The
WTO panel has ruled that since China
UnionPay is the only company that processes yuan denominated credit/debit
card payments therefore the country maintains
a monopoly in this regard which is against WTO rules. However, the ruling did not go as far as to suggest that
China UnionPay was an "across-the-board monopoly supplier".
Other
international service providers such as Visa, Mastercard and American Express are
not allowed to process Yuan payments in China. US had made an official
complaint to WTO in 2010. Several US
and foreign firms find it difficult to operate in China as they either have to
partner with a Chinese bank or directly with China UnionPay to process yuan
transactions.
Although
most in North America or Europe wouldn’t have heard of China UnionPay but it is
one of the leading players in card
industry. It operated in more than a 100 countries and claims to be the third biggest card company in terms of
amounts of transactions. Up until July last year, the company had issued 1.4
billion debit cards and was worth approximately $11 billion.
Commenting
on the decision, Visa said that it is “hopeful that this ruling will pave the
way for international payment companies to participate in the domestic payments
marketplace in China".
Jay
Carney, the White House Press Secretary was surprisingly delighted with the
decision calling it a “win” against
“unfair Chinese trade practices”. It is expected that the results of the WTO
ruling will be used in the President’s election campaign.
China
now, has a 60 day period in which it can file an appeal against the ruling. Tim
Reif, general counsel for the U.S. Trade Representative's office, has said that
the decision, when implemented, could potentially create 6,000 jobs. In reality, there are no guarantees as to when and how
the decision will be implemented and if, it will bring any substantial change.
To implement the decision, China will have to go through a lengthy legislation
process which could take years.
Your
Comments and Feedback are always appreciated
Relevant
Links
WTO:
China Discriminates Against U.S. Credit Cards [Wall Street Journal]
WTO:
China Discriminating Against US Credit Companies [Voice of America]
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