china's quest to capture the international financial information services market

14
China’s Quest to Capture the International Financial Information Services Market Simon Lacey | Last Updated 15 April 2013

Upload: simon-lacey

Post on 26-Jan-2015

111 views

Category:

Business


2 download

DESCRIPTION

This presentation covers China's two attempts to capture the international financial information services markets, the first being in 1997, the other being in 2007. In both cases, China was ultimately dissuaded from pursuing this course any further and in both cases, the WTO played a significant role.

TRANSCRIPT

Page 1: China's Quest to Capture the International Financial Information Services Market

China’s Quest to Capture the International Financial Information Services Market

Simon Lacey | Last Updated 15 April 2013

Page 2: China's Quest to Capture the International Financial Information Services Market

Time Line of the 1996/97 Events

January 1996 – New decree from Xinhua. Three months later – McGreggor leads a group of 25 US executives on a lobbying

trip to Washington to renew China’s MFN trading status. April 15 1996 Xinhua announces implementing regulations for the January decree. April 1997 warns that Dow Jones and Reuters customers in Guangdong province

would have their satellite dishes cut on June 30 unless they registered with Xinhua. June 30 1997 British Government hands back Hong Kong to China. Within 2 weeks of the HK handover, Xinhua agrees on an exchange of letters

between the US and China. Five months after the US letter, Xinhua provides a response in which it Xinhua

essentially backs off.

www.uph-analytics.com

2

Page 3: China's Quest to Capture the International Financial Information Services Market

The Measure at Issue (1996/97)

January 1996 Decree from Xinhua- Xinhua will supervise foreign wire services to safeguard state

sovereignty- Government departments at all levels, enterprises and institutions … are

not allowed to purchase economic information directly from foreign wire services

- Xinhua will examine and approve … economic information to be released in China.

- Xinhua will determine subscription rates- Foreign news agencies have three months to register with Xinhua

www.uph-analytics.com

3

Page 4: China's Quest to Capture the International Financial Information Services Market

The Main Actors 1996/97

Dow Jones (US company) Reuters (UK Company) USTR, EC Commission World Bank representative and others Xinhua

- Communist Party Propaganda Department- State Council (author of the January 1996 Decree)

www.uph-analytics.com

4

Page 5: China's Quest to Capture the International Financial Information Services Market

Time Line of the 2006/08 Events

September 2006 Xinhua issued the Decree “Administrative Measures on News and Information Release by Foreign News Agencies within China”.

After complaints from the US and EU, China’s Premier publicly promised that the new rules would not change how foreign financial information service providers did business in China.

Shortly thereafter Xinhua told foreign financial information service providers that the new rules would only be applied to them after an implementing measure was issued.

But it then required foreign financial information service providers to conclude agreements with a Xinhua affiliate before renewing their licenses.

March 2008 US files a request for consultation Nov 2008 China settles the dispute with the US, the EU, and now Canada.

www.uph-analytics.com

5

Page 6: China's Quest to Capture the International Financial Information Services Market

The Measure at Issue (2006/08)

September 2006 Administrative Measures on News and Information Release by Foreign News Agencies within China

- Preclude foreign providers of financial information services from contracting directly with, or providing financial information services directly to domestic Chinese clients

- Requires foreign financial information services providers to operate through a Xinhua-designated agent (Xinhua affiliate China Economic Information Service – CEIS)

- Prohibits users of financial information services in China from directly subscribing to services supplied by foreign suppliers

- Requires foreign financial information service providers and their customers to provide the Foreign Information Administration Center (FIAC) detailed information concerning these services and the terms they were provided under.

www.uph-analytics.com

6

Page 7: China's Quest to Capture the International Financial Information Services Market

The Main Actors 2006/08

Thomson Reuters Dow Jones Bloomberg USTR, EC Commission, Canadian MFAT Xinhua

- China Economic Information Service – CEIS- Foreign Information Administration Center (FIAC)

www.uph-analytics.com

7

Page 8: China's Quest to Capture the International Financial Information Services Market

What were the WTO Obligations cited?

Art. XVI Market Access Art. XVII National Treatment Art. XVIII Additional Commitments The horizontal standstill commitment contained in

China’s Schedule; and Para 309 of the Working Party Report (as incorporated

by the Protocol of Accession).

www.uph-analytics.com

8

Page 9: China's Quest to Capture the International Financial Information Services Market

What were the WTO Obligations cited?

The sectoral commitments contained in China’s Schedule (Market Access, National Treatment Additional Commitments)

www.uph-analytics.com

9

Limitations on Market Access

Limitation on National Treatment

Under Financial ServicesK. Other financial services as listed below: k. Provision and transfer of financial information, and financial data processing and related software by supplier of other financial services

(1) None(2) None(3) None (Criteria for authorization to deal in China's financial services sector are solely prudential (i.e., contain no economic needs test or quantitative limits on licenses). Branches of foreign institutions are permitted.(4) Unbound except as indicated in Horizontal Commitments

(1) Unbound(2) None(3) None(4) Unbound except as indicated in Horizontal Commitments.

Page 10: China's Quest to Capture the International Financial Information Services Market

What were the WTO Obligations cited?

www.uph-analytics.com

10

Page 11: China's Quest to Capture the International Financial Information Services Market

What were the WTO Obligations cited?

www.uph-analytics.com

11

Page 12: China's Quest to Capture the International Financial Information Services Market

How was the issue resolved?

In 1996/97? In 2006/08

www.uph-analytics.com

12

Page 13: China's Quest to Capture the International Financial Information Services Market

What was different in 96/97 to 2006/8?

1997 – Hong Kong handover, China’s annual MFN renewal, Ongoing accession to the WTO

In 2006/8 China was a WTO Member What motivated China’s ultimate decision to settle the

case in your opinion?

www.uph-analytics.com

13

Page 14: China's Quest to Capture the International Financial Information Services Market