Yesterday, a World Trade Organization panel ruled that certain actions taken by China related to the processing of electronic payments (e.g., credit cards) violate WTO rules on trade in services. As the Office of the U.S. Trade Representative put it in the press release announcing victory:
Electronic payment services (EPS) are vital to facilitating commerce in any modern economy and are familiar to any consumer. EPS are what make possible payments using credit, debit, prepaid, and other payment cards. EPS enable, facilitate and manage the flow of information and the transfer of funds from cardholders’ banks to merchants’ banks. Most of the world’s top providers of electronic payment services for credit and debit card transactions are headquartered in the United States. By industry estimates, the U.S. stands to gain 6,000 jobs related to EPS.
Each year well over one $1 trillion worth of electronic payment card transactions are processed in China. China’s regulator of EPS, the People’s Bank of China, issued a series of measures – dating back to 2001 – that discriminate against foreign suppliers of EPS at every stage of a payment card transaction. China’s measures impose requirements on institutions in China that issue payment cards, on all point-of-sale terminal and payment card processing equipment in China, and on the institutions in China that have the relationship with the EPS supplier and handle payment card transactions for Chinese merchants.
The 6,000 jobs figure mentioned by the USTR may be a stretch, but what this case makes clear is that, despite recent political rhetoric to the contrary, jobs do exist outside of the manufacturing sector. Not only do they exist, but they are good jobs, ones that China was seeking through its measures, and jobs the USTR was fighting for in the trade litigation arena. All of this suggests that obsessing over (allegedly) lost manufacturing jobs is based on a misunderstanding of how modern economies operate.