Nov. 13 (Bloomberg) -- China agreed to ease limits on foreign financial-information providers, shifting control of licensing to an independent regulator from the state-owned news service, after a trade complaint by the U.S. and Europe.

Under the deal with the European Union, the U.S. and Canada, information suppliers will provide a level playing field for all operators in China, the EU and the U.S. said in separate statements today. The changes, agreed to in talks after the three governments filed World Trade Organization complaints, will be put in place by June 1.

In the joint complaint lodged in March, the U.S. and the EU said China violated global trade rules by giving Xinhua News Agency the right to issue annual licenses for overseas media organizations, barring them from directly soliciting subscribers in China. Canada made a similar complaint three months later.

``Today's agreement ensures that investors and market operators will be able to receive comprehensive and objective financial information,'' European Trade Commissioner Catherine Ashton said in the statement from Brussels.

Xinhua was given sole power in September 2006 to regulate news services that distribute financial information in China while competing with them. Both the 27-nation EU and the U.S. condemned the move, which marked a further tightening of media controls in the world's biggest Communist-ruled nation.

`Adequate Protection'

China agreed today in Geneva that responsibility will pass from Xinhua to a new, independent regulator and the requirement for foreign suppliers to operate through an agent will be removed. China also will ensure ``adequate protection'' for business-confidential information and pledged that foreign financial information suppliers will face no obstacles regarding setting up commercial establishment in China, the EU said.

``I am very pleased we have been able to sign an agreement with China to allow financial information suppliers to operate in China free of unfair restrictions that threatened to place them at a serious competitive disadvantage,'' U.S. Trade Representative Susan Schwab said in a statement from Washington.

China's pledge to establish an independent regulator is ``especially important,'' she added. ``The independence of the regulator is critical to ensuring a legal environment that is free of damaging potential conflicts of interest.''

`Vital Interests'

The accord will encourage growth of China's financial- services industry, economy and capital markets because it ``serves the vital interests of Chinese consumers of financial information,'' said Judith Czelusniak, a spokeswoman for Bloomberg LP.

``More broadly, it recognizes the benefits of open markets and competition among providers and strengthens the global trading system,'' she said. New York-based Bloomberg LP is the parent of Bloomberg News.

Henry Manisty, head of government and regulatory affairs for Thomson Reuters Corp., praised the ``constructive approach shown by all the governments involved'' and said the financial news and data provider ``looks forward to continuing to strengthen our longstanding and friendly cooperation with Xinhua News Agency in the development of news agency services for the growing media market in China.''

In a statement, Dow Jones & Co. said the agreement it will ``benefit our customers in China by allowing them to receive timely information so they can make sound financial decisions.''

Trade Ties

Trade relations between China and the U.S. and the EU have become increasingly strained as allegations have been made that Chinese exporters are undercutting higher-cost European and U.S. manufacturers and complaints that the Chinese currency is undervalued. Policy makers from the EU and U.S. are pressing for gains in the yuan against the euro and the dollar to narrow trade deficits.

The March complaint by the U.S. and the EU followed by less than a month a preliminary WTO judgment that China's tariffs on imported auto parts break global trade rules. China appealed the ruling -- its first loss at the WTO since it became a member in December 2001 -- in September.

China's economy, the world's fourth biggest, expanded 11.4 percent in 2007, the fastest pace in 13 years. The Asian nation passed Canada last year to become the largest source of products shipped to the U.S.

China is also the main supplier of goods to the 15-nation euro region, overtaking the U.K. and adding urgency to Europe's campaign for a stronger Chinese currency. The EU, whose trade relationship with China was worth more than 300 billion euros ($375 billion) last year, is trying to restrict imports of dozens of Chinese products ranging from textiles and chemicals to ironing boards and bicycles through anti-dumping duties.

Under current Chinese rules, media agencies can sell news and data to subscribers only via agents designated by Xinhua, which has the right to select information released by foreign organizations and to delete any materials that undermine China's social stability, endanger national security or disrupt the country's economic order, among other prohibitions.

To contact the reporter on this story: Jennifer M. Freedman in Geneva at jfreedman@bloomberg.net

Last Updated: November 13, 2008 11:48 EST