CHINA – CERTAIN MEASURES AFFECTING ELECTRONIC PAYMENT SERVICES
Document: Request for the Establishment of a Panel by the United States
Date: 14 February 2011
Document codes: WT/DS413/2
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

Request for the Establishment of a Panel by the United States

 The following communication, dated 11 Febr uary 2011, from the delegation of the United
States to the Chairman of the Dispute Settlement Bo dy, is circulated pursuant to Article 6.2 of the
DSU.

 On 15 September 2010, the United States requested consultations with the Government of the
People's Republic of China ("China") pursuant to Articles 1 and 4 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes ("DSU"), and Article XXII of the General
Agreement on Trade in Services ("GATS") with respect to certain restrictions and requirements
maintained by China affecting electronic payment services
1 for payment card 2 transactions and the
suppliers of those services ("electronic payment services suppliers"). 3 The United States held
consultations with China on 27 – 28 October 2010. Unfortunately, those consultations did not resolve
the dispute.

 In the financial services sector, as set out in China's GATS Schedule of Specific
Commitments on Services (the "Schedule"),
4 China undertook commitments under Articles XVI and
XVII of the GATS with respect to:

1 "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 participating 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
procedures that facilitate, manage, and enable transaction information 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 institutio ns 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.
2 A "payment card" includes 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.
3 WT/DS413/1.
4 Annex 9 of the Protocol on the Accession of the People's Republic of China , WT/L/432,
23 November 2001 (the "Accession Protocol").

• "Banking services as listed below: . . . All payment and money transmission services,
including credit, charge and debit cards, travellers cheques and bankers drafts
(including import and export settlement)";

• "Other financial services as listed below: . . . Provision and transfer of financial
information, and financial data processing and related software by supplier of other
financial services"; and

• "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."
5

Despite those commitments, China imposes market access restrictions and requirements on
service suppliers of other Members seeking to supply electronic payment services in China. Through
these and other related and reinforcing requirements and restrictions China accords less favorable
treatment to electronic payment services suppliers of other Members than to Chinese suppliers of
these services.

 China UnionPay ("CUP"), a Chinese entity, is the only entity that China permits to supply
electronic payment services for payment card transactions denominated and paid in renminbi
("RMB") in China. China also requires the hand ling by CUP of all RMB transactions in Macao or
Hong Kong using payment cards issued in Main land China, as well as any RMB transactions in
Mainland China using RMB payment cards issued in Hong Kong, China or Macao, China. The
United States considers that th ese measures are inconsistent w ith China's obligations under GATS
Article XVI:1 to accord services and services supplie rs of any other Member treatment no less
favorable that that provided for in China's Sche dule and that China is maintaining or adopting
measures set out in Article XVI:2 of the GATS. These measures also appear inconsistent with
China's obligations under GATS Article XVII to accord to services and service suppliers of any other
Member treatment no less favorable than that it accords to its own like services and service suppliers.

 In addition, China requires all payment card processing devices at merchant locations, all
automated teller machines ("ATMs"), and all point -of-sale ("POS") terminals in China to be
compatible with CUP's system and capable of accepting CUP payment cards. China also requires that
all acquiring institutions
6 post the CUP logo and be capable of accepting all payment cards bearing
the CUP logo. China further requires that all paym ent cards, including "dual currency" cards, issued
in China capable of being used for transactions de nominated and paid in RMB bear the CUP logo.
This means that issuing banks must have access to the CUP system, and must pay CUP for that
access. These measures do not impose similar requirements regarding non-CUP payment cards or to
transactions using non-CUP payment cards. The Un ited States considers that these measures are
inconsistent with China's obligations under GA TS Article XVI:1 to accord services and services
suppliers of any other Member treatment no less favo rable that that provided for in China's Schedule
and that China is maintaining or adopting measures set out in Article XVI:2. The United States
considers that these measures are inconsistent w ith China's obligations under GATS Article XVII to
accord to services and service suppliers of any other Member treatment no less favorable than that it
accords to its own like services and service suppliers.

5 Section II, 7 (Financial Services), B (Banking and Other Financial Services) of the Schedule
(circulated in WT/ACC/CHN/49/Add.2 and WT/MIN(01)/3/Add.2).
6 An "acquiring institution" provides POS equipment to merchants so they can process payment cards,
maintains the merchant's account, handles relations with the merchant, and ensures that payments are properly
credited to the merchant.

 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. Th e United States also considers that these measures are inconsistent
with China's obligations under GA TS Article XVI:1 to accord services and services suppliers of any
other Member treatment no less favorable that that provided for in China's Schedule and that China is
maintaining or adopting measures set out in Article XVI:2. The United States also considers that
these measures are inconsistent with China's ob ligations under GATS Article XVII to accord to
services and service suppliers of any other Member tr eatment no less favorable than that it accords to
its own like services and service suppliers.

 The United States understands that the instru ments through which China maintains these
measures include:

• Measures for the Administration of Bank Card Business by the People's Bank of
China (Yinfa [1999] 17), issued on 27 January 1999;

• Circular of the People's Bank of China on Promulgation of Opinions on
Implementation of Joint Work in Bank Ca rd Interoperability in 2001 (Yinfa [2001]
37) issued on 19 February 2001;

• Circular on Uniform Use of CUP Logo and its Holographic Label for Anti-
counterfeiting by the People's Bank of China (Yinfa, [2001] 57), issued on
13 March 2001;

• Notice of Circulating the Bank Card Connection Business Standard by the People's
Bank of China (Yinfa [2001] 76), issued 29 March 2001, including but not limited to
the Appendix, Business Practices for the Interoperable Service of Bank Cards

• Opinions on Bank Card Interoperability Re lated Work in 2002 by the People's Bank
of China (Yinfa [2002] 94), issued on 5 April 2002;

• Circular regarding Issues concerning Bank Card Interoperability Related Work by the
People's Bank of China (Yinfa [2002] 272), issued on 29 August 2002;

• Circular on Further Improving Bank Card Interoperability Related Work by the
People's Bank of China (Yinfa [2003] 129), issued on 2 July 2003;

• Announcement of Clearing Arrangements Provided by Banks in relation to
Individuals' Deposits, Exchanges, Bank Card and Remittance in RMB in Hong Kong
(PBOC Announcement [2003] 16), issued on 19 November 2003;

• Circular on Regulating the Administration of Foreign Currency Bank Cards by the
State Administration of Foreign Exchange Circular (Huifa [2004] 66), issued on 30
June 2004;

• Announcement of Clearing Arrangements Provided by Banks in relation to
Individuals' Deposits, Exchanges, Bank Cards and Remittance in RMB in Macao
(PBOC Announcement [2004] 8), issued on 3 August 2004;

• Notice of the People's Bank of China con cerning Relevant Issues on Accepting and
Using Renminbi Bank Cards in Border Areas (Yinfa [2004] 219), issued on 21
September 2004;

• Circular regarding Issues concerning Indi vidual RMB Business Handled by Banks in
Mainland China and Banks in Hong Kong a nd Macao by the People's Bank of China
(Yinfa [2004] 254), issued on 28 October 2004;

• Some Opinions of the People's Bank of China, the National Reform and Development
Commission, the Ministry of Public Security, the Ministry of Finance, the Ministry of
Information Industry, the Ministry of Commerce, the Station Administration of
Taxation, China Banking Regulatory Commission and the State Administration of
Foreign Exchange on Promoting the Deve lopment of Bank Card Industry Some
Opinions of the People's Bank of China, the National Reform and Development
Commission, the Ministry of Public Security, the Ministry of Finance, the Ministry of
Information Industry, the Ministry of Commerce, the Station Administration of
Taxation, China Banking Regulatory Commission and the State Administration of
Foreign Exchange on Promoting the Deve lopment of Bank Card Industry (Yinfa
[2005] 103), issued 24 April 2005;

• Guiding Opinions of the People's Bank of China on Regulating and Promoting the
Development of Bank Card Acceptance Market (Yinfa [2005] 153), issued on 16
June 2005;

• Notice of the People's Bank of China on the Relevant Issues concerning
Strengthening the Administration of Oversea Business Acceptance of Bank Cards
(Yinfa [2007] 273), issued on 6 August 2007;

• Notice of the China Banking Regulatory Commission on the Issues Concerning
Wholly Foreign-funded and Chinese-forei gn Equity Joint Banks in Conducting the
Bank Card Business (Yin Jian Fa [2007] 49), issued 6 June 2007;

• Notice of the People's Bank of China, the China Banking Regulatory Commission,
the Ministry of Public Security and the State Administration for Industry and
Commerce on Strengthening the Safety Ma nagement of Bank Cards and Preventing
and Combating Bank Card Crimes (Yinfa [2009] 142), issued 27 April 2009;

• The Opinions of the Standing Office of the People's Bank of China on the Circular on
Strengthening the Safety Management of Bankcards and Preventing and Fighting
Crimes in Bank Cards by the People's Bank of China, the China Banking Regulatory
Commission, the Ministry of Public Security and the State Administration for
Industry and Commerce (Yinfa [2009] 149), issued 1 August 2009;

• Notice of the State Administration of Foreign Exchange on the Management of
Foreign Currency Bank Cards [2010] 53, issued 11 October 2010; and

• 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;

• as well as any amendments to date or any related implementing measures to date.

 The United States considers that these measur es are inconsistent with China's obligations
under Articles XVI, including XVI:1 and XVI:2(a), and XVII of the GATS. These measures also

appear to nullify or impair the benefits accruing to the United States directly or indirectly under the
cited agreements.

 Accordingly, the United States respectfully requ ests that, pursuant to Article 6 of the DSU,
the Dispute Settlement Body establish a panel to ex amine the matter, with the standard terms of
reference as set out in Article 7.1 of the DSU.