As many may already be aware, the U.S. heard arguments from lawyers representing the major credit card companies, including Visa, MasterCard and Discover, about lodging a formal complaint against China for failing to meet compliance issues when it became a part of the World Trade Organization in 2001.  As A. Harrison Barnes, lawyer and founder of LawCrossing.com explains, “Part of those compliance issues was China’s agreement to remove market access restrictions and allow open channels for foreign credit and debit card processing companies and that has not happened”.

The Office of the U.S. Trade Representative is currently considering the best approach for ensuring China meets its obligations as spelled out in WTO documents.  The companies, which include First Data Corporation, Visa, MasterCard and American Express, have attempted to break the barriers ever since China’s acceptance, but to no avail.  A representative from the U.S. Trade Representative’s office said the best approach has always been direct negotiations; however, those negotiations have been ongoing for years.  Ron Kirk, who is with USTR, said that his office is awaiting recommendations over whether a suit should be filed.  A. Harrison Barnes says it’s likely a stronger stance will be required, although it remains unclear as to what a “stronger stance” would include and with the exception of brief statements released by USTR, that could mean any number of things.

China’s payment processing market is currently estimated to hover near $1 trillion and to date, the only processing company allowed access is China Union Pay.  There was a December 2006 deadline for China to open the market for global payment processing companies and several legal requests and discussions have proved fruitless.  An anonymous spokesperson is quoted as saying, “China’s refusal to open its payment processing market is ‘part and parcel of their broad approach t blocking foreign competition and developing national champions” and then goes on to say “appropriate actions” will be taken this year by attorneys for the U.S. to ensure American providers have access to the open market commitments made by China.

This is ahead of the annual report released by USTR that outlines the most difficult trade barriers the U.S. faces.  That report is due in early April.  For now, a letter to President Obama requests this report be used to determine a strategy that will finally resolve this near decade-long standstill.  According to the LawCrossing.com founder, some are insisting the Obama Administration get tough with China for its “manipulation” of its currency in order to allow an unfair trade advantage.

In the meantime, the Ways and Means Committee, along with an army of lawyers, are closely monitoring the situation in hopes of avoiding any kind of showdown.  Reuters is reporting many American companies are reluctant to push the country out of fear of repercussions from Beijing.