WTO Dispute May Accelerate China’s Liberalization

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Recently, a WTO dispute panel, in response to the recent US complaint, said China is breaking the WTO rules by maintaining CUP as a monopoly supplier for the clearing of certain types of RMB-denominated payment card transactions. The specific areas where the panel determined that China had discriminated against foreign bank card suppliers are that 1) China requires all payment cards issued in China to work with the CUP network and to carry its logo, and 2) China forces all payment terminals to accept CUP network.

 

However, the panel rejected the United States' claim on the basis of insufficient evidence that China maintains CUP as an across-the-board monopoly supplier for the processing of all domestic RMB payment card transactions.

Although the dispute was partially a result of the “China-bashing” of the White House in an election year, we believe that the WTO decision is likely to further propel the liberalization and opening-up of the China market in general. In fact, card payment might not be the only area that is inconsistent with WTO rules and accordingly prone to attacks. Hence, accelerating China’s progress on the path to a market-driven card industry seems the only sensible solution.

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