I don't think it was UK initially but I do know that trying to use a US card without the Chip & Pin is sometimes impossible in France and the UK. Retailers just don't carry the old paper slips and card slide machines, they all use the card reader with the keyboard for you to enter your pin.I first met chip n pin in Switzerland in about 1992. Whilst the retailers would accept UK cards, they were annoyed they had to work with the old paper voucher system as was still being used in the UK.
I don't know where it did actually start but I don't think it was the UK. I wouldn't be at all surprised were it France, since they do seem to get on board of latest technology much quicker than anywhere else (cf Minitel).
Citicards did talk about issuing C&P but they haven't yet to my knowledge, and one reason might be the 'tipping' which is normally added to the paper card slip by the purchaser - can't do that with C&P. Tipping is a big issue in the US unlike Europe, loads of US places rely on tips for their staff income.