CHINA - MEASURES AFFECTING FINANCIAL INFORMATION SERVICES AND FOREIGN FINANCIAL INFORMATION SUPPLIERS
Document: Request for Consultations by Canada
Date: 23 June 2008
Document codes: WT/DS378/1; S/L/337
Complainant: Canada
Respondent: China
Dispute stage: Consultation
Agreements cited: Art. XVI, XVII, XVIII  Services (GATS)Part I, para. 1.2  Protocol of Accession

CHINA - MEASURES AFFECTING FINANCIAL INFORMATION SERVICES AND
FOREIGN FINANCIAL INFORMATION SUPPLIERS

Request for Consultations by Canada

 The following communication, dated 20 June 2008, from the delegation of Canada to the
delegation of China and to the Chairman of the Dis pute Settlement Body, is ci rculated in accordance
with Article 4.4 of the DSU.

My authorities have asked me to request consu ltations 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 and Article XXII of the General Agreement on
Trade in Services ("GATS") with respect to certain measure s pertaining to financial information
services and service suppliers.

In the financial services sector, as set out in its GATS Schedule of Specific Commitments on
Services (the "Schedule"),
1 China made market access and national treatment commitments with
regard to the provision and transfer of financia l information. China also undertook a horizontal
"standstill" commitment in its Schedule not to make the conditions of ownership, operation, and scope
of activities - as set out in contractual agreements or licences establishing or authorizing the operation
or supply of services by an existing foreign service su pplier - more restrictive than they were as of the
date of China's accession to the World Trade Or ganization ("WTO"). Despite those commitments,
various measures of China appear to impose market access restrictions and discriminatory
requirements on foreign service suppliers seeking to supply financial information to customers in
China.

China requires foreign financial information suppliers to supply their services through an
entity designated by Xinhua News Agency ("Xinhua"). Xinhua has designated only one agent, China
Economic Information Service ("CEIS"), one of Xi nhua's commercial enterprises. China prohibits
foreign financial information suppliers from direct ly soliciting subscriptions for their services,
requiring that solicitation of subscriptions be do ne through the Xinhua-designated entity. China
likewise prohibits users of financial informati on services in China from directly subscribing to
services supplied by foreign suppliers. Furthermore, in order to renew their licences, China requires
foreign financial information suppliers to provide the Foreign Information Administration Center
("FIAC"), a regulatory body within the Xinhua framework, detailed and confidential information
concerning their financial information services and their customers along with a copy of an agreement
with the designated agent. China also requires customers to provide FIAC detailed information
regarding their financial information services c ontracts with foreign suppliers. These and other

1 Annex 9 of the Protocol on the Accession of the People’s Republic of China , WT/L/432,
23 November 2001 (the "Accession Protocol").

requirements and restrictions appear to accord less favorable treatment to foreign financial
information services and service suppliers than th at accorded Chinese financ ial information services
and service suppliers which are not affected by these requirements and restrictions.

China also appears to prevent foreign fi nancial information service suppliers from
establishing any commercial presence in China other than limited representative offices.

In its Accession Protocol (which incorporates the commitment in paragraph 309 of the Report
of the Working Party on the Accession of China
2), for the services included in its Schedule, China
committed to maintain regulatory authorities that are separate from, and not accountable to, service
suppliers they regulate. Xinhua, through its orga nizational structure, including related entities and
affiliates, appears to be both the regulator of foreign financial information suppliers and their
competitor in the domestic market. For exampl e, in addition to having responsibility for the
examination and approval of forei gn financial information suppliers , Xinhua also supplies financial
information services through its commercial entity , CEIS. On 20 June 2007, Xinhua also launched
"Xinhua 08", a financial information supplier th at supplies services on a commercial basis and in
competition with foreign service suppliers. Individu als within Xinhua who have authority over FIAC
also appear to be participants in Xinhua's commercia l activities. China thus a ppears to have failed to
provide a regulatory authority that is separate from, and not accountable to, a service supplier that that
authority regulates.

China's measures also appear to impose re quirements on foreign financial information
suppliers that are more restrictive than those impo sed on them at the time of China's accession to the
WTO. Pursuant to licences granted at that time, foreign financial information suppliers were allowed
to contract with customers in China, to distribut e their services directly to these customers, and to
have their license applications approved withou t providing the regulator details of financial
transactions with their customers.

Canada understands that the measures thr ough which China has maintained these
requirements and restrictions include, but are not limited to:

• Notice Authorizing Xinhua News Agency to Implement Centralized Administration
over the Release of Economic Information in the People's Republic of China by
Foreign News Agencies and their Subsidiary Information Institutions (State Council,
31 December 1995 (issued as Circular No.1 of 1996));
• Decision on Establishing Administrative Permission for the Administrative
Examination and Approval of Items that Must Be Retained (State Council Order
No. 412, 29 June 2004);

• Measures for Administering the Release of News and Information in China by
Foreign News Agencies (Xinhua News Agency, 10 September 2006);

• Notices on the Annual Inspection of Foreign News Dissemination Entities (Notice
provided to foreign financial information suppliers regarding information that must be
provided to FIAC as part of its annual licensing procedures);

• Catalogue of Industries for Guiding Foreign Investment (Order No. 57 of the National
Development and Reform Commission and the Ministry of Commerce,
31 October 2007);

2 WT/MIN(01)/3, 10 November 2001, para. 309 (the "Working Party Report").

• Decisions of the State Council Regarding Entrance of Non-Public Capital into
Cultural Industries (Promulgated by the State Council, 13 April 2005);

• Several Opinions on Introducing Foreign Investment into the Cultural Sector
(Ministry of Culture No. 19, 6 July 2005);

• Opinion on Foreign Investment in Cultural Industries (Promulgated by the Ministry of
Culture, 5 August 2005);

• Detailed Rules on the Approval and Contro l of Resident Representative Offices of
Foreign Enterprises (MOFTEC Order No. 3, 13 February 1995);

• Procedures of the State Administration for Industry and Commerce for the
Registration and Administration of Resident Representative Offices of Foreign
Enterprises (Promulgated by the State Council, 5 March 1983);

• Rules for Internet Information Se rvices (State Council Decree No. 292,
September 2000); and

• Administrative Rules for Internet News Information Services (State Council
Information Office and Ministry of Information Industry, 25 September 2005);

as well as any amendments, related measures, or implementing measures.

These measures appear to be inconsistent with the following provisions:

• Article XVI of the GATS;
• Article XVII of the GATS;
• Article XVIII of the GATS;
• The horizontal standstill commitment contained in China's Schedule; and
• China's Accession Protocol (including Part I.1.2 which incorporates the commitments
reproduced in paragraph 309 of the Working Pa rty Report), which is an integral part
of the Marrakesh Agreement Establishing the World Trade Organization.
China's measures also appear to nullify or impair the benefits accruing to Canada directly or
indirectly under the cited agreements.

 Canada reserves the right to address additiona l issues regarding the above matters in the
course of the consultations.
We look forward to receiving your reply to the present request and to fixing a mutually
convenient date for consultations.