China's Union Pay (银联) finally got busted. The WTO ruled yesterday* that Union Pay has an illegitimate monopoly on electronic payments that must come to an end. The US Trade Representative trumpted the win on its website.
*(well, actually they ruled a few weeks ago but only released their findings yesterday)
This is the second financial services case brought against China -- the first involved financial information -- Xinhua wanted to be the sole distributor of financial information -- and China lost that case, too.
China has one year from today to implement the ruling, and I expect them to do so within that timeframe. Chinese were happy this case was brought against Union Pay, because their monopoly has made the credit card business more expensive for Chinese banks and others. So Mastercard, Visa, and others who pushed the US to bring the case are not the only beneficiaries. The only thing that could lead to a different outcome is if US-China relations go into such a nosedive (over say the South China Sea or another trade dispute) that this case gets tied up in other conflicts. Possible but that hasn't happened to other WTO disputes. China has a clear record of modifying domestic laws and regs to come into compliance when it loses in Geneva. The only exception was the case concerning movie distribution rights, since it related to the regulatory authority of the Party's propaganda bureaucracy. Despite that, a deal in that case was reached to the satisfaction of Hollywood.
From a consumer's perspective, I'm now hopeful that greater competition in China will lead to an elimination of the often imposed 3% fee on using foreign credit cards for local transactions.
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