WASHINGTON, D.C. – United States Trade Representative
Susan C. Schwab announced today that the United States has requested dispute
settlement consultations with China at the World Trade Organization (WTO)
regarding China’s treatment of U.S. suppliers of financial information
services.
China’s
regulatory regime requires foreign financial information suppliers to operate
through a government-designated distributor in China and
prohibits them from establishing local operations to provide their services.
In addition, the agency designated by China to
regulate this financial service appears to have a conflict of interest, since
the agency seems to be closely aligned with a Chinese competitor in the supply
of these services. The United
States believes that China’s treatment of foreign financial
information suppliers is inconsistent with China’s WTO
obligations.
“China’s restrictive treatment of outside
suppliers of financial information services places U.S.
and other foreign suppliers at a serious competitive disadvantage,” Schwab
said. “We have raised this matter with China
repeatedly, yet the problem has not been resolved. We hope the filing of
our request for formal WTO consultations will lead to a swift resolution of this
matter.”
“It is not in China’s interest to restrict access
to the high-quality, comprehensive financial information provided by foreign
service suppliers,” Schwab added. “Financial market professionals in
domestic and foreign banks, investment firms and other businesses in
China need real-time access to this
information from diverse sources – foreign and domestic – in order to make
effective business decisions.”
New Chinese regulations, from 2006, require foreign
financial information suppliers to supply their services through an entity
designated by China’s regulatory authority.
The regulations prohibit foreign financial information suppliers from directly
soliciting customers for their services, requiring efforts to develop new
customers to be conducted exclusively through the government-designated entity.
China likewise
prohibits users of financial information services in China from
directly purchasing services supplied by foreign suppliers. Furthermore,
China prevents foreign
financial information suppliers from establishing local operations in
China to provide their
services.
These new restrictions and requirements imposed by
China on foreign financial
information suppliers are now even more restrictive than those in place at the
time of China’s accession to the
WTO.
The European Union has also requested formal WTO
consultations with China on this matter today.
Background:
Banks, investment firms, and other businesses involved
with financial markets need to keep constantly abreast of national and global
developments affecting those markets. Suppliers of financial information
services provide these clients the specialized news, data, analysis, and
commentary that they require to make fast and effective business and investment
decisions.
In 1996, China attempted to impose
restrictions and requirements on foreign financial information suppliers similar
to those currently being imposed. That matter was resolved in 1997 when
China agreed to allow foreign
financial information suppliers to contract directly with customers in
China and to distribute their
services directly to these customers. Ten years later, China’s
regulator has again attempted to impose similar restrictions on foreign
suppliers. This is despite China’s strong market opening
commitments in the financial information sector in its 2001 WTO
accession.
The United
States maintains that China’s restrictions and requirements limit the
ability of foreign suppliers of financial information services to conduct
business in China and place them at a competitive
disadvantage in the marketplace. The apparent conflict of interest of
China’s regulatory authority
compounds these issues. As such, China appears to be acting inconsistently with
several WTO provisions, including Articles XVI and XVII of the General Agreement
on Trade in Services as well as commitments made by China in its WTO
accession agreement.
Consultations are the first step in a WTO dispute.
Under WTO rules, if the parties do not resolve an issue through consultations,
the complaining party may refer the matter to a WTO dispute settlement
panel.
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