2010-24456. WTO Dispute Settlement Proceeding Regarding China-Certain Measures Affecting Electronic Payment Services

AGENCY:

Office of the United States Trade Representative.

ACTION:

Notice; request for comments.

SUMMARY:

The Office of the United States Trade Representative (“USTR”) is providing notice that on September 15, 2010, the United States requested consultations with the People's Republic of China (“China”) under the Marrakesh Agreement Establishing the World Trade Organization (“WTO Agreement”) concerning issues relating to certain restrictions and requirements maintained by China pertaining to electronic payment services for payment card transactions and the suppliers of those services. That request may be found at www.wto.org contained in a document designated as WT/DS413/1. USTR invites written comments from the public concerning the issues raised in this dispute.

DATES:

Although USTR will accept any comments received during the course of the dispute settlement proceedings, comments should be submitted on or before October 29, 2010 to be assured of timely consideration by USTR.

ADDRESSES:

Public comments should be submitted electronically to http://www.regulations.gov,, docket number USTR-2010-0026. If you are unable to provide submissions to http://www.regulations.gov,, please contact Sandy McKinzy at [phone] to arrange for an alternative method of transmission. If (as explained below) the comment contains confidential information, then the comment should be submitted by fax only to Sandy McKinzy at [phone].

FOR FURTHER INFORMATION CONTACT:

Frank J. Schweitzer, Associate General Counsel, Office of the United States Trade Representative, 600 17th Street, NW., Washington, DC 20508, [phone].

SUPPLEMENTARY INFORMATION:

USTR is providing notice that consultations have been requested pursuant to the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (“DSU”). If such consultations should fail to resolve the matter and a dispute settlement panel is established pursuant to the DSU, such panel, which would hold its meetings in Geneva, Switzerland, would be expected to issue a report on its findings and recommendations within nine months after it is established.

Major Issues Raised by the United States

On September 15, 2010, the United States requested consultations with China concerning issues relating to certain restrictions and requirements maintained by China pertaining to electronic payment services for payment card transactions and the suppliers of those services. Electronic payment services involve the services through which transactions involving credit card, debit card, charge card, check card, automated teller machine (“ATM”) card, prepaid card, or other similar card or money transmission product, are processed and through which transfers of funds between institutions participating in the transactions are managed and facilitated.

In the financial services sector, as set out in China's Schedule of Specific Commitments on Services annexed to the Protocol on the Accession of the People's Republic of China, China undertook both market access and national treatment commitments with respect to electronic payment services.

Despite those commitments, China appears to impose market access restrictions and requirements on services suppliers of other Members seeking to supply electronic payment services in China. It appears that 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. Service suppliers of other Members can only supply these services for payment card transactions paid in foreign currency. In addition to permitting only CUP to supply electronic payment services for payment card transactions in China denominated and paid in RMB, China also requires all payment card processing devices at merchant locations to be compatible with CUP's system, which gives CUP guaranteed access to all merchants in China who accept payment cards. Electronic payment services suppliers of other Members or their participating institutions, by contrast, must negotiate for access to merchants. In addition, China requires that all payment cards, including “dual currency” cards, issued in China for transactions denominated and paid in RMB bear the CUP logo. These and other requirements and restrictions maintained by China appear to be inconsistent with China's market access commitments and to accord less favorable treatment to electronic payment services suppliers of other Members than to Chinese suppliers of these services. The United States considers that China therefore appears to be acting inconsistently with its obligations under Articles XVI and XVII of the General Agreement on Trade in Services.

In its request for consultation, the United States identified the following instruments through which China maintains these measures:

• 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 Card 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;
• Opinions on Bank Card Interoperability Related 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 concerning Relevant Issues on Accepting and Using Renminbi Bank Cards in Border Areas (Yinfa [2004] 219), issued on 21 September 2004;
• Circular regarding Issues concerning Individual RMB Business Handled by Banks in Mainland China and Banks in Hong Kong and 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 Development 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-foreign 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 Management of Bank Cards and Preventing and Combating Bank Card Crimes (Yinfa [2009] 142), issued 27 April 2009; and
• 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;
• As well as any amendments, related measures, or implementing measures.

Public Comment: Requirements for Submissions

Interested persons are invited to submit written comments concerning the issues raised in this dispute. Persons may submit public comments electronically to www.regulations.gov docket number USTR-2010-0026. If you are unable to provide submissions by http://www.regulations.gov,, please contact Sandy McKinzy at [phone] to arrange for an alternative method of transmission.

To submit comments via www.regulations.gov,, enter docket number USTR-2010-0026 on the home page and click “search”. The site will provide a search-results page listing all documents associated with this docket. Find a reference to this notice by selecting “Notice” under “Document Type” on the left side of the search-results page, and click on the link entitled “Submit a Comment.” (For further information on using the www.regulations.gov Web site, please consult the resources provided on the website by clicking on “How to Use This Site” on the left side of the home page.)

The http://www.regulations.gov site provides the option of providing comments by filling in a “Type Comment and Upload File” field, or by attaching a document. It is expected that most comments will be provided in an attached document. If a document is attached, it is sufficient to type “See attached” in the “Type Comment and Upload File” field.

A person requesting that information contained in a comment submitted by that person be treated as confidential business information must certify that such information is business confidential and would not customarily be released to the public by the submitter. Confidential business information must be clearly designated as such and the submission must be marked “BUSINESS CONFIDENTIAL” at the top and bottom of the cover page and each succeeding page. Any comment containing business confidential information must be submitted by fax to Sandy McKinzy at [phone]. A non-confidential summary of the confidential information must be submitted to http://www.regulations.gov. The non-confidential summary will be placed in the docket and open to public inspection.

Information or advice contained in a comment submitted, other than business confidential information, may be determined by USTR to be confidential in accordance with section 135(g)(2) of the Trade Act of 1974 (19 U.S.C. 2155(g)(2)). If the submitter believes that information or advice may qualify as such, the submitter—

(1) Must clearly so designate the information or advice;

(2) Must clearly mark the material as “SUBMITTED IN CONFIDENCE” at the top and bottom of the cover page and each succeeding page; and

(3) Must provide a non-confidential summary of the information or advice.

Any comment containing confidential information must be submitted by fax to Sandy McKinzy at [phone]. A non-confidential summary of the confidential information must be submitted to http://www.regulations.gov. The non-confidential summary will be placed in the docket and open to public inspection.

USTR will maintain a docket on this dispute settlement proceeding accessible to the public. The public file will include non-confidential comments received by USTR from the public with respect to the dispute. If a dispute settlement panel is convened or in the event of an appeal from such a panel, the U.S. submissions, any non-confidential submissions, or non-confidential summaries of submissions, received from other participants in the dispute, will be made available to the public on USTR's Web site at www.ustr.gov,, and the report of the panel, and, if applicable, the report of the Appellate Body, will be available on the web site of the World Trade Organization, http://www.wto.org.

Comments will be placed in the docket and open to public inspection pursuant to 15 CFR 2006.13, except confidential business information exempt from public inspection in accordance with 19 U.S.C. 2155(g)(2). Comments open to public inspection may be viewed on the http://www.regulations.gov Web site.

Steven F. Fabry,

Assistant United States Trade Representative for Monitoring and Enforcement.