.142 The United States replies that China's position is inconsistent with the ordinary meaning of
"settlement and clearing services for financial assets" and fails to recognize that subsector (xiv)
constitutes a substantially different financial service th an the services at issue. It argues that China's
position also fails to interpret the term "financial ass et" within its immediate context, which is the full
sentence in subsector (xiv).187
7.143 Australia argues that subsector (xiv) covers settlement and clearing services for financial
assets, other than card based transactions. Settlement and clearing services for financial assets are
clearly distinct from the settlement and clearing activity that is part of payment and money
transmissions, such as credit card transactions. 188 The European Union submits that the clearing and
settlement services involved in the trading (buying a nd selling) of "securities, derivative products and
other negotiable instruments" are separate and di stinct 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". 189 According to Korea, subsector (xiv) of
the Annex addresses mainly paper-based financial asset transactions which, in and of themselves,
represent or carry designated monetary value. The term "financial assets" refers to an object or
instrument that contains or represents some sort of monetary value to its owner, which can
subsequently be sold or negotiated; this is not the case for credit card or credit card transactions.190
7.144 The Panel observes that the parties do not dispute that payment card transactions must be
cleared and settled. They disagree, however, where the clearing and settlement of payment card
transactions should be classified. We recall that our interpretation of subsector (d) thus far has led us
to the view that this subsector includes t hose services that are essential to the processing and
completion of transactions using payment cards. We also concluded, in paragraph 7.118 above, that
the parenthetical addition "(including import and e xport settlement)" confirms that subsector (d)
includes settlement, and by implication clearing. Consistent with this view, clearing and settlement of
payment card transactions should a priori be classified under subsector (d), because they are essential
services to complete a payment card transaction. We also recall that, although we decided to begin
our analysis with subsector (d) of China's Schedule, we also said that we would turn to subsector (xiv)
of the Annex before reaching a final conclusion on the scope of subsector (d).191
7.145 Starting with an examination of the ordinary meaning of the terms "clearing", "settlement"
and "financial assets", the Panel notes the following definitions:
Clearing: "process of transmitting, reconciling and, in some cases, confirming
payment orders or security transfer instructions prior to settlement, possibly including

186 China's first written submission, paras. 79-89; respon se to Panel question No. 39(a), para. 47; and
second written submission, paras. 2-33.
187 United States' response to Panel question No. 24, paras. 68-80; and second written submission,
paras. 42-74.
188 Australia's third-party submission, para. 17; and third-party response to Panel question No. 1 (no
paragraph numbering provided).
189 European Union's third-party submission, para. 27.
190 Korea's third-party submission, para. 1; and third-party response to Panel question No. 15(a) (no
paragraph numbering provided).
191 See para. 7.72 above.

the netting of instructions and the establishment of final positions for settlement"192 or
"(a) the exchange of the payment instrume nt or of relevant payment information
between the payer's and the payee's financial institutions, and (b) the calculation of
claims for settlement".
193
Settlement: "an act that discharges obliga tions in respect of funds or securities
transfers between two or more parties" 194 or "a transfer of funds to complete one or
more prior transactions that were made s ubject to final settlement. Settlement is the
point at which underlying claims and obligations are satisfied".195
Financial assets: "[m]oney and claims, as distinct from physical assets such as land,
buildings, or equipment. Financial asset s include money, securities constituting a
claim to receive money, such as bills or bonds, and shares giving indirect ownership
of the physical assets of companies. The claims held as financial assets include the
obligations of individuals, companies, and governments, domestic and foreign.
Financial assets include shares in financ ial institutions, and derivatives such as
options."196 Other definitions describe a "financial asset" as "[a]n asset that is either
cash, a contractual right to receive cash, or the right to exchange a financial
instrument with another entity under pot entially favourable terms or an equity
instrument of another entity"; 197 or "assets in the form of stocks, bonds, rights,
certificates, bank balances, etc., as distinguished from tangible, physical assets …". 198
Financial: "of or pertaining to revenue or money matters".199
7.146 An examination of dictionary definitions and other specialized glossaries suggests that the
ordinary meaning of the words "clearing" and "se ttlement" refers to activities that are relevant for
both retail payment instruments and securities. The ordinary meaning of the term "financial assets"
encompasses virtually all financial instruments. We al so observe that definitions of the terms used in
subsector (xiv) may overlap with definitions of term s in subsector (d) – for instance, "settlement" and
"payment" are almost synonymous. 200 It is difficult, therefore, to ascertain the scope of subsector (d)
of China's Schedule and that of subsector (xiv) of the Annex based solely on the ordinary meaning of
the terms used in these sector descriptions. We al so recall that the Appellate Body has cautioned
against using dictionary definitions in a mechanical manner.201
7.147 Thus, while we agree with China that an inte rpretation of the term "financial assets" must
begin with the ordinary meaning of the terms, our interpretation cannot end there. We recall that,
pursuant to Article 31(1) of the Vienna Convention, the ordinary meaning of "financial assets" must
be interpreted "in good faith in accordance with the or dinary meaning to be given to the terms of the
treaty in their context and in the light of its object and purpose" (emphasis added). With this in mind,

192 BIS Glossary, Exhibits US-68 and CHN-2, p. 13.
193 BIS (CPSS), Clearing and Settlement Arrangements for Retail Payments in Selected Countries,
2000, Exhibit CHN-1, pp. 2-6.
194BIS Glossary, Exhibits CHN-2 and US-68, p. 45.
195 Banking Terminology, Exhibit CHN-5, p. 323, definition 3.
196 A Dictionary of Economics, 3rd ed., Oxford University Press, 2009, Exhibit CHN-32, p. 167.
197 A Dictionary of Accounting, Oxford University Press, 1999, Exhibit CHN-38, p. 161.
198 Dictionary of Finan ce and Investment Terms , 8th ed., Barron's, New York, 2010, Exhibit CHN-34,
p. 257.
199Shorter Oxford English Dictionary , Vol. 1, p. 964. The Shorter Oxford English Dictionary does not
contain a definition for financial asset or for clearing.
200 See, above in section VII.D.2(a) our analysis of the ordinary meaning of the terms used in
subsector (d) of China's Schedule.
201 Appellate Body Report, US – Gambling, para. 164.

we now turn to the phrase "including secur ities, derivative products, and other negotiable
instruments", which follows immediately after the words "settlement and clearing for financial assets"
in subsector (xiv) and hence constitutes immediate context.
7.148 The United States argues that illustrative lists ma y be more than merely non-exhaustive lists
of examples. They may also inform the overall scope of a provision and the meaning of a term that
they illustrate. An examination of each of th e items in the illustrative list in subsector (xiv)
demonstrates that retail receipts, such as a claim on a payment card, are not the same type of financial
asset as the items included in the illustrative lis t ("securities", "derivative products" and "other
negotiable instruments"). According to the United States, the illustrative list of financial assets in
subsector (xiv) indicates that the scope of those asset s is limited to tradable investment instruments,
which supports the conclusion that the term "financial assets" as used in subsector (xiv) is intended to
be limited to these types of instruments.202
7.149 China submits that the three examples in the illustrative list do not constitute an exhaustive
list of what constitutes a "financial asset" under s ubsector (xiv). Moreover, according to China, the
United States tries to work backwards from these ex amples to limit the ordinary meaning of the term
"financial assets" to what it calls "tradeable fina ncial instruments" or, alternatively, "tradeable
investment instruments". For China, the referenc e to "negotiable instruments" in subsector (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. More over, China contends that because subsector (viii)
of the Annex provides examples of negotiable instruments as types of "payment services", the drafters
understood that the clearing and settlement of these instruments under subsector (xiv) is distinct from
the issuance and acceptance of these instruments under subsector (viii).203
7.150 The Panel is of the view that the list containe d in subsector (xiv) sheds light on the type of
clearing and settlement services covered under that sub sector. In this respect, we recall the view of
the panel in China – Publications a nd Audiovisual Products that "the word 'including' in ordinary
usage indicates that what follows is not an exha ustive, but a partial, list of all covered items". 204 We
find this statement to be correct in the specific cont ext of subsector (xiv), an d so, like the parties, we
regard the list as illustrative. Accordingly, we c onclude that this illustrative list is a non-exhaustive
enumeration of the kinds of "financial assets", the clearing and settlement of which are classified
under subsector (xiv).
7.151 We observe that although the parties appear to concur that the illustrative list in item (xiv)
informs the understanding of the term "financial assets", they reach different conclusions on the
meaning and scope of that term. For the United States , illustrative lists "may help to inform the
overall scope of a provision and the mean ing of a term that they illustrate". 205 For China, the
reference to "negotiable instruments" in the illust rative list of subsector (xiv) "necessarily informs the
understanding of the term 'financial assets'".206

202 United States' response to Panel question No. 42, para. 107; and second written submission,
paras. 75-93.
203 China's response to Panel question No. 39(c), paras. 54-62; and second written submission,
paras. 15-26. It will be recalled th at subsector (viii) states as follows : "[a]ll payment and money transmission
services, including credit, charge and debit cards, trave llers cheques and bankers drafts" and that China states
that subsector (d) was based on subsector (viii). See, para. 7.106 above.
204 Panel Report, China – Publications and Audiovisual Products, para. 7.294.
205 United States' second written submission, para. 75.
206 China's response to Panel question No. 39(a), para. 49.

7.152 We now turn to the specific financial inst ruments listed in the illustrative list of
subsector (xiv), i.e. securities, derivative products , and other negotiable instruments, and start with
an examination of their ordinary meaning:
Security: "A document held by a credit as guarantee of his or her right to payment; a
certificate attesting ownership of stock, shares, etc.; the financial asset represented by
such a document. Also (US), such a doc ument issued to investors to finance a
business venture";207 or "A pledge of financial or physical property to be surrendered
in the event of failure to repay a loan. Any medium of investment in the money
market or capital market, e.g. a money-mark et instrument, a bond, a share. A term
used to refer only to bonds, and shares, as distinct from money-market assets."208
Derivative product: "An arrangement or in strument (such as a future, option, or
warrant) whose value derives from and is dependent on the value of an underlying
asset.";209 or "a financial contract the value of which depends on the value of one or
more underlying reference assets, rates or indices. For analytical purposes, all
derivatives contracts can be divided into b asic building blocks of forward contracts,
options or combinations thereof."210
7.153 Definitions found in general a nd specialized dictionaries suggest that "securities" (i) are a
medium of investment, (ii) attest ownership right s and (iii) grant financial returns. Derivative
products essentially share these same characteristics.
7.154 We consider now the ordinary meaning of th e term "negotiable instruments". The word
"negotiable" is defined as follows: "[o]f a bill, draf t, cheques, etc.: transferable or assignable in the
course of business from one person to another simply by delivery." 211 A "negotiable instrument" is "a
document of title that can be freely negotiated …" 212 or "unconditional order or promise to pay an
amount of money, easily transferable from one person to another". 213 The characteristics of
"negotiable instruments", as identified in speciali zed dictionaries, are that they (i) are easily
transferable from one person to another, and (ii) can be freely negotiated.
7.155 In our view, the reference to "securities, derivative products and other negotiable instruments"
indicates that this subsector deals with financial as sets which have in common the characteristic of
being "negotiable". Many types of financial instruments are negotiable and some retail payment
instruments listed under subsector (d) of China's Sc hedule, such as traveller's cheques and banker's
drafts, may be negotiable. In contrast, we observe, and the parties seem to agree, 214 that plastic

207 Shorter Oxford English Dictionary, Vol. 2, p. 2733.
208 The Economist, Dictionary of Business , by Graham, Davis, Trott, Un cles, Bloomberg Press, 2003,
Exhibit US-69, p. 334.
209 Shorter Oxford English Dictionary, Vol. 1, p. 653.
210BIS Glossary, Exhibit US-68, p. 20.
211 Shorter Oxford English Dictionary, Vol. 2, p. 1905.
212 A Dictionary of Finance and Banking , Oxford Paperback Reference, Oxford, 2008,
Exhibit CHN-39, p. 303.
213 Dictionary of Finan ce and Investment Terms , 8th ed., Barron's, New York, 2010, Exhibit CHN-40,
p. 469.
214 The United States submits that "[p]ayment cards and the sales slips generated from payment card
transactions do not meet the internationally accepted criteria for a negotiable instrument." United States' second
written submission, para. 81. China states that "[c]re dit, charge, and debit cards are more modern payment
instruments, and their relationship to the concept of negotiability is more complicated. It is clear that the cards
themselves – the pieces of plastic – are not negotiable instruments. … The slip is a promise to pay, but, in many
cases, that promise will be subject to the terms and co nditions of a contractual agreement (e.g. the cardholder
agreement between the issuer and the cardholder). In these circumstan ces, the promise to pay may not be

payment cards and sales slips signed in connection with payment card transactions are not negotiable
instruments because they are neither transferable nor can they be traded on a market. Hence, on this
basis we consider that payment cards and sales s lips do not fall within the category of "other
negotiable instruments" referred to in the illustrative list of subsector (xiv).
7.156 China argues, however, that payment cards have "common features" with bankers' drafts and
traveller's cheques in the sense th at each of these instruments gi ves rise to inter-bank claims for
payment between acquiring banks and issuing banks, a nd that such claims need to be cleared and
settled. China concludes that, "since it is beyo nd any reasonable dispute that the clearing and
settlement of negotiable instruments is encompassed by item (xiv), it would be arbitrary and illogical
to conclude that clearing and settlement services fo r certain types of retail payment instruments are
covered by item (xiv), while clearing and settle ment services for other types of retail payment
instruments are covered by item (viii) ".215
7.157 The United States submits that there are many types of negotiable instruments and, while
some are used for payments (for example, cheque s), others are used as investment vehicles (for
example, commercial paper). The reference to "ne gotiable instruments" in subsector (xiv) does not
include all such instruments. In the United Stat es' view, subsector (xiv) only indicates that there are
negotiable instruments that settle and clear lik e securities and derivative products. However,
subsector (xiv) cannot be read properly to mean th at all negotiable instruments are settled and cleared
like securities and derivative products. Thus, the United States considers that to the extent a
negotiable instrument appears in subsector (viii), it is not a negotiable instrument referred to in
subsector (xiv).216
7.158 The Panel observes that, according to China, the clearing and settling of payment card
transactions should be covered under subsector (xiv ) because payment cards have "common features"
with other payment instruments listed in subsector (d) (for example, bankers' drafts and travellers'
cheques), these "common features" being, in China' s view, that "(1) each is a type of payment
instrument that is issued by banks; and (2) that each of these instruments gives rise to inter-bank
claims for payment between acquiring ba nks and issuing banks, which such [ sic] claims need to be
cleared and settled." 217 In other words, China's interpretati on brings the clearing and settlement of
non-negotiable payment instruments, such as payment cards, within the scope of subsector (xiv).
What appears to matter most, in China's view, is that clearing and settlement services for all financial
instruments, whether negotiable or not, be classified in the same subsector.
7.159 It is not clear to us, however, how this interp retative approach can be reconciled with the
terms used in subsector (xiv). First, we note that subsector (xiv) does not refer to "all settlement and
clearing services", in contrast to the "[a]ll payment and money transmission services" found in
subsector (d). Furthermore, we observe that the illustrative list includes two specific terms –
"securities and derivative products" – and a broa der, residual category – "other negotiable
instruments". The adjective "other"
218 ties "negotiable instruments" back to "securities" and
"derivative products", thereby establishing a nexus between these three categories of instruments.
Reading the term "other negotiable instruments" with reference to the terms "securities" and
"derivative products" that precede it supports the conc lusion that the term "negotiable instruments"
does not include any and all instruments that are "n egotiable". We note in this respect that the

"unconditional", which is usually a formal requirement of negotiability." China's response to Panel's question
No. 39(a), para. 48.
215 China's response to Panel question No. 39(a), paras. 49 and 50.
216 United States' response to Panel question No. 39(a), paras. 99-100.
217 China's response to Panel question No. 39(a), para. 49.
218 "Other" (adj.) is defined as "4 Existing besides or distinct from that or those already specified or
implied; further, additional. …". Shorter Oxford English Dictionary, Vol. 2, p. 2035.

illustrative list does not say "any other negotiable instruments" or "other negotiable instruments of any
kind". Thus, we consider that the term "other negotia ble instruments", read in its context, covers only
those instruments that share essentially the same characteristics as securities and derivative products.
7.160 Turning to the term "securities", we noted above that this term is defined as a means of
investment attesting ownership rights and granting fi nancial returns. We also noted that derivative
products essentially share these same characteristics. In our view, payment cards and other payment
instruments listed in subsector (d) do not share these characteristics. In particular, payment
instruments are not a means of investment, do not grant ownership rights and do not yield financial
returns. Hence, we agree with the United States th at instruments listed in subsector (d), such as
travellers' cheques, although pote ntially negotiable, are not among the negotiable instruments falling
within subsector (xiv).
7.161 Furthermore, we find convincing the arguments and factual evidence submitted by the United
States that there are many practical differences between the systems used to clear and settle
investment instruments of the kind referenced in subsector (xiv) and the systems used to clear and
settle payment instruments, such as those mentioned in subsector (d).
 219 These differences relate to
the following: (i) the financial instruments involved and the value of typical transactions; (ii) the
market participants involved in the transaction and related processing; (iii) the infrastructure needs for
such processes to occur safely and e fficiently; and (iv) regulatory oversight and systemic risk to the
financial system. The distinction between payment systems and securities infrastructure as distinct
components of the market infrastructure is common in many countries, including in China.220
7.162 China does not contest the differences between clearing and settlement of payment
instruments, on the one hand, and securities and derivatives, on the other hand. China argues,
however, that these differences are not relevant to the interpretation of the term "financial assets" and
do not change the ordinary meaning of the term "ne gotiable instruments". We disagree. In our view,
classification of services is not an abstract exerci se; due regard should be had to market and
regulatory realities. A classification approach reflecting, and in accord with, those realities
contributes to the clarity and, therefore, security and predictability, of GATS specific commitments.
Our reading of the scope of subsector (xiv) in the Annex and that of subsector (d) in China's Schedule
is consistent with these considerations, because it takes due account of (i) the way payment systems
are generally organized and regulated, as well as ( ii) the essential differences between the settling and
clearing of payment instruments and of securities and other negotiable instruments.
7.163 In sum, we find that subsector (xiv) encompasses the clearing and settlement of financial
instruments sharing essentially the same characteris tics as securities, derivative products and other
negotiable instruments. More particularly, we cons ider that subsector (xiv) covers the clearing and
settlement of financial instruments which have inv estment attributes, grant ownership rights and yield
financial returns. Our conclusion is also based on the important practical differences between, on the
one hand, the clearing and settlement of financial assets like securities and, on the other hand, the
clearing and settlement of payment transactions. Hen ce, it is our view that retail payment instruments
listed in subsector (d) of China's Schedule are not "f inancial assets" within the meaning that term has
in subsector (xiv) of the Annex and, therefore, transactions based on the payment instruments listed in
subsector (d), including payment cards, are not cleared and settled under subsector (xiv).

219 United States' second written submission, paras. 55 to 74 and Exhibits cited in those paragraphs.
220 The Panel asked China whether China UnionPay was involved in any st age of the clearing and
settlement of securities in China. China replied "[n]o". China's response to Panel question No. 34, para. 35.

Subsector (x) of the Annex
7.164 Subsector (x) in paragraph 5(a) of the Annex on Financial Services reads as follows:
(x) Trading for own account or for account of customers,
whether on an exchange, in an over-the-counter market or
otherwise, the following:
(A) money market instruments (including cheques, bills,
certificates of deposits);
(B) foreign exchange;
(C) derivative products including, but not limited to,
futures and options;
(D) exchange rate and interest rate instruments, including
products such as swaps, forward rate agreements;
(E) transferable securities;
(F) other negotiable instruments and financial assets,
including bullion.
7.165 The United States argues that China's interpre tation of "financial asset" and "negotiable
instruments" as they appear in subsector (xiv ) does not accord with how these terms are used
elsewhere in the Annex. The United States notes that these terms also appear in paragraph 5(a),
subsector (x) of the Annex. The illustrative list of tradable assets under subsector (x) includes "other
negotiable instruments and financial assets, includi ng bullion". Thus, according to the United States,
"negotiable instruments" and "finan cial assets" as used in subsector (x ) refer to tradable investment
assets, rather than "[m]oney and claims." This indi cates that "negotiable instruments" and "financial
assets" are not retail payment vehicles like credit and debit cards.221
7.166 China submits that the United States overlooks the fact that subsector (x)(A) of the
Annex explicitly refers to "cheques" as among the "n egotiable instruments" and "financial assets"
included within this category. According to Ch ina, "this fatally undermines the United States'
insistence that the drafters of the Annex meant to exclude cheques from the ordinary meaning of the
terms 'financial assets' and 'negotiable instruments"'.222
7.167 The Panel observes that subsector (x) of the Anne x contains a list of instruments that can be
"traded for own account or for account of customer s, …". The Panel has already observed that
cheques are among those retail payment instruments th at are potentially negotiable. In our view, the
list in subsector (x) confirms this point. Yet we do not consider that the fact that "cheques" are listed
in subsector (x) as tradable instruments would s upport the view that clearing and settlement of
cheques and other payment instruments should fall unde r subsector (xiv) of the Annex. It is only if
one assumes that the clearing and settlement of pot entially negotiable instruments of any kind falls
under subsector (xiv) that this would be so, and we have already explained that we are unable to
accept this assumption. Finally, we note that sub sector (x) does not refer to payment cards, which
also supports our earlier conclusion that payment cards are not negotiable instruments.
7.168 To conclude, we consider that the fact that s ubsector (x) in the Annex refers to cheques as a
kind of tradable instrument does not invalidate our conclusion with respect to the scope of
subsector (d) in China's Schedule.

221 United States' second written submission, paras. 94 and 95.
222 China's opening statement at the second substantive meeting, para. 15.

Summary of findings on the GATS Annex on Financial Services
7.169 In our examination of subsector (xiv) of the Annex, we found that payment instruments listed
in subsector (d) of China's Schedule, such as paym ent cards, are not "financial assets" within the
meaning of that term as it is used in subsector (xiv) of the Annex. Therefore, in our view, the clearing
and settlement of transactions involving the use of the payment instruments listed in subsectors (d) of
China's Schedule are not covered under subsector (xiv) of the Annex. In our view, having regard to
the broad phrase "[a]ll payment and money transmission services", clearing and settlement services
concerning transactions using payment cards are prope rly classified under subsector (d). As concerns
subsector (x) in the Annex, we found that the fact that it refers to cheques as tradable instruments does
not invalidate our conclusion with respect to the scope of subsector (d) in China's Schedule.
7.170 Hence, our analysis of the context provided by the GATS Annex on Financial Services does
not contradict our finding that subsector (d) of China's Schedule encompa sses the services that are
essential to the processing and completion of transactions using payment cards.
(iv) The structure of the GATS
7.171 We turn now to a consideration of the structur e of the GATS. The United States submits that
EPS fall within the ordinary meaning of "payment and money transmission services" as one type of
"all" such services. EPS are at the centre of all payment card transactions and without these services
the transactions could not occur. According to the United States, EPS involve the services through
which transactions involving payment cards are pr ocessed and through which transfers of funds
between institutions participating in the transacti ons are managed and facilitated. Moreover, EPS are
integral to the processing of credit, charge, deb it and other payment card-based electronic payment
transactions, and without these services, payment card transactions could not occur.223
7.172 China submits that the assertion by the United St ates that subsector (d) encompasses all of the
services at issue is based on an interpretation of th is subsector that is "vastly overbroad." This
interpretation would lead to the conclusion that this subsector encompasses not only services supplied
by banks, but also services supplied to banks. More over, in China's view, services that "manage" or
"facilitate" the supply of a service, or that relate to the "processing" of another service transaction, are
not necessarily classifiable as that other service, but mu st be classified separately to the extent that
they are distinct and separately identifiable services. China points out that, pursuant to the 2001
Scheduling Guidelines, "input" services must be class ified and evaluated as distinct services. China
further submits that a schedule of specific co mmitments is based on taxonomy of distinct and
mutually exclusive services. Many of those ser vices could be said to "manage" or "facilitate" the
provision of other services within the taxonomy, or relate to the "processing" of a distinct service
transaction. In China’s view, this system of classifying services would collapse if distinct and
separately identifiable services could be classified under another sector or subsector merely because
they "manage", "facilitate", or relate to the "processing" of that service.
224
7.173 The United States replies that it has described the entire package provided by an EPS supplier
as "managing," "facilitating," or "enabling" the processi ng of payment card transactions in an effort to
capture the "intrinsic linkage" between EPS and payment card transactions. EPS do not "manage,"
"facilitate," or relate to the "processing" of a pa yment and money transmission service. EPS are the
service at issue. EPS "manage," "facilitate," a nd relate to the "processing" of payment card
transactions – which is one type of payment service falling within "all payment and money

223 United States' response to China's request fo r a preliminary ruling, para. 149; first written
submission, paras. 25-26; response to Panel question No. 26, paras. 84-86; and second written submission,
paras. 13-18.
224 China's first written submission, paras. 102-108.

transmission services" in subsector (d). Accord ing to the United States, EPS for payment card
transactions constitute one integral, indivisible service . They are sold in a bundle and the service is a
coherent whole, and the service supplier and se rvice consumer are the same for the various
component services. Without this integrated servi ce, a payment card transaction could not happen.
EPS for payment card transactions is a single service th at is "intrinsically linked" to payment card
transactions and that, for purposes of classification, should be analysed as a whole. The United States
also submits that, if China's position were accepted – that a service must first be disaggregated into
subcomponents and each subcomponent separately classified – it would render WTO Members'
concessions meaningless for a wide range of services.225
7.174 China further submits that network services are at most "inputs" to card issuance and
acceptance services, and are better seen as altogeth er different services. The services supplied by
network operators relate to how financial institutions interact with each other, not to how card holders
and merchants interact with each other. For China, the United States is trying to imply in
subsector (d) a right of market access for a different set of service suppliers who provide input
services (at most) at an entirely different level of trade. This is not only inconsistent with the
principle of mutual exclusivity, but with WTO Me mbers' express recognition that input services must
be classified and evaluated as distinct services. Ch ina also takes issue with the argument that EPS is
"one integral, indivisible service" and notes that the United States shifted to the singular when
referring to EPS. In China's view, the evidence estab lishes that different "elements" or "components"
of what the United States calls "electronic payment services" are routinely supplied as different
services by different service suppliers. Hence, th ese services are not "supplied and consumed as an
integrated service".
226
7.175 In the Panel's view, the arguments by the par ties raise three issues: (i) the scope of
subsector (d) as it relates to EPS; (ii) whether th e fact that different components of EPS can be
supplied by different suppliers means that these diff erent components must be classified separately;
and (iii) the relevance of the 2001 Scheduling Guidelines for interpreting subsector (d). We shall
examine these three issues in turn.
7.176 Turning to the scope of subsector (d) as it rela tes to EPS, we recall that, in China's view, the
"U.S. interpretation of subsector (d) as encompassi ng 'any service' that is somehow associated with
the use of payment cards" is "vastly overbroad an d inconsistent with well-established principles of
interpreting Schedules of Specific Commitments".227
7.177 In addressing this issue, the Panel must first examine the concept of "sector" under the GATS.
The Panel recalls that, in US – Gambling, the Appellate Body referred to the definition of "'sector' of a
service" contained in Article XXVIII(e)228 and explained that:

225 United States' second written submission, paras. 16 and 17.
226 China's second written submission, paras. 52 and 53; opening statement at the second substantive
meeting, para. 20; response to Panel question No. 75, paras. 1-3; and comments on United States' response to
the Panel question Nos. 73-77, paras. 3-5 and 12.
227 China's comments on United States' response to Panel question Nos. 73-77. In this comment, China
refers to United States' first written submission, para. 22. We note that the United States referred to by China
reads in fact: "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' including 'credit, charge, and debit cards' payment transactions". United
States' first written submission, para. 22 (emphasis added).
228 Article XXVIII provides that:
 "(e) 'sector' of a service means,
 (i) with reference to a specific commitm ent, one or more, or all, Subsectors of
 that service, as specified in a Member's Schedule,

… the structure of the GATS necessarily im plies two things. First, because the
GATS covers all services except those supplied in the exercise of governmental
authority, it follows that a Member may sch edule 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 that 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.229
7.178 We also recall that, when referring to Article XXVIII(e)(ii) of the GATS, the panel in China –
Publications and Audiovisual Products, found that:
A description of a service sector in a GA TS schedule does not need to enumerate
every activity that is included within the sc ope of that service, and is not meant to do
so. A service sector or subsector in a GATS schedule thus includes not only every
service activity specifically named within it, but also any service activity that falls
within the scope of the definition of that sector or subsector referred to in the
schedule.230
7.179 Hence, the definition of "sector of a service" contained in the GATS and the finding of the
Panel in China – Publications and Audiovisual Products confirm that a "sector" may include "any
service activity that falls within the scope of the definition of that sector", whether or not these
activities are explicitly enumerated in the definition of that sector or subsector.
7.180 The Panel observes that, when a card holder pays for a good or a service with a credit card
and the merchant accepts that form of payment, both the card holder and the merchant naturally
expect that the transaction for which that payment card is used will be completed. The completion of
a transaction in which payment cards are used includes, at a minimum, what we referred to as "front-
end processing" (which serves to authenticate and authorize transactions) and "back-end processing"
(which essentially entails clearing and settlement of the transaction). 231 In our view, there cannot be
any "payment service" and "money transmission service" if the payment is not effected and the money
not transferred from the customer's account to the merchant's account. In that sense and referring to
the finding cited above, these activities, even though th ey are not explicitly listed in subsector (d), are
necessarily included within the scope of the definiti on of that subsector because they must operate
together for the payment and money transmission servi ce to be supplied. The fact that they are not
specifically listed under the subsector at issue does not matter, as stated by the panel in China –
Publications and Audiovisual Products. Hence, we agree with the United States' characterization of
subsector (d) as encompassing "any service that is essential to 'payment and money transmission'". 232
In the view of the Panel, the classification under a single entry, of a service made up of a combination
of different services is not incompatible with the pr inciple of mutual exclusivity when these combined
services result in a distinct service, which is supplied and consumed as such.233

 (ii) otherwise, the whole of that serv ice sector, including all of its Subsectors;"
229 Appellate Body Report, US – Gambling , para. 180 (emphasis added). The Appellate Body further
explained that "[i]f this were not the case [i.e. if sectors and subsectors were not mutually exclusive], and a
Member scheduled the same service in two different sectors, then the scope of the Member's commitment would
not be clear where, for example, it made a full commitment in one of those sectors and a limited, or no,
commitment, in the other." Ibid. fn. 219.
230 Panel Report, China – Publications and Audiovisual Products, para. 7.1014.
231 See paras. 7.20 to 7.24 above.
232 United States' first written submission, para. 22.
233 We note that our interpretation is supported by a rule of interpretation in the CPC prov.:

7.181 Finally, contrary to China's view 234, we consider that the fact that the United States switched
from plural to singular when referring to "EPS" is immaterial for the purposes of services
classification.235 In our view, in a normal hierarchical classification scheme (like the CPC or the
Annex on Financial Services), a service combining different services can be described simply as a
"service", or as "services" in the plural. In the latte r case, "services" refers to the sum of the different
services classified by reference to the "service".
7.182 We examine now whether the fact that differe nt components of the EPS can be supplied by
different suppliers means that these different com ponents must be classified separately. We recall
that, according to the United States, "EPS for payment card transactions is a single, integrated service
– one that is supplied and consumed as such". 236 China submits that different "elements" or
"components" of the services at issue are routinely supplied as different services by different service
suppliers. In particular, the network and auth orization components of the services at issue are
frequently supplied by entities other than the entiti es that provide clearing and settlement services for
the same transactions. Hence, according to Chin a, the United States' assertion that the services at
issue are "supplied and consumed as an integrated service" is incorrect.237
7.183 The Panel observes that the manner in which th e supply of integrated services such as the
services at issue is organized depends on a numbe r of parameters, including the business models
adopted by specific companies, the regulatory fra mework in the country concerned, and how the
direct users of payment services (e.g. issuing and acquiring institutions) organize their supply in
specific jurisdictions. 238 Some companies may provide the various components of the services at
issue, thus supplying a final product as a "packag e" for the direct users and for the ultimate
beneficiaries of these services (i.e. the card holder, the issuer, the acquirer and the merchant). There
may, however, be other circumstances where the different components are supplied by different
suppliers.239 The evidence submitted by China indicates, for instance, that, in the case of France, the
authorization process, on the one hand, and cleari ng and settlement, on the other hand, are provided
by two different entities.240
7.184 Thus, the evidence before us suggests that, in practice, the services essential to a payment
card transaction to be completed may be supplied by one or more service supplier(s). As we have
said, while some suppliers provide all the various co mponents of that service in an integrated manner,
other suppliers may specialize in one segment of th at service. In our view, the fact that some
component services may be supplied by different suppliers is not a sufficient basis for classifying each
or some of these services under different subsectors. Indeed, as noted by the United States, "[i]t is the

"1. When services are, prima facie, classifiable under two or more categories, classification shall be
effected as follows, on the understand ing that only categories at the same level (sections, divisions, groups,
classes or subclasses) are comparable : (a) The category that provides the most specific description shall be
preferred to categories providing a more general description; (b) Composite services consisting of a combination
of different services which cannot be classified by refere nce to 1(a) shall be classified as if they consisted of the
service which gives them their essential character, in so far as this criterion is applicable ." Provisional Central
Product Classification, Statistical Papers, Series M No.77, United Nations (1991), p. 20 (emphasis added).
234 China's comments on United States' response to Panel question Nos. 73-77, paras. 4 and 5.
235 China's comments on United States' response to the Panel question Nos. 73-77, para. 2.
236 United States' second written submission, para. 11 (citing further references to United States' written
submissions). See also United States' second written submission, paras. 13-18.
237 China's opening statement at the second substantive meeting, paras. 20 and 21; response to Panel
question No. 75, paras. 1-3; and comments on the United States' response to Panel question Nos. 73 and 77,
para. 12.
238 See above section VII.C.1.
239 See our discussion above in para. 7.60.
240 China's response to Panel question No. 75, paras. 1-3, including the evidence indicated therein.

combination that enables the payment card transaction to occur".241 Hence, the mere fact that separate
suppliers provide one particular component of a service does not in itself imply that that component
should be classified as a distinct service, or that the component is not part of an integrated service. In
our view, what is relevant in rela tion to an integrated service is not whether it is supplied by a single
supplier or by several suppliers, but rather whethe r the component services, when combined together,
result in a new and distinct service, the integrated service.
7.185 We note that China itself appear s to accept that some services, although supplied by different
suppliers, are nonetheless classifiable under the same subsector. Indeed, issuing and acquiring
services could be considered as two "distinct and sep arately identifiable servi ces", to borrow China's
terminology. As evidenced by the arguments of the parties, issuing and acquiring are different
activities.242 Moreover, for any given payment card tran saction, the issuing and acquiring institutions
are not necessarily the same entity; in the four-party model, they are often different entities.
Nevertheless, China is not proposing to classify, respectively, issuing services and acquiring services
under two separate subsectors, but argues instead that these two services fall under subsector (d).243
7.186 We turn now to the third issue raised by the parties, namely whether the services at issue are
inputs into a service classified under subsector (d). We recall that, according to China, the 2001
Scheduling Guidelines expressly recognize that a sp ecific commitment does not extend to input
services that are separately classifiable within the relevant taxonomy of services. In China's view, the
services at issue are at most "inputs" to card issu ance and acceptance services, which, according to
China, are classified under subsector (d) of its Schedule.244
7.187 According to China, the 2001 Scheduling Guidelines are a supplementary means of
interpretation falling under Article 32 of the Vienna Convention. 245 We understand, therefore, that
China is not proposing that we rely on the 2001 Scheduling Guidelines as context in our interpretation
of subsector (d) pursuant to Article 31 of the Vi enna Convention. Regardless of whether the 2001
Scheduling Guidelines may be considered as contex t or as supplementary means of interpretation,

241 Ibid.
242 United States' response to China's request for a preliminary ruling, para. 43; and first written
submission, para. 20.
243 China submits that "China's actual commitment in subsector (d) … was to allow foreign financial
institutions to enter its market on a commercial presence basis to issue payment cards to cardholders and acquire
payment card transactions from merchants". China's firs t written submission, para. 8 (emphasis in the original).
We recall that issuing and acquiring services are not at stake in this dispute and, hence, we do not need to
determine where these services should be classified . We accept China's position merely for the sake of
argument on this issue.
244 China's first written submission, paras. 106-108; and second written submission, paras. 51 and 52.
Paragraph 25 of the 2001 Sc heduling Guidelines reads as follows: "[i]t is unders tood 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." See also paragraph 17 of the 1993 Scheduling Guidelines.
245 China' response to Panel question No. 58, para. 105 ("The Appellate Body in U.S. – Gambling
found that the 1993 Guidelines constitute 'supplementary means of interpretation' under Article 32 of the Vienna
Convention. China sees no reason to depart from this finding with respect to the 2001 Guidelines.") In
response to the same question, the United States submitted that "[w]ith respect to the 2001 Guidelines, there are
questions that arise as to timing, such as whether th ey were actually available when China was negotiating its
Services commitments". United States' response to Panel question No. 58, para. 145. We note that the third
parties have different views as to whether the 2001 Scheduling Guidelines should be considered under
Article 31 or 32 of the Vienna Convention. Australia considers that the 2001 are relevant context pursuant to
Article 31 of the Vienna Convention, while the Eu ropean Union and Guatemala view this document as
belonging to supplementary means of interpretation pursua nt to Article 32. Australia's third-party response to
Panel question No. 6 (no paragraph numbering provided), the European Union's third-party response to Panel
question No. 6, para. 18; and Guatemala's third-party response to Panel question No. 6, para. 24.

however, we are not persuaded by China's argument.246 China has provided no evidence to support its
assertion that EPS are "input" services into issui ng and acquiring services. Nor has it explained
through argument why this is so: it has merely pointed to a rule referring generally to "input"
services. It is unclear to us, for example, whet her it could be argued that issuing and acquiring
services are "inputs" into EPS, as opposed to the other way around. 247 In the absence of supporting
evidence or explanation related to EPS as inputs, we are unable to accept China's contention in this
respect.
7.188 To summarize our interpretation of subsector (d) based on the structure of the GATS as
context, we are of the view that the classification under a single subsector of a service made up of a
combination of different services is not incompatible with the principle of mutual exclusivity if these
services, when combined together, result in a distin ct service that is supplied and consumed as such.
Moreover, the mere fact that separate suppliers provide one particular component of a service does
not in itself imply that that component should be classified as a distinct service, or that the component
is not part of an integrated service. In our view, wh at is relevant in relation to the classification of an
integrated service is not whether it is supplied by a single supplier or by several suppliers, but rather
whether the component services, when combined toge ther, result in a new and distinct service, the
integrated service. This confirms our view that subsector (d) encompasses the services essential to the
processing and completion of transactions using payment cards.
(v) Schedules of other WTO Members
7.189 China submits that other WTO Members consider the services encompassed by
subsector (viii) to be limited to services that ar e supplied by banks and other types of financial
institutions. According to China, there is no indication in any WTO Member's commitments for
subsector (viii) that these services are provided by suppliers other than banks or other financial
institutions.248
7.190 The United State submits that a 1998 Background Note by the WTO Secretariat indicates
with respect to credit card services that these are "either part of 'all payment and money transmission
services'" or "they constitute an independent item." Hence, WTO Members either treated "credit card
services" as part of "all payment and money transmission services" or as a separate, independent
entry; and no Member included "credit card services" in 7.B.j (item (xiv) of the annex) – "settlement
and clearing services for financial assets, including securities, derivatives, and other negotiable
instruments".
249
7.191 The Panel recalls that, in US – Gambling and in China – Publications and Audiovisual
Products, GATS schedules of other WTO Members were u sed by the panels and the Appellate Body
as relevant context for the interpretation of a Memb er's Schedule. As noted by the Appellate Body,
"this is the logical consequence of Article XX:3 of the GATS, which provides that WTO Members'

246 China asserts that "[i]n many cases, services 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".
China's first written submission, para. 107.
247 We would observe that, when licensing its brand to a bank, an EPS supplier grants permission to
that bank to issue a credit card under a trademark. It is the availability of the card that will allow customers to
make payments. Hence, the final service, namely the payment service, is supplied by the EPS supplier, not by
the bank. From that point of view, it is at least argu able that issuing and acquiring services constitute input
services into EPS. As noted above, this discussion is without prejudice to where is suing and acquiring services
should be classified.
248 China's first written submission, para. 99; and response to Panel question No. 60, para. 109.
249 United States' response to Panel question No. 59, para. 150; and second written submission,
paras. 40 and 41. The United States refers to the WT O Secretariat Background No te on Financial Services,
S/C/W/72 (2 December1998), para. 13.

Schedules are 'an integral part' of the GATS." 250 At the same time, the Appellate Body acknowledged
that use of other WTO Members' schedules as c ontext must be tempered by the recognition
that"[e]ach Schedule has its own intrinsic logic"; hence, Schedules of other WTO Members may be
"of limited utility in elucidating the meaning of the entry to be interpreted".251 Thus far, they have not
figured as a central element in the contextual analysis of a disputed entry.
7.192 We observe that the schedules of other WTO Members cited by China use different names to
describe entities supplying services under subsector (d ). These include "banks", "commercial banks",
"financial institutions", "specialized fina nce companies" and "credit institutions". 252 China did not
submit evidence or make arguments as to the pr ecise nature of these differently named entities in
China's and other WTO Members' schedules. For that reason, it is not clear to us whether the
schedules of other WTO Members cited by Ch ina do indicate that "all payment and money
transmission services" can only be supplied by "banks and other types of financial institutions" within
the meaning attributed by China to those terms. Indeed, as noted above, each schedule has its own
intrinsic logic and we are not in a position to dete rmine, without more, whether, and to what extent,
the entities referred to in the schedules cited by Ch ina do coincide with "banks and other types of
financial institutions". Moreover, as we explain in detail further below (see Section VII.F.1), we
consider that China's commitments in subsectors (a ) to (f) apply to all foreign financial institutions
and that the term "foreign financial institutions" as used in China's Schedule includes EPS suppliers.
7.193 Hence, the context provided by the Schedules of other WTO Members does not point to an
interpretation that is different from that suggested by other elements of context examined above.
(c) Object and purpose
7.194 China argues that the United States' interpre tation of China's Schedule or items in the
Annex on Financial Services is "plainly contrary to the object and purpose of the GATS", because it is
"arbitrary, illogical, and completely unpredictable". In China's view, the Un ited States' approach is
contrary to the "security and predictability of WTO Members' specific commitments, which is an
important object and purpose of the GATS". For Ch ina, the United States' approach leads to an
interpretation of China's Schedule and the Annex lis t 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 predicta bility". According to China, this approach is
"manifestly contrary" to the object and purpose of the GATS and must be rejected.
253
7.195 The United States submits that the "progressive lib eralization" called for in the Preamble of
the GATS could never be achieved where, as under Ch ina's theory, a recognized, integrated service
that is supplied and consumed as such, could not be classified in one subsector. Moreover, regarding
China's argument that the object and purpose of the GATS calls for greater "transparency," China's
own theory would render WTO Members' servic es schedules "indecipherable and impossible to
reconcile with the commercial reality of the services they are supposed to reflect". The United States
questions how transparency could be achieved where a Member could purport to liberalize a
particular subsector through specific commitments, but then dismantle an integrated service that

250 Appellate Body Report, US – Gambling, para 182.
251 Appellate Body Report, China – Publications and Audiovisual Products, para. 383.
252 China referred to the schedules of Cambodia (GATS/SC/140), FYR M acedonia (GATS/SC/138),
India (GATS/SC/42), Jordan (GAT S/SC/128), Korea (GATS/SC/48), M acao (GATS/SC/50), Saudi Arabia
(GATS/SC/141), Slovak Republic (GATS/SC/77), Venezuela (GATS/SC/92) and Vietnam (GATS/SC/142).
China's first written submission, para. 99.
253 China's second written submission, paras. 27-29.

would otherwise fall within that subsector and argue that various pieces constitute separate "services"
for which that Member has undertaken no commitments.254
7.196 The Panel begins its consideration of the object and purpose of the GATS and the WTO
Agreement by noting one of the key objectives liste d in the Preamble to the GATS, namely "the
establishment of a multilateral framework of principles and rules for trade in services with a view to
the expansion of such trade under conditions of transparency and progressive liberalization "
(emphasis added). We note that, in US – Gambling , the Appellate Body found that the purpose of
transparency contained in the Pr eamble to the GATS supported the need for precision and clarity in
scheduling GATS commitments, and underlined the importance of having schedules that are readily
understandable by all other WTO Members, as well as by services suppliers and consumers.255 In that
dispute, the Appellate Body also recalled that:
… the security and predictability of "the reciprocal and mutually advantageous
arrangements directed to the substantial reduction of tariffs and other barriers to
trade" is an object and purpose of the WTO Agreement …. This confirms the
importance of the security and predictab ility of Members' specific commitments,
which is equally an object and purpose of the GATS.256
7.197 We also recall that, in examining the principl e of progressive liberalization as an expression
of the object and purpose of the GATS, the Appellate Body did not consider that this principle "…
lends support to an interpretation that would constrain the scope and coverage of specific
commitments that have already been undertaken by WTO Members and by which they are bound." 257
We are also aware that, in both US – Gambling and China – Publications and Audiovisual Products,
the Appellate Body observed that the objectives of the GATS did not provide specific guidance as to
the correct interpretation of the entries at stake.258
7.198 We find that our interpretation of the scope of China's commitment under subsector (d) is
consistent with the objective of transparency b ecause it classifies under a single subsector services
which, when combined together, result in a new a nd distinct service, the integrated service. This
integrated service is supplied and consumed as such. Furthermore, by reconciling the classification of
EPS with the commercial reality of those services, our interpretation reinforces the predictability,
security and clarity of GATS specific commitments. For those same reasons, our interpretation is also
consistent with the objective of progressive liberalization contained in the Preamble to the GATS.
7.199 Hence, our conclusion that subsector (d) of China's Schedule encompasses EPS is consistent
with the object and purpose of the GATS and the WTO Agreement.
(d) Conclusion
7.200 The Panel has now completed its analysis of the scope of China's commitment in
subsector (d) of its GATS Schedule on "all paym ent and money transmission services, including
credit, charge and debit cards, travellers' che ques and bankers' drafts (including import and export
settlement)" according to the rules of interpretation codified in Article 31 of the Vienna Convention.

254 United States' opening statement at the second substantive meeting, para. 17.
255 Appellate Body Report, US – Gambling, para. 188.
256 Ibid.
257 Appellate Body Report, China – Publications and Audiovisual Products, para. 394.
258 "None of the objectives listed in the GATS pr eamble provides specific guidance as to the correct
interpretation to be given to China's GATS Schedule entry 'Sound recording distribution services'". Appellate
Body Report, China – Publications and Audiovisual Products, para. 393. See also Appellate Body Report, US –
Gambling, para. 189.

7.201 Our analysis of the ordinary meaning of the terms "payment", "money" and "transmission",
when used in combination, refers to the transfer of money from one person or place to another. The
transferred money may be due for goods or servi ces, or for settling a debt. When examining the
expressions "payment services" and "money transmission services", we determined that "payment and
money transmission services" can be characterized as those services that "manage", "facilitate" or
"enable" the act of paying, or transmitting money. Finally, we observed that the use of the term "all"
manifests an intention to cover comprehensivel y the entire spectrum of the "payment and money
transmission services" encompassed under subsector (d ). With regard to the phrase "including credit,
charge and debit cards, travellers cheques and bankers drafts" in subsector (d), we concluded that this
phrase constitutes an illustrative list that provides confirmation that the phrase "[a]ll payment and
money transmission services" refers to those services that are essential to the processing and
completion of transactions involving the use of paym ent cards. Moreover, the parenthetical addition
"(including import and export settlement)" confirms that subsector (d) in cludes settlement, and by
implication clearing, when bankers' drafts are u sed as payment instruments. This, in our view,
provides an indication that settlement, and therefor e clearing, of transactions involving the use of
other payment instruments, such as those listed in subsector (d), is properly classified under
subsector (d).
7.202 When examining the remainder of China's Sc hedule, we found that neither the heading
"Banking services as listed below", nor the inscripti ons under the mode 1 commitment, pointed to a
different interpretation of the scope of subsector (d ). Moreover, our analysis of the GATS Annex on
Financial Services led us to the conclusion that s ubsector (xiv) of that Annex does not encompass the
clearing and settlement of payment card instruments listed in subsector (d) of China's Schedule.
Furthermore, our contextual interpretation of subsect or (d) based on the structure of the GATS led us
to the view that the classification, under a single s ubsector, of a service made up of a combination of
different services is not incompatible with the princi ple of mutual exclusivity if these services, when
combined together, result in a distinct service, wh ich is necessarily supplied and consumed as such.
Also, the mere fact that separate suppliers may pr ovide particular components of a service does not in
itself imply that that component should be classified as a distinct service, or that the component is not
part of an integrated service. In addition, the ar guments submitted with respect to schedules of other
WTO Members do not point to an interpretation different from that suggested by other elements of the
context. Finally, we found that our interpreta tion of China's commitment under subsector (d) is
consistent with the object and purpose of the GATS and the WTO Agreement.
7.203 We recall that the panel request defines the services at issue as follows:
[E]lectronic payment services 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.
7.204 Having regard to our examination of the scope of subsector (d) in China's Schedule, the Panel
finds that this subsector includes the services at issue.259
3. Recourse to supplementary means of interpretation
7.205 Pursuant to Article 32 of the Vienna Conventio n, a treaty interpreter may have recourse to
supplementary means of interpretation "in order to confirm the meaning resulting from the application
of Article 31, or to determine the meaning when the interpretation according to Article 31 leaves the
meaning ambiguous or obscure or leads to a result which is manifestly absurd or unreasonable."

259 In our view, the services at issue are covered by subsector (d), whether they are provided in
connection with payment cards that are used, for instance, at POS terminals to purchase goods or services or in
connection with payment cards that are used at ATMs to withdraw cash.

7.206 The parties to the dispute referred to the CPC as supplementary means of interpretation. 260
China also referred to the 2001 Scheduling Gu idelines as a source of interpretation under
Article 32.261 The Panel considers that its interpretation of China's Schedule pursuant to Article 31 of
the Vienna Convention does not leave the meaning ambiguous or obscure, nor does it lead to a result
which is manifestly absurd or unreasonable.
7.207 Accordingly, we do not find it necessary to reso rt to supplementary means of interpretation
under Article 32 of the Vienna Convention.
E. THE MEASURES AT ISSUE
7.208 The United States has identified a series of six requirements, or measures, which it claims
operate alone or in combination to impose ma rket access restrictions and national treatment
limitations on service suppliers of other WTO Me mbers seeking to supply EPS in China. The
United States argues that these measures are maintained through a series of legal instruments. As will
be discussed in detail in Sections VII.F and VII.G, the United States asserts that these six
requirements are inconsistent with China's ob ligations under Articles XVI:1 and XVI:2(a), and
Article XVII of the GATS.
7.209 The United States has alleged the existence of the following requirements262:
(a) 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 Renminbi (RMB)
(hereafter referred to by the Panel as "sole supplier requirements");
(b) Requirements on issuers that payment cards issued in China bear the CUP logo
("issuer requirements");
(c) Requirements that all ATMs, merchant card processing equipment and POS terminals
in China accept CUP cards ("terminal equipment requirements");
(d) Requirements on acquiring institutions to post the CUP logo and be capable of
accepting all payment cards bearing the CUP logo ("acquirer requirements");
(e) Prohibitions on the use of non-CUP cards for cross-region or inter-bank transactions
("cross-region/inter-bank prohibitions"); and
(f) Requirements pertaining to card-based elect ronic transactions in China, Macao, and
Hong Kong ("Hong Kong/Macao requirements")263.
7.210 The United States considers that these require ments are maintained through a series of
Chinese legal instruments that are themselves identified in the United States' request for establishment
of a panel.264

260 United States' response to Panel question No. 76, paras. 12 and 39.
261 China's first written submission, paras. 102-108.
262 The short descriptions of the relevant requirements provided below are identical or closely similar to
those that appear in written submissions of the United St ates. E.g., United States' response to China's request
263 Consistent with the views taken by of the partie s, this Report refers to the separate customs
territories of Hong Kong, China and Macao, China as Hong Kong and Macao, respectively.
264 WT/DS413/2, pp. 3-4.

7.211 China contends that the United States has fail ed to demonstrate that the alleged measures
operate in a manner that is incons istent with either Article XVI 265 or XVII 266 of the GATS. China
submits that the requirements identified by the United States as measures at issue in this dispute do
not violate these WTO provisions, as the United States a lleges. Rather, it considers that the identified
measures establish a national inter-bank netw ork for clearing and settling RMB payment card
transactions and otherwise create uniform technical and commercial standards that allow this inter-
bank payment card network to function.
267 In the event that the Panel proceeded to consider the
United States' claims, China argues that those cl aims must be based exclusively on the legal
instruments specifically identified in the panel request.268
7.212 The Panel will consider below the United St ates' claims that China imposes certain
requirements that are inconsistent with its obliga tions under Articles XVI and XVII of the GATS. In
undertaking this task, we must first consider whether China in fact imposes the requirements
mentioned above. This necessitates that we evalua te the precise content of the series of legal
instruments that have been cited by the United States. Before turning to this assessment, however, we
first address the status of three legal instruments that China alleges have been repealed or replaced as
well as China's concern that the United States' has broadened the scope of its challenge to include
measures that are not specifically identified in the panel request.
1. The specific measures at issue that form part of the United States' challenge
(a) Chinese legal instruments as the basis for the existence of the measures at issue
7.213 We explained above that the United States has identified a series of six requirements that it
claims are inconsistent with Articles XVI and XVII of the GATS. For each of these six requirements,
the United States has identified an "illustrative list of instruments in which the particular measure is
reflected."269
7.214 In its rebuttal submission, China argues that th e United States has sought to improperly base
its claims on measures that are not specifi cally identified in the panel request.270 Rather than focusing
on those legal instruments, China is of the view that the United States has attempted to improperly
shift the basis of its claims to target measures at issue that exist "independently" of any particular
legal instrument. 271 Due to the manner in which the United States formulated its panel request,
however, China argues that the United States may not sh ift its challenge so as to allege that the six
requirements exist "independently" or as "unwritten 'rules or norms of general and prospective
application'".272 China asserts that the United States has pr esented "no evidence wh atsoever" to meet
the "high threshold" that a complaining party must face when challenging an alleged unwritten rule or

265 China's second written submission, paras. 90-102.
266 China's first written submission, paras. 151-160; second written submission, paras. 115-121.
267 China's first written submission, para. 36.
268 China's second written submission, paras. 83-89.
269 United States' response to Panel question No. 5.
270 China's second written submission, para. 89. China took issue with the manner in which the
United States identified the measures at issue in this dispute in its second written submission, specifically in
respect of the United States' claim under Article XVI:2(a) of the GATS. See China's second written submission,
paras. 83-89. The United States has framed its claims under Articles XVI and XVII of the GATS in respect of
the same measures and identical legal instruments. Acco rdingly, the Panel considers it appropriate to address
this issue generally in relation to all of the United States' claims.
271 China's second written submission, para. 84; comm ents on the United States' response to Panel
question Nos. 70-72, 86-96, 115-123, para. 62.
272 China's second written submission, para. 88; comm ents on the United States' response to Panel
question Nos. 70-72, 86-96, 115-123, paras. 63-70.

norm.273 Accordingly, China requests that the Panel limit its evaluation of the United States' claims to
measures that are "specifically" identified in the pa nel request in accordance with the requirements of
Article 6.2 of the DSU.274
7.215 The Panel notes that Article 6.2 of the DSU requires that a complaining party identify the
"specific measures at issue" among meeting other re quirements. Moreover, Article XXVIII(a) of the
GATS defines a "measure" for purposes of the GATS as "any measure by a Member, whether in the
form of a law, regulation, rule, procedure, decision, administrative action, or any other form".
7.216 In three narrative paragraphs in its panel request 275 , the United States describes those
"requirements" or "measures" that it considers are inconsistent with China's obligations under
Articles XVI and XVII of the GATS. In addition, the panel request specifies a series of instruments
described as those "through whic h China maintain s these measures." 276 The United States has
referred to these six requirements throughout the pr oceedings as well as the identified instruments. 277
For each of the alleged six requirements, the United States explained that it provided an "illustrative
list of instruments in which the particular measure is reflected". 278 The United States requested that
the Panel make findings "with respect to each of the measures that the United States has
challenged."279
7.217 In the light of the formulation of the United States' panel request and explanations provided in
submissions and in response to questions from the Panel, we understand the United States seeks
findings on the six alleged requirements, namely th ose referred to in paragraph 7.209 above. We
further understand that the United States has submitted the relevant legal instruments as evidence in
support of the existence of the six alleged requirements.
7.218 We note China's concern that the United States sought to establish the existence of the alleged
six requirements "independently" from the legal inst ruments appearing in the panel request. We
consider that the United States must establish th e existence of the alleged requirements on some
concrete evidentiary basis and not simply by asserting their existence. In its first written submission,
its opening statement at the first substantive meetin g of the Panel, and in response to questions from
the Panel following the first substantive meeting, the United States specified that the instruments
identified in the panel request establish the basis for the United States' claims with respect to each of
the six requirements. 280 Thus, it is our view that the United States based its case on those legal
instruments. We will therefore consider the United States' claims in light of these instruments.
7.219 Finally, we consider this appro ach is consistent with the broad definition attributed to a
measure under Article XXVIII(a) of the GATS. In our view, the fact that the United States considers
that a series of "instruments" "illustrate" or "reflect" the existence of six alleged requirements does not
prevent making findings on the six identified require ments as the "measures" at issue in the sense of

273 China's second written submission, para. 88, citing Appellate Body Report, US – Zeroing (EC) ,
para. 198.
274 China's second written submission, paras. 86 and 87.
275 WT/DS413/2, pp. 2-3.
276 WT/DS413/2, pp. 3-4.
277 See, e.g. United States' first written submission, para. 4; second written submission, para. 6; opening
statement at the second meeting of the Panel, para. 38; response to Panel question Nos. 4 and 71.
278 United States' response to Panel question No. 5.
279 United States' response to Panel question No. 5 (emphasis original).
280 United States' first written submission, paras. 55-72, 89-117 and fns. 40-45, 62-67, 81-84; opening
statement following the first substantive meeting, paras. 43-44, 48-51 and fns. 37-38, 42-45; response to Panel
question No. 5, paras. 24-36.

Article 6.2 of the DSU and Article XXVIII(a) of the GATS. We also observe that this approach is
consistent with the United States' request as to how the Panel should consider its case.281
7.220 Accordingly, we will examine whether the lega l instruments identified in the United States'
panel request establish the existence of the six alle ged requirements or measures at issue. It is
incumbent on the United States as the complaining party to demonstrate their existence.
(b) The repeal or replacement of certain Chinese legal instruments
7.221 China in its first written submission to the Panel submitted evidence that Document
Nos. 94282 and 272283 were both repealed on 23 March 2010 and ceased to have legal effect prior to
the date of the Panel's establishment on 11 February 2011. 284 In response to a question from the
Panel, China pointed out that a third instrument, Document No. 66 285, was replaced by Document
No. 53 on 1 November 2010, also in advance of th e Panel's establishment. China requests that the
Panel should decline to make findings w ith respect to these three instruments. 286 The United States
referred to all of these legal instruments in its panel request 287 and subsequently in its submissions to
the Panel.
7.222 The issue here is whether the Panel should cons ider certain instruments – Document Nos. 66,
94 and 272 ‒ in its assessment of the United States' claims. We consider it appropriate to address the
status of these instruments first, before consider ing the United States' clai ms, since these instruments
have been cited as evidence of the existence of five of the six alleged requirements at issue.
7.223 The United States indicated in response to a qu estion from the Panel that it "does not contest
that Document No. 53 indicates it will come into force simultaneously with the abolition of other
instruments, including Document No. 66, and in this sense, [Document No. 53] may be considered to
have replaced Document No. [66]". 288 The United States does not specifically comment on the
instruments that announced the re peal of Document Nos. 94 and 272. Instead, the United States
argues that "separate and apart" from Document Nos. 66, 94 and 272, the other identified instruments
at issue adequately "establish a basis" for its claims. 289 Thus, the United States has not rebutted
evidence submitted by China concerning the repeal of Document Nos. 94 and 272, nor does the
United States contest that Document No . 66 was replaced by Document No. 53. 290 Having regard to
the evidence submitted by China and the arguments of both parties, we consider that Document Nos.
94 and 272 were both repealed, and Document No. 66 was replaced by Document No. 53.

281 For further discussion on this, see paras. 7.230-7.232 below.
282 Exhibits US-42; CHN-57.
283 Exhibits US-43; CHN-58.
284 China's first written submission, fn. 27, re ferring to PBOC Announcement [2010] No. 2,
Exhibit CHN-15.
285 Exhibits US-45; CHN-61.
286 China's first written submission, fn. 27; response to Panel question No. 21. China refers to
Article VIII of Document No. 53, which was submitted as Exhibit CHI-54, as evidence of the replacement of
Document No. 66. China's translation of Article VIII of this document provides as follows: "This Circular shall
come into force as of November, 1 2010. The Circul ar of the State Administration of Foreign Exchange on
Regulating the Administration of Foreign Currency bankcards [Hui Fa (2004) No. 66] … shall be abolished at
this time". The translation of Document No. 53 provided by the United States indicates similarly.
287 WT/DS413/2, p 3.
288 United States' response to Panel question Nos. 4-6; response to Panel question No. 70.
289 United States' response to Panel question No. 6.
290 We noted in fn. 286 that both the United States' and China's translations of Document No. 53
provide similarly that Document No. 53 replaces Document No. 66.

7.224 In US – Upland Cotton , the Appellate Body noted that "the fact that a measure has expired
may affect what recommendation a panel may make" but it is "not dispositive of the preliminary
question of whether a panel can address claims in respect of that measure". 291 In previous cases,
panels have looked to Article 3.7 of the DSU to determine whether it was appropriate to address
claims in respect of such measures. Article 3.7 of the DSU provides that "[t]he aim of the dispute
settlement mechanism is to secure a positive solution to a dispute". When deciding whether or not the
aim of securing a positive solution warrants findings on m easures that expired before a panel's date of
establishment, panels have taken into account th e particular circumstances of a given dispute. 292
These circumstances included such considerations as the timing of the withdrawal of a measure 293, as
well as the likelihood that the respondent would later reintroduce the measure.294
7.225 In its panel request, the United States identif ied a series of requirements, which it claims
impose market access restrictions and requireme nts on service suppliers of other WTO Members
seeking to supply EPS in China.295 It indicates in its panel request that each of these "requirements" is
"maintained through a series of instruments". 296 The panel request thereafter identifies a list of
instruments. The United States subsequently ex plained that, for each of these "requirements", it
identified an "illustrative list of instruments in which the particular measure is reflected".297
7.226 In deciding whether to take account of Docu ment Nos. 66, 94 and 272 for purposes of
determining whether they support the existence of relevant requirements, we consider it appropriate to
determine whether addressing these legal instruments would conform with the aim of securing a
positive solution to the present dispute.
7.227 We note that Document Nos. 94 and 272 were re pealed more than ten months before the
Panel's establishment on 11 February 2011, and mo re than six months before the date on which
consultations were requested on 15 September 2010. Document No. 66 was replaced on 1 November
2010, three days after consultations were held, but fi ve months before the Panel's establishment. We
do not know the factors that influen ced China's decision to repeal Docu ment Nos. 94 or 272, and to
replace Document No. 66, and the timing of these ac tions. The United States has not expressed the
view, or provided any indication, that any of these instruments stand to be reintroduced. Rather, it has
made clear that its case stands even without th ese instruments, as it tak es the position that the
requirements are still maintained through other instruments. 298 The United States also argued that
foreign suppliers did not experience any "changes in the market regarding restrictions, prohibitions,

291 Appellate Body Report, US – Upland Cotton , para. 272. We note as well that in US – Certain EC
Products, the Appellate Body did not disapprove of the decision by a panel to make a finding concerning a
measure that no longer existed at the time of establishment of the panel. Rather, the Appellate Body concluded
that the panel erred in recommending that the Dispute Settlement Body request the responding party to bring
into conformity with its WTO obligations a measure wh ich the Panel found to no longer exist. See also
Appellate Body Report, US – Countervailing Measures on Certain EC Products, para. 81.
292 Appellate Body Report, US – Countervailing Measures on Certain EC Products , paras. 60-82;
Panel Reports, EC – Approval and Marketing of Biotech Products , paras. 7.1648-7.1654; Argentina – Textiles
293 Panel Reports, EC – Biotech , para. 7.1653; and Argentina – Textiles and Apparel , para. 6.1 and
6.13.
294 Panel Reports, Argentina – Textiles and Apparel, para. 6.14; and US – Gasoline, para. 6.19. The US
– Gasoline panel contrasted its decision with that taken by the GATT panel EEC – Apples (Chile I) in1980,
which ruled on a measure terminated be fore agreement on the Panel's terms of reference. As noted by the US –
Gasoline panel, the terms of reference in that case specifica lly included the terminated measure and, the dispute
concerning a seasonal measure, there remained the prospect of its reintroduction. See GATT Panel Report, EEC
– Apples (Chile I).
295 WT/DS413/2, pp. 2-3.
296 WT/DS413/2, pp. 3-4.
297 United States' response to Panel question No. 5.
298 United States' response to Panel question No. 6.

and other impediments on the supply of EPS for pa yment card transactions" following the entry into
force of Document No. 53.299
7.228 On the evidence before us, we have no reason to assume that the three instruments will be re-
introduced. Our determination therefore focuses on th ree elements that are clear. First, Document
Nos. 66, 94 and 272 were no longer in force at the tim e of the Panel's establishment. In other words,
they no longer had any legal effect. Secondly, the United States has not put forward any claim or
evidence that these instruments might be re-introdu ced by China. Thirdly, we understand the United
States to allege that China currently maintains in place each of the relevant requirements even without
these instruments being in effect. For instance, th e United States alleges that the requirements exist
independently of the content of Document Nos. 66, 94 and 272, such that "there would be no impact
on [the United States'] claims relating to the six di stinct measures, comprised of instruments operating
together"300, even if the Panel were to decline to take into account Document Nos. 66, 94 and 272.
Accordingly, in order to provide a positive solution to this dispute, we consider that our task is to
assess the existence of the particular measures in Chin a on the basis of those instruments that were in
force at the time of panel establishment. We do no t consider that in the particular circumstances of
this case there is any need to go further and a ddress also Document Nos. 66, 94 and 272. As
indicated, the United States did not argue in this ca se that a decision by the Panel not to take these
instruments into account would effectively deprive th e United States of the possibility to have one or
more of the challenged requirements considered by the Panel.
7.229 Therefore, for the foregoing reasons, the Pane l declines to take Document Nos. 66, 94 and
272 into account in our analysis of the measures at issue. Accordingly, we do not consider them
further.
2. Evaluation of the existence of the measures at issue
7.230 The United States asks that the Panel assess th e six requirements both individually and in
conjunction with each other to determine whether th ey give rise to a breach of Articles XVI and XVII
of the GATS. The United States argues that such an approach would be consis tent with past practice
of panels and th e Appellate Body 301, and submits that doing so would help to "ensure the effective
resolution of this dispute".302
7.231 China recognizes in general that panels may need to consider the overall conformity of a set
of measures or legal instruments and how measures interact with each other based on the content of
those instruments. 303 In this dispute, however, China s ubmits that the United States has not
established that the identified instruments are rela ted to each other as necessary to succeed with its
challenge. China submits that the identified instruments "in many cases have no demonstrable
relationship to each other", because the instruments were issued "at different times, by different
agencies, on different topics". 304 In addition, China asserts that the United States' claims in relation
to the first alleged requirement, i.e. "requirement s that mandate the use of CUP and/or establish CUP
as the sole supplier of EPS for all domestic transactio ns denominated and paid in RMB", and the fifth
alleged requirement, "broad prohibition on th e use of non-CUP cards", amount to "drawing a

299 See United States' response to Panel question No. 70.
300 United States' response to Panel question No. 6, para. 23.
301 United States' first written submission, para. 34, citing Appellate Body Report, EC – Asbestos ,
para. 64; Panel Report, US – Export Restraints. paras. 8.82-8.131.
302 United States' first written submission, paras. 30 and 32.
303 China's second written submission, fn. 48, refe rring to United States' first written submission,
paras. 34 and 35; Panel Reports, US – Section 301 Trade Act; Australia – Apples.
304 China's second written submission, fn 48.

distinction without a difference". 305 Accordingly, China addresses the United States' allegations
concerning these requirements together in its submissions.
7.232 The Panel notes that, in previous instances, pa nels and the Appellate Body have analysed
measures or legal instruments not only on an in dividual basis, but have considered how certain
measures or instruments operate collectively, in c oncert, or in combination, when evaluating the
claims of a complainant. 306 We see no reason at the outset to d ecline to consider the United States'
request to consider the requirements both individually and as they operate together. As in previous
cases, the need to do so depends on the particul ar circumstances of the matter before the Panel,
including the content of the particular measures be fore the Panel, the interrelationship of those
measures, and the result of the Panel's assessment of the measures considered individually. In our
evaluation here, we will assess both the content and interrelationship of those instruments before us.
7.233 We also note that there is overlap in terms of the particular legal instruments that are
identified in respect of the six alleged requirements. Specifically, as the United States clarified to the
Panel307, each of the instruments identified in respect of the alleged issuer requirements, terminal
equipment requirements, acquirer requirements, cross-region/inter-bank prohibitions and Hong
Kong/Macao requirements, i.e. the second through sixth requirements listed in paragraph 7.209 above,
are also identified in connection with the alleged so le supplier requirement, i.e. the first requirement
listed in paragraph 7.209 above. In cases where the same instrument is identified in respect of more
than one requirement, the United States frequently refers to the same provisions of that instrument. In
view of the fact that the alleged sole supplier requirements incorporate every legal instrument cited in
support of the other five requirements, we consider it appropriate to be gin with a review of the issuer,
acquirer and terminal equipment requirements before turning to the sole supplier requirement.
7.234 In addition, as pointed out by China, we not e that the United States' claim regarding the
existence of a sole supplier requirement and its cl aim regarding the existenc e of cross-region/inter-
bank prohibitions address fundamentally the same concern, namely, whether the measures at issue
require the processing of all domestic, RMB inter-bank payment card transactions over the CUP
network, and not over the network of any other EPS supplier, including foreign ones. The United
States acknowledges that the "ultimate effect" of these two "requirements" is the same on foreign EPS
suppliers, but explains that it seeks separate findings in this regard "to ensure that [the Panel's]
findings reach the requirement irrespective of whethe r they are framed in terms of a mandate to use
CUP or CUP cards, or a prohibition on the use of non-CUP cards or a prohibition on the use of an
EPS supplier other than CUP". 308 Due to the similar nature of these two alleged measures, and
because all of the legal instruments identified in connection with the alleged cross-region/inter-bank
prohibitions are also identified in connection with the sole supplier requirement, we will analyse the
instruments identified in connection with the cross-region/inter-bank prohibitions in the context of our
assessment of the alleged sole supplier requirement. In doing so, we will bear in mind the distinction
drawn by the United States' between whether the in struments are framed so as to mandate the use of
CUP or non-CUP cards, or as a prohibition.
7.235 We also recall our decision set out in paragr aphs 7.221 to 7.227 above not to consider
Document Nos. 66, 94 and 272. Therefore, these pa rticular instruments are not further considered
below to assess whether the six alleged requirements exist.

305 China's second written submission, para. 96.
306 See, e.g. Appellate Body Report, China – Raw Materials , paras. 250-255; Panel Reports, China –
Raw Materials, para. 7.68; US – Tuna II (Mexico), paras. 7.16-7.26.
307 See United States' response to Panel question No. 4.
308 United States' response to Panel question No. 2, para. 8.

7.236 Finally, as discussed in paragraph 1.10 and Annex H to this Repor t, we recall that the parties
indicated their disagreement on the correct transla tion of a number of aspects of the identified legal
instruments. As the complaining party, the Unite d States provided its own En glish language versions
of provisions of these instruments. China at times submitted its own English la nguage versions of the
same instruments. At the Panel's request, the parties undertook efforts to agree on a single translation.
They succeeded in doing so in certain instances. For those occasions in which the parties were unable
to agree on a single translation, the Panel, in cons ultation with the parties, appointed an independent
translator – the United Nations Office at Geneva (UNOG) – to provide expert linguistic advice to
assist the Panel in determining the correct translati on. In general, we will refer to the complaining
party's translation, unless the parties specifically agr eed to a different translation, or if we elect to
follow the advice of the UNOG translator. In all cases, however, we have reviewed both parties'
translations. Where appropriate, we refer also to China's versions. Any citation to the United States'
translation, or UNOG's suggested translation, of a particular aspect of Chinese law, should not be
construed to imply that it is an authoritative translation of China's instruments.
7.237 Before proceeding to consider the relevant Chinese requirements, it is useful briefly to
address the question of whether, as the United States contends
309, CUP is a supplier of the services at
issue, i.e. an EPS supplier. In support of its position, the United States points inter alia to Article 12
of CUP's Articles of Association and to the de finition of CUP's business scope contained in the
Notification of Approval of CUP's Business Licence. 310 The two provisions have nearly identical
terms, which is why it is sufficient to set out Article 12. It provides:
Upon being registered according to law, the business scope of the Company is as
follows: (1) To establish and operate a si ngle nationwide inter-bank card information
switching network; (2) to provide adva nced electronic payment technologies and
specialized services in connection with the inter-bank bank card information
switching; (3) to engage in bankcard t echnological innovation; (4) to manage and
operate the brand of "UnionPay"; (5) to fo rmulate the code and technical standards
for inter-bank card transactions, and to me diate and arbitrate any business disputes
arising out of inter-bank transactions; (6) to organize trainings for the industry,
business seminars and international excha nge programs, and to conduct related
researches and consulting services; and (7) to conduct such other businesses as may
be approved by the People's Bank of China.
7.238 In addition, we note that China has not specifically contested that CUP provides the services
at issue, i.e. EPS as defined in the United States' requ est for the establishment of a panel. In the light
of these elements, CUP can in our view properly be considered a supplier of the services at issue.
(a) Requirements on issuers that payment cards i ssued in China bear the CUP logo ("issuer
requirements")
7.239 We turn first to address the issuer require ments. The United States asserts that these
requirements are imposed by specific provisions of the following Chinese legal instruments:
311
 Document No. 37 (Articles 1.2(i), 2 and 3)

309 United States' first written submission, paras. 1 and 3.
310 United States' response to China's request for a pr eliminary ruling, paras. 70 and 72 (referring to
Article 12 of CUP's Articles of Association, Exhibit US-20, and the Notification of Approval of CUP's Business
Licence, Exhibit US-29). See also the 2007 China Payment System Development Report, Exhibit US-15, p. 25.
311 United States' response to Panel question No. 4, para. 17. The United States also relies on
Document Nos. 94 and 272. As explained above at paragraphs 7.221-7.229 above, the Panel has decided not to
consider the substance of these documents.

 Document No. 57 (Articles 1-6)
 Document No. 129 (Article 3.2(ii))
 Document No. 219 (Article III)
 Document No. 76 (Chapter I, Article 4)
 Document No. 17 (Articles 5, 7-10 and 64)
7.240 The United States submits that through these in struments, China maintains requirements on
issuers that payment cards issued in China bear the CUP logo. More particularly, in the United States'
view, China imposes requirements that any bank car ds issued in China fo r RMB purchases in China,
as well as any dual currency cards issued in China, must bear the CUP logo. According to the
United States, this means that issuers must have access to the CUP system, and must pay CUP for that
access.312
7.241 China responds that the instruments at issu e require all RMB-denominated payment cards
issued in China to bear a common logo – the Yin Lian logo – and to adhere to certain technical
standards so as to be capable of being processed over the CUP network. 313 These instruments allow a
national inter-bank payment card netw ork to function. China further submits that the United States
fails to identify any aspect of the alleged issuer requirements that would prevent the issuance of
payment cards that are capable of being processed over multiple networks. 314 China contends that
there are many banks throughout the world that i ssue cards that are capable of being processed over
more than one network. 315 China also argues that nothing in the instruments at issue prevents issuers
from placing the logos of EPS suppliers other than CUP on bank cards they issue, provided that they
bear the Yin Lian logo.
316
7.242 The Panel will examine one by one the above -mentioned instruments relied on by the
United States so as to determine whether they impo se the alleged issuer requirements. Before doing
so, however, we need to address a translation issue that arises in connection not only with the alleged
issuer requirements, but also the alleged terminal equipment and acquirer requirements.
(i) Preliminary translation issue
7.243 According to the United States, the instrument s that impose the aforesaid requirements make
frequent references to a logo that must be displaye d on bank cards issued in China or on terminal
equipment operated in China. 317 The United States is of the view that the logo in question is that of
China UnionPay Co., Ltd. (¨"CUP") and accordingly refers to it as the "CUP logo". In contrast, China
argues that the relevant instruments refer to the " Yin Lian logo", which China says indicates a bank
card's interoperability. In view of the parties' di sagreement, it is necessary to determine the correct
translation of the Chinese characters that are used in the relevant instruments to describe the logo in
question.
7.244 The United States argues that the correct English translation of the logo in all instances at
issue is "CUP logo", because in ternet translation engines comm only translate the characters " Yin
Lian" as "CUP" and because CUP itself refers to its logo as the "CUP logo" or the "CUP label", or in

312 United States' first written submission, paras. 4 and 100; WT/DS413/2, p. 2.
313 China's first written submission, para. 36; China's response to Panel question No. 104(b), para. 51.
314 China's second written submission, para. 93.
315 China's response to Panel question No. 22(c), para. 18.
316 China's response to Panel question No. 104(b), para. 51.
317 The logo in question consists of a tricolour lozenge that contains the phrase "UnionPay" in English
as well as the Chinese characters "Yin Lian".

certain instances as the "UnionPay logo". The Unite d States further submits that contrary to China's
suggestion, there is no reason to employ the transliteration " Yin Lian". The United States observes in
this regard that the logo itself uses the English transl ation "UnionPay". And it adds that in the case at
hand the product of transliteration – " Yin Lian " – has no meaning in English. The United States
therefore considers that if the Panel does not translat e the logo as "CUP logo", there is no basis for
translating the logo into English as anything other than "UnionPay".318
7.245 China argues that it is incorrect to translate the Chinese term " Yin Lian" as CUP. The term
"CUP" stands for China UnionPay and is an offici al abbreviation for the company "China UnionPay
Co., Ltd." (CUP). Also, the word "China" is not found in the relevant provisions that use the term
"Yin Lian". China notes that the Yin Lian logo was approved by the People's Bank of China (PBOC)
in 2001 as a symbol of bank card interoperability. China notes that CUP was not established until
March 2002. China further points out that the logo used by CUP consists of three parts: (1) the logo
for bank card interoperability; (2) the Chin ese phrase for China UnionPay (Zhong Guo Yin Lian); and
(3) the English phrase "China UnionPay". According to China, this logo is used as a trademark or
company identity symbol. China therefore suggests that the Panel use the term " Yin Lian" instead of
CUP.
319
7.246 The UNOG translator asked to advise the Panel points out that there is no ready means of
distinguishing between "Yin Lian" when used as an idiomatic short form meaning "bank card network
interoperability", and " Yin Lian" when used to stand for UnionPay or even, again idiomatically, the
company CUP. The UNOG translator further observ es that the English term "UnionPay" is itself a
convenient but necessarily approximate equivalent for "Yin Lian" in its application as a term for "bank
card network interoperability".320 Moreover, the same term has been incorporated in the name of the
relevant company. As a result, in the view of the UNOG translator, the use of the English term
"UnionPay" as shorthand for the concept of inte roperability and for the company gives rise to
confusion. In the light of this ambiguity, the UNOG translator advises that the Panel use the
compound form "Yin Lian/UnionPay", except where the Chinese u ses the fuller "China UnionPay" or
"China UnionPay Co. Ltd.".321
7.247 In considering this translation issue, we firs t note the Business Practices Appendix contained
in Document No. 76, which in an annex defines the term "network logo" as "[t]he […] logo
compris[ing] the uniform brand name for domestic bank cards (the Chinese characters "Yin Lian") and
the design symbolizing the united network, as regist ered with the trademark office. All rights of
ownership and use belong to the [United Association]…". 322 Document No. 76 was promulgated by
the PBOC and dates from 2001. 323 In 2002, CUP obtained its bus iness licence. According to that
licence, the activities that are w ithin the company's business scope include the establishment and
operation of a single nationwide inter-bank card info rmation switching network, and the management
and operation of the brand "UnionPay". 324 Thus, the nationwide inter-bank network to which

318 United States' translation comments of 4 January 2012, pp. 1-2; comments on the UNOG evaluation
of 24 February 2012, pp. 1 and 3.
319 China's translation comments of 4 January 2012, pp. 1-3.
320 The UNOG translator notes that the English equivalent of "UnionPay" bears only tangential relation
to the original Chinese meaning and that a more appropriate choice would have been "BankCardNet".
321 UNOG evaluation, pp. 3-4 and 16.
322 See the UNOG translator's linguistic advice as set out in Annex H. Article 4.2 of Chapter I of the
Business Practices Appendix contains a very similar definition.
323 See also the press release by the People's Bank of China entitled "Central Bank Introduces Bankcard
Network Logo" (Exhibit US-26).
324 Exhibit US-29 uses the term "UnionPay". Article 12 of CUP's Articles of Association. describes the
company's business scope in the same terms as the No tification of Approval of CUP's Business Licence.
According to the United States, CUP's Articles of Associa tion also date from 2002. United States' response to

Document No. 76 and the Notification of Approval of CUP's Business Licence refer are one and the
same. As the parties have explained, CUP as of 2002 took over the responsibility of that network
from the United Association.325
7.248 We understand from the UNOG translator's evaluation that what the parties have referred to
in their translations of Chinese instruments as the "CUP logo" or the " Yin Lian logo" is generally the
aforementioned network logo, except for certain inst ances where the Chinese original refers to CUP.
Based on the UNOG translator's advice, we accept that the network logo that uses the Chinese
characters "Yin Lian" symbolizes interoperability, as China contends.326 But the network logo is not a
generic logo that indicates that a par ticular bank card is interoperable with a nationwide inter-bank
payment card network in China. Rather, as is cl ear from Document No. 76 and the Notification of
Approval of CUP's Business Licence, the network logo indicates that a particular bank card is
interoperable with the specific network that is currently operated by CUP.
7.249 We understand from China that the company Ch ina UnionPay (CUP) has its own company
logo, which incorporates the network logo. To the right of that logo, the company logo adds the term
"China UnionPay" in both Chinese and English.
327 To that extent, as noted by the UNOG translator, a
distinction can, in principle, be made between th e network logo and the company logo. However, as
also confirmed by China in response to a ques tion from the Panel, CUP on its own CUP-branded
cards issued in China does not use the full company logo, but only the network logo. 328 Plainly, this
blurs the distinction between the network logo and the company logo.
7.250 In the light of the foregoing, we find persuasi ve the UNOG translator's suggestion that we
refer to the network logo as the " Yin Lian/UnionPay" logo. The suggested compound form usefully
distinguishes the network from the company CUP. In addition, the compound form reflects the fact
that both terms appear on the network logo – " Yin Lian" in Chinese and "UnionPay" in English – and
that the English term "UnionPay " "bears only tangential relation" 329 to the meaning of the Chinese
characters " Yin Lian ". Consequently, throughout the remai nder of this Report, we will use the
UNOG-suggested translation, except where the Ch inese original refers to CUP or where we
summarize arguments put forward by the parties.
7.251 Using the suggested translation helps to clarif y that, formally speaking, the relevant legal
texts generally refer to the network logo as opposed to the company logo. We hasten to recall,
however, that it is CUP that currently operates the network in question, and that CUP appears to use
only the network logo on its own CUP-branded cards. As a result, it is virtually inevitable, in our
view, that the average bank card user whose card di splays the network logo will associate that logo
with CUP or the nationwide inter-bank network operated by CUP. We therefore consider that as long
as CUP is the company charged with operating the relevant nationwide inte r-bank network, it makes
little practical difference whether the relevant Chinese instruments formally refer to the network logo
or the CUP logo. We will revert to this point further below.330

325 United States' second written submission, para. 160; response to Panel question Nos. 71, para. 7;
326 Specifically, China has said that the Yin Lian logo designates that the RMB bank card on which the
logo appears can be used on an inter-bank, interoperable basis. China's response to Panel question No. 105(a),
para. 54.
327 China's response to Panel question No. 105(b), para. 55.
328 China's response to Panel question No. 105(b) and (c), paras. 55-57. Evidence submitted by China
demonstrates that there are CUP-branded credit and debit cards that display only the network logo
(Exhibit CHN-105).
329 UNOG evaluation, p. 16.
330 See, below para. 7.696.

(ii) Document No. 37
7.252 The Panel now addresses the Chinese legal instruments cited by the United States as sources
of the alleged issuer requirements. We begin with Document No. 37.
7.253 In relation to Document No. 37, the United States refers the Panel to the text of Articles 1.2(i)
and 2.331 In one footnote, the United States also cites Article 3 as a provision requiring the use of the
CUP logo. 332 Regarding Article 2, the United States observes that it prohibits the use of non-CUP
cards for cross-region or cross-bank transactions.333
7.254 China states that Document No. 37 establish es uniform technical standards for inter-bank
payment cards. It also establishes the Yin Lian logo as the common logo for inter-bank payment cards
that conform to these standards. It requires comme rcial banks that issue inter-bank payment cards to
use the Yin Lian logo and to join the national inter-bank payment card network.334
7.255 The Panel notes that the United States identified Articles 1.2(i), 2 and 3 of Document No. 37
as the relevant provisions. Article 1.2(i) imposes a requirement on all commercial banks to complete,
by the end of 2001, the transformation of their in ternal bank card processing system according to the
uniform standards and specifications for bank cards, and to make technical preparations for accepting
bank cards bearing the Yin Lian/UnionPay logo.335 This provision does not impose a requirement that
all bank cards issued in China must bear the Yin Lian/UnionPay logo. Rather, it appears to require
that all commercial banks, which include issuers, be capable of processing transactions involving
bank cards bearing the Yin Lian/UnionPay logo.
7.256 Article 2.1(i) provides in relevant part that "bank cards issued by all commercial banks with
inter-bank usability in China must bear the [ Yin Lian /UnionPay] logo" on the front of the cards. 336
Article 2.2(i) stipulates that by the end of 2003, commercial banks had to replace all bank cards that
did not conform to the Yin Lian /UnionPay logo use requirement. As from 2004, bank cards not
bearing the Yin Lian /UnionPay logo could no longer be used for cross-region or inter-bank
transactions.
7.257 Article 2.1(iii) states that all cards bearing the Yin Lian /UnionPay logo must abide by the
unified technical specifications, and that all issu ers of bank cards must provide corresponding cross-
region and inter-bank services pursuant to the unified business specifications. Moreover, pursuant to
Article 2.2(i), by the end of 2003 commercial banks had to replace all bank cards that did not conform
to the unified requirements. These Articles do not requi re that all bank cards issued in China must
bear the Yin Lian /UnionPay logo. But they do impose requirements on issuers that relate to bank
cards issued in China and bearing the Yin Lian/UnionPay logo.
7.258 Regarding Article 3, the United States states that it requires the use of the Yin Lian/UnionPay
logo. We see nothing in Article 3 that would support this assertion. We note, however, that
Article 3.1 requires commercial banks that engage in bank card business in China to join the
nationwide bank card inter-bank exchange network.337

331 United States' first written submission, para. 94.
332 United States' second written submission, fn. 201.
333 United States' preliminary ruling submission, para. 106.
334 China's first written submission, para. 45.
335 See the UNOG translator's linguistic advice as set out in Annex H.
336 Pursuant to Article 2.1(i), "special cards" are not subject to this requirement. Articles 7 and 8 of
Document No. 17 suggest that "special cards" are one type of debit card.
337 The United States has referenced Article 3.1 in the context of a discussion concerning applicable
technical specifications. United States' response to Panel question No. 119, para. 118.

7.259 Based on the foregoing, we consider that Articles 2.1(i) and 2.2(i) require issuers to ensure
that all bank cards issued in China for use in connection with domestic inter-bank transactions bear
the Yin Lian/UnionPay logo. In contrast, Article 1.2(i) requires issuers to transform their processing
systems so that they can process trans actions involving bank cards bearing the Yin Lian /UnionPay
logo. Article 2.1(iii) imposes requirements on issuers that appear intended to ensure that bank cards
bearing the Yin Lian /UnionPay logo are interoperable, i.e. that they can be used in domestic inter-
bank and cross-region transactions. Article 3.1 requi res issuers to join the national inter-bank bank
card network.
(iii) Document No. 57
7.260 The United States submits that Document No. 57 contains several requirements – set out in
Articles 1-6 – that mandate that payment cards bear the CUP logo.338
7.261 China argues that Document No . 57 elaborates on the requirements set forth in Document
No. 37. It requires payment cards issued for domestic inter-bank use to bear the Yin Lian logo, and
requires commercial banks that issue inter-bank payment cards to adhere to the business specifications
for bank card interoperability contained in Document No. 76.339
7.262 The Panel notes that the provisions of Document No. 57 identified as relevant by the
United States are Articles 1 through 6. Article 1 stipulates that bank cards issued by all commercial
banks solely for domestic interoperable use must bear the uniform Yin Lian/UnionPay logo, and RMB
credit cards must also bear the Yin Lian/UnionPay holographic anti-counterfeiting logo.
340 Article 2
makes it mandatory for "dual-account" (i.e. dual curren cy) bank cards issued by all commercial banks
in China for both domestic and foreign in teroperable use to bear the uniform Yin Lian /UnionPay
logo.341
7.263 Article 3 provides that bank cards issued for cross-region or inter-bank use must comply with
the unified business specifications and technical standards. It further stipulates that commercial banks
must provide card samples to the PBOC that comply with the Yin Lian /UnionPay logo use
requirements. Neither of these two elements of Article 3 imposes a requirement that bank cards
issued in China bear the Yin Lian/UnionPay logo. The former element – that bank cards must comply
with the unified business specifications and tec hnical standards – nonetheless imposes a requirement
on issuers that relates to bank cards bearing the Yin Lian /UnionPay logo. Regarding the second
element of Article 3 – that commercial banks must provide card samples to the PBOC that comply
with the Yin Lian /UnionPay logo use requirements – the Unite d States asserts that this means that
issuers must submit any cards to be issued for approval by the PBOC. 342 China responds that the
United States misinterprets Article 3.343 We are not persuaded on the basis of the text of Article 3 and
in the absence of other evidence that this article confers on the PBOC the power to deny issuance of a
bank card that complies with the logo use requirements of Document No. 57.

338 United States' first written submission, para. 93; second written submission, fn. 201.
339 China's first written submission, para. 45.
340 Credit card logos, like the Yin Lian/UnionPay bank card logo, appear in the lower right corner of the
front side of the card. They serve to identify the card's brand. Holographic anti-counterfeiting logos also appear
on the front side of the card, on the right-hand side, above the card logo. They serve a security function. We
note that the United States' description of the issuer requirements makes no mention of the Yin Lian/Union Pay
anti-counterfeiting logo. United States' first written submission, para. 4.
341 Regarding the translation of Articles 1 and 2, see the UNOG translator's linguistic advice as set out
in Annex H.
342 United States' response to Panel question No. 15, para. 57.
343 China's second written submission, fn. 51.

7.264 Article 4 is concerned with the Yin Lian /UnionPay holographic anti-counterfeiting logo,
which is different from the Yin Lian/UnionPay logo. Also, Article 4 does not impose a requirement
on issuers or require the use of the Yin Lian/UnionPay logo.
7.265 Article 5 states in relevant part that commercial banks must take the job of promoting the use
and acceptance of the Yin Lian/UnionPay seriously344, and that they were gradually to reduce the role
of their own bank card brands in the market. Article 6 provides inter alia that as from 2002, no bank
cards were allowed to bear a regional interoperability logo.
7.266 Based on the above, we consider that Articles 1, 2, 5 and 6 impose a requirement that all bank
cards, including dual currency cards, issued in Chin a for use in connection with domestic inter-bank
transactions bear the Yin Lian /UnionPay logo. Article 3 also im poses a requirement on issuers.
However, it concerns ensuring that bank cards bearing the Yin Lian/UnionPay logo are interoperable,
i.e. that they can be used in domestic inter-bank and cross-region transactions.
(iv) Document No. 129
7.267 The United States submits that Article 3.2(ii) of Document No. 129 requires that all newly
issued bank cards must bear the CUP logo and must conform to unified business specifications and
meet technical CUP standards.345
7.268 China does not specifically address Document No. 129.
7.269 The Panel notes that Article 3.2(ii) relates to the "universal use of bank cards bearing the [ Yin
Lian/UnionPay] logo". It provides in relevant part that all RMB bank cards newly issued by
commercial banks must conform to the unified busin ess specifications and technical standards, and
must bear the unified Yin Lian/UnionPay logo. It further states that commercial banks must formulate
and submit to PBOC specific plans for replacement of remaining bank cards not bearing the Yin
Lian/UnionPay logo.
7.270 In the light of this, we consider that Article 3.2(ii) imposes a requirement that all RMB bank
cards issued in China for use in connection with domestic inter-bank transactions must bear the Yin
Lian/UnionPay logo. The Article further imposes a re quirement on issuers that seeks to ensure that
bank cards bearing the Yin Lian/UnionPay logo are interoperable.
(v) Document No. 219
7.271 The United States argues that Article III of Do cument No. 219 provides for both the use of
CUP to process authorized card transactions and also that no supplier of EPS can process a card
transaction that is not authorized (i.e. cards not bearing the CUP logo).346
7.272 China states that Article III regulates acquirers in China's border areas and is designed to
combat payment card fraud. It requires that the acquiring agreement between an acquirer and
merchant stipulate that the merchant must not use the Yin Lian logo for purposes outside the scope of
the agreement.347

344 The parties have provided no elaboration on the mean ing of this requirement, other than to confirm
that it is a requirement. United States' response to Pa nel question No. 123, para. 122; China's response to Panel
question No. 123, para. 89.
345 United States' first written submission, para. 95.
346 United States' first written submission, para. 95; United States' response to China's request for a
preliminary ruling, para. 107.
347 Exhibit CHI-74.

7.273 The Panel notes that Article III is addressed to RMB bank card acquiring institutions. 348 It
provides that the RMB card acquisition agreements that such institutions conclude with merchants are
to stipulate, inter alia, that merchants must not use the Yin Lian/UnionPay logo or POS terminals for
purposes outside the scope of the acquisition agreement. 349 Thus, Article III is concerned with RMB
bank card acquirers and the merchants with whom they enter into acquisition agreements. It is not
concerned with issuers or the issuance of bank cards.
7.274 In the light of this, we consider that Article III does not impose a requirement on issuers that
bank cards issued in China must bear the Yin Lian/UnionPay logo.
(vi) Document No. 76
7.275 The United States draws the Panel's attention to Chapter I, Article 4 of Document No. 76,
which assigns to the "United Association" ownershi p of the "UnionPay" logo and gives it the use and
management rights of the logo. As the rights of th e United Association were eventually transferred to
CUP, CUP has exclusive control over the UnionPay logo. According to the United States, CUP can
therefore refuse permission for the logo to appe ar on any bank cards that carry the logo of a
competing EPS supplier. The United States argues th at if CUP does so, the bank cards carrying the
logo of the competing supplier cannot be issued and the competing supplier is effectively barred from
the market.350
7.276 China points out that Document No. 76 sets forth detailed specifications concerning the
technical and commercial aspects of inter-bank payment card transactions. 351 China argues that the
United States has failed to identify anything in th e instruments at issue that would give CUP the
"negative" power to prevent banks from placi ng other logos on a bank card that bear the Yin Lian
logo.352
7.277 The Panel begins by recalling that CUP w as given the role of operating the "United
Association" when CUP was established in 2002.353 We further observe that pursuant to Article 4.2 of
Chapter I of the Business Practices Appendix of Document No. 76, the United Association does
indeed possess the ownership in and the use and management rights of the Yin Lian /UnionPay
network logo.354 However, Article 4.2 must in our view be read together with the Article that follows
it, Article 4.3. Article 4.3 is entitled "Right to use the logo". It stipulates that "Interoperating
Members" "automatically obtain" the right to use the logo as from the date on which they officially
engage in the inter-bank business upon approval by the United Association. 355 Document No. 76
makes clear that "Interoperating Members" include issuing banks that participate in the bank card
interoperating business. 356 To become an "Interoperating Member", an issuing bank must be

348 As its title indicates, Document No. 219 concer ns "Relevant Issues on Accepting and Using RMB
Bankcards in Border Areas" (Exhibit US-47).
349 See the UNOG translator's linguistic advice as set out in Annex H.
350 United States' response to Panel question No. 71, para. 7.
351 China's first written submission, para. 45.
353 See para. 7.247 above.
354 We also recall that the Notification of Busine ss License Approval and Issuance (Exhibit US-29)
makes clear that CUP's business scope includes the management and operation of the network brand
"UnionPay/Yin Lian".
355 The United States has provided two exhibits with translated versions of Document No. 76. In this
instance, we rely on Exhibit US-63. The translation provided of Article 4.3 in Exhibit US-56 is slightly
different. It reads: "The members are automatically gran ted the rights to use the logo when they are approved
by the Association to initiate the cross-bank business".
356 Articles 2.3 and 5.2.3 of Chapter I as well as the Appendix (Definition of Terms and Phrases) of the
Business Practices Appendix contained in Document No. 76.

approved as such by the United Association fo llowing an examination by a testing team. 357 As we
understand Article 4.3, once an issuing bank offici ally becomes an "Interoperating Member", it as a
consequence has the right to use the network logo. 358 We therefore fail to see how Article 4.2 could
provide a basis for the United Association, or CU P, to refuse permission for the network logo to
appear on bank cards bearing the logo of competing EPS suppliers. 359 In other words, Article 4.2 in
our view does not demonstrate that the logo use requirements enable CUP to prevent issuers from
issuing bank cards of competing EPS suppliers.
7.278 We observe as an additional matter that the Un ited States also refers to a provision of the
CUP's Operating Regulations in support of its argument based on Article 4.2. 360 The United States
submitted the relevant provision of the Operati ng Regulations as part of its response to a Panel
question that was posed after the second substantive meeting. 361 According to the United States, the
Operating Regulations prohibit the logo of a competing EPS supplier from appearing on the surface of
"UnionPay Cards".362 China responds that the United States ' assertion that CUP does not licence the
Yin Lian/UnionPay network logo for use on bank cards that carry the logo of competing EPS suppliers
is contradicted by the evidence on record. Specifi cally, China points to the prevalence of dual logo
cards that bear the Yin Lian/UnionPay network logo as well as the logo of other EPS suppliers.363
7.279 We note that the relevant provision of the Oper ating Regulations, submitted very late in the
proceedings, raises a number of questions that the United States did not address. For instance, it is not
clear to us from the text of the relevant provi sion whether the bank cards on which other logos may
not appear – referred to in the relevant provisions as "UnionPay Cards" – are only CUP-branded bank
cards (China UnionPay cards) or also perhaps an y bank card issued in China supported by a foreign
EPS supplier and that in addition to the logo of th e foreign EPS supplier, would have to bear the Yin
Lian/UnionPay network logo. Nor do we have a re sponse from the United States to China's argument
about the existence of dual logo bank cards that are i ssued in China. Moreover, the United States, in
its response to the Panel's question, has not tried to reconcile its interpretation of the Operating
Regulations with Article 4.3 of the Business Practic es Appendix, which indicates that the right to use
the Yin Lian/UnionPay logo is automatically granted to "Interoperating Members". The United States
merely asserts, without elaboration, that the Oper ating Regulations implemen t the mandate regarding
the requirements in the Business Practices Append ix related to the use and non-use of the
UnionPay/Yin Lian logo.364 For these reasons, we are not persuade d that the relevant provision of the

357 Articles 2.1, 2.3, 5.2.1, 5.3.1.1 and 5.3.4 of Chapter I of the Business Practices Appendix contained
in Document No. 76.
358 The United States itself appears to share this unde rstanding. In response to Panel question No. 92
(para. 86), it states in relation to acquirers that "[o] nce an acquiring institution has been approved as a member
of CUP, the acquiring institution gains the right to the CUP logo" according to Article 4.3 of the Business
Practices Appendix contained in Document No. 76.
359 The United States' argument based on Article 4 is that CUP could refuse permission to use the
network logo, not that CUP could bar an issuing bank from becoming an "Interoperating Member". It is
pertinent to note in this respect that according to the parties, several foreign bank s are currently members of
CUP. United States' response to Panel question No. 15, para. 108 (citing six foreign banks as examples);
China's response to Panel question No. 115, para. 76; Exhibit CHN-105.
360 United States' response to Panel question No. 94, para. 94 (citing Document No. 76 and the
Operating Regulations together); and also response to Panel question Nos. 86, para. 64, and No. 117, para. 113.
361 We note that the Operating Regulations date from April 2011, which is before this Panel was
composed. Also, the United States did not submit the entire text of the Operating Regulations, but only the
relevant provision.
362 The United States identifies Article 2.5.3.2 of the Operating Regulations (Exhibit US-115).
363 China's comments on the United States' response to Panel question Nos. 70-72, 86-96, 115-123,
para. 67. China also points out that the document in question was not identified in the request for establishment
of a panel. China's comments on the United States' response to Panel question Nos. 70-72, 86-96, 115-123,
para. 68.
364 United States' response to Panel question No. 86, para. 64.

Operating Regulations supports the United States' assertion that the logo use requirements allow CUP
to prevent issuers from issuing bank cards of competing EPS suppliers.
7.280 Finally, we note that in response to another question from the Panel concerning CUP's alleged
power to refuse permission to use the network logo, the United States asserts that CUP at times did
not approve EPS suppliers' applications for new dua l-branded, dual-logo cards, and that it achieved
this "essentially through the card approval process". 365 According to the Un ited States, this is
demonstrated in various press re ports that date from 2006 and 2007. 366 We note, initially, that the
United States provides no elaboration on what the relevant "card approval pr ocess" entails and what
the governing rules and procedures are. 367 Furthermore, and without entering into a discussion of the
evidentiary value of these press reports, we observe that the press reports do not refer to either
Article 4 of the Business Practices Appendix or th e Operating Regulations, or another instrument
cited by the United States in support of the issuer requirements. Nor do they indicate that CUP denied
or prevented approval of a card programme specifi cally by refusing permission to use the network
logo.368 In the light of this, the press reports in ques tion in our view do not assist the United States in
demonstrating that by virtue of the logo use re quirements CUP can prevent issuers from issuing bank
cards of competing EPS suppliers.
(vii) Document No. 17
7.281 The United States observes that the issuer requirements concern "bank cards" and that
Document No. 17 defines that term. According to the United States, Document No. 17 in Articles 5
and 7-10 defines "bank cards" as encompassing the range of payment cards that are broadly used in
card-based electronic payment transactions. 369 The United States further asserts that Article 64 of
Document No. 17 requires the use of the unified standards of the Business Practices Appendix of
Document 76, which are CUP-only.370
7.282 China does not specifically address the provisions identified by the United States, except to
note that Document No. 17 was issued in 1999 an d that subsequent instruments have established
additional requirements.371
7.283 The Panel notes that Articles 5 and 7-10 of Document No. 17 do not impose any
requirements. Rather, they provide legal definitio ns. They notably indicate that the term "bank
cards", which appears in several of the instrume nts at issue, comprises both credit cards and debit
cards, and that the latter category includes cards for transferring accounts and stored-value cards
(Articles 5 and 7). It is further stipulated th at bank cards may be classified into both domestic
currency cards – RMB cards – and foreign currency cards (Article 5).
7.284 The United States' claims in this case concern EPS for "payment card" transactions and not
EPS for "bank card" transactions. 372 However, "payment cards" as defined by the United States

365 United States' response to Panel question No. 117, para. 113.
366 Exhibits US-119, US-120, US-121, US-122 and US-123.
367 The only card approval process that we have been ma de aware of is that provided for in Article 3 of
Document No. 57. It states in relevant part that commercial banks must submit to PBOC a card sample which
complies with the requirements of the Yin Lian/UnionPay logo as laid down in Document No. 57. On its face,
Article 3 does not provide for any involvement of CUP in the approval process.
368 For example, one of the press reports indicates merely that CUP refused the request of a commercial
bank for card issuance (Exhibit US-120).
369 United States' response to China's request for a preliminary ruling, fn. 153.
370 United States' second written submission, para. 170 and fn. 201.
371 China's response to Panel question No. 122, para. 88.
372 WT/DS413/2, p. 1.

include bank cards, credit cards, debit cards and prep aid cards. Thus, the term "bank card" as defined
in Document No. 17 covers at least some important types of "payment card".
7.285 The United States suggests that the definition of "bank cards" provided in Document No. 17
is also applicable when this term appears in other instruments at issu e. China has not asserted
anything to the contrary. We see nothing in Document Nos. 37, 57, 129, 219 or 76 to indicate that we
should not take that definition into account in our analysis of these instruments.373
7.286 As regards Article 64, it provides in relevant part that a commercial bank in China, when
issuing any variety of bank cards (other than those of an international credit card organization), must
implement the technical standards prescribed by the State. 374 In our view, Article 64 does not require
that all bank cards issued in China must bear the Yin Lian/UnionPay logo. Nor does Article 64 itself
require the use of the unified standards set out in the Appendix on Business Practices contained in
Document No. 76. But we agree that the Business Practices Appe ndix includes technical standards
prescribed by the State that are applicable to issuers.375 In the light of this, we consider that Article 64
in conjunction with Document No. 76 requires issuer s to implement technical standards when issuing
bank cards that must bear the Yin Lian/UnionPay logo.
(viii) Yin Lian/UnionPay logo use requirements versus interoperability requirements
7.287 Before reaching overall conclusions, it is nece ssary to address an additional point that was
made by the United States. According to the United States, the fact that issuers in China are subject to
Yin Lian/UnionPay logo use requirements means that th ey must have access to the CUP system and
pay CUP for that access. As this contention concer ns two distinct elements, we first consider the
issue of access to the CUP system.
7.288 In our view, the Yin Lian/UnionPay logo use requirements do not in and of themselves mean
that issuers must have access to the CUP system.376 As the preceding analysis shows, however, China
does maintain related requirements on issuers that ar e designed to ensure that issuers join CUP and
that the bank cards that must bear the Yin Lian/UnionPay logo meet uniform business specifications
and technical standards and thus be interoperable with CUP. 377 The specific provisions and
instruments that impose these requirements are the following: Articles 1.2(i), 2.1(iii), 2.2(i) and 3.1 of

373 Document No. 76 in Chapter 10 specifically refers to Document No. 17.
374 In response to a question from the Panel con cerning the reference to international credit card
organizations, China has said that Document No. 17 dates from 1999 and that subsequent instruments have
established that all RMB payment cards must have th e technical capability of being processed over the CUP
network. China's response to Panel question No. 122, para. 88. We do not understand this response to mean
that Document No. 17 does not require compliance with technical standards prescribed by the State that post-
date Document No. 17. The United States similarly resp onded that Article 64 predates the creation of CUP and
that it does not mean that banks in China can issue RMB cards that carry only the logo of an international credit
card organization. United States' response to Panel question No. 122, para. 121.
375 See, e.g. Articles 5.2.2 and 5.2.3 of Chapter I and paragraph 3 of the Notice.
376 The United States appears to acknowledge this when it states, in response to Panel question No. 119
(para. 118), that Article 2.1 of Document No. 37 "requires that all cards bearing the UnionPay/ Yin Lian logo
(which, by virtue of measures described elsewhere, includes all cards issued in China for domestic use) 'must
strictly abide by the unified technical specification and all bank card issuers must provide [...] services pursuant
to the unified business specifications.'"
377 The United States has itself distinguished these two requirements. United States' response to Panel
question No. 15, para. 57. According to the United States, the uniform business specifications include relevant
provisions of the Business Practices Appendix contained in Document No. 76. With regard to the uniform
technical specifications, the United States points out that they include a variet y of technical documents
(including Document No. 76), some of which have been issued by CUP and some of which have been issued by
the PBOC or other agencies. United States' response to Panel question Nos. 15, para. 57; and 72, paras. 14 and
15.

Document No. 37; Article 3 of Document No. 57; Article 3.2(ii) of Document No. 129; and Article 64
of Document No. 17 in conjunction with Document No. 76. Having regard to these provisions, it is in
our view correct to say that issuers must have access to the CUP network.378
7.289 The United States in response to a question from th e Panel referred to this category of issuer
requirements as "interoperability requirements". 379 As the United States has raised the element of
access to the CUP system from the beginning in connection with the requirements on issuers that bank
cards bear the Yin Lian/UnionPay logo380, we will proceed on the basis that there are two categories of
issuer requirements for us to address: those that relate to the Yin Lian/UnionPay logo use and those
that relate to interoperability.
7.290 We now turn to the issue of payment for acc ess to the CUP network. The United States
alleges that in order to join the ne twork, issuers must pay fees to CUP. 381 Here again, it appears that
what triggers the alleged fees are not the Yin Lian/UnionPay logo use requirements per se, but rather
the interoperability requirements imposed on issuers. In response to a question from the Panel, the
United States identifies two types of fee that may need to be paid to CUP: membership fees and
testing fees. 382 In support of its allegation, the United St ates refers the Panel to Article 3.1(iii) of
Document No. 94. That Article states in relevant part that CUP must "regulate fee charging methods
and standards for inter-bank transactions at all city centers". We recall that Document No. 94 was
repealed and ceased to have legal effect prior to th e date of the Panel's establishment. As indicated
above383, we therefore decline to take this document into account in our analysis of the measures at
issue, which include the issuer requirements. In an y event, even if Document No. 94 were relevant
for our purposes, it is not clear that it supports the United States' allegation regarding fees payable for
joining the CUP network. The United States do es not address whether the fees referred to in
Article 3.1(iii) are fees payable to CUP for access to the network. As the United States points out,
Article 3.1(iii) is concerned with the regulatio n of inter-bank transactions, including fee-setting. 384
China has explained that inter-bank transactions of ten involve so-called interchange fees that are
usually paid by acquirers to issuers.385
7.291 The United States also relies on Articles 11 and 12 of CUP's Articles of Association. 386
However, these Articles do not mention any fees th at CUP charges issuers. Additionally, the
United States in response to a Panel question posed after the second substantive meeting submitted the
previously mentioned CUP Operating Regulations. 387 They include provisions on membership and
testing fees payable to CUP.388 However, as also pointed out by China, the Operating Regulations are

378 China appears to agree that its instruments require that all inter-bank bank cards adhere to a
common technical standard and that all issuers of such c a r d s i n C h i n a m u s t b e m e m b e r s o f C U P . C h i n a ' s
response to Panel question No. 22(c), para. 17.
380 WT/DS413/2, p. 2; United States' response to China's request for a preliminary ruling, paras. 102
and 111; first written submission, paras. 12, 50 and 100; and second written submission, para. 201.
381 United States' response to Panel question No. 94, para. 96.
382 United States' response to Panel question No. 93, para. 93.
383 See paras. 7.221 et seq. above.
384 United States' response to Panel question No. 93, pa ra. 91. We also note that Article 2.4.1 of
Document No. 76 refers to obligations to be met by Interoperating Members that include "abiding by relevant
regulations governing interoperation fees".
385 China's first written submission, para. 52. We note that the Visa IPO Prospectus (Exhibit US-3), at
page 146, confirms China's explanation. It also st ates that Visa sets default interchange rates in the
United States and other regions, and that in certain jurisdictions interchange rates are subject to government
regulation.
386 Exhibit US-20.
387 United States' response to Panel question No. 93, para. 93.
388 The United States identifies Chapter 7 of the Operating Regulations (Exhibit US-116).

not identified as a relevant legal instrument in th e United States' request for the establishment of a
panel.389 Moreover, unlike in the context of the l ogo use requirements where the United States also
refers to the Operating Regulations, in the pr esent context the United States does not specifically
contend that they implement a requirement containe d in one of the instruments cited by it in support
of the issuer requirements. 390 We note in this respect that th e provisions on membership and testing
fees provided to us by the United States do not, by their terms, establish a link to any of the
aforementioned instruments.391 In the absence of further explanation on the Operating Regulations, it
is therefore not clear to us that its provisions on membership and testing fees are linked to any of the
specific provisions and instruments cited by the Unite d States in support of the issuer requirements.
We are therefore not persuaded that the Operati ng Regulations demonstrate what the United States
asserts, i.e. that as a result of Document Nos. 37, 57, 129, 219, 76 or 17, issuers in China must pay
fees to CUP for access to the CUP network.
7.292 For these several reasons, the United States in our view has not established that the issuer
requirements entail, or are associated with, access fees payable to CUP.
(ix) Conclusions and implications
7.293 Having regard to the preceding analysis, we reach the following conclusions in respect of the
United States' assertions concerning the issuer require ments. First, China maintains requirements on
commercial banks as issuers of bank cards. The term "bank cards" as defined in Document No. 17
covers at least some types of what the United States has defined as "payment cards".
7.294 Secondly, all RMB bank cards issued in Chin a by commercial banks for use in domestic
inter-bank RMB transactions must bear the Yin Lian/UnionPay logo on the front of the card. This
requirement is maintained through Articles 2.1(i) an d 2.2(i) of Document No. 37; Articles 1, 5 and 6
of Document No. 57; and Article 3.2(ii) of Do cument No. 129. Similarly, dual currency (dual
account) bank cards issued by commercial banks in China for use inter alia in domestic inter-bank or
cross-region RMB transactions must also bear the Yin Lian/UnionPay logo on the front of the card.
This requirement is imposed thr ough Article 2 of Document No. 57. Additionally, all RMB credit
cards must bear the Yin Lian /UnionPay holographic anti-counterfeiting logo. This requirement is
imposed by Article 1 of Document No. 57.
7.295 Thirdly, China requires that issuers join CUP, and that the bank cards which they issue and
which must bear the Yin Lian /UnionPay logo meet uniform business specifications and technical
standards. These interoperability requirements are maintained through the following provisions:
Articles 1.2(i), 2.1(iii), 2.2(i) and 3.1 of Docu ment No. 37; Article 3 of Document No. 57;
Article 3.2(ii) of Document No. 129; and Article 64 of Document No. 17 in conjunction with
Document No. 76.
7.296 Finally, and in contrast, we have determined th at Article 4 of Document No. 57, Article III of
Document No. 219 and Article 4.2 of Document No. 76, when considered individually, either do not
impose requirements on issuers or do not constitute rele vant issuer requirements. We find no basis to
modify our conclusion when consid ering these provisions either togeth er or with the other provisions
and instruments cited by the United States in connection with the issuer requirements.

389 China's comments on the United States' response to Panel question Nos. 70-72, 86-96, 115-123,
para. 68.
390 United States' response to Panel question Nos. 86, para. 64; and 93, para. 93. We note that CUP's
Articles of Association are not among the instruments cited in support of the issuer requirements.
391 Exhibit US-116. We observe in this connection th at the Panel's question aske d the United States to
indicate, "in any of the instruments before the Panel", th e specific provisions concerning access fees for issuers.
The Operating Regulations were not among these instru ments at the time the question was put to the United
States.

7.297 It remains for us to address an assertion made by China regarding the implications of the
issuer requirements. China asserts that the Un ited States has not demonstrated that the issuer
requirements would prevent the issuance in China of bank cards that are capable of being processed
over more than one network and that bear both the Yin Lian logo and the logo of an EPS supplier
other than CUP. Thus, the issue to be addressed is whether the issuer requirements would prevent
commercial banks from issuing single or dual currenc y bank cards in China that could be used in
domestic inter-bank RMB transactions and that woul d be capable of being processed over a network
in China that is not the CUP network.
7.298 We understand that it is technically possible fo r a single bank card to be capable of being
processed over more than one network. 392 We can therefore proceed to consider the issuer
requirements. We begin with the Yin Lian /UnionPay logo use element of these requirements. The
relevant provisions of Document Nos. 37, 57 and 129 concern the requirement to bear the Yin
Lian/UnionPay logo. They do not state that bank cards cannot be issued in China if they are capable
of being processed over a network in China other than that of CUP. Nor do they say that bank cards
can bear the logo of only one – CUP's – network. 393 The United States contends, however, that the
Yin Lian /UnionPay logo use requirement is incompatib le with logo use requirements of competing
EPS suppliers.394 China responds that the United States h as cited no evidence of this incompatibility
and points out that bank cards in China frequently bear more than one logo. 395 China notably
provided unrefuted evidence of the existence of dual-logo bank cards. 396 For these reasons, we see no
basis on which to conclude that the provisions in question would prohibit the issuance of relevant
cards that would be capable of being processed ove r more than one inter-bank network in China,
provided these cards also bear the Yin Lian/UnionPay logo.397 We note that the United States itself
appears to view the issuance of such car ds as a possible, if unlikely, scenario. 398 Specifically, the
United States has said that "[e]ven if a foreign s upplier of EPS was to convince an issuer to issue a
card, [the issuer] requirements ensure that it will not be able to compromise CUP's prominent logo or
obtain any market share to the certain exclusion of CUP."399
7.299 Turning to the interoperability element of the issuer requirements, China submits that these
requirements do not preclude issuers from being memb ers of networks other than the CUP network,
and do not prevent bank cards from adhering at the sam e time to technical standards that are not those
of CUP.400 In support of its view, China points to the issuance of dual-branded, dual-currency bank
cards issued in China. 401 To us, the existence of dual-brande d (dual-logo), dual-currency bank cards
issued in China suggests that it is technically po ssible for bank cards simultaneously to comply with
different sets of business specifications and technical standards. Moreover, nothing in the relevant

392 The parties have, for instance, provided the example of dual-branded (dual-logo), dual-currency
bank cards. Additionally, China contends that it is tec hnically possible for POS terminals to give card holders
or merchants a choice as to the network over which a payment card transaction will be processed. China's
response to Panel question No. 7, para. 61.
393 We note that Exhibit CHN-112 shows examples of dual-branded (dual-logo), dual-currency bank
cards issued in China.
394 United States' response to Panel question No. 86, para. 62.
395 China's comments on the United States' response to Panel question Nos. 70-72, 86-96, 115-123. ,
paras. 56 and 73.
396 Exhibit CHN-112.
397 We recall that we have already rejected relevant arguments developed by the United States on the
basis of Article 4.2 of Document No. 76 and CUP's Operating Regulations. See paras. 7.275 to 7.279 above.
398 Para. 7.360 below addresses the United States' claim that the logo use requirements modify the
conditions of competition to the detriment of EPS suppliers of other Members.
399 United States' first written submission, para. 101. See also first written submission, para. 80.
401 China's comments on the United States' response to Panel question Nos. 70-72, 86-96, 115-123,

provisions of Document Nos. 37, 57, 129 or 17 (in conjunction with No. 76) indicates that issuers who
are members of CUP may not join other networks in China, or that bank cards that meet CUP's
uniform business specifications and technical stan dards must not, or cannot, simultaneously meet
those of other networks. The United States refe rs to paragraph 5 of the Notice of Document
No. 76.402 It states that bank card business rules that are inconsistent with the Business Practices
contained in Document No. 76 must be abolished as from the date of implementation of Document
No. 76. As we understand it, para graph 5 means that bank card business rules that differ from those
of the Business Practices can be implemented, provided they do not conflict with the Business
Practices.403 The United States has not demonstrated that any of the aforementioned provisions are
inconsistent with central issuer-related bank car d business rules that have been adopted by EPS
suppliers other than CUP. Consequently, we find no basis to conclude that the issuer requirements
that relate to interoperability would prevent the i ssuance of single or dual currency cards that would
be capable of being processed over more than one inte r-bank network in China. But if any such cards
are issued by commercial banks in China, they must bear the Yin Lian/UnionPay logo.
(b) Requirements that all ATM, and POS termin als in China accept CUP cards ("terminal
equipment requirements")
7.300 The requirements to which the Panel turns next are the alleged terminal equipment
requirements. The United States asserts that th ese requirements are maintained through specific
provisions of the following Chinese legal instruments:404
 Document No. 17 (Article 64)
 Document No. 37 (Articles 1.2(i); 2.1(ii) and (iii))
 Document No. 57 (Articles 3, 5 and 6)
 Document No. 153 (Article 2.2)
 Document No. 149 (Article 2(5)(iii))
 Document No. 76 (Chapter II, Article 1.2)
7.301 The United States submits that through these instruments Ch ina requires that all ATMs,
merchant card processing equipment and POS terminals in China be capable of accepting CUP
cards.405
7.302 China responds that the measures at issue requi re that all POS terminals used for domestic
inter-bank transactions denominated in RMB in Ch ina be capable of accepting bank cards that bear
the Yin Lian logo and they must adhere to certain technical standards. 406 These measures create
uniform technical and commercial standards that a llow a national inter-bank payment card network to
function. China further submits that the United States fails to identify any aspect of the alleged
terminal equipment requirements that would prevent the acceptance of payment cards that are capable

402 United States' second written submission, para. 163.
403 Paragraph 5 does not say that any and all bank card business rules that differ from those contained
in the Business Practices are to be abolished.
404 United States' response to Panel question Nos. 4, para. 18; and 6, para. 32. The United States also
relies on Document Nos. 94 and 272. As explained above at paras. 7.221-7.229, the Panel has decided not to
consider the substance of these documents.
405 United States' first written submission, paras. 4 and 102; WT/DS413/2, p. 2.
406 China's first written submission, para. 36; response to Panel question Nos. 22(c), para. 17; 101,
para. 43.

of being processed over multiple networks. 407 China observes in this resp ect that most POS terminals
are capable of processing any type of bank card.408
7.303 Below, the Panel will examine the above-listed instruments so as to determine whether they
impose the requirements alleged by the United States. It is important to point out in this respect that
the United States has described the terminal equi pment requirements as mandating that terminal
equipment in China – ATMs and POS terminals used by merchants or other operators such as banks –
be capable of accepting Yin Lian /UnionPay bank cards. The alleged requirements are not about
whether the Yin Lian /UnionPay logo must be posted on terminal equipment. 409 The issue of the
posting of the Yin Lian/UnionPay logo has been raised by the United States only in the context of its
challenge to the alleged acquirer requirements.410
(i) Document No. 17
7.304 The United States submits that Document No . 17 mandates the use of unified, CUP-only
standards. It asserts that this in turn means th at any POS terminal must be capable of accepting CUP
cards for any payment card transaction in China.411
7.305 China does not address the specific requirement on which the United States relies.
7.306 The Panel notes that the requirement referred to by the United States may be found in
Article 64 of Document No. 17, which has been addressed earlier. 412 Article 64 requires commercial
banks in China to implement technical standards pr escribed by the State when issuing bank cards. It
makes no reference to terminal equipment, or to acceptance of bank cards. In the absence of any
elaboration by the United States, it is not clear to us why and how Article 64, which on its face
focuses on the activity of bank card issuance, "means that any POS terminal must be capable of
accepting CUP cards".413
7.307 In the light of this, we do not consider that Article 64 of Document No. 17 imposes a
requirement that all ATMs, merchant card processi ng equipment and POS terminals must be capable
of accepting bank cards bearing the Yin Lian/UnionPay logo.
(ii) Document No. 37
7.308 The United States also refers the Panel to the te xt of Articles 1.2(i) and 2.1(ii) and (iii) of
Document No. 37.414
7.309 China states that Document No. 37 establishes uniform technical standards for POS terminals
that accept inter-bank payment cards.415

407 China's second written submission, para. 93.
408 China's response to Panel question No. 101, para. 43.
409 In the context of the Chinese instruments be fore us, the two issues – the posting of the
UnionPay/Yin Lian logo and the capability of terminal equipment to accept bank cards bearing the logo – are not
one and the same. As will be clear from the analysis below and that concerning the alleged acquirer
requirements, the relevant instruments address these two issues in separate requirements.
410 See, e.g. United States' first written submission, paras. 4, 12, 102 and 111; WT/DS413/2, p. 2.
411 United States' second written submission, para. 177.
412 See para. 7.286 above.
413 United States' second written submission, para. 177.
414 United States' first written submission, paras. 103 and 105.
415 China's first written submission, para. 45.

7.310 The Panel notes that Article 1.2(i) does not specifically mention ATMs or POS terminals. 416
However, it requires commercial banks to make "technical preparations for accepting bank cards
bearing the [ Yin Lian /UnionPay] logo". 417 We note the references to "technical preparations" and
"acceptance" of bank cards. ATMs or POS term inals of commercial banks constitute technical
equipment used for accepting bank cards. In our assessment, these elements support the view that
Article 1.2(i) requires, inter alia , that terminal equipment of commercial banks must be capable of
accepting cards bearing the Yin Lian/UnionPay logo.
7.311 Article 2.1(ii) prescribes in relevant part that "[a]ll terminals (such as ATMs and POS) which
join the nationwide bank card inter-bank processing network must be capable of accepting all bank
cards bearing the [ Yin Lian/UnionPay] logo". As regards Article 2.1(iii), as pointed out above, this
provision is concerned with bank cards bearing the Yin Lian /UnionPay logo and the services to be
supplied by issuers of bank cards pursu ant to the unified business specifications. 418 In the absence of
an explanation by the United States on how this provision lays down a requirement concerning
terminal equipment , we are not persuaded that this is the case.
7.312 Based on the foregoing, we consider that Articles 1.2(i) and 2.1(ii) require that all terminal
equipment of commercial banks that join China's na tional inter-bank bank card network be capable of
accepting bank cards bearing the Yin Lian /UnionPay logo. China has clarified in response to a
question from the Panel that there is terminal equipm ent in China that does not need to be connected
to the national inter-bank network. Such terminal equipment is used exclus ively for foreign currency
transactions.419
(iii) Document No. 57
7.313 The United States also relies on Document No. 57, specifically its Articles 3, 5 and 6.420
7.314 China argues that Document No. 57 requires pa yment cards issued for domestic inter-bank
use to bear the Yin Lian logo, and requires commercial banks th at issue inter-bank payment cards to
adhere to the business specifications for bank card interoperability contained in Document No. 76.421
7.315 As the Panel explained above, Article 3 provides that bank cards issued for domestic inter-
bank use must comply with the unified business specifications and technical standards. It further
provides that commercial banks must provide card samples to the PBOC that comply with the Yin
Lian/UnionPay logo use requirements. 422 Article 5 provides in relevant part that POS terminals must
have the Yin Lian /UnionPay logo posted. Article 6 ma ndates the abolition of regional bank card
interoperability logos and requires that terminal equipment such as ATMs and POS terminals not bear
any regional bank card interoperability logo. 423 In our view, none of these Articles imposes a
requirement that terminal equipment in China be capable of accepting bank cards bearing the Yin

416 Article 1.2(i) was discussed above in connection with the issuer requirements. See para. 7.255
above.
417 See the UNOG translator's linguistic advice as set out in Annex H.
418 See para. 7.257 above.
419 China's response to Panel ques tion No. 101, para. 43. The United States has confirmed that there
are a small number of POS terminals th at can only accept foreign-issued bank cards and that are not required to
be connected to the CUP network. United States' comments on China's response to Panel question No. 101,
para. 37.
420 United States' second written submission, para. 179; response to Panel question Nos. 6, para. 32; 71,
para. 8.
421 China's first written submission, para. 45.
422 See para. 7.263 above.
423 Article 5 contains a corresponding requirement th at all POS terminals in the bank card acceptance
market must have the UnionPay/Yin Lian logo posted.

Lian/UnionPay logo. Article 3 deals with bank car ds. Only Articles 5 and 6 mention terminal
equipment. Article 5 requires the posting of the Yin Lian /UnionPay logo on POS terminals, while
Article 6 is concerned with regiona l interoperability logos that termin al equipment may not display.
Neither Article 5 nor Article 6 addresses the issue of whether terminal equipment in China must be
capable of accepting bank cards bearing the Yin Lian/UnionPay logo.424 This is consistent with the
title of Document No. 57, which is "Circular on Uniform Use of CUP Logo and its Holographic Label
for Anti-Counterfeiting". 425 As we have explained earlier the terminal equipment requirements as
described by the United States are not concerned with the posting of the Yin Lian/Union Pay logo on
such equipment.
7.316 Based on the above, we consider that Articles 3, 5 and 6 of Document No. 57 do not impose a
requirement that all terminal equipment in China be capable of accepting bank cards bearing the Yin
Lian/UnionPay logo.
(iv) Document No. 153
7.317 The United States identifies Document No. 153 as another instrument that imposes a terminal
equipment requirement. According to the United States, the relevant provision is Article 2.2.426
7.318 China does not specifically address Document No. 153 in connection with the alleged
terminal equipment requirements.
7.319 The Panel notes that Article 2 of Document No. 153 is entitled "Principles to be complied
with in the merchant acquiring business". Article 2.2 requires that POS terminals placed by acquirers
or third-party service providers conform to the business specifications and technical standards of
cross-network interoperability, be posted with the unified Yin Lian/UnionPay logo, and be capable of
accepting all bank cards bearing the Yin Lian/UnionPay logo.
7.320 In the light of this, we consider that Artic le 2.2 imposes a requirement that merchant POS
terminals in China that have been placed by acquire rs or third-party providers be capable of accepting
bank cards bearing the Yin Lian/UnionPay logo.
(v) Document No. 149
7.321 The United States submits that Document No. 149 contains a clear prohibition on accepting
non-CUP cards. According to the United States, Artic le 2(5)(iii) prevents acquirers and merchants
from accepting prepaid bank cards that do not bear the CUP logo.427
7.322 China argues that Article 2(5)(iii) relates to pr epaid cards issued by non-financial institutions,
including cards issued by a retailer that are meant to be used only at that retailer. China states that the
point of this provision is that these types of non-in teroperable payment cards should not be processed
through the same POS terminals used to pro cess interoperable payment cards that bear the Yin Lian
logo. According to China, Article 2(5)(iii) is in tended to prevent payment card crimes. Specifically,
it seeks to prevent a situation in which someone tri es to use a prepaid card i ssued by a retailer, for
example, to complete a transaction with someone othe r than that retailer. China points out that this
would be a form of fraud since the merchant that accepts the card is unlikely to be able to obtain
payment from the retailer that issued the prep aid card. China maintains, therefore, that

424 We recall in this connection that there are other provisions, e.g. in Document No. 37, that
specifically require that terminal equipment be capable of accepting bank cards bearing the UnionPay/ Yin Lian
logo.
425 Exhibit US-41, heading.
426 United States' second written submission, para. 176.
427 United States' second written submission, para. 175.

Article 2(5)(iii) merely reflects the fact that all interoperable RMB payment cards must be capable of
being processed over the CUP network and bear the Yin Lian logo. China also states that
Article 2(5)(iii) does not prohibit accepting cards that bear the Yin Lian logo and the logo of another
network operator (i.e. dual-logo cards).428
7.323 The Panel notes that Document No. 149 is about security management of bank cards and
preventing and fighting crime in bank cards. 429 Article 2(5)(iii) of Document No. 149 relates to
access to bank card terminals, and to prepaid cards . Prepaid cards are among the payment cards at
issue in this dispute. Moreover, according to linguistic advice provided by the UNOG translator,
Article 2(5)(iii) concerns prepaid cards issued by "non-financial social enterprises". The UNOG
translator indicates that "non-financial social ente rprises" are social enterprises that are not financial
institutions, such as charitable institutions or social enterprises that provide prepaid debit cards to their
clientele.430 China states that the relevant enterprises woul d also include retailers. Even if this means
that China argues for a broader category of non- financial enterprises, China's position does not
contradict the fundamental point that the relevant prepaid cards are issued by non-financial
enterprises.431
7.324 Article 2(5)(iii) states that acquirers may not allow prepaid cards to be accepted at bank card
terminal equipment (POS terminals) if these cards do not bear the Yin Lian/UnionPay logo or do not
meet the PBOC 2.0 standard. In our view, this Article is not about which prepaid cards POS terminals
must be capable of accepting. Rather, the Article is about which prepaid cards such terminals must
not accept. This view is consistent with the purpo se of Document No. 149, which is to prevent bank
card crime. In the case of Article 2(5)(iii), as China has explained, the specifi c concern is to prevent
fraud involving prepaid cards issued by relevant enterprises.
7.325 In our view, the fact that prepaid cards without the Yin Lian/UnionPay logo are not allowed to
be accepted at bank card POS terminals does not imply that all prepaid cards bearing the Yin
Lian/UnionPay logo must be allowed.432 It implies merely that the relevant terminals may allow such
cards to be accepted.433 We also note that no evidence other than the text of Article 2(5)(iii) itself has
been provided to assist us in determining the legal effect of this provision.434
7.326 As a result, we are not persuaded that Article 2(5)(iii) imposes a requirement that all merchant
POS terminals be capable of accepting prepaid cards issued by relevant enterprises and bearing the
Yin Lian/UnionPay logo.

428 China's response to Panel question Nos. 104(b), paras. 52 and 53; 110, para. 68; Exhibit CHN-74.
429 Exhibit US-50, heading.
430 UNOG evaluation, p. 13.
431 This view also draws support from the fact that Ar ticle 2(5)(iii) refers to prepaid "cards" rather than
to prepaid bank cards.
432 We note that prep aid cards bearing the Yin Lian/UnionPay logo would appear to include dual-logo
prepaid cards that at the same bear the logo of another EPS supplier.
433 In response to a Panel question, the United States itself states that Article 2(5)(iii) "means that only
CUP cards may be used at such terminals". United States' response to Panel question No. 91, para. 85.
434 Given this, it is important, in our view, not to re ad into Article 2(5)(iii) more than it says, or
necessarily implies, all the more so as there are provisions of other Chinese instruments, notably Document Nos.
37 and 153, which explicitly require that bank cards bearing the UnionPay/Yin Lian logo be accepted at relevant
terminals.

(vi) Document No. 76
7.327 The United States cites Document No. 76 as a further source of the alleged terminal
equipment requirements. The United States refers the Panel to Article 1.2 of Chapter II of the
Business Practices Appendix.435
7.328 China points out that Document No. 76 sets forth detailed specifications concerning the
technical and commercial aspects of inter-bank payment card transactions.436
7.329 The Panel notes that in accordance with Article 1.2 of Chapter II, the "Unified Network
Logo"437 must be posted on the machines and equipment of any merchant in accordance with relevant
regulations of interoperability, and must be posted on the merchant's cash register machines. This
requirement mandates the posting of the Yin Lian /UnionPay logo. It does not address the issue of
whether merchants' terminal equipment must be capable of accepting bank cards bearing the Yin
Lian/UnionPay logo. 438 As mentioned above, the alleged terminal equipment requirements as
described by the United States are not about the posting of logos.
7.330 In the light of this, we do not consider that Article 1.2 of Chapter II imposes a requirement
that all merchant terminal equipment be capable of accepting bank cards bearing the Yin
Lian/UnionPay logo.
(vii) Conclusions and implications
7.331 Having regard to the preceding analysis, we ag ree that China maintains terminal equipment
requirements with regard to bank cards for use in domestic inter-bank RMB transactions. More
specifically, in our view China requires that term inals (ATMs, merchant processing devices and POS
terminals) in China that are part of the national bank card inter-bank processing network be capable of
accepting all bank cards bearing the Yin Lian /UnionPay logo. 439 This requirement is maintained
through Articles 1.2(i) and 2.1(ii) of Document No . 37 (for terminal equipment of commercial banks)
and also through Article 2.2 of Document No. 153 (for merchant terminal equipment).
7.332 However, we are not convinced that Article 64 of Document No. 17, Articles 3, 5 or 6 of
Document No. 57, Article 2(5)(iii) of Document No. 149, or Article 1.2 of Chapter II of the Business
Practices Appendix contained in Document No. 76, when considered individually, require that all
terminal equipment in China be capable of accepting bank cards bearing the Yin Lian/UnionPay logo.
We find no basis to modify our conclusion when considering these provisions together, or with the
other provisions cited by the United States in connection with the terminal equipment requirements.

435 United States' response to China's request for a preliminary ruling, para. 113.
436 China's first written submission, para. 45.
437 The Business Practices Appendix to Document No. 76 defines this term as meaning the uniform
brand name for domestic bank cards (the Chinese characters yinlian) and the design symbolizing the united
network, as registered with the trad emark office. See the UNOG's translat or's linguistic advice as set out in
Annex H.
438 As is clear from our findings so far, there are provisions of other Chinese instruments – such as
Document Nos. 37 and 153 – which explicitly require that bank cards bearing the UnionPay/ Yin Lian logo be
accepted at relevant terminals. Therefore, we are not persuaded that we can infer that a logo posting
requirement amounts at the same time to a requirement that terminal equipment be capable of accepting bank
cards bearing the relevant logo.
439 The terminals in question are those that are used for domestic inter-bank RMB transactions. China's
response to Panel question No. 101, para. 43.

7.333 Finally, we recall that Document Nos. 37 and 15 3 use the term "bank card". The term "bank
card" as defined in Document No. 17 covers at least some types of "payment card", which is the term
used by the United States in its request for the establishment of a panel.440
7.334 Having reached these conclusions, we now c onsider China's argument concerning the
implications of the terminal equipment requirement s. According to China, the United States has not
identified any aspect of the terminal equipment re quirements that would prevent the acceptance of
bank cards that are capable of being processed ove r multiple networks. China submits that POS
terminals can accept bank cards that bear different logos. 441 We also understand that modern ATMs
and POS terminals are typically capable of accepti ng not just bank cards with the logo of one
particular EPS supplier, but also bank cards with the logo of other EPS suppliers. Furthermore, the
relevant provisions of Document Nos. 37 and 153 do not state that the terminal equipment that must
be capable of accepting bank cards bearing the Yin Lian /UnionPay logo must not be capable of
accepting, at the same time, bank cards bearing th e logo of different EPS suppliers. Hence, in the
absence of other evidence, we see no basis for concl uding that the terminal equipment requirements
would prevent the acceptance of bank cards that w ould be capable of being processed over an inter-
bank network in China other than that of CUP.442
(c) Requirements on acquiring institu tions to post the CUP logo and be capable of accepting all
payment cards bearing the CUP logo ("acquirer requirements")
7.335 We now consider the alleged acquirer requireme nts. The United States asserts that these
requirements are maintained through specifi c provisions of the following Chinese legal
instruments:443
 Document No. 153 (Article 2.2)
 Document No. 149 (Article 2(5)(iii))
 Document No. 37 (Article 1.2(i))
 Document No. 76 (Notice, paragraphs 2 and 3; Chapter I, Articles 2.1 and 5.2.1)
7.336 The United States submits that through these inst ruments China requires that all acquirers in
China post the CUP logo and be capable of accepting CUP cards.444
7.337 China responds that the measures at issue require POS terminals in China to adhere to certain
technical standards and to bear a common logo indi cating their ability to be used for domestic inter-
bank transactions.445 These measures create uniform technical and commercial standards that allow a
national inter-bank payment card netw ork to function. China further submits that the United States

440 See para. 7.284 above.
441 China's response to Panel question No. 22(c), para . 18; comments on the United States' response to
Panel question Nos. 70-72, 86-96, 115-123, para. 73.
442 We note that the United States itself appears to suggest that terminal equipment in China could in
principle accept relevant bank cards. The United States points out that "a foreign EPS [s upplier] must build that
network [of merchants that accept its card] by mark eting itself to merchants and acquiring banks"
(United States' first written submission, para. 110). Simila rly, the United States observes that "[t]o 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
the [terminal equipment] requirement" (United States' first written submission, para. 80).
443 United States' response to Panel question No. 4, para. 19. The United States also relies on
Document Nos. 94 and 272. As explained above at paras. 7.221-7.229, the Panel has decided not to consider the
substance of these documents.
444 United States' first written submission, paras. 4 and 111.
445 China's first written submission, para. 36.

fails to identify any aspect of the alleged acquirer requirements that would prevent the acceptance of
payment cards that are capable of being processed over multiple networks.446
7.338 The Panel begins its analysis by noting that the acquirer requirements as defined by the
United States comprise two distinct elements (i) requirements that acquirers post the Yin
Lian/UnionPay logo, and (ii) requirements that ac quirers be capable of accepting payment cards
bearing the Yin Lian /UnionPay logo. We gather from the specific provisions relied on by the
United States that the second element includes allege d requirements that terminal equipment operated
or provided by acquirers (ATMs and merchant POS terminals) must be capable of accepting payment
cards bearing the Yin Lian/UnionPay logo. To that extent, there is overlap between the acquirer and
the above-discussed terminal equipment requireme nts. The United States itself has pointed out,
however, that there is a "significant degree of overlap" among the six categories of requirements it has
distinguished.447 In addition, the United States has stat ed that the acquirer requirements include
alleged requirements on acquirers to join CUP and to comply with business standards and technical
specifications of inte r-bank interoperability. 448 The United States has explained that these
requirements concern the capabilities of acquirers th emselves, regardless of the type of terminal
equipment located at merchants' places of business. 449 Consequently, the alleged requirements that
acquirers be capable of accepting Yin Lian /UnionPay logo payment cards appear to comprise both
terminal equipment and interopera bility requirements. With this in mind, we now proceed to
determine whether the four instruments identifie d by the United States impose the alleged acquirer
requirements.
(i) Document No. 153
7.339 The United States cites Article 2.2 of Document No. 153 as one source of the alleged acquirer
requirements.450
7.340 China does not specifically address Document No. 153 in connection with the alleged
acquirer requirements.
7.341 As previously noted by the Panel 451, Article 2.2 states that merchant POS terminals in China
that have been placed by qualified merchant acquirers 452 or third-party providers must: (i) conform to
the business specifications and technical standards of cross-network interoperability, (ii) be capable of
accepting bank cards bearing the Yin Lian /UnionPay logo, and (iii) be posted with the unified Yin
Lian/UnionPay logo. 453 Thus, Article 2.2 establishes a require ment that acquirers be capable of
accepting bank cards bearing the Yin Lian /UnionPay logo (interoperability requirement (i) and
terminal equipment requirement (ii)). It also requires that acquirers post the Yin Lian/UnionPay logo
on the POS terminals they provide to merchants (requirement (iii)).
7.342 In the light of this, we consider that Article 2.2 imposes a requirement that qualified acquirers
in China post the Yin Lian /UnionPay logo and be capable of ac cepting, through the merchant POS
terminals they place with merchants, all bank cards bearing the Yin Lian/UnionPay logo.

446 China's second written submission, para. 93.
448 United States' second written submission, para. 181; response to Panel question No. 92, para. 90.
449 United States' response to Panel question No. 1, para. 1.
450 United States' first written submission, para. 112.
451 See para. 7.319 above.
452 According to Article 1.1 of Document No. 153, merchant acquiring institutions comprise financial
institutions and qualified professional acquiring institutions.
453 See para. 7.320 above.

(ii) Document No. 149
7.343 The United States submits that Article 2(5)(iii) of Document No. 149 also sets forth acquirer
requirements.454
7.344 China argues that Article 2(5)(iii) simply refl ects the fact that all POS terminals must be
capable of accepting prepaid payment cards that bear the Yin Lian logo. It does not prohibit accepting
cards that also bear other logos.455
7.345 As explained above456, the Panel is not persuaded that this Article requires that prepaid cards
bearing the Yin Lian/UnionPay logo must be accepted at any POS bank card terminals.457 As a result,
we find that the United States has failed to demons trate that Article 2(5)(iii) imposes a requirement
that acquirers be capable of accepting all prepaid ca rds that have been issued by the relevant non-
financial enterprises and bear the Yin Lian/UnionPay logo.
(iii) Document No. 37
7.346 The United States considers that acquirer requireme nts are also laid down in Article 2.1(i) of
Document No. 37. According to the United States , Article 2.1(i) requires all commercial banks to
make technical preparations for accepting bank cards bearing the CUP logo, and requires acquirers to
join CUP for accepting cards.458
7.347 China states that Document No. 37 establishes uniform technical standards for POS terminals
that accept inter-bank payment cards. It also re quires commercial banks that acquire inter-bank
payment cards to use the Yin Lian logo and to join the national inter-bank payment card network.459
7.348 The Panel notes that the United States has iden tified the wrong provision of Document No.
37. Article 2.1(i) imposes neither of the two a lleged requirements. Howe ver, as explained above,
Article 1.2(i) of Document No. 37 imposes an interoperability requirement addressed to all
commercial banks, which include acquiring banks 460, and also a requirement that terminal equipment
operated by acquiring banks and merchant terminal equipment provided by acquiring banks be
technically capable of accepting cards bearing the Yin Lian /UnionPay logo. 461 Moreover, Article
3.1(i) requires that commercial banks, which in clude acquiring banks, join the national inter-bank
exchange network, i.e. the CUP network.
7.349 For these reasons, we agree that, by imposing a terminal equipment requirement (Article
1.2(i)) and interoperability requireme nts (Articles 1.2(i) and 3.1(i)), Articles 1.2(i) and 3.1(i) require
that acquiring banks be capable of accepting all bank cards bearing the Yin Lian/UnionPay logo.
(iv) Document No. 76
7.350 The United States also relies on Document No. 76. The United States asserts that in
accordance with Document No. 76, any financial institutions seeking to acquire merchant bank card

454 United States' first written submission, para. 113.
455 Exhibit CHN-74.
456 See para. 7.323 above.
457 See para. 7.323 above.
458 United States' second written submission, para. 182.
459 China's first written submission, para. 45.
460 See para. 7.255 above.
461 See para. 7.310 above.

transactions must join CUP and process transact ions according to CUP's rules and procedures,
including the logo requirements and the unified CUP standards.462
7.351 China points out that Document No. 76 sets forth detailed specifications concerning the
technical and commercial aspects of inter-bank payment card transactions.463
7.352 The Panel notes that in connection with the a lleged acquirer requirements, the United States
has referred to the following provisions of Document No. 76: paragraphs 2 and 3 of the Notice;
Articles 2.1, 5.2.1, 5.2.2 and 5.2.3 of Ch apter I of the Business Practices Appendix. 464 Paragraph 2
provides in relevant part that the Business Prac tices contained in Document No. 76 apply to all
commercial banks participating in bank car d service in China. Paragraph 3 states inter alia that
acquiring banks that have been participating in the bank card acceptance business must meet the
relevant requirements of the Business Practices Ap pendix. Articles 2.1 and 5.2.1 of Chapter I are
among these requirements. These Articles make clear that commercial banks that conduct bank card
business in China must join the United Association (i.e . CUP) before they can apply to participate in
bank card interoperable service. To qualify as interoperating banks, appl ying banks must meet
technical specifications and business requirements laid down in Articles 5.2.2 and 5.2.3 of Chapter I.
In our view, the provisions identified by the United States mean that acquiring banks must join CUP
and comply with United Association (CUP) business standards and technical specifications of inter-
bank interoperability.
7.353 In the light of this, we consider that, togeth er, paragraphs 2 and 3 of the Notice, as well as
Articles 2.1 and 5.2.1-5.2.3 of Chapter I of the Business Practices Appendix, impose a requirement
that all acquiring banks must be capable of accepting bank cards bearing the Yin Lian/UnionPay logo.
(v) Conclusions and implications
7.354 Based on the above analysis, we conclude that China imposes a requirement that acquirers
post the Yin Lian/UnionPay logo. This requirement is main tained through Article 2.2 of Document
No. 153 (for all qualified acquirers). In addition, we find that Ch ina maintains requirements that
acquirers be capable of accepting all bank cards bearing the Yin Lian /UnionPay logo. These
requirements are maintained through Article 2.2 of Document No. 153 (for all qualified acquirers);
Articles 1.2(i) and 3.1(i) of Document No. 37 (for acquiring banks); and para graphs 2 and 3 of the
Notice as well as Articles 2.1 and 5.2.1-5.2.3 of Chapter I of the Business Practices Appendix, both of
which are contained in Document No. 76 (for acquiring banks).
7.355 Furthermore, and in contrast, we are not co nvinced that Article 2(5)(iii) of Document
No. 149, considered on its own, imposes a requirement that acquirers must be capable of accepting all
bank cards that bear the Yin Lian/UnionPay logo. We find no basis to modify our conclusion when
considering this provision together with the other provisions cited by the United States in connection
with the acquirer requirements.
7.356 Finally, we recall that Document Nos. 153, 37 and 76 use the term "bank card". The term
"bank card" as defined in Document No. 17 covers at least some types of "payment card", which is the
term used by the United States in its request for the establishment of a panel.
465

462 United States' second written submission, para. 182.
463 China's first written submission, para. 45.
464 United States' response to Panel question No. 71 , para. 11 (referring to second written submission,
paras. 153-165); second written submissi on, paras. 155 and 157; response to Panel question No. 72, para. 17;
response to Panel question No. 92, para. 86 (referring to business standards and technical specifications).
465 See para. 7.284 above.

7.357 As regards the implications of the acquirer re quirements, we note China's argument that the
United States has not identified any aspect of the acquirer requirements that would prevent the
acceptance of bank cards that are capable of be ing processed over multiple networks. China submits
that acquirers can accept bank cards that bear different logos.466
7.358 We first consider the terminal equipment element of the acquirer requirements. For the same
reasons as those we have enunciated above in connection with the terminal equipment
requirements467, in the absence of other evidence we see no basis for concluding that these acquirer
requirements would prevent the acceptance by acquirers of bank cards capable of being processed
over an inter-bank network in China other than that of CUP.
7.359 As concerns the interoperability element of th e acquirer requirements, we understand that it
would be technically possible for acquirers simultane ously to comply with different sets of business
standards and technical specifications. Also, the relevant provisions of Document Nos. 153, 37 and
76 do not indicate that acquirers that are members of CUP may not join other networks in China, or
that acquirers complying with CUP's uniform business standards and technical specifications must not
simultaneously abide by those of other networks. With regard to paragraph 5 of the Notice of
Document No. 76
468, we note that the United States has not demonstrated that the relevant provisions
are inconsistent with key acquirer-related bank card business rules of EPS suppliers other than CUP.
As a result, there are no reasonabl e grounds to conclude that the acquirer requirements pertaining to
interoperability would prevent the acceptance of bank cards that are capable of being processed over
more than one inter-bank network in China.
7.360 We address, lastly, the Yin Lian /UnionPay logo element of the acquirer requirements.
Document No. 153 does not say that terminal e quipment provided by acquirers must not post the
logos of EPS suppliers other than CUP. The United States contends, however, that the requirement to
post the Yin Lian/UnionPay logo is incompatible with requirements of competing networks that do not
use the Yin Lian /UnionPay logo. 469 China responds that the United States cited no evidence in
support of this contention and avers that merchants in China frequently post more than one logo.470 In
the light of this, we have no basis, given the ab sence of evidence, to conclude that the acquirer
requirement that mandates the posting of the Yin Lian/UnionPay logo prevents the posting of other
EPS suppliers' logo, much less the acceptance by acqui rers of bank cards that are capable of being
processed over an inter-bank network in China other than that of CUP.
(d) Requirements pertaining to card-based electronic transactions in China, Hong Kong and
Macao ("Hong Kong/Macao requirements")
7.361 The United States argues that China requires that CUP handle the clearing of all RMB bank
card transactions in Hong Kong or Macao using bank cards issued in China, and that CUP handle the
clearing of any RMB bank card transaction in China using bank cards issued in Hong Kong or
Macao.471 It asserts that these requirements are refl ected in and imposed by the following Chinese
legal instruments:
 Document No. 16 (Article 6)

466 China's response to Panel question No. 22(c), para . 18; comments on the United States' response to
Panel question Nos. 70-72, 86-96, 115-123, para. 73.
467 See para. 7.334 above.
468 See para. 7.299 above.
469 United States' response to Panel question No. 86, para. 62.
470 China's comments on the United States' response to Panel question Nos. 70-72, 86-96, 115-123,
para. 56.
471 United States' response to China's request fo r a preliminary ruling, para. 132; first written
submission, para. 4; United States' second written submission, paras. 147 and 189.

 Document No. 8 (Article 6)
 Document No. 219 (Article 3)
 Document No. 254 (Articles 3, 4 and 17)
7.362 China rejects the view that this requirement or any of the identified legal instruments are
relevant to the modes of supply at issue in this dispute, on the basis that the measures concern the
clearing of RMB transactions taking place in either Hong Kong or Macao, both of which are separate
customs territories. Therefore, China requests the Pa nel to reject the United States' claims concerning
alleged Hong Kong and Macao requirements.
7.363 The Panel will examine in this section whet her the above-mentioned instruments impose the
alleged requirements. We will address China's arguments regarding the status of Hong Kong and
Macao as separate customs territories and the rele vance of the measures and the modes of supply at
issue in the context of the United States' Article XVI claims in Section VII.F below.
(i) Document No. 16
7.364 The United States argues that Document No. 16 establishes CUP as the sole entity responsible
for clearing any RMB bank card transaction taking place in Hong Kong using a bank card issued in
China, and any RMB bank card transactions taking place in Hong Kong or China using a bank card
issued in Hong Kong. Therefore, the United States considers this provision precludes foreign
suppliers from processing these transactions.
472
7.365 China argues that this measure relates to the clearing and settlement of RMB bank card
transactions that take place in the separate customs territory of Hong Kong and, therefore, there is no
"legal basis" for the claims advanced by the United States in relation to EPS services in Hong Kong
under the modes of supply at issue. 473 China considers its commitments relate only to the supply of
services in China.
7.366 The Panel notes that Document No. 16 governs "clearing arrangements" for various RMB-
related matters in Hong Kong, including individual bank card matters. Article 6 indicates that "[t]he
clearance of individual RMB bankcards is organize d and handled by the clearing banks and [CUP]".
This provision provides that Chinese residents ma y use individual RMB bank cards issued by the
domestic banks to pay for expenses including shopp ing, meals and lodging in Hong Kong, or to
withdraw small amounts of cash in Hong Kong dollars from ATMs in Hong Kong. In addition, RMB
bank cards issued to Hong Kong individual residents by participating banks can be used to pay for
individual expenses in China and to withdraw sm all amounts of RMB cash from ATMs in China.
Article 1 of Document No. 16 specifies that PB OC in conjunction with the Hong Kong Monetary
Authority will select and authorize "a licensed ba nk in Hong Kong" to serve as a clearing bank for
related Hong Kong banks in handling RMB bank card ser vices. Pursuant to Article 2, this clearing
bank will enter into "business clearing agreements" with other banks that wish to participate in the
RMB bank card business.
7.367 Based on the text of Article 6, as identifie d by the United States, we understand that
Document No. 16 expressly governs the clearance of RMB bank card transactions that take place in

472 United States' response to China's request for a preliminary ruling, para. 91; first written submission,
paras. 55 and 58; response to Panel question No. 89, para. 81.
473 China's second written submission, para. 97 (citing Exhibit CHN-74).

Hong Kong. 474 Based on the second and third sentences of Article 6, this Article expressly covers
transactions that involve either an RMB bank card i ssued in China and used in Hong Kong, or a bank
card issued in Hong Kong that is used in China in an RMB bank card transaction. Article 6 explicitly
requires that CUP, as the EPS supplier working in c onjunction with designated "clearing banks", is to
handle the clearing of these RMB bank card transacti ons involving individual RMB bank cards issued
in Hong Kong. It is thus not possible, based on th e text of this instrument, for any clearing channel
other than CUP ‒ be it a foreign-based channel or a domestic-based provider other than CUP ‒ to
clear any of the aforementioned types of RMB bank card transactions. 475 We note that China does not
contest that the measure operates as contested by the United States; rather, it disagrees as to the
relevance of this provision in light of the status of Hong Kong as a separate customs territory.
7.368 We therefore conclude that Article 6 of Document No. 16 requires that CUP and no other EPS
supplier is to handle the clearing of RMB bank card transactions that involve an RMB bank card
issued in China and used in Hong Kong, or an RM B bank card issued in Hong Kong that is used in
China in an RMB bank card transaction.
(ii) Document No. 8
7.369 The United States argues that Document No. 8 est ablishes CUP as the sole entity responsible
for clearing any RMB bank card transaction taking pl ace in Macao using a bank card issued in China,
and any RMB bank card transaction taking place in Macao or China using a bank card issued in
Macao. Therefore, the United States considers this provision precludes foreign suppliers from
processing these transactions.476
7.370 China argues that this measure relates to th e clearing of RMB payment card transactions in
the separate customs territory of Macao and, therefore, there is no "legal basis" for the claims
advanced by the United States in relation to EPS services in Macao under the modes of supply at
issue.477 China considers its commitments relate only to the supply of services in China.

474 The Panel notes that the United States provided an English translation of Article 6 of Document
No. 16. See Exhibits US-44 and US-46; United States' response to Panel question No. 12. China provided an
English translation of the full text of Document No. 16 as Exhibit CHN-60.
475 In response to Panel question No. 9, the Unite d States identified three scenarios in which it
considers Document Nos. 8, 16, 219 and 254 operate together to ensure CUP's exclusivity in respect of card-
based RMB transactions taking place in China, Macao and Hong Kong. These include: (i) the case of a Chinese
national travelling to Hong Kong and making a purchase w ith a card issued in China; (ii) the case of a Hong
Kong or Macao national travelling to China and making a purchase with a card issued in Hong Kong or Macao;
and (iii) the case of a Hong Kong or Macao national making an RMB purchase in either of these territories with
an RMB payment card issued in either Hong Kong or Macao. However, the Panel considers only the United
States' claim in the case of the first and second scenarios. The United States' panel request provides a brief
narrative description that explicitly covers these two scenar ios, but does not refer, either explicitly or implicitly,
to a third scenario in which an RMB-denominated bank card is both issued and used in either Hong Kong or
Macao. We recognized above that, through narrative paragraphs in its panel request, the United States described
those "requirements" or "measures" that it considers ar e inconsistent with China's obligations under Articles
XVI and XVII of the GATS. Accordingly, the Panel cons iders that the two types of transactions that are
specified in the relevant narrative paragraph fall within its terms of reference. In contrast, the third type of
transaction – those involving cards is sued and used in Hong Kong or Macao – is nowhere specified in the
relevant narrative paragraph. For this reason, we consider that the Hong Kong/Macao requirements as described
in the panel request do not include the third scenario. Put differently, we consider that the United States' claim
in respect of the third scenario falls outside our terms of reference. We therefore reject this claim.
476 United States' response to China's request for a preliminary ruling, para. 91; first written submission,
paras. 55 and 58; response to Panel question No. 89, para. 81.
477 China's second written submission, para. 97 (citing Exhibit CHN-74).

7.371 The Panel notes that the content of Document No . 8 is identical to that of Document No. 16,
except that it concerns "clearing arrangements" for various RMB-related matters in Macao instead of
Hong Kong.478 Taking this into account, for the same reasons as those set out in paragraphs 7.367 and
7.368 above, we conclude that Article 6 of Document No. 8 requires that CUP and no other EPS
supplier is to handle the clearing of RMB bank card transactions that involve an RMB bank card
issued in China and used in Macao, or a bank card i ssued in Macao that is u sed in China in an RMB
bank card transaction.
(iii) Document No. 219
7.372 The United States argues that Article 3 of Docu ment No. 219 prohibits EPS suppliers other
than CUP from processing RMB card transactions based on the fact that this provision mandates that
merchants shall not authorize "third parties" to handle RMB card business or otherwise transfer such
business to a third party. 479 The United States additionally submits that this measure is applicable in
"border areas", which includes Macao and Hong Kong.480
7.373 China argues that this provision addresses RMB card fraud in connection with the acquiring
of RMB card transactions in border areas within China and does not prohibit EPS suppliers from
processing RMB card transactions as the United States al leges. In addition, China argues that Hong
Kong and Macao are not "border areas" within the m eaning of the term as it is used in Document
No. 219. It argues that this term refers to "regi ons within [China] that neighbour a foreign country
(such as Russia) or region (such as Hong Kong or Macao)". 481 China further notes that the only
reference to CUP is the requirement that acquiri ng agreements require merchants not to use the Yin
Lian logo for purposes outside the scope of the acquiring agreement.482
7.374 The Panel notes, as reflected in the title of Document No. 219 ("Notice of the People's Bank
of China concerning Relevant Issues on Accepti ng and Using Renminbi Bank Cards in Border
Areas"), that Article 3 requires inter alia that acquiring institutions handling RMB transactions in
"border areas" enter into "card acquisition agreem ents" with merchants. In accordance with these
agreements, merchants are prohibited from using sales documentation, the Yin Lian/UnionPay logo or
POS for purposes falling outside the acquisition agreem ent. Under Article 3, merchants are also
prohibited from "entrust[ing] or transfer[ing] the handling of RMB card business to a third party", or
otherwise falsely reporting transactions or using POS terminals to fraudulently withdraw RMB cash.
7.375 Based on these elements, the Panel understands that Article 3 contains various anti-fraud
measures applicable in "border areas". The fo cus on fraud, money laundering and other criminal
concerns is further evident in other provisions of the document. In our view, this focus informs the
interpretation of the principal language in conten tion within this provision, namely that of
"entrust[ing] or transfer[ing] the handling of RMB card business to a third party". There is no textual
basis elsewhere in the provision of Document No . 219 to conclude that EPS suppliers should be
considered as a "third party" and thus be prevented from handling RMB bank card inter-bank
information, clearing and settlement. On this basis, we do not agree with the United States'
interpretation that Article 3 of Document No. 219 prevents EPS suppliers other than CUP from
handling RMB transactions in "border areas" in Chin a. Like China, we consider this provision
prohibits a merchant from outsourcing any aspect of its core acquisition business to a third party, such

478 The United States provided an English translation of Article 6 of Document No. 16. See Exhibits
US-44 and US-46; United States' response to Panel question No. 12. China provided an English translation of
the full text of Document No. 16 as Exhibit CHN-62.
479 United States' first written submission, para. 58; second written submission, para. 152; comments on
China's response to Panel question No. 109, para. 51.
480 United States' response to Panel question No. 16.
481 China's second written submission, fn. 53.
482 China's second written submission, para. 97 (citing Exhibit CHN-74).

as a third-party "acquirer processor". To that exte nt, we do not understand this provision to reserve
certain transactions to CUP.
7.376 Turning to the parties' arguments regarding the meaning of the term "border areas", we noted,
the title of this instrument makes clear that the scope of Article 3 relates to bank card acceptance in
border areas. The United States asserts that H ong Kong and Macao qualify as border areas within the
meaning of this instrument. However, the Unite d States has not provided any evidence in support of
its assertions in this respect. China has argued that "border areas" refers to regions within China that
neighbour a foreign country such as Russia or a region such as Hong Kong or Macao. . Thus, it
argues that Hong Kong and Macao are not border regions themselves. To us, it is not readily apparent
from the evidence before us, namely the text of Document No. 219, that Hong Kong and Macao
should be considered border areas for the purposes of Document No. 219. In the absence of any
supporting evidence on this issue, we consider we lack the necessary elements to determine the
precise scope of application of Document No. 219 As noted, however, we are not persuaded that his
provision reserves certain transactions to CUP.
7.377 For the foregoing reasons, in the absence of a dditional evidence, we are unable to conclude
that Article 3 of Document No. 219 prohibits EPS suppliers other than CUP from processing RMB
card transactions taking place in Hong Kong or Macao using RMB cards issued in either Hong Kong,
Macao or China, or RMB card transactions taking place in China using RMB cards issued in Hong
Kong or Macao.
(iv) Document No. 254
7.378 The United States argues that Document No. 25 4 establishes and maintains CUP as the sole
EPS supplier that may handle the processing of RM B bank card transactions taking place in Hong
Kong and Macao using bank cards issued in either Hong Kong, Macao or China, or RMB bank card
transactions taking place in China using RMB bank cards issued in Hong Kong and Macao.
483
7.379 As with Document Nos. 16 and 8, China argues th at there is no "legal basis" for the claims
advanced by the United States as this instrument relates to the clearing of RMB bank card transactions
in the separate customs territories of Hong Kong and Macao.
484
7.380 The Panel notes that United States refers to Articles 3, 4 and 17 of Document No. 254 in
support of its claim. Article 3 states that, "[w]here RMB bank cards issued by domestic banks are
used for paying expenses or withdrawing cash in Hong Kong dollars or Macao dollars in Hong Kong
or Macao, the issuers shall process clearing in RMB with [CUP]". In addition, it provides that CUP
shall process clearing in Hong Kong dollars or Macao dollars with acquiring banks in Hong Kong and
Macao after purchasing foreign exchange from d esignated foreign exchange banks. Article 4
provides that CUP shall handle clearing in RMB be tween issuers and acquiring banks "[w]here the
RMB bank cards issued by Hong Kong or Macao par ticipating banks are used for paying expenses or
withdrawing RMB cash in Mainland China". Finally , Article 17 provides that banks in China shall
clear all transactions with CUP and "shall not dire ctly carry out RMB transactions with the other
Hong Kong or Macao Institutions".
7.381 The Panel notes that, much like Document Nos. 16 and 8, Articles 3, 4 and 17 of Document
No. 254 govern particular bank card transactions th at involve RMB bank cards issued in China and
used in Hong Kong or Macao, and bank cards issu ed in Hong Kong or Macao and used in China in
RMB-denominated transactions. These transactions c oncern payments for consumption or tourism or

483 United States' response to China's request fo r a preliminary hearing, para. 93; first written
484 China's second written submission, para. 97 (citing Exhibit CHN-74).

limited cash withdrawals. In each case, Articles 3, 4 and 17 specify that CUP is to handle clearing of
these transactions through purchasing foreign curre ncy (Hong Kong dollars or Macao dollars) from
designated foreign exchange banks and clearing with the relevant acquirer in either Hong Kong or
Macao, or in China. As with Document Nos. 16 and 8, these provisions of Document No. 254
expressly require that CUP is to handle the clearing of these RMB bank card transactions as the EPS
supplier working in conjunction with issuers and acquirers.
7.382 Based on the clear language in Articles 3, 4 an d 17, we therefore conclude that Document
No. 254 requires that CUP and no other EPS supplie r is to handle the clearing of RMB bank card
transactions that involve an RMB bank card issued in China and used in Hong Kong or Macao, or a
bank card issued in Hong Kong that is used in China in an RMB payment card transaction.
(v) Conclusions
7.383 Based on the above analysis of Document Nos. 16, 8 and 254 485, we conclude that China
requires that CUP and no other EPS supplier sha ll handle the clearing of certain RMB bank card
transactions that involve either an RMB bank card is sued in China and used in Hong Kong or Macao,
or a bank card issued in Hong Kong or Macao that is used in China in an RMB transaction. These
bank card transactions concern payment for e xpenses incurred through purchases, meals and
accommodation, or limited cash withdrawals. We recall from above 486 that the term "bank cards" as
defined in Document No. 17 covers at least some types of what the United States has defined as
"payment cards". We further conclude that Article 3 of Document No. 219 does not require that CUP
is the sole supplier to handle the clearing of these RMB bank card transactions. We found that
Article 3 is directed at third parties involved w ith the outsourcing of any aspect of a merchant's
acquisition business, rather than EPS suppliers.
7.384 Because we have already concluded that the identified provisions of Document Nos. 16, 8 and
254 individually mandate the u se of CUP to process the clearing of the particular RMB bank card
transactions discussed above, we do not consider it necessary to assess these instruments further in
combination with each other. Regarding the app licability or relevance of Document No. 219 to RMB
matters taking place in Hong Kong or Macao, we find nothing in Docu ment Nos. 16, 8 or 254 that
modifies our conclusions in respect of Docume nt No. 219. Accordingly, we do not consider
Document No. 219 further in respect of requirements pertaining to Hong Kong or Macao.
(e) Requirements that mandate the use of CUP and/ or establish CUP as the sole supplier of EPS
for all domestic transactions denominated and pa id in RMB ("sole supplier requirement") and
prohibitions on the use of non-CUP cards for cr oss-region or inter-bank transactions ("cross-
region/inter-bank prohibitions")
7.385 The United States asserts that China imposes meas ures that mandate the use of or establish
CUP as the sole supplier of EPS for all domestic tr ansactions denominated and paid in RMB through
the following Chinese legal instruments:487
 Document No. 37 (Articles 1.2(i), 2.1(i)-(iii), 2.2(i), and 3.1)
 Document No. 57 (Articles 1, 2, 3, 5, and 6)

485 The Panel specifically refers to Article 6 of Document No. 16, Article 6 of Document No. 8 and
Articles 3, 4 and 17 of Document No. 254. See paras. 7.364-7.368, 7.369-7.371 and 7.378-7.382 above.
486 See para. 7.283 above.
487 United States' response to China's request for a preliminary ruling, para. 77; first written submission,
para. 49; response to Panel question No. 4. The United States also relies on Document Nos. 94 and 272. As
explained above at paragraphs 7.221-7.229, the Panel has decided not to consider the substance of these
documents.

 Document No. 16 (Article 6)
 Document No. 8 (Article 6)
 Document No. 219 (Article 3)
 Document No. 254 (Articles 3,4, and 17)
 Document No. 103 (Section II.5(1) and Section III)
 Document No. 153 (Articles 1.2, 1.3, 2.2, 4, 5, and 6)
 Document No. 149 (Article 2(5)(iii))
 Document No. 53 (Articles V.2, and VII.3)
 Document No. 49 (Article 4)
 Document No. 129 (Articles 3.2 and 3.4)
 Document No. 76 (Notice, paragraph 5, Business Practices Appendix, Chapter I,
Articles 1.1, 2.1, 4, and Chapter 10)
 Document No. 17 (Article 64)
 Document No. 142 (Articles 2.3, 4, 5, and 6)
7.386 The United States argues that the preceding le gal instruments interact to establish and
maintain CUP as the sole supplier in three ways: (i) certain instruments explicitly state that CUP must
be used to process specific types of bank card tran sactions; (ii) certain instruments establish and/or
require the use of business specifications and techni cal standards which mandate the use of CUP; and
(iii) certain instruments implicitly recognize that CUP is the sole supplier of EPS services for RMB
denominated transactions.488
7.387 The United States argues that in the Notifica tion of Approval of CUP's Business Licence,
China's State Council and the PBOC explicitly approved and authorized only CUP to "establish and
operate a single nationwide inter-bank bank card information switching network". 489 The United
States argues that the use of the word "single" in this document, in addition to similar language
appearing in CUP's Articles of Association, conf irms that CUP was established to operate an
exclusive nationwide inter-bank card information switching network.
490
7.388 China rejects that the identified legal instruments operate to establish CUP as sole supplier for
the clearing and settlement of all RMB dom estic inter-bank bank card transactions. 491 Rather, China
submits that the identified measures operate to establish a common national network for processing
RMB domestic inter-bank bank card transactions. In its view, this does not equate to establishing an
exclusive provider of network services in China. 492 Under a common network, China submits that
inter-bank bank cards and POS devices must adhere to certain technical standards. However, it does
not consider the above instruments preclude adheren ce to other technical standards. Similarly, it
argues that issuers that participate in the CUP network are not precluded from being members of other

488 United States' second written submission, para. 144.
489 United States' first written submission, para. 46.
490 United States' comments on China' s response to Panel question No. 121, para. 62; see also second
written submission, para. 184
491 China's second written submission, paras. 90-102.
492 China's first written submission, para. 64; response to Panel question No. 121, para. 87.

networks.493 Thus, China argues, there is nothing in an y of these instruments that would prevent a
foreign provider of network services from establishing a domestic clearing channel in China.494
7.389 The Panel will examine the above-mentioned inst ruments to determine whether they impose
the alleged requirements in respect of bank card tran sactions denominated and paid in RMB. In other
words, in conducting our analysis, we need to asses s, not whether as a factual matter there is a single
supplier operating in China, but whether the instrume nts in question require that CUP is the sole EPS
supplier for RMB bank card transactions involving ba nk cards issued and used in China. We first
examine the instruments individually and thereafter, we consider them in conjunction. We recall also
that certain of the instruments identified in connect ion with the sole supplier requirement have also
been identified in relation to the other requirements that are alleged in this dispute. Where this is the
case, we will refer to our preceding analysis as appropriate. In addition, we recall 495 that we will
analyse the instruments identified in connection w ith the cross-region/inter-bank prohibitions in the
context of our assessment of the sole supplier re quirement, bearing in mind the distinction drawn by
the United States between whether the instruments are framed so as to mandate the use CUP or CUP
cards, or as a prohibition.
(i) Document No. 37
7.390 As discussed in paragraphs 7.253, 7.308, a nd 7.346 above, the United States submits that
Document No. 37 establishes and entrenches CU P as the exclusive EPS supplier for inter-bank
transactions by requiring the use of the CUP logo for inter-bank bank cards, requiring that all ATM
and POS terminals in China accept CUP cards, and by requiring that acquiring banks be capable of
accepting all bank cards bearing the CUP logo.496
7.391 China responds497 that Document No. 37 requires the use of the Yin Lian/UnionPay logo as
the common logo for inter-bank bank cards, ATMs and POS terminals, and otherwise, this document
requires that commercial banks that issue and acquire inter-bank bank cards meet business and
technical standards. However, China argues that the identified provisions do not preclude banks from
becoming members of other networks.498 As a general matter, in its view, the fact that bank cards and
POS devices must adhere to certain technical standards does not preclude adherence to other technical
standards.499
7.392 The Panel concluded in paragra phs 7.256-7.259, 7.311, 7.312, and 7.349 above that Articles
1.2(i), 2.1(ii) and 3.1 of Document No. 37 mandate the use of the Yin Lian/UnionPay logo and impose
certain interoperability requirements. As stated previously 500, however, we see nothing in these
requirements themselves or elsewhere in Document No . 37 that precludes bank cards issued in China
from bearing logos of other EPS suppliers in addition to the Yin Lian /UnionPay logo, nor do the
identified provisions prohibit the use of bank cards on other networks with the same or different
technical/interoperability requirements, so long as th e cards meet CUP interoperability requirements.
Therefore, we do not identify anything on the face of these provisions that establishes or maintains
CUP as the exclusive EPS supplier for all RMB bank card transactions involving bank cards issued
and used in China. In the ab sence of specific evidence demonstrating otherwise, we reject the
assertion that this instrument on its own establishes or maintains CUP as a sole supplier.

493 China's response to Panel question No. 22(c), paras. 17 and 18.
494 China's response to Panel question No. 103, para. 45.
495 See para. 7.234 above.
496 United States' response to China's request for a preliminary ruling, para. 126; second written
submission, paras. 186 and 187.
497 See paras. 7.254, 7.297, 7.309, 7.334, 7.347 and 7.357 above.
498 China's first written submission, para. 45; response to Panel question No. 22(c), para. 18.
499 China's response to Panel question No. 22(c), para. 18.
500 See paras. 7.299, 7.334 and 7.358- 7.360 above.

(ii) Document No. 57
7.393 As discussed in paragraphs 7.260 and 7.265 above, the United States argues that Document
No. 57 requires that all regional non-CUP logo bank card interoperability logos be gradually
eliminated501, and that commercial banks promote the use of the CUP logo. 502 In addition, it argues
that Document No. 57 requires that newly issued bank cards with cross-region or inter-bank
functionality comply with relevant technical sta ndards and with unified "Business Specifications for
Interoperable Service of Bank Cards" in Document No. 76.503
7.394 China states that Document No. 57 elaborates on requirements set forth in Document No. 37
and discussed above, namely, it requires bank cards issued for domestic inter-bank use to bear the Yin
Lian/UnionPay logo, and requires that commercial banks that issue and acquire inter-bank bank cards
to meet business and technical standards. 504 China disputes that these requirements preclude banks
from becoming members of other networks.505
7.395 The Panel concluded in paragraph 7.266 above that Articles 1, 2, 5 and 6 of Document No. 57
mandate the use of the Yin Lian /UnionPay logo and impose certain interoperability requirements.
However, as mentioned above in respect of Document No. 37 and as stated previously 506, we do not
identify anything on the face of this document that precludes ba nk cards issued in China from bearing
logos of other EPS suppliers in addition to the Yin Lian /UnionPay logo. Nor do the identified
provisions prohibit the use of bank cards on ot her networks with the same or different
technical/interoperability requirements, so long as th e cards meet CUP interoperability requirements.
Therefore, we do not identify anything on the face of these provisions that establishes or maintains
CUP as the exclusive EPS supplier for all RMB bank card transactions involving bank cards issued
and used in China. In the ab sence of specific evidence demonstrating otherwise, we reject the
assertion that this instrument on its own establishes or maintains CUP as a sole supplier.
(iii) Document No. 16
7.396 As discussed in paragraph 7.364 above, the Un ited States argues that Article 6 of Document
No. 16 establishes CUP as the sole entity responsible for clearing and settling RMB bank card
transactions taking place in Hong Kong using bank cards issued in China, and RMB bank card
transactions taking place in Hong Kong or China usi ng bank cards issued in Hong Kong. The United
States considers this instrument demonstr ates that CUP is the sole supplier for all RMB bank card
transactions involving bank cards issued and used in China.
507
7.397 China maintains its position that this measur e relates to the clearing of RMB bank card
transactions that take place in the separate customs territory of Hong Kong and, therefore, there is no
"legal basis" for the claims advanced by the United States in relation to EPS services in Hong Kong
under the modes of supply at issue. 508 China considers its commitments relate only to the supply of
services in China.
7.398 The Panel recalls from paragraphs 7.364-7.368 above its conclusion that Article 6 requires
that CUP and no other EPS supplier is to be involv ed in the clearing of RMB bank card transactions

501 United States' response to Panel question No. 2, para. 10; second written submission, para. 186.
502 United States' response to Panel question No. 6, para. 36.
503 China's comments on the United States' response to Panel question Nos. 70-72, 86-96, 115-123.
504 China's first written submission, para. 45.
505 China's comments on the United States' response to Panel question Nos. 70-72, 86-96, 115-123.
506 See para. 7.299 above.
507 United States' response to China's request for a preliminary ruling, para. 91; first written submission,
paras. 55 and 58; response to Panel question No. 89, para. 81.
508 China's second written submission, para. 97 (citing Exhibit CHN-74).

that involve either an RMB bank card issued in China and used in Hong Kong, or a bank card issued
in Hong Kong that is used in Hong Kong or China in an RMB transaction. As Document No. 16 is
limited in scope to bank card transactions that invo lve bank cards issued in China and used in Hong
Kong, or alternatively, bank cards issued in H ong Kong and used either in Hong Kong or China, we
fail to see how this instrument establish es CUP as the sole supplier of EPS for all domestic
transactions denominated and paid in RMB. Theref ore, we do not consider that Article 6 establishes
CUP as the sole supplier of EPS for all domestic transactions denominated and paid in RMB. Below,
we further consider this instrument as it operates in relation to other identified instruments, in the
context of the United States' assertion that the meas ures at issue establish CUP as the sole supplier of
EPS for all domestic transactions.
(iv) Document No. 8
7.399 As discussed in paragraphs 7.369 above, the Un ited States argues that Article 6 of Document
No. 8 also establishes CUP as th e sole entity responsible for clearing and settling RMB bank card
transactions taking place in Macao using bank cards issued in China, and RMB bank card transactions
taking place in Macao or China using bank cards issu ed in Macao. The United States considers this
instrument demonstrates that CUP is the sole supplier for all RMB bank card transactions involving
bank cards issued and used in China.509
7.400 China again maintains that this measure relates to the clearing of RMB bank card transactions
in the separate customs territory of Macao and, therefore, there is no "legal basis" for the claims
advanced by the United States in relation to EPS services in Macao under the modes of supply at
issue.510 China considers its commitments relate only to the supply of services in China.
7.401 The Panel recalls its conclusion from paragraphs 7.369-7.371 that the content of Document
No. 8 is identical to that of Document No. 16, except that it concerns "clearing arrangements" for
various RMB-related matters in Macao, instead of Hong Kong. Taking this into account, for reasons
set out in paragraphs 7.367 and 7.368 above, we are unable to conclude that Document No. 8
establishes CUP as the sole supplier of EPS for all domestic transactions denominated and paid in
RMB. As with Document No. 16, we further consid er below this instrument as it operates in relation
to other identified instruments, in addressing the United States' claim that the measures at issue
establish CUP as the sole supplier of EPS for all domestic transactions.
(v) Document No. 219
7.402 As discussed in paragraphs 7.372 above, the Un ited States argues that Article 3 of Document
No. 219 prohibits processing of RMB card transactions by EPS suppliers other than CUP based on the
fact that this provision mandates that merchants shall not authorize "third parties" to handle RMB card
business or otherwise transfer such business to a third party. 511 The United States submits that this
measure is applicable in "border areas", which sp ecifically refers to the "special administrative
regions" of Macao and Hong Kong.512
7.403 China maintains that this provision does not establish CUP as a sole supplier as the United
States alleges, but rather, this provision addresses RMB card fraud in connection with the acquiring of
RMB card transactions in border areas within China. China asserts that the only reference to CUP is

509 United States' response to China's request for a preliminary ruling, para. 91; first written submission,
paras. 55 and 58; response to Panel question No. 89, para. 81.
510 China's second written submission, para. 97 (citing Exhibit CHN-74).
511 United States' first written submission, para. 58; second written submission, para. 152; comments on
China's response to Panel question No. 109, para. 51.
512 United States' response to Panel question No. 16.

the requirement that acquiring agreemen ts require merchants not to use the Yin Lian/UnionPay logo
for purposes outside the scope of the acquiring agreement.513
7.404 The Panel recalls from paragraphs 7.372-7.376 above its conclusion that Article 3 is
concerned with RMB bank acquirers and the merc hants with whom they enter into acquisition
agreements and, as such, it is not evident on its f ace that this provision prohibits processing of bank
card transactions by EPS suppliers other than CUP. Accordingly, we do not consider that this
provision on its own establishes or maintains CU P as the exclusive EPS supplier for all RMB card
transactions involving bank cards issued and used in China
(vi) Document No. 254
7.405 As discussed in paragraphs 7.378 above, the United States argues that Document No. 254
establishes CUP as the sole entity responsible fo r processing RMB bank card transactions using bank
cards issued in China and used in Hong Kong or Macao, or RMB bank cards issued in Hong Kong
and Macao and used in China.514
7.406 China maintains that this measure relates to the clearing of RMB bank card transactions
taking place in the separate customs territory of Ho ng Kong and Macao and, therefore, there is no
"legal basis" for the claims advanced by the United States in relation to EPS services in Hong Kong
and Macao under the modes of supply at issue. 515 China considers its commitments relate only to the
supply of services in China.
7.407 The Panel recalls its conclusion from paragra phs 7.378-7.381 above that Articles 3, 4 and 17
of Document No. 254 expressly require that CU P is to handle the clearing of RMB bank card
transactions that involve RMB bank cards issued in China and used in Hong Kong or Macao, and
bank cards issued in Hong Kong or Macao and used in China in an RMB transaction. Due to the fact
that Document No. 254 is limited in scope to bank card transactions that involve bank cards issued in
China and used in Hong Kong or Macao, or alterna tively, bank cards issued in Hong Kong or Macao
and used in China, we fail to see how this instru ment establishes CUP as the sole supplier of EPS for
all domestic transactions denominated and paid in RMB. Below, we further consider this instrument
as it operates in relation to other identified instrume nts, in the context of the United States' assertion
that the measures at issue establish CUP as the sole supplier of EPS for all domestic transactions
denominated and paid in RMB.
(vii) Document No. 103
7.408 The United States argues that Section III of Document No. 103 provides explicit recognition
by multiple Chinese government agencies of China' s awareness that any purported limitations on
market access to the RMB "bank card industry" were to be eliminated by 2006. Moreover, it argues
that Document No. 103 sets out a requirement th at banks competing in the RMB bank card business
use uniform business specifications and technical standards that mandate the use of CUP. 516
7.409 China considers this provision to reflect that issuers and acquirers would be permitted to enter
the Chinese market beginning in 2006, but not EPS suppliers. In general, China maintains that a
requirement to comply with one set of business rules and technical standards does not preclude a bank

513 China's second written submission, para. 97 (citing Exhibit CHN-74).
514 United States' response to China's request for a preliminary ruling, para. 93; first written submission,
515 China's second written submission, para. 97 (citing Exhibit CHN-74).
516 United States' response to China's request fo r a preliminary ruling, para. 100; first written
submission, paras. 43, 44, 83; second written submission, para. 154.

card issuer from issuing cards that also comply w ith other rules and standards, which would enable
that card to operate over other networks.517
7.410 The Panel observes that Article III provides that "[t]he RMB bankcard business opens fully to
the outside world at the close of 2006, posing great er challenges to the China bankcard industry; the
limited time remaining must be used to boost that industry's competitiveness". The United States also
points to Section II.5(1), which provides that any newly issued RMB bank cards shall comply with
applicable technical standards.
7.411 The Panel takes note of the identified provisions of Document No. 103, including the
statement that newly issued RMB bank cards shall comply with applicable technical standards.
Following the advice we received from the UNOG translator 518, we do not understand this provision
to impose a normative mandate that establishes CUP as the sole supplier of EPS in China. In the
absence of further information, it is also not clear to us from reading the text of Document No. 103
what is encompassed by the term "RMB bankcard bu siness" and specifically whether this term covers
the provision of EPS, or whether it refers only to other relevant business activities, such as issuing
bank cards and acquiring bank card tr ansactions. Concerning Section II.5(1), as we stated in respect
of other instruments that impose interoperability requirements 519 , in the absence of evidence
demonstrating otherwise, we cannot conclude that Section II.5(1) on its own maintains or establishes
CUP as the sole supplier of EPS in respect of domestic transactions denominated or paid in RMB.
Accordingly, we are not persuaded that this instru ment alone maintains or establishes CUP as the sole
supplier in China.
(viii) Document No. 153
7.412 The United States argues that Article 1.2 of Do cument No. 153 explicitly establishes CUP as
the sole supplier of EPS for RMB bank card transacti ons in China through its invocation that "[CUP]
is the domestic clearance organization" (emphasis added). The United States submits that this
conclusion is supported in other provisions of Docume nt No. 153. It argues that Article 1.3 prohibits
EPS suppliers other than CUP from clearing RMB ba nk card transactions in China as this provision
states that "[n]o third party service provider shall engage in bank card information exchange
services".520 In addition, according to the United States , Article 5 establishes CUP as the only entity
that is permitted to promote bank card acceptance 521 and Article 6 prevents any "organizations" from
interfering with bank card processing by CUP. 522 Finally, it asserts that Articles 2.2 and 4 require
that POS terminals and merchant acquirers comply with the business specifications and technical
standards for cross-network interoperability, and inter-bank business, respectively.523
7.413 China disputes the United States' translation of Ar ticle 1.2, arguing instead that this provision
states that "[CUP] is a domestic clearing organization" (emphasis added), and that, as such, it does not
establish CUP as the sole supplier of EPS. Even accepting the translation provided by the United
States, China submits that Document No. 153 does not support the United States' claims. 524 China

517 China's response to Panel question No. 22(c), pa ra.18; comments on the United States' response to
Panel question Nos. 70-72, 86-96, 115-123, para. 56.
518 See Annex H.
519 See the Panel's discussion of Document Nos. 37 and 57 above.
520 United States' response to China's request fo r a preliminary ruling, para. 88; second written
521 United States' response to Panel question No. 6, paras. 25 and 27; response to Panel question
No. 88(a), para. 76 (quoting the second and third paragraphs of Article 5 of Document No. 153).
522 United States' second written submission, para. 150; response to Panel question No. 90, para. 84.
523 United States' second written submission, para. 154; response to Panel question No. 71(c), para. 9.
524 China's comments on United States' response to Panel question Nos. 70-72, 86-96, 115-123,
para. 78.

argues that the context in Article 1.3 makes cl ear that Document No. 153 prohibits acquiring
institutions from outsourcing their switching functions to third-party service providers, but it does not
prevent the establishment of other inter-bank card networks. 525 In its view this is clear from the fact
that this provision addresses secu rity of financial information 526 as well as the fact that "third-party
service providers" are clearly defined in the text. China argues that the definition of third-party
service providers in Document No. 153 refers to me rchant or acquirer "processors" at the point of
interconnection between the acquirer and EPS suppliers, and not EPS suppliers themselves. 527 Thus,
China does not prevent the establishmen t of other inter-bank EPS networks. 528 Finally, China argues
that Article 6 is not relevant to the United States ' claims as it relates to use of bank cards outside
China. In particular, it asserts that Article 6 w as a response to efforts by international EPS suppliers
to prevent acceptance of Yin Lian bank cards outside of China, particularly dual logo cards. 529
Regardless, China contends that this provision only requires that Chinese issuers are capable of
processing transactions over the CUP network, but do es not require them to process transactions over
the CUP network.530
7.414 The Panel recalls at the outset its conclusion in paragraphs 7.319, 7.341, and 7.342 above, that
Articles 2.2 and 4 mandate the use of the Yin Lian/UnionPay logo and impose certain interoperability
requirements. We further note that Document No. 153, which was issued in 2005, set outs
responsibilities directed at agencies to promote th e development of a bank card acceptance market in
China. Following the advice we received from the UNOG translator, Article 1.2 of this document,
labelled "Regarding bank card clearance organizations", specifies that CUP is "currently the domestic
clearing organization" that specializes in the supply of EPS for RMB bank card inter-bank
transactions. CUP is designated to formulate specifi cations and standards for this inter-bank network.
Article 1.3 defines "third party service providers of merchant acquiring business" as "the legal person
enterprises which engage in non-core businesses of the bank card acquiring business entrusted by
merchant acquiring institutions on the basis of ma king their own operation decisions…" Article 1.3
states further that "[n]o third party service provider shall engage in bank card information exchange
services".
7.415 Article 1.3 further explains that the bank car d exchange system concerns the security of
financial information and payment systems and is subject to strict access and management. We
further note that Article 3 sets out that merchant ac quiring institutions may "freely decide" whether to
outsource to third party services providers their no n-core business such as "equipment placement and
services, system construction and maintenance, and customer service and training". Merchant
acquiring institutions can choose third-party providers that meet security management requirements
and technical standards of PBOC.
7.416 Article 5 expressly authorizes CUP to establis h branches in certain areas of China "in
accordance with the company's overall plan to provi de bank card information exchange and clearance
services". This "engagement in inter-bank POS tran saction information transfer shall be directly
managed and operated by [CUP], and shall not be indirectly managed or operated through
authorization". Finally, Article 6 of Document No. 153 provides that "Chinese issuing banks should
support routing through the CUP network" and "[n] o organizations should set any obstacles or cause
any interference".

525 China's second written submission, paras. 97 (c iting Exhibit CHN-74) and 98; response to Panel
question No. 109, para. 65.
526 China's response to Panel question No. 109, para. 65.
527 China's response to Panel question No. 102, para. 44; response to Panel question No. 109, para. 66;
comments on the United States' response to Panel question No. 90, para. 57.
528 China's second written submission, paras. 97 (citing Exhibit CHN-74) and 98.
529 China's response to Panel question No. 100.
530 China's second written submission, para. 97 (citi ng Exhibit CHN-74); response to Panel question
No. 100.

7.417 With this in mind, we address the United St ates' contention that Article 1.2 explicitly
recognizes CUP as the sole supplier of EPS for RMB bank card transactions in China, and that
Articles 1.3, 5 and 6 support this conclusion.
7.418 Beginning with Article 1.2, as we noted above, it is not in dispute that this provision
acknowledges that CUP was an EPS supplier for RMB bank card transactions before June 2005, the
date on which Document No 153 was published. Th rough the use of the term "currently", this
provision refers to the situation as it existed at that time, but does not, by its terms, impose a limitation
going forward. 531 As the parties' submissions highlight 532, there was no nationwide EPS supplier
operating in China before June 2005. Article 1.2 a ppears to recognize this. Against this background,
it is at least understandable that Document No. 153 would have designated CUP to formulate the
specifications regarding relevant inter-bank processing (as discussed in Article 1.2). Taking this into
account, it follows logically that CUP was authorized to establish branches in certain areas of China
(as discussed in Article 5, which states that "[a]fter being approved by PBOC, [CUP] may set up
branches in regions where there is a market demand"), as well as expand RMB bank card acceptance
in overseas markets (as discussed in Ar ticle 6). China would not have been in a position to direct an
entity or EPS supplier outside of China to do this.
7.419 We do not consider the authority granted to CUP under Article 5 to set up new branches in
China precludes other EPS suppliers from establishing a network in China. In our view, this language
instructs CUP to manage and operate the network th at it is tasked to establish, and CUP should not
delegate this authority.
7.420 In addition, we do not understand the guidan ce found in Article 6 that CUP expand RMB
bank card acceptance in overseas ma rkets to mean that other suppliers of EPS are prohibited from
establishing a network in China. We note that Ar ticle 6 addresses setting up an international network
for acceptance of RMB bank cards bearing the Yin Lian/UnionPay logo. This provision indicates that
Chinese-based issuing banks "should support" inte r-bank EPS processing for dual currency credit and
debit card transactions that take place abroad and "should open the RMB accounts related transactions
and settlements to the CUP network". We note first that, in certain respects, Article 6 employs the use
of the term "should" differently from the use of th e word "shall" that appears elsewhere in Document
No. 153. This suggests that the guidance to support routing through the CUP network is not
mandatory. By stating that issuing banks "should support" this routing, the provision does not appear
to prevent them from routing transactions through other networks. Moreover, we do not read the
guidance that "[n]o organizations should set any ob stacles or cause any interference" to mean that
other suppliers of EPS are prohibited from establishing a network in China. In our view, the fact that
Article 6 provides that issuing banks should suppor t routing through the CUP network, and should
open RMB accounts to the network, with the further guidance that other organizations should not
interfere, does not preclude any bank or entity from additionally having relationships with other EPS

531 In stating this, we note that the advice provided by the UNOG translator in dicates that the context
provided by the Chinese text "strongly implies that the situation (whatever it is) may change". See Annex H.
532 United States' response to China's request for a preliminary ruling, paras. 64-71; citing Steve
Worthington, The Chinese payment card market: an exploratory study , 21 Int'l J. of Bank Marketing, pp. 324,
325, 327 (2003), Exhibit US-21; Pecht, Michael, Ch ina's Electronics Industry : The Definitive Guide for
Companies and Policy (2006), pp. 82-83, Exhibit US-22; Strong Measures to be Taken to Achieve the Target of
Commecting Bank-Card Networks This Year, PBOC (March 27, 2002), available at
http://www.pbc.gov.cn/publish/english/955/1965/19655.html , Exhibit US-25; Marina Yu Zhang & Mark
Dodgson, High Tech Entrepreneurship in Asia: Innova tion, Industry and Institutional Dynamics in Mobile
Payments, Edward Elgar Publishing Limited (2007) , pp. 215-216, Exhibit US-30; China's first written
submission, paras. 38-46.

suppliers or routing transactions through other networks. We further do not understand this provision
would prohibit another supplier of this service from establishing a network in China.533
7.421 Finally, we do not agree that Article 1.3 can be read to prohibit the use of EPS suppliers other
than CUP. Article 1.3 refers to and defines "thi rd party service providers" as those entities that may
engage in "non-core business of the bank card ac quiring business" as entrusted by merchant acquiring
institutions. We note in this respect that thir d-party providers are discussed separately from
provisions addressing "bank card clearing organizati ons" (Article 1.2), suggesting that these entities
are different in nature. In addition, since the "m ain business" in which CUP specializes is the supply
of EPS for RMB bank card transactions and not the ac quisition of bank card transactions (i.e. acquirer
services), the fact that third-party service providers may only engage in the "non-core business of the
bank card acquiring business" would seem to indicate that third-party providers would not handle any
of those activities falling within the principal activities of CUP.
7.422 We further consider that the language referred to by the United States in Article 1.3 must be
read in the light of Article 3 of Document No . 153, which addresses "Rules of merchant acquiring
business' outsourcing". As indicated above, this pr ovision indicates which is the "non-core business"
that a merchant acquiring institution may outsource to a third party service provider. These activities
include "equipment placement and services, system construction and maintenance, and customer
service and training", none of which are primary activities in respect of RMB bank card inter-bank
information routing and exchange. Reading these provisions together, we understand that Document
No. 153 seeks to prevent third party service providers of merchant acquiring business from addressing
core aspects related to supply of EPS in such a wa y that would compromise the security of sensitive
financial information exchange. It would seem, therefore that this provision seeks to limit the number
of actors including third parties that work in conj unction with acquirers that have access to sensitive
information, so as to prevent fraudulent misuse of information. For these reasons, we are not
convinced that Article 1.3 effectively bans other EPS suppliers – which are different from third party
service providers of merchant acquiring business – from the marketplace in China, taking into account
the focus of this provision.
7.423 Accordingly, for the reasons set out above, we conclude that Articles 1.2, 1.3, 5 or 6 of
Document No. 153 do not establish or maintain CUP as the sole supplier of EPS for RMB bank card
transactions in China or otherwise prohibit the use of EPS suppliers other than CUP. In concluding
this, we take into account the refe rence in Article 1.2 that "[CUP] is currently the domestic clearing
organization". As we discuss further in paragraphs 7.431-7.441 below, we note that our conclusion is
consistent with the reference to "domestic cleari ng channels" that appears in the plural form in
Document No. 53. It is pertinent to note in addition that Document No. 53 postdates Document
No. 153.
(ix) Document No. 149
7.424 The United States argues that Article 2(5)(iii) of Document No. 149 prohibits acquirers from
allowing "non-CUP" and "non-PBOC 2.0 prepayment cards" to be accepted at POS terminals.
534 In

533 According to China, Article 6 of Document No. 153 relates to the development of a payment card
acceptance network outside of China for RMB cards that bear the Yin Lian/UnionPay logo and is therefore not
relevant to this dispute. China submits that Article 6 is a response to efforts by international EPS suppliers to
prevent the acceptance of payment cards bearing the Yin Lian /UnionPay logo outside of China. China's
response to Panel question No. 100, paras. 41 and 42, citing Exhibits CHN-108 and CHN-109.
534 United States' second written submission, para. 151; response to Panel question No. 71(c)(iii),

its view, this provision effectively limits the number of suppliers of EPS in China, and establishes and
maintains CUP's monopoly on EPS for RMB bank card transactions in China.535
7.425 China argues, as indicated in paragraph 7.322 above, that Document No. 149 as a whole
addresses RMB bank card crimes in respect of prepayment cards and that the purpose of
Article 2(5)(iii) is to prevent the card holder fro m fraudulently using a non-interoperable card on an
interoperable basis. 536 In China's view, it does not prohibit the acceptance of cards bearing other
logos in addition to the Yin Lian logo.537
7.426 The Panel observes, as indicated by the UNOG translator538, that Article 2(5)(iii) provides that
"[n]o acquiring institutions may allow non-" Yin Lian/UnionPay" and non-PBOC 2.0 standard prepaid
cards issued by non-financial social enterprises to be accepted at bankcard terminal equipment". We
understand this provision prevents acquire rs from allowing non-YinLian/UnionPay prepaid cards
issued by non-financial enterprises to access bank card terminals. 539 In other words, this provision
relates to access to terminal equipment by prepai d cards that were issued by relevant enterprises 540
and that do not bear the Yin Lian/UnionPay logo. This provision is itself limited in focus to a narrow
subset of bank cards.
7.427 Setting aside this particular provision, we re call that Document No. 149 broadly relates to
security management of bank cards and preventing bank card-related crimes. This is reflected in the
title of the instrument, which refers to "Strengt hening the Safety Management of Bank Cards and
Preventing and Fighting Crimes in Bank Cards". It is also reflected in other references in the
document. Notably, Article 1 refers to the objective of "stabilizing the market order of bank cards".
Article 2(4) addresses issues related to card holder iden tity fraud. CUP is designa ted to participate in
reporting on identity-related crimes.541
7.428 In our assessment of Article 2(5)(iii) in paragra phs 7.323 and 7.325 above, we noted that this
provision addresses specifically those cards that ma y not be accepted at bank card POS terminals,
which we found to be consistent with the purpo se of preventing bank card-related crimes. These
include non-" Yin Lian /UnionPay" and "non-PBOC 2.0" prepaid cards. We noted as well that the
United States did not provide evidence other than the text of Article 2(5)(iii) to elucidate the legal
effect of this provision.
7.429 We have explained in Section VII.E.2(a) a bove that China imposes requirements on issuers
that bank cards issued in China bear the Yin Lian/UnionPay logo, and furthermore, China requires that
issuers become members of the CUP network, and th at the payment cards they issue in China meet
certain uniform business specifications and technical st andards. In addition, China requires acquirers
to post the Yin Lian /UnionPay logo, become members of the CUP network and be capable of
accepting all bank cards bearing the Yin Lian/UnionPay logo. In our assessment of these instruments,
we have explained that the requirement that a given bank card bear the Yin Lian/UnionPay logo would
not preclude bank cards issued in China from bearin g logos of other EPS suppliers in addition to the
Yin Lian/UnionPay logo. Moreover, such a requirement would not preclude the use of a bank card on
other networks with the same or different technical /interoperability requirements, so long as it was at
the same time compatible with the CUP network.

535 United States' comments on China's response to Panel question No. 104, para. 41.
536 China's comments on the United States' response to Panel question No. 91, para. 58.
537 China's response to Panel question No. 110, para. 68.
538 See Annex H.
539 As noted above in paragraph 7.323, the exact nature of the relevant enterprises is not entirely clear.
We understand, though, that the relevant prepaid cards are issued by non-financial enterprises.
540 As explained in fn. 430 above, "non-financial social enterprises" refer to entities that are not
financial institutions.
541 See, e.g. Articles 2(4)(xii)-(xiii).

7.430 We see nothing on the face of Article 2(5)(iii) that would prevent acceptance at a bank card
terminal of a prepaid card issued by a relevant enterprise that bears the logo of another EPS supplier
and is interoperable with that supplier's network, provided the card also bears the Yin Lian/UnionPay
logo and is interoperable over the CUP network. In our view, Article 2(5)(iii) is about access to bank
card terminal equipment. At that level, there is no exclusive access for CUP. Article 2(5)(iii), by its
terms, does not speak to the processing of the transacti ons that involve the use of the relevant prepaid
cards. In the absence of any argument and evidence on this, we have no basis for assuming that any
transaction would have to be processed over the CUP network. Therefore, the United States in our
view has not demonstrated that Article 2(5)(iii) establishes or maintains CUP as the exclusive supplier
in respect of prepaid cards.
(x) Document No. 53
7.431 The United States argues that the references to "domestic clearing channels" and "domestic
RMB card clearing organizations" in Articles V.2 a nd VII.3 of Document No. 53, respectively, have
the effect of guaranteeing that CUP processes al l RMB-denominated transactions in China that
involve bank cards issued in China. It considers this to be further evident when these provisions are
read in conjunction with Article 1.2 of Docume nt No. 153, which refers to CUP as the "domestic
clearing organization". 542 The United States does not consider that the references to "domestic
clearing channels" and "domestic RM B card clearing organizations" in their plural forms alters the
fact that CUP exclusively processes all RMB bank card transactions. 543 To the extent this language
alone is not clear, the United States argues that a dditional language in Article V.2 regarding payment
of overdrafts in RMB provides further evidence that only CUP may process domestic RMB bank card
transactions.544 Moreover, it considers that the requireme nt in Article VII.3 that bank card issuers
report the bank identification numbers (BINs) of their cards "to the domestic RMB card clearing
organization" facilitates and ensures that transacti ons will automatically be processed over the CUP
network.545
7.432 China argues that the purpose of Document No. 53 is to require that RMB card transactions
are cleared and settled in RMB to avoid unnecessary foreign exchange transactions in cases where a
dual- or foreign-currency card is used in China. 546 Setting aside the purpose of this document, China
argues that the references to "domestic clear ing channels" and "domestic RMB card clearing
organizations" do not establish that CUP will be the only domestic clearing organization in China
going forward in time. 547 It considers this to be clear, based on the fact that the terms appear in the
plural, and because Document No. 53 does not expressly refer to CUP by name.548
7.433 The Panel notes that Document No. 53 is en titled "Notice of the State Administration of
Foreign Exchange on the Management of Foreign Curre ncy Bank Cards". Article I of this document
defines "foreign currency bank cards" as "domestic foreign currency cards … issued by domestic

542 United States' second written submission, para. 167; response to Panel question No. 6, para. 28
543 United States' response to Panel question No. 88(b), para. 78.
544 United States' first written submission, paras. 59 and 60; response to Panel question No. 15,
paras. 58 and 59.
545 United States' response to Panel question No. 1, pa ras. 58 and 59; response to Panel question No. 6,
para. 28; response to Panel question No. 15, paras. 58 and 59; response to Panel question No. 87, para. 68;
response to Panel question No. 95, para. 100; response to Panel question No. 116, para. 112; comments on
Chinese replies to Panel question No. 106, para 48 (c iting CUP's Operating Regulations, Volume III, Rules on
UnionPay Card, BIN and Logo, April 2011, Section 2.5.3.2, Exhibit US-115).
546 China's second written submission, para. 99; response to Panel question No. 111, paras. 69 and 70;
comments on the United States' response to Panel question Nos. 70-72, 86-96, 115-123, para.77.
547 China's comments on the United States' response to Panel question Nos. 70-72, 86-96, 115-123,
para.78.
548 China's second written submission, paras. 97 (referencing Exhibit CHN-74) and 100.

financial institutions … and foreign bank cards … issued by overseas institutions … except … RMB
cards issued by [domestic financial institutions and overseas institutions]". Article II.3 states that
"domestic cards are classified into foreign currency cards, which refers to those denominated in only
one foreign currency, and home-fo reign currency cards, which refers to those denominated in both
RMB and one or more foreign currencies".549
7.434 Article V.2 of Document No. 53 specifies that "[d]omestic card transactions inside China
shall be settled in RMB throug h domestic clearing channels…". 550 It provides further that "[a]ny
overdraft arising from domestic tran sactions shall be paid by the cardholder in RMB". According to
the translation advice provided by the UNOG translator 551 , Article V.3 in turn identifies two
circumstances in which international bank card organizations may clear transactions involving
domestically issued bank cards. These are:
(1) where domestic foreign currency card transactions occurring within China are
cleared through an international bankcar d organization; and (2) "wrong hand-off"
transactions, in which domestic dual-currency cards, which should be treated as RMB
cards, are mistakenly identified by the acquiring financial institution as foreign
currency cards and are thus handed off to an international bankcard organization for
clearance.
7.435 Article VII.3 provides that "[d]omestic RMB card clearing organizations shall do a good job
in the RMB clearing of domestic transactions of home-foreign currency cards". As noted above 552,
home-foreign currency cards are dual-currency cards. In addition, Article VII.3 requires that card
issuers report the BIN of cards that are issued to "the domestic RMB card clearing organizations".
7.436 Articles V.2, V.3 and VII.3, when read toge ther, make clear that domestically based EPS
suppliers are to handle the clearing and settle ment of RMB payment transactions involving
domestically issued RMB cards. Article V.2 provides that " domestic card transactions inside China
shall be settled in RMB through domestic clearing channels" (emphasis added). Article V.3
characterizes "wrong hand-off" transactions as tho se cases in which domestic dual-currency cards are
"mistakenly identified" as foreign currency cards a nd are thus handled by an "international bankcard
organization". Articles I and II.3 indicate that "f oreign currency bank cards" include single-currency,
foreign currency cards issued by domestic ins titutions, as well as single-currency, foreign currency
cards issued by overseas institutions. Howeve r, "domestic cards" include dual-currency cards
denominated in RMB and any other currency that ar e issued jointly by domestic financial institutions
and overseas institutions. These do not qualify as foreign currency cards. Thus, any transaction made
in China with a card that is denominated in part or in whole in RMB should not as a rule be handled
by an international bank card organization. The requirement in Article VII.3 for issuers to report
BINs appears directed at avoiding "wrong hand-off" transactions as described in Article V.2 that arise
when dual-currency cards are mistakenly treated as foreign-currency-only cards, and are thereby
cleared and settled by international bank card organizations.553

549 We note that this dispute concerns exclusively bank cards issued in China.
550 United States' second written submission, para. 145; response to Panel question No. 87, para. 67.
551 See Annex H.
552 In paragraph 7.433, we note that Article II.3 defines "home-foreign currency cards" as "those
denominated in both RMB and one or more foreign currencies".
553 In stating this, we understand the United States ' position to be that an EPS supplier would sort
through different transactions based on the card-specifi c BIN, enabling it to disti nguish between transactions
that are initiated with a dual-currency card or a foreign-cu rrency card. It considers that, when a transaction is
initiated at a merchant POS terminal, the transaction w ill automatically be processed over the CUP network as
the card's BIN will match the BIN transferred to, and stored in, CUP's BIN table. See United States' response to

7.437 Taking into account the operation of these prov isions together, we understand that any
transaction made in China with an RMB bank card th at is issued in China or a card with an RMB
component must be handled by a domestic clearing cha nnel. It is evident on the face of Articles V.2,
V.3 and VII.3 that a domestic clearing channel may not be an international bank card organization.
China itself explains that an international bank car d organization or "interna tional network operator"
should be distinguished from a "domestic network" or "RMB clearing channel". 554 Therefore, we
understand a domestic clearing channel must be based in China in acco rdance with Document No 53.
We further understand from China that Document No . 53 is directed at avoiding unnecessary foreign
exchange transactions; this is why the relevant tr ansactions must be cleared through domestic RMB
clearing channels, and not over the networks of international bank card organizations.
7.438 Setting aside the purpose behind this instrument, it is clear that foreign-based EPS suppliers
are excluded from handling the clearing of RMB paym ent transactions involving domestically issued
cards. This would seem to be the case regardless of whether it were possible for a foreign-based EPS
supplier to clear such a transacti on abroad in RMB, i.e. without involving foreign exchange, since
Article V.2 states that all such transactions " shall be settled in RMB through domestic clearing
channels" (emphasis added).
7.439 Nevertheless, we have not identif ied any language in Articles V.2, V.3 or VII.3 that specifies
that CUP alone must be that domestic clearing chan nel, or that EPS suppliers of other WTO Members
could not meet the definition of domestic clearing channels or domestic RMB card clearing
organizations. For one thing, th e language seems to acknowledge th e possibility of more than one
domestic clearing channel, through the reference to "channels" in the plural form. In addition, there is
no explicit indication in any of these provisions th at CUP specifically must process all RMB payment
transactions involving domestically issued cards.555
7.440 Turning to the United States argument that the reference to CUP in Article 1.2 of Document
No. 153 confirms that CUP is the only entity that may process domestic RMB bank card transactions,
we recall that Article 1.2 of Document No. 153 provides that "[CUP] is currently the domestic
clearing organization specializing in RMB bank card inter-bank information routing and exchange".556
This document dates from June 2005. We recall our conclusion that, while CUP may have been the
only domestic clearing channel operating in China in 2005, and may still be the sole domestic channel
operating in China that clears domestic RMB ba nk card transactions, the relevant language in
Document No. 153 does not grant CUP the exclusive privilege to clear and settle RMB for
transactions involving domestic foreign currency and dual currency bank cards.
7.441 Therefore, having addressed the foregoing aspects of Document No. 53, as well as the United
States' argument regarding Document No. 153, we conclude that Document No. 53 does not impose a

554 In response to Panel question No. 116, China expl ained that a number of "complex" factors affect
the network over which a dual-logo card is processed. Fo r international transactions, where the issuing bank is
not located in the country in which the transaction occu rs, China explains that certain transactions will be
permitted to be processed over "domestic" networks, while in other cases, they may need to be processed over
an external network, such as "VisaNet". See China's response to Panel question No. 116, para. 79 and fns. 39
and 40. See also Visa International Operating Regulations, Core Principle 7.4, Exhibit CHN-113.
555 We also recall that Document No. 53, which was promulgated on 11 October 2010 and entered into
force on 1 November 2010, replaced Do cument No. 272. We stated ab ove that we would not consider
Document No. 272 in our analysis in part due to its repeal prior to the establishment of the panel. See
paras. 7.221-7.227 above. We do not wish to make any findings in respect of Document No. 272 here, but find
it pertinent to note that, differently from Document No. 53, Article 4.1 of Document No. 272 expressly required
that all domestic RMB transactions involving domestic foreign currency and dual currency bank cards be
handled through CUP.
556 See also discussion in paras. 7.412-7.421 above.

requirement or otherwise maintain or establish CUP as the sole supplier of EPS in respect of domestic
RMB bank card transactions.
(xi) Document No. 49
7.442 The United States argues that Document No. 49 requires that a wholly foreign-funded bank or
a Chinese-foreign equity joint bank that plans to issue bank cards comply with the bank card business
and technical standards formulated by the PBOC. In its view, this requirement to follow uniform
business specifications and technical standards establi shes a mandate that CUP be used to process all
RMB bank card transactions.557
7.443 China did not specifically address Document No . 49. In general, China argues that a
requirement to comply with one set of business rules and technical standards does not preclude a bank
card issuer from issuing cards that also comply with other rules and standards that enable that card to
operate over other networks. China submits that many such cards exist around the world.558
7.444 The Panel notes that Article IV, in a translati on agreed between the parties, requires a wholly
foreign-funded bank or Chinese-foreign equity joint bank that plans to issue bank cards to abide by
the business and technical standards formulated by the PBOC and to ensure that issued bank cards
meet the general requirements regarding the network for bank card interoperability.559
7.445 In our view, this provision intends to ensure inter alia that bank cards issued in China can be
used in domestic inter-bank transactions. Similarly to what we have said above in respect of other
instruments that impose interoperability requirements 560, we do not identify an ything on the face of
this document that requires that all cross-regi on or inter-bank transactions occur over the CUP
network, or that prohibits the use of cards on othe r networks with different technical/interoperability
requirements. Accordingly, in the absence of evid ence demonstrating otherwise, we cannot conclude
that this instrument on its own mandates or establis hes CUP as the sole supplier of EPS in respect of
domestic bank card transactions denominated or paid in RMB.
(xii) Document No. 129
7.446 The United States argues that Article 3.2 of Do cument No. 129 mandates that all RMB bank
cards newly issued by commercial banks and posta l savings and remittance bureau comply with
unified business specifications and technical standard s of the CUP network and bear the CUP logo.
Based on adherence to these standards, the United States argues, therefore, that this provision
mandates and establishes CUP as the sole supplier to process all RMB bank card transactions issued
and used in China. 561 The United States notes as well that Article 3.4 of this document requires
commercial banks to work with CUP to "imp rove procedures for dealing with errors". 562 It submits
that, if suppliers other than CUP were permitted in the market, then all other EPS suppliers would be
subject to similar requirements. The fact that othe r suppliers are not subject to the same requirements
demonstrates that CUP is a sole supplier, in its view.

557 United States' second written submission, para. 154 (citing Article 4 of Document No. 49).
558 China's response to Panel question No. 22(c), pa ra.18; comments on the United States' response to
Panel question Nos. 70-72, 86-96, 115-123, para. 56.
559 See Translation Issues in DS413, Table I: Translation Issues Agreed by China and the United States,
dated 6 December 2011.
560 See paras. 7.299, 7.334 and 7.358- 7.360 above; see also the Panel's discussion of Document
Nos. 37, 57, 103 and 149 in this section of the Report.
561 United States' second written submission, para. 154; response to Panel question Nos. 88(a), para. 73;
119, para. 118.
562 United States' second written submission, para. 168.

7.447 China does not specifically refer to Document No. 129. In general, China argues that a
requirement to comply with one set of business rules and technical standards does not preclude a bank
card issuer from issuing cards that also comply w ith other rules and standards, which would enable
that card to operate over other networks. China submits that many such cards exist around the
world.563
7.448 The Panel concluded above 564 that Article 3.2(ii) requires that all RMB bank cards issued in
China must bear the Yin Lian/UnionPay logo and must be interope rable with the CUP network. In
addition, Article 3.4(i) provides that "[CUP] shall, in conjunction with all commercial banks, further
supplement and perfect error processing manage ment measures and implementation rules,
establishing a scientific and effective error process ing procedures, clarify the responsibilities of the
parties involved in error processing and specify the task assignment".
7.449 We have indicated in respect of Document No. 129 above 565 , and in respect of other
instruments at issue 566 our view that the requirement to comp ly with logo and business and technical
requirements for interoperability does not preclude ba nks from issuing cards that meet other technical
or business requirements and also bear the logo of a foreign EPS supplier. Similarly here, we
consider the requirement to bear the Yin Lian/UnionPay logo and meet interoperability requirements
does not on its own establish or maintain CUP as a so le supplier. We find nothing on the face of this
measure that would prevent cards from bearing th e logo of another EPS supplier or operating over the
network of another EPS supplier, so long as that card also bears the Yin Lian/UnionPay logo and is
interoperable with the CUP network.
7.450 We note that Article 3.4 refers to CUP by name , and directs CUP to work together with all
commercial banks to develop and perfect erro r processing related to bank card transactions.
Document No. 129 dates from July 2003. As we have discussed above 567, CUP may have been the
only EPS supplier operating in China in 2003, and ma y today still be the sole EPS supplier operating
in China, that clears domestic RMB-denominated ba nk card transactions for cards issued in China. If
this is the case, then this could explain the referen ce in Document No. 129 to CUP in its direction to
work with commercial banks to handle error pro cessing. That is, in referring to CUP, Document
No. 129 does not exclude other suppliers; it merely re flects the fact that CUP was and perhaps still is
the only supplier. Moreover, if the CUP network was and is the only EPS supplier in China, any
errors in bank card processing would occur on CUP's ne twork. In other words, we have not identified
any language in Articles 3.2(ii) and 3.4(i) of Document No. 129 that grants CUP the exclusive
privilege to process RMB transactions on a continuing basis. There is also no evidence before this
Panel that other EPS suppliers were prevented from establishing alternative networks to process RMB
transactions. In the absence of additional evidence, we are unable to conclude that Document No. 129
mandates or establishes CUP as the sole supplie r of EPS in respect of domestic transactions
denominated or paid in RMB.
(xiii) Document No. 76
7.451 The United States contends that Document No. 76 requires that all entities participating in the
bank card business comply with a series of "business practices" and implement technical standards as
set out in the Business Practices Appendix to Document No. 76. Consistent with the way that laws
are typically written, the United States considers th at these rules and procedures must be followed to

563 China's response to Panel question No. 22(c), para. 18; comments on the United States' response to
Panel question Nos. 70-72, 86-96, 115-123, para. 56.
564 See para. 7.270 above.
565 See para. 7.299 above.
566 See the Panel's discussion of Document Nos. 37, 57, 103, 149 and 49 in this section of the Report.
567 See para. 7.440 above.

the exclusion of other rules. 568 It argues that all entities participating in the bank card business
participate in the common network, process all RM B bank card transactions over the network, and
process transactions according to uniform rules and procedures, including conforming to CUP logo
requirements.569 The United States considers the net effect is to mandate the use of CUP for all RMB
bank card transactions, and otherwise prohibit the use of EPS suppliers other than CUP. 570 Moreover,
the United States submits that CUP's own operating regulations "implement the mandate in Document
No. 76", and similarly prohibit logos of competing EPS suppliers from appearing on CUP cards.571
7.452 According to the United States, a number of elements in Document No. 76 support the
conclusion that CUP alone may handle RMB bank card tr ansactions. It considers that references to a
"countrywide", "unified logo" or "standardize[d]" system throughout Document No. 76 reinforce that
CUP alone may process RMB transactions taking place in China. 572 It argues that the reference to the
establishment of a "unified" network in CUP's Artic les of Incorporation and Notification of Approval
of CUP's Business Licence support this interpretation. 573 It further submits that the "precise" ways in
which Document No. 76 describes how transactions must be processed and how participating banks
must organize themselves further supports the inte ntion that all issuers and acquirers must comply
with uniform standards which are exclusive to CU P and necessitate that all RMB transactions will be
processed by CUP.574
7.453 In addition, the United States considers the fa ct that Chapter 10 of the Business Practices
Appendix to Document No. 76 excludes applicati on of the business practices to foreign currency
cards issued outside China, conversely demonstrat es that the business practices are intended to apply
to all transactions involving domes tically issued cards in China. 575 The United States also notes that
paragraph 5 of the Notice to Document No. 76 re quires that all "bankcard business rules that are
inconsistent with the Specif ications shall be abolished" 576. In its view, this limitation contradicts any
assertions by China that bank cards may conform to ot her standards and rules, and consequently, that
other EPS suppliers may process RMB transactions. 577 Finally, the United States submits that
Article 4 of the business practices assigns exclusive ow nership and management rights of the network
logo to CUP.578 The United States argues that CUP is thus capable of protecting its exclusivity in the
marketplace by refusing permission to use the CUP logo to issuers of cards carrying the logo of
competing EPS suppliers.
579
7.454 China agrees that Document No. 76 sets forth detailed rules and technical specifications
pertaining to bank card interoperability. 580 However, as repeated th roughout its submissions and
reflected in preceding sections, China argues that compliance with one set of business rules does not
preclude compliance with another set of business rules, the latter of which would enable bank cards to

568 United States' second written submission, para. 163.
569 United States' response to Panel question No. 88(a), para. 72.
570 United States' second written submission, paras. 153, 159 and 161.
571 United States' response to Panel question No. 8; comments on China's response to Panel question
No. 104.
572 United States second written submission, para. 164 (r eferring to Chapter I, Articles 1.1, 2.1 and 4.1
of the Business Practices Appendix to Document No. 76); comments on China's response to Panel question
No. 119, para. 60.
573 United States' second written submission, para. 165.
574 United States' second written submission, paras. 157-171.
575 United States' response to Panel question No. 88(a), para. 74.
576 United States' response to Panel question No. 88(a), para. 74; comments on China's response to
Panel question No. 119, para. 69.
577 United States' second written submission, para. 163.
578 United States' response to Panel question No.15, para. 57.
579 United States response to Panel question No. 71(b)(i), para. 7.
580 China's first written submission, para. 45.

operate over other networks. Chin a considers that many bank cards in the marketplace are capable of
operating over numerous networks.581
7.455 The Panel concluded in paragra ph 7.330 above that Article 1.2 of Chapter II of the Business
Practices Appendix does not impose a requirement that all merchant terminal equipment be capable of
accepting bank cards bearing the Yin Lian /UnionPay logo. The Panel further concluded in
paragraphs 7.352 and 7.353 that pa ragraphs 2 and 3 of the Notice to Document No. 76 as well as
Articles 2.1 and 5.2.1-5.2.3 of Ch apter I of the Business Practices Appendix do impose a requirement
that all acquiring banks must be capable of accepting bank cards bearing the CUP logo. We
understand that Document No. 76 establishes clear busi ness and technical standards to facilitate the
processing of transactions over the CUP network. With this in mind, we assess the United States'
contention that Document No. 76 requires that all domestic RMB transactions on domestically issued
cards be processed over the CUP network.
7.456 We begin with the United States' argument that paragraph 5 of the Notice and Chapter 10 of
the Business Practices Appendix to Document No. 76 support the United Stat es' allegation that only
CUP may process domestic RMB transactions on dom estically issued cards, and that other EPS
suppliers may not do so. The United States contends th at the requirement in paragraph 5 to abolish all
business rules that are inconsistent with the Business Practices Appendix to Document No. 76
following the entry into force of Do cument No. 76 effectively grants CUP sole supplier status. Given
the context provided by Articles 1.1 and 2.1 and elsewhere in Document No. 76, we understand
paragraph 5 serves to ensure that entities particip ating in the bank card business do not apply business
rules that are inconsistent with the Business Pract ices Appendix, thereby effectively preventing the
establishment of a unified, interoperable network. As we have indicated above
582, the United States
has provided no evidence to demonstrate that it would not be possible for a bank card issuer to issue a
card, or an acquirer or terminal equipment to accept a card, that is at the same time interoperable with
the business rules of EPS suppliers of other WTO Members and the rules of the Business Practices
Appendix to Document No. 76. In the absence of a ny such evidence, we are not persuaded that it can
be inferred from paragraph 5 that all cross-region or inter-bank transactions must occur over the CUP
network, or that it would not be technically or legally possible to issue and use cards in China on other
networks that apply different business rules, while at the same time ensuring their consistency with
the Business Practices Appendix. Accordingly, we cannot conclude that paragraph 5 mandates that
CUP is the sole supplier of EPS in respect of domestic transactions denominated or paid in RMB.
7.457 We next turn to Chapter 10 of the Busi ness Practices Appendix, which provides that
Document No. 76 does not apply to foreign currenc y cards issued outside China that are used in
China. The United States' claims are directed toward all RMB cards issued and used in China. In our
view, when read in isolation, it is not clear to us that this statement means that Document No. 76 is
applicable to all RMB-denominated payment cards is sued in China. Regardless, we do not consider
that this statement alone would support the conclusion that the bu siness and technical standards set
out in the Business Practices Appendix must apply to all cards issued in China to the exclusion of
other rules. As we have already stated above 583, we do not consider the requirement to bear the Yin
Lian/UnionPay logo and meet business and technical requirements for interoperability on its own
establishes or maintains CUP as a sole supplier. We are thus not persuaded that the United States'
reference to Chapter 10 supports its allegations.
7.458 We have found throughout Section VII.E.2(e) that the requirement to bear the Yin
Lian/UnionPay and meet certain business and techni cal requirements for interoperability does not

581 China's response to Panel question No. 119, para. 84.
582 See paras. 7.299 and 7.358- 7.360 above.
583 See the Panel's discussion of Document Nos. 37, 57, 103, 149, 49 and 129 in this section of the
Report.

preclude issuers from issuing bank cards that are also interoperable with the business and technical
rules of EPS suppliers of other WTO Members. In vi ew of this, we similarly reject the United States'
contention that the "way" in which Document No. 76 is written as a regulation means that the rules
and procedures in Document No. 76 must be fo llowed to the exclusion of other procedures. 584 We
therefore consider whether any other elements id entified by the United States in Document No. 76
mandate the use of CUP for all RMB-denominated transactions.
7.459 We next consider the United States' contenti on that references to a "unified logo" or
"standardize[d]" system throughout Document No. 76 support the conclusion that CUP is intended to
be a sole supplier of EPS services for RMB bank card transactions in China. The United States argues
that the use of the phrase "to set up and operat e a single nationwide inter-bank card information
switching network" and particularly the word "single", that is used both in CUP's Articles of
Association
585 and Notification of Approval of CUP's Business Licence 586, confirm that CUP alone
may supply EPS services for RMB transactions in China for those cards issued in China. It argues
that "China's decision early on to position CUP as the monopoly supplier of EPS in China is reflected
in these foundational documents".587
7.460 We first note that the Article 2.1 of the Bu siness Practices Appendix to Document No. 76
provides that the "bank card united association" that was to be established pursuant to this document,
(and that later became CUP) means a "countrywide bank card united operational organization". In
discussing the meaning of "bank card interoperation" , Article 2.2 provides that bank card institutions
and merchants should "link themselves with the countrywide… system to achieve the sharing of
information …and interoperation". Article 4.2 of the Business Practices Appendix states that the logo
of the network consists of "the Chinese charact er of 'UnionPay' and a graph symbolising the united
network" (emphasis added). In our view, the re ferences to the establishment of a "countrywide"
network, or the provision mentioning that the logo of the network should symbolize that the network
is "united", reflects foremost an intention to establish a common, nationwide network. Evidence on
record indicates that, prior to 2001, when Docume nt No. 76 was issued, no EPS supplier had in place
a nationwide, interoperable network.
588 The fact that a nationwide network did not exist in China
previously meant that bank cards were not guarant eed to be usable throug hout China. Hence, we
understand the focus in Document No. 76 was to create a network that is "united" and "countrywide".
In reaching this view, however, we do not agree with the United States that one can properly infer
from this effort to create a nationwide network an in tention to create an exclusive network in China,
wherein all other EPS suppliers except the associa tion that would later become CUP would be
prohibited from operating. We do not find the infe rence drawn by the United States is supported by
the aforementioned references, nor do we find such support elsewhere in Document No. 76. As we
explained above, we have found nothing in Document No. 76 that prevents issuers from incorporating
logos of other EPS suppliers, or issuing cards that comply with the rules of other EPS suppliers, so
long as those cards bear the Yin Lian/Union Pay logo and are interoperable with the CUP network.
7.461 As noted, the United States also refers to the reference to the establishment of a "single"
network in CUP's Articles of Association and Notif ication of Approval of CUP's Business Licence in
support of its interpretation of what was intende d through Document No. 76, in particular the
references to a "unified logo" or a "standardize[d]" system. We note that the term "single" does not
appear in Document No. 76 itself. One meaning of the term "single" is "cons isting of only one part",

584 In this respect, we respond to the United States' argument as set out in paragraph 163 of its second
written submission.
585 See CUP's Articles of Association, Articles 11 and 12, Exhibit US-20.
586 Notification of Approval of CUP's Business Licence, Exhibit US-29.
587 United States' response to Panel question No. 121.
588 See United States' response to Ch ina's request for a prel iminary ruling, paras. 64-71; China's first
written submission, paras. 38-46. See also fn. 532 above.

as a limitation in number.589 However, we note that the term "single" may also be understood to mean
"undivided, united".590 In addition to the meaning of this te rm, we also note that the phrase "to set up
and operate a single nationwide inter-bank card info rmation switching network" uses the indefinite
article "a", and not the definite article "the", and to that extent does not appear to indicate an intention
to limit the number of EPS suppliers in the marketplace to one. Moreover, we note that Article 11 of
CUP's Articles of Association specifies that the purpose of CUP is "to set up a unified, highly
efficient and safe inter-bank card information exchange network across the country". In view of the
different meanings of "single" and its use in CU P's foundational documents, we do not agree with the
United States that these documents should inform th e conclusion that CUP is a sole supplier of EPS
services for RMB bank card transactions in China. Rather, we find the use of "single" in these
identical phrases in CUP's Articles of Association and Notification of Appr oval of CUP's Business
Licence is consistent with the stated objective in Ar ticles 1.1 and 2.1 of Document No. 76 to establish
a "countrywide", "interoperable" bank card network in China. In our view, therefore, the stated
objective to establish a "single" network is not in dicative of an intention to create an exclusive
network.
7.462 Finally, we turn to the United States' contention that CUP's control of the ownership and
management rights of the Yin Lian /UnionPay logo enables it to prohibit other EPS suppliers from
operating in China. We concluded in paragraph 7.277 above that Ar ticle 4.2 of the Appendix grants
the United Association (now CUP) exclusive ow nership and use and management right of the Yin
Lian/UnionPay logo. However, we observed that, pursuant to Article 4.3 of the Business Practices
Appendix, "Interoperating Members" (which include issuing banks) "automatically obtain" the right
to use the logo from the date they officially e ngage in inter-bank business upon approval by the
United Association/CUP. Therefore, we stated 591 that we were not persuaded that Article 4.2, when
read together with Article 4.3, provides a basis for CUP to refuse permission for the logo to appear on
bank cards bearing the logo of competing EPS supplie rs. Rather, banks that already engage in the
bank card business would be permitted to incorporate additional logos of EPS suppliers.
7.463 In its responses to several of the Panel's qu estions following the second substantive meeting
of the parties 592, the United States submitted the text of CUP's Operating Regulations 593 as well as
reports from China's press 594 in support of its allegation that CUP uses its control over the CUP logo
to prevent other logos from appearing on the car ds and thereby limits the ability of other EPS
suppliers to enter the Chinese market. According to the United States, CUP's Operating Rules state in
relevant part:
The following logos cannot appear on UnionP ay Card surface (including card face
and card back).
 Name/logo/trademark of credit card or debit card of the
companies and their subsidiaries that are deemed to have
competitive relationship with UnionPay by UnionPay Board
of Directors …

589 Shorter Oxford English Dictionary, Vol. 2, p. 2843.
590 Shorter Oxford English Dictionary, Vol. 2, p. 2843.
591 See paras. 7.277-7.279
592 United States' response to Panel question No. 11 7. See also United States' response to Panel
question Nos. 86 and 94.
593 CUP's Operating Regulations, Volume III, Rule s on UnionPay Card, BIN and Logo, April 2011,
Section 2.5.3.2, Exhibit US-115
594 See Exhibits US-119, US-120, US-121, US-122, and US-123.

7.464 As we noted above 595, CUP's Operating Regulations are not identified as a relevant legal
instrument in the United States' panel request. We are unclear why the United States did not identify
these regulations earlier. We recall China's view that evidence on record does not support the United
States' assertion that CUP does not licence the Yin Lian/UnionPay logo for use on cards that also carry
the logo of other EPS suppliers. 596 China submits Exhibit CHN-112 as evidence that a large number
of cards in China are "dual logo" cards.597
7.465 We set out reasons in paragraph 7.279 above why we are not convinced that the identified
provisions of CUP's Operating Re gulations support the United States' assertion that the logo use
requirements enable CUP to prevent an issuer fro m issuing bank cards of competing EPS suppliers.
We noted that the Regulations, submitted very late in the proceedings, raise a number of questions
concerning their operation that the United States di d not address. In particular, the Operating
Regulations do not specify whether the bank cards on which other logos may not appear – referred to
above – are only CUP-branded bank cards, or also bank cards issued in China that bear more than one
logo. We also took note of evidence submitted by China that numerous cards issued in China – "one
quarter of all bank cards issued in China in 2010" – carry the logo of other EPS suppliers. 598 In our
view, the United States failed to reconcile its interp retation of CUP's Operating Regulations with this
evidence. The United States also failed to explain its interpreta tion of the language taking into
account that Article 4.3 of the Business Practices Appendix to Document No. 76 indicates that the
right to use the logo is automatically grante d to interoperating members to the CUP network. 599 For
these reasons, we reject the United States' conten tion that CUP's control of the ownership and
management rights of the Yin Lian /UnionPay logo enables it to prohibit other EPS suppliers from
operating in China.
7.466 Accordingly, for the reasons set out above, we conclude that Document No. 76 does not
establish CUP as the sole supplier of EPS for RMB- denominated transactions in China or otherwise
prevent the use of EPS suppliers other than CUP.
(xiv) Document No. 17
7.467 The United States submits that Article 64 of Document No. 17 requires issuing banks to
"implement technical standards prescribed by the State" when issuing bank cards. 600 The United

595 See para. 7.291 above.
596 See para. 7.278 above.
597 China's comments on United States' response to Panel question Nos. 70-72, 86-96, 115-123,
para. 67.
598 Exhibit CHN-112.
599 In respect of its claim that China limits EPS suppliers other than CUP from entering the Chinese
market, the United States' asserts that CUP at times has not approved EPS suppliers' applications for new dual
logo cards, as it argues is demonstrated in various press reports (Exhibits US-119, US-120, US-121, US-122,
US-123). Without entering into a discussion of the evid entiary value of these press reports, as explained in
paragraph 7.280, we do not understand how the United States' assertion that CUP undertakes approval of
applications to issue dual logo cards can be reconcile d with Article 4.3. Also, the United States has not
explained to us how its allegation that CUP restrains the issuance of dual branded cards to a "certain threshold
percentage (e.g. 80%)" (stated in response to Panel question No. 117, para. 114) supports the contention that
CUP is therefore the "sole supplier" of EPS for RMB tr ansactions. In addition, we note the United States'
argument in response to Panel question No. 94 (para. 95) that CUP has the authority to deny or delay the
issuance of BIN numbers to competing EPS suppliers, thereby preventing EPS suppliers from competing in the
Chinese market. Like China, we note that the United States has not provided an y specific reference in the
instruments at issue to substantiate its assertion. We are therefore unable to agree that the above elements
support the United States' claim that China limits EPS suppliers other than CUP from entering the Chinese
market.
600 United States' second written submission, para. 154.

States argues that "many" of the technical standa rds are developed by CUP, and as a result, the
requirement to implement CUP standards "enhances CUP's position as sole supplier".601
7.468 China does not specifically address the provision identified by the United States. We recall
that, in general, China maintains that a requireme nt to comply with one set of business rules and
technical standards does not preclude a bank card issu er from issuing cards that also comply with
other rules and standards, which would enable that card to operate over other networks.602
7.469 The Panel concluded in paragraph 7.286 above that Article 64, when read in conjunction with
Document No. 76, requires issuers to implement business and technical standards when issuing bank
cards that bear the Yin Lian/UnionPay logo.603 It is not clear that "many" of the technical standards
prescribed by the State are those standards developed by CUP. But even if it were, as we stated in
respect of Document No. 17 above 604, and in respect of other instruments that impose interoperability
requirements605, we do not consider the requirement to comply with certain business and technical
interoperability requirements alone precludes banks from issuing cards that meet other technical or
business requirements that enable these cards to ope rate on another network. Given our conclusions,
we do not consider that Article 64 individually coul d be considered to mandate the use of CUP or
establish CUP as the sole supplier of EPS for all domestic transactions denominated and paid in RMB,
and hence we do not agree with the United States that Article 64 results in "enhanc[ing] CUP's
position as sole supplier".
(xv) Document No. 142
7.470 The United States argues that Article II.3 of Document No. 142 requires that issuers of bank
cards prioritize issuance of cards that adopt the PBOC 2.0 Standards, a chip standard developed by the
PBOC and CUP. It submits that China "intends to require that all cards comply with this standard. 606
The United States submits that this standard is Ch ina-specific and incompatible with the "EMV" chip
standard used by non-Chinese EPS suppliers.607 As a result, the United States argues that non-Chinese
EPS suppliers have to redesign their chips to allow their cards to be used in China. 608 The United
States considers that this requirement contributes to establishing CUP as a sole supplier in the
processing of RMB bank card transactions. In addition, it notes that various provisions in Document
No. 142 – notably Articles III, V and VI – desi gnate CUP to participate with other Chinese
institutions in an effort to enhance bank card securi ty. The United States submits that, if suppliers
other than CUP were permitted in the market, then all other EPS suppliers woul d similarly be subject
to the requirements set out in Articles III, V and VI of Document No. 142. The fact that other
suppliers are not so subject demonstrates that CUP is a monopoly, in its view.
609

601 United States' response to Panel question No. 71(a), para. 6.
602 China's response to Panel question No. 22(c), pa ra.18; comments on the United States' response to
Panel question Nos. 70-72, 86-96, 115-123, para. 56.
603 We concluded, however, that Article 64 does not require that all bank cards in China must bear the
Yin Lian/UnionPay logo and that it does not require the use of the unified standards in all cases.
604 See para. 7.299 above.
605 See the Panel's discussion of Document Nos. 37, 57, 103, 149, 49, 129 and 76 in this section of the
Report.
606 United States' response to Panel question No. 94, para. 97.
607 United States' response to Panel question No. 72, para. 17.
608 United States' response to Panel question No. 94, para. 97 (citing Article 2.3 of Document No. 142);
see also response to Panel question No. 88, para. 73.
609 United States' second written submission, para. 168.

7.471 China contends that the United States provides no support for its assertion that EPS suppliers
will need to significantly redesign their chip to be allowed to operate in the Chinese market. 610
Setting this aside, as noted above 611, China maintains that a requirement to comply with CUP's
business rules and technical standards does not preclude bank card issuers from issuing cards that also
comply with other rules and standards that enable that card to operate over other networks.
7.472 The Panel notes that Article II.3 directs card issuer s to ensure that all cards issued meet the
requirements of the "Bank Card Specifications (JR0052-2009)" and the "Technical Specifications on
Bankcard Interoperability (JR-55-2009)". The United States suggests that this standard will be
implemented at a future point in time. 612 Issuers are directed to give priority to the issuance of bank
cards which adopt the "PBOC 2.0 Standards" to improve "the anti-counterfeiting ability of bank
cards." Article II.5 and Articles III.7 and III.8 dir ect card issuers to submit risk information on bank
cards to the bank card information sharing system of CUP to aid in preventing bank card fraud.
Article V.15 directs CUP, inter alia, to improve its "bank card risk prevention and control system",
including setting up a "uniform national merchant information registration and risk prevention and
control system"; and to "work out the business rul es and technical standards for inter-bank payment
services … that are not specified in th e current networking business standards".
7.473 We note the United States' assertion that the PBOC 2.0 standard is not compatible with the
EMV chip standard used in other parts of the worl d, and that EPS suppliers will have to "significantly
redesign their chips" to allow their cards to be u sed in China. Although stating that this redesign
would be a "significant" one, the United States does not provide explanation or evidence about what
would be involved in such redesign. Hence we have nothing on which to assess the significance,
difficulty or otherwise of any redesign procedures .. Nor does the United States assert that a redesign
to conform to the PBOC 2.0 standard would be so difficult such that EPS suppliers would opt not to
enter the market. In the absence of any suppor ting evidence, we are unable to accept the United
States' assertion that a requirement to comply with th is standard in the future would ensure that CUP
would remain in the market as a sole supplier. In addition, the United States does not assert that
compliance with the PBOC 2.0 standard would pr eclude simultaneous compliance with the EMV or
any other standard, such that we cannot conclude that a given card would be prevented from operating
over more than one network.
7.474 We indicated above in respect of other instruments 613 that the requirement to comply with
technical/interoperability requirements does not precl ude banks from issuing cards that meet other
technical requirements. Thus, we are not persuaded that the initiative set out in Article II.3 to require
compliance with PBOC 2.0 standards prevents cards from complying with other standards such that
they might operate over other networks. Accordingly, we are unable to conclude that a requirement to
comply with PBOC 2.0 standards establishes or maintains CUP as a sole supplier.
7.475 We note, finally, the United States' argument that the designation of CUP in Articles III, V
and VI in Document No. 142 to participate with ot her Chinese institutions in an effort to enhance
bank card security demonstrates that CUP is a sole su pplier. We concluded in paragraph 7.450 above
that the mere fact that Document No. 129 designates card issuers or acquirers to work together with
CUP, so as to develop error processing related to bank card transactions, does not by itself establish or

610 China's comments on the United States' response to Panel question Nos. 70-72, 86-96, 115-123,
para. 69.
611 See, e.g. China's response to Panel question No. 22(c), para.18; comments on the United States'
response to Panel question Nos. 70-72, 86-96, 115-123, para. 56.
612 As we noted, the United States ar gues that "China intends to require that all cards comply with the
new chip standard…" See United States' response to Panel question No. 94, para. 97.
613 See the Panel's discussion of Document Nos. 37, 57, 103, 149, 49, 129, 76 and 17 above.

maintain CUP as a sole supplier. 614 We consider our conclusions in that context to be relevant here
and conclude similarly. Document No. 142 entere d into force in 2009. Given CUP's position in the
Chinese marketplace, the fact that CUP is identified by name may simply reflect the prevailing market
situation in China at that time. Hence, Document No. 129 designates CUP to participate in reducing
bank card-related crimes. Apart from this specific role, there is no language in Document No. 142
that grants CUP the exclusive privilege to pr ovide RMB inter-bank information exchange and
processing on a continuing basis. In the absence of additional evidence, we are unable to conclude
that references to CUP in Document No. 142 have the effect of mandating or establishing CUP as the
sole supplier of EPS in respect of domestic transactions denominated or paid in RMB.
(xvi) Conclusions on the instruments individually
7.476 Based on the above analysis, the Panel concludes that none of the identified legal instruments
considered individually mandates or establishes CUP as sole supplier of EPS in respect of domestic
RMB bank card transactions or otherwise prohibits the use of EPS suppliers other than CUP.
7.477 Specifically, we concluded that certain provisions in Document Nos. 17, 37, 49, 57, 76, 129,
142, 149 and 153 require that all bank cards issued in China, including dual currency bank cards, for
use in connection with domestic inter-bank transactions bear the Yin Lian/UnionPay logo. In various
respects, these documents further require, inter alia , that terminal equipment operated by acquirers
and merchant terminal equipment provided by acquirers be technica lly capable of accepting all bank
cards bearing the Yin Lian/UnionPay logo. Finally, these documents require that acquirers themselves
be capable of accepting bank cards bearing the Yin Lian/UnionPay logo. We found, however, that
nothing in the cited provisions of these instruments precludes the issuance or acceptance of bank cards
that would operate on any inter-bank networks other than that of CUP, or precludes the use, or the
acceptance at terminals, of bank cards bearing logos of other EPS suppliers, so long as those cards
also bear the Yin Lian/UnionPay logo and are also interoperable over the CUP network. Accordingly,
we found that the cited provisions of these inst ruments do not establish or maintain CUP as the
exclusive EPS supplier for all RMB bank card transacti ons, where a bank card is issued and used in
China. We similarly concluded that Document No. 103 does not establish or maintain CUP as the
sole supplier.
7.478 We further concluded that Document No. 153 does not grant CUP the exclusive privilege to
provide EPS in relation to RMB bank card transactions taking place in China on the basis that it refers
to CUP as the domestic clearing channel, or becau se it regulates third-party service providers. We
similarly concluded that Document No. 53 does not require that CUP alone may serve as a domestic
clearing channel to process RMB transactions.
7.479 Finally, in our analysis of Document Nos. 16, 8 and 254, we recalled our previous
conclusions
615, that China requires that CUP and no other EPS supplier is to handle the clearing of
certain RMB bank card transactions that involve either an RMB bank card issued in China and used in
Hong Kong or Macao, or a bank card issued in Hong Ko ng or Macao that is used in either of these
territories, or in China in an RMB transaction. We additionally recalled our conclusion that
Document No. 219 does not establish or maintain CUP as sole EPS supplier for RMB transactions in
respect of the clearing of these RMB card transactio ns in Hong Kong, Macao and China, specifically,
or in relation to RMB transactions in China generally.616

614 See also para. 7.440.
615 See paras. 7.383-7.384 above.
616 See paras. 7.372-7.377 and 7.402-7.404.

7.480 As we explained, Document Nos. 16, 8 and 254 617 establish CUP as the exclusive EPS
provider for RMB bank card transactions concerning Chinese, Hong Kong or Macao nationals who
travel in China, Hong Kong or Macao. In this section of the Report, we specifically address the
question of whether legal instruments at issue in th is dispute explicitly establish or maintain CUP as
sole supplier in respect of all RMB bank card transactions in China. As Document Nos. 16, 8 and 254
are limited in scope to bank card transactions that involve bank cards issued in China and used in
Hong Kong or Macao or, alternatively, payment ca rds issued in Hong Kong or Macao and used in
China, we explained above that we do not see how any of these instruments establish CUP as sole
supplier of EPS for all domestic transactions occurring throu ghout China that are denominated and
paid in RMB. As these measu res pertain to transactions concerning Chinese, Hong Kong or Macao
nationals who travel in China, Hong Kong or Macao , we thus do not consider them as a direct
indication of the establishment or mainte nance of CUP as the sole supplier for all RMB transactions
taking place in China.618
7.481 Therefore, in respect of the various instrument s identified in connection with the alleged sole
supplier requirements, we are unable to conclude that any of the legal instruments, when considered
individually, maintains or establishes CUP as the exclusive EPS supplier for RMB bank card
transactions, or otherwise prohibit the use of EPS suppliers other than CUP.
(xvii) Collective assessment of the legal instruments at issue
7.482 We recall that the United States has requested the Panel to consider the "measures" at issue in
this dispute both individually and in combination wi th each other. It submits that these measures, or
six requirements, reflected or embodied in the various legal instruments affect "every element of the
electronic payment system and all of the key participants", including issuers, acquirers, merchants and
EPS suppliers themselves. 619 In particular, it argues that all entities participating in the bank card
business in China participate in the CUP networ k, process all RMB bank card transactions over the
network, and process transactions according to uniform rules and procedures, including conforming to
logo requirements.620 The United States considers that the ne t effect of these measures is to "create a
system in which CUP is the only entity that can supply EPS for RMB transactions", or that the
measures "ensure and consolidate CUP's monopoly position"621.
7.483 The United States maintains that the various legal instruments interact to establish and
maintain CUP as the sole supplier in three principal ways: (i) certain instruments explicitly state that
CUP must be used to process specific types of bank card transactions; (ii) certain instruments
establish and/or require the use of business specifica tions and technical standards which mandate the
use of CUP; and (iii) certain instruments implic itly recognize that CUP is the sole supplier of EPS
services for RMB denominated transactions. 622 It argues that the various requirements "ensure CUP's
privileged position", both "explicitly" and "effectively".623
7.484 The United States argues that no EPS supplier other than CUP benefits from issuer
requirements, terminal equipment requirements and acquirer requireme nts. The United States argues
that because of the need to fulf il these requirements, issuers and acquirers must have access to the

617 The Panel specifically refers to Article 6 of Document No. 16, Article 6 of Document No. 8 and
Articles 3, 4 and 17 of Document No. 254. See paras. 7.372-7.377 and 7.402-7.404 above.
618 The Panel addresses below, at paras. 7.482 and 7.57 6, whether this requirement is inconsistent with
Articles XVI and XVII of the GATS.
619 United States' first written submission, para. 48.
620 United States' response to Panel question No. 88(a), para. 72.
621 United States' first written submission, para. 63; second written submission, paras. 153, 159, and
161.
622 United States' second written submission, para. 144.
623 United States' first written submission, para. 46

CUP system, and must pay for that access. 624 It contends that it is thus "economically unviable" for
any foreign supplier of EPS to participate in the market.625 The United States explains:
Document Nos. 37, 57, 94, 272, 129, and 219 contain requirements that banks that
issue payment cards in China must bear the CUP logo at a specified position, and that
all ATMs and POS terminals must be capable of processing cards that bear the CUP
logo. No foreign suppliers are eligible fo r this privilege. As banks and processing
parties are already required to provide CUP such access (as well as pay for it), it
makes no economic sense for such banks to pa y for the additional privilege of using a
foreign EPS. In other words, these types of privileges do not simply discriminate
against foreign suppliers in the market place; they effectively deny them access
altogether.626
7.485 The United States submits that the requirement to pay fees to join CUP's network "creates an
unlevel playing field with other suppliers, even in those small areas where other suppliers are
permitted to operate (e.g . dual currency cards)." 627 Elsewhere, the United States argues that each of
the six requirements help "entrench CUP's positi on as the sole service supplier in the market". 628 It
explains, "[t]hese requirements gave CUP automati c and universal acceptance of its RMB payment
card products by banks and merchants in China and permitted and supported CUP becoming the sole
supplier of EPS in China".629
7.486 As we noted above, China maintains that the six alleged requirements do not operate in such a
way as to establish CUP as sole supplier for the clearing and settlement of all RMB domestic inter-
bank bank card transactions. 630 Rather, China submits that the identified measures establish a
common national network for processing RMB domestic inter-bank bank card transactions. 631 China
further submits that the above instruments do not preclude adherence to other technical standards,
such as the rules and operating procedures of othe r EPS suppliers. Similarly, it argues that issuer
banks are not prevented from being memb ers of other EPS suppliers' networks. 632 Thus, it maintains
that there is nothing in any of these instrume nts that would prevent a foreign EPS supplier from
establishing a domestic clearing channel in China.633
7.487 Taking into account the United States' argumen ts, we understand the United States considers
that the six requirements, as reflected in the legal instruments at issue, operate together in several
respects to establish and maintain CU P as the sole or exclusive EPS supplier. 634 First, the United
States maintains that various legal instruments work together in ways to explicitly or implicitly
restrict entry into the Chinese market
. Second, the United States' arguments suggest that it considers
that certain instruments work together in ways th at impose technical barriers to entry. Third, the

624 United States' first written submission, paras. 50-52.
625 United States' first written submission, para. 66.
626 United States' first written submission, para. 69.
627 United States' response to Panel question No. 94, para. 96..
628 United States' second written submission, paras. 173, 180, and 183; response to Panel question
No. 86, para. 63; 92, para. 88.
629 United States' second written submission, para. 190.
630 China's second written submission, paras. 90-102.
631 China's first written submission, para. 64; response to Panel question No. 121, para. 87.
632 China's response to Panel question No. 22(c), paras. 17, 18.
633 China's response to Panel question No. 103, para. 45.
634 In this respect, we note that the European Payments Council, "SEPA Cards Framework," refers to
"technical", "legal" and "commercial" barriers when discussing requirements or regulations governing co-
branding or limiting international EPS suppliers to offe ring services only for transactions outside of the SEPA
area. See United States' response to Panel question No. 73; European Payments Council, "SEPA Cards
Framework," Version 2.1, 16 December 2009, Section 1.2, Exhibit US-110, page 4.

United States considers that the measures operate together in a way that makes it "economically
unviable" to enter the market. We address each of these three arguments in turn.
7.488 As an initial matter, the parties dispute whethe r CUP is currently the only EPS supplier in the
market. China contends that the Rural Cred it Banks Funds Clearing Center (RCBFCC) operates
throughout China as a second EPS supplier for RM B bank card transactions, and processes inter-bank
bank card transactions independently of CUP. 635 In reference to the Center's website and related
materials, the United States considers that the RCBF CC is a "clearing and settlement center used by
rural commercial banks in China", 636 but that rural commercial banks using the RCBFCC "issue bank
cards bearing the CUP logo and transactions using these cards are processed by CUP." 637 As bank
cards issued by rural commercial banks for use on the RCBFCC network must carry the CUP logo,
issuers of these cards must be members of CUP, wh ich entails following all applicable CUP rules and
regulations.
7.489 The website reference provided by the United States is entirely in Chinese. However, as the
United States contends, the RCBFCC website contains a series of images of bank cards, each of
which includes a depiction of the CUP logo. In this respect, it would appear that bank cards depicted
on the RCBFCC website also conform to the issuer requi rements at issue in this dispute. However,
we cannot be sure of this as we have not been pr ovided with evidence explaining the origin of this
site, its date, or its contents. Nor are we able to verify China's assertion that the RCBFCC is a second
EPS supplier operating in China because we do not have access to a version of the website in an
official WTO language. Accordingly, we reach no findings in respect of the RCBFCC that would
inform or alter our analysis.
Explicit and implicit legal operation of the instruments when considered collectively
7.490 As reflected in our discussion above, China's inst ruments affect all aspects of the market for
bank card transactions and affect all entities in the process, including issuers, acquirers, merchants,
EPS suppliers and potentially third parties involved in the handling of bank card transactions. Our
analysis above also confirms that requirements imposed by the instruments are mandatory.
7.491 However, as we stated before, with the excep tion of RMB bank card transactions involving
Hong Kong and Macao nationals that travel to Chin a, and Chinese nationals that travel to Hong Kong
or Macao, we found that the United States had faile d to identify anything in the identified legal
instruments that explicitly grants CUP the exclusiv e privilege to supply EPS in respect of all RMB
bank card transactions taking place in China. In addi tion, the United States did not point to anything
in the identified provisions of the instruments at i ssue that prevents issuers from incorporating logos
of other EPS suppliers, in addition to the Yin Lian/UnionPay logo, or issuing cards that comply with
the rules of other EPS suppliers, so long as those cards also bear the Yin Lian/UnionPay logo and are
also interoperable with the CUP network. In th is sense, despite the fact that the measures are
mandatory and may lead to opportunities for CUP that other suppliers do not enjoy, we found that the
United States did not identify anything on the face of these instruments that legally prohibits EPS
suppliers other than CUP from operating in China's market.
7.492 The United States maintains that, in the even t that the instruments individually do not
demonstrate that CUP is a sole supplier, collectively, the instruments operate in this way. Primarily,
the United States bases its collective assessment on references to the text of the instruments
themselves. For instance, in response to question No. 87 from the Panel, the United States argues:

635 China's response to Panel question No. 114, para. 75; comments on United States' response to Panel
question Nos. 70-72, 86-96, 115-123, fn. 43.
636 United States' response to Panel question No. 88(b), para. 79.
637 Ibid.

The logo requirements work in conjunction with one another and are reinforced and
complemented by the mandate to conform to CUP's rules and procedures contained in
Document No. 76. These requirements work together to reinforce CUP's monopoly
over payment card transactions in China by ensuring that only CUP cards can be
issued for RMB denominated accounts, that all merchants accept those cards when
they are presented for purchases, and that the transactions will be processed in
accordance with CUP's rules and procedures. Consequently, no other supplier of EPS
may conduct domestic RMB transactions in China.
638
7.493 As set out in our assessment of the instrume nts individually, we found that none of the
instruments, such as Document No . 76, individually supports the proposition that "only CUP cards
can be issued for RMB denominated accounts". Having concluded as such, we find no basis to
conclude that merely reading the various instrume nts together, as the United States seems to suggest
that we do, leads us to modify our conclusions regarding the United States' assertion. Beyond
asserting that particular cited provisions of instru ments or requirements "work together", we find no
explanation that varies from that provided in the United States' assessment of the instruments
individually.
639 In other words, in relying on the texts of the provisions and without more, the United
States has not in our view established that the pr ovisions taken together effectively create a monopoly
in favour of CUP.
7.494 We recall the United States' view that the stated purpose set out in both CUP's Articles of
Association640 and in the Notification of A pproval of CUP's Business Licence 641 "to set up and
operate a single nationwide inter-bank card informat ion switching network" and particularly the word
"single", confirms that CUP alone may supply EPS services for RMB transactions in China for those
cards issued in China. In view of the different me anings of "single" and its use in CUP's foundational
documents, we concluded in paragra ph 7.461 above that the references to the establishment of such a
"single" network does not establish that CUP is the sole supplier of EPS services for RMB bank card
transactions in China. Rather, we explained that th is statement is consistent with the objective stated
elsewhere in Document No. 76 to establish a "countrywide", "interoperable" bank card service in
China.
7.495 We note as well that the United States has identi fied certain instruments that pertain to
transactions involving Hong Kong and Macao, in arguing that the legal instruments at issue in this
dispute explicitly establish or maintain CUP as a sole supplier in respect of all RMB bank card
transactions. We explained in pa ragraph 7.473 above that these instruments do not establish CUP as
the sole supplier of EPS for all domestic RMB bank card transacti ons occurring throughout China,
since the measures are lim ited in scope to bank card transactions that involve bank cards issued in
China and used in Hong Kong or Macao, or alterna tively, bank cards issued in Hong Kong or Macao
and used in China.

638 United States' response to Panel question No. 87, para. 69.
639 We note that, in response to question No. 115, the United States similarly argues the following:
The requirement on issuing banks to issue on ly cards that carry the CUP logo, when
combined with the requirements on acquiring banks to be capable of accepting CUP cards
(as discussed in response to question No. 92), and the mandate to use CUP processing
rules (as discussed in response to question No. 86) establishes CUP's monopoly over RMB
denominated cards. No other EPS supplier can establish a competing interoperative bank
card network.
United States' response to Panel question No. 115, para. 107. Again, in a statement such as this, which
serves as a mere recitation of the requirements individually, we find no support for the conclusion that no other
EPS supplier can establish itself in China.
640 See CUP's Articles of Association, Articles 11 and 12, Exhibit US-20.
641 Notification of Approval of CUP's Business Licence, Exhibit US-29.

7.496 Finally, we note the United States' refrain that its interpretation of various provisions is
"consistent" with the fact that CUP's network is the exclusive network for all RMB bank card
transactions. In support of this view, the United Stat es has referred to the fact that certain provisions
at issue refer singularly to CUP. For instance, it asserts that Article 5 of Document No. 153 expressly
authorizes CUP to establish bran ches in certain areas of China "i n accordance with the company's
overall plan to provide bank card information exch ange and clearance services". It submits that
Article 3.4 of Document No. 129 requires commer cial banks to work with CUP to "improve
procedures for dealing with errors". It also considers that Articles III, V and VI of Document No. 142
direct CUP to participate with other Chinese institutions in an effort to enhance bank card security. In
respect of instances such as thes e, in our assessment above, we stated how references to CUP, or
recognition of CUP's role, do not necessarily confirm that CUP operates exclusively in China. Rather,
we indicated that these references may inform a di fferent interpretation. In the absence of further
evidence that would eliminate reasonable alternative interpretations, we consider the United States has
not met its burden to establish that the instruments ope rate collectively in this way, so that we should
conclude in favour of the United States' interpretation. The Appellate Body in US – Carbon Steel has
explained:
The party asserting that another party's munici pal law, as such, is inconsistent with
relevant treaty obligations bears the burde n of introducing evidence as to the scope
and meaning of such law to substantiate th at assertion. Such evidence will typically
be produced in the form of the text of the relevant legislation or legal instruments,
which may be supported, as appropriate, by ev idence of the consistent application of
such laws, the pronouncements of domestic courts on the meaning of such laws, the
opinions of legal experts and the writings of recognized scholars. The nature and
extent of the evidence required to satisfy the burden of proof will vary from case to
case.
642
7.497 In the absence of evidence other than the texts of the instruments, such as on how the relevant
provisions have been applied or opinions of legal experts, we consider the United States has not met
its burden to establish that the net, or combined, legal effect of these instruments is to preclude EPS
suppliers other than CUP from operating in China's market for RMB bank card transactions.
Technical barriers imposed through the instruments
7.498 The United States has also alleged that the ru les and standards imposed under certain of the
instruments at issue make it technically difficult fo r foreign EPS suppliers to operate in the market,
thereby effectively "entrenching" CUP as the sole supplier. 643 We explained in paragraph 7.477
above that nothing in the identified provisions in Document Nos. 17, 37, 49, 57, 76, 129, 142, 149 and
153 impose technical barriers that cannot be met by EPS suppliers other than CUP so as to completely
prevent those EPS suppliers from entering and operating in the market for RMB bank card
transactions in China. In particular, we found that nothing in the identified provisions of the
instruments at issue prevents i ssuers from issuing cards that comply with the rules of other EPS
suppliers, so long as those cards are also interoperable with the CUP network.
7.499 In addition to the requirements just mentioned, the United States, asserts that Document No
142 requires that all RMB bank cards incorporate the PBOC 2.0 standard which, in the United States’
view, would force EPS suppliers to significantly redesign their chips in order to allow their cards to be
used in China. Allegedly, this is because the PBOC 2.0 and EMV chip standards are incompatible.644

642Appellate Body Report, US – Carbon Steel, para. 157.
643 See, e.g. United States' second written submi ssion, paras. 153-165; response to Panel question
No. 106, para. 47.
644 United States' response to Panel question No. 94, para. 97.

As we noted in paragraph 7.473 above, the Unite d States does not provide any evidence to indicate
that the redesign would be so "significant" so as to effectively "lock" EPS suppliers out of the market
entirely.645 Accordingly, in the absence of any evidence that an EPS supplier would not be able to
take such steps to make its cards compatible with th is standard due to costs or other reasons, or that
competing standards are inherently incompatible, we consider that the United States has failed to
establish that the need to comply with this standard would ensure that CUP is the sole supplier. We
consider this to be the case even when we assess this, in the light of current evidence, together with
other elements identified in the instruments.
Economic barriers imposed by the instruments
7.500 Lastly, we address the United States' contention that the instruments in question make it
"economically unviable" for any foreign EPS supp lier to participate in that market, thereby
entrenching CUP as the sole supplier in the mark et for RMB bank card transactions. The United
States argues that, because issuers and acquirers are required to join the CUP network, and pay for
that access, it makes "no economic sense" for these en tities to additionally pay to use the services of a
foreign EPS supplier. In other words, we unders tand the United States to argue that foreign EPS
suppliers have no incentive to enter the market because potential customers (i.e. issuers and acquirers)
would not demand their services since they are obliged already to pay for the services of CUP.
7.501 In response to questions from the Pane l following the second substantive meeting 646, the
United States referred to the text of CUP's Operating Regulations, which set out one-time membership
fees and testing fees. We explained in paragra ph 7.291 that CUP's Operating Regulations were not
identified in the United States' panel request and do not constitute measures at issue in this dispute.
We further explained that the United States faile d to establish a link between these regulations and
any of the legal instruments under discussion. That concern aside, we observe that the cited
provisions of CUP's Operating Regulations provide insufficient information on membership fees and
testing fees to enable us to ascertain the additiona l costs or indeed the total costs that would be
incurred by an issuer seeking services from particular EPS suppliers. Even if there are no additional
costs, we do not have information on how significan t any CUP fees are relative to the profits that
issuers and acquirers may earn in the marketplace. Nor has the United States explained what fees
participating institutions would incur if they wished to join the networks of other EPS suppliers. In
the absence of such evidence, we are unable to gauge whether those costs are significant enough to
discourage issuers. Despite asserting that the member ship and testing fees have this "discouraging"
effect, the United States has not provided evidence that issuers, acquirers or merchants are or would
in fact be unwilling to join the network of ot her EPS suppliers and pay additional fees required for
such access. Due to the variety of factors that might influence the decision of an EPS supplier to enter
the market for RMB payment transactions, we cannot merely accept the assertion that the mere
imposition of the fees in question has had or will ha ve the effect of preventing foreign EPS suppliers
from entering and establishing themselves in China. We also note that there is evidence on record
that a number of "dual-branded, dual logo" cards exist in the Chinese market, as noted by China
647,
which suggests that EPS suppliers have in fact been willing to enter the market in some form. In the
absence of other evidence, the fact that these cards exist in the market suggests that the fees have not
dissuaded issuers or acquirers from seeking the services of other EPS suppliers.
7.502 We additionally note that, while it is foreseeable that there may be a cost associated with
complying with the technical and business standards imposed by Document Nos. 17, 37, 49, 57, 76,
129, 142, 149 and 153, the United States has not provided evidence of the costs of compliance,

645 Ibid.
646 See United States' response to Panel question Nos. 86, 94 and 117.
647 Exhibit CHN-112. See China's comments on the United States' response to Panel question
Nos. 70-72, 86-96, 115-123, para. 67 and fn. 38; Exhibit CHN-112.

beyond suggesting that compliance might prove difficu lt or burdensome. In the absence of concrete
evidence, we are again not persuaded that the cost associated with these or other business or technical
requirements has dissuaded or would in the futu re dissuade issuers or acquirers from seeking the
services of other EPS suppliers, thereby effectiv ely establishing or maintaining CUP as the only
supplier in the market.
7.503 We have pointed out that the instruments in question place CUP in a unique position in the
Chinese EPS market. Through the issuer requirements, CUP is effectively assured that every card that
might be issued by an EPS supplier other than CUP is effectively a "CUP" card, i.e. a card that is
capable of operating over the CUP network. In other words, only dual-logo cards that bear the Yin
Lian/UnionPay logo in addition to the logo of another EPS supplier may be issued. At the same time,
the acquirer requirements oblige all acquiring instituti ons to be capable of acquiring transactions from
cards bearing the Yin Lian /UnionPay logo, and terminal equipm ent requirements mandate that all
merchants be capable of accepting these cards. Even though the relevant instruments would not
prevent acquirers or merchants from accepting ot her cards, CUP has a significant foothold in the
market. The fact that CUP does not have to inv est in promoting its brand to issuing institutions
(because issuer requirements are mandatory), and do es not have to invest in persuading banks to
acquire transactions for the CUP brand (because ac quirer requirements are also mandatory) further
solidifies CUP's privileged position.
7.504 Nevertheless, in the absence of specific lega l provisions designating a company as the single
supplier in a market, the United States in our view needs to provide eviden ce to sustain the assertion
that the instruments produce economic effects that are so significant that they preclude other EPS
suppliers from operating in the market. 648 In the present case, we have no evidence, e.g. economic
analyses of profitability, price-cost margins, or demand elasticity, including in comparison with other
markets, that would allow us to assess whether ind eed the instruments at issue make it economically
unviable for other EPS suppliers to establish themselves and operate in China. We note that parties in
previous disputes have submitted economic anal yses and econometric studies when alleging actual
economic and trade effects of particular measures, and to support allegations that those effects are
attributable to the measures. 649 Additional information on th e conduct of CUP (e.g. price
discrimination or evidence that CUP charges different customers different prices for the same service)
could have assisted us in our analysis, but no su ch information was submitted. We are aware that
relevant data may be difficult to obtain. However, given the lack of concrete evidence, we are unable
to conclude that CUP is the sole supplier. Assertion without more is simply not enough.
Conclusions on collective assessment
7.505 Accordingly, for the reasons set out here and above, we find that the United States has not
substantiated its claim that the instruments at i ssue collectively mandate the use of CUP or establish
CUP as the sole supplier of EPS for all domestic RMB bank card transactions. The United States
carries the burden to demonstrate that the measures operate together to establish or maintain CUP as

648 In competition policy enquiries, for instance, monopol y power is found to exist if (i) the firm has a
high share of a relevant market and (ii) there are entry barriers – perhaps ones created by the company's conduct
itself – that allow the company to exercise substantial market power for an appreciable period of time. See U.S.
Department of Justice (2008) "Competition and Monopoly: Single-Firm Conduct Under Section 2 of the
Sherman Act". In assessing the existence of a monopoly, competition authorities typically evaluate a company's
market share and the durability of market power, i.e. the ability to price substantially above the competitive
level for a significant period of time without erosion of the position by new entrants.
649 For instance, the panel in US – COOL noted in this respect that the function of panels does not
exclude, but may in fact require, the review of eco nomic and econometric eviden ce and arguments. See Panel
Reports, US – COOL , para. 7.452 and paras. 7.507-7.546. See also Thailand – Cigarettes (Philippines) ,
paras. 136-138; and Philippines – Distilled Spirits , para. 7.55, 7.109-7.113; and Appellate Body Report,
Thailand – Cigarettes (Philippines), paras. 136-138.

the exclusive supplier. That is, the United States must demonstrate that CUP is the only supplier
permitted to operate in the Chinese market. It is not clear to us, in the absence of any concrete
evidence, that the consequence of the instruments in question is to reduce the number of suppliers in
the market to one. As we explained, in our view, the United States has failed to demonstrate that the
instruments impose a legal barrier to entry, explicit or otherwise. We also found that the United
States has failed to demonstrate that the technical requirements that must be met to operate in China
preclude other EPS suppliers from operating in the ma rket. Finally, we explained that we did not
have sufficient evidence before us to accept the United States' allegation that the operation of the
instruments makes it "economically unviable" to en ter the market, such that no other EPS supplier
would be willing to enter the market.
7.506 In reaching this conclusion, we are uncertain whether CUP currently operates in the market as
the sole supplier for RMB bank card transactions. Although it is possible that this is the case,
including for reasons unrelated to the instruments we have addressed above, we are not persuaded
based on the arguments of the United States and the ev idence before the Panel that the instruments in
question establish or maintain CUP as the only EPS supplier in the market.
(f) Overall conclusions on the evaluation of the existence of the measures at issue
7.507 The Panel concluded above, as reflected in various legal instruments, as follows that:
(a) China, through Document Nos. 37, 57 and 129, imposes requirements on issuers that
bank cards issued in China bear the Yin Lian/UnionPay logo, and furthermore, China,
through Document Nos. 17, 37, 57, 76 and 129, requires that issuers become
members of the CUP network, and that the bank cards they issue in China meet
certain uniform business specifications and technical standards;
(b) China, through Document Nos. 37 and 153, imposes requirements that all terminals
(ATMs, merchant processing devices and POS terminals) in China that are part of the
national bank card inter-bank processing ne twork be capable of accepting all bank
cards bearing the Yin Lian/UnionPay logo;
(c) China, through Document No. 153, imposes requirements on acquirers to post the Yin
Lian/UnionPay logo and furthermore, China, through Document Nos. 37, 76 and 153,
imposes requirements that acquirers join the CUP network and comply with uniform
business standards and technical specifications of inter-bank interoperability, and that
terminal equipment operated or provided by acquirers be capable of accepting bank
cards bearing the Yin Lian/UnionPay logo;
(d) China, through Document Nos. 16, 8 and 254, imposes requirements that CUP and no
other EPS supplier handle the clearing of certain RMB bank card transactions that
involve either an RMB bank card issued in China and used in Hong Kong or Macao,
or an RMB bank card issued in Hong Kong or Macao that is used in China in an
RMB-denominated transaction;
(e) The United States failed to establish that China, through Document Nos. 37, 57, 16,
8, 219, 254, 103, 153, 149, 53, 49, 129, 76, 17 and/or 142, imposes requirements that
mandate the use of CUP or establish CUP as the sole supplier of EPS for all domestic
transactions denominated and paid in RMB; and
(f) Having regard to our assessment of the in struments in connection with the sole
supplier requirement, the United States fail ed to establish that China, through

Document Nos. 37, 57, 153, 219 and/or 76, imposes broad prohibitions on the use of
"non-CUP" cards for cross-region or inter-bank transactions.
F. THE UNITED STATES' CLAIMS UNDER ARTICLE XVI OF THE GATS
7.508 The United States argues that the six alleged re quirements imposed by China on the supply of
EPS are inconsistent with Article XVI of the GA TS. The United States submits that China made
mode 1 and mode 3 650 commitments in its Schedule coveri ng the supply of EPS, wherein China
committed not to maintain any limitations on th e number of foreign EPS suppliers. Through the
imposition of these six requirements, the United St ates asserts, China established and maintains a
monopoly structure to ensure that CUP is the exclusive supplier of EPS for all RMB bank card
transactions in China whenever a bank card is issued in China and used in China. 651 It further argues
that the measures are not justified by any limitations , conditions or qualifications on market access in
China's Schedule. As a result of this, the Unite d States considers that the measures at issue are
inconsistent with China's obligations under Articles XVI:1 and XVI:2(a) of the GATS.652
7.509 China argues that the United States has failed to prove that China made relevant market
access and national treatment commitments under subsector (d) in relation to mode 1 and mode 3, and
therefore requests the Panel to dismiss the United St ates' claims. According to China, claims under
Article XVI are limited to the sectors and sub sectors in which the responding Member has made
market access commitments. 653 Even if the Panel were to conclude that China made specific
commitments in respect of the particular services and suppliers at issue, China contends that the
United States has failed to demonstrate that the a lleged measures maintain or adopt limitations on the
number of service suppliers in the form of monopo lies or exclusive service suppliers to prove its
claim under Article XVI of the GATS.654
7.510 Article XVI of the GATS, entitled "Market Access", provides in relevant part:
1. With respect to market access through the modes of supply identified in
Article I, each Member shall accord se rvices and service suppliers of any other
Member treatment no less favourable than that provided for under the terms,
limitations and conditions agreed and specified in its Schedule.
2. In sectors where market-access comm itments are undertaken, the measures
which a Member shall not maintain or adopt either on the basis of a regional
subdivision or on the basis of its entire te rritory, unless otherwise specified in its
Schedule, are defined as:
(a) limitations on the number of service suppliers whether in the
form of numerical quotas, monopolies, exclusive service suppliers or
the requirements of an economic needs test
7.511 The Panel recalls that in the United States' view , the measures at issue are inconsistent with
Articles XVI:1 and XVI:2(a) of the GATS. In the specific context of Article XVI:2(a), the Appellate

650 The Panel will use the term "mode 3" to refer to the supply of a service that is "by a service supplier
of one Member, through commercial presence in the terr itory of any other Member", as provided for in
Article I:2(c) of the GATS.
651 United States' second written submission, paras. 137- 143; see also response to China's request for a
preliminary ruling, Sections V.B to V.I; first written submission, paras. 12, 31, 37-72, and 79-92; opening
statement at the first meeting of the Panel, para. 43; response to Panel question Nos. 4, 6, 17 and 23.
652 See, e.g. United States' first written submission, paras. 37-40 and 70-72.
653 China's first written submission, paras. 123 and 124; second written submission, para. 81.
654 China's second written submission, paras. 90-102.

Body in US – Gambling explained that a complaining party must do two things to establish a prima
facie case of violation. First, it must establish that a responding party has undertaken relevant market
access commitments in its GATS Schedule and th ereafter, it must "identify[] with supporting
evidence, how the challenged laws constitute imperm issible 'limitations'" falling within the meaning
of one of the subparagraphs of Article XVI:2. 655 This same approach was followed by the panel in
China – Publications and Audiovisual Products.656
7.512 We see no reason to depart from this approach an d therefore, we begin by addressing whether
China made market access commitments under mode 1 or mode 3 in respect of the services at issue.
Only if we determine that China has made a commi tment will we consider whether the requirements
at issue impose limitations that are inconsistent with Article XVI of the GATS.
1. Whether China has made mode 1 or mode 3 market access commitments covering the
supply of EPS
7.513 Consistent with Appellate Body guidance, we begin our analysis under Article XVI by
determining whether China has undertaken rele vant market access co mmitments in its GATS
Schedule for subsector (d) and the two modes of supp ly relied on by the United States, i.e. modes 1
and 3. As China's Schedule contains different en tries for these two modes, we first address China's
mode 1 market access entry.
(a) Mode 1 commitments
7.514 The United States argues that China has undertak en mode 1 market access commitments with
respect to subsector (d) in its Schedule. Under mode 1, the word "Unbound" is followed by the
qualifying phrase "except for the foll owing," which in turn is further elaborated by two sentences that
describe elements of the services within subsector (d). According to the United States, China's
mode 1 commitment must be understood as recogn izing that "payment and money transmission"
services include aspects of "provision and transf er of financial information" and "advisory,
intermediation and other auxiliary services" to the ex tent that such aspects are integral to the core
service, and that such aspects are properly classifi ed within "payment and money transmission"
services and not in subsector (k) or (l). In the Unite d States' view, the fact that there are elements of
"provision and transfer of financial informati on, and financial data processing" and "auxiliary,
intermediation, and advisory services" embedded in the core "payment and money transmission"
services is not inconsistent with the principle that sectors must be scheduled in a mutually exclusive
manner.657
7.515 China recalls its view that the services at issue are not properly classifiable under
subsector (d) of its Schedule. China submits that its market access entry for subsectors (a) through (f)
repeats, verbatim, the descriptions of subsectors (k) and (l), which appear under the heading of
"[o]ther financial services as listed below". 658 In China's view, the identical language in the same
Schedule cannot have two different meanings. The mean ing of this portion of China's Schedule is that

655 Appellate Body Report, US ‒ Gambling, para. 143.
656 Panel Report, China – Publications and Audiovisual Products, para. 7.1354.
657 United States' first written submission, para. 41; and response to Panel question Nos. 45, para. 118
and 46(b), para. 127.
658 China notes that there is a minor difference consis ting of a plural form in the mode 1 entry, which
refers to "suppliers of other financial services" while subsector (k) states "by supplier of other financial
services". In China's view, the latter appears to be a typographical error. China's response to Panel question
No. 50, fn. 50.

China undertook no market access commitments under mode 1 with respect to subsectors (a) through
(f), including subsector (d).659
7.516 China states that there are two possible ways of reading the "except" language in the mode 1
market access entry. The first is as a cross-re ference to China's mode 1 market access commitment
for subsectors (k) and (l). The second is as a d escription of the exception to China's unbound market
access entry for subsectors (a) through (f) in mode 1. According to China, the "embedded services"
theory proposed by the United Stat es is contrary to the principle of mutual exclusivity and runs afoul
of the principle of effective treaty interpretation. China argues that, in order to give effect to its
unbound market access entry for subsectors (a) through (f), it is critically important to distinguish
between those activities that are unbound in mode 1 and those activities that fall within the exception.
If the United States has met its burden of proving that the services at issue in this dispute are
classifiable under subsector (d), then, in Chin a's view, the United States cannot simultaneously
maintain that China undertook mode 1 market access commitments in respect of those services. For
China, the services at issue cannot be covered in subsector (d), and also in subsectors (k) and (l).660
7.517 Australia submits that the commitment at issue is unclear, but is not unbound. 661 According
to the European Union, China is unbound under mode 1 for subsectors (a) to (f), except for parts of
the subsectors described in the two hyphens; Chin a has then committed the actual service of
"provision and transfer of financial information" and "advisory, intermedia tion and other auxiliary
services" as stand-alone services under subsectors (k) an d (l). The European Union is of the view
that, if China had intended this entry to be a cross -reference, it should have been explicitly set out in
the Schedule. 662 Guatemala submits that the two subsectors listed, respectively, under the mode 1
entry at issue and under subsectors (k) and (l) c over the same services, but refer to different
commitments. According to Guatemala, th ere is no cross-reference among the subsectors. 663 Japan is
of the view that, by inscribing "unbound except for the following", China intended to make no
commitment and that the question to be addr essed is whether EPS corres pond to "provision and
transfer of financial information […]". 664 Korea submits that the two subsectors committed under
mode 1 of subsector (d) relate only to the services described under the latter subsector. In contrast,
subsectors (k) and (l) are separate and distinct subsect ors which are not confined to subsector (d). For
Korea, China's cross-reference argument is misp laced because subsectors (a) to (f) on the one hand
and subsectors (k) and (l) on the other are found under different subheadings.665

659 China's first written submission, paras. 126 and 127.
660 China's response to Panel question No. 50(a), para. 76; and second written submission, paras. 58-62.
661 Australia's third-party response to Panel question No. 11.
662 European Union's third-party response to Panel question No. 4, para. 13; and third-party response to
Panel question No. 11, para. 34.
663 Guatemala's third-party response to Panel question No. 4, para. 20; and third-party response to Panel
question No. 11, para. 36.
664 Japan's third-party response to Panel question No. 23, para. 3.
665 Korea's third-party response to Panel question No. 4; and third-party response to Panel question
No. 11.

7.518 The relevant section of China's Schedule is reproduced below (emphasis added):
[…]

B. Banking and Other Financial Services
 (excluding insurance and securities)

 Banking services as listed below:

(a) …
(b) …
(c) …

(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) [...]
(d) All payment and money transmission
services, including credit, charge and debit
cards, travellers cheques and bankers
drafts(including import and export
settlement);
(e) …
(f) …

(3) […]

4) […]

- 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) […]
(3) […]
(4) […]

- 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.

- Securities

(1) None
(2) […]
(3) […]
(4) […]

(1) […]
(2) […]
(3) […]
(4) […]

7.519 The Panel notes that the mark et access entry under mode 1 contains the term "Unbound",
which is qualified by the words "except for the following". In GATS schedules, the term "Unbound"
means that, for a given sector and mode of supply, a Member undertakes no commitment.
666 The
qualifying phrase "except for the following" suggest s that there follows an exception to the general
"Unbound" entry. The expression "Unbound except for the following" is then followed by the
descriptions of two services listed in the two hyphens. These services are (i) "[p]rovision and transfer
of financial information, and fi nancial data processing and related software by suppliers of other
financial services"; and (ii) "[a]dvisory, intermedia tion and other auxiliary financial services on all
activities listed in subparagraphs (a ) through (k), including credit refe rence and analysis, investment
and portfolio research and advice, advice on acquisitions and on corporate restructuring and strategy".
The descriptions of these two services are nearly identi cal to the descriptions of subsectors (k) and (l)
that, in the case of China's Schedule, appear under the subheading "[o]ther financial services as listed
below"; the only difference is that the description in the first hyphen under the mode 1 entry at issue
refers to "suppliers" in the plur al, whereas the description in subsector (k) uses the singular form of
the same term.667 The mode 1 market access commitment assumed by China for subsectors (k) and (l)
is full ("None").

666 Paragraph 46 of the 2001 Scheduling Guidelines stipulates: "…, the Member remains free in a
given sector and mode of supply to introduce or mainta in measures inconsistent with market access or national
treatment. In this situation, the Member must record in the appropriate column the word: UNBOUND. […]."
See also paragraph 27 of the 1993 Scheduling Guidelines. Moreover, in US – Gambling , the Appellate Body,
when examining the term "None" scheduled in the entry at issue in that dispute, found that "[t]his notation is the
opposite of the notation 'Unbound', which means that a Member undertakes no specific commitment."
Appellate Body Report, US – Gambling, fn. 257 (emphasis original).
667 We agree with China that the singular form of the term "supplier" in subsector (k) appears to be a
typographical error (see fn. 658 above). We note, first, that this singular form results in a grammatically
incorrect phrase. In addition, subsector (xv) of the GATS Annex on Financial Services, on which China said its
Schedule is based (China's first written submission, para. 80), refers to "suppliers" in the plural. The French and
Spanish versions of subsector (xv) of the Annex on Financial Services also use the plural form for this particular
term, as do the French and Spanish versions of China's Schedule.

7.520 The Panel observes that WTO Members commonl y use the inscription "Unbound except for"
in their GATS schedules. China has made use of it in other sectors listed in its Schedule. 668
Moreover, China employs this inscription for its mo de 4 commitments as well, as have most other
WTO Members.669 What is particular about and sets apart the mode 1 entry in question, however, is
the fact that the two services referred to are textua lly nearly identical to subsectors (k) and (l) for
which China has undertaken specific commitments. Pursuant to Article 31 of the Vienna Convention,
the Panel will examine the ordinary meaning of the text of the relevant mode 1 entry in its context and
in the light of the object and purpose of the GATS and the WTO Agreement.
7.521 We turn first to an examination of the ordina ry meaning of the terms used to describe the
services that fall within the first hyphen. The descrip tion reads: "[p]rovision and transfer of financial
information, and financial data processing and related software by suppliers of other financial
services" (emphasis added). As there is no comma after "related software", the question arises
whether the phrase "by suppliers of other financial services" relates only to the phrase "financial data
processing and related software" which immediatel y precedes the reference to suppliers of other
financial services, or whether that reference al so qualifies the phrase "provision and transfer of
financial information". In addressi ng this question, we note that the description of subsector (xv) of
the GATS Annex , on which China's Schedule is based, does not contain a comma after the equivalent
of "related software". However, the equally authen tic French and Spanish versions of subsector (xv)
of the Annex, which are relevant context for interp reting China's Schedule, shed useful light on this
issue. In both of these versions, a comma has been added after the phrase "related software". 670 The
French and Spanish versions of China's Schedule also include that comma. Moreover, we fail to
discern a plausible rationale for why the services described as "financial data processing and related
software" would warrant a reference to the suppliers of such services that was not equally warranted
in the case of the services described as "provision a nd transfer of financial information". For these
reasons, we consider that the phrase "by suppliers of other financial services" in the mode 1 entry at
issue qualifies both the phrase "financial data processing and related software" and the phrase
"provision and transfer of financial information".
7.522 We turn now to the word "other" in the phrase "b y suppliers of other financial services". The
ordinary meaning of the word "oth er" suggests that the services provided by the relevant suppliers are
different from the services listed in the sectoral column with respect to subsectors (a) to (f). 671 In
other words, a distinction appears to be made be tween two different categories of financial services
suppliers: (i) the suppliers of financial services list ed under subsectors (a) to (f) in the sectoral column
of the Schedule, and (ii) the suppliers of "other financial services" which undertake the "provision and
transfer of financial information, and financial data processing and related software" to other suppliers
of financial services. If the phrase "provision and tr ansfer of financial information […]" concerned
suppliers providing the financial services at issue in subsectors (a) to (f), or components thereof, it
would be incongruous to refer to a category of suppliers supplying "other" financial services.
Conversely, if there were an intention to re fer to services other than those classifiable under
subsectors (a) to (f), it would be necessary to make this intention clear, a nd the word "other" would
serve that purpose. In our view, therefore, a textual analysis of the entry in the first hyphen supports

668 See, for instance, China's mode 1 commitments with respect to "Retailing services (excluding
tobacco)" ("Unbound except for mail order") and "Environmental services" ("Unbound except for
environmental consultation services").
669 We also recall in this regard paragraph 45 of the 2001 Scheduling Guidelin es and paragraph 26 of
the 1993 Scheduling Guidelines.
670 The French version reads "[f]ourniture et transfer t d'informations financières, et traitement de
données financières et logiciels y relatifs, par les fournisseurs d'autres services financiers", and the Spanish
version "[s]uministro y transferencia de información financiera, y procesamiento de datos financieros y soporte
671 "Other" is defined, inter alia, as "[e]xisting besides or distinct from that or those already specified or
implied; further, additional. […]", Shorter Oxford English Dictionary, Vol. 2, p. 2035.

the view that "suppliers of other financial servi ces" supply services that are not simply integral
components of the services listed in the sectoral column (or, to use the United States' terms, an
element "embedded" in a "core" service), but rath er services that are separate and distinct from the
services classifiable in subsectors (a) to (f).
7.523 We now examine the ordinary meaning of the terms used to describe the services that fall
within the second hyphen, "[a]dvisory, 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 acquis itions and on corporate restructuring and strategy"
(emphasis added). First, that the reference to "and other auxiliary … services" suggests to us that the
services covered in this hyphen are considered "a uxiliary". The ordinary meaning of the word
"auxiliary"672 indicates that these services are separate and different from the services falling within
subsectors (a) to (f), rather than "embedded" 673 in them. Furthermore, the second hyphen uses the
phrase "auxiliary financial services on all activities listed in s ubparagraphs (a) through (k) "
(emphasis added). This clear textual distincti on between, on the one hand, the services listed in the
sectoral column and, on the other hand, services that are "auxiliary" to them reinforces our view that
auxiliary services cannot properly be considered to be the same as the services described in the
sectoral column under subsectors (a) to (f), or integral components thereof. As an additional matter, it
is noteworthy that the second hyphen refers to servi ces which are "auxiliary" to all activities "listed in
subparagraphs (a) through (k) " (emphasis added). China's sect oral column concerning "banking
services" lists only subsectors (a) through (f), not (a ) through (k). If the second hyphen were intended
to set out services that are "embedded" in their en tirety in services listed in the sectoral column with
respect to subsectors (a) to (f), it would have referre d to "activities listed in subparagraphs (a) through
(f)", for China has not listed any other subsectors under "[b]anking services".674
7.524 Therefore, our analysis of the ordinary mean ing of the terms used to describe the services
under the mode 1 entry at issue does not allow us to conclude that these services are "elements" of "all
payment and money transmission services" in subsector (d), as contended by the United States. It
suggests, to the contrary, that these services are sep arate and distinct from the services listed in the
sectoral column with respect to subsectors (a) to (f). To that extent, the text in the two hyphens is
consistent with the view that th is entry refers to the full market access commitment on mode 1 for
subsectors (k) and (l).675
7.525 We turn now to an examination of relevant c ontextual elements, which include the remainder
of China's Schedule and the Annex. The first element we take note of is China's sectoral
commitments under mode 4, which generally read "[u]nbound, except as indicated in horizontal
commitments". These inscriptions are found under both the market access and national treatment
columns, and refer to the horizontal section of Ch ina's Schedule where the scope of China's mode 4
commitments is defined.
676 Hence, these mode 4 entries tell us that, as a general matter, China's
Schedule does contain cross-references to another part of the same Schedule. We recognize, however,

672 "Auxiliary" is defined, inter alia , as "[h]elpful; giving support or succour; […] Subsidiary,
additional, ancillary; […]", Shorter Oxford English Dictionary, Vol, 1, p. 158.
673 "Embed" (verb), is defined, inter alia , as "[p]lace or secure within something else, esp. within a
larger or firmer entity; cause to be wholly contained within." Ibid. p. 816.
674 While the reference to "subparagraphs (a) through (k)" may reflect an error, we must not lightly
assume that this is the case. Neither party has suggested that the second hyphen contains an error.
675 China's response to Panel question No. 50(a), para. 76.
676 As noted above, the technique of cross-referencing mode 4 commitments is acknowledged in the
2001 Scheduling Guidelines. See fn. 669 above.

that the mode 1 entry at issue does not specifically refer to commitments undertaken under
subsectors (k) and (l).677
7.526 Continuing our contextual analysis, we note the United States' argument that the limitations
inscribed in the market access and national treatment columns "cannot change the scope of the sector
description itself".678 Hence, according to the United States:
China's mode 1 commitment must be understood as recognizing that 'payment and
money transmission' services include aspects of 'provision and transfer of financial
information' and 'advisory, intermediation an d other auxiliary services' to the extent
that such aspects are integral to the core service, and that such aspects are properly
classified within 'payment and money transm ission' services and not in subsector (k)
or (l).679
7.527 The Panel observes that subsectors (k) and (l) in China's Schedule are relevant contextual
elements for the interpretation of the mode 1 entry at issue. As noted above, the descriptions of these
two subsectors are almost identical to the descrip tions of the services in the two hyphens. Thus,
although the United States submits that limitations in the market access and national treatment
columns cannot modify the scope of the sector descrip tion, it appears to us that the United States'
proposed approach to interpreting the excepted la nguage in the mode 1 entry at issue would do
precisely that. By carving out elements of the ser vices listed in the two hyphens on the grounds that
these elements are "aspects" of the services described under subsector (d), the United States' approach
would correspondingly remove these same elements from subsectors (k) and (l) which are committed
in the sectoral column of China's Schedule.
7.528 We now consider the United States' view that th ere are "elements" of the services listed in the
two hyphens that are "embedded" in the "core" "payment and money transmission services". In
considering this argument, we determine first whet her it is possible to identify clearly, on the one
hand, the "core" service and, on the other hand, the "elements" of, respectively, "provision and
transfer of financial information" and "advisory , intermediation and other auxiliary services" that,
according to the United States, are included in the "core" service under subsector (d). We note that, in
a response to a question by the Panel, the United States provided a chart illustrating, for each of the
five components referred to in its panel request, the "aspects of EPS" which, according to the United
States, are covered by the mode 1 market access commitment. 680 In the United States' view, these
"aspects" include such elements as the provision of the underlying physical network and wiring; fraud
protection; authorization routing, authorizati on decision solutions, global clearing management,
exception handling solutions, automated calculation of the net financial position of a sender/receiver
of financial transactions based on the desired cu rrency and settlement service option selected by each
party; and, the creation and execution of the transf er order for each financia l institution participating
in the value day payment activity. Moreover, when asked by the Panel to indicate those services that
would fall within subsector (d), but would fall outside the mode 1 commitment, the United States
cited the establishment of settlement accounts as "an example of an aspect of the service at the 'back
end' of EPS processing … that falls outside China's mode 1 commitment". 681 As evidenced by this
response, the United States was able to provide on e example of what it considers to be a "core"

677 We note, however, that the services described in the second hyphen reference "activities listed in
subparagraphs (a) through (k)".
678 United States' response to Panel question No. 45, para. 118; second written submission para. 107.
679 United States' response to Panel question No. 45, para. 118. Therefore, according to the United
States, the services in the two hyphens are "an integral part" of the provision of "payment and money
transmission services", while subsectors (k) and (l) encomp ass services "that facilitate but are not integral to"
the provision of "payment and money transmission services". Ibid. paras. 118 and 119.
680 United States' response to Panel question No. 46(a), para. 121.
681 United States' response to Panel question No. 77, para. 43.

service that falls within subsector (d), but falls out side of the two services described under mode 1.
This contrasts with its detailed description of the "e lements" of the two services that, according to the
United States, are "embedded" in the "core" service.
7.529 In the Panel's view, these responses by the United States reveal the difficulty entailed by the
United States' approach. It is rather counter-intuitive that, under the taxonomy provided by the United
States, the "core" appears largely to coincide with the "embedded elements". In other words, were we
to accept the United States' position, subsector (d) w ould appear to be composed overwhelmingly of
the services described in subsectors (k) and (l). 682 Moreover, in the case of subsector (d), these
services would be "integral to a core service", while , in the case of subsectors (k) and (l), the same
services would be supplied "independently", as the United States put it. 683 In our view, the result of
the approach proposed by the United States is di fficult to reconcile with the Appellate Body's
clarification that a specific service cannot fall within two different sectors or subsectors.684
7.530 Furthermore, in response to a question from th e Panel, the United States submits that the
GATS framework itself recognizes the interrelated na ture of financial services. According to the
United States, this "interrelated nature" is illustra ted by the fact that the GATS Annex on Financial
Services covers (i) services that are "auxiliary" to "the activities listed in subparagraphs (v) through
(xv)" in subsector (xvi), as well as (ii) "provision and transfer of financial information" provided by
suppliers of "other financial services" in subsector (xv).
685 In the United States' view, "whether an
aspect of a service falls into one of these separate subsectors as an independent service or whether it
falls into one of the other subsectors depends on how central that aspect is to the provision of the
service described".686
7.531 We recall that the Annex is relevant context for the interpretation of China's Schedule and
that subsectors (xv) and (xvi) of the Annex corr espond to, respectively, subsectors (k) and (l) in
China's Schedule. We agree that various financ ial services subsectors listed in the Annex may be
"interrelated" in practice. As we have said, the reading proposed by the United States is in our view
difficult to reconcile with the principle that sectors and subsectors must be mutually exclusive. In
view of this principle, the fact that the financia l services described in subsectors (xv) and (xvi) of the
Annex may be "interrelated" with other financial services in the Annex does not mean that they can be
properly classified as those other services. By the same token, it may well be that the services in
subsectors (k) and (l) in China's Schedule are "interrelated" with the services committed under
subsectors (a) to (f). However, this does not mean that the services in subsectors (k) and (l) – or
aspects thereof – are classifiable under subsectors (a) to (f). Furthermore, the United States has not
provided a principled basis for evaluating how "centr al" an aspect of a service is to the provision of a

682 We recall that the United States' panel request (WT/DS413/2) also referred to subsectors (k) and (l)
of China's Schedule. However, in the course of thes e proceedings, the United Stat es did not put forward any
claims on the basis of commitments in these subsectors.
683 As we explained above in Section VII.D, paragrap h 7.188, the mere fact that separate suppliers
provide one particular component of an integrated service does not in itself imply that that component should be
classified as a distinct service. While in our view a composite service may consist of component services
supplied by one or more supplier(s), all these components belong to the "integrated" service and are classified as
such. To that extent, those same component services are not classifiable under other subsectors even when
supplied "independently".
684 The Appellate Body found that "[b]ecause 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 that
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 ." Appellate Body Report, US – Gambling,
para. 180 (emphasis added).
685 United States' response to Panel question No. 46(b), para. 128.
686 Ibid.

particular service described in a schedule, nor has it explained what degree of centrality would
warrant classifying that aspect as one or other service.
7.532 The United States additionally refers to paragraph 8 of the Understanding on Commitments in
Financial Services in support of its view that a service may include elements of "provision and
transfer of financial informati on, and financial data processing". 687 According to the United States,
this provision means that "the provision and transf er of financial information and data processing is
central to the supply of many different financ ial services, and, according to the Understanding,
signatory WTO Members cannot frustrate their commit ments by, for example, blocking the ability to
communicate and process information." 688 We observe, first, that, as acknowledged by the United
States, China is not a party to the Understanding. 689 Hence, paragraph 8 of the Understanding is not
applicable to China. Second, we do not question that, in many, if not most cases, "transfers of
information or the processing of financial inform ation, including transfers of data by electronic
means" may be an important part in the provision of financial services. However, even if paragraph 8
of the Understanding on Financial Services were rele vant to this dispute, we do not see how this
provision could detract from our interpretation, whic h is based on the text of the entry in the first
hyphen and which led us to the c onclusion that "suppliers of othe r financial services" supply services
that are separate and distinct from the services classifiable in subsectors (a)-(f).
7.533 To sum up our analysis so far, we note that, unlike China's mode 4 commitments, the mode 1
commitment at issue does not refer explicitly to another section of China's Schedule. Our textual
analysis led us to the view that the services described in the two hyphens are distinct from the services
listed in the sectoral column under subsector (a) thro ugh (f), and that they invol ve different suppliers.
Therefore, the services referred to in the two hyphe ns cannot constitute "elements" of the services
encompassed under subsector (d). Furthermore, th e interpretation proposed by the United States is
difficult to reconcile with the principle that a specific service must not fall within two different sectors
or subsectors.
7.534 Based on the preceding analysis, we consider that the mode 1 entry at issue does not result in
a market access commitment under mode 1 for "all payment and money transmission services". In
our assessment, China's mode 1 ma rket access entry concerning s ubsectors (a) to (f) should be
understood instead as referencing China's mode 1 market access commitment for subsectors (k) and
(l), which, as noted above, is fully bound. To our minds, the meaning and effect of this entry is to
indicate that, although there are no mode 1 commitments for subsectors (a) to (f), there are
commitments under mode 1 for services falling within subsectors (k) and (l), which services are often
provided in connection with services classified under s ubsectors (a) to (f). In other words, it is our
view that in this particular instance, the phrase "except for the following" has not been used to
undertake a market access commitment under mode 1 for subsectors (a) to (f). Rather, it serves to
alert the reader to other relevant content in China's Schedule – in this case, the full mode 1
commitment undertaken by China under subsectors (k) and (l) of its Schedule.
7.535 Our interpretation of the mode 1 entry at issue must also be considered in the light of the
object and purpose of the GATS and the WTO Agreem ent. We identified the relevant object and
purpose of the agreements in Section VII.D.2(c) a bove. We consider that our conclusion that the

687 Paragraph 8 of the Understanding on Commitment in Financial Services stipulates: "No Member
shall take measures that prevent transfers of informati on or the processing of financial information, including
transfers of data by electronic mean s, or that, subject to importation rules consistent with international
agreements, prevent transfers of equi pment, where such transfers of information, processing of financial
information or transfers of equipment are necessary for the conduct of the ordinary business of a financial
service supplier".
688 United States response to Panel question No. 46(b), para. 131; and second written submission,
paras. 114 and 115.
689 Ibid.

entry at issue references China's market access entr y commitments for subsectors (k) and (l) is not
inconsistent with the object and purpose of those tw o agreements. In giving the words contained in
the two hyphens the meaning they can be reasonably understood to bear in their context, our
interpretation ensures security and predictability of specific commitments.
7.536 From a strictly legal perspective, it may see m unusual to reference services classifiable under
subsectors (k) and (l) in an entry that concerns s ubsectors (a) to (f). However, as explained above, we
do find it difficult to read the mode 1 entry at issue as creating a market access commitment for
subsector (d). We consider that, on balance, our read ing is the better reading of this particular entry.
As we have said, the services listed in the two hyphe ns are often supplied in connection with services
listed under subsectors (a) to (f). To that extent and taking a broader perspective, it is not
unreasonable to read in the words used in their contex t a desire on the part of the negotiators to clarify
that, although China was not prepared to make any mode 1 market access commitments for services
classifiable under subsectors (a) to (f), it did make unqualified market access commitments for other
relevant services.
7.537 We consider that our interpretation of the mode 1 entry at issue pursuant to Article 31 of the
Vienna Convention does not leave the meaning ambi guous or obscure, nor does it lead to a result
which is manifestly absurd or unreasonable. Acco rdingly, we do not find it necessary to resort to
supplementary means of interpreta tion under Article 32 of the Vienna Convention. We also note that
the parties did not provide any evidence of the ne gotiating history that could help to confirm our
interpretation of this entry.
690
7.538 Based on the above considerations, we conc lude that China has no market access
commitments under mode 1 with respect to th e services encompassed under subsector (d) of its
Schedule.
(b) Mode 3 commitments
7.539 The Panel now examines what market acce ss commitments China has undertaken in
subsector (d) and mode 3, and if so, whether these commitments apply to EPS suppliers of other WTO
Members. The Panel notes that China's Schedule c ontains a relevant entry in the column entitled
"Limitations on market access".691
7.540 The United States argues that under the mark et access commitments for mode 3, China
scheduled certain limitations rega rding geographic coverage, potentia l clients, and licensing, all of
which were to be eliminated within five years after China's accession, i. e. in December 2006.
Therefore, since December 2006, China's Sche dule provides no market access limitations under
mode 3 with respect to EPS.692
7.541 China argues that its market access commitments for subsector (d) and mode 3 are limited to
foreign financial institutions (FFIs) and did not expi re five years after China's accession. As regards
the heading "clients" in its mode 3 market access en try, China submits that no limitations expired in
December 2006. Rather, it is on that date that Ch ina's commitment became e ffective. China argues
that as of that date, FFIs were to "be permitted" to provide relevant services "to all Chinese clients".
China made no commitment to permit entities that ar e not FFIs to provide these services, at any point
in time. Referring to another heading in its mode 3 entry concerning "licensing", China observes that
its commitment to eliminate existing non-prudentia l measures was similarly limited to FFIs. And
with regard to the qualifications for engaging in local currency business that are also specified under

690 See notably China's response to Panel question No. 50(b), para. 79.
691 For the text of the entry, see Annex G to this Report.
692 United States' first written submission, para. 19.

the heading "licensing", China intended that only FF Is meeting these qualifications would engage in
local currency business.693
7.542 China notes that the term "financial instituti ons" has been widely used by various WTO
Members in their Schedules, without a definition of the term. 694 China further points out that its
mode 3 market access entry pervasively refers to FFI s, and that it does not refer to "financial service
suppliers" or "foreign service suppliers". 695 China submits that consistent with the principle of
effective treaty interpretation, th is difference in terminology must be given effect. According to
China, the ordinary meaning of the term "FFIs" is narrower than the term "financial service
suppliers". In China's view, financial institutions are banks and other types of regulated financial
institutions. According to China, dictionary definitions reflect that there are two essential attributes of
a financial institution: (1) that it collects funds fro m the public (whether as deposits or investments),
and (2) that it is subject to some type of regulation or supervision. 696 China observes that this general
definition is consistent, inter alia, with the definition given to the term "foreign financial institutions"
in its own domestic financial service regulations. 697 China considers that in the particular context of
China's Schedule, the term "FFIs" refers to foreign banks and finance companies.698
7.543 China additionally points out that limiting its commi tments to FFIs is consistent with the fact
that the services classifiable under subsectors (a) to (f) are core banking and finance services provided
by regulated financial institutions. China adds that the United States' position on FFIs would have
absurd consequences. For example, it would mean that non-bank foreign service suppliers could enter
the Chinese market and begin accepting deposits or ma king loans, while foreign banks – the types of
entities that actually supply these services – would need to establish a branch or subsidiary in China
and engage in foreign currency business for thr ee years before obtaining a bank licence. Also, non-
FFIs would then have had a right of market access since 2001, which is the date of China's accession
to the WTO. China observes that like other WTO Members, it plainly did not intend entities that are
not financial institutions subject to comprehensive supervision by their home countries to enter the
Chinese market to provide these types of banking services.699
7.544 China argues, lastly, that the United States faile d to demonstrate that EPS suppliers of other
WTO Members are FFIs. China contends that they are not FFIs under any understanding of the term
and notes that they go out of their way to disavow any such status.
700 China considers that the United
States has therefore failed to demonstrate that Ch ina's commitments are relevant to the services and
service suppliers at issue.701
7.545 The United States responds that China's mode 3 market access commitments are not limited
to FFIs. Although China includes certain limitations w ith regard to FFIs, this does not mean that its
commitments are limited to FFIs. It would have been necessary to impose such a limitation explicitly

693 China's first written submission, paras. 134-136.
694 China provides relevant excerpts from the Schedules of Angola, Australia, Côte d'Ivoire, El
Salvador, Guatemala, Honduras, Korea, Malta and Singapore in Exhibit CHN-85.
695 China notes, however, that the term "foreign service supplier" appears approximately thirty different
times throughout China's Schedule. China's response to Panel question No. 63, para. 116.
696 China's first written submission, paras. 140-142; re sponse to Panel question Nos. 49, para. 71; 51,
para. 80; and 52(a), para. 82.
697 China refers to the Regulations of the People's Republic of China on Administration of Foreign-
Funded Banks of 2006, Exhibit CHN-45.
698 China's response to Panel question No. 49, para. 72.
699 China's first written submission, para. 143; second written submission, paras. 71-73.
700 China refers e.g. to MasterCard Worldwide Terms of Use and to Visa Gift Card Holiday Guide,
Exhibit CHN-84. See China's response to Panel question No. 49, para. 72.
701 China's first written submission, paras. 145 and 1 46; response to Panel question Nos. 49, para. 72;
and 53, para. 95.

by prefacing the commitments with language like "unbound except" or "the service may only be
supplied by ...". The United States argues that the only limitations China may impose are prudential
authorization criteria and the now defunct restri ctions on geographic sc ope and use of domestic
currency as well as on-going requirements applicable to banks. Nothing in China's Schedule supports
the view that China may condition the supply of a service on the aforementioned criteria and
restrictions listed in the market access column and in addition require that another Member's service
supplier meet unspecified criteria to be recognized as a "financial institution".702
7.546 The United States further argues that even if China's commitments were somehow limited to
FFIs, the definition of that term offered by Chin a is much too narrow. The United States notes that
many dictionary definitions of the term "financi al institutions" are much broader. In the United
States' view, EPS suppliers of other WTO Me mbers would qualify as financial institutions. 703 The
United States also points out that in 2002 CUP was referred to by the PBOC as a joint-stock "financial
institution" that provides an inter-bank bank car d information switching network and associated
specialized services. 704 The United States further notes that a CUP executive during a press event
similarly referred to CUP as a "financial institu tion for offering cross-bank information exchange
network and specialized services for bankcards".705
7.547 Australia submits that, although China included certain limitations with respect 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 word s "unbound except", or
"otherwise unbound" in its Schedule, as it has with respect to mode 1. According to Australia, a
Member wishing to limit the service suppliers that are permitted to provide a particular service must
explicitly inscribe such a limitation in its schedule.
706 The European Union argues that there is no
"chapeau" along the lines of "unbound except for the following" preceding the limitations listed under
subsector (d), mode 3 in China's Schedule. This is different from the text preceding the limitations on
market access for modes 1 and 4, which clearly state "Unbound except …". In the European Union's
view, therefore, anything that is not explicitly in cluded in the scheduled limitation (which has already
run its course), would fall under China's commitment to provide market access. 707 Japan submits that
the absence of any "Unbound except …" or similar language with respect to the market access and
national treatment commitments under mode 3 strongly indicates that China's commitments are not
limited to "financial institutions".708
7.548 The Panel notes that both parties agree th at China has market access commitments in
subsector (d) and mode 3 that apply to FFIs. The parties disagree, however, on whether these
commitments are limited to FFIs and on whether EPS suppliers are FFIs. As it is common ground
(and we agree with the parties on this) that Chin a has commitments that apply to FFIs, we first
determine whether, for the purposes of China's co mmitments concerning subsector (d) and mode 3,
EPS suppliers of other WTO Members are FFIs. The firs t point to be noted is that the term "FFIs" is
not defined in China's Schedule. Nor is it define d in the GATS or any of its annexes. However,
section C of the relevant mode 3 market access entry in China's Schedule makes it clear, in our view,
that the term includes, at a minimum, foreign ba nks and foreign finance companies. Section C is
entitled "Licensing" and specifies that FFIs that me et certain conditions "are permitted to establish a
subsidiary of a foreign bank or a foreign finance co mpany in China". This implies that foreign banks

702 United States' second written submission, paras. 116 and 121-123.
703 United States' second written submission, paras. 117 and 124.
704 Paragraph 2 of the Reply of PBOC on the Opening of CUP, Exhibit US-27.
705 "China Unionpay Executive Met the Press", Answer to Question 5 of 26 March 2002,
Exhibit US-101.
707 European Union's third-party submission, para. 36.
708 Japan's third-party statement, para. 9; response to Panel question No. 23(b), para. 4.

and finance companies are considered FFIs for the purposes of China's Schedule. If a foreign finance
company were not an FFI, it could not "establish a subsidiary of ... a foreign finance company in
China". Finance companies are de fined as "non-bank financial instituti on[s] that provide[] credit to
customers that are either purchasing or leasing a product". 709 We thus deduce from the relevant
mode 3 entry itself that, for purposes of China's Sc hedule, FFIs include at least foreign banks and
foreign finance companies. We also understand th at the latter are a type of non-bank financial
institution.
7.549 To determine whether EPS suppliers of othe r WTO Members constitute non-bank FFIs, we
must first ascertain the ordinary meaning of the te rm "FFIs". We note that the parties have submitted
several dictionary definitions of the term "financial institutions". It emerges from these materials that
the term "institutions" refers to organizations, companies or other entities. 710 The definitions provided
to us also confirm that banks and fina nce companies are financial institutions. 711 We further observe
that some of the definitions before us are quite narrowly drawn, e.g. one dictionary describes a
financial institution as any organization "… that collects funds ... and invests these funds or lends
them on to borrowers". 712 Other dictionaries or reference sources define the covered activities more
broadly and suggest that the term is not limited to banks and finance companies. Specifically, these
sources state that a financial institution is (a) "[a] n organization whose core activity is to provide
financial services or advice in relation to financial products" 713; (b) "[a] firm that handles financial
transactions or gives financial advice" or "[ a]n establishment responsible for … facilitating
transmission of funds" 714; or (c) "[a] business organization[] that offer[s] a broad base of financial
services or specialize[s] in specific functions, pr oducts or services, e.g., commercial banks, … and
others that deal in money or equivalents".715
7.550 We find that some of the above-quoted dictionary definitions are sufficiently broad to capture
EPS suppliers. Indeed, looking at these particular de finitions, we consider that EPS suppliers can be
reasonably described as (a) organizations whose core activity is to provide specific financial services;
(b) establishments that handle financial transactio ns and facilitate the transmission of funds; or
(c) business organizations that specialize in specifi c financial service functions or financial services,
or that deal in money equivalents (electronic retail payment instruments).
7.551 As always, the ordinary meaning to be given to a treaty term must fit the specific context
within which that term appears. We recall in this re spect that the term "FFIs" appears in an entry that
relates to China's commitments concerning certain financial services, specifically those classified
under subsectors (a) to (f). This fact, together with the aforementioned dictionary definitions,

709 The Palgrave Macmillan Dictionary of Finance, Investment and Banking , Exhibit CHN-88, p.206.
This dictionary also states that finance companies "generate[] revenues based on the differential between [their]
own rate of borrowing and the rate at which [they] lend to customers". China further explains that the principal
difference between a bank and a finance company is that a bank has a licence to borrow money in the form of
demand deposits and other repayable funds from the public, while a finance company borrows money from
other sources. China's response to Panel question No. 53, fn. 58.
710 E.g. Oxford Dictionary of Finance and Banking, Exhibit US-76; Webster's New World, Finance and
Investment Dictionary, Exhibit CHN-90; Black's Law Dictionary, 9th Edition, (West Publishing 2010) (Black's
Law Dictionary), Exhibit CHN-91.
711 E.g. A Dictionary of Finance , Exhibit CHN-48, which refers to banks and finance houses. A
"finance company" is defined as "a non-bank financial institution […]", The Palgrave Macmillan Dictionary of
Finance, Investment and Banking, Exhibit CHN-88.
712 A Dictionary of Finance , Exhibit CHN-48. Similar definitions are provided in Barron's Dictionary
of Finance and Investment Terms, Exhibit CHN-49; and Webster's Finance and Investment Dictionary,
Exhibit CHN-90.
713 Oxford Dictionary of Finance and Banking, Exhibit US-76.
714 Banking Terminology, Exhibit US-113.
715 The Dictionary of Banking, Exhibit US-114.

suggests to us that in the specific context of Chin a's Schedule, "FFIs" are any foreign organizations,
companies or other business entities that provide fi nancial services classified under subsectors (a) to
(f).
7.552 China argues that financial institutions are, in addition, regulated, or supervised,
organizations.716 In support of this assertion, China s ubmitted a dictionary definition and legal
definitions contained in certain free trade agreements to which the United States is a party, e.g. the
North American Free Trade Agreement (NAFTA).717 Regarding the definitions provided in free trade
agreements, we note that they are not applicable to all WTO Members or even the two parties to the
present dispute. Moreover, they are definitions that were agreed on by the parties to that agreement.
The parties' agreement need not necessarily accord w ith the ordinary meaning of the term "financial
institutions". As concerns the dictionary definition718, we note that other definitions provided to us do
not suggest that financial institutions are by definition regulated organizations. We do not dispute that
financial institutions are commonly subject to so me domestic regulation or supervision. We
understand that the extent to which this is the case varies depending on the country and the type of
financial institution and may even vary over time for a given country and type of financial institution.
In our view, the existence, nature and extent of any regulation and supervision reflect policy choices,
and we do not consider that regul ation or supervision is a defi ning characteristic of financial
institutions. We are therefore unable to accept China's argument on this point.
7.553 Other evidence placed on the record includes US and Chinese domestic legal documents. The
United States submitted a law of the United States, Section 5312(a)(2)(L) of the United States'
Code.
719 That section, which relates to reporting requirements on monetary transactions, bank secrecy
and money laundering, provides a legal definition of the term "financial institution". Among the
entities listed is "an operator of a credit card system ". Thus, Section 5312(a)(2)(L) characterizes EPS
suppliers that process credit card transactions as "f inancial institutions". China has pointed out,
however, that another United States law, the Hiri ng Incentives to Restore Employment Act, defines
"financial institutions" more narrowly as includi ng essentially all entities accepting deposits, holding
financial assets for the account of others or enga ged in the business of investing or trading in
securities.720
7.554 China also refers the Panel to documents issued by the China Banking Regulatory
Commission (CBRC) in 2003, i.e. af ter China's accession to the WTO. 721 The documents indicate
that CBRC rescinded the "financial institution" licen ce that had been issued to CUP when it was

716 China's first written submission, para. 140.
717 The Palgrave Macmillan Dictionary of Finance, Investment and Banking , Exhibit CHN-46. The
free trade agreements cited by China are: the North American Free Trad e Agreement, Exhibit CHN-50; the
United States – Australia Free Trade Agreement, Exhi bit CHN-51; and the Korea – United States Free Trade
Agreement, Exhibit CHN-52. According to China, a standard definition of "financial institution" found in these
agreements is a "financial intermediary or other enterpri se that is authorized to do business and regulated or
supervised as a financial institution under the law of the Party in whose territory it is located". China's first
written submission, fn 82.
718 The Palgrave Macmillan Dictionary of Finance, Investment and Banking , Exhibit CHN-46, defines
"financial institution" as "[a] regulated organization that provides a range of banking and investment services"
(Exhibit CHN-46, p. 207).
719 31 U.S.C. 5312(a)(2)(L), Exhibit US-102.
720 United States Hiring Incentives to Restore Employment Act, H.R. 2847, 111 th Congress §1471
(2010), Exhibit CHN-94.
721 Transfer of Regulatory Function with Respect to China UnionPay (2003), Exhibit CHN-97, and
Notice regarding relevant issues on the transfer of th e regulatory responsibilities of China UnionPay Co., Ltd.
(2003), Exhibit CHN-97.

established in 2002. 722 The regulatory responsibility over CUP was to be transferred in December
2003 from the "non-bank financial institution regula tory department" of CBRC to PBOC. The reason
provided for this transfer of regulatory functions was that th e business scope of CUP "does not
include financial services" and that it "t herefore is not a financial institution".723 We note as an initial
matter that these documents concern CUP, not EPS suppliers of other WTO Members. 724
Furthermore, they suggest that CUP was considered, and authorized as, a non-bank financial
institution before its financial institution licence was revoked in 2003. Finally, we recall that the basis
for rescinding CUP's licence as a financial institutio n was the CBRC's view that CUP did not provide
the specific financial services that are regulated a nd supervised by the CBRC, i.e. China's banking
regulator.725
7.555 China further draws the Panel's attention to its Regulations on Administration of Foreign-
Funded Banks which define a "foreign financial institution" as "a financial institution that is registered
outside the People's Republic of China and ap proved or licensed by the financial regulatory
authorities of the country or region where it originated". 726 This definition is provided for the
purposes of these particular Regulations, and the Regulations talk about FFIs in the specific context of
establishment of foreign-funded banks.727
7.556 In considering the above-men tioned United States and Chinese legal documents, we observe
that they emanate from, and reflect the particular objectives and needs of, the domestic legal systems
of the United States and China. It is therefore im portant to be cautious when interpreting the treaty
term "FFIs" that we do not attribute undue we ight to these documents for the purposes of our
interpretative task. In particular, as regards the legal definitions provided in some of these documents,
we consider that it would be inappropriate to dr aw, from these context-specific definitions, general
conclusions as to the meaning and scope of the term "FFIs" as it appears in China's Schedule. At any
rate, these various documents do not suggest to us th at there is anything inherently questionable about
conceiving of EPS suppliers as non-bank financial institutions.
7.557 Evidence submitted by the parties shows that cer tain EPS suppliers – specifically those that
have adopted a four-party business model – refer to their clients as financial institutions.728 This is not
surprising, as issuers and acquirers are often banks. In contrast, these EPS suppliers do not appear to
refer to themselves as financial institutions. 729 We have said above that industry sources may

722 Regarding the "financial institution" licence from 2002, we note paragraph 2 of the Reply of PBOC
on the Opening of CUP, Exhibit US-27. It provides that "China UnionPay Co., Ltd. is a joint-stock financial
institution that provides an inter-bank bankcard information switching network and specialized services in
connection therewith".
723 It remains unclear on what definition of "financial services" the CBRC based this assessment.
724 Nonetheless, as we have explained above in Section VII.E of this Report, CUP in our view is an
EPS supplier.
725 We understand that CUP is now subject to the supervision and regulation of another financial
agency, the PBOC. We also recall that we have found a bove in Section VII.D that, fo r the purposes of China's
GATS Schedule, the services provided by EPS suppliers are financial services and are properly classified under
subsector (d) of that Schedule.
726 Article 3 of the Regulations of the People's Republic of China on Administration of Foreign-Funded
Banks, Exhibit CHN-45.
727 See Article 2 of the Regulations of the Peopl e's Republic of China on Administration of Foreign-
Funded Banks. Article 3, which sets out the definition, opens with the phrase: "A foreign financial institution
referred to in these Regulations shall mean …". Also , Article 3 provides exactly the same definition for
"foreign banks", except that it defines these as commercial banks rather than financial institutions.
728 See, e.g. Visa 2008 IPO Prospectus, Exhibit US-3, pp. 128-129; MasterCard 2010 Annual Report,
Exhibit US-6, p. 4; MasterCard Worldwide Terms of Use and Visa Gift Card Holiday Guide, Exhibit CHN-84.
729 China has submitted print-outs from the websites of two EPS suppliers of the United States that
have adopted the four-party model (Exhibit CHN-84). In these print-outs, the EPS suppliers state that they are

sometimes shed useful light on the ordinary meaning of terms. 730 In this instance, we do not consider
that much weight can be attributed to the EPS industry's usage of the term "financial institutions". We
would not find it unusual if companies in a given i ndustry did not claim to be subject to what often
amounts to burdensome regulation as financial ins titutions, unless it is important for business reasons
to be considered a financial institution (as in the case of banks, for instance). Moreover, what
ultimately matters are the views of regulators. Hence, it was open to the drafters of China's Schedule
to bring EPS suppliers of other WTO Members within the ambit of the Schedule term "FFIs" even if
EPS suppliers did not refer to themselves as financial institutions. For these reasons, we consider that
the EPS industry's usage of the term "financial institutions" does not demonstrate that, despite the
broad ordinary meaning of the term "FFIs", EPS suppliers of other WTO Members are not FFIs for
the purposes of China's mode 3 entry.
7.558 At the end of our analysis of the ordinary meaning of the term "FFIs", we thus remain of the
view that the term "FFIs" as it appears in Chin a's Schedule is reasonably susceptible of meaning any
foreign institutions that provide financial services classifiable under subsectors (a) to (f). This would
notably include EPS suppliers of other WTO Members. But our analysis so far has shown that the
term "FFIs" likewise bears the narrower meaning ar gued for by China, according to which the term
covers only foreign banks and finance companies providing these services.
7.559 We therefore need to examine further and in more detail whether the relevant context
confirms or puts in doubt either of the above-noted ordinary meanings. We begin this task by noting
that the relevant mode 3 entry lists temporary or permanent (i) geographic restrictions (section A), (ii)
client limitations on local currency business (sec tion B), and (iii) licensing requirements, including
general authorization criteria731 and qualifications for engaging in local currency business (section C).
These elements are applicable to all FFIs. We perceive no basis to conclude that it would be
unreasonable to impose these limitations on EPS suppliers of other WTO Members.
7.560 Additionally, we note that the licensing requirements in section C include minimum asset
requirements. They apply to FFIs wishing to establis h "a subsidiary of a foreign bank or a foreign
finance company in China", "a branch of a foreign bank in China" or "a Chinese-foreign joint bank or
a Chinese-foreign joint finance company in China". Or, to put it differently, these requirements apply
to foreign banks or finance companies that wish to establish in China in one of the specified forms of
commercial presence.732 As noted above, these requirements confirm that foreign banks and finance
companies are FFIs. But if the term "FFIs" encompassed solely foreign banks and finance companies,
it would have been simpler and more natural, in our view, for section C to refer to FFIs wishing to
establish a "subsidiary in China" rather than "a su bsidiary of a foreign bank or a foreign finance
company in China", and to "a Ch inese-foreign joint venture enterp rise in China" rather than "a
Chinese-foreign joint bank or a Chinese-foreign joint finance company in China". Conversely, if the
term "FFIs" included, but was not limited to, fo reign banks and finance companies, it would have
been necessary to specify to which type of FFI th e relevant asset requirements applied. For this
reason, we consider, first, that the asset requireme nts support the view that foreign banks and finance
companies are not the only institutions covered by the term "FFIs". Secondly, and contrary to China's
contention, the asset requirements do not indicate, in our view, that only fo reign banks and finance

not financial institutions and do not issue payment cards. China further provided a submission by one of these
suppliers to Canada's Competition Tribunal in which a similar statement is made (Exhibit CHN-84, para. 11).
730 See para. 7.89 above.
731 Among these are prudential author ization criteria. China has stated that the term "prudential
regulation" is generally understood to relate only to the regulation of deposit-taking financial institutions (e.g. to
capital adequacy requirements). China's response to Panel question No. 55, para. 100.
732 It appears to us that in order to establish a subsidiary "of a foreign bank", for instance, the FFI must
be a foreign bank.

companies may establish a commercial presence in Ch ina to provide the services under subsectors (a)
to (f).733
7.561 It should also be recalled that China's mode 3 market access entry relates to services that
appear under the subheading "Banking services...". As we have determined in Section VII.D above
that subsector (d) covers EPS, the subheading "Banking services" in our view does not support
China's contention that the term "FFIs" covers foreign banks and finan ce companies, but not EPS
suppliers of other WTO Members.
7.562 We also note that China's Schedule under "Ba nking and Other Financial Services" contains a
separate subsectoral description which reads "mot or vehicle financing by non-bank financial
institutions". The parties agree that the non-bank fi nancial institutions referred to in this description
cover finance companies and/or other t ypes of non-bank financial institutions.734 China has explained
that scheduling this commitment separately ensured th at non-bank financial institutions would be able
to provide motor vehicle financing immediatel y upon China's accession to the WTO in December
2001, without the limitations on market ac cess inscribed for subsectors (a) to (f). 735 In our view,
China's explanation concerning the separate commitme nt relating to motor vehicle financing by non-
bank financial institutions is consistent with the view that FFIs include non-bank financial institutions.
China's explanation would appear to imply that if China had wished to subject motor vehicle
financing by non-bank financial institutions to the li mitations inscribed for subsectors (a) to (f), China
would have classified it under "Banking services" (subsect ors (a) to (f)). We recall in this respect that
China's mode 3 commitments concerning subsectors (a) to (f) apply to FFIs.
7.563 We further find relevant China's mode 3 mark et access entry concerning subsectors (k) and
(l). This entry is also part of the commitments concerning "Banking and Other Financial Services". It
specifies that "[b]ranches of foreign institutions are permitted". While this entry refers to "foreign
institutions", thus omitting the word "financial", we attach no particular significance to this omission
as the entry relates to subsectors listed under the heading "other financial services". We recognize
that some of the services falling within subsectors (k ) and (l) are provided by e.g. banks – such as
advice on acquisitions and on corporate restructuri ng. But we do not consider that the services
described in subsectors (k) and (l) are exclusively provided by banks and/or finance companies. For
instance, the United States has noted that subsector (k) includes such information services supplied by
financial news providers like Reuters and Bloomberg.736 Similarly, subsector (l) includes the services
provided by what are known as credit rating agencies.737
7.564 Also worthy of note are China's financial ser vices commitments in the subsectors concerning
insurance and securities services. The relevant en tries use the terms "foreign insurance institutions"
and "foreign securities institutions", respectively. Accordingly, the reference to foreign "institutions"
is not unique to China's commitments in the sub sector concerning banking services. China's Schedule
does not provide much guidance as to the meaning and coverage of the term "foreign securities
institutions". In contrast, it is clear from the Sche dule that the term "foreign insurance institutions" is
used broadly to cover not just foreign life an d non-life insurers, but also insurance brokers. 738
Moreover, whereas outside the context of China's Sc hedule the term "financial institutions" is often

733 China's response to Panel question Nos. 52(a), para. 87, and 80, para. 16.
734 United States' response to Panel question No. 84(a), para. 59; China's response to Panel question
No. 84(a), para. 32.
735 China's response to Panel question No. 84(b), para. 33.
736 United States' response to Panel question No. 45, para. 119. Subsector (k) refers inter alia to
"[p]rovision and transfer of financial information".
737 Subsector (l) refers inter alia to "credit reference and analysis, investment and portfolio research
and advice".
738 See notably section D of China's mode 3 market access entry concerning insurance and insurance-
related services.

used to refer narrowly to banks and finance companie s (as some of the dictionary meanings indicate),
the terms "insurance institutions" and "securities institutions" to our know ledge are less commonly
encountered. They do not suggest a narrow meaning. 739 To us, the use of parallel terms – financial
institutions, insurance institutions and securities in stitutions, respectively – in China's financial
services commitments provides further support for the view that the word "institution" may be
understood to refer notably to compan ies that provide the relevant services. 740 We note that the EPS
suppliers of other WTO Members to which the pa rties have referred in these proceedings are all
companies.
7.565 Finally, China refers the Panel to the GATS Schedules of eight other WTO Members. 741 As
they are all integral parts of the GATS, they also fo rm part of the relevant context. The excerpts from
other WTO Members' Schedules that China has provided to us use the term "foreign financial
institutions" or "financial institutions", and do not o ffer a formal definition of either term. Several
Schedules provide confirmation that banks and finance companies w ould be considered financial
institutions for the purposes of these Schedules. We note, though, that the excerpts provided do not
specifically indicate that EPS suppliers are financial institutions, or that they are not.
742 In the light of
this, we do not find these other Schedules to be par ticularly instructive. As we have explained, the
term "FFIs" in our view can refer to a variety of foreign institutions, including, but not limited to,
banks and finance companies. Therefore, the fact that in some WTO Members' Schedules this term
might possibly have been used in a narrower sense do es not demonstrate that it would be improper, in
the context of China's Schedule, to give it the me aning its words are capable of bearing. As the
Appellate Body has observed, each Schedule has "its own intrinsic logic" and must be interpreted on
its own merits.743
7.566 To sum up, the preceding contextual considerati ons either support or do not contradict the
view that the term "FFIs" covers any foreign ins titutions that provide financial services classifiable
under subsectors (a) to (f). Thus, on the basis of the ordinary meaning of the term "FFIs" read in the
specific context provided by China's Schedule, we se e no reason to construe that term in such a way
that it would exclude EPS suppliers of other WTO Members.

739 We note that while e.g. the above-mentioned Oxford Dictionary of Finance and Banking ,
Exhibit US-76, and the Barron's Dictionary of Finance and Investment Terms , Exhibit CHN-49, contain an
entry for "financial institution", they do not contain entries for either "insurance institution" or "securities
institution".
740 It is pertinent to note that section D of China's mode 3 market access commitments concerning
insurance services specifically states that the qualifica tions for establishing a "foreign insurance institution"
include the requirement that the investor be a foreig n insurance company with 30 years of establishment
experience in a WTO Member. Thus, this particular entry appears to indicate that only companies can be
foreign insurance institutions. We further note that one of the dictionaries that has been referred to by China has
an entry concerning "insurance company" that says "[s]ee insurer". The word "insurer" is in turn defined as "[a]
regulated institution that accepts the risks of insureds or cedants through the insurance mechanism …". See The
Palgrave Macmillan Dictionary of Finance, Investment and Banking, pp. 272-273.
741 "Use of the term 'financial institution" in other WTO Members' Schedules" (Exhibit CHN-85). The
eight WTO Members are: Angola, Australia, Côte d'Ivoire, Honduras, Korea, Malta, Singapore and Venezuela.
742 In contrast, Brazil's Schedule, which was not provided to us by China, contains the following
definition: "Financial institutions subject to this commitment are classified as commercial bank, investment
bank, consumer finance company, financial leasing company, brokers and dealers". See the horizontal note on
financial services of Brazil's Schedule (GATS/SC/13). Th is definition appears to imply that EPS suppliers are
not financial institutions for the purposes of Brazil's Sche dule. We note, however, that unlike Brazil, China has
not included a definition of the term "FFIs" in its Schedu le. China itself has stated that in the absence of an
explicit definition in its Schedule, treaty terms must be interpreted in accordance with customary rules of
interpretation of public international law. China's response to Panel question No. 54, para. 97.
743 Appellate Body Report, US – Gambling, para. 182.

7.567 The result of our interpretative analysis so far n eeds to be considered al so in the light of the
object and purpose of the GATS and the WTO Agreement. We have previously identified relevant
objects and purposes of these two agreements. 744 With specific reference to the term "FFIs", we do
not consider that interpreting that term so as to include EPS suppliers of other WTO Members would
be at variance with the object and purpose of either the GATS or the WTO Agreement. In our view,
the purpose of ensuring the security and predictab ility of commitments is served by giving the words
used in China's Schedule the meaning that they are fairly capable of bearing in their context.
7.568 As an additional matter, we note that China h as adverted to the importance of avoiding any
interpretation of its mode 3 market access entry that would produce what it considers unreasonable
results. Essentially, China submits that any interp retation of the entry in question must take full
account of the fact that China was allowed to maintain geographic, client and non-prudential
limitations for the first five years after its accession to the WTO, and that it is still allowed to impose
prudential authorization criteria and qualificati ons requirements for engaging in local currency
business. Under our interpretation of the term "FFIs", foreign non- bank financial in stitutions other
than finance companies were, and are, subject to the same limitations as foreign banks and finance
companies (which China accepts are FFIs). Our in terpretation therefore steers clear of a result
whereby, e.g. for the first five years, non-bank financial institutions other than finance companies
could enter China's market without being subjected to the aforementioned limitations, while foreign
banks and finance companies would have faced these limitations.
7.569 China further appears to suggest that any interp retation of the term "FFIs" that would cover
institutions other than foreign banks and finance companies would mean that non-bank foreign service
suppliers with little industry experience could en ter the Chinese market and begin accepting deposits
or making loans. That is not the case, however. As indicated above, in accordance with section C of
China's mode 3 market access entry, China may impose prudential authorization criteria.
Additionally, as confirmed by the preamble to the GATS, China retains the right to regulate, and to
introduce new regulations on the supply of services to meet domestic policy objectives. Articles VI:1
and VI:5 of the GATS further confirm that even in sectors in which a WTO Member has undertaken
specific commitments, that WTO Member may, subj ect to certain disciplines, apply measures of
general application affecting trade in services, including e.g. non-di scriminatory licensing,
qualification and technical requirements. Finally , paragraph 2(a) of the GATS Annex on Financial
Services provides that, notwithstanding any other pr ovisions of the GATS, a WTO Member may take
measures for prudential reasons, including for the prot ection of e.g. investors and depositors, or to
ensure the integrity and stability of the financial system.
7.570 For all these reasons, we conclude that the term "FFIs" as it appears in China's commitments
concerning banking services covers foreign companies that supply financial services classifiable
under subsectors (a) to (f). 745 Accordingly, it is our view th at, as used in China's relevant
commitments, the term "FFIs" covers foreign banks, foreign finance companies, as well as other
foreign non-bank financial institutions, including EPS suppliers.
7.571 Having found that EPS suppliers of other Me mbers are FFIs for the purposes of China's
market access commitments, there is no need to go on to determine whether China has any market
access commitments in subsector (d) and mode 3 th at would apply to any foreign service suppliers
that are not FFIs. We thus proceed to examine Ch ina's current market access commitments in respect
of FFIs that provide their services through mode 3.

744 See paras. 7.196-7.197 above.
745 It is not necessary in this dis pute to determine whether, for the purposes of China's Schedule, the
term "FFIs" covers only companies, or whether they also include other organizations and entities.

7.572 We note that the claims put forward by the United States in the present dispute concern the
provision of EPS for domestic RMB payment card transactions in China. 746 Consequently, it would
appear that for purposes of China's mode 3 entry, the relevant business in which EPS suppliers of
other WTO Members would engage in China is local currency (RMB) business. 747 China's mode 3
entry expressly states that for local currency business, and after expiry of the phase-out period of five
years, FFIs – which in our view include EPS suppliers of other WTO Members – may provide their
services to all Chinese enterprises and natural pe rsons, without being subject to geographic
restrictions or non-prudential authorization criteria restricting their ownership, operation or juridical
form.748 The enterprises and natural persons that EPS s uppliers serve are issuers, acquirers, merchants
and private or corporate card holders.749
7.573 Significantly, China's mode 3 entry does not set out any limitations on the number of service
suppliers in the form of a monopoly or exclusive service suppliers. 750 The entry nonetheless specifies
that China's market access commitment is subject to a limitation concerning qualifications for FFIs to
engage in local currency business. 751 Pursuant to the limitation in question, prior to applying for
authorization to engage in local currency busin ess, FFIs must have three years of business operation
in China and be profitable for two consecutive years. In other words, as also pointed out by China 752,
FFIs must engage in foreign currency business thr ough commercial presence in China before they can
apply for authorization to conduct local currency business.
7.574 It should be added that, as a general matter, China's Schedule might possibly set out
additional relevant limitations on market access in th e section that concerns horizontal commitments.
Neither party argues that this is the case, howev er. Having reviewed these horizontal commitments,
we consider that they do not modify the result we have reached on the basis of the mode 3 entry in
question.
7.575 Accordingly, we come to the conclusion th at in respect of services classified under
subsector (d) and provided by FFIs – which we c onsider include EPS provided by EPS suppliers of
other WTO Members – China has made a commitment on market access concerning mode 3. That
commitment is not subject to any limitations on the nu mber of service suppliers. But it is subject to a
limitation with regard to the qualifications that FFI s must meet to be permitted to engage in local

746 The United States alleges, for instance, that Ch ina refuses to allow EPS suppliers of other WTO
Members "to process payment card tran sactions in China denominated and paid in China's domestic currency,
Renmimbi ('RMB')". United States' first written submission, para. 3.
747 The Panel asked the United States whether its Artic le XVI claims that are based on China's mode 3
market access entry related to foreign or local currency business. The Un ited States did not provide a direct
answer to the question. It pointed out that whether the purchase is RMB-denominated or whether the payment
card is RMB-denominated, a payment car d transaction would, in its view, be processed by CUP when the card
is issued and used in China. United States' response to Panel question No. 65, para. 168. China, for its part,
understands the United States to be claiming a right of market access to engage in local currency business.
China states that although the United States in its vi ew avoided answering Panel question No. 65, the subject
matter of this dispute is what the United States calls "domestic transactions denominated and paid in RMB",
which China understands to be part of local currency business. China's second written submission, para. 69.
748 See sections A, B and C of the relevant mode 3 market access entry. We also note that China's
mode 3 national treatment entry further specifies that with the expiry of the phase-ou t period of five years,
China may no longer maintain any limitations on national treatment in respect of FFIs. As stated in the relevant
entry, FFIs may do business, without restrictions or need for case-by-case approval, with foreign invested
enterprises or non-Chinese natural persons, or with Chinese clients.
749 The enterprises or persons with which EPS supp liers do business vary according to the type of
network EPS suppliers use (four-party vs. three-party model).
750 We do not understand the parties to argue otherwise. E.g. United States' second written submission,
para. 116; China's first written submission, paras. 133-139.
751 See section C of the relevant mode 3 market access entry.
752 China's response to Panel question No. 52(a), para. 86.

currency (RMB) business. As a consequence, China is obligated to give EPS suppliers of other WTO
Members access to its market, through commercial presence, so that they may engage in local
currency business in China, subj ect to such suppliers meeting the aforementioned qualifications
requirement.
2. Whether the measures at issue are inconsistent with Article XVI of the GATS
7.576 The United States asserts that China made re levant commitments in its Schedule not to
maintain any limitations on the number of EPS supp liers of other WTO Members in respect of the
services at issue. As a result of these commitments, the Unite d States considers the measures at issue
are inconsistent with China's obligations under Articles XVI:1 and XVI:2(a) of the GATS. 753 In
respect of Article XVI:2(a), the United States claims that each of the six requirements establishes and
maintains CUP as both a "monopoly" supplier and an "e xclusive service supplier" within the meaning
of Article XVI:2(a) of the GATS for all RMB bank card transactions.754
7.577 China asserts that the United States has failed to demonstrate that the measures at issue
maintain or adopt limitations on the number of service suppliers that are inconsistent with
Article XVI:1 or XVI:2(a) of the GATS. 755 China argues that the lega l instruments which form the
basis of the United States' claims establish a common national network for processing domestic inter-
bank bank card transactions. In its view, th is does not equate to a "monopoly" network. 756 It submits
that there is nothing in the instruments that w ould prevent the issuance or acceptance of bank cards
bearing more than one logo and capable of being processed over multiple networks. 757 Moreover, it
considers the fact that bank cards, POS devices and AT Ms must adhere to certain technical standards
does not preclude their adherence to other technical standards. 758 Finally, in respect of requirements
identified in relation to Hong Kong and Macao, Ch ina argues that its own obligations under the
covered agreements do not extend to separate custom s territories, and therefore there is no "legal
basis" for the claims advanced by the United States relating to services in Hong Kong or Macao under
the modes of supply at issue in this dispute.759
7.578 The Panel recalls its conclusions that certain Chinese legal instruments require that bank cards
issued in China bear the Yin Lina/UnionPay logo , and furthermore, China, requires that issuers
become members of the CUP network, and that th e bank cards they issue in China meet certain
uniform business specifications and technical standards. 760 We found that China also imposes
requirements that all terminals (ATMs, merchant processing devices and POS terminals) in China that
are part of the national bank card inter-bank pr ocessing network be capable of accepting all bank
cards bearing the Yin Lian/UnionPay logo.761 We also concluded that China requires acquirers to post
the Yin Lian/UnionPay logo, become members of the CUP network and be capable of accepting all
bank cards bearing the Yin Lian /UnionPay logo. 762 In addition, we found that certain instruments
mandate that CUP and no other EPS supplier handle the clearing of certain RMB bank card
transactions that involve either an RMB bank card is sued in China and used in Hong Kong or Macao,

753 United States' first written submission, para. 61.
754 United States' first written submission, para. 65; response to Panel question No. 64, para. 165.
755 China's response to Panel question No. 22; second written submission, para. 90.
756 China's first written submission, paras. 54, 92-93, and 101; opening statement at the first meeting of
the Panel, para. 20; response to Panel question No. 22; comments on United States' response to Panel question
Nos. 70-72, 86-96, 115-123, paras. 72 and 73.
757 China's second written submission, para. 93; comments on United States' response to Panel question
Nos. 70-72, 86-96, 115-123, para. 73.
758 China's response to Panel question No. 22.
759 China's response to Panel question No. 18, paras. 1-5.
760 See Section VII.E.2(a) above.
761 See para. 7.239 above.
762 See Section VII.E.2(c) above.

or an RMB bank card issued in Hong Kong or Macao that is used in China in an RMB transaction. 763
We did not conclude, however, that there is a gene ral requirement that mandates the use of CUP or
otherwise establishes CUP as the sole supplier of EPS for all domestic RMB bank card transactions
that take place in China.764 Similarly, we did not conclude that there are broad prohibitions on the use
of "non-CUP cards" for cross-region or inter-bank transactions.
7.579 As we have concluded that there is no require ment that establishes CUP as the "sole supplier"
(i.e. the alleged "sole supplier requirements"), and that there are no broad prohibitions on the use of
non-CUP cards for cross-region or inter-bank tr ansactions (the alleged "cross-region/-bank
requirements"), we do not address the United States' claims under Article XVI in respect of these two
alleged "requirements". By contrast, we have conc luded that China maintains in place certain issuer,
terminal equipment and acquirer requirements (the "issuer requirements", "terminal requirements" and
"acquirer requirements", respectively), and that CU P enjoys exclusivity as the EPS supplier in respect
of transactions concerning Chinese nationals trave lling in Hong Kong or Macao, and Hong Kong or
Macao nationals travelling in China (the "Hong K ong/Macao requirements"). Therefore, we consider
below whether these four requirements are inconsiste nt with China's obligations under Article XVI of
the GATS, as claimed by the United States.
7.580 With this in mind, we recall our conclusion above 765 that China has not undertaken any
market access commitments under mode 1 in Sector 7.B(d) of its Schedule in respect of the services at
issue in this dispute. In light of this finding , the Panel further finds that the issuer, terminal
equipment, acquirer and Hong Kong/Macao requirements are not inconsistent with Article XVI of the
GATS.
7.581 In addition, we concluded above 766 that China has undertaken a market access commitment
under mode 3 in Sector 7.B(d) of its Schedule in respect of the services at issue in this dispute. In
light of this finding, we therefore proceed to consider whether the issuer, terminal equipment, acquirer
and Hong Kong/Macao requirements are inconsistent with any of China's market access obligations in
respect of this commitment. Additionally, in the li ght of the United States' assertion that each of the
four requirements at issue maintains limitations on the number of service suppliers in the form of a
"monopoly" and "exclusive service supplier" within the meaning of Article XVI:2(a) of the GATS,
we begin our assessment under Article XVI:2(a) of the GATS.
(a) Whether the relevant requirements fall within the scope of Article XVI:2(a) of the GATS
7.582 The United States argues that each of the requ irements at issue is inconsistent with
Article XVI:2(a) of the GATS because they limit the number of foreign suppliers of EPS for bank
card transactions. The United States considers these measures establish and maintain CUP as both a
"monopoly" supplier and an "exclusive service supplier" within the meaning of Article XVI:2(a) of
the GATS for all RMB bank card transactions.
767 In accordance with statements by the Appellate
Body in US ‒ Gambling, the United States submits that the terms "monopolies" and "exclusive service
suppliers" should be interpreted to include not only limitations that are "in the form" of monopolies or
exclusive service suppliers, but also those that are "in effect" such limitations.768
7.583 China argues that the Appellate Body made clear in US ‒ Gambling that the scope of
Article XVI:2(a) extends only to "quantitative" or "quantitative-type measures" and therefore,

763 See paras. 7.361-7.383 above.
764 See paras. 7.385-7.504 above.
765 See para. 7.538 above.
766 See paras. 7.539-7.575 above.
767 United States' first written submission, para. 65; response to Panel question No. 64, para. 165.
768 United States' response to Panel question No. 67; see also second written submission,
paras. 132-136.

Article XVI does not extend to measures that "merely have the effect of limiting the number of
services suppliers".769 China argues that, if Article XVI we re understood to encompass measures that
"have the effect" of limiting the number of servi ce suppliers, then measur es that are permitted under
other provisions of the GATS would need to be consid ered to fall within the scope of Article XVI due
to their limiting effect. China argues that the subj ect matter of Article XVI would thus "begin to
overlap" with other GATS disciplines, and this woul d inappropriately "blur the distinction" between
different disciplines and would "intrude upon" Members' rights. 770 Furthermore, China disagrees with
the United States that the terms "monopoly" and "exclu sive service suppliers" should be interpreted to
have the same meaning.771
7.584 The Panel will consider the scope of Article XVI:2(a) of the GATS before assessing the
United States' particular claims. We first note that the parties provided several definitions and
explanations of the terms "monopoly" and "exclusive service suppliers".
7.585 Article XXVIII(h) of the GATS defines "monopoly supplier of a service" as "any person,
public or private, which in the relevant market of the territory of a Member is authorized or
established formally or in effect by that Member as the sole supplier of that service". Article VIII:5
states: "The provisions of this Article shall also apply to cases of exclusive service suppliers, where a
Member, formally or in effect, (a) authorizes or establishes a small number of service suppliers and
(b) substantially prevents competition among those suppliers in its territory" (emphasis added).
7.586 Referring to dictionary definitions 772 and the meaning given to the term "monopoly supplier
of a service" in Article XXVIII(h) of the GATS, the United States emphasizes that a monopoly
supplier is a single or sole supplier that has an excl usive right to operate in a market. China similarly
refers to the definition in Artic le XXVIII(h) in arguing that a monopol y encompasses a sole supplier.
Regarding "exclusive service suppliers", the United States observes that they are not granted sole
access, but rather, more than one exclusive service supplier will be granted rights to operate in a
market that protects them from competition. China appears to agree, based on Article VIII:5 of the
GATS, that the term "exclusive service suppliers" en tails a small number of service suppliers that are
protected from competition.
7.587 As a general textual matter, the definitions of the term "monopoly" provided by the United
States support the view that the notion of a monopoly service supplier may overlap with that of an
exclusive service supplier. However, Article XV I:2(a) of the GATS draws a distinction between
these two terms. We must give meaning to all terms and cannot therefore assume that the terms mean
one or the same thing.
773 Taking into account the different meaning given to these terms in the text of
the Articles VIII:5 and XXVIII(h) of the GATS, and the distinction made in Article XVI:2(a), we
consider that a monopoly supplier is a sole supplier au thorized or established formally or in effect by
a Member, whereas an exclusive service supplier is on e of a small number of suppliers in a situation
where a Member authorizes or establishes a small numbe r of service suppliers, either formally or in
effect, and that Member substantially prevents competition among those suppliers. We have not
identified anything in the definitions provided by the parties, or elsewhere, that would lead us to

769 China's response to Panel question No. 67 (quoting Appellate Body Report, US ‒ Gambling ,
para. 248).
770 See China's response to Panel question No. 67 (citing Panel Report, US ‒ Gambling, para. 6.305).
771 China's response to Panel question No. 66.
772 As also pointed out by the United States, a monopoly can be defined as "exclusive possession or
control of the trade in a commodity or service … the condition of having no competitor in one's trade or
business…" or as "an exclusive privilege to carry on a business, traffic, or service granted by a government".
See United States' first written submission, para. 65, citing New Shorter Oxford English Dictionary (1993),
p. 1819.
773 See Appellate Body Report, US – Gasoline, p. 23, DSR 1996:I, 3, at p. 29.

conclude differently. Thus, for the purposes of Article XVI:2, we do not consider that a monopoly
supplier is at the same time an exclusive service supplier.
7.588 Due to the formulation of the United States' panel request and its subsequent
argumentation774, we understand the United States to claim th at, in the event that the Panel was to
determine that CUP operates as the sole supplie r in the Chinese market, then CUP constitutes a
monopoly within the meaning of Article XVI:2(a). We note, in this respect, the United States alleges
specifically that CUP is the "sole supplier" of EPS for RMB bank card transactions. 775 In the event
that the Panel was to determine that CUP is one of a small number of EPS suppliers, then we
understand it is the United States' view that CUP opera tes as an exclusive service supplier within the
meaning of that provision. Thus, whether the requirements at issue establish CUP as the sole supplier
of EPS services, or whether they establish CUP as one of a small number of EPS suppliers and
substantially prevent competition
776, the United States considers that the requirements are inconsistent
with Article XVI:2(a). We will assess the United States' claims with this understanding in mind.
7.589 We next address the parties' arguments concer ning the scope of Article XVI:2(a), namely,
whether Article XVI:2(a) extends to cover measures that impose "quantitative" or "quantitative-type"
limitations, and whether it should be interpreted to include not only limitations that are "in the form"
of monopolies or exclusive service suppliers, but also those that are "in effect" such limitations.
7.590 As noted by both parties, the Appellate Body in US ‒ Gambling considered the meaning of
the terms "monopoly" and "exclusive service suppliers" that appear in Article XVI:2(a). It stated:
[T]he reference, in Article XVI:2(a), to limitations on the number of service suppliers
"in the form of monopolies and exclusive service suppliers" should be read to include
limitations that are in form or in effect, monopolies or exclusive service suppliers. 777
(emphasis original)
7.591 Looking at the remaining context of Article XVI :2(a), the Appellate B ody concluded that the
thrust of Article XVI:2(a) is not on the "form" of a measure, but on its "numerical, or quantitative,
nature", stating:
This is not to say that the words "in the form of" should be ignored or replaced by the
words "that have the effect of". Yet, at the same time, they cannot be read in
isolation. Rather, when viewed as a whole, the text of sub-paragraph (a) supports the
view that the words "in the form of" must be read in conjunction with the words that
precede them—"limitations on the number of service suppliers"—as well as the
words that follow them, including the words " numerical quotas". (emphasis added)

774 See, e.g. United States' first written submission, pa ra. 65. The United States argues that the "types
of privileges afforded CUP by the measures, including the ability to set prices, fall within the definition of both
'monopoly' and 'exclusive service supplier'".
775 The United States specifically alleges in this dispute that China maintains certain measures,
including 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. Th e United States also consid ers that CUP is the sole
supplier for transactions pertaining to the particular RM B card-based transactions taking place in China, Macao
and Hong Kong at issue in this dispute. See, e.g. United States' first written submission, para. 4.
776 In respect of whether CUP would constitute an exclusive service provider, we recall that China
asserts that a second domestic RMB clearing organizatio n, the RCBFCC, currently supplies EPS in the Chinese
market. See China's response to Panel question Nos. 98 , 113 and 114. The United St ates disputes that the
RCBFCC handles the processing of RMB payment card transac tions. As we explained above, we are unable to
verify China's assertion that the RCBFCC is a second EPS supplier operating in China, or the United States'
contention in this regard. See paras. 7.488 and 7.489 above.
777 Appellate Body Report, US – Gambling, para. 230.

Read in this way, it is clear that the thrust of sub-paragraph (a) is not on the form of
limitations, but on their numerical, or quantitative, nature.778 (emphasis original)
7.592 Therefore, as these statements reflect, whether a limitation is "in the form of" a monopoly or
exclusive service supplier within the meaning of Article XVI, turns notably on whether it is
"numerical" or "quantitative" in nature. We unde rstand the Appellate Body to mean that even a
measure that is not, for instance, called a "quota" can fall within the scope of Article XVI:2(a), if it is
quantitative in its thrust and therefore, limits th e supply of a service as a quota would do. Regarding
the form of such a measure, it may be any type of government-imposed law or regulation.779
7.593 Accordingly, we consider that in our Article XVI :2 analysis of the four requirements at issue
we must focus, not on whether they formally or explicitly institute a monopoly or an exclusive service
supplier, but on whether they constitute a limita tion that is numerical and quantitative in nature. More
particularly, we must examine whether they are of such a nature that they limit to one, or a small
number, the number of authorized EPS suppliers in China.
7.594 With the foregoing considerations in mind, we proceed to consider whether the issuer,
terminal equipment, acquirer and Hong Kong/Macao requirements constitute such "limitations on the
number of service suppliers" "in the form of" a monopoly or an exclusive service supplier as those
terms are used in Article XVI:2(a) of the GATS.
(b) Whether the issuer, terminal equipment and acquirer requirements are inconsistent with
Article XVI:2(a) of the GATS
7.595 The United States argues that, in accordance w ith its GATS Schedule, China committed not
to maintain any limitations on the number of foreig n service suppliers of EPS. We recall that the
United States argues that the imposition of variou s requirements "ensure CU P's privileged position",
both "explicitly" and "effectively". 780 Specifically, the United States argues that no EPS supplier
other than CUP benefits from requirements impos ed on issuers and acquirers of bank cards, or
terminal equipment requirements. Due to the n eed to fulfil these requirements, the United States
argues that issuers and acquirers must have access to the CUP system, and must pay for that access. 781
It contends that it is thus "economically unviable" fo r any foreign supplier of EPS to participate in the
market.782 This is so, it argues, because it does not make "economic sense" for banks and processing
entities to pay for the privilege of using a foreign EPS supplier in addition to what it pays to have
access to CUP's network. 783 Broadly, it argues that each of these requirements help "entrench CUP's
position as sole service supplier in the market". 784 In addition, it argues that the collective effect of
these requirements establish CUP as the sole entity able to provide EPS for bank card transactions in

778 Appellate Body Report, US – Gambling, para. 232.
779 Regarding the "effect" of a measur e, unlike Article XVI:2(a) of the GATS, we note that Article XV
of the GATS, entitled "Subsidies" refers to the "distortive effects on trade in services" that subsidies may have.
Article XV:2 indicates that a Member may request consultations with another Member in instances where it
considers itself to be "adversely affected" by a subsidy of that other Member. Thus, this provision contemplates
the "effect" a measure may have. Article XVI:2(a) does not expressly refer to the "effects" that arise from a
limitation such as a monopoly or exclusive service provider.
780 United States' first written submission, para. 46
781 United States' first written submission, paras. 50-52.
782 United States' first written submission, para. 66.
783 United States' first written submission, para. 69.
784 United States' second written submission, paras. 173, 180 and 183.

China. 785 In this respect, it argues that the requi rements gave CUP automatic and universal
acceptance of its RMB bank cards by banks and merchants.786
7.596 China contends that none of these three re quirements "have anythi ng to do with the
maintenance or adoption of a limitation on market access 'in the form of' of a monopoly or exclusive
service supplier arrangement".787 In addition, as discussed in Section VII.E.2(b) above, China argues
that the United States failed to identify any aspect of these alleged requirements that would prevent
the issuance or acceptance of bank cards that are capable of being processed over multiple networks,
and therefore, it failed to establish that these m easures impose "quantitative" or "quantitative-type"
limitations on market access such that they would violate Article XVI:2(a) of the GATS. 788
Accordingly, China requests the Panel to reject the United States' claims under Article XVI.
7.597 The Panel concluded in Section VII.E.2(a) above that, China, through Document Nos. 37, 57
and 129 imposes requirements on issuers that bank cards issued in China bear the Yin Lian/UnionPay
logo, and furthermore, China, through Document Nos. 17, 37, 57, 76 and 129 requires that issuers
become members of the CUP network, and that th e bank cards they issue in China meet certain
uniform business specifications and technical sta ndards. In reaching findings on these issuer
requirements, we further indicated that none of the legal instruments reflecting these requirements
indicates that issuers who are members of CUP may not join other networks in China (with the result
that the bank cards issued work over those other networks), or that bank cards that meet CUP's
uniform business specifications and technical stan dards must not, or cannot, simultaneously meet
those of other networks.789
7.598 We further concluded in Section VII.E.2(b) above that China, through Document Nos. 37 and
153, imposes requirements that all terminals (ATMs, merchant processing devices and POS terminals)
in China that are part of the national bank card inter-bank processing network must be capable of
accepting all bank cards bearing the Yin Lian/UnionPay logo. In reaching findings on these terminal
equipment requirements, we further indicated that none of the legal instruments reflecting these
requirements indicates that terminal equipment that must be capable of accepting bank cards bearing
the Yin Lian /UnionPay logo could not also be capable of accepting, at the same time, bank cards
bearing the logo of different EPS suppliers. Hence, we saw no basis to conclude that the terminal
equipment requirements would prevent the acceptance of bank cards that would be capable of being
processed over an inter-bank network in China other than that of CUP.790
7.599 Finally, we concluded in Section VII.E.2(c) above that China, through Document No. 153,
imposes requirements on acquirers to post the Yin Lian /UnionPay logo and furthermore, China,
through Document Nos. 37, 76 and 153, imposes re quirements that acquirers join the CUP network
and comply with uniform business standards and technical specifications of inter-bank
interoperability, and that terminal equipment opera ted or provided by acquirers be capable of
accepting bank cards bearing the Yin Lian /UnionPay logo. In reaching findings on these acquirer
requirements, we further concluded that none of the legal instruments reflecting these requirements
indicates that acquirers may not also accept bank car ds that would be capable of being processed over
an inter-bank network in China other than that of CUP.791

785 For further explanation on the United States' ar guments concerning the co llective effect of the
requirements at issue, see paras. 7.482-7.506 above.
786 United States' second written submission, para. 190.
787 China's second written submission, para. 92.
788 China's second written submission, para. 93.
789 See paras. 7.297-7.299 above.
790 See para. 7.334 above.
791 See paras. 7.359-7.360 above.

7.600 It is clear from our conclusions as to the na ture of these requirements that none of them
imposes a limitation on the supply of EPS services that is quantitative in nature, i.e. they do not
require that CUP shall be established and main tained as a "monopoly" or an exclusive service
supplier. In addition, in view of our conclusions , we find that none of the provisions in the legal
instruments that reflect these three requirements im poses an express limitation on the number of EPS
suppliers that is numerical or quantitative in natu re, be it in the form of a monopoly or exclusive
service supplier. As we explained, we perceive no limitation on the number of EPS suppliers that
could support the issuance of bank cards bearing their own logo. Similarly, we see no limitation on
the number of EPS suppliers resulting from the fact that terminal equipment in China must be capable
of accepting all bank cards bearing the Yin Lian/UnionPay logo. Finally, we see no limitation on the
number of EPS suppliers that arises from the fact that acquirers must post the Yin Lian/UnionPay logo
and be capable of accepting all bank cards bearing the Yin Lian/UnionPay logo.
7.601 We also recall that, in our evaluation of the ex istence of a "sole supplier" requirements above,
we assessed the instruments at i ssue in this dispute not only individually, but also together. 792 We
consider our conclusions above equally relevant to our assessment here.
7.602 As is clear from our assessment above, we c oncluded that the United States did not identify
anything in the requirements that would lead us to conclude that the issuer, terminal and acquirer
requirements considered alone or in combination, have the "effect" of limiting the number of services
suppliers so as to maintain or establish CUP as a monopoly or exclusive service provider. As
explained above, we noted that the imposition of these requirements places CUP in a unique position
and may grant CUP certain advantages in the EPS ma rket. Despite this, we nevertheless concluded
that the United States has not identifi ed anything in the instruments, when considered individually or
together, that would explicitly establish CUP as the sole supplier of all RMB bank card transactions.
In addition, we indicated that the fact that the various measures (such as Document Nos. 17, 37, 49,
57, 76, 129, 142, 153) mandate compliance with CU P business and technical standards does not mean
that issuers or acquirers are prevented from operating over other networks. We explained that the fact
that the stated objective for CUP is to establish a "countrywide", "unified" or single network is not
indicative of an intention to create an exclusive network.
7.603 We further concluded that the United Stat es has not submitted evidence beyond mere
assertions to support its conclusion that the rul es and requirements imposed under certain of the
instruments at issue make it technically difficult fo r foreign EPS suppliers to operate in the market,
thereby effectively "entrenching" CUP as the sole s upplier. We found that the United States did not
submit any evidence to support its assertion that, due to costs or other reasons, such as the fact that
competing standards are inherently incompatible, other EPS suppliers would not enter the market.
7.604 Finally, we rejected the United States' assertion th at the collective "economic" effect of the
imposition of the requirements is to entrench CUP's status as a sole supplier in China. 793 In reaching
this conclusion, we noted that the United States did not establish that the economic effect of any of the
requirements was to prevent foreign EPS supplie rs from entering and establishing themselves in
China. Finally, we noted that we have no direct evidence to assess whether the instruments at issue
make it economically unviable for other EPS suppliers to establish themselves and operate in China.
7.605 Accordingly, we are unable to conclude that the imposition of issuer, acquirer and terminal
equipment requirements imposes a limitation on the num ber of EPS suppliers in China in the form of
a monopoly or exclusive service supplier. For these reasons, we are unable to conclude that the issuer,

792 See paras. 7.385-7.481 and 7.482-7.506 above.
793 See paras. 7.500-7.504 above.

terminal equipment and acquirer requirements, consid ered either separately or in combination, are
inconsistent with Article XVI:2(a) of the GATS.794
(c) Whether the requirements pertaining to RMB ca rd-based transactions taking place in China,
Macao and Hong Kong are inconsistent with Article XVI:2(a) of the GATS
7.606 In Section VII.E.2(a) above, we concluded that , as reflected in various legal instruments,
certain instruments mandate that CUP and no othe r EPS provider handle the clearing of certain RMB
bank card transactions that involve either an RMB bank card issued in China and used in Hong Kong
or Macao, or an RMB bank card issued in Hong Kong or Macao that is used in in China in an RMB
transaction.795 These bank card transactions concern paym ent for expenses including shopping, meals
and accommodation, or small cash withdrawals from ATMs.
7.607 The United States argues that this requirement establishes and maintains CUP as a
"monopoly" supplier or an "exclusive service supplier" within the meaning of Article XVI:2(a) of the
GATS in respect of the services at issue. On the basis that China made specific market access
commitments not to maintain any limitations on the number of foreign EPS suppliers, the
United States considers these requirements are inconsistent with Ch ina's obligations under
Article XVI:2(a) of the GATS.
7.608 China contends that there is no legal basis fo r the claims advanced by the United States in
relation to EPS services in Hong Kong or Macao under the modes of supply at issue. Pursuant to
Article XVI:2 of the GATS, China argues that a Member's schedule only implicates the provision of
services in the territory of that Member. 796 China submits that Hong Kong and Macao are separate
customs territories for purposes of the covered WT O agreements, and that each maintains their own
rights and obligations in respect of these agreements. In considera tion of their status, China argues
that its own obligations under the covered agre ements therefore do not extend to Hong Kong and
Macao. Accordingly, it requests that the Panel reject these claims.797
7.609 As an initial point, the Panel notes that the f our legal instruments identified in connection
with this requirement – Document Nos. 8, 16, 21 9 and 254 – were also identified in connection with
the alleged "sole supplier" requirements. In a ddition, Document No. 219 was also identified in
connection with cross-region/inter-bank prohibitio ns. The United States argues that these four
instruments "entrench" 798 , or enforce, the existence of the sole supplier requirement and cross-
region/inter-bank prohibitions . Because we found above 799 that no "sole supplier" requirement has
been demonstrated in respect of the supply of EPS for all domestic RMB bank card transactions
taking place in China, and that there are no cro ss-region/inter-bank prohib itions, we do not reach
conclusions on these instruments in respect of either of these "requirements". Rather, our analysis
focuses on these instruments as they concern RMB bank card-based transactions taking place in
China, Macao and Hong Kong. We therefore address the United States' Article XVI claims in this
respect only.

794 We consider in Section G, whether these sa me requirements are inconsistent with China's
obligations under Article XVII of the GATS.
795 See paras. 7.361-7.383 above. We recall our conclusion above that Document No. 219 does not
require that CUP be the sole supplier of EPS services in respect of RMB car d-based transactions taking place in
China, Macao and Hong Kong. See, specifically, paras. 7.372-7.376 above.
796 China's second written submission, para. 95.
797 China's first written submission, fn. 27; response to Panel question No. 18, paras. 1-5; second
written submission, para. 95.
798 United States' second written submission, paras. 141 and 190.
799 See paras. 7.385-7.481 and 7.482-7.506.

7.610 The Panel finds it useful to begin with China's contention that there is no legal basis for the
claims advanced in relation to Hong Kong and Macao due to their status in the WTO as separate
customs territories. The WTO status of Hong Kong and Macao per se is not in question in this
dispute, nor is the fact that each of these territori es maintains its own rights and obligations in respect
of the WTO Agreements. What is at issue is whet her or not the particular requirements in question
relate to China's WTO obligations.
7.611 We understand that China invokes the language in Article XVI:2 to support its contention that
its WTO obligations do not extend to Hong Kong or Macao. Pursuant to Article XVI:2 of the GATS,
a Member's market access commitments impose lim itations on certain 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". On it s face, we understand this language to indicate
merely that a measure of a Member may be subject to obligations under Article XVI not only in cases
where it is applicable or enforced across the entire territory of a Member, but also in cases where it is
applicable or enforced in only a part of that Member's territory.
7.612 The United States identifies different scenarios in which it considers Document Nos. 8, 16
and 254 operate together to ensure CUP's exclusiv ity in respect of the RMB card-based transactions
taking place in China, Macao and Hong Kong. In the case of a Chinese national travelling to Hong
Kong and making a purchase, according to the United States, CUP would mandatorily provide
services to the issuing bank in China and the acqui ring bank in either Hong Kong or Macao. Hence,
EPS suppliers of other WTO Members would be prohibited from establishing a local presence in
China to supply EPS services to either the issuing ba nk located in China or the acquiring bank located
in either Hong Kong or Macao. 800 In a situation where either a Hong Kong or Macao national travels
to China and makes a purchase, th e United States argues that CUP would also mandatorily provide
services to the issuing bank in either Hong Kong or Macao as well as the acquiring bank in China.
Here again, the United States submits that a fore ign EPS supplier would be prohibited from providing
services to either the issuing or acquiring bank. 801 Finally, the United Stat es contends that a foreign
EPS supplier is prohibited from providing its services from China to an issuing or acquiring bank
even, for instance, where the issuing bank is located in Hong Kong and issues a card to a Hong Kong
national who then makes a purchase in Hong Kong.802
7.613 In our discussion of the services at issue above 803 , we indicated that the clearing and
settlement of a given bank card transaction involves participation by various actors. Under a four-
party model, typically a card holder, an acquirer, an issuing bank/institution and an EPS supplier
would all be involved in a transaction. 804 Under a three-party model or other similar variations, at a
minimum, a card holder and an EPS supplier would be involved in a given transaction.
7.614 We also found above 805 that China's Schedule contains a mode 3 market access commitment
that covers the supply of EPS. This includes the supply of EPS provided under both the three-party

800 United States' response to Panel question No. 9, para. 46. We recall our conclusion in
paragraphs 7.538 above that China has no market access commitment under mode 1 in respect of the services at
issue.
801 United States' response to Panel question No. 9, para. 47.
802 United States' response to Panel question No. 9, para. 48.
803 See paras. 7.14-7.24 above.
804 In the case a card holder uses a payment card to make a purchase, a merchant would be involved in
the transaction. If a card holder us es a payment card to withdraw cash, for instance from an ATM, a merchant
would not be involved. In either case, an acquiring institution would be involved in the transaction, either
having supplied a POS terminal to the merchant or by servicing the ATM. As discussed in paras. 7.46-7.54
above, third party "processors" may also participate in the transaction.
805 See paras. 7.539-7.575 above.

and four-party models. This commitment requi res that foreign EPS suppliers are permitted to
establish operations in China and supply their services from within China to the relevant customers.
7.615 It is clear to us from Document Nos. 8, 16 and 254, and as illustrated through the examples
presented by the United States, that both actors located in China and actors outside of China, in either
Hong Kong or Macao, would be involved in the typ es of transactions which are governed by these
three instruments. In the first two scenarios descr ibed in paragraph 7.612, at least one of the actors
involved in the transaction – be it the issuer or acqui rer – will be located in China. As we understand,
in the third example outlined above, the United States contends that the RMB bank card holder, issuer
of such a card, acquirer and merchant would all be located outside of China, in either Hong Kong or
Macao, while the EPS supplier and settlement bank would be located in China.
7.616 The issue arises whether the supply of servi ces through commercial presence under China's
mode 3 commitment includes the supply of servi ces to all actors under these three scenarios,
including actors located outside of China, in either Hong Kong or Macao. In assessing this issue, we
note that the supply of a service through commercial pr esence (mode 3) is defined in Article I:2(c) of
the GATS as the supply of a service "by a service supplier of one Member, through commercial
presence in the territory of any other Member". "Commercial presence" is defined in Article XXVIII,
as follows:
(d) "commercial presence" means any type of business or professional establishment,
including through
 (i) the constitution, acquisition or maintenance of a juridical
person, or
(ii) the creation or maintenance of a branch or a representative
office,
within the territory of a Member for the purpose of supplying a
service
7.617 As the panel noted in its report in Mexico – Telecoms, this definition is silent with respect to
any other territorial requirement (as is the case in cross-border supply under mode 1) or the nationality
of the service recipient (as is the case in cons umption abroad under mode 2). The definition of
services supplied through commercial presence addresses only the location of the foreign service
supplier, not that of the recipient of the relevant service, nor the nationality of the recipient. It
indicates that for purposes of the GATS a service is s upplied through mode 3 if a service supplier of a
Member supplies its service through commercial presence in the territory of another Member. 806 The
definition does not state that a foreign service supplier may supply its services only to recipients that
are in the territory of the Member in which th e service supplier has established a commercial presence
and are nationals of that Member. Nor does the definition state that a foreign service supplier may not
supply its services to recipients that are outside the territory of the Member in which the service
supplier has established a commercial presence. Ta king into account the absence of any territorial
qualification as to the location of the recipient of a service, the panel in Mexico – Telecoms concluded
that Mexico's commitment under mode 3 covered the supply of basic telecommunications services at
issue both within Mexico and from Mexico into any other country.807

807 In reaching this view, the panel in Mexico – Telecoms also took into accoun t the fact that the
Chairman's Note for Scheduling Basic Telecommunications Services Commitments makes specific reference to
"local, long distance and international services", as well as the fact that Mexico did not exclude international

7.618 We agree with the reasoning of the panel in Mexico – Telecoms. Nothing in the GATS
suggests that the supply of a service through commerc ial presence in the territory of a Member does
not extend to the "export" of services from that Memb er's territory to a recipient in the territory of
another Member or to a foreign recipient located in the "exporting" Member's territory. A foreign
service supplier may therefore, subject to any limitations set out in the Member's schedule, supply a
committed service to a foreign recipient wherever located, and of whatever nationality or origin.808
7.619 In view of our interpretation, and in the absen ce of a specific mode 3 limitation in China's
Schedule that restricts the supply of EPS from within China into the territory of other WTO Members,
we consider that China's commitment under mode 3 covers not only the supply of EPS to clients
within China, but also the supply of EPS to clients located in the territory of other WTO Members.809
7.620 Having concluded that China's mode 3 commit ment for EPS covers the supply of EPS into
the territory of any other WTO Member, we do not agree with China that there is no legal basis for the
claims advanced in relation to Hong Kong and Macao . Having so concluded, we therefore turn to
consider whether China has fulfilled its obligations in Section 7.B(d) of its Schedule to ensure that
EPS suppliers of any other Member may supply thei r services from China to issuers and acquirers, in
a four-party model, or to the card holder and me rchant, in a three-party model or other similar
variations, in order to comply with its obligations under Article XVI:2(a) of the GATS.
7.621 We recall again, the measures require that only CUP handle the processing of the relevant
transactions taking place in Hong Kong or Macao, or China. These transactions include situations in
which (i) a Chinese national travels to Hong Kong or Macao and initiates an RMB bank card
transaction with a card issued in China; and (ii) a Hong Kong or Macao national travels to China and
initiates an RMB bank card transaction there with a card issued in either Hong Kong or Macao.
7.622 In the light of our understanding of what th e supply of EPS under mode 3 may entail, we
conclude that China's mode 3 commi tment for EPS is applicable to the two scenarios described in the
preceding paragraph.
810 Due to the requirement that only CU P handle the processing, in the event a
foreign EPS supplier established itself in China through commercial presence, that foreign EPS
supplier would be prevented from providing its services with respect to any such transaction. This
would be the case despite the fact that China committed to allow foreign EPS suppliers to provide
these services, subject to their meeting the qualifica tions requirements specified in China's mode 3
market access entry.

services in the sector column, or else where in its schedule, from the scope of services that commercial agencies
may supply. The panel concluded that the Chairman's No te was an important part of the circumstances of the
conclusion of the negotiations of the GATS, and should be given considerable weight in its assessment. See
Panel Report, Mexico – Telecoms, paras. 7.376-7.377.
808 This means, for example, that a mode 3 commitment on data processing services would allow a
foreign company established in the territory of a Member to supply data processing services to a consumer
located in the territory of another Member. Similarly, a mode 3 commitment on "hotel services" would allow a
foreign-owned hotel established in the territory of that Member to supply hotel services to foreign tourists.
809 It is useful to note that the supply of EPS from China into the territory of another Member could
potentially be subject to market access or national treatment limitations in China and/or that other Member. For
instance, the supply of services c ould be limited by the mode 3 market access commitments of China. Or it
could be limited by the mode 1 (cross-border supply) commitments of the other Member.
810 We recall, in footnote 475 above, we explained that we would address the United States' claim only
in relation to Document Nos. 8, 16 and 254 in (i) the case of a Chinese national travelling to Hong Kong and
making a purchase with a card issued in China; (ii) the case of a Hong Kong or Macao national travelling to
China and making a purchase with a card issued in Hong Kong or Macao. We stated that we would not consider
a third scenario involving a Hong Kong or Macao national making an RMB purchase in either of these
territories with an RMB payment card issued in either Hong Kong or Macao because we consider that the
United States' claim in respect of the third scenario falls outside our terms of reference.

7.623 We recall that we need to determine whether th e requirements at issue impose a limitation on
the number of EPS suppliers, be it in the form of a monopoly or exclusive service suppliers. As we
have explained in this section, Document Nos. 8, 16 and 254 811 mandate that only CUP handle the
processing of RMB bank card transactions that involve either an RMB bank card issued in China and
used in Hong Kong or Macao, or a bank card issued in Hong Kong or Macao th at is used in China in
an RMB transaction. Thus, the Hong Kong/Macao requirements limit the number of suppliers of EPS
to one, namely to CUP. Plainly, this limitation is of a numerical and quantitative nature. We recall
that a monopoly supplier is a sole supplier authori zed or established formally or in effect by a
Member. Due to the exclusivity th at CUP enjoys as the sole EPS supplier in respect of the relevant
transactions, we conclude that with regard to these transactions CUP is a monopoly within the
meaning of Article XVI:2(a) of the GATS.812
7.624 Therefore, and for the foregoing reasons, we find that the Hong Kong/Macao requirements
impose a limitation on the number of service suppliers in the form of a monopoly within the meaning
of Article XVI:2(a) of the GATS for the supply of EPS for RMB bank card transactions that involve
either an RMB bank card issued in China and used in Hong Kong or Macao, or an RMB bank card
issued in Hong Kong or Macao that is used in Ch ina in an RMB-denominated transaction. This
limitation on the number of suppliers is imposed even in respect of EPS suppliers of other WTO
Members that meet the qualifications requirements sp ecified in China's mode 3 market access entry.
Because China has not "otherwise specified in its Schedule" that it may maintain such a limitation, we
conclude that the Hong Kong/Macao requirement s imposed by China are inconsistent with
Article XVI:2(a) of the GATS.
(d) Whether China's requirements, when consid ered jointly, are inconsistent with
Article XVI:2(a) of the GATS
7.625 The Panel recalls that the United States requ ested that the Panel consider the Chinese
requirements at issue not only individually, but also in conjunction with each other, as it considers the
requirements at issue are not just WTO-inconsistent when analysed individually, but operate together
in a manner that is also WTO-inconsistent. 813 . The United States argues that this would help to
ensure the effective resolution of this dispute.814
7.626 We concluded above that we would not address the United States' claims under Article XVI
in respect of the sole supplier requirement or cross-region/inter-bank-bank prohibitions, as we
concluded on the evidence before us that Chin a does not maintain in place either of these
"requirements". Having concluded that China maintains in place certain issuer requirements, terminal
equipment requirements, acquirer requirements and Hong Kong/Macao requirements, however, we
considered whether these four requirements ar e inconsistent with China's obligations under
Article XVI of the GATS, as claimed by the United States. Ultimately, we concluded above 815 that
the United States failed to establish that the issu er, terminal equipment a nd acquirer requirements,
considered either separately or in combination, are inconsistent with Article XVI:2(a) of the GATS.
Separately, we concluded that the Hong Kong/Macao requirements impose a limitation on the number
of service suppliers in the form of a monopoly within the meaning of Article XVI:2(a) of the GATS.
Because China has not "otherwise specified in its Sche dule" that it may maintain such a limitation in

811 The Panel specifically refers to Article 6 of Document No. 16, Article 6 of Document No. 8 and
Articles 3, 4 and 17 of Document No. 254. See paras. 7.372-7.377 and 7.402-7.404 above.
812 In our view, the relevant markets in which CUP is a monopoly within the meaning of
Article XXVIII(h) of the GATS are the s upply of EPS for RMB bank card trans actions that involve a bank card
issued in China and used in Hong Kong or Macao, and for RMB bank card transactions that involve a bank card
issued in Hong Kong or Macao that is used in China in an RMB-denominated transaction.
813 United States' first written submission, para. 29; response to Panel question No. 4.
814 United States' first written submission, para. 32
815 See paras. 7.600-7.605 above.

respect of its mode 3 market access commitm ent, we concluded that the Hong Kong/Macao
requirements imposed by China are inconsistent with Article XVI:2(a) of the GATS.816
7.627 In the light of the United States' request , we consider whether an assessment of the
requirements in conjunction with each other would m odify our conclusions. We have noted above on
various occasions 817 that the Hong Kong/Macao requirements are limited in scope to bank card
transactions that involve bank cards issued in China and used in Hong Kong or Macao, or
alternatively, bank cards issued in Hong Kong or Macao and used in China. Due to their limited
scope, we do not see how consideration of the Hong Kong/Macao requirements in conjunction with
the issuer, terminal equipment and acquirer requireme nts would lead us to conclude that the issuer,
terminal equipment and acquirer requirements impose a type of limitation that is inconsistent with
Article XVI:2(a) of the GATS. In other words, it is not clear to us how combining the Hong
Kong/Macao requirements with any of the other requirements would have the effect of converting any
of the other requirements into the type of measur e referred to in Article XVI:2(a). We therefore
conclude that the United States has not establis hed that the Hong Kong/Macao, issuer, terminal
equipment and acquirer requirements, when consider ed in conjunction, give rise to a separate and
independent breach of Article XVI:2(a) of the GATS.
(e) Whether the measures at issue are inconsistent with Article XVI:1 of the GATS
7.628 We recall that the United States has raised cl aims in respect of both Articles XVI:1 and
XVI:2(a) of the GATS. Several panels have discu ssed the relationship between Articles XVI:1 and
XVI:2. The panel in US – Gambling found "[t]he ordinary meaning of the words, the context of
Article XVI, as well as the object and purpose of the GATS confirm that the restrictions on market
access that are covered by Article XVI are only those listed in paragraph 2 of this Article". 818 On this
basis, finding that the measures at issue were incons istent with Articles XVI:2(a) and (c), the panel in
that dispute did not consider it necessary to reach findings in respect of Article XVI:1 of the GATS.
The Appellate Body in that dispute did not speci fically address what is required to establish a
violation of Article XVI:1.819
7.629 In China – Publications and Audiovisual Products , the panel concluded similarly to the panel
in US – Gambling, as follows:
Paragraph 1 of Article XVI sets out the general principle that a Member must accord
to services and service suppliers of other Members treatment no less favourable than
that specified under the "terms, limitations a nd conditions" contained in its schedule.
Paragraph 2 is more specific. It defines, in six sub-paragraphs, the measures that a
Member, having inscribed a specific sectoral commitment, must not adopt or
maintain "unless otherwise specified in its Schedule". The six types of measures
form a closed or exhaustive list, as indi cated by the wording of the chapeau to
paragraph 2 ("the measures … are defined as"). Under Article XVI, a Member
undertakes a minimum standard of treatment, and is thus free to maintain a market

816 See para. 7.624 above.
817 See paras. 7.398, 7.401, 7.407, 7.480 and 7.491 above.
818 Panel Report, US ‒ Gambling, paras. 6.318, 6.298-6.299.
819 Appellate Body Report, US ‒ Gambling , para. 256. On appeal, the Appellate Body noted that
Antigua conditionally appealed whether the measures at st ake were also inconsistent with Article XVI:1 of the
GATS, "in the event the Appellate Body were to agree with the United St ates' argument that GATS
Articles XVI:2(a) and (c) only apply to limitations that are in form specified exactly and expressly in terms of
numerical quotas." Having upheld the panel's interpretation of sub-paragraphs (a) and (c) of Article XVI:2, the
Appellate Body decided to "leave the issue of the relationship between the first and the second paragraphs of
Article XVI for another day" (Appellate Body Report, US ‒ Gambling, para. 256).

access regime less restrictive than set out in its schedule, as confirmed in paragraph 1
which refers to a standard of "no less favourable" treatment.820
7.630 Bearing the approaches of these panels in mind, we similarly do not consider it necessary to
proceed in our analysis under Article XVI:1. We first recall our finding above that the issuer,
terminal equipment and acquirer requirements ar e not among the measures which Article XVI:2 says
a Member may not maintain, and more specifically that they do not constitute market access
limitations within the meaning of Article XVI:2(a) of the GATS. That being so, as the United States
has directed its arguments toward alleging a ma rket access limitation of the type described in
Article XVI:2(a), it is difficult to see how the relevant requirements could be subject to Article XVI:1.
In any event, in the absence of an y meaningful attempt by the United States to demonstrate that the
issuer, terminal equipment and acquirer requirement s, taken either individually or together, are
separately inconsistent with Article XVI:1, we cons ider that the United States has failed to meet its
burden to present a prima facie case in respect of its Article XVI:1 claim.
7.631 In addition, we recall our finding above that the Hong Kong/Macao requirements imposed by
China pursuant to Document Nos. 8, 16 and 254821 are inconsistent with Article XVI:2(a). In the light
of this finding, there is in our view no need to offer additional findings on these requirements under
Article XVI:1 and we therefore decline to consider this claim further.
3. Conclusions
7.632 Having completed its analysis, we recall our ma in conclusions on the United States' claims
under Article XVI of the GATS.
(a) China's commitment under mode 1 in Sector 7.B(d) of its Schedule
7.633 The Panel finds that China has not undertaken a market access commitment under mode 1 in
Sector 7.B(d) of its Schedule in respect of the ser vices at issue. Therefore, the Panel concludes that
the issuer, terminal equipment, acquirer and H ong Kong/Macao requirements are not inconsistent
with Article XVI of the GATS in this respect.
(b) China's commitment under mode 3 in Sector 7.B(d) of its Schedule
7.634 The Panel finds that China has undertaken a market access commitment under mode 3 in
Section 7.B(d) of its Schedule in respect of the ser vices at issue in this disp ute. That commitment is
not subject to a limitation on the number of service suppliers in the form of monopolies.
(i) Issuer, terminal equipment, acquirer requirements
7.635 The Panel finds that the United States failed to establish that the issuer, terminal equipment
and acquirer requirements are inconsistent with Ar ticle XVI:2(a) of the GATS, as these requirements
do not impose a limitation that falls within the scope of Article XVI:2(a). The Panel further finds that
the United States failed to meet its burden to present a prima facie case in respect of its Article XVI:1
claims concerning the issuer, terminal equipment and acquirer requirements.

820 Panel Report, China ‒ Publications and Audiovisual Products, para. 7.1353.
821 The Panel specifically refers to Article 6 of Document No. 16, Article 6 of Document No. 8 and
Articles 3, 4 and 17 of Document No. 254. See paras. 7.372-7.377 and 7.402-7.404 above.

(ii) Hong Kong/Macao requirements
7.636 The Panel finds that China, through Document Nos. 8, 16 and 254 822, imposes a limitation on
the number of service suppliers in the form of a monopoly for CUP concerning the supply of EPS for
RMB bank card transactions that involve either an RMB bank card issued in China and used in Hong
Kong or Macao, or an RMB bank card issued in H ong Kong or Macao that is used in China in an
RMB transaction. That limitation on the number of service suppliers is imposed even in respect of
EPS suppliers of other WTO Members that meet the qualifications requirements specified in China's
mode 3 market access entry. Accordingly, we find that the Hong Kong/Macao requirements imposed
by China are inconsistent with Article XVI:2(a) of the GATS. In the light of this finding, the Panel
exercised judicial economy with respect to the United States' claims under Article XVI:1 of the GATS
regarding the Hong Kong/Macao requirements.
G. THE UNITED STATES' CLAIMS UNDER ARTICLE XVII OF THE GATS
7.637 The Panel now turns to assess the United States' claims under Article XVII of the GATS. The
United States claims that each of the challenge d Chinese requirements (measures) are inconsistent
with Article XVII in view of commitments taken by China under subsector (d) and modes 1 and 3.
Article XVII is entitled "National Treatment" and provides as follows:
1. In the sectors inscribed in its Sche dule, and subject to any conditions and
qualifications set out therein, each Member shall accord to services and service
suppliers of any other Member, in respect of all measures affecting the supply of
services, treatment no less favourable than that it accords to its own like services and
service suppliers.
2. A Member may meet the requirement of paragraph 1 by according to services
and service suppliers of any other Member, either formally identical treatment or
formally different treatment to that it accords to its own like services and service
suppliers.
3. Formally identical or formally differe nt treatment shall be considered to be
less favourable if it modifies the conditions of competition in favour of services or
service suppliers of the Member compared to like services or service suppliers of any
other Member. (footnote omitted)
7.638 As noted, the United States claims that all six of China's requirements at issue are inconsistent
with Article XVII both individually and in conjunction with each other. It bases these claims on
national treatment commitments which it alleges we re assumed by China under subsector (d) and
modes 1 and 3. The United States submits that these requirements treat foreign suppliers of EPS
services less favourably than CUP.
823
7.639 China requests the Panel to dismiss the Unite d States' claims under Article XVII in their
entirety. With regard to its national treatment commitments, China argues th at the United States
failed to demonstrate that these commitments are relevant to the services and service suppliers at
issue. More specifically, China contends that the United States failed to demonstrate that EPS
suppliers of other WTO Members are "foreign financ ial institutions" within the meaning of China's
GATS Schedule.
824 As concerns China's national treatment commitments in mode 1, China submits

822 The Panel specifically refers to Article 6 of Document No. 16, Article 6 of Document No. 8 and
Articles 3, 4 and 17 of Document No. 254. See paras. 7.372-7.377 and 7.402-7.404 above.
824 China's first written submission, para. 146.

that the United States improperly bases its claims under Article XVII on the same aspects of the same
requirements that are the foundation of the Unite d States' claims under Article XVI of the GATS. 825
China argues that it reserved the right to introdu ce market access limitations for subsector (d) and
mode 1, including limitations under Article XVI:2 that might be seen as discriminatory. China is of
the view that its right to introduce such measures cannot be taken away by a finding that the exact
same aspects of the requirements at issue are inconsistent with Article XVII. According to China, this
would defeat the choice that it made by leaving market access unbound in mode 1.826
7.640 The Panel begins its assessment of the United States' Article XVII claims by setting out its
analytical approach and determining the scope of its Article XVII findings.
1. Analytical approach and scope of Article XVII findings
7.641 As has been pointed out by th e United States, the panel in China – Publications and
Audiovisual Products effectively applied a three-part test to assess whether a Member's measure is
inconsistent with Article XVII. 827 The United States suggests that we follow the same analytical
approach.828 We find it appropriate to do so, noting also that China has not specifically opposed the
United States' suggestion. Accordingly, in order to sustain its claim that China's measures are in
breach of Article XVII, the United States as the co mplaining party needs to establish all of the
following three elements:
 (i) China has made a commitment on national treatment in the relevant sector and
mode of supply, regard being had to any conditions and qualifications, or
limitations829, set out in its Schedule;

 (ii) China's measures are "measures affecti ng the supply of services" in the relevant
sector and mode of supply; and

 (iii) China's measures accord to services or service suppliers of any other Member
treatment less favourable than that Chin a accords to its own like services and service
suppliers.

7.642 We separately examine these three elements below. The Chinese requirements we will
review in this section include the issuer require ments, the terminal equipment requirements and the
acquirer requirements. As concerns the remaining three requirements at issue, we recall our
conclusion that the United States has not establishe d the existence of the alleged sole supplier
requirements or the alleged cross-region/inter-bank prohibitions. We consequently do not examine
these requirements under Article XVII. Furthermore, as we have determined above that the Hong
Kong/Macao requirements are inconsistent with Artic le XVI of the GATS in respect of foreign EPS
suppliers supplying EPS through mode 3, in the interest of judicial economy we refrain from

825 China's first written submission, para. 148.
826 China's first written submission, para. 159.
827 The panel in China – Publications and Audiovisual Products at one point in its report distinguished
four elements. But elsewhere in its report, the panel combined two of the four elements into one, thus
effectively applying a three-pa rt test. See Panel Report, China – Publications and Audiovisual Products ,
paras. 7.1272, 7.942 and 7.956.
828 United States' first written submission, paras. 74 and 75.
829 Regarding the term "limitations", we note that Article XX:1 of the GATS refers specifically to
"terms, limitations and conditions" to market access, and "conditions and qualifications" to national treatment.
This accords with the wording of Articles XVI:2 (o n market access), XVII:1 (on national treatment) and
XX:1(b) (on schedules of specific commitments). For simplicity, we adopt the term "limitations", which is used
in the column headings in China's Schedule (and those of other Members), and throughout the 1993 and 2001
Scheduling Guidelines.

determining whether these requirements are also inco nsistent with Article XVII for mode 3 suppliers.
We do, however, examine whether the Hong Kong/ Macao requirements are inconsistent with
Article XVII in respect of foreign EPS suppliers supplying EPS through mode 1.
7.643 Having clarified which requirements are to be the subject of our Article XVII findings, we
can commence our three-part analysis of the relevant requirements.
2. China's requirements considered individually
(a) Whether China has undertaken relevant national treatment commitments
7.644 The first element of our three-part analysis is to determine whether China has made
commitments on national treatment in the relevant s ector and modes of supply, regard being had to
any limitations set out in its Schedule. The Pane l recalls that the United States in this case has
identified subsector (d) as the relevant inscribed sector, and modes 1 and 3 as the relevant modes of
supply. We first consider whether China h as undertaken national treatment commitments under
mode 1.
(i) Mode 1 commitments
General
7.645 The United States argues that China has made a full national treatment commitment for
subsector (d) in mode 1, having inscribed "None " (no limitations) for this mode in the national
treatment column of its Schedule.830
7.646 China responds that 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 under
Article XVI of the GATS. 831 In China's view, the measures de scribed in Article XVI:2 cannot
simultaneously be subject to Article XVII, without wholly disregarding the basis upon which market
access and national treatment commitments were scheduled. 832 For China, the United States'
approach is contrary to the "order of preced ence" that Article XX:2 establishes in favour of
Article XVI, as well as the principle of effectiveness of treaty interpretation ( effet utile).833 According
to China, Article XVI governs "all aspects" of the measures described in Article XVI:2(a)-(f),
including any respect in which such a measure is potentially discriminatory. 834 Articles XVI and
XVII are thus "mutually exclusive" in their respective spheres of application. 835 To interpret these
provisions otherwise would make it impossible for Chin a to remove a national treatment
inconsistency, while leaving in place its market access limitation. 836 It would defeat entirely the
policy choice that China made by leaving market access unbound in mode 1.837
7.647 The United States disagrees with China's argument that the inscription of "Unbound" for
market access in mode 1 affects the scope of its national treatment commitment for that mode. 838
Article XVI:2, for the United States, does not extend to restrictions that are discriminatory. 839 A

830 United States' first written submission, paras. 20 and 77.
831 China's first written submission, paras. 148 and 150.
832 China's first written submission, para. 150.
833 China's first written submission, para. 156.
834 China's first written submission, para. 156.
835 China's first written submission, para. 156.
836 China's second written submission, para. 119.
837 China's first written submission, para. 159.
838 United States' second written submission, para. 194.
839 United States' response to Panel question No. 69, para. 196.

measure limiting the number of foreign suppliers onl y would not, for example, limit "the number of
services suppliers" under Article XVI:2(a), since th e measure is silent as to how many domestic
persons can supply the service. 840 As for Article XX:2, the United States argues that it is simply a
scheduling rule that exists becau se measures may be inscribed in a Member's schedule that are
inconsistent with both Articles XVI and XVII. 841 For the United States, Article XX:2 does not make
Articles XVI and XVII "mutually exclusive" in thei r respective spheres of application, as argued by
China.842 Thus, an "Unbound" inscription for market access, combined with a "None" for national
treatment, "carves out" only overall quantitative limita tions, not limitations that discriminate against
foreign suppliers.843
7.648 According to the European Union, an inscrip tion of "Unbound" in the market access column
of a schedule logically implies that a Member has re tained the right to impose any of the limitations
under Article XVI:2, and that those limitations, in accordance with Article XX:2, extend to its
national treatment obligations under Article XVII, de spite the absence of limitations scheduled under
this provision.844 Japan, Australia and Ecuador agree th at China's unbound entry for market access
allows it to maintain market access limitations that are discriminatory. 845 Guatemala, on the other
hand, argues that the inscription of "Unbound" for market access means that China must respect any
national treatment commitments that it has made under Article XVII.846
7.649 The Panel notes that the parties disagree on the scope of China's national treatment
commitment in mode 1, as it applies to the meas ures at issue. Their disagreement focuses on the
effect, if any, of China's market access inscription of "Unbound" on the scope of its national treatment
commitment, the entry for which is inscribed as "None". 847 To resolve this issue, we begin by
examining Article XX:1 of the GATS, which sets out the basic rule fo r a Member inscribing
commitments in its schedule:
1. Each Member shall set out in a schedule the specific commitments it
undertakes under Part III [including Articles XVI and XVII] of this Agreement. With
respect to sectors where such commit ments are undertaken, each Schedule shall
specify:
(a) terms, limitations and conditions on market access;
(b) conditions and qualifications on national treatment;

7.650 We observe that Article XX:1 requires a Memb er to inscribe, for the sectors it has committed
in its Schedule, the limitations ("terms, limitations and conditions") it intends to maintain for market
access, and the limitations ("conditions and quali fications") it wishes to maintain for national
treatment. Each inscription of a limitation (or absen ce thereof) is normally entered in the appropriate
market access or national treatment column of the Schedule by inscribing "None" (no limitations),

840 United States' response to Panel question No. 69, para. 196.
841 United States' second written submission, para. 195.
842 United States' second written submission, para. 195.
843 United States' second written submission, para. 196.
844 European Union's response to Panel question No. 7(a), para. 22.
845 Japan's response to Panel question No. 24; Australia's response to Panel question No. 7(a) and 7(b);
846 Guatemala's response to Panel question No. 7(a), para. 28.
847 Since we have found that China's market access inscription of "Unbound, except …" amounts to
unbound market access, for the sake of simplicity we use the term "Unbound" in this part of the Report.

"Unbound" (no commitment), or the measure or measures that limit the commitment. 848 This
terminology and usage is drawn from the Scheduling Guidelines.849
7.651 In the light of the basic rule set out in Article XX:1, supplemented by the Scheduling
Guidelines, we now examine the relevant entries in China's Schedule. We start with China's
inscription for national treatment in mode 1. We recall that China has inscribed the term "None" in
the column entitled "Limitations on National Treatment". Although no specific definition exists in the
GATS of the term "None", its ordinary meaning is clear when read in conjunction with the title of the
column in which the term appears. It indicates th at China has undertaken "no" limitations – in other
words, a full commitment – with respect to nationa l treatment in this mode, unless otherwise inferred
from its Schedule. 850 Hence, as regards the supply of services in subsector (d) through mode 1, the
entry of "None" in the national treatment column suggests that China would be committed to
providing full national treatment. This national treatment would extend to "all measures affecting the
supply of services", the scope of Article XVII as defined in that provision.
7.652 We continue our analysis by examining Chin a's inscription for market access in mode 1,
which we have found in paragraph 7.538 to amount to "Unbound". Although there is no specific
definition in the GATS of this term, we note that a general dictionary meaning of the term "bound" is
to be "compelled or obliged".
851 This sense is supported by a specialized legal dictionary, which gives
a meaning of "constrained by a contractual or other obligation". 852 Thus the term "unbound" would
indicate an absence of constraint or obligation. 853 In the same vein, the Scheduling Guidelines
instruct a Member wishing to retain the freedom to introduce measures inconsistent with market
access or national treatment to record the term "Unbound" in its GATS Schedule. 854 Since we have
found subsector (d) to be unbound for market access, this suggests that China is under no constraint or
obligation to grant market access within the terms of Article XVI:2. Unlike Article XVII, however,
the scope of the market access obligation does not extend generally to "all measures affecting the
supply of services". Instead, it applies to six caref ully defined categories of measures of a mainly
quantitative nature. The issue thus arises whether th e scope of these measures, and thus the extent of
China's absence of obligation with respect thereto, extends to discriminatory measures in the sense of
Article XVII.

848 Occasionally, Members use variations of thes e basic inscriptions. A common example is the
inscription "Unbound except …", an ex ample of which is found in China's market access inscription for mode 4
in subsector (d).
849 1993 Scheduling Guidelines, paras. 24, 25, and 27; 2001 Scheduling Guidelines, paras. 42, 44, and
46. The original 1993 Scheduling Guidelines were upda ted and formally agreed in a 2001 Decision by the
Council for Trade in Services. Th e 1993 Scheduling Guidelines are cons idered a supplementary source of
interpretation for the GATS. See Appellate Body Report, US – Gambling, para. 196.
850 The interpretation of "None" as meaning a full commitment has been confirmed, in the context of a
market access commitment, by the Appellate Body (Appellate Body Report, US – Gambling, para. 215).
851 Shorter Oxford English Dictionary, Vol.1, p. 236.
852 Black's Law Dictionary, p. 210.
853 We note as additional context that the term "u nbound" is also used in connection with GATT 1994
goods schedules to indicate, with respect to a particular tariff line, absence of obligation. See, for example,
usage in China's WTO goods schedule (Schedule CLII, People's Republic of China, Part I – Most-favoured-
nation Tariff, Section II – Other Products) in which "bound rate of duty" is indicated in one column, and "Base
rate of duty U/B" in another. The structure of a WTO goods schedules is described generally in a Secretariat
Note on "Preparation of the Uruguay Round Schedules of Concession on Market Access",
MTN.GNG/MA/W/25 of 22 December 1993.
Body Report, US – Gambling, fn. 257, which states: "This notation is the opposite of the notation 'Unbound',
which means that a Member undertakes no specific commitment."

7.653 On this matter, the United States takes the position that discriminatory quantitative
restrictions are not within the scope of Article XVI:2. 855 The Panel, in assessing the scope of the six
categories of measures in Article XVI:2, observes at the outset that subparagraph (f), concerning
foreign equity limitations, is expressly discriminatory, and that the limitation on joint ventures in
subparagraph (e) is inherently so since this busin ess form is very likely applicable only to foreign
service suppliers. Nonetheless, while the wordi ng of subparagraphs (e) and (f) suggests that
discriminatory measures are not completely excluded from the scope of Article XVI:2, it does not, in
the Panel's view, indicate whether the other four subparagraphs also extend to discriminatory
measures.
7.654 Pursuing our examination of the scope of Article XVI:2, we note that the wording of the
quantitative measures described in subparagraphs (a )-(d) contains nothing that would suggest that
measures having discriminatory aspects are for this reason excluded. This view finds contextual
support in the wording of Article XX:2 (examined in paragraph 7.657 below), which is premised on
the existence of measures "inconsistent with both Articles XVI and XVII", and thus on the existence
of measures within the scope of Article XVI:2 that have discriminatory aspects. Since nothing in the
generality of the wording of Article XX:2 indicates th at it applies only to measures within the scope
of subparagraphs (e) and (f), which are expressly or inherently discriminatory in nature, we view
Article XX:2 as a further indication that measures w ithin the scope of any of the subparagraphs of
Article XVI:2 can have discriminatory aspects. This view is also supported by the Scheduling
Guidelines, in which the generality of the discussion on measures inconsistent with both Articles XVI
and XVII reflects the view that, overall, Article XVI:2 extends to measures with discriminatory
aspects.856 For these reasons, the Panel finds that the obligations in Article XVI:2 can extend to
measures that are also within the scope of Article XVII. With respect to China's inscription of
"Unbound" for market access in mode 1, our fi nding would therefore suggest that China may
introduce or maintain any measures falling within Article XVI:2, including those that may be
discriminatory within the meaning of Article XVII.
7.655 The Panel notes, however, that its analysis of the scopes of Articles XVI and XVII leads to an
apparent ambiguity in China's inscriptions in m ode 1 for market access and national treatment. On
the one hand, China's full national treatment commitment under Article XVII extends to "all measures
affecting the supply of a service", which would app ear to include measures within the scope of its
unbound market access commitment. On the othe r, China's unbound market access commitment
under Article XVI would appear to extend to measur es that are also discriminatory, and within the
scope of its full national treatment commitment. The United States argues that China's full national
treatment commitment implies that measures inconsistent with both Articles XVI and XVII are
subject to China's obligations under Article XVII. China, on the other hand, argues that its absence of
market access commitment mean s that such measures are not subject to any obligations it may have
under Article XVII.
7.656 In resolving this difference of view, the Pane l considers that the main issue is not an
ambiguity over the scope of Article XVI and the scope of Article XVII. The main issue is rather a
lack of clarity about the scope of the inscriptions "Unbound" and "None" when applied, in China's
Schedule, to measures that conflict with both mark et access and national treatment obligations. In
considering this more specific question, we observe that the basic scheduling rule in Article XX:1,
referred to above, does not determine how a Member should inscribe a limitation in such a case.
Instead, we note that a special scheduling rule in Article XX:2 aims to resolve this lack of clarity:

855 United States' second written submission, para. 196.

Measures inconsistent with both Articles XVI and XVII shall be inscribed in the
column relating to Article XVI. In this case the inscription will be considered to
provide a condition or qualification to Article XVII as well.
7.657 The wording of Article XX:2 indicates that it a pplies when a measure is (a) inconsistent with
both Article XVI and Article XVII, and (b) inscrib ed in the market access column of a Member's
Schedule. As long as these two requirements are me t, then the inscription under market access will
provide a "condition or qualification" or, in th e simpler usage we adopt, a "limitation", to
Article XVII as well. In other words, the si ngle inscription of a measure conflicting with both
Articles XVI and XVII in the market access column of a schedule provides a limitation for both
discriminatory and non-discriminatory aspects of the measure.
7.658 The Panel draws several inferences from the wording of Article XX:2. First, the provision
confirms the basic point that measures exist that ar e inconsistent with both market access and national
treatment obligations. In that sense, the scope of Article XVI and the scope of Article XVII are not
mutually exclusive, as China appears to argue. Bo th provisions can apply to a single measure. As
Article XX:2 makes clear, a single measure can contain or give rise to two simultaneous
inconsistencies: one with respect to a market ac cess obligation, the other with respect to a national
treatment obligation. To maintain or introdu ce such a measure, the normal rule for inscribing
commitments in Article XX:1 might suggest that a Member needs to enter an explicit limitation in
both the market access and national treatment column s. In such cases however, the special rule in
Article XX:2 provides a simpler requirement: a Me mber need only make a single inscription of the
measure under the market access co lumn, which then provides an implicit limitation under national
treatment.
7.659 Secondly, the Panel observes that the wording of Article XX:2 indicates that what is inscribed
in the market access column is a "measure" which, in the situation of conflict contemplated by
Article XX:2, must encompass aspects that are incons istent with both Articles XVI and XVII. In this
way, a single inscription under Article XVI of a "measure" will provide a limitation as well under
Article XVII.
7.660 The United States argues that the term "Unbound" cannot be viewed as the inscription of
"measures" and therefore cannot provide a conditio n or qualification to Article XVII through the
operation of Article XX:2.857 In contrast, China says that the term "Unbound" is "simply a shorthand
device for inscribing all measures, present or futu re" that are inconsistent with Article XVI:2. 858 The
Panel notes that Article XX:2 states that " [m]easures inconsistent with bot h Articles XVI and XVII
shall be inscribed ..." (emphasis added). We see nothing in the text of Article XX:2 that would
constrain the latitude of a Member to inscribe th e "measures" excluded from Article XVI:2 either
individually or collectively. In our view, it would be incongruous if an inscription of "Unbound" had
an effect different from that of inscribing individu ally all possible measures within the six categories
foreseen under Article XVI:2. To take a different interpretation would be to elevate form over
substance. In our assessment, ther efore, an inscription of the term "Unbound" in the market access
column should be viewed as an inscription of "m easures", specifically of all those defined in
Article XVI:2, which a Member may not maintain or adopt, unless otherwise specified in its schedule.
For this reason, we find that Article XX:2 does apply to situations where a Member has inscribed
"Unbound" in the market access colu mn of its schedule. In the Panel's view, the inscription of
"Unbound" in the market access column of China' s Schedule has the equivalent effect of an
inscription of all possible measures falling within Article XVI:2.

857 United States' response to Panel question No. 69, para. 173.
858 China's response to Panel question No. 69, para. 125.

7.661 Having found that the special scheduling rule in Article XX:2 applies to China's inscription of
"Unbound", the Panel must now consider what eff ect this has on the scope of China's national
treatment commitment. The Panel recalls that Article XX:2 provides, in the case of measures
inconsistent with both Articles XVI and XVII, that the measure inscribed in the market access column
encompasses aspects inconsistent with both market access and national treatment obligations.
Consequently, an "Unbound" inscription in the market access column encompasses inconsistencies
with Article XVII as well as those arising from Ar ticle XVI. The inscription of "Unbound" will
therefore, in the terms of Article XX:2, "provide a condition or qualification to Article XVII as well",
thus permitting China to maintain measures that ar e inconsistent with both Articles XVI and XVII.
With an inscription of "Unbound" for subsector (d) in mode 1 under Article XVI, and a corresponding
"None" for Article XVII, China has indicated that it is free to maintain the full range of limitations
expressed in the six categories of Article XVI:2, whether discriminatory or not.
7.662 The Panel recalls that China's overall argument is that the United States improperly cites "the
same aspects of the same measu res" to support claims that China both maintains a monopoly
inconsistent with Article XVI:2(a) and violates its national treatment commitment under
Article XVII.859 China submits that Article XVI "governs all aspects of the measures identified in
Article XVI:(a)-(f), including the maintenance of a monopoly", and that this is in accordance with
Article XX:2 and necessary to give effect to Chin a's "Unbound" entry in the market access column. 860
Our findings respond to China's argument on this point, in that they imply that a measure that is
inconsistent with both Articles XVI and XVII, and th at is inscribed in the market access column of
China's Schedule, could not be found to be in br each of China's full national treatment commitment.
The relevant measure would not be subject to Ch ina's full national treatment commitment as it would
be covered by the market access limitation.
7.663 In the present case, we consider that our inte rpretation of the meaning of "Unbound" when
inscribed in the market access column of a schedule gives full meaning to that term. By inscribing
"Unbound" under market access, China reserves the right to maintain any type of measure within the
six categories falling under Article XVI:2, regardless of its inscription in the national treatment
column. We observe, however, that our interpreta tion also gives meaning to the term "None" in the
national treatment column. Due to the inscription of "None", China must grant national treatment
with respect to any of the measures at issue that are not inconsistent with Article XVI:2. China's
national treatment commitment could thus have prac tical application should China, for example,
choose to allow in practice the supply of services fr om the territory of other WTO Members into its
market, despite the fact that it has not undertaken any market access commitments in subsectors (a) to
(f) of its Schedule.
7.664 We point out that our conclusion on the re lationship of the inscription "Unbound" under
Article XVI with that of "None" under Article XVII preserves the freedom of WTO Members, when
taking services commitments, to choose the combination of market access and national treatment
limitations, if any, that they wish to maintain. Our conclusion does not narrow the range of options
available to WTO Members to limit their market access and national treatment commitments. It
focuses solely on how to interpret through scheduli ng rules, notably Article XX:2, the inscriptions
that a WTO Member has chosen to enter in its sch edule. We emphasize as well that we do not find
that either of Articles XVI or XVII is substantivel y subordinate to the other. We find simply that
Article XX:2 establishes a certain scheduling primacy for entries in the market access column, in that
a WTO Member not wishing to make any commitm ent under Article XVI, discriminatory or non-
discriminatory, may do so by inscribing the term "Unbound" in the market access column of its
schedule.

859 China's first written submission, para. 150.
860 China's first written submission, paras. 149-159.

7.665 For all these reasons, the Panel finds that China's market access entry concerning
subsector (d) and mode 1 allows it to maintain a ny measures in that subsector and mode that are
inconsistent with both Articles XVI and XVII.
Whether China has mode 1 national treatment co mmitments that apply to China's relevant
requirements
7.666 Having considered the mode 1 market access and national treatment entries in China's
Schedule, we address whether China has mode 1 national treatment commitments that apply to
China's relevant requirements. We first examin e the Hong Kong/Macao requirements. At the outset
of our examination we recall that we have alre ady found above at paragraph 7.624 that these
requirements are inconsistent with Article XVI :2(a) because China has undertaken market access
commitments in mode 3 for subsector (d) and because these requirements constitute limitations on the
number of service suppliers in the form of a monopoly – a limitation not included in China's schedule.
The question arises whether these sa me requirements constitute limitati ons on the number of service
suppliers only with regard to mode 3 or whether they also limit the number of service suppliers with
regard to mode 1.
7.667 We recall that the instruments that impose the Hong Kong/Macao requirements – Document
Nos. 8, 16 and 254 – mandate that only CU P handle the processing of RMB payment card
transactions that involve either an RMB payment card issued in China and used in Hong Kong or
Macao, or an RMB card issued in Hong Kong or Macao and used in China. Therefore, it is clear to us
that in respect of such transactions EPS supp liers of other WTO Members are precluded from
providing their services on a cross-border basis to consum ers (i.e. issuers or acquirers), that are based
in China. In the light of this, the Hong Kong/M acao requirements in our view constitute limitations
on the number of service suppliers in the form of a monopoly, including with regard to EPS suppliers
of other WTO Members that would supply their services on a cross-border basis to Chinese
consumers (mode 1 supply). In other words, we consider that these requirements impose an
Article XVI:2(a)-type limitation on market access through mode 1.
7.668 As such, the Hong Kong/Macao requirements are covered by China's market access entry for
mode 1 and subsector (d). We have determined above that due to the inscription of "Unbound" in that
entry and Article XX:2, China is allowed to ma intain the full range of limitations expressed in
Article XVI:2, whether discriminatory or not. More particularly, Article XX:2 makes clear that even
if the Hong Kong/Macao requirements, in addition to being market access limitations, are also
"measures affecting the supply of services" within the meaning of Article XVII:1 and result in EPS
suppliers of other WTO Members being treated less favourably than like Chinese services and service
suppliers when supplying through mode 1, the in scription of "Unbound" in China's market access
entry provides "a condition or qualification to Artic le XVII". In turn, Article XVII:1 states that a
Member's national treatment obligations apply "subject to any conditions and qualifications set out [in
its Schedule]". Accordingly, despite the inscrip tion of "None" in its national treatment column
concerning subsector (d) and mode 1, China has no obligation in respect of the Hong Kong/Macao
requirements to accord to EPS supplied through m ode 1, and EPS suppliers of other WTO Members
supplying through mode 1, treatment no less favourable than that it accords to its own like services
and service suppliers.
7.669 For these reasons, we conclude that the Hong Kong/Macao requirements, to the extent that
they affect the cross-border supply of EPS (mode 1) , are not inconsistent with China's obligations
under Article XVII:1 of the GATS.
7.670 With respect to the issuer, terminal equipment and acquirer requirements, we have previously
found that, contrary to the United States' assertion, these requirements are not subject to Article XVI
because they do not impose any market access limitations of the type specified in Article XVI:2(a).

As a result, the inscription of "Unbound" in Chin a's market access column does not apply to these
requirements. We recall, however, that China has inscribed in its national treatment column a full
national treatment commitment in mode 1 for subsec tor (d). The issuer, terminal equipment and
acquirer requirements are covered by this commitment if they are "measures affecting the supply" of
EPS through mode 1. We will address this issue further below.861
(ii) Mode 3 commitments
General
7.671 The Panel must now examine whether Ch ina has undertaken national treatment
commitments in subsector (d) concerning mode 3. China's Schedule in the column entitled
"Limitations on national treatment" contains a relevant entry. It reads as follows:
(3) Except for geographic restrictions an d client limitations on local currency
business (listed in the market access co lumn), foreign financial institution [ sic] may
do business, without restrictions or need for case-by-case approval, with foreign
invested enterprises, non-Chinese natura l persons, Chinese natural persons and
Chinese enterprises. Otherwise, none.862
7.672 The United States notes that this entry provides for no national treatment limitations
concerning subsector (d) and mode 3 other than the geographic and client limitations inscribed in the
mode 3 market access column. The United States ar gues that because those market access limitations
expired in December 2006, there are no longer any national treatment limita tions with regard to
subsector (d) and mode 3. In the United States' view, China must therefore provide national treatment
within the meaning of Article XVII to forei gn EPS suppliers supplying services on a commercial
presence basis.863
7.673 China responds that its mode 3 national treat ment commitments for subsector (d) mirror the
corresponding limitation on market access inscribe d by China in its Schedule for the same
subsector and mode. Thus, China submits that its mode 3 national treatment commitments are limited
to "foreign financial institutions". In other words, China contends that the only types of entities that
may provide relevant services on a commercial presen ce basis are foreign financial institutions. 864
China argues that contrary to the United States' assertion, this limitation of its commitments to foreign
financial institutions did not expire five years after China's accession to the WTO. China also
contends that the United States failed to demonstr ate that EPS suppliers of other WTO Members are
foreign financial institutions.865
7.674 The Panel observes that China's national treatme nt entry concerning mode 3 ends with the
phrase "otherwise, none". This indicates that there are no limitations on China's national treatment
commitment concerning subsector (d) and mode 3 other than those set out in the preceding sentence
of the entry. Having regard to that sentence, we note that it refers to geographic restrictions and client
limitations on local currency business conducted by fore ign financial institutions that are listed in the
corresponding mode 3 market access column of Chin a's Schedule. However, these restrictions and
limitations were only in effect until December 2006. 866 As a consequence, under the terms of the

861 See paras. 7.680 et seq. below.
862 For the geographic restrictions and client limitations on local currency business that are listed in the
market access column of China's Schedule, see Annex G.
863 United States' first written submission, paras. 20 and 77.
864 China's first written submission, para. 137.
865 China's first written submission, paras. 131-132.
866 The relevant restrictions and limitations expired five years after China's accession to the WTO.

entry in question, foreign financial institutions must no longer face any limitations on national
treatment.
7.675 The next issue we consider is whether EPS suppliers of other WTO Members constitute
foreign financial institutions within the meaning of the entry in question. We recall that we addressed
the same question in the context of our analysis of China's market access commitments concerning
subsector (d) and mode 3. We determined there that EPS suppliers of other WTO Members – i.e.
WTO Members other than China – can be properl y considered foreign financial institutions. 867 We
find no basis to conclude differently in the contex t of the present inquiry. Indeed, we note that the
mode 3 national treatment limitations specifically refer to the mode 3 market access limitations.
7.676 In our view, the entry at issue therefore suppor ts the conclusion that China has committed to
allow EPS suppliers of other WTO Members to carry out local currency business 868 in China with
issuers, acquirers, merchants and card holders 869, without restrictions that would constitute limitations
on national treatment, except for any national tr eatment limitations inscribed by virtue of
Article XX:2 in the mode 3 market access column concerning subsector (d). A relevant limitation that
is inscribed in the market access co lumn concerns qualifications for foreign financial institutions to
engage in local currency business.870
7.677 We are mindful that there are limitations on national treatment contained in the section of
China's Schedule that sets out horizontal commi tments. However, we discern nothing in the
horizontal section of China's Schedule that would lead us to modify the conclusion we have reached
on the basis of the columns on national treatment limitations and market access limitations.
7.678 For all these reasons, we conclude that, with regard to EPS provided by suppliers of other
WTO Members, China has made a commitment on national treatment concerning mode 3. That
commitment is subject to a limitation concerning qua lifications to engage in local currency business.
China is therefore obligated to accord national tr eatment to like EPS and EPS suppliers of other WTO
Members in respect of local currency (RMB) business, subject to such suppliers meeting the aforesaid
qualifications requirement.
Whether China has mode 3 national treatment co mmitments that apply to China's relevant
requirements
7.679 With respect to the issuer, terminal equipm ent and acquirer requirements, we found earlier
that these requirements are not subject to Article XVI because they do not impose any market access
limitations of the type specified in Article XVI:2(a). However, in our view these requirements are
covered by China's aforementioned national treatme nt commitment for mode 3, provided they are
"measures affecting the supply" of EPS through mode 3. We address this issue below.871

867 See para. 7.570 above.
868 As explained at para. 7.572 above, we understand that for the purposes of the requirements at issue
the relevant business in which EPS suppliers of other WTO Members would engage is local currency (RMB)
business.
869 We recall that the enterprises or persons with which EPS suppliers do business vary according to the
type of network that EPS suppliers use (four-party vs. three-party model).
870 Pursuant to the entry in question, prior to applying for authorization to engage in local currency
business, foreign financial institutions must have three years of business operation in China and be profitable for
two consecutive years.
871 See paras. 7.680 et seq. below.

(b) Whether China's requirements affect the supply of services
7.680 The second element of our Article XVII inquiry calls for an analysis of whether China's
requirements (measures) affect the supply of services. 872 We recall that in this particular Article XVII
inquiry, we are concerned with EPS services provide d by service suppliers of other WTO Members
through modes 1 and 3, because the United States bases its Article XVII claims on China's relevant
commitments under these two modes of supply.
7.681 The Appellate Body has provided the following re levant clarification regarding the meaning
of the term "affect":
[T]he term "affecting" [as it appears in Artic le I:1 of the GATS] reflects the intent of
the drafters to give a broad reach of the GATS. The ordinary meaning of the word
"affecting" implies a measure that has "an effect on", which indicates a broad scope
of application. This interpretation is further reinforced by the conclusions of previous
panels that the term "affecting" in the c ontext of Article III of the GATT is wider in
scope than such terms as "regulating" or "governing".873
7.682 Accordingly, we need to determine whethe r the Chinese requirements to be examined
regulate or at least have an effect on the supply of EPS services by service suppliers of other Members
through modes 1 and 3.
7.683 Turning now to the requirements to be examined under the second element of our
Article XVII inquiry, we recall that in respect of the Hong Kong/Macao requirements we have already
reached the conclusion that they are not inconsistent with Article XVII to the extent that they affect
the cross-border supply of EPS. We do not, therefore, need to examine these requirements further. In
contrast, we do need to determine whether the i ssuer, terminal equipment and acquirer requirements
affect the supply of EPS.
7.684 The United States submits that these three require ments affect the supply of EPS by foreign
suppliers because they directly regulate the terms on which they may be provided in China. The
United States argues that they are requirements that promote CUP's position in the marketplace by
imposing certain requirements on every key player in a card-based electronic payment transaction,
including issuers, merchants and acquirers. 874 More specifically, the United States notes that, due to
the issuer requirements, bank cards in China used for RMB purchases in China, as well as dual
currency cards issued in China, must bear the CUP logo, while no foreign EPS supplier is afforded a
similar privilege. 875 Similarly, the United States argues th at as a consequence of the terminal
equipment and acquirer requirements, all terminal equipment must accept CUP cards and acquirers in
China must post the CUP logo and accept all bank car ds bearing that logo. According to the United
States, no foreign EPS supplier is afforded a similar privilege.876
7.685 China does not specifically address the issue of whether the requirements at issue affect the
supply of services.

872 To recall, Article XVII states that WTO Members must provide national treatment "in respect of all
measures affecting the supply of services".
873 Appellate Body Report, EC – Bananas III , para. 220. As indicated, the Appellate Body made this
statement in relation to the term "affecting" as it appear s in Article I:1 of the GATS. We find the statement to
be equally relevant and persuasive when looked at in th e context of our Article XVII analysis, not least in view
of the Appellate Body's explicit reference to Article III of the GATT, which is the GATT-equivalent of
Article XVII of the GATS.
874 United States' first written submission, paras. 79 and 81.
875 United States' first written submission, para. 80.
876 United States' first written submission, para. 80.

7.686 The Panel notes that the issuer, terminal equipment and acquirer requirements are addressed,
inter alia , to issuers, merchants and acquirers, but not to EPS suppliers. However, all three
requirements explicitly relate to one – and only on e – EPS supplier, CUP. As noted by the United
States and as further explained by our findings below concerning the issue of less favourable
treatment, these requirements have an effect on the terms on which CUP can supply its services in the
Chinese market. We have not been made aware of any parallel requirements that would specifically
relate to EPS suppliers other than CUP. Therefor e, due to the fact that the three requirements in
question have an effect on the terms on which CUP can supply its services, they also have a
consequential effect on the terms on which CUP's potential competitors, which include EPS suppliers
of other Members, can supply their services in Ch ina, e.g. on a cross-border basis or through
commercial presence. In the light of this, we c onclude that the issuer, terminal equipment and
acquirer requirements "have an effect" on, and he nce affect, the mode 1 and 3 supply of EPS by
suppliers of other Members. In other words, we consider that the three requirements at issue each
constitute "measures affecting the [mode 1 and 3] supply of services" within the meaning of
Article XVII:1.
(c) Whether China's requirements accord less favourable treatment
7.687 It remains for us to address the third and last element of our Article XVII inquiry. This
involves determining whether China's requirements (mea sures) accord to services or service suppliers
of any other Member "treatment less favourable" th an that China accords to its own "like services and
service suppliers". We note that the GATS provi des no definition of the phrase "like services and
service suppliers". In contrast, as regards the c oncept of "less favourable treatment", Article XVII:3
provides useful clarification. It states that forma lly identical or different treatment is deemed less
favourable "if it modifies the conditions of competit ion in favour of services or service suppliers of
the Member compared to like services or service su ppliers of any other Member". We deduce from
this that, subject to all other Article XVII conditions being fulfilled, formally identical or different
treatment of service suppliers of another Member c onstitutes a breach of Article XVII:1 if and only if
such treatment modifies the conditions of competition to their detriment.
7.688 The only requirements at issue in respect of which we reach the third element of our
Article XVII inquiry are the issuer, terminal equipment and acquirer requirements. In respect of these
requirements, the United States alleges that on their face they confer an advantage, or privilege, on
CUP that is not afforded EPS suppliers of another Member. 877 We therefore understand the United
States to allege that China provides formally diffe rent treatment to CUP, on the one hand, and like
EPS suppliers of other Members, on the other hand , and that the different treatment modifies the
conditions of competition to the detriment of the latter.
7.689 Accordingly, our examination of the third Ar ticle XVII element will proceed in two steps
for each of the relevant requirements. First we w ill analyse whether, and if so, how the requirements
provide for different treatment between CUP and "lik e" EPS suppliers of other Members. We note in
this respect that these requirements are not addr essed to CUP, but at such entities as issuers or
acquirers. Then we will examine whether any different treatment of like services and service
suppliers that we might find amounts to less favourable treatment.

877 United States' first written submission, paras. 80 and 109; second written submission,
paras. 201-203 and 207.

(i) Issuer requirements
Different treatment of like services and service suppliers
7.690 The United States points out that the issuer requirements mandate that any payment cards
used only for RMB purchases in Chin a, as well as any dual currency cards issued in China, bear the
CUP logo. The United States submits that no other EPS provider is afforded such a privilege.878
7.691 The United States argues in addition that the issuer requirements, as well as the other
requirements at issue in this dispute, provide disparate treatment solely according to the identity of the
EPS supplier: CUP or not CUP. In the United Stat es' view, it is evident from China's own documents
that China was concerned about the potential competition its domestic supplier of EPS would face
from foreign suppliers of EPS as a result of China' s WTO commitments. The United States considers
that it is therefore unsurprising that the require ments at issue are mean t to favour the domestic
Chinese entity and accordingly discriminate on that b asis. The United States further observes that
outside of its protected Chinese home market, CUP is being described by other EPS suppliers as an
active competitor in the global market for card-b ased electronic payment transactions. The United
States also points out that CUP's Articles of Association are explicit that the company is "[T]o provide
advanced electronic payment technologies and specia lized services in connection with the inter-bank
card information switching." 879 To the United States, it is clear that CUP provides services for
payment card transactions "like" those provided by foreign suppliers of EPS for payment card
transactions and that the basis for the differential treatment by China is ultimately one of origin.
Referring to the panel report in China – Publications and Audiovisual Products
880, the United States
submits that the "like service suppliers" requirement of Article XVII is therefore satisfied.881
7.692 China does not specifically address whether th e issuer requirements result in different
treatment of CUP and its services, on the one hand, and "like" services and service suppliers of other
Members, on the other hand. China considers that it is unnecessary to resolve this question. In
China's view, the United States' claims under Artic le XVII should be dismissed because the United
States did not distinguish its national treatment claims from its market access claims.882
7.693 The Panel first addresses the issuer requirements that relate to the Yin Lian/UnionPay logo
use. These requirements mean that bank cards issu ed by commercial banks in China must bear the
Yin Lian/UnionPay logo. In contrast, there is nothing in the record to indicate that bank cards must
bear the logos of other EPS suppliers. Thus, the requirements in question give rise to formally
different treatment between CUP and its network, on the one hand, and other EPS suppliers and their
networks, on the other.
7.694 As concerns the other relevant type of issuer requirements – those relating to
interoperability – we recall that they require issuer s in China to join CUP, and bank cards issued in
China to be interoperable with the CUP network. The parties have not made us aware of any
comparable requirement whereby issuers would have to join other networks and bank cards would
need to be interoperable with them. We conseque ntly determine that the relevant requirements also
result in formally different treatment between CUP and other EPS suppliers.

878 United States' first written submission, para. 80.
879 Article 12 of CUP's Articles of Association.
880 Panel Report, China – Publications and Audiovisual Products, para. 7.975.
881 United States' first written submission, paras. 82-87.
882 China's response to Panel question No. 124, para. 91.

7.695 The question we need to consider next is wh ether the issuer requirements accord different
treatment to "like services and service suppliers". We note in this regard the United States' reliance
on the following statement by the panel in China – Publications and Audiovisual Products:
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 mate rial 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 ex clusively linked to the origin of service
suppliers, but to other factors, a more deta iled analysis would probably be required to
determine whether service suppliers on either side of the dividing line are, or are not,
"like".883
7.696 The United States argues that the basis for the di fferential treatment resulting from the issuer
requirements, as well as the other Chinese requirements at issue in this dispute, is "ultimately one of
origin".884 We are not persuaded. As an initial matter, we recall that some of the relevant provisions
of the instruments through which these requirements are maintained refer to the network logo – the
Yin Lian /UnionPay logo – as opposed to the logo of the company China UnionPay (CUP). For
reasons we have stated earlier, however, we consid er that it makes no significant practical difference
whether the relevant Chinese instruments formally re fer to the network logo or the CUP logo, as long
as CUP remains the company charged with operati ng the relevant nationwide inter-bank network. 885
We also accept, of course, that CUP is a Chin ese EPS supplier. But the issuer requirements do not
provide for different treatment between Chinese EPS s uppliers, on the one hand, and EPS suppliers of
other Members, on the other. Rather, they disti nguish between CUP, including via the references to
the network logo, and all other EPS suppliers. The "all other" category comprises actual or potential
EPS suppliers of other Members as well as actual or potential Chinese EPS suppliers. Indeed, the
United States itself has stated that the treatment of EPS suppliers varies "according to the identity of
the EPS supplier: CUP or not CUP."886
7.697 According to the panel in China – Publications and Audiovisual Products , in a case "where a
difference of treatment is not exclusively linked to th e origin of service suppliers, but to other factors,
a more detailed analysis [of 'likeness'] would probab ly be required." As our case fits this situation,
consistent with the view expressed by that panel, we undertake a more detailed analysis of the
likeness issue.
7.698 We address first the reference in Article XVII to "like services". As there is a particular
framework for analyzing the "lik eness" of products in the context of Article III of the GATT 1994 887,
we requested the parties to provide their views on any relevant criteria for establishing the "likeness"
of services in the context of Article XVII. Neither party provided the Panel with such criteria,
however, or suggested a particular analytical framework. 888 In approaching this matter, we do not
assume that without further analysis we may simp ly transpose to trade in services the criteria or
analytical framework used to de termine "likeness" in the context of the multilateral agreements on
trade in goods. We recognize important dissimilari ties between the two areas of trade – notably the

883 Panel Report, China – Publications and Audiovisual Products , para. 7.975 (original footnote
omitted).
884 United States' first written submission, para. 87.
885 See para. 7.251 above.
886 United States' first written submission, para. 82.
887 E.g. Appellate Body Report, EC – Asbestos, para. 102.
888 United States' response to Panel question No. 124, para.124; China's response to Panel question
No. 124 para. 91.

intangible nature of services, their supply through four different modes, and possible differences in
how trade in services is conducted and regulated.
7.699 We thus begin our interpretative analysis by c onsidering the ordinary meaning of "like".
The dictionary defines the adjective "like" as "[ h]aving the same characteristics or qualities as some
other person or thing; of approximately identical shape, size, etc., with something else; similar".889 To
us, this range of meanings suggests that for services to be considered "like", they need not necessarily
be exactly the same, and that in view of the references to "approximately" and "similar", services
could qualify as "like" if they ar e essentially or generally the same. 890 The aforementioned definition
highlights another point: something or someone is lik e in some respect, such as – in the terms of the
definition – the "shape, size, etc." of a thing or pers on. To determine in what respect services need to
be essentially the same for them to be "like", we turn to consider the context of the phrase "like
services".
7.700 We note that Article XVII:1 requires that a Member accord to services of another Member
"treatment no less favourable" than that it accords to its own like services. Article XVII:3 clarifies in
relevant part that a Member would be deemed to provide less favourable treatment if it "modifies the
conditions of competition in favour of services … of [that] Member compared to like services … of
any other Member". We deduce from these provisi ons that Article XVII seeks to ensure equal
competitive opportunities for like services of other Me mbers. These provisions further suggest that
like services are services that are in a competitive relationship with each other (or would be if they
were allowed to be supplied in a particular market). Indeed, only if the foreign and domestic services
in question are in such a relationship can a me asure of a Member modify the conditions of
competition in favour of one or other of these services.
7.701 Furthermore, we note that Article XVII is applicable to all services891, in any sector, and that
services – which are intangible – may be provided th rough any of the four modes of supply. As well,
Article XVII refers to "like services and service supplie rs". In the light of this complexity, "like
services and service suppliers" analyses should in our view take into account the particular
circumstances of each case. In other words, we co nsider that determinations of "like services", and
"like service suppliers", should be made on a case-by-case basis.892
7.702 In the light of the above, we consider that a likeness determination should be based on
arguments and evidence that pertain to the compe titive relationship of the services being compared. 893
As in goods cases where a panel assesses whether a pa rticular product is a "like product", the
determination must be made on the basis of the evidence as a whole. 894 If it is determined that the
services in question in a particular case are essentia lly or generally the same in competitive terms,
those services would, in our view, be "like" for purposes of Article XVII.895

889 Shorter Oxford English Dictionary, Vol. 1, p. 1601.
890 We note in this regard that another panel based a likeness determination on a finding that the
services at issue were "virtually the same". Panel Report, EC – Bananas III (Ecuador), para. 7.322.
891 Except for services supplied in the exercise of governmental authority. See Article I:3(b) of the
GATS.
892 For a similar view with regard to "like products" determinations in the context of Article III of the
GATT 1994, see Appellate Body Reports, EC – Asbestos , para. 101; and Japan – Alcoholic Beverages II ,
DSR 1996:I, 97, at p. 113.
893 This is also consistent with the approach taken in the goods context. See Appellate Body Reports,
EC – Asbestos, paras. 99 and 103; and Philippines – Distilled Spirits, fn. 211.
894 See Appellate Body Report, EC – Asbestos, para. 103.
895 It is important to note that even if relevant serv ices are determined to be "like" and a measure of a
Member is found to result in less fa vourable treatment of "like" servi ces of another Member, it may still be
possible to justify that measure under one of the general exceptions set out in Article XIV of the GATS.

7.703 With the foregoing observations in mind, we turn to assess whether EPS supplied by CUP
are like those supplied by EPS suppliers of other Member s. To that end, we must review any relevant
evidence. To begin with, evidence submitted by th e United States indicates that CUP is perceived by
other global EPS suppliers as a competitor in the global marketplace. 896 Additional evidence
submitted by the United States indicates that CUP and EPS suppliers of other Members provide a
data-processing infrastructure. 897 Both CUP and EPS suppliers of other Members also provide
services in connection with inter-b ank bank card information switching. 898 Specifically, both
categories of suppliers are engaged in the authorization899 and clearing900 of payment card transactions
and also facilitate their settlement 901. They are further involved in any related transfer of data and
information. 902 Moreover, both CUP and EPS suppliers of other Members establish common
standards, rules and procedures that enable tran saction information and data processing for the
purpose of processing payment card transactions. 903 Finally, CUP and EPS suppliers of other
Members mediate or arbitrate any business disputes arising out of payment card transactions. 904 Thus,
evidence placed on record by th e United States shows that CUP an d EPS suppliers of other Members
offer essentially the same description of their busin ess scope and of the specific services that they
provide.
7.704 While the evidence provided by the United States is not extensive, it is sufficient to raise a
presumption that the services supplied by CUP and those supplied by EPS suppliers of other Members
are essentially the same in competitive terms. Ch ina has not adduced any evidence to rebut the
United States' assertion, nor has China asserted that the services supplied by CUP, on the one hand,
and by foreign EPS suppliers, on the other, are not "like" services. 905 Moreover, evidence submitted

896 Visa IPO Prospectus, Exhibit US-3, p. 147; MasterCard 2009 Annual Report, Exhibit US-5, p. 20.
We understand that there ar e currently no EPS suppliers of other WTO Members providing EPS in China for
domestic inter-bank RMB transactions. We also note that the 2007 China Payment System Development Report
of the PBOC compares CUP's inter-bank transaction volu me to that of Visa, MasterCard and American Express
(2007 China Payment System Development Report, Financial Service Report of the People's Bank of China,
No. 5, 2008, Exhibit US-15, p. 59). Moreover, we note that American Express, in its 2010 annual report,
indicates that it "competes in the global payment industry with other card networks, including, among others,
Visa, MasterCard, Diners Club International … and Discover…" (American Express 2010 Annual Report,
Exhibit US-7, p. 13).
897 Article 12 of CUP's Articles of Association; MasterCard 2009 Annual Report, Exhibit US-5, p. 7;
and Visa IPO Prospectus, Exhibit US-3, p. 138.
898 Article 12 of CUP's Articles of Association; Visa IPO Prospectus, Exhibit US-3, p. 135; and
MasterCard 2009 Annual Report, Exhibit US-5, pp. 78.
899 Article 2.4.A of Chapter III of the Business Practices Appendix of Document No. 76; MasterCard
2010 Annual Report, Exhibit US-6, p. 8; and Visa IPO prospectus, Exhibit US-3, p. 136.
900 Article 2.4.B of Chapter III, and Article 1.4.1 of Chapter IV, of the Business Practices Appendix of
Document No. 76; MasterCard 2010 Annual Report, Exhibit US-6, p. 9; and Visa IPO prospectus, Exhibit US-3,
pp. 136-137.
901 Article 2.4.B of Chapter III, and Articles 1.4.3 and 2 of Chapter IV, of the Business Practices
Appendix of Document No. 76; MasterCard 2010 Annual Report, Exhibit US-6, p. 9; and Visa IPO prospectus,
Exhibit US-3, pp. 136-137.
902 Article 12 of CUP's Articles of Association; Article 3 of Chapter I, and Article 1.2 of Chapter III, of
the Business Practices Appendix of Document No. 76; Visa IPO prospectus, Exhibit US-3, pp. 130-131.
903 Article 12 of CUP's Articles of Association; MasterCard 2010 Annual Report, Exhibit US-6, pp. 4
and 18; and Visa IPO prospectus, Exhibit US-3, p. 131.
904 Article 12 of CUP's Articles of Association; Visa IPO prospectus, Exhibit US-3, pp. 129 and 131;
and Visa 2010 Annual Report, Exhibit US-4, p. 8.
905 China notes that the creation of CUP reflected a desire to "establish alternatives to the global
networks". China's first written submission, para. 54. Similarly, China states that CUP operates China's
national inter-bank payment card network. In establishing a nationwide network, China wanted to achieve the
network effects associated with inter-bank payment cards, "but without having the Chinese market taken over by
the same [global] network operators that had come to dominate other markets". China's first written submission,
paras. 54, 44 and 57. Finally, China states that the United States has not identified anything in the instruments

by China regarding the existence of dual-lo go bank cards – i.e. bank cards bearing the Yin
Lian/UnionPay logo and the logo of an EPS supplier of another Member and that are interoperable
with the networks of both suppliers – lends s upport to the view that EPS supplied by CUP and
suppliers of other Members are closely competitive services. 906 Furthermore, in the particular
circumstances of this case, we do not see how our conclusion on "likeness" of services could be
different depending on whether EPS suppliers of other Members supply EPS through mode 1 or
through mode 3. In the light of this, we consid er that EPS supplied by CUP are like EPS supplied by
EPS suppliers of other Members.
7.705 Turning now to the issue of "likeness" of ser vice suppliers, we note that in a different
dispute, a panel has found that entities may be cons idered like service suppliers if, and to the extent
that, they provide like services. 907 We agree that the fact that service suppliers provide like services
may in some cases raise a presumption that they are "like" service s uppliers. However, we consider
that, in the specific circumstances of other cases, a separate inquiry into the "likeness" of the suppliers
may be called for. For this reason, we consider that "like service suppliers" determinations should be
made on a case-by-case basis.
7.706 In the present case, we have already found th at CUP and EPS suppliers of other Members
provide like services. Furthermore, the evidence be fore us indicates that CUP and EPS suppliers of
other Members describe their business scope in very si milar terms, and that CUP is perceived by EPS
suppliers of other Members as a competitor in th e global marketplace. This suggests that these
suppliers compete with each other in the same busin ess sector. Also, in the particular circumstances
of this case, we see no basis for reaching a diffe rent conclusion on "likeness" of service suppliers
depending on whether EPS suppliers of other Me mbers supply EPS through mode 1 or through
mode 3.
7.707 Additionally, we recall that in our case the treatment in China of EPS suppliers varies
according to the identity of the EPS supplier or its network, namely according to whether or not the
EPS supplier is CUP or the network is that of CUP. We consider that the fact that EPS suppliers of
other Members are not CUP, and that their networks are not that of CUP, does not render EPS
suppliers of other Members or their networks "unl ike" CUP or its network. In our view, to accept
otherwise would make it easy to circumvent the national treatment obligation and would deprive
Article XVII of any useful effect.
7.708 Based on these elements and considerations, a nd in the absence of any evidence from China
suggesting that CUP is different fro m EPS suppliers of other Members, we consider that for purposes
of this case CUP and EPS suppliers of other Member s are "like" suppliers of EPS, at least to the
extent that they provide "like" services.
7.709 In the light of our findings above, we thus come to the conclusion that the issuer
requirements result in different treatment of "like" EPS and EPS suppliers of other Members.
Less favourable treatment
7.710 In relation to the "less favourable treatment" c ondition, the United States argues that due to
the issuer requirements, issuing banks may not u se the CUP logo unless they have access to the CUP

at issue that prevents other EPS suppliers from processing inter-bank payment card transactions, and that there
is nothing in these instruments that establishes a "monopoly". China's opening statement at the first meeting of
the Panel, para. 20.
906 "Dual-logo bankcards bearing the Yin Lian logo and the logo of an international network operator",
Exhibit CHN-112.
907 Panel Report, EC – Bananas III (Ecuador), para. 7.322.

network, paid CUP for that access, and meet CUP's technical standards. The United States considers
that issuing banks have no reason to seek an alte rnative EPS supplier, as any issuing bank is required
to have access to the CUP system and to pay for that access. According to the United States, the
issuer requirements have three competitive effects – they guarantee CUP an income stream from
every credit card issued for domestic use within China, they give issuers an incentive to control costs
by using CUP as their exclusive supplier, and they provide free branding to CUP. The United States
submits that, in contrast, foreign suppliers of EPS ar e forced to secure such access and promote their
brand on their own. The United States contends th at even if a foreign su pplier of EPS were to
convince an issuer to issue a card, these requirement s ensure that it will not be able to compromise
CUP's prominent logo or obtain any market share to the certain exclusion of CUP. In its view, the
value, if any, of co-branding or having a non-CUP supplier of EPS is extremely limited in any event,
because only CUP can handle inter-bank or cross-region card-based electronic transactions.908
7.711 China does not specifically address whether th e issuer requirements accord less favourable
treatment to like EPS and EPS suppliers of other Members. China contends, however, that the
requirement that all RMB-denominated cards bear the Yin Lian logo does not require banks to
purchase network services from CUP. China further states that CUP charges for network services on
a transaction-by-transaction basis.909
7.712 The Panel first addresses the Yin Lian /UnionPay logo element of the issuer requirements.
To recall our earlier finding, China requires that RMB bank cards, and dual cu rrency bank cards, that
are issued in China by commercial banks and usab le in domestic inter-bank RMB transactions must
bear the Yin Lian/UnionPay logo on the front of the card.910 We have also found no basis on which to
conclude that the provisions in question would proh ibit the issuance of relevant cards that would be
capable of being processed over a network in China th at is not that of CUP. As a result, any EPS
supplier of another Member that wishes to have a commercial bank in China issue a bank card on its
network would have no ch oice but to accept that the Yin Lian/UnionPay logo feature prominently on
the front of that card. Holders of the relevant bank card would thus be c onstantly reminded of the
availability of CUP, a competing EPS supplier, and it s network. There is a further way in which CUP
benefits from the Chinese requirements that bank cards issued in China bear the Yin Lian/UnionPay
logo. As a consequence of these requirements, issuers must give publicity to the Yin Lian/UnionPay
logo by putting it on all cards that they issue, and they must do so for free, whereas EPS suppliers of
other Members are not entitled to have their logo put on CUP-branded cards. The attention that is
drawn in this way to the CUP network raises its profile. 911 Based on these elements, we consider that
China's requirements that RMB and dual currency bank cards bear the Yin Lian /UnionPay logo
modify the conditions of competition in favour of CUP. Pursuant to Article XVII:3, these
requirements can therefore be considered to r esult in like EPS suppliers of other Members being
treated less favourably than CUP.
7.713 We now consider the interoperability element of the issuer requirements. The United States
asserts in this context that issuers must have acc ess to the CUP network and must pay fees to CUP for
that access. The United States also refers to a guaranteed income stream for CUP from every credit
card that is issued. However, the United States has not established that the issuer requirements entail,
or are associated with, access fees payable to CU P, let alone their level and other modalities. 912 Nor

908 United States' first written submission, paras. 80 and 100-101.
909 China's response to question No. 104(b), para. 51.
910 In the case of credit cards issued solely for dom estic use in China the CUP anti-counterfeiting logo
must also be displayed.
911 We note that according to one global EPS supp lier, brand recognition is one of the principal
competitive factors in the global payments industry. See American Express 2010 Annual Report, Exhibit US-7,
p. 13.
912 For instance, it is not clear whether fees would need to be paid for every bank card that is issued or
whether access fees would have to be paid by issuers for access to CUP independently of the number of bank

has the United States provided evidence to substa ntiate its assertion that the issuer requirements
guarantee CUP an income stream from each and every credit card issued in China. In contrast, we
agree that issuers in China must have access to the CUP network, and that bank cards that must
display the Yin Lian/UnionPay logo must also be interoperable with CUP. Accordingly, we confine
our analysis to these particular requirements. We recall in this connection that these requirements do
not appear to prevent issuers who are members of CU P from joining other networks in China, or that
bank cards that meet CUP's uniform business specifi cations and technical standards must not, or
cannot, simultaneously be interoperable with other EPS suppliers' networks.
7.714 In effect, these interoperability requirements guarantee that all commercial banks that issue
bank cards for use in domestic inter-bank RMB tran sactions in China are members of CUP. They
further guarantee that all bank cards that are issued for such use by commercial banks – CUP cards as
well as non-CUP cards – are capable of being processed over CUP's network. In contrast, EPS
suppliers of other Members have to c onvince issuers to join their networks. 913 They might be
unsuccessful in that endeavour, or at least they migh t fail to achieve the same level of membership of
relevant issuing banks.914 And even if they could achieve the same level of membership, unlike CUP,
EPS suppliers of other Members would need to expend time and effort in the process. 915 Moreover, if
issuers in China were to issue relevant bank cards that are interoperable with the networks of EPS
suppliers of other Members, those bank cards woul d also need to be interoperable with the CUP
network. In contrast, in cases where CUP-branded ba nk cards are issued, they would not need to be
interoperable with networks of EPS suppliers of other Members. 916 Based on these elements, we
consider that the interoperability requirements in question modify the conditions of competition in
favour of CUP. By virtue of Article XVII:3, they thus result in like EPS suppliers of other Members
being treated less favourably than CUP.
7.715 In the particular case of the issuer requireme nts, we do not see how our conclusions on the
issue of less favourable treatment could be aff ected by whether a like EPS supplier of another
Member provides its services under mode 1 or mode 3. In our view, the conditions of competition of
EPS suppliers of other Members are adversely modifi ed irrespective of whethe r the relevant services
are provided under mode 1 or 3. In relation to mode 3, it is nonetheless necessary to add that the
issuer requirements result in less favourable treatment of like EPS suppliers of other Members even if
these suppliers meet the qualifications for engaging in local currency business that are stipulated in
China's mode 3 limitation.
7.716 We observe, finally, that with regard to thr ee-party networks, the United States argues that,
due to the issuer requirements, three-party EPS suppl iers are not able to issue their own branded bank

cards they issue on that network. This information would also be important for any assessment of the United
States' assertion that the alleged access fees give issuer s an incentive to control co sts by using CUP as their
exclusive supplier. We add in this regard that, in our understanding, it is not uncommon for issuing banks to
issue bank cards on the networks of different EPS suppliers' networks, to meet bank clients' demand. See, e.g.
MasterCard 2009 Annual Report, Exhibit US-5, p. 21.
913 We recall in this respect that issuers play an esse ntial part in the business model of EPS suppliers.
They issue the bank cards that are used in transactions that will be processed over a particular EPS supplier's
network.
914 Evidence submitted by the United States suggests th at a relevant factor in this regard is the
economic attractiveness to bank card issuers of an EPS supplier's network. See American Express 2010 Annual
Report, Exhibit US-7, p. 13; Discover 2010 Annual Report, Exhibit US-8, p. 10.
915 Evidence provided by the Unite d States indicates that the succes s of marketing and promotional
campaigns is a relevant competitive factor for EPS su ppliers. See American Express 2010 Annual Report,
Exhibit US-7, p. 13.
916 We note in this regard that according to one EPS supplier, one of the main competitive factors in the
global payments industry is the number of cards in force and the amount of spending on these cards. See
American Express 2010 Annual Report, Exhibit US-7, p. 13.

cards.917 As also indicated by the United States, th ree-party EPS suppliers ordinarily issue cards
directly to card holders.918 We note that the issuer requirements concern commercial banks as issuers
and bank cards issued by such banks. We consider that to the extent that EPS suppliers, such as those
that implement a three-party model, use institutions authorized as commercial banks in China to issue
bank cards, or are themselves authorized as commerc ial issuing banks, the issuer requirements result
in less favourable treatment of such EPS suppliers.
(ii) Terminal equipment requirements
Different treatment of like services and suppliers
7.717 The United States recalls that under the terminal equipment requirements all ATMs,
merchant card processing equipment and POS terminals must accept cards bearing the CUP logo.
According to the United States, there is no equivalent requirement for other cards, and no foreign EPS
supplier is afforded a similar privilege.919
7.718 The United States further argues that the termin al equipment requirements, as well as the
other requirements at issue in this dispute, provide disparate treatment solely according to the identity
of the EPS supplier: CUP or not CUP. The Unite d States considers that CUP provides services for
payment card transactions "like" those provided by foreign suppliers of EPS for payment card
transactions and that the basis for the differential treatment by China is ultimately one of origin.
Referring to the panel report in China – Publications and Audiovisual Products , the United States
submits that the "like service suppliers" requirement of Article XVII is therefore satisfied.920
7.719 China does not specifically address whether the terminal requirements result in different
treatment of CUP and its services, on the one hand, and "like" services and service suppliers of other
Members, on the other hand. China considers that it is unnecessary to resolve this question because
the United States national treatment claims in its view should be dismissed in their entirety.921
7.720 The Panel notes that pursuant to the terminal equipment requirements, terminal equipment
that joins the national bank card inter-bank pro cessing network must be capable of accepting bank
cards bearing the Yin Lian /UnionPay logo. In contrast, the record does not indicate that China
imposes a requirement whereby terminal equipment must be capable of accepting bank cards bearing
the logos of other EPS suppliers. In the light of this, we determine that the terminal equipment
requirements result in formally different treatment between CUP and other EPS suppliers.
7.721 The next issue for us to examine is whethe r the terminal equipment requirements accord
different treatment to "like services and service suppliers". As with the issuer requirements, the
terminal equipment requirements in our view draw a distinction between CUP and other EPS
suppliers that is not based on origin, but on the identity of the EPS supplier, or the network it operates.
Therefore, as in the context of our analysis of th e issuer requirements, we consider it appropriate to
undertake a more detailed analysis of the likeness i ssue than the one that was conducted by the panel
in China – Publications and Audiovisual Products. We recall that we have already conducted such an
analysis above. Thus, for the reasons set out in pa ragraphs 7.698 - 7.708 above, we consider that for
purposes of this case EPS supplied by CUP are "lik e" EPS supplied by EPS suppliers of other

917 United States' response to Panel question No. 25, para. 82.
918 Ibid., para. 81.
919 United States' first written submission, paras. 80 and 109.
920 United States' first written submission, paras. 82-87.
921 China's response to Panel question No. 124, para. 91.

Members, and that CUP and EPS suppliers of other Me mbers are "like" suppliers of EPS, at least to
the extent that they provide "like" services.922
7.722 In the light of the above, we conclude that the terminal equipment requirements result in
different treatment of "like" EPS and EPS suppliers of other Members.
Less favourable treatment
7.723 The United States argues that the terminal equipment requirements modify the conditions of
competition in favour of CUP. CUP is guaranteed access to all merchants in China who accept credit
cards, while foreign EPS must market themselves to each POS terminal user. The United States
observes that the main value that an EPS supplier has to offer issuing banks and card holders is the
ability to use a card at a large number of locations, and the larger the network of merchants that use
the card, the greater the attractiveness of the EPS su pplier to its customers. The United States argues
that the terminal equipment requirements give CU P automatic and universal acceptance of its bank
cards by banks and merchants. In contrast, in Ch ina a foreign EPS supplier must build that network
by marketing itself to merchants and acquiring banks. The United States notes in this respect that
EPS suppliers must ordinarily invest heavily and incur substantial expense to build acceptance of their
payment products by merchants, often in vigorous competition with other suppliers of EPS.923
7.724 China does not specifically address whether th e terminal equipment requirements accord
less favourable treatment to like EPS and EPS suppliers of other WTO Members.
7.725 The Panel recalls that pursuant to the termin al equipment requirements all terminals in
China that are part of the national bank card inter-bank processing network must be capable of
accepting all bank cards bearing the Yin Lian/UnionPay logo. This guarantees that all bank cards that
bear the Yin Lian /UnionPay logo can be accepted by commercial bank and merchant terminal
equipment in China and processed over CUP's netw ork. As regards EPS suppliers of other WTO
Members, we recall that the terminal equipment requirements do not appear to preclude terminals
from accepting at the same time bank cards that would be capable of being processed over a network
in China other than that of CUP. Consequently , EPS suppliers of other WTO Members could seek to
obtain access to the terminals that must be capable of accepting bank cards bearing the Yin
Lian/UnionPay logo. These terminals could then pr ocess transactions also over their networks.
However, EPS suppliers of other WTO Members may not be able to get access to all these terminals
because, unlike in the case of bank cards bearing the Yin Lian /UnionPay logo, commercial banks,
acquirers and merchants could refuse access.
924 Also, even if the same level of access to terminal
equipment could be achieved by EPS suppliers of ot her WTO Members, they would need to expend
time and effort, which is not the case for CUP. 925 As pointed out by the United States, the level of
access to bank and merchant terminals that an EPS supplier has is an important determinant of its
attractiveness to issuers as well as bank car d users and thus of its competitive position. 926 Based on

922 As we indicated earlier, in the particular circumst ances of this case, we see no basis for reaching a
different conclusion on "likeness" of services or service suppliers depending on whether EPS suppliers of other
WTO Members supply EPS through mode 1 or through mode 3.
923 United States' first written submission, paras. 10 2 and 110; second written submission, para. 207;
response to Panel question No. 15, para. 56.
924 Evidence submitted by the United States suggests th at a relevant factor in this regard is the
economic attractiveness to merchants of participating in an EPS supplier's network. See American Express
2010 Annual Report, Exhibit US-7, p. 13.
925 As noted earlier, EPS suppliers suggest that the success of marketing and promotional campaigns is
a relevant competitive factor for them. See American Express 2010 Annual Report, Exhibit US-7, p. 13.
926 We note in this regard that according to evid ence submitted by the United States the quantity and
quality of establishments where bank cards can be used ranks among the principal competitive factors in the
global payments industry. See American Express 2010 Annual Report, Exhibit US-7, p. 13.

these elements, we consider that the terminal equipment requirements modify the conditions of
competition in favour of CUP. Having regard to Article XVII:3, they therefore accord to like EPS
suppliers of other WTO Members less favourable treatment than to CUP.
7.726 In the particular case of the terminal equipm ent requirements, we do not consider that our
conclusions on the issue of less favourable treatme nt are affected by whether a like EPS supplier of
another WTO Member provides its services under mode 1 or mode 3. In our view, the conditions of
competition of EPS suppliers of other WTO Members are adversely modified irrespective of whether
the relevant services are provided under mode 1 or 3. In relation to mode 3, it is nonetheless
important to add that the terminal equipment requirements result in less favourable treatment of like
EPS suppliers of other WTO Members even if these s uppliers meet the qualifications for engaging in
local currency business that are stipulated in China's mode 3 limitation.
7.727 Finally, we note that the United States has not specifically addressed how the terminal
equipment requirements affect three-party networks. It is clear to us, however, that EPS suppliers
operating such networks would find themselves in substantially the same position as EPS suppliers
operating four-party networks as regards the issue of access to terminal equipment in China. We
therefore consider that our finding of less favourable treatment applies to EPS suppliers, regardless of
whether they adopt a three- or a four-party model or some variation of either model.
(iii) Acquirer requirements
Different treatment of like EPS suppliers
7.728 The United States notes that under the acquirer requirements all acquiring institutions in
China must post the CUP logo and accept all bank car ds bearing that logo. According to the United
States, no foreign EPS supplier is afforded a similar privilege.927
7.729 The United States further argues that the acquirer requirements, as well as the other
requirements at issue in this dispute, provide disparate treatment solely according to the identity of the
EPS supplier: CUP or not CUP. The United States considers that CUP provides services for payment
card transactions "like" those provided by foreign suppliers of EPS for payment card transactions and
that the basis for the differential treatment by China is ultimately one of origin. Referring to the panel
report in China – Publications and Audiovisual Products , the United States submits that the "like
service suppliers" requirement of Article XVII is therefore satisfied.928
7.730 China does not specifically address whether th e acquirer requirements result in different
treatment of CUP and its services, on the one hand, and "like" services and service suppliers of other
WTO Members, on the other hand. China considers that it is unnecessary to resolve this question
because the United States national treatment claims in its view should be dismissed in their entirety.929
7.731 The Panel recalls that pursuant to the acquirer requirements acquirers must (i) post the Yin
Lian/UnionPay logo and (ii) be capable of accepting bank cards bearing the Yin Lian/UnionPay logo.
The latter requirements relate both to terminal equipm ent and interoperability. In contrast, the parties
have not made us aware of any requirements whereb y acquirers would have to post the logos of other
EPS suppliers or be capable of accepting bank cards b earing their logos. We therefore consider that
the acquirer requirements result in formally different treatment between CUP and other EPS suppliers.

927 United States' first written submission, para. 80.
928 United States' first written submission, paras. 82-87.
929 China's response to Panel question No. 124, para. 91.

7.732 We now address whether the acquirer requirements accord different treatment to "like
services and service suppliers". As with the issuer and terminal equipment requirements, the acquirer
requirements in our view draw a distinction between CUP and other EPS suppliers that is not based on
origin, but on the identity of the EPS supplier, or th e network it operates. Therefore, as in the context
of our analysis of the issuer and terminal equi pment requirements, we consider it appropriate to
undertake a more detailed analysis of the likeness i ssue than the one that was conducted by the panel
in China – Publications and Audiovisual Products. We recall that we have already conducted such an
analysis above. Thus, for the reasons set out in pa ragraphs 7.698 - 7.708 above, we consider that for
purposes of this case EPS supplied by CUP are "lik e" EPS supplied by EPS suppliers of other WTO
Members, and that CUP and EPS suppliers of other WTO Members are "like" suppliers of EPS, at
least to the extent that they provide "like" services.930
7.733 Based on the foregoing considerations, we concl ude that the acquirer requirements result in
different treatment of "like" EPS and EPS suppliers of other WTO Members.
Less favourable treatment
7.734 The United States argues that the acquirer requirements distort the competitive relationship
between CUP and foreign EPS suppliers for the same reasons as the terminal equipment requirements.
The United States adds that acquirers have important relationships with merc hants, often providing
POS terminal and processing equipment to merchants so that they can process payment cards.
Acquirers also maintain merchants' accounts, ha ndle relations with merchants, and ensure that
payments are properly credited to merchants.931
7.735 China does not specifically address whet her the acquirer requirements accord less
favourable treatment to like EPS and EPS suppliers of other Members.
7.736 The Panel first addresses the acquirer requirement s that relate to terminal equipment.
Pursuant to these requirements, terminal equipm ent operated by acquiring banks and merchant
terminal equipment provided by acquirers must be technically capable of accepting cards bearing the
Yin Lian /UnionPay logo. We also recall our view that these requirements would not prevent the
acceptance by acquirers, or merchants, of bank cards that would be capable of being processed over a
network in China other than that of CUP. To th at extent, the analytical starting point for these
acquirer requirements is not substan tially different from that for the terminal equipment requirements
we have examined earlier. 932 Consequently, our considerations in paragraphs 7.717 to 7.727 above
concerning the terminal equipment requirements ar e applicable, with the necessary modifications, to
the acquirer requirements in question. Accordingly, on the basis of the factual situation described in
this paragraph and the considerati ons set out in paragraphs 7.728 to 7.734, we consider that the
acquirer requirements that relate to terminal e quipment modify the conditions of competition in
favour of CUP. That being the case, we also cons ider that they result in like EPS suppliers of other
Members being treated less favourably than CUP.
7.737 We now proceed to address the interoperabilit y element of the acquirer requirements.
Pursuant to these acquirer requirements, acquirers must join CUP and comply with uniform business
standards and technical specifications of inter-ba nk interoperability. We also recall that these
requirements do not appear to prevent acquire rs from complying with business standards and

930 As we indicated earlier, in the particular circumst ances of this case, we see no basis for reaching a
different conclusion on "likeness" of services or service suppliers depending on whether EPS suppliers of other
WTO Members supply EPS through mode 1 or through mode 3.
931 United States' second written submission, para. 203.
932 The main difference is that in this case, we are concerned only with those terminals that are operated
or provided by acquirers.

technical specifications adopted by EPS suppliers of other Members. Thus, if EPS suppliers of other
Members wish acquirers to join their networks and to be able to accept bank cards that are
interoperable with their networks, they must take the initiative. It is uncertain, however, whether any
such initiative would result in the same level of membership of relevant acquirers and the same
number of acquirers meeting the business standards and technical specifications of EPS suppliers of
other Members, because acquirers are not required to respond favourably. And even if EPS suppliers
of other Members could achieve the same result, they would need to invest time and effort. 933 We
note in this respect that acquirers are important to EPS suppliers because they acquire merchant
transactions and provide merchants with terminal equipment that can process transactions over a
particular EPS supplier's network. Based on these elements, we consider that the acquirer
requirements that relate to interoperability modify the conditions of competition in favour of CUP. In
view of Article XVII:3, we further determine that they result in like EPS suppliers of other Members
being treated less favourably than CUP.
7.738 The final element of the acquirer requirements to be examined is the Yin Lian /UnionPay
logo element. Pursuant to this requirement, acquirers must post the Yin Lian /UnionPay logo on
merchant terminals. We also recall that this requi rement does not appear to prevent the posting of the
logo of competing EPS suppliers. Thus, while the Yin Lian/UnionPay logo is automatically posted,
EPS suppliers of other Members who wish acquirers to post their logo need to invest time and effort
to achieve this. In our view, the posting of an EPS supplier's logo on merchant terminals is relevant
inasmuch as it alerts card holders to the option of using their bank card rather than paying in cash, for
instance. The logo may thus generate additional transactions that the EPS supplier whose logo is
posted can process. Also, since merchant termin als are frequently capable of accepting bank cards
with a variety of logos, the fact that one EPS s upplier's logo is posted while another's is not might
mislead holders of cards bearing the latter's logo, in the sense that the absence of a particular logo
might suggest that cards bearing that logo would not be accepted. As a result, such cards might either
not be used by card holders or car d holders might not seek to get such bank cards in the first place.
Based on these elements, the requirement that acquirers must post the Yin Lian/UnionPay logo in our
view modifies the conditions of competition in fav our of CUP. In accordance with Article XVII:3,
the requirement can thus be considered to result in like EPS suppliers of other Members being treated
less favourably than CUP.
7.739 In the particular case of the acquirer require ments, we do not see how our conclusions on
the issue of less favourable treatment could be a ffected by whether a like EPS supplier of another
Member provides its services under mode 1 or mode 3. In our view, the conditions of competition of
EPS suppliers of other Members are adversely modifi ed irrespective of whethe r the relevant services
are provided under mode 1 or 3. In relation to mode 3, it is nevertheless important to add that the
acquirer requirements result in less favourable treatment of like EPS suppliers of other Members even
if these suppliers meet the qualifications for engaging in local currency business that are stipulated in
China's mode 3 limitation.
7.740 We also observe that the United States has not specifically addressed how the acquirer
requirements affect three-party networks. As described by the United States, these networks
ordinarily serve merchants directly. As regards th e acquirer requirements that relate to terminal
equipment and the logo posting, we do not see how EPS suppliers of other Members would be
impacted differently, depending on whether they oper ate a three- or a four-party network or some
variation of either type of netw ork. With regard to the intero perability element of the acquirer
requirements, we consider that to the extent that EPS suppliers, such as those that implement a three-
party model, operate as acquiri ng banks in China, the interope rability element of the acquirer
requirements results in less favourable treatment of such EPS suppliers.

933 As noted earlier, EPS suppliers suggest that the success of marketing and promotional campaigns is
a relevant competitive factor for them. See American Express 2010 Annual Report (Exhibit US-7), p. 13.

(d) Overall conclusions
7.741 As we have completed our analysis of the three Article XVII elements, we can come to
overall conclusions on the United States' claims that the Hong Kong/Macao requirements as well as
the issuer, terminal equipment and acquirer requirements are inconsistent with Article XVII.
(i) Hong Kong/Macao requirements
7.742 We found above that the Hong Kong/Macao requirements impose an Article XVI:2(a)-type
limitation on market access through mode 1 and that they are therefore subject to China's "Unbound"
market access entry for that mode and subsector (d ). We further found that Article XX:2 indicates
that even if the Hong Kong/Macao requirements are also "measures affecting the supply of services"
within the meaning of Article XVII:1 and result in EPS suppliers of other Members being treated less
favourably than like Chinese services and service s uppliers when supplying through mode 1, the
inscription of "Unbound" in China's market access en try provides "a condition or qualification to
Article XVII". We determined on that basis that China has no obligation in respect of the Hong
Kong/Macao requirements to accord national treatme nt to EPS supplied through mode 1, and EPS
suppliers of other Members supplying through mode 1. For these reasons, we conclude that the Hong
Kong/Macao requirements, to the extent that they affect the cross-border supply of EPS (mode 1), are
not inconsistent with Article XVII:1 of the GATS.934
(ii) Issuer requirements
7.743 We also found that the issuer requirements (relating to both the Yin Lian/UnionPay logo and
interoperability elements) are subject to commitm ents set out in China's mode 1 and 3 national
treatment entries concerning subsector (d); that they are measures affecting the supply of services; and
that they result in like EPS and EPS suppliers of other Members being treated less favourably than
CUP and its EPS, irrespective of whether the rele vant services are provided under mode 1 or 3 and
even in cases where those other suppliers would meet the qualifications for engaging in mode 3 local
currency business. For these reasons, we conclude th at the issuer requirements are inconsistent with
Article XVII:1 of the GATS. The issuer requirements that relate to the Yin Lian/UnionPay logo use
are maintained through Articles 2.1(i) and 2.2(i) of Document No. 37; Articles 1, 2, 5 and 6 of
Document No. 57; and Article 3.2(ii) of Document No . 129. Those that relate to interoperability are
maintained through Articles 1.2(i), 2.1(iii), 2.2(i) and 3.1 of Document No. 37; Article 3 of Document
No. 57; Article 3.2(ii) of Document No. 129; and Article 64 of Document No. 17 in conjunction with
Document No. 76.
(iii) Terminal equipment requirements
7.744 We further found that the terminal e quipment requirements (relating to both the Yin
Lian/UnionPay logo and interoperability elements) are subject to commitments set out in China's
mode 1 and 3 national treatment entries concerning subsector (d); that they are measures affecting the
supply of services, and that they result in like EPS and EPS suppliers of other Members being treated
less favourably than CUP and its EPS, irrespectiv e of whether the relevant services are provided
under mode 1 or 3 and even in cases where those other suppliers would meet the qualifications
stipulated in China's Schedule for engaging in m ode 3 local currency business. For these reasons, we
conclude that they are inconsistent with Article XVII:1 of the GATS. These requirements are
maintained through Articles 1.2(i) and 2.1(ii) of Do cument No. 37 and also Article 2.2 of Document
No. 153.

934 We recall that we exercised ju dicial economy in respect of the United States' claim that the Hong
Kong/Macao requirements are also inconsis tent with Article XVII to the extent that they affect the supply of
EPS through commercial presence in China (mode 3).

(iv) Acquirer requirements
7.745 Finally, we found that the acquirer require ments (relating to both the posting of the Yin
Lian/UnionPay logo and the capability of accepting bank cards bearing the Yin Lian/UnionPay logo )
are subject to commitments set out in China's m ode 1 and 3 national treatment entries concerning
subsector (d); that they are measures affecting the supply of services, and that they result in like EPS
and EPS suppliers of other Members being treated less favourably than CUP and its EPS, irrespective
of whether the relevant services are provided under m ode 1 or 3 and even in cases where those other
suppliers would meet the qualifica tions stipulated in China's Schedule for engaging in mode 3 local
currency business. For these reasons, we conclude that they are inconsistent with Article XVII:1 of
the GATS. The acquirer requirement that relates to the posting of the Yin Lian /UnionPay logo is
maintained through Article 2.2 of Document No. 153 . The requirements that relate to the capability
of acquirers to accept bank cards bearing the Yin Lian /UnionPay logo (terminal equipment and
interoperability elements) are maintained through Ar ticle 2.2 of Document No. 153; Article 1.2(i) of
Document No. 37; and paragraphs 2 and 3 of the Notice as well as Articles 2.1 and 5.2.1-5.2.3 of
Chapter I of Document No. 76.
3. China's requirements considered jointly
7.746 The Panel now addresses the United States' requ est that the Chinese requirements at issue
should be considered not only individually, but al so when operating in conjunction. The United
States argues that this would help to ensure the effective resolution of this dispute.935
7.747 According to the United States, the requirements at issue are not just WTO-inconsistent when
analysed individually, but operate together in a manner that is also WTO-inconsistent. 936 The United
States submits in this respect that the effect of the requirements at issue is to distort competition in
China's market for EPS. The Unite d States submits that these requireme nts maintain CUP as the sole
entity able to provide the full range of EPS. Th e United States further observes that under these
requirements, banks in China must join CUP in order to issue bank cards or acquire bank card
transactions, and only cards bearing the CUP logo can be issued as RMB denominated cards.
According to the United States, these requirements al so mean that all banks that wish to acquire
merchant transactions or operate ATMs and all me rchants that wish to accept bank cards must join
CUP and process transactions in accordance with CU P's rules and procedures. In the United States'
view, these requirements gave CUP significant leverage and automatic and universal acceptance of its
RMB payment card products by banks and mercha nts in China and permitted and supported CUP
becoming the sole EPS supplier in China. The Unit ed States points out that no foreign EPS supplier
enjoys any of these advantages.937
7.748 In considering the United States' request, the Pane l recalls that it found above that the issuer,
terminal equipment and acquirer re quirements are each inconsistent with Article XVII:1 for modes 1
and 3. We further found that the Hong Kong/ Macao requirements are inconsistent with
Article XVI:2(a) for mode 3, and not inconsistent with Article XVII:1 for mode 1 (due to the absence
of a national treatment obligation covering these requi rements). In our view, these findings help to
secure a positive solution to this dispute. That being so, we see no need to determine whether the
same requirements, when considered in conjunc tion with each other, would give rise to an
independent breach of Article XVII:1 for mode 1 or 3. We therefore decline to offer a separate

935 United States' first written submission, para. 32.
936 United States' first written submission, para. 29; response to Panel question No. 4.
937 United States' second written submission, para. 207; response to Panel question No. 71, para. 7.

conclusion on whether the issuer, terminal equi pment, acquirer and Hong Kong/Macao requirements,
when considered jointly, are also inconsistent with Article XVII:1.938
VIII. CONCLUSIONS AND RECOMMENDATIONS
8.1 For the reasons set forth in this Report, the Panel concludes as follows:
(a) In respect of the United States' panel request: 939
(i) the Panel finds that China has failed to establish that the United States' panel
request is inconsistent with Article 6.2 of the DSU on the grounds that it does
not provide a brief summary of the legal basis sufficient to present the
problem clearly.
(b) In respect of the services at issue:
(i) the Panel finds that the services at issu e as defined by the United States in its
request for the establishment of a panel are classifiable under Sector 7.B(d) of
China's Schedule, which reads "[a]ll payment and money transmission
services, including credit, charge and debit cards, travellers cheques and
bankers draft (including import and export settlement)".
(c) In respect of repealed or replaced Chinese legal instruments:
(i) the Panel finds that Document Nos. 94 and 272 were repealed prior to the
date of establishment of the panel and, therefore, do not figure in the Panel's
findings or recommendations; and
(ii) the Panel finds that Document No. 66 was replaced by Document No. 53
prior to the date of establishment of the panel and, therefore, does not figure
in the Panel's findings or recommendations.
(d) In respect of China's measures at issue:
(i) the Panel finds that China, through Document Nos. 37, 57 and 129, imposes
requirements on issuers that bank cards issued in China bear the Yin
Lian/UnionPay logo, and furthermore, China, through Document Nos. 17, 37,
57, 76 and 129, requires that issuers become members of the CUP network,
and that the bank cards they issue in China meet certain uniform business
specifications and technical standards;
(ii) the Panel finds that China, through Document Nos. 37 and 153, imposes
requirements that all terminals (ATMs, merchant processing devices and POS
terminals) in China that are part of the national bank card inter-bank

938 This approach is consistent with that followed by the panel in Turkey – Rice. The panel in that case
found two Turkish measures to be individually inconsistent with Turkey's WTO obligations. The panel then
stated that "[i]n the light of these findings, and under the guidance of the principle of judicial economy, we do
not see the need to reach a separate conclusion on these measures considered jointly, for the resolution of this
dispute" (Panel Report, Turkey – Rice, para. 7.281). We further note that the United States itself has drawn our
attention to this particular statement. See United States' first written submission, fn 49.
939 The Panel's conclusions incorporate those set forth in its preliminary ruling, which is contained in
document WT/DS413/4 circulated on 30 September 2011 and which forms an integral part of this Report.

processing network be capable of accepting all bank cards bearing the Yin
Lian/UnionPay logo;
(iii) the Panel finds that China, through Document No. 153, imposes requirements
on acquirers to post the Yin Lian /UnionPay logo, and furthermore, China,
through Document Nos. 37, 76 and 153, imposes requirements that acquirers
join the CUP network and comply with uniform business standards and
technical specifications of inter-ban k interoperability, and that terminal
equipment operated or provided by ac quirers be capable of accepting bank
cards bearing the Yin Lian/UnionPay logo;
(iv) the Panel finds that China, through Document Nos. 16, 8 and 254, imposes
requirements that CUP and no other EPS supplier handle the clearing of
certain RMB bank card transactions that involve either an RMB bank card
issued in China and used in Hong Kong or Macao, or an RMB bank card
issued in Hong Kong or Macao that is used in China in an RMB-denominated
transaction;
(v) the Panel finds that the United States fa iled to establish that China, through
Document Nos. 37, 57, 16, 8, 219, 254, 103, 153, 149, 53, 49, 129, 76, 17
and/or 142, imposes requirements that mandate the use of CUP and/or
establish CUP as the sole supplier of EPS for all domestic RMB payment
card transactions; and
(vi) the Panel finds that the United States fa iled to establish that China, through
Document Nos. 37, 57, 153, 219 and/or 76, imposes broad prohibitions on the
use of "non-CUP" cards for cross-region or inter-bank transactions.
(e) In respect of the United States' claims under Article XVI of the GATS:
(i) in relation to the United States' claims concerning China's Sector 7.B(d)
mode 1 market access commitment, the Panel finds that the issuer, terminal
equipment, acquirer and Hong Kong/Macao requirements are not inconsistent
with Article XVI of the GATS, as China has not undertaken a market access
commitment under this mode and in this sector in respect of the services at
issue in this dispute;
(ii) the Panel finds that the United States failed to establish that the issuer
requirements are inconsistent with Artic le XVI:2(a) of the GATS, in respect
of China's Sector 7.B(d) mode 3 market access commitment, as these
requirements do not impose a limitation that falls within the scope of
Article XVI:2(a);
(iii) the Panel finds that the United States failed to establish that the terminal
equipment requirements are inconsistent with Article XVI:2(a) of the GATS,
in respect of China's Sector 7.B(d) mode 3 market access commitment, as
these requirements do not impose a limitation that falls within the scope of
Article XVI:2(a);
(iv) the Panel finds that the United States failed to establish that the acquirer
requirements are inconsistent with Artic le XVI:2(a) of the GATS, in respect
of China's Sector 7.B(d) mode 3 market access commitment, as these

requirements do not impose a limitation that falls within the scope of
Article XVI:2(a);
(v) the Panel finds that the Hong Kong/Macao requirements are inconsistent with
Article XVI:2(a) of the GATS because, contrary to China's Sector 7.B(d)
mode 3 market access commitments, they maintain a limitation on the
number of service suppliers in the form of a monopoly;
(vi) the Panel finds that the United Stat es failed to establish that the Hong
Kong/Macao, issuer, terminal equipmen t and acquirer requirements, when
considered jointly, give rise to a sep arate and independent breach of Article
XVI:2(a) of the GATS;
(vii) the Panel finds that the United States failed to present a prima facie case that
the issuer, terminal equipment or acquirer requirements, considered either
individually or jointly, are inconsistent with Article XVI:1 of the GATS in
respect of China's Sector 7.B(d) mode 3 market access commitment; and
(viii) the Panel exercised judicial economy with respect to the United States' Sector
7.B(d) mode 3 market access claims under Article XVI:1 of the GATS
regarding the Hong Kong/Macao requirements.
(f) In respect of the United States' claims under Article XVII of the GATS:
(i) the Panel finds that the issuer re quirements are inconsistent with
Article XVII:1 of the GATS, because contrary to China's Sector 7.B(d)
mode 1 and mode 3 national treatment commitments, these requirements fail
to accord to services and service supplie rs of any other Member treatment no
less favourable than China accords to its own like services and service
suppliers;
(ii) the Panel finds that the terminal e quipment requirements are inconsistent
with Article XVII:1 of the GATS, because contrary to China's Sector 7.B(d)
mode 1 and mode 3 national treatment commitments, these requirements fail
to accord to services and service supplie rs of any other Member treatment no
less favourable than China accords to its own like services and service
suppliers;
(iii) the Panel finds that the acquirer re quirements are inconsistent with
Article XVII:1 of the GATS, because contrary to China's Sector 7.B(d)
mode 1 and mode 3 national treatment commitments, these requirements fail
to accord to services and service supplie rs of any other Member treatment no
less favourable than China accords to its own like services and service
suppliers;
(iv) the Panel finds that the Hong Kong/Macao requirements are not inconsistent
with Article XVII:1 of the GATS, as China has no Sector 7.B(d) mode 1
national treatment obligation in respect of these requirements;
(v) the Panel exercised judicial economy with respect to the United States' Sector
7.B(d) mode 3 national treatment cl aims under Article XVII:1 of the GATS
regarding the Hong Kong/Macao requirements; and

(vi) the Panel declined to conclude separat ely on whether the issuer, terminal
equipment, acquirer and Hong Kong/Macao requirements, when considered
jointly, are also inconsistent with Article XVII:1 of the GATS.
8.2 Under Article 3.8 of the DSU, in cases where th ere is an infringement of the obligations
assumed under a covered agreement, the action is considered prima facie to constitute a case of
nullification or impairment. We conclude that, to the extent that the measures at issue are inconsistent
with the GATS, they have nullified or impaired benefits accruing to the United States under that
agreement.
8.3 Pursuant to Article 19.1 of the DSU, we recommend that the Dispute Settlement Body request
China to bring its measure into conformity with its obligations under the GATS.