WORLD TRADE  
ORGANIZATION  G/C/W/498 
5 November 2004 
 (04-4702) 
Council for Trade in Goods Original:   English 
  
 
TRANSITIONAL REVIEW MECHANISM IN CONNECTION WITH PARAGRAPH 18 OF 
THE PROTOCOL ON THE ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA
1 
 
Communication from Japan  
  
 The following communication, dated 1 November 2004, is being circulated at the request of 
the Delegation of Japan.  
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 Japan's comments to the Council for Trade in Goods
 
  
1.  Export restriction (coke) 
 
 China has been, for certain reasons, restri cting coke exports through export licensing 
measures.  However, because of the insufficient supply of export licences at the beginning of this 
year, the export price for Chinese coke soared and the negative impact on the market still remains. 
Since China's restriction has had an adverse imp act on the coke-consuming industries, such as the 
steel and foundry industries, Japan is deeply con cerned about China's export licensing issuance plan 
for 2005 which has, so far, not been announced ye t.  Since China's export licensing measure does not 
appear to be made effective in conjunction with restrictions on domestic production or consumption, 
Japan is concerned that the restriction may not be justified under GATT Article XX(g) regarding the 
conservation of exhaustible natura l resources, and thereby in violation of the GATT Article XI.  
Moreover, Japan recognizes the fact that China has limited the allocation of export licences to certain 
enterprises.  The short supply of export licences ha s also resulted in the unusually high fees paid as 
premium by traders wishing to export coke, which, in  our view, could eventually constitute a violation 
of the GATT Article VIII:1(a) which states that rendered export fees and charges must be limited in amount to the approximate cost of services. 
 
In this context, Japan urges China to: 
 
(a) provide China’s view on the WTO consistency of export restrictive measures, which appears 
not to have been made effective in conjunc tion with restrictions on domestic production or 
consumption; 
 
(b) notify the quantity of coke produced and consumed in China in 2001, 2002, 2003 and 2004 
(up to the latest available month) and to explain what kind of restrictions on domestic 
production and consumption, if any, have been taken and how they have worked during this 
period; 
 
                                                     
 
1 WT/L/432. G/C/W/498 
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 (c) explain the rationale for limiting the alloca tion of export licences to a certain number of 
trading enterprises and for the way the Chinese G overnment ensures that the fee and charges 
paid by these export licence holders are limited to the approximate cost of services rendered, 
and; 
 
(d)   specify when and how China will issue e xport licences for 2005 and what will be the total 
amount of coke authorized by the export licences. 
 
2.  Export restriction (fluorite) 
  In the TRM of the Council of Trade in Goods held last year, China explained, "the measure 
for protection of natural resources is maintained a bout fluorite".  The GATT Article XX(g) sets forth 
a general exception insofar as the measures are ma de effective in conjunction with domestic 
production or consumption.  China's domestic consumption of fluorite seems to be increasing, in light 
of the information that the production of hydro fluorite, which is made from fluorite, has been 
increasing in China.  
 
 It so appears as if the decrease in the licensed export of fluorite is intended to compensate for 
the increase in the domestic demand of it.  
 
 Japan urges China to account for the WTO-cons istency of such measures, especially with 
regard to the GATT Articles XI and XX. 
 
 Japan also urges China to provide detailed information on the regulation which China has 
imposed on the fluorite users in China, if China is to regard the regulation consistent with the GATT 
Article XX. 
 
3. Government procurement 
 
 At the Working Party for WTO accession, Ch ina committed itself to initiating negotiations 
for its membership to the Government Procurem ent Agreement (GPA) (see, Report of the Working 
Party, para. 339).  China also agreed to table an Appendix 1 offer as soon as possible (see, also, 
Report of the Working Party, para. 341) and, until such a time, and to require all government entities 
to conduct their procurement in a transparent manne r and to provide all foreign suppliers with an 
equal opportunity to participate in the procurement pursuant to the principle of MFN. 
 
  Japan urges China to:  
(a)  outline the schedule for China's requests for GPA membership, including the commencement 
of the negotiation process, and; 
 (b)  confirm that all government procurement pr ocedures are conducted in a transparent manner 
and that the MFN principle is applied to all fo reign suppliers in practice, not withstanding the 
fact that Article 10 of China's Law on G overnment Procurement (enacted 29 June 2002, 
enforced 1 January 2003) only stipulates that the Government must procure national goods 
and services. 
 
4.  Authorizing system of complete automobile feature 
  Japan thanks China for the responses provided so  far at the last MA committee.  However, 
Japan believes that some of our questions have unfo rtunately not been responded to yet.  Using this 
valuable opportunity, Japan wishes to ask China for an elaboration on some of these questions, as a 
part of the transitional review mechanism.   G/C/W/498 
 Page 3 
 
 
  
(a)  At the last MA committee, regarding the customs classification of CKD and SKD kits in 
connection with the Article 55-57 of the auto  industry development policy, China responded 
that the current practice has not changed. 
 (b)  We would like to know what is meant by "the current practice".  In other words, we would 
like to know whether it means China has alread y created tariff lines for CKD and SKD kits 
for motor vehicles. 
 
(c)  If China's answer is "yes" (China already has those tariff lines), it raises the question as to 
whether China's current practice is consistent  with this commitment as stipulated in 
paragraph 93 of the Working Party Report on Ch ina's Accession.  China committed that with 
regard to the CKD and SKD kits, "the tariff ra tes would be no more than 10 per cent."  Japan 
welcomes China’s explanation of this. 
 
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