Where Should Trump Start on China Trade Policy? Visa and Mastercard

by Sarah Grotta 0

Eric Grover in American Banker shares his view regarding the recent mandate from the Chinese government that banks there must end their co-branded card partnerships with Mastercard and Visa. A clear indication, lest we forget, that commerce is not a level playing field there:

The People’ Bank of China’s recent directive to Chinese banks not to renew China UnionPay cards cobranded with foreign networks, such as Mastercard and Visa, forcefully reminds us that China isn’t living up to the letter or spirit of its 2001 World Trade Organization commitment to completely open up its domestic payment card market by 2006.

The article suggest this is an opportunity waiting for the new president elect:

Trump should act early in 2017 to direct tariffs towards China’s foreign payment card policy. U.S. card leaders – Visa, Mastercard, American Express and Discover – are household names. Doing so would therefore be a high-profile way to make the point with American voters and the Chinese government that he was serious about fair trade policy and about responding to countries that do not honor their obligations.

The payment network industry is also the perfect sector in which to retaliate. Unlike other industries where disputes with China are over industries’ cost bases or the appropriate exchange rate, which are almost always subject to debate, China’s exclusion of U.S. payment networks for the last decade and a half is black and white.

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

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