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Geneva, 13 November 2008

Memorandum of Understanding with China on financial information services

The EU and China (together with the US and Canada) have today reached a landmark agreement on the treatment of financial information services in China. Financial information suppliers such as Thomson Reuters, Bloomberg and Dow Jones will in future benefit from a new regulatory framework that once implemented will help to ensure a level playing field for all operators in the Chinese market.

What has been achieved?

The Memorandum of Understanding has resolved the serious obstacles and concerns of EU operators, which related primarily to China's adoption of a new set of rules governing the supply of financial information services by foreign companies in September 2006. The issues that the EU had outlined in its WTO consultation request have been fully addressed.

The main elements of the MOU signed on 13 November in Geneva are as follows:

  1. Foreign financial information suppliers are no longer required to supply their services through an agent. They will now be allowed to supply directly to their clients who, in turn, will not be subject to any licensing requirements or similar approvals.
  2. Xinhua News Agency, a competing supplier of financial information services, will no longer be the regulator in charge of financial information services. The responsibility will be moved towards a new regulator that will be independent of any supplier of financial information services.
  3. Confidential information provided to the regulator by foreign suppliers will receive adequate protection, in accordance with China's laws and regulations.
  4. There are no obstacles to the establishment of a full commercial presence by foreign financial information suppliers.
  5. The scope of the MOU is determined by a precise definition of financial information services that includes information that could affect financial markets, and financial data, targeted at financial users. This definition of financial information services ensures that the financial information services supplied by Thomson Reuters and other foreign suppliers are fully covered by the MOU.

What was the concern with the previous Chinese system?

The previous system, put in place through measures adopted by Xinhua News Agency in September 2006, prohibited foreign suppliers of financial information services from offering and providing their services directly to their clients in China. It required that this be done through an agent designated by the Chinese government. The only designated agent was "China Economic Information Service" (CEIS), an entity controlled by Xinhua, the state news agency. In June 2007 Xinhua had launched a commercial service supplying financial information in direct competition with foreign operators.

By requiring that all foreign suppliers provide their services through a single agent, China denied them the possibility of conducting their business under fair conditions. It was also not feasible for a single agent to manage the supply of the highly complex services of competing foreign providers. Moreover, the agent itself was a competitor, and belonged to the very entity (Xinhua News Agency) in charge of regulating the sector.

This situation denied foreign operators access to the Chinese market for financial information services on fair terms. Foreign operators were also required to hand over commercially confidential information to Xinhua as part of their regulatory compliance obligations.

How does the settlement impact on EU companies?

Foreign companies had been at a disadvantage in the Chinese market for financial information services, in particular following the launch of the financial information service "Xinhua 08" by Xinhua News Agency in June 2007. Foreign companies were at risk of losing a substantial share of the market as a result.

The settlement requires that a new regulatory framework be put in place that will resolve and clarify the uncertain legal situation in which foreign companies had been operating. EU operators can now look forward to a legally certain environment in which they will be able to compete on an equal footing with local suppliers under the supervision of an independent regulator.

Thomson Reuters will be the main European company to benefit from the settlement.

How was the settlement reached?

On 10 September 2006, Xinhua News Agency issued the set of measures relating to the release of news and information by foreign news agencies in China. The issue was subsequently raised at various levels with the Chinese government. It was raised several times by then Trade Commissioner Peter Mandelson, including at Vice Premier level (Wu Yi), Ministerial level (previous Minister of Commerce Bo Xilai) and also with the Xinhua leadership itself (former Xinhua President Tian Congming). The issue was also discussed at the EU-China Summit in November 2007.

The EU (and the United States) requested WTO consultations with China on 3 March 2008. The relevant WTO Dispute Settlement consultations were held on 22-23 April 2008. After this, a joint EU-US-China process was set up to try and find an amicable solution to this dispute. This process was later joined by Canada, who had requested consultations with China on the same issue on 20 June 2008. The Memorandum of Understanding was signed by the respective Ambassadors to the WTO in Geneva on 13 November 2008.

What is the timeframe for implementing the settlement?

All measures foreseen in the MOU will be in place at the latest by 1 June 2009.

The MOU requires action by the Chinese State Council (appointing the new regulator and making this clear in the relevant Chinese legislation) and by the new regulator, who will be in charge of issuing the new rules to replace the measures that Xinhua News Agency issued in September 2006. The MOU provides for consultation and communication between the EU and China on implementation.

What rules and obligations in WTO law or agreements were relevant?

The Chinese measures of September 2006 appeared to breach China's GATS commitments on financial information services, both as regards the right to enter the market (market access in GATS terminology) and the right to be treated in equal terms with domestic suppliers (national treatment in GATS terminology). Also, the previous situation cut back on existing rights of foreign companies and was at odds with the necessary regulatory independence which China committed to ensure at the time of its WTO accession. Moreover, there were concerns regarding China's obligations in respect of the protection of undisclosed information under the TRIPS.

For the documentation related to the request for consultations at the WTO in this case, please see:

For more information on WTO dispute settlement, please see

For more information on EU trade policy see

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