WORLD TRADE
ORGANIZATIONG/MA/W/34
30 August 2002
(02-4630)
Committee on Market Access Original:  English
CHINA'S TRANSITIONAL REVIEW MECHANISM
Communication from Japan
The following communication, dated 23 August 2002, has been received from the Permanent
Mission of Japan.
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Japan welcomes China's efforts to implement its commitments under the Protocol on the
Accession into the WTO. We have the view that Transitional Review Mechanism (TRM) would
contribute to improved adherence by China to rules, disciplines and its commitments, if it would be
operated in a meaningful and productive manner.
While China has committed to provide relevant information to each subsidiary body in
advance of the review under the Protocol on the Accession into the WTO, such information has not
yet been received.
We, therefore, submit our comments well in advance of the Committee on Market Access of
23 September 2002, in order for the Chinese authority to reply and to submit necessary information.
Japan looks forward to working with China and other Members, so as to ensure the transparency
committed under the Protocol, and appreciates, if China responds to our comments in written form tendays before the meeting.
1. Tariffs
(i) Certain photographic and cinematographic goods
While China committed the concession tariff rates on 35 items of photographic products in
HS Chapter 37, on an ad valorem  (levied on yuan/yuan) basis, those items are currently levied by
specific import duties (levied on yuan/square metre basis) in a manner of far more excessive tariff
rates than bindings.1
      Japan has the view that those excessive duties should be lowered at the level of the boundrates. Could China provide a concrete time schedule for the revision from specific duties to ad
valorem duties, in line with China's Schedule of Concessions and Commitments on Goods?
                                                     
1 The Report of the Appellate Body for the case of Argentine minimum specific import duties
concludes that it is inconsistent with Article II:1(b) of the GATT 1994(1) if the application of a type of dutydifferent from the type provided in the bound tariff schedule results in the levying of excessive duties, in any
transaction, compared to the concession tariff rates. (WT/DS56/AB/R).G/MA/W/34
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(ii) Beer
 While China committed the tariff rate on beer in HS chapter 22, on ad valorem basis, it is
currently levied specific import duties. Japan has the view that China should observe the bound rate in
line with China's Schedule of Concessions and Commitments on Goods.
 (iii)  CKD/SKD tariff lines of motor vehicles
Does China have intention to create new tariff lines for CKD or SKD for motor vehicles? If
so, please provide us relevant information, such as, how define CKD and SKD as new tariff line,
and/or what tariff rate (in percent) will be applied to these tariff lines respectively?
- Related China's Commitment: Paragraph 93 of the Working Party report2
2. Quantitative restrictions on imports
(i) Import quotas on motor vehicles
(a) Notification of information on procedures of import quota on motor vehicles
- In accordance with Article 1, paragraph 4(a) of the Agreement on Import Licensing
Procedure, procedures for submitting applications shall be published in the sources notified tothe Committee in all circumstances insofar as possible by whenever practicable, 21 days prior
to the effective date of the requirement. Please inform us of where the publication is available.
- In addition, under Article 5, paragraph 1 of the Agreement, Members which institute import
licensing procedures or changes in licensing procedures shall notify the Committee of suchwithin 60 days of publication. Please confirm that China has not yet instituted imported
licensing procedures or changes, since China has not yet notified in this regard.
(b) Publication and provision of information on the implementation of import quotas on
automobiles
In accordance with relevant provisions under the Agreement on Import Licensing Procedure,
please provide the necessary information as follows.
(i) With respect to Article 1, paragraph 4 (a) of the License Agreement (information to be
published)
- The eligibility of the applicant, and in particular, relationship to trading rights
- Paragraph 128 of the report of the Working Party
Is there any entity without trading rights that has been qualified as applicants? If so, what
conditions apply to such entities? What kind of entity has been qualified as applicants so far?
(ii) With respect to Article 3, paragraph 5 (a) of the License Agreement (information to be
provided upon the request of any Member),
                                                     
2 " China had no tariff lines for completely knocked-down kits (CKD) for motor vehicles or semi-knocked down
kits (SKD) for motor vehicles? If China created such tariff lines, the tariff rates would be no more than 10 percent."G/MA/W/34
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- Information (both on the basis of application and actual allocation) on the value of import
quotas for complete vehicles, CKD, and parts, broken down, respectively, by country of
origin, engine displacement, and company.
- According to paragraph 4 of "Implementation Rules on the Quota Administration on Imports
of Machinery and Electrical Products", the Ministry of Foreign Trade and Economic
Cooperation (MOFTEC) is responsible to examine and supervise the status of allocation of
import license. Please provide relevant information on current status of import quota
allocation distributed by following entities; all provinces, autonomous regions, municipalities
directly under the central government and those with independent budgetary status, coastal
open cities, and by external economic trading management departments of special economic
zones and State Council-related machinery/electrical products import/export administrativeoffices.
- According to paragraph 129 of the report of the Working Party, August is the application
period, and no later than 60 days after closure of the application quota allocation will be
made. Please confirm this schedule for year 2003 that quotas will be allocated by October 30.
(c) Reallocation of unused quotas
We are requesting that unused quotas for this year be returned and reallocated as specified in
the Report of the Working Party3.  Please explain when and how China does it, [and if not, please
explain why].  In this connection, the report of the Working Party provides that the deadline for return
of unused quota is September 1, but China started the actual allocation of quota for current year in
April. Does China intend to postpone the deadline for return of unused quota? And until when?
 (d) Concern over priority consideration to new entrants in quota allocation
China should give priority consideration to new entrants in allocating quotas, as committed4.
Please explain how China implements this obligation and specify what amount of quota has been
allocated to new entrants.
(e) Rules concerning quota system for motor vehicles
We have the view that "Implementation Ru les on the Quota Administration on Imports of
Machinery and Electrical Products" should specify the following points so as to embody this scheme
provided for in the Report of the Working Party5:
(i) Priority consideration to be given to new entrants, enterprises with foreign ownership equal to
or less than 50 percent, and enterprises with foreign ownership greater than 50 percent in
allocating quota.
(ii) An import license to be issued in most case s within 3 working days, and in exceptional cases,
within the maximum of 10 working days, after a request for the license.
(iii) An import license to be extended once, upon request, for up to 3 months, if the request is
made before 15 December of the current quota year.
(iv) The procedures for requests for extension mentioned in 3) above.
                                                     
3 Paragraphs 130 and 131
4 Paragraphs 128 and 130 of report of Working Party
5 Paragraphs 127, 129, and 130 of report of Working PartyG/MA/W/34
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(v) Methodology of quota reduction for holders failing to return unused quota, and the date of
reduction.
Japan appreciates the China's response on this issue.
(f) Extension of period for quota allocation
       Paragraph 129 of the report of Working Party provides that import licenses would be
extended once, upon request, up to 3 months, if the request is made before December 15.  We would
appreciate, if China ensure that for this year, the effective period for all quotas and related import
licenses be extended by three months, since the allocation of quota delayed for three months.
(3) Import prohibition policy of used goods
As far as current information indicates, China prohibits imports of certain used goods listed in
a list of goods subject to import prohibition of used  industrial electric products.  GATT Article XI:1
generally bans import restrictions, and China’s Protocol of Accession does not permit such import
prohibition. Please confirm the above-mentioned information, and explain consistency of import
prohibitions for used goods with the WTO Agreement.
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