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US hails WTO win vs. China on electronic payments

Veronica Smith
A man displays multiple credit cards at a store in Miami, Florida in 2009. The United States has won a WTO ruling in a dispute with China, which Washington accused of discriminating against US credit card companies.

The United States welcomed Monday a WTO decision upholding its claim that China discriminates against US suppliers of electronic payment services, including credit and debit cards.

US Trade Representative (USTR) Ron Kirk said the victory in the World Trade Organization dispute would allow US companies to compete on a level playing field with China's own company, China Union Pay, which has dominated the EPS market.

"The WTO panel agrees that China's pervasive and discriminatory measures deny a level playing field to American service providers, which are world leaders in this sector," Kirk said.

"This decision will help US companies and increase American jobs as a more efficient credit and debit payment system in China enables consumers to buy more goods, including quality, made-in-America products," he said.

According to industry estimates, the United States will gain 6,000 jobs related to electronic payment services, the Obama administration said.

Most of the world's top providers of electronic payment services for credit and debit card transactions are headquartered in the United States.

White House spokesman Jay Carney welcomed the announcement as "another clear win for the United States in a trade dispute with China."

Traveling with President Barack Obama to Ohio, a key battleground state for Obama's re-election bid, the spokesman praised the president's trade policies with the Asian giant.

"Today's win highlights that tackling unfair Chinese trade practices has been a priority of this president" since he took office in January 2009, he said, according to a pool report.

The WTO trade victory came less than four months ahead of the November 6 election as the Democratic president fends off criticism from Republican rival Mitt Romney's pledge to get tough with China over its massive trade surplus.

Romney has said that would declare China a currency manipulator, paving the way for sanctions, on his first day in office.

Obama accuses Romney of outsourcing American jobs to China and elsewhere while he was in charge of investment company Bain Capital.

The administration launched the electronic payment services case against China at the WTO in September 2010, with a request for consultations.

In February 2011, the US requested the WTO set up a dispute settlement panel in the ongoing row with China, where more than $1 trillion EPS transactions are processed each year.

Tim Reif, USTR general counsel, said the WTO panel's final report Monday found in favor of the United States "with respect to each aspect" of the complaint of discrimination.

The United States "scored a decisive victory in this dispute," Reif said in a teleconference with reporters.

It sends a signal that the US "does not intend to sit still" and allow China to flaunt its WTO trade obligations.

The WTO found that China had violated trade rules in its regulations that also entrenched China Union Pay as the dominating force in the market.

Violations were found China's requirements on EPS related to banks issuing or doing business with merchants, as well as on the processing equipment and automated teller machines (ATMs).

Both sides have 60 days to appeal the WTO decision.