China discriminates against foreign bank card suppliers by maintaining state-owned China UnionPay as the monopoly supplier for clearing certain transactions, a World Trade Organization dispute panel said in a ruling published on Monday.
The panel said China was breaking WTO rules by requiring all payment cards issued in China to work with the China UnionPay (CUP) network and to carry its logo, as well as by forcing all payment terminals in China to work on the CUP network.
White House spokesman Jay Carney called the ruling a "win" that showed "our determination to go after China's efforts to distort global trade rules."
"That is precisely why 3.5 years into the president's first term we have doubled the rate of WTO cases again China, versus the prior administration," he told reporters aboard Air Force One.
Tim Reif, general counsel for the U.S. Trade Representative's office, said the United States had "prevailed" and that the ruling, which is open to appeal, would support about 6,000 U.S. jobs. He conceded Washington had lost on some minor points.
China's Ministry of Commerce said the dispute panel had rejected several U.S. claims, including allegations about the monopoly status of China UnionPay and about China's having committed to cross-border supply of electronic payment services.
In the complaint, launched in September 2010, the United States said China was keeping foreign firms out of the market for electronic payment services denominated in China's currency, the yuan.
With firms such as Visa Inc., MasterCard Inc. and American Express restricted to foreign currency transactions, China UnionPay (CUP) enjoyed a monopoly position in local currency electronic payment services, the U.S. complaint said.
MasterCard said Monday's ruling would make the opportunities for the company "all the more interesting" and it looked forward to continuing to grow its business in China.
"MasterCard has long been of the view that open payment systems promote growth by reducing the need for cash payments, fostering innovation and reducing system risk," it said in a statement.
CUP already operates in more than 110 countries and claims to be the third most used card in terms of transaction amount.
Based on share sale documents filed by a minority investor to a Chinese stock exchange in July 2011, it had more than 1.4 billion debit cards in circulation and was valued at around $11.3 billion at the time.
China's Big Four lenders, namely ICBC, China Construction Bank, Agricultural Bank of China and Bank of China are major shareholders of UnionPay, the listings showed.
The adjudicators on the WTO dispute panel were Thai diplomat Virachai Plasai, who chaired the panel, the head of Canada's Environmental Assessment Agency, Elaine Feldman, and Argentina's former central bank chief Martin Redrado.
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