Amidst tectonic shifts in the global electronic commerce and supply chains, China has issued a proposal on how electronic payments must be conducted in the ongoing Joint Statement Initiative on digital trade, WTD has learned.
China’s restricted proposal INF/ECOM/80 circulated yesterday is apparently a revised negotiating textual proposal on e-payments and logistics services. It seeks to promote the adoption of international standards, interoperability, and transparency.
However, it is somewhat puzzling that the Chinese proposal comes close on the heels of heightened tensions and barriers imposed on the supply of vital chips/semiconductors by the United States and its allies on the one side, and China on the other over the supply of critical raw materials, said people familiar with the negotiations.
Despite the ongoing JSI negotiations, which are yet to resolve core issues like sharing the source code, cross-border data flows and even localization of services among others, attempts are underway to prepare a JSI package of deliverables at the upcoming 13th ministerial conference to be held in Abu Dhabi in February 2024, said people preferring not to be quoted.
Further, some major industrialized countries seem to be toying with the idea that cross-border services under Mode 1 of GATS is part of the 1998 e-commerce moratorium, which is mandated to be terminated in the first quarter of 2024, said people who asked not to be quoted.
Logistics, according to the Chinese proposal, seen by the WTD, aims to focus on how to improve/enable cross-border e-commerce, perhaps under Mode 1 of the General Agreement on Trade in Services.
The underlying rationale in the Chinese proposal, according to a source, is “to enhance regulatory cooperation in the e-payments and logistics services sectors, which are indispensable parts of the global e-commerce ecosystem.”
In search of common ground, the proposal does not require JSI participants to make further market access liberalization commitments in these two important sectors, the source said.
The three-page proposal, which begins with the definition of what would constitute electronic payment, says, in paragraph 2, “Noting the rapid growth of electronic payments, in particular, those supplied by new electronic payment services suppliers, [Parties/Members] agree to support the development of efficient, safe and secure cross-border electronic payments by fostering the adoption and use of internationally accepted standards, promoting interoperability and the interlinking of payment infrastructures, and encouraging useful innovation and competition in the payments ecosystem.”
Then it goes on to urge the JSI parties to recognize the following principles:
a) [Parties/Members] shall endeavor to make their respective regulations on electronic payments, including those pertaining to regulatory approval, licensing requirements, procedures and technical standards, publicly available in a timely manner.
b) [Parties/Members] shall endeavor to take into account, for relevant electronic payment systems, internationally accepted payment standards to enable greater interoperability between payment systems.
c) [Parties/Members] shall endeavor to promote the use of Application Programming Interface (API) and to encourage financial institutions and electronic payment services suppliers to make available APIs of their financial products, services and transactions to third party players where possible to facilitate greater interoperability and innovation in the electronic-payments ecosystem.
d) [Parties/Members] recognize the importance of upholding safety, efficiency, trust and security in electronic payment systems through regulation. The implementation of regulation should, where appropriate, be proportionate to and commensurate with the risks posed by the provision of electronic payment systems.
e) [Parties/Members] agree that policies should promote innovation and competition in a level playing field and recognize the importance of enabling the introduction of new financial and electronic payment products and services by incumbents and new entrants in a timely manner.
China said JSI members must “accord national treatment, each [Party/Member] shall grant electronic payment services suppliers of another [Party/Member] established within its territory access to payment and clearing systems operated by public entities, and to official funding and refinancing facilities available in the normal course of ordinary business.”
The Chinese proposal emphasizes that JSI members “shall take such reasonable measures as may be available to it to ensure that the rules of general application adopted or maintained by self-regulatory organizations of the [Party/Member] are promptly published or otherwise made available.”
The Chinese proposal “shall not apply to measures adopted or maintained by a [Party/Member] relating to a) activities conducted by a central bank or monetary authority or by any other public entity in pursuit of monetary or exchange rate policies; b) activities forming part of a statutory system of social security or public retirement plans; and, c) other activities conducted by a public entity for the account or with the guarantee or using the financial resources of the Government.”
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