US weighing action against China's financial services barrier

The Obama administration has been in talks with many US credit card companies about barriers they face in China and is considering the best course of action to gain entry to the Chinese market.
 
"My preferred course of action is always ... direct negotiations," US Trade Representative Ron Kirk told reporters when asked about the possibility of filing a World Trade Organisation case on the issue.

He added that if negotiation did not yield results then a decision could be taken at an appropriate time as to whether a suit needed to be filed. He added that the government had so far not made any decision and that he was still waiting for recommendations.

Currently, the Chinese government allows only China Union Pay to process domestic electronic payments in China.

This runs counter to its promise at the time of joining the WTO in 2001 that it would remove market access restriction and provide national treatment for foreign credit, charge and debit card companies.

According to analysts, USTR had a case ready anytime it decided it wanted to take recourse to the legal route.

They say the Chinese refusal to open up their payment-processing market was part of their broad national approach to deny access to foreign competition.
 
China failed to open up the market by a December 2006 deadline and since then the issue has figured repeatedly at high-level talks between the US and China.

"The United States will continue to pursue this issue vigorously in 2010, taking further appropriate actions seeking to ensure that US providers of electronic payment processing and related services enjoy the full benefits of the market-opening commitments that China made," USTR said in a December 2009 report.

Next week, USTR is expected to release a report on the most worst of the trade barriers faced by US companies.

The chairman of the US House of Representatives Ways and Means Committee, Sander Levin, along with other Democrats, has in a letter on Friday, urged president Barack Obama to use that report to plan a strategy for the resolution of long-standing trade barriers.

Obama is also under increasing pressure to adopt a tougher stance with China for manipulation and undervaluation of its currency to offer Chinese companies an unfair trade advantage.
 
Many US companies fear to come out openly on such issues to avoid attracting retaliatory action from Beijing.